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TMI Tax Updates - e-Newsletter
November 14, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Court quashes blocking of Tax Credit Ledger for lack of reasons and natural justice.
Rule 86A of the Central/State Goods and Services Tax Rules, 2017, which allows blocking of the Electronic Credit Ledger, has been held unconstitutional by the High Court due to violation of principles of natural justice. The Court observed that no pre-decisional hearing was provided to the petitioner, and the impugned order lacked independent or cogent reasons, relying solely on reports from the Enforcement Authority, which amounts to "borrowed satisfaction." The Court relied on its previous decision in K-9-ENTERPRISES, where it held that in the absence of valid and sufficient material constituting "reasons to believe," the mandatory requirements/prerequisites/parameters contained in Rule 86A were not fulfilled, and the respondents were not entitled to block the Electronic Credit Ledger by invoking the said Rule. Consequently, the impugned order dated 06.05.2024, blocking the petitioner's Electronic Credit Ledger u/r 86A, was quashed by the High Court for being illegal and arbitrary.
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Goods in transit with valid docs, but registration suspended: Court intervenes.
The summary focuses on the challenge to proceedings initiated u/s 129 of the CGST Act read with Section 20 of the IGST Act, involving a penalty order for the movement of goods without proper documents. The key points are: The goods were accompanied by dated documents, but the petitioner's registration was suspended by the jurisdictional authorities after the documents were issued. A coordinate Bench of the High Court, in the Halder Enterprises case, held that if goods are found with proper tax invoices and e-way bills, the circular dated 31.12.2018 would apply, deeming the petitioner as the owner, and the goods should be released u/s 129(1)(a) of the CGST Act. In the present case, the respondents did not dispute the presence of proper tax invoices and e-way bills, and the action was solely based on the suspension of registration. The High Court, relying on its previous decisions, set aside the impugned order and allowed the petition.
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Municipal Corp challenges tax notices, claiming services exempt/nil-rated under GST laws.
The petitioners challenged the show cause notices (SCNs) issued by the respondent under the CGST Act, IGST Act, and MGST Act, contending that the services rendered by the Municipal Corporation of Greater Mumbai (MCGM) are exempted or subject to a nil tax rate under the relevant exemption notifications. The key issues are: 1) The jurisdiction of the SCNs, as the petitioners claim the services are exempt or nil-rated. 2) The factual element regarding each demand must be examined against the backdrop of the exemption or nil rate notifications. 3) The adjudicating authority must determine whether the taxed activities relate to functions entrusted to MCGM under Article 243W of the Constitution. The High Court held that the petitions cannot bypass the statutory alternate remedies, as the issue of exemption applicability is debatable and requires factual examination. Splitting or quashing the SCNs is not permissible where arguable issues exist on both sides. The contention of the SCNs being wholly without jurisdiction cannot be accepted, and the petitions were dismissed.
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Dismissal of plea to summon GST official, petitioners' rights clarified in evidence production stage.
In a case concerning the dismissal of an application to summon an official from the GST Department in Ludhiana along with the GST 3B return record, the High Court held that the petitioners do not have the right to summon witnesses at the stage when the respondent-complainant is producing evidence. The petitioners have the right to cross-examine the respondent-complainant and witnesses, and confront them with documents, but they are not entitled to summon witnesses during this stage. The petitioners sought to produce the GST 3B return document, which they can present to the respondent-complainant or witnesses without summoning an official. The trial Magistrate's well-reasoned order dismissing the petitioners' application was upheld by the High Court, finding no merit in the petition.
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Land purchase, construction GST credit restricted; SC upholds CGST Act provisions.
Section 17(5)(c) and (d) of the Central Goods and Services Tax Act, 2017, which restricts input tax credit on GST paid for purchase of land and construction thereon, has been upheld by the Supreme Court. The petitioner sought to claim input tax credit on GST paid for land purchase and construction. However, the issue is no longer res integra and is covered by the Supreme Court's decision in Chief Commissioner of Central Goods and Service Tax & Ors. Versus M/s Safari Retreats Private Ltd. & Ors., where the constitutional validity of these provisions was upheld. The petitions are disposed of, allowing the petitioners to file claims for availing input tax credit, which shall be considered in accordance with law.
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Gambling Site Loophole? No Cheating Offence if No Victim Identified.
Interpretation of Sections 415 and 420 of the Indian Penal Code (IPC) and Section 66D of the Information Technology Act, 2000, in the context of online betting. The court held that for an offence u/s 415 (cheating) to be punishable u/s 420, there must be a person who has been deceived from the inception with a dishonest intention to commit fraud. The court found no evidence of any person being deceived or hoodwinked in the present case. Relying on Supreme Court precedents, the court concluded that the necessary ingredients for offences u/ss 415 and 420 IPC were not met. The state's investigation spanning over three years failed to identify any victims or evidence against the petitioners. Allowing further proceedings would amount to an abuse of the legal process. Invoking Section 482 of the Criminal Procedure Code, the High Court quashed the FIR to prevent a miscarriage of justice.
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CBIC order blocking company's ECL quashed for lack of reasons and hearing.
The court quashed the order blocking the Electronic Credit Ledger (ECL) of the petitioner u/r 86A of the Central Goods and Services Tax Rules, 2017. The respondents did not provide a pre-decisional hearing to the petitioner, nor did the impugned order contain cogent reasons to believe that blocking the ECL was necessary, violating principles of natural justice. The court relied on the K-9-Enterprises case, where it was held that the mandatory requirements of Rule 86A were not fulfilled, and the respondents could not rely on the satisfaction of another officer. The impugned order merely stated that the supplier was found non-existent or not conducting business, without providing independent or cogent reasons. Consequently, the impugned orders were quashed for lack of valid reasons and violation of principles of natural justice.
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Tax Credit Dispute: Court Orders ITC Unblocking & Release Per Prior Ruling.
The court held that the issue in controversy regarding the legality of sub-section (4) to Section 16 of the Central Goods and Service Tax Act, 2017 and the Karnataka Goods and Service Tax Act, 2017, concerning the date of availment of input tax credit (ITC) in the books of account of the petitioner, is directly and squarely covered by its previous judgment in M/s. Sadhana Enviro Engineering Services vs. Joint Commissioner of Central Tax & Others. In that case, the court directed the respondents to unblock and release the credit balance of the petitioner in their ITC Ledger/Account immediately and without delay. Consequently, the present petition deserves to be allowed and disposed of accordingly.
Income Tax
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Agricultural land sale: Proper inquiry on distance from municipal limits ignored, inviting tax exemption denial.
The assessee claimed exemption from long-term capital gains tax on the sale of agricultural land situated beyond the prescribed distance from municipal limits. The Assessing Officer (AO) accepted the assessee's claim without proper inquiry or verification from relevant authorities like the District Town Planner (DTP). The Principal Commissioner of Income Tax (PCIT) invoked Section 263, holding the AO's order erroneous as it lacked inquiry and application of mind. The High Court upheld the PCIT's order, observing that the AO failed to conduct any inquiry to verify the land's agricultural status and distance from municipal limits. The AO relied solely on a self-serving statement from the assessee without corroborating evidence. The Court ruled that the AO's order was erroneous and prejudicial to revenue interests due to lack of effective inquiry and non-application of mind, justifying revision u/s 263.
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Cash gifts worth Rs. 10 lakh from Privy Purse account to trusts deemed taxable income, overturning Tribunal's order.
The High Court found that the Income Tax Appellate Tribunal's order regarding the source of cash gifts was perverse and failed to consider the available evidence. The bank statement of the Privy Purse account clearly showed that cheques and cash totaling Rs. 10 lakh were released from this account to the two trusts on various dates. Therefore, the court held that the gift amount was made out of the Privy Purse, requiring further adjudication. The court's decision favored the assessee, overturning the Tribunal's order on this issue.
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Foreign Company Avoids Tax by Splitting Contracts, Court Rejects Permanent Establishment Claim.
The assessee had artificially split the composite contract to avoid establishment of a permanent establishment (PE) in India and tax payment. The Assessing Officer (AO) held that the assessee has a PE in India in the form of a fixed place and dependent agent PE (DAPE) through GE Power India Ltd. (GEPIL). However, the Coordinate Bench of the Tribunal, on similar facts for the same assessee for Assessment Years 2018-19 and 2019-20, had held that there is no business connection of the assessee in India, and no fixed place PE or construction PE exists. Consequently, the provisions of Section 44BBB of the Act are not applicable. Therefore, the receipts from offshore supplies and the amount received from GEPIL are not taxable in India. The addition made by the AO by bringing offshore supply receipts to tax is directed to be deleted. Interest u/s 234B is consequential and the AO is directed to levy it accordingly.
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Cash deposits queried; assessee denied fair hearing, order set aside for fresh adjudication with opportunity to justify.
The case concerns the reopening of assessment u/s 147 based on information from the Non-filers Monitoring System (NMS) about cash deposits in the assessee's bank account. The Assessing Officer made an addition of unexplained money u/s 69A, partially accepting the assessee's explanation for the cash deposits but rejecting others due to lack of documentary evidence. The Tribunal found that the assessee was deprived of a fair chance to present their case due to procedural deficiencies and reliance on email communication inaccessible to the assessee. The order of the Additional Commissioner of Income Tax (Appeals) was set aside, and the matter was remanded back for fresh adjudication after providing adequate opportunity to the assessee to present their case, in accordance with the principles of natural justice.
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Mushroom farming income exempt from tax under agricultural income provision.
Income derived from cultivation and sale of white button mushrooms was characterized as agricultural income exempt u/s 10(1) of the Income Tax Act, following the precedent set by the Inventaa Industries (P.) Ltd. case [2018 (8) TMI 69 - ITAT HYDERABAD] with identical facts. The Appellate Tribunal allowed the assessee's claim, treating the cultivation and sale of white button mushrooms as an agricultural activity, resulting in the income being exempt from taxation u/s 10(1).
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Financial advisor fees allowed as related to income earning despite disallowance u/s 57(iii.
The assessee claimed expenditure relating to financial advisor's fees, which was disallowed u/s 57(iii) as it did not relate to earning such income. However, the CIT(A) deleted the addition, and the ITAT upheld the CIT(A)'s order, following the Supreme Court's judgment in Rajendra Prasad Moody's case, as the assessee had a legal dispute pending related to earning income during the year. Regarding the disallowance u/s 37(1) for expenses incurred on bills/vouchers, the ITAT rejected the Revenue's ground, as the AO made an ad-hoc disallowance without pointing out any specific element of such expenditure. The CIT(A) rightly deleted the ad-hoc disallowance, as the expenses were necessary and genuine for the business or profession, as substantiated by the assessee.
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Unaccounted Sales Estimated from Notebooks, WhatsApp; Corresponding Expenses Incurred; Profit Estimation by GP Rates Reasonable.
Assessee's unaccounted sales were estimated based on notebooks, diaries, and WhatsApp conversations. Only real income can be taxed. While unaccounted sales existed, corresponding unaccounted expenses were also incurred. AO cannot accept part of the transaction. CIT(A) estimated profit by applying regular GP rates, which is logical and reasonable. Circular transactions within group entities lack the character of income and should be excluded from unaccounted sales receipts estimation. Bogus expenditure disallowance at 12.5% is reasonable to plug revenue leakages. Unaccounted cash receipts additions for certain years based on unsigned excel sheets lack evidentiary value without corroboration. Additions based on notebooks seized from a non-employee were reasonably estimated by applying GP rates. Email communication suggesting accounting adjustments cannot be presumed as manipulations without corroboration, especially when accounts were audited without adverse remarks. Relevant legal principles were applied in estimating real income and making reasonable additions/disallowances.
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Customs valuation discrepancy resolved: Gross assessable value difference not income suppression.
The assessee recorded all imports in its books, but the AO presumed non-declaration based on the export-import summary data without considering credit notes. The duty paid matched, and the difference was in the gross assessable value, not the actual cost. The AO made an addition without proper verification, rejecting the assessee's explanation. Even though there was a difference in reconciling the gross assessable value, it did not lead to non-disclosure of income. The Tribunal held that the AO failed to substantiate how recording imports would result in undervaluation or suppression of income. Therefore, the issue was decided in favor of the assessee as there was no involvement of undisclosed income.
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Revenue appeal dismissed due to low tax effect; exceptions may revive it.
Maintainability of revenue appeals before the Tribunal when the tax effect is below a certain threshold. According to CBDT instructions, subordinate authorities should not challenge CIT(Appeals) orders before the Tribunal if the tax effect due to relief granted is less than Rs. 60,00,000, unless the case falls within specified exceptions. In the instant case, since the tax effect is below the threshold and no exceptions apply, the revenue appeal is dismissed for lack of tax effect. However, if upon re-verification the tax effect exceeds the limit or an exception applies, the Revenue can file a miscellaneous application to revive the appeal.
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Taxpayer failed to justify abnormal transport expense hike without proper bills/vouchers. Evidence inadequate.
Onus on assessee to explain exorbitant increase in transport expenses and support with proper bills/vouchers, which assessee failed. Sample bills/vouchers not for transport expense, lacking lorry details, origin and destination. Bills for purchase of materials like sand, mentioning 'transportation' but not actual transport expenses. Evidence not explaining abnormal increase in transport expense despite substantial increase in petrol expense. Cogent explanation and complete bills/vouchers lacking, hence addition confirmed by CIT(A) upheld by ITAT. Decided against assessee.
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Indian firm's foreign taxes credited for services rendered in Japan and other nations.
Partnership firm rendered professional services in Japan, taxes withheld there. Firm claimed foreign tax credit (FTC) which was denied by tax authorities. ITAT held that under India-Japan tax treaty, firm's income taxable as fees for technical services, entitling it to FTC for Japanese taxes withheld. Even if interpretations differ between residence and source countries on treaty provisions, FTC cannot be denied when source country levies tax. ITAT allowed FTC for taxes withheld in Japan and other countries like Nepal, Brazil, China and Malaysia based on earlier ruling favoring the firm. Assessee's appeal allowed granting FTC.
Corporate Law
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Stock Exchange Overreach? Court Quashes Direction Blocking Share Transfer.
This case pertains to the transfer of shares and the issuance of a duplicate share certificate. The key points are: The National Stock Exchange (NSE) issued a "stop transfer" direction to the transfer agent, citing default by a trading member in making payments. The petitioner challenged this direction, arguing that the shares did not constitute assets of the defaulting member. The court held that the NSE, being a stock exchange, is covered under the definition of 'State' and amenable to writ jurisdiction. The impugned communication was neither an order nor a decision under the Securities Contracts (Regulation) Act (SCRA), and the NSE failed to show authority for issuing such a direction. The court quashed the impugned communication and consequential proceedings by the NSE against the transfer agent, allowing the petition for the issuance of a duplicate share certificate as the shares were still recorded in the petitioner's name.
IBC
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Director's disqualification challenged in financial creditor's insolvency petition against corporate debtor.
Disqualification of a director of the financial creditor to sign the Section 7 application was challenged. The application u/s 7, signed by the director of the financial creditor company, was rejected. The appellant contended that the Infracon company, where Sachdeva was also a director, had been struck off due to non-filing of financial statements for three years, attracting director disqualification u/s 164. The Tribunal held that Section 164(2) requires non-filing of financial statements or annual returns for any continuous period of three financial years, which was not applicable in this case. The company was incorporated in 2014, and the last balance sheet filing date was 31.03.2015. The proviso to Section 167(1), inserted in 2018, was also not applicable to disqualify Sachdeva as a director in the financial creditor company. As the Infracon company had already been struck off when the Section 7 application was filed, Sachdeva could not continue as its director but remained competent to act as a director in the financial creditor company. The Adjudicating Authority's order rejecting the application was upheld, and the appeals were dismissed.
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Corporate Insolvency Dispute: Court Overrules Premature Dismissal, Orders Resolution Process.
The Adjudicating Authority erred by dismissing the Section 95 application without appointing a Resolution Professional and following the statutory process under the Insolvency and Bankruptcy Code. The principle of waiver is inapplicable as the Appellant did not consciously abandon any existing legal right. The Adjudicating Authority lacks jurisdiction to consider objections on the merits of the Section 95 application before appointing a Resolution Professional, as clarified by the Supreme Court in Dilip B. Jiwrajka's case. The order dismissing the Section 95 application is set aside, and the appeal is allowed.
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Claim adjustment allowed, security amount set-off permitted, CIRP regulation applied.
The Appellate Tribunal addressed the issue of refund and adjustment of security amount in a claim. It examined Clause 8 of the Claim Form and found that the security amount was already adjusted in the claim itself. The Adjudicating Authority had relied on a Supreme Court judgment concerning the Corporate Insolvency Resolution Process (CIRP), which permitted set-off of accounts under Regulation 29. However, the Appellate Tribunal held that the Adjudicating Authority erred in observing that the anticipated claim adjustment by the Appellant could not be permitted, as the present case involved an actual claim filed with adjustment of the security claim. Consequently, the Appellate Tribunal ruled that the Adjudicating Authority's direction to pay Rs. 1,15,33,600/- could not be sustained, and the Appeal was partly allowed.
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Security deposit for lease premises deemed operational debt, not financial debt under IBC.
Classification of a security deposit made by the appellant for a lease deed with the corporate debtor, as either a financial debt or an operational debt under the Insolvency and Bankruptcy Code (IBC). The key points are: The security deposit is a claim within the meaning of the IBC. To qualify as a financial debt u/s 5(8), there must be a disbursal of money against consideration for the time value of money. However, the security deposit was a refundable corpus amount without interest, not disbursed for time value of money, lacking elements of commercial borrowing. Therefore, it does not satisfy the definition of financial debt. An operational debt u/s 5(21) relates to claims for provision of goods, services, employment, or government dues. The security deposit, being an advance for prospective occupation and use of leased premises, can be considered a claim for services, satisfying the definition of operational debt. The NCLAT held that the security deposit should be classified as an operational debt, and the appellant should be accorded the status of an operational creditor. The resolution professional was directed to admit the appellant's claim as an operational creditor and allow the appellant to substitute the relevant form.
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Financial creditor's application admitted, consent decree default beyond Section 10A purview.
The Appellate Tribunal dismissed the appeal, holding that the Section 7 application filed by the Financial Creditor was not barred by Section 10A of the Insolvency and Bankruptcy Code (IBC). The Corporate Debtor had committed defaults on 21.12.2017 and 29.06.2018, leading to accounts being declared as NPA by lenders. Although assignment was made in favor of the Financial Creditor in 2019 and a settlement was agreed upon on 26.04.2019, which was not honored, constituting a further default prior to the Section 10A period. The Section 7 application was based on the default arising from the Consent Decree dated 29.08.2022, which cannot be pegged within the Section 10A period. The Adjudicating Authority did not err in admitting the Section 7 application, as it was not hit by Section 10A of the IBC.
Indian Laws
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Public-private contracts can't unilaterally appoint sole arbitrator or curate panel for other party's selection. Equal treatment applies.
The principles of independence and impartiality of arbitral tribunals under the Arbitration and Conciliation Act 1996 were evaluated in relation to party autonomy. Unilateral appointment of sole arbitrator or curation of panel for other party's selection was examined. The majority held that equal treatment applies at appointment stage, prohibiting unilateral appointments or curated panels by one party. Such clauses in public-private contracts violate Article 14. Waiver u/s 12(5) is possible post-disputes. The ruling applies prospectively to three-member tribunals. A minority view permitted unilateral appointments if arbitrators meet eligibility criteria, limiting judicial intervention at appointment stage. The interplay between contractual autonomy and statutory duty to constitute independent tribunals was analyzed, with the latter being a non-derogable public policy under the Contract Act. Courts must scrutinize agreements to ensure compliance with this requirement while respecting party autonomy.
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Fugitive billionaire seeks to quash summons, challenges economic offender charges.
The petition filed u/ss 4, 10, and 12 of the Fugitive Economic Offenders Act challenges the summoning order and seeks to quash the miscellaneous application. The court examined the scope of jurisdiction exercised by the Special Judge in issuing the summons. The complainant stated the accused owns properties listed in Annexures A to A3, acquired through proceeds of crime exceeding Rs. 100 crores, warranting application of Section 2(1)(f) of the Act. A combined reading of Sections 4 and 10 requires the Special Court to issue notice upon filing an application u/s 4 as per the prescribed Rules. The Fugitive Economic Offenders Act is a special statute, and the argument regarding "duly filed" must be understood per the Rules. The complainant provided detailed information and supporting documents, recording the "reason to believe." The petitioner's arguments were rejected, as the respondent pointed out non-disclosure of the UK address, invoking the court's jurisdiction without clean hands. The petitioner could have appeared before the Special Judge u/s 11 but invoked Section 482 Cr.P.C. jurisdiction instead. The court found it inappropriate to interfere, considering the peculiar facts and circumstances, and the availability of Section 11 proceedings.
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Hybrid car bought before tax exemption policy, registration after; no refund eligibility despite later registration.
Exemption scheme or policy cannot be applied retrospectively. Petitioner purchased a hybrid vehicle and paid applicable tax before the exemption policy was introduced. Although vehicle was registered after policy date, tax payment occurred earlier. Supreme Court precedent mandates strict interpretation of exemption notification eligibility criteria. Petitioner ineligible for tax refund under the exemption policy since tax was paid prior to policy introduction. High Court dismissed petition seeking refund direction as no case was made out.
VAT
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Tax notices validly issued for revision assessments despite errors.
Notices issued u/ss 84 and 27(1)(a) of the Tamil Nadu Value Added Tax Act, 2006 were valid. The time limitation for revising assessment orders is not an issue if a notice is issued in time. The High Court had previously dealt with a similar case involving Section 27. According to the proviso to Section 22(2), assessment years were deemed completed on 30.06.2012. Any revision proceedings had to be completed within six years for deemed assessments u/s 27. Mentioning the wrong provision or not mentioning it does not invalidate an order if the authority had requisite jurisdiction. The 23.07.2014 notices, though erroneously mentioning Section 84, were intended for revision u/s 27(1)(a). The assessments completed on 04.01.2021, 31.12.2020, and 07.01.2021 were within the limitation period prescribed u/s 27(1)(a). The writ petitions were dismissed.
Central Excise
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Excess excise duty charged but CENVAT credited to govt; Sec 11D demand set aside.
The appellant paid excise duty on the removal of inputs as such, based on the transaction value. However, this excise duty was found to be in excess of the actual CENVAT credit involved in such removal. Section 11D of the Central Excise Act, 1944, states that if an assessee collects an amount in the name of excise duty and retains it, the same must be credited to the Central Government. In this case, although the appellant charged excise duty over and above the CENVAT credit involved, the total amount collected from the customer was paid by debiting the CENVAT account. According to the CESTAT judgment in Shivam Metals, if the amount collected in the name of excise duty is paid to the government, the demand for such amount cannot be raised invoking Section 11D. Therefore, the demand u/s 11D in the present case is not sustainable, and the impugned orders are set aside, allowing the appeals.
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Bio-fungicides & bio-insecticides misclassified, ignoring binding precedents. Order quashed for defiance of judicial discipline.
Commissioner failed to follow binding Tribunal precedents on classification of bio-fungicides and bio-insecticides, erroneously believing Supreme Court appeals left issue open. Tribunal clarified Supreme Court appeals were on different issues, not classification. Commissioner bound by Tribunal precedents, cannot independently decide contrary. Order set aside for not following judicial discipline and binding precedents, displaying mala fides. Appeal allowed.
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Procedural lapses ignored for area-based exemption due to substantial compliance.
Area based exemption notification eligibility criteria were substantially met despite procedural lapses. Appellants commenced increased production capacity after substantial expansion before the specified date, rendering them eligible for exemption from that date onwards. Mere procedural violation of not filing declaration should not preclude exemption benefit. Department failed to establish suppression of facts or intent to evade duty payment, hence extended period of limitation cannot be invoked. Penalties imposed u/s 11AC set aside. Appeal partly allowed.
Case Laws:
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GST
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2024 (11) TMI 600
Seeking direction to the respondents to make payment of the difference in the rate of GST - respondent no.6-PIU submits that the requisite would be released to the petitioner in case the CCL has been received, as claimed by the counsel appearing for respondent no.4 - HELD THAT:- The petitions filed by the petitioner are disposed of - The respondent no.6 is directed to release the amount to the petitioner within a period of one week from the date of this order.
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2024 (11) TMI 599
Challenge to assessment order - opportunity of personal hearing not provided to the petitioner - violation of principles of natural justice - HELD THAT:- Admittedly, no such opportunity of personal hearing was provided to the petitioner. The provision of Section 75(4) of the GST Act mandates that if an adverse order is going to be passed, it is mandatory to provide an opportunity of personal hearing to the Assessee. However, in the case on hand, though the impugned assessment order was passed against the petitioner by confirming the demand, the respondent had failed to provide an opportunity of personal hearing as per the terms of Section 75(4) of the GST Act. Thus, it is clear that the impugned order was passed in violation of principles of natural justice as well as in contravention of provision of Section 75(4) of the GST Act and hence, the same is liable to be set aside. The impugned order dated 26.04.2024 is set aside and remanded back to the respondent for re-adjudication - Petition allowed by way of remand.
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2024 (11) TMI 598
Constitutional Validity of Rule 86A of the Central Goods and Service Tax Act / State Goods and Service Tax Rules, 2017 - blocking the Electronic Credit Ledger (ECL) - pre-decisional hearing was not provided to the petitioner nor does the impugned order contain any reason to believe as to why it was necessary to block the Electronic credit ledger - violation of principles of natural justice - HELD THAT:- In K-9-ENTERPRISES, KWALITY METALS, K-9-INDUSTRIES VERSUS THE STATE OF KARNATAKA, THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, BELAGAVI. [ 2024 (10) TMI 491 - KARNATAKA HIGH COURT] it was held that ' The aforesaid facts and circumstances are sufficient to come to the unmistakable conclusion that in the absence of valid nor sufficient material which constituted reasons to believe which was available with respondents, the mandatory requirements/pre-requisites /ingredients/parameters contained in Rule 86A had not been fulfilled/satisfied by the respondents-revenue who were clearly not entitled to place reliance upon borrowed satisfaction of another officer and pass the impugned orders illegally and arbitrarily blocking the ECL of the appellant by invoking Rule 86A which is not only contrary to law but also the material on record and consequently, the impugned orders deserve to be quashed.' In the instant case, since no pre-decisional hearing was provided/granted by the respondents before passing the impugned order, coupled with the fact that the impugned order invoking Section 86A of the CGST Rules by blocking of the Electronic credit ledger of the petitioner does not contain independent or cogent reasons to believe except by placing reliance upon the reports of Enforcement authority which is impermissible in law, since the same is on borrowed satisfaction as held by the Hon ble Division Bench of this Court, the impugned order deserves to be quashed. It is also pertinent to note that in the impugned order except stating that respondent received a letter dated 04.12.2023 reporting that the registered taxpayer M/s. Mazhar Enterprises was found to be a bill trader involved in issuance/availment in fake invoices , no other reasons are forthcoming in the impugned order. On this ground also, the impugned order dated 06.05.2024 deserves to be quashed. Impugned order dated 06.05.2024 at Annexure-A is hereby quashed - The petition is hereby allowed.
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2024 (11) TMI 590
Disallowance of Input Tax Credit - filing of returns prescribed under Section 39 of the CGST Act, 2017 - HELD THAT:- In view of Clause (5) of Section 16 inserted by the Finance (No. 2) Act, 2024, with effect from 01.07.2017, the respondents are directed to allow the petitioner to take Input Tax Credit in respect of delayed returns filed for the Financial Year 2019-20, and the interest and penalty levied on the petitioner by the respondents shall be refunded with 6% p.a. interest from the date of such collection till the date of repayment. This writ petition stands disposed of.
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2024 (11) TMI 589
Challenge to proceedings initiated u/s 129 of the CGST Act read with Section 20 of the IGST Act - penalty order - movement of goods without proper documents - HELD THAT:- The facts are not in dispute that the documents in question which were accompanied the goods, were dated 01.10.2024 and at the time of interception of the vehicle, the requisites were found. The notice issued by the respondents indicated the fact of the registration being suspended by the jurisdictional authorities at Bihar on 03.10.2024, based on which, the penalty has been imposed under provisions of Section 129(1)(b) of the Act. A coordinate Bench of this Court in the case of Halder Enterprises [ 2023 (12) TMI 514 - ALLAHABAD HIGH COURT] , wherein, the goods were intercepted on 03.10.2023 and the suspension took place on 06.10.2023 w.e.f. 18.09.2023, after referring to the orders of this Court in M/s Sahil Traders v. State of U.P. and another, [ 2023 (6) TMI 360 - ALLAHABAD HIGH COURT] and M/s Sanjay Sales Agency v. State of U.P. and another, 2023 [ 2023 (10) TMI 641 - ALLAHABAD HIGH COURT] , and provisions of Section 129 came to the conclusion that once the goods were found with proper tax invoice and E-way bill belonging to the petitioner, the circular dated 31.12.2018 would apply and the petitioner would be deemed to be owner of the goods and the same was to be released in terms of Section 129 (1) (a) of the CGST Act. In the present case also, as noticed hereinbefore this is not the case of the respondents that the goods were not accompanied with proper tax invoice and E-way bill and only on account of the fact that the registration was suspended on 03.10.2024 that the action has been initiated and the order impugned has been passed as such the issue stands covered. The impugned order is set aside - petition allowed.
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2024 (11) TMI 588
Challenge is to the SCN issued by the respondent under the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act), Integrated Goods and Services Tax Act, 2017 (IGST Act) and Maharashtra Goods and Services Tax Act, 2017 (MGST Act) - Jurisdiction of SCN - HELD THAT:- In most of these petitions, the petitioners have questioned the impugned show cause notices cum tax demands without participating in the adjudication process in pursuance of the impugned show cause notices. In one of the petitions, leave is sought to amend by challenging the order made on the impugned show cause notice during the petition's pendency. In yet another petition, the challenge is to the order made after adjudication of the show cause notice, among other things, on the ground that the show cause notice was itself without jurisdiction. he main contention is that taxes have been demanded for services in relation to functions entrusted to the MCGM under Article 243W of the Constitution, even though the exemption notifications exempt or precisely impose only a nil tax rate on such services. No case is made out to establish that such a contention cannot be considered by the adjudicating authorities or the appellate authorities should the adjudication be complete and the adjudication orders affect any parties adversely. The contention that these petitions involve no disputed questions of fact cannot be accepted. The factual element regarding each of the demands will have to be examined and evaluated against the backdrop of the exemption or the nil tax rate notifications relied upon by the petitioners. The adjudicating authority will also have to determine whether the activities or services regarding which tax is demanded relate to any functions entrusted to the MCGM under Article 243W of the Constitution. In Whirlpool Corporation [ 1998 (10) TMI 510 - SUPREME COURT] , the Hon ble Supreme Court explained that Writ Petitions may be entertained against show cause notices where the petitioners seek enforcement of any fundamental rights, where there is a violation of principles of natural justice or where the order or proceedings are wholly without jurisdiction or where the vires of the Act is itself challenged. None of these circumstances are made out in the present batch of petitions. Simply alleging that the impugned show cause notices are without jurisdiction because, according to the petitioners perception, the exemption covers them, or the nil tax rate notification is insufficient. The usual adjudicatory process, where such a matter can be effectively adjudicated upon, cannot be scuttled by rushing to the writ court and securing stays on the adjudicatory process. In the present petitions, the issue of whether the petitioners cases are covered by the exemption notification or the nil tax rate notification is debatable. The petitioners themselves accept that some of the services in the SCN may attract exemption and others may not. Ordinarily, SCNs cannot be split or quashed, especially where there are arguable issues on either side. In any case, the resolution would require examination into several factual aspects. In such situations, the contention of the SCN being wholly without jurisdiction cannot be accepted. Thus, no case has been made by any of the petitioners to bypass the statutory alternate remedies and insist upon the entertainment of these petitions. No case is also made to grant the petitioner in Writ Petition No. 3624/2024 leave to amend the Writ Petition and challenge the order dated 30 April 2024 - petition dismissed.
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2024 (11) TMI 587
Rejection of TRANS-1 claim for Central Excise Duty due to wrong filing in wrong Column, i.e. 6(A) instead of Column 5(A)/7(A) - HELD THAT:- Copy of the petition has been served on the counsel representing the respondents, who have raised objection about the delay in filing the petition as the order impugned was passed on 24.02.2023 and the petition has been filed on 23.10.2024 without any explanation in this regard. On the merit of the case, reliance was placed in UNION OF INDIA VERSUS BHARTI AIRTEL LTD. ORS. [ 2021 (11) TMI 109 - SUPREME COURT] , however, presently no submission has been made on the plea raised pertaining to availability of credit to the tune of Rs. 30,20,268.52. Issue notice to respondents - As the respondents are duly represented, no need to issue fresh notice.
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2024 (11) TMI 586
Dismissal of application moved by the petitioner for summoning official of GST Department, Ludhiana along with record of GST 3B return - HELD THAT:- Admittedly and evidently, the complaint filed by the respondent and pending before the learned trial Magistrate is at the stage of producing evidence of the respondent. No doubt, the petitioners have a right to cross-examine the respondent-complainant and the witnesses to be produced by her. Simultaneously, it is the right of the petitioners to confront the respondent-complainant or her witnesses with some document. However, that does not make the petitioners entitled to summon any witness at the stage when the respondent-complainant is availing her right to produce her own evidence. More so, as reflected, it was only some document in the form of GST 3B return which the petitioners want to be produced on record so that the same can be put to the respondent-complainant or the witnesses to be examined by her. Such a document can even otherwise be put to the respondent-complainant by the petitioners and not by way of summoning a witness from GST Department. The learned trial Magistrate after taking all these facts and circumstances into consideration and by passing a speaking and well-reasoned order, had dismissed the application moved by the petitioners and in view of the discussion as made above, there are no reason to come to any contrary conclusion. Accordingly, finding no merit, the petition is dismissed.
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2024 (11) TMI 585
Vires of Section 17 (5) (c) (d) of Central Goods and Service Tax Act, 2017 - eligibility to claim input tax credit on GST paid on the purchase of land and constructions done - HELD THAT:- The issue raised in this petition is no longer res integra and is covered by the decision of Supreme Court in Chief Commissioner of Central Goods and Service Tax Ors. Versus M/s Safari Retreats Private Ltd. Ors. [ 2024 (10) TMI 286 - SUPREME COURT ] where Supreme Court held ' challenge to the constitutional validity of clauses (c) and (d) of Section 17 (5) and Section 16(4) of the CGST Act is not established.' The issue in the present petition on merits is that the petitioner wants to avail input tax credit on GST paid on the purchase of land and constructions done thereon. The Supreme Court has upheld the vires of Section 17 (5)(c) (d) of CGST Act. The petitions are disposed of with liberty to the petitioners to file the claim before the respondents for availing the ITC and same shall be considered in accordance with law.
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2024 (11) TMI 584
Online betting - The role of GST Intelligence and its proceedings - offences under Sections 120B and 420 of the IPC and Section 66D of the Information Technology Act, 2000 - seeking more time to investigate into the matter - whether the allegations would meet the ingredients of Section 415 of the IPC and Section 66D of the Act? - HELD THAT:- Section 415 of the IPC mandates that whoever by deceiving any person fraudulently or dishonestly induces the person so deceived to deliver any property to any person . Therefore, there should be a person who has been deceived and the deception should be from the inception, all with an dishonest intention to commit fraud. A perusal at the complaint would not indicate any person complaining against the petitioners. Therefore, there has been no person who has been deceived. Unless there is any person who has been hoodwinked, the ingredients under Section 415 of the IPC cannot be met. Interpretation of the offence of cheating under Section 415 of the IPC need not detain this Court for long or delve deep into the matter as the Apex Court in plethora of judgments has elucidated what is necessary for an offence under Section 415 of the IPC, for it to become punishable under Section 420 of the IPC. The Apex Court in the case of VIJAY KUMAR GHAI AND OTHERS v. STATE OF WEST BENGAL AND OTHERS [ 2022 (3) TMI 1527 - SUPREME COURT] reiterated the entire spectrum of law with regard to criminal breach of trust and cheating and has held 'Having gone through the complaint/FIR and even the charge sheet, it cannot be said that the averments in the FIR and the allegations in the complaint against the appellant constitute an offence under Section 405 420 Penal Code, 1860. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making promise being absent, no offence under Section 420 IPC can be said to have been made out. In the instant case, there is no material to indicate that Appellants had any mala fide intention against the Respondent which is clearly deductible from the MOU dated 20.08.2009 arrived between the parties.' In the light of the elucidation by the Apex Court as afore-quoted and the facts obtaining in the case at hand, in the considered view of this Court, it would not meet the necessary ingredients of Section 415 of the IPC for it to become punishable under Section 420 of the IPC for permitting further proceedings to continue. Therefore, the offence under Section 420 of the IPC is loosely laid against these petitioners. It is the categorical statement of the State who has investigated the matter for the last 42 months three years and 6 months. No victim has come forward to complain or give evidence against these petitioners. The defence is that, the petitioners have managed. It is highly improbable that the petitioners can manage any persons, if they are aggrieved. Therefore, if further proceedings are permitted to continue against these petitioners, it would become an abuse of the process of the law. It is apposite to refer to the judgment of the Apex Court in the case of STATE OF HARYANA V. BHAJAN LAL [ 1990 (11) TMI 386 - SUPREME COURT] - The Apex Court holds that the Court exercising jurisdiction under Section 482 of the Cr.P.C., can quash the FIR on certain circumstances. Three of the circumstances are undoubtedly present in the case at hand. Therefore, to prevent the proceedings becoming miscarriage of justice, it is deemed appropriate to obliterate the crime. It is made clear that the observations made in the course of the order is for only consideration of the petition under Section 482 of the Cr.P.C. and it would not influence or bind any pending proceedings. The criminal petition is allowed.
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2024 (11) TMI 583
Seeking withdrawal of petition - input tax credit on the purchases made from Bharat Petroleum has been wrongly blocked - HELD THAT:- The writ petition is dismissed as withdrawn, as prayed, with liberty to take recourse to an appropriate statutory remedy, albeit, as per law. Liberty is also given to the petitioner to move an application for decision concerning the ITC which stands presently blocked. If such an application is moved, the concerned authority, in the first instance shall render a decision on the same.
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2024 (11) TMI 582
Validity of a SCN which purports to initiate proceedings for cancellation of its registration under the Goods and Services Tax, Act 2017 - no reasons on the basis of which the purported action is proposed to be initiated - violation of principles of natural justice - HELD THAT:- Since the notice is clearly bereft of any reasons on the basis of which the purported action is proposed to be initiated, the same cannot be sustained. The impugned Show Cause Notice dated 20 September 2024 set aside - petition allowed.
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2024 (11) TMI 581
Blocking of the Electronic Credit Ledger (ECL) under Rule 86A of the Central Goods and Services Tax Rules, 2017 - pre-decisional hearing was not provided to the petitioner nor does the impugned order contain any reason to believe as to why it was necessary to block the Electronic credit ledger - violation of principles of natural justice - HELD THAT:- In K-9-Enterprises s case [ 2024 (10) TMI 491 - KARNATAKA HIGH COURT] , the issue was answered in favour of the petitioner-assessee, where it was held that ' in the absence of valid nor sufficient material which constituted reasons to believe which was available with respondents, the mandatory requirements/pre-requisites/ingredients/parameters contained in Rule 86A had not been fulfilled/satisfied by the respondents-revenue who were clearly not entitled to place reliance upon borrowed satisfaction of another officer and pass the impugned orders illegally and arbitrarily blocking the ECL of the appellant by invoking Rule 86A which is not only contrary to law but also the material on record and consequently, the impugned orders deserve to be quashed.' Thus, in the instant case, since no pre-decisional hearing was provided/granted by the respondents before passing the impugned order, coupled with the fact that the impugned order invoking Section 86A of the CGST Rules by blocking of the Electronic credit ledger of the petitioner does not contain independent or cogent reasons to believe except by placing reliance upon the reports of Enforcement authority which is impermissible in law, since the same is on borrowed satisfaction as held by the Hon ble Division Bench of this Court, the impugned order deserves to be quashed. It is also pertinent to note that in the impugned orders except stating that a registered supplier who has been found to be non-existent or not to be conducting business from his place of registration , no other reasons are forthcoming in the impugned orders. On this ground also, the impugned orders dated 28.02.2024 and 16.02.2024 deserves to be quashed. The impugned orders are set aside - petition allowed.
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2024 (11) TMI 580
Challenge to SCN issued by respondent no. 4 - parallel investigations by the State Excise and Central Excise Authorities - HELD THAT:- The matter requires further examination. Issue notice. Mr. Sushant Kaprate, learned Additional Advocate General, accepts notice on behalf of respondents no. 1 to 3, while Mr. Vijay Arora, learned counsel, accepts notice on behalf of respondent no. 4. List the matter on 14th October 2024.
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2024 (11) TMI 579
Legality of Sub-section (4) to Section 16 of the Central Goods and Service Tax Act, 2017 and the Karnataka Goods and Service Tax Act, 2017 - input tax credit in the books of account of the Petitioner is the date of availment of ITC - HELD THAT:- A perusal of the material on record will indicate that the issue in controversy involved in the present petition is directly and squarely covered by the judgment of this Court in the case of M/s. Sadhana Enviro Engineering Services vs. Joint Commissioner of Central Tax Others [ 2024 (9) TMI 1648 - KARNATAKA HIGH COURT ], where it was held that ' The respondents are directed to unblock and release the credit balance of the petitioner in their ITC Ledger / Account, if not already released, immediately / forthwith upon receipt of a copy of this order without any delay.' The present petition also deserves to be allowed and disposed of.
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2024 (11) TMI 578
Seeking review of the Judgment and Order - error apparent on the face of the record - HELD THAT:- Review jurisdiction is to be exercised in a very limited manner where there an is error apparent on the face of the record. This Court has considered each and every document and the submissions while rendering the Judgment HARBOUR HOTELS [ 2023 (11) TMI 1305 - KERALA HIGH COURT] . Furthermore, these documents were not part of the pleadings. Review does not mean rehearing or appeal. There are no error apparent on the face of the record which warrants this Court to reconsider this Judgment under review - There is no substance in this review petition and the same is hereby dismissed.
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2024 (11) TMI 577
Challenge to SCN in FORM GST MOV-07 - petitioner is ready to pay the applicable tax and penalty under section 129(1)(a) of the CGST Act, 2017 - HELD THAT:- In view of the fact that the petitioner has come forward to pay the applicable tax and penalty under section 129(1)(a) of the CGST Act, 2017, the third respondent is hereby directed to calculate the applicable tax and penalty under Section 129(1)(a) of the CGST Act, 2017 within three days from the date of receipt of the certified copy of this order. Upon receipt of the applicable tax and penalty, the Assistant Commissioner of Commercial Taxes (Enforcement), Bidar is directed to release the seized goods and the vehicle bearing Registration No. KA-07-8529 - It is made clear that payment of applicable tax and penalty under section 129(1)(a) of the CGST Act, 2017 is subject to the outcome of the final order that would be passed by the Assistant Commissioner of Commercial Taxes (Enforcement), Bidar on impugned notice. Petition disposed off.
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2024 (11) TMI 576
Imposition of GST under the reverse charge mechanism on the seigniorage paid by the petitioner to the Government - HELD THAT:- Reliance placed in the 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.' In view of the above judgment, this petition is liable to be disposed of on the same terms.
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2024 (11) TMI 575
Maintainability of petition - availability of alternative remedy - petitioner accepts the legal position that the petitioner has an alternative remedy of appeal under Section 107 of the OGST Act, 2017 - HELD THAT:- As the petitioner has an effective statutory remedy of appeal against the impugned order, it is not required to entertain this writ petition filed under Article 226 of the Constitution of India. This writ petition stands disposed of with a liberty to the petitioner to prefer an appeal, if so advised, against the impugned order in accordance with law.
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Income Tax
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2024 (11) TMI 597
Exemption u/s 11 - object is about the kuri and finance business in order to enhance the finance of the trust - as per revenue activities of the appellant is coming under residual entry of sec 2(15) are hit by the provisions of sec 13(8) - HELD THAT:- As perused the financial statement filed by the assessee and in nowhere it is mentioned that the income earned through kuri and finance business is utilized for the welfare of the trustees and infactthe amounts were spent towards achieving the objects mentioned in the byelaws of the trust. Further, by way of conducting kuri and finance business, the assessee is receiving a small amount and that amounts were utilized by the assessee for conducting various charitable activities. We find that the assessee is not doing the kuri and finance business solely for the purpose of earning income like various other corporate entities doing. In order to do various charitable activities, the assessee is also doing small kuri and finance business and rightly spent the amount to achieve the objects mentioned in the byelaws. A.O. as well as the CIT(A) has misconstrued the provisions of sec.2(15) of the Act and denied the exemption claimed u/s.11 of the Act. Conducting of kuri and finance business itself came up for consideration before the case of Bharthashemam [ 2020 (11) TMI 1125 - KERALA HIGH COURT] considered kuri and finance business carried out by the trust and held that the trust is eligible for deduction u/s.11 of the Act since they are doing charitable activities out of the incomes received through kuri and finance business. The assessee is also entitled for exemption u/s.11 of the Act in respect of the incomes earned from the kuri and finance business. Further, all along the department had accepted the claim of the assessee and granted exemption but only for the above mentioned assessment years a different view has been taken which in our opinion is not correct. As decided in Navodaya Gramin Vikas Charitable Trust [ 2023 (9) TMI 256 - ITAT BANGALORE] the money lending business carried out by the trust in order to do the various charitable activities would not be a reason for denying the deduction u/s.11. Decided in favour of assessee.
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2024 (11) TMI 574
Depreciation @ 50% on a building claiming it to be a temporary structure -Nature of expenditure - HC [ 2023 (7) TMI 1490 - PATNA HIGH COURT] held that as only 10% depreciation for buildings other than used for residential purpose and not covered by subitems 1 and 3 there is absolutely no valid claim for the assessee to obtain a 50% depreciation. HELD THAT:- There is gross delay of 344 days in filing this Special Leave Petition. The reasons assigned are neither satisfactory nor sufficient in law to be condoned. Hence, the application seeking condonation of delay is dismissed. Consequently, the Special Leave Petition also stands dismissed. Petitioner submitted that the petitioner has also filed a statutory appeal in the year 2018. It is needless to say that the petitioner is at liberty to prosecute the said appeal in accordance with law and on its own merits.
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2024 (11) TMI 573
Revision u/s 263 - Taxability of capital gain - nature of land sold - s cope of erroneous orders - Whether asset sold by the assessee was the agricultural land situated 5 kms / 8 kms beyond the boundary limits of the municipal corporation? - HELD THAT:- In the present case, while invoking the provisions of Section 263 of the Act against the order passed by the AO u/s 143 (3) PCIT emphasized that the AO did not scrutinize the critical documents, particularly those concerned with the claim of the assessee with respect to the land being agricultural in nature and its sale being exempt from capital gains tax. Specifically, the PCIT noted that the AO relied on a certificate issued by the Tehsildar, but failed to obtain corroborative evidence from other important and necessary authorities like the DTP, Gurugram. The AO, according to the PCIT, accepted the assessee s claim without proper verification, which amounted to no-inquiry. Ultimately, the PCIT took a view that the land sold by the assessee was not agricultural land, and thus, the assessee was not entitled for long-term capital gains tax exemption. However, the learned ITAT in the impugned order opined in the present case that the AO had considered the issue of capital gains taxability and had accepted the submissions of the assessee. The critical issue remains whether the inquiry made by the AO in this case can be actually considered as an inquiry required to be conducted by the AO. The fact that the AO neither read the contents of the certificate issued by the Tehsildar, which is discernible from the fact that the certificate did not even mention the distance of the land from the municipal limits which is a criteria for determining the agricultural status of land under the Act, nor sought any additional evidence or document from the relevant authorities like the DTP, Gurugram, undoubtedly, suggests that the AO failed to undertake any inquiry or even apply his mind to the documents submitted by the assessee to arrive at the conclusion regarding the long-term capital gains exemption. There is no cavil that the PCIT would not have jurisdiction to pass an order under Section 263 of the Act solely for the reason that he held a different opinion with the AO. If the AO has applied his mind and had arrived at a plausible view, the same would not be amenable to a revision under Section 263 of the Act. Similarly in the case of Tara Devi Aggarwal [ 1972 (11) TMI 2 - SUPREME COURT] upheld the finding of the CIT that the assessments made by the ITO were made in post haste without making any enquiry or investigation into the antecedents of the assessee In the present case, the AO had issued a questionnaire to the assessee on 19.08.2015. The assessee responded to the said questionnaire by claiming that she had earned long term capital gains which was not chargeable to tax as the agricultural land was beyond the prescribed distance from the municipal limits of Sohna district. She also enclosed therewith a document described as a certificate issued by Tehsildar, Sohna to the aforesaid effect. A plain reading of the said document indicates that it did not certify that the land in question was beyond the prescribed distance from the municipal limits as claimed by the assessee. Notwithstanding the same, the AO passed the assessment order on the same date. It is thus apparent that the AO had not applied his mind to the relevant point whether the asset sold by the assessee was the agricultural land situated 5 kms / 8 kms beyond the boundary limits of the municipal corporation. The noting made by the Tehsildar on 24.04.2012, which the assessee claims to be a certificate, merely stated that the land in question was outside the border of Sohna Municipal Corporation . Whether the land in question was outside the municipal limits but whether it was an agricultural land that was located 5 kms. / 8 kms. beyond the municipal limits ? - The Tehsildar s noting is clearly not to the aforesaid effect. It is thus clear that this is not a case where the enquiries conducted by the AO were inadequate; this is a case of lack of enquiry as the AO had not conducted any enquiry to verify whether the land sold by the assessee was beyond the prescribed distance from the boundary of Sohna Municipal Corporation. It is apparent that no enquiry to the said effect was conducted by the AO and there is no material before the AO, other than the self-serving statement of the assessee, to corroborate the same. The assessment order passed by the AO under Section 143 (3) of the Act even records no reasons for accepting the version of the assessee that the land was agricultural land, and not capital asset, and thus exempt from capital gain. In fact, there is no mention of this aspect at all in the order passed by the AO under Section 143 (3) of the Act. Thus, it is not clear as to what had weighed in the mind of the AO since the order passed by the AO is totally silent on this aspect. Therefore, the present case would be one where the absence of any effective inquiry and a total non-application of mind by the AO is evident, and thus, the order passed by the AO would clearly fall within the meaning of an erroneous order . The order is also, undisputedly, prejudicial to the interests of the Revenue inasmuch as it results in loss of the Revenue in the form of tax. PCIT had exercised the jurisdiction under Section 263 of the Act correctly and legally, in view of the fact that the order passed by the AO was erroneous and prejudicial to the interest of the Revenue since the same was passed without conducting any enquiries and applying mind to the claims of the assessee. We are also of the view that the ITAT erred in setting aside the order passed by the PCIT u/s 263 of the Act on the ground that the PCIT had wrongly exercised jurisdiction u/s 263 of the Act. Decided in favour of assessee.
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2024 (11) TMI 572
Nature of gifts received - Commissioner of Gift Tax has held that the cash gifts were made out of Privy Purse - Since the appellant-Assessee did not produce the proof relating to the source of cash and cheques having come from Privy Purse, the ITAT cannot be said to be committed any illegality in not treating the same to be from the Privy Purse - HELD THAT:- The statement of account of the Privy Purse of a particular Bank Account No.956 of State Bank of India, Patiala was available before the concerned Commissioner Gift Tax and it clearly reflected that from the account relating to Mohinder Kaur Trust Privy Purse, cheques and cash were released in favour of the said Trust amounting to Rs. 6,00,000/- and to Amarinder Singh Trust of Rs. 4,00,000/- in all on various dates which would further require adjudication. We, therefore, find that the order passed by the ITAT hinges on perversity and does not take into account the record which was available with them as the case had been travelled from the Commissioner Gift Tax. The answer to question No.(a) is, therefore, accordingly found to be in favour of the appellant-Assessee and it is held that the gift amount was made out of Privy Purse.
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2024 (11) TMI 571
Rectification u/s 254(2) - recalling order disposing of the appeal ex-parte - By the application sufficient cause was shown but the Tribunal arbitrarily dismissed the same - adjournments obtained by petitioner - HELD THAT:- Tribunal considered the appeal disposal order, wherein it had been specifically recorded that what had not been collected in the last five years would obviously not be possible (to be collected) in 20 days and, therefore, the adjournment sought was nothing but challenge to functioning of the Bench. It was said to be not an error made by the Tribunal. This reason though is on the question of rectification, the contention on adjournment was also thereby dealt with. However, the Tribunal failed to see that it was to obtain satisfaction from the application, on causes shown for not appearing on the date of hearing. Cause alleged was indisposition of the learned advocate. We find from the application, that apart from annexing therewith medical certificate, also annexed were additional grounds of appeal etc., filed therewith for kind consideration of the Bench. The miscellaneous application therefore disclosed documents, which the disposal order had said as could not be disclosed in twenty days. We are persuaded to interfere with impugned order. We may add that Rabindra Kumar Mohanty [ 2020 (3) TMI 1326 - ORISSA HIGH COURT ] is of no assistance to petitioner because view taken was on requirement of the Tribunal to deal with an appeal on merits where appellant was absent but respondent had appeared and urged its contention(s). Impugned order is set aside and quashed. The miscellaneous application is allowed and the appeal restored.
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2024 (11) TMI 570
Undisclosed interest income on the undisclosed deposits in HSBC Bank Geneva - CIT(A) deleted addition - HELD THAT:- As decided in assessee own case [ 2019 (7) TMI 596 - ITAT DELHI] addition made in assessment year 2006-07 and also in assessment year 2007-08, therefore, on this ground itself the addition made by the assessing officer is liable to be deleted. Independent thereof, we note that in the instant case, the addition has been made purely on notional basis on the premise that the assessee: (a) had alleged foreign bank account, which itself is under serious challenge; and (b) on such bank account, assessee earned interest @ 4% - case of the assessee is on a much better footing vis- -vis the facts in judicial precedents relied upon inasmuch as in the aforesaid cases there was at least some basis of taxation of notional amount/ interest, which was never realized/ received by the assessee, but in the case of the assessee, the so-called amount of interest brought to tax is totally without any basis and is clearly hypothetical/ imaginary. Since there is no evidence that the assessee actually received interest on the disputed deposit and just by figment of imagination it has been concluded that the assessee earned interest on such deposits @ 4% p.a., the impugned addition on account of notional interest, has, even on merits, been rightly deleted by the CIT(A). Assessee appeal allowed.
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2024 (11) TMI 569
Receipt from offshore supplies to THDC India Ltd - taxability in India under the provisions of the Act - assessee had artificially split the composite contract to avoid establishment of the PE in India and tax payment in India and that the assessee has a PE in the form of a fixed place and dependent agent PE (DAPE) at and through GE Power India Ltd. (GEPIL) - HELD THAT:- On similar facts, the Co-ordinate Bench in the case of the assessee company vide the above order for Assessment Years 2018-19 and 2019-20 [ 2024 (3) TMI 1369 - ITAT DELHI] had held that there is no business connection of the assessee in India and also there does not exist fixed place PE or construction PE of the assessee in India and provisions of Section 44BBB of the Act are not applicable in its case and had deleted the said addition. The addition made by the ld. AO by bringing to tax receipts from offshore supply is hereby directed to be deleted. Bringing to tax receipts received by the assessee from GEPIL in respect of offshore supplies made to it - DRP confirmed the above action of the Assessing Officer on the ground that it had confirmed the action of the Assessing Officer in the draft assessment order for Assessment Year 2018-19 and in earlier years by holding that the assessee has a PE in the form of a fixed place and dependent agent PE (DAPE) through GEPIL - HELD THAT:- As we have seen that the Co-ordinate Bench of the Tribunal [ 2024 (3) TMI 1369 - ITAT DELHI] for Assessment Years 2018-19 and 2019-20 in the case of the assessee and as discussed above, had held that there is no business connection of the assessee in India and also there does not exist fixed place PE or construction PE of the assessee in India and provisions of Section 44BBB of the Act are not applicable in its case. Therefore, we hold that amount received by the assessee from GE Power India Ltd. (GEPIL) is not taxable in India. Levying interest under 234B is consequential in nature. AO is directed to levy interest u/s 234B.
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2024 (11) TMI 568
Deduction u/s. 80P(2)(d) - interest earned on the appellant s interest income from investment with KDCC Bank - HELD THAT:- As in this case the assessee has invested surplus funds out of the activities carried out as per the provisions of section 80P(2)(a) of the Act. We therefore by respectfully following in the case of Vavveru Cooperative Rural Bank Ltd. [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] and case of Kakateeya Mutually Aided Thrift and Credit Co-op Society Limited. [ 2023 (9) TMI 211 - ITAT VISAKHAPATNAM] held that interest income should be allowed as deduction u/s. 80P(2)(a)(i) of the Act - Assessee appeal allowed.
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2024 (11) TMI 567
Reopening of assessment u/s 147 - information received through the Non-filers Monitoring System (NMS) indicating cash deposits in the assessee s ICICI Bank account - Fair opportunity for the assessee to present case or not? - addition of unexplained money u/s 69A of the Act, accepting part of the assessee s explanation for the cash deposits but rejecting others due to lack of documentary evidence - HELD THAT:- We find that the assessee was deprived of a fair chance to present his case due to procedural and communication deficiencies. The reliance on the email communication, which the assessee had no access to, and the subsequent non-prosecution of the appeal without considering the merits of the case, are contrary to the principles of natural justice. The assessee should be granted a fresh opportunity to present the necessary documentation and explanations in support of his case. The order of the Addl.CIT(A) is set aside, and the matter is remanded back to the file of Addl.CIT(A) for fresh adjudication in accordance with law, after providing adequate opportunity to the assessee to present his case. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes
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2024 (11) TMI 566
Addition u/s 68 - Appellant had failed to give the details of source of cash deposits - as argued cash deposit were made out of cash balance available with the Appellant as also the cash withdrawals made by the Appellant - HELD THAT:- As submitted that the return filed by the Appellant for the immediately preceding Assessment Year 2015- 16 has been accepted and the availability of cash-in-hand as on the last date of the relevant previous year 2014-15 was not in dispute. However, on perusal of record we find that the aforesaid submissions made by the Appellant are not supported by any material on record. As observed by the CIT(A), the summary of cash deposits and withdrawals on which reliance was placed by the Learned Authorized Representative for the Appellant is not supported by corresponding supporting documents such as bank statement, income tax return pertaining to Assessment Year 2015- 16, and financial statements. On the other hand we note that the Orders passed by the authorities below are silent on this issue. The details of cash deposits and withdrawals for the relevant previous year 2015-16 have been reproduced by the CIT(A) in the order impugned according to which cash-in-hand was available with the appellant as on 01/04/2015. Accordingly, given facts and circumstances of the present case we deemed it appropriate to remand the issue pertaining to addition u/s 68 back to the file of Assessing Officer with the directions to adjudicate the same a fresh after granting Appellant reasonable opportunity of being heard. Appellant is directed to file all documents/details and supporting evidence explaining source of cash deposits including relevant financial statements, bank statement, ledger accounts and return of income to substantiate the availability of cash in hand - Ground allowed for statistical purposes.
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2024 (11) TMI 565
Addition of unsecured loans - accommodation entries receipts - addition of interest payment in respect of these loans - HELD THAT:- The assessee had furnished copy of ledger account, bank statement of the creditors reflecting the loan transaction, income tax returns and their audited financial statements wherein they have shown the source of giving the loans and were regularly assessed the tax. Not only that, ld.AO himself carried out his own enquiry and issued notice u/s. 133(6) and in response these parties had given the entire details as required by the ld.AO. Once these parties have confirmed the source of their loan, which is out of their own funds from the balance sheet, then the creditworthiness stands proved and ld. AO has not further brought anything on record that such source of funds are fictitious. Then again, when ld. AO summoned all the three parties, two of them personally appeared before him and have given their statement on oath and they have categorically admitted of giving of loan; have explained their operation of the business and the extent of their turnover and the funds in the balance sheet. Thus, the onus which lied upon the assessee was duly discharged at the assessment stage. The entire premise of the ld. AO is based on Investigation report in the case of Bhanwarlal Jain and nothing has been brought on record by him that any particular information or material was found relating to the assessee that assessee was beneficiary of accommodation entry of loan or advance from any of the group concerns of Bhanwarlal Jain. Once AO himself has carried out his enquiry and nothing adverse has been found, then simply relying upon the investigation report cannot justify the addition. Disallowance of interest especially on the loan taken in the earlier year by the assessee and the said party has duly confirmed that it has given loan and has given all the details then, there is no question of disallowing any interest. Once, the loans have been accepted to be genuine, then disallowance and interest made by the ld.AO is deleted. Appeal of the Revenue is dismissed.
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2024 (11) TMI 564
Characterization of income - income derived from cultivation and sale of white button mushrooms - business income v/s agricultural income u/s 10(1) - HELD THAT:- Respectfully following the decision of Inventaa Industries (P.) Ltd. [ 2018 (8) TMI 69 - ITAT HYDERABAD ] under identical fact pattern, we allow the claim of the assessee for treating the cultivation and sale of white button mushroom as agriculture activity resulting in the agriculture income exempted u/s. 10(1) of the Act. Accordingly, grounds taken by the assessee in this respect are allowed.
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2024 (11) TMI 563
Disallowance u/s 57(iii) - assessee is claiming expenditure not relating to the earning of such income - assessee s financial advisor has charged a fee more than 75% fee/commission - CIT(A) deleted addition - HELD THAT:- Since the issue before us is mutatis mutandis squarely covered by the judgment of Apex Court in the case of Rajendra Prasad Moody [ 1978 (10) TMI 133 - SUPREME COURT ], in our view, the AO has not disputed the fact that the assessee has legal dispute pending which is closely related to earning of income during the year. Ld CIT(A) has passed a speaking order addressing the issues involved in this case. we respectfully following the aforesaid findings, uphold the order of the learned CIT(A) on this issue by dismissing the ground 1 raised by the Revenue. Disallowance u/s 37(1) - assessee has income from business and profession incurred by him on bills/vouchers - HELD THAT:- On careful consideration and after hearing both the parties we find that the AO has made an adhoc disallowances on this expenditure without pointing out any element of such expenditure. It is noted that only requiring u/s 37 of the Act is that the expenses, which are not capital or personal in nature, can be claimed for the purpose of the business or profession. There is no need to demonstrate that a certain expense relates to a particular income in order to claim such expense. However from the discussion made above, it is clear that the appellant, in more than one we, has substantiated necessity and genuineness of expenses claimed.. The CIT(A) in his order has rightly deleted the adhoc disallowance. Ground no.2 of the appeal of the revenue is rejected.
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2024 (11) TMI 562
Estimation of GP - unexplained investment/sales -Addition based on five notebooks and diaries as seized - AO analyzed the same and based on sworn statements and certain whatsapp conversations, arrived at a conclusion of unaccounted sales - HELD THAT:- These notebooks contain details of expenditure incurred by the assessee out of unaccounted sales. It is trite law that only real income could be subject to tax. Though there are unaccounted sales, there are unaccounted expenditure also. AO can not accept a part of the transaction. On the facts of the case, it could be seen that Ld. CIT(A) has estimated the profit on the unaccounted sales by applying regular Gross Profit rate shown by the assessee in respective years. The same, in our considered opinion, is quite logical and reasonable. Therefore, the methodology of Ld. CIT(A), in applying GP rates, could not be faulted with. AR has urged that this estimation has been made on circular transactions also which merely represents circular amount received from another group entity viz. M/s V.V. Minerals and these receipts have been returned back to the group entity. Such circular transactions form part of above receipts. The fact of circular transaction has also been accepted by Ld. CIT(A) in the impugned order. In our considered opinion, circular transactions within group entities would not partake the character of income in the hands of the assessee. Accordingly, the receipt could not be held to be part of unaccounted sales receipts and therefore, the same are to be excluded while estimating the profit on these transactions. Therefore, Ld. AO is directed to exclude the same while making the computations for respective years. Bogus Expenditure - The ledger accounts would show that the assessee has not made any payment to the said vendors and therefore, the question of receiving back the cash would not arise at all. The Ld. AO has not made any independent enquiries and no material evidence has been brought on record to prove that the cash was actually received back from the vendors. The Ld. CIT(A), in our considered opinion, has clinched the issue in correct perspective and was quite logical in estimating the disallowance by following various judicial decisions holding the field. The estimation of 12.5% is quite reasonable and justified enough to plug the leakages of revenue. Therefore, we see no reason to interfere in the same. Unaccounted Cash Receipts - We find that the additions for AYs 2014-15 2015-16 are based on certain excel sheet as exchanged in e-mail between Shri Jegatheesan (Partner of M/s V.V. Minerals) and Smt. Jeyanthi (an employee of M/s V.V. Minerals). However, these sheets are unsigned sheets and unless corroborated by independent evidences, would bear no evidentiary value. The Ld. AO has not made any enquiries to corroborate the notings in the excel sheet. The Ld. CIT(A) has correctly noted that Ld. AO did not examine / confront the excel sheets to any of the parties. In the absence of valid details and the circumstances in which the excel sheet was prepared and the corresponding entries, the same could not be relied upon to make impugned additions in the hands of the assessee. The evidences relied upon by the AO in the form of excel sheets does not constitute adequate evidence to draw adverse inference against the assessee, in the absence of any other corroborative evidences. We concur with all these findings of Ld. CIT(A) and also confirm reliance on the decision of Sant Lal [ 2020 (3) TMI 692 - DELHI HIGH COURT] holding that the assessee could not be put to any liability on the action of a third-person where the material was not found from the premises of the assessee nor was it in the handwriting of the assessee since the third person may write the name of any person at his sweet will and the revenue did not make any effort to gather corroborative evidences in this relation. Additions based on notebooks as seized from Shri S. Raja who was not an employee of the assessee company - Considering the inconsistencies in generation and accounting of unaccounted sales by the assessee company, Ld. CIT(A) has examined the factual position and applied Gross Profit Rate to the un-reconciled receipts and sustained the additions to that extent. On the facts and circumstances of the case, the aforesaid estimation, in our considered opinion, is quite logical and reasonable which do not call for any interference on our part. Addition for alleged manipulation in the accounts - CIT(A) noted that this addition was merely based on e-mail communication between Shri J. Thangadurai and Shri V. Subramanian - HELD THAT:- In the said e-mail, there was no incriminating noting to suggest that the stated accounting adjustments were manipulations to evade the tax liability. It was only the view of the person handling taxation issues of the assessee company. It was the duty of Ld. AO to examine each issue by analyzing the books to prove that the suggestions in the e-mail actually resulted in tax evasion by the assessee. The said communication could not be presumed to be accounting manipulations carried out by the assessee company in the absence of any corroboration thereof. As further observed that the books of account of the assessee-company were duly audited by an Independent Firm of Chartered Accountants. There was no adverse noting either in the Statutory Audit Report or in the Tax Audit Report relating to valuation of Ilmenite, stock-in-process and depreciation claim. No incriminating material was found during the course of search to prove that the contents of the e-mail communication between Shri J. Thangadurai and Shri V. Subramanian were an outcome of a planned accounting manipulation. Therefore, the impugned addition was deleted.
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2024 (11) TMI 561
Non-disclosure of income - involvement of undisclosed income - Reconciliation of imports - difference in the reconciliation of gross assessable value - HELD THAT:- From the chart submitted by the assessee, we observed that the assessee has recorded all the imports in its books of account and the difference observed by the AO without considering the credit notes. AO presumed that assessee has not declared the value of import as per the export-import summary data and he failed to recognise that the information contained in the data is only imports. Since the value of duty paid by the assessee is perfectly matching and the difference in gross value of invoice mentioned in CBEC which is only a gross assessable value. What is relevant is the actual cost to the assessee which has to be recognised in its books of account. We observed that merely relying on the export-import summary data, the AO has made the addition without proper verification and rejected explanation submitted by the assessee at the face value. After considering the detailed submission of the assessee, we do not see any reason to sustain the addition made by the AO. AO has not substantiated how recording of imports in the books of account will lead to under valuation and suppression of income of the assessee. Thus, in the present case, even though there may be some difference in the reconciliation of gross assessable value, this will not lead to non-disclosure of income involved. Therefore, we are inclined to decide the issue in favour of the assessee as there is no involvement of undisclosed income.
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2024 (11) TMI 560
Maintainability of revenue appeal on low tax effect before Tribunal - HELD THAT:- As in the instant case the tax effect by virtue of relief given by the first appellate authority is less than Rs. 60,00,000/-. As per CBDT Instruction bearing No. 9 of 2024 issued on 17th September, 2024, CBDT has directed its subordinate authorities not to challenge the order of CIT(Appeals) before Tribunal if tax effect by virtue of relief given by the ld. CIT(Appeals) is less than Rs. 60,00,000/- and such order could only be challenged if it comes within exceptions provided in the Instruction and if these cases do not fall in any of the exceptions then such appeals are not maintainable. On due consideration of the above facts and circumstances, we dismiss this appeal of the Revenue for want of tax effect. However, in case on re-verification of the facts at the end of the AO, it comes out that tax effect is more or this case falls in any of the exceptions provided in the CBDT Instruction (supra). Then Revenue will be at liberty to file Miscellaneous Application for revival of these appeals.
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2024 (11) TMI 559
Disallowance of transport expenses - addition made being not supported by any bill/voucher - onus to prove - HELD THAT:- The onus was squarely on the assessee to not only explain the reason for this exorbitant increase in transport expenses but also to support the same with proper bills and vouchers, which the assessee had failed to do. From the sample copy of bills and vouchers of the transport expense brought on record, it is found that these bills were not in respect of transport expense. As rightly pointed out by the CIT(A), no lorry details are appearing in these bills/vouchers. Further, the details regarding place of transport i.e. the place of origin and the place of destination is not found mentioned in all the bills/vouchers. Only in some of the bills the destination is appearing. Rather these bills are found to be in respect of purchases of materials and have details of goods, weight, rate and total amount. Merely because the word transportation is mentioned in these bills, they cannot be considered as evidence for transport expense as the place of origin, place of destination, lorry number, actual transportation expenses etc. are not appearing in most of these bills. These bills clearly mention that they are for purchase of materials, such as sand, kapdi, dust and other building materials. Further, the evidence as produced does not explain the correctness of expenditure and the exorbitant increase in transportation expense during the year, particularly when the Petrol expense had also increased substantially. No reason to interfere with the order of CIT(A). In the absence of any cogent explanation in respect of abnormal increase in transport expense and also in the absence of complete bills and vouchers and evidences for incurring these expenditures, the addition as confirmed by the Ld. CIT(A) is upheld. Decided against assessee.
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2024 (11) TMI 558
Additions u/s 68 - deposit of funds remained unexplained - economic rationale behind such transaction is to provide accommodation entries for bringing back the unaccounted money/fund of the clients to their regular books of accounts - CIT(A) deleted addition - HELD THAT:- We find that the appeal was filed by the Revenue does not fall under any exceptional clause as argued by Learned Departmental Representative, the case primarily involves on the addition made during the demonetization period and the CIT(A) has rightly observed that the assessee had sufficient cash balance during the relevant financial year as evidences by the cash book. We further note that the AO made the addition based on assumption and conjecture without concrete evidence to support the claim cash deposit were unexplained. The Learned CIT(A) properly examine the facts and found that the assessee had sufficient cash balance to explain the deposits. CIT(A) decision to delete the addition under Section 68 of the Act is well founded. Moreover, the tax effect in the present case is below threshold specified by the CBDT s Circular and the case does not fall under any exceptional category. The Revenue appeal is thus not maintainable on this ground as well. Appeal of the Revenue is dismissed.
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2024 (11) TMI 557
Validity of reopening of assessment - primary reason to believe - additions of other items as escaped income without making any addition towards cash deposits which formed the substantial basis for reopening - Legality of additions made u/s 69 and 69A - absence of first ground/item i.e. Cash deposits - HELD THAT:- Admittedly in the reassessment, the Ld. AO had made no addition in relation to first ground/item despite the fact that he had reason to believe that cash deposits had escaped assessment in the hands of the assessee which was sought to be taxed as per the reasons recorded. The second item interest per se was insufficient to give rise to escapement of income on solitary basis so as to trigger the invocation of reassessment jurisdiction u/s 148 r.w.s. 149(1)(b) r.w.s. 139(1)(b) of the Act. Hence, when the very basis of reasons recorded cash deposits by the Ld. AO was ultimately not added, then the primary reason to believe that income had escaped assessment fails and such reassessment cannot be treated as a valid order in the eyes of law. Hon'ble Jurisdictional High Court after sumptuous consideration of explanation 3 to section 147 of the Act, while adjudicating the issue in CIT Vs Jet Airways (I) Ltd. [ 2010 (4) TMI 431 - BOMBAY HIGH COURT] held that when reasons are recorded for bringing to tax 'X' income and no assessment is made on the 'X' income, the AO does not possess the jurisdiction to tax any other income in the reassessment order. This ratio finds reiterated in SV Jadhav [ 2024 (5) TMI 106 - BOMBAY HIGH COURT] and also followed in Ranbaxy Laboratories Ltd. [ 2011 (6) TMI 4 - DELHI HIGH COURT] ACIT Vs MD Mehta [ 2011 (11) TMI 462 - CHATTISGARH HIGH COURT] and Ganesh Housing Corp. Ltd. [ 2012 (4) TMI 419 - GUJARAT HIGH COURT] . Thus, we are of the considered view that, if the income which he has initially formed a reason to believe that such income has escaped assessment, which in fact did not escape assessment owning to operation of provisions of clause (b) of s/s (1) of section 139 of the Act then notice falls out of that particular ground, additional grounds are not available to the Revenue for making additions of any other incomes which do not find place in the 148 notice issued to the assessee. Therefore respectfully following the former judicial precedents we hold that the jurisdiction to reassess issues other than the issues in respect of which proceedings are initiated but was not so justified when the reasons for the initiation of those proceedings ceased to survive. Thus once re-assessment framed is held as unsustainable in the eyes of law then same cannot be continued, hence quashed. Assessee appeal allowed.
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2024 (11) TMI 556
Denial of foreign tax credit - income received for services rendered in Japan -claim denied as assessee has provided professional services to clients in Japan and do not have a fixed base or presence for more than 183 days in Japan HELD THAT:- It is found that the Hon ble ITAT, Mumbai has already decided the identical issue in favour of the Appellant in AY 2014-15 reported in [ 2020 (12) TMI 776 - ITAT MUMBAI] as has held that Article 14 of the India-Japan DTAA was applicable only to individuals and thus not applicable to the Appellant, which is a partnership firm. It further held that the fees earned by the Appellant firm in Japan was taxable as fees for technical services under Article 12 and that the FTC ought to have been granted to the Appellant firm for the taxes withheld in Japan - Also when the source jurisdiction has taken a reasonable and bonafide view, which is not manifestly erroneous, that taxes should be withheld at source, FTC should be provided by the resident jurisdiction even though the legal position in the residence jurisdiction may not be the same. Accordingly, the Hon'ble ITAT held that India should provide FTC for the taxes withheld in Japan. Thus we hold that the appellant is entitled to get Foreign Tax Credit (FTC) in respect of tax withheld in Japan. FTC with respect to the other countries (namely Nepal, Brazil, China and Malaysia) - As again Hon'ble Mumbai ITAT in the case of the appellant itself (supra.) has held that DTAA provisions don't require that state of residence and eliminate the double taxation in all cases where state of source has imposed its tax by applying to an item of income, a provision of convention that is different from state of residence considers to be applicable. Therefore, in all cases in which interpretation of residence country about applicability of a treaty provision is not the same as that of source jurisdiction about the provision and yet the source country levied taxes whether directly or by way of tax withholding, tax credit cannot be declined. Assessee appeal allowed.
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2024 (11) TMI 541
Miscellaneous Application filed u/s 4, 10 and 12 of the Fugitive Economic Offenders Act before the Court of Ld. Special Judge, Rouse Avenue Court Complex, Delhi - Assessment under the Black Money Act - petitioner in the present case has challenged the summoning order and has sought the quashing of the miscellaneous application. Before proceeding any further, it is crucial to examine the scope of the jurisdiction exercised by the learned Special Judge at the time of issuing the summons - HELD THAT:- It is essential to ensure that the summoning order complies with the established legal standards and does not infringe upon the rights of the petitioner. The complainant has specifically and categorically stated that the accused is the owner of the properties listed in Annexure A to Annexure A3, which were acquired by him and are involved in the commission of the scheduled offence. The complainant has further asserted that, based on the available material, it is abundantly clear that the proceeds of crime in the present case exceed Rs. 100 crores as of date, and that Non-Bailable Warrants have been issued against the accused. Therefore, the petitioner falls within the scope of Section 2 (1) (f) of the Act. A combined reading of Section 4 and Section 10 leads to the conclusion that, if an application under Section 4 has been filed in accordance with The Declaration of Fugitive Economic Offenders (Forms and Manner of Filing the Application) Rules, 2018, the Special Court is required to issue a notice to any individual alleged to be a fugitive economic offender. The jurisdiction exercised under this Act is distinct from the summoning of an accused for other criminal offences. The Fugitive Economic Offenders Act, 2018 is a special statute enacted for a specific purpose, and the legislature, in its wisdom, has provided that upon filing a complaint application in accordance with the aforementioned Rules, the Special Court shall issue a notice. The argument regarding duly filed is liable to be rejected, as the concept of duly filed must be understood in accordance with the above-said Rules. The petitioner s argument that the complaint has been filed solely on the basis of the Income Tax authorities' letter dated 09.07.2019 is also liable to be rejected. The complainant, in its complaint, has provided detailed information regarding the properties and has submitted supporting documents in its possession. The reason to believe has also been recorded in writing. In these circumstances, none of the petitioner s arguments can be accepted. The present petition is liable to be outrightly rejected, as the respondent/agency has pointed out that the petitioner has not disclosed his address in the United Kingdom. A person who invokes the jurisdiction of the Court must come with clean hands, as stated by the respondent in the affidavit; the petitioner is also required to disclose his current address. The exercise of jurisdiction u/s 482 of the Cr.P.C. is intended to prevent the abuse of the process of law and to secure the ends of justice. These are extraordinary reliefs, which can only be granted to individuals who approach the Court with clean hands. In the present case, the petitioner is absconding and seeks to invoke the Court's discretionary power without disclosing his current whereabouts. Petitioner could have appeared before the learned Special Judge as provided under Section 11 of the FOE Act and could have filed the reply. However, instead of that the petitioner has invoked the jurisdiction of this Court by filing the petition under Section 482 Cr. PC. It may again be repeated event at the cost of brevity that discretionary jurisdiction can be invoked only in the sparing circumstances. It has also kept in mind that the petitioner seems to be fighting a proxy war as he has chosen not to give his address and complete particulars in the petition. The present petition involves peculiar facts and circumstances, and this Court is of the considered view that it is inappropriate to interfere in the matter and exercise extraordinary jurisdiction. It is also relevant to note that Section 11 of the Act provides that, if a notice has been issued u/s 10 (1), the individual may appear in person, and the Special Court may terminate the proceedings.
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Customs
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2024 (11) TMI 596
Inordinate delay in disposal of the Show Cause Notice - HELD THAT:- By adopting the reasoning in our judgment and order disposing of the connected Writ petition challenging the very same impugned show cause notice, we allow this Petition and quash and set aside the impugned show cause notice - We also retrain the respondents from taking further steps against the petitioner based on the impugned show cause notice we have now quashed.
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2024 (11) TMI 595
Demand / claim made against the petitioner - placing reliance upon the information collected from Wikipedia - grievance of the petitioner that despite the petitioner specifically pointing out that the respondent was not entitled to place reliance upon the information collected from the Wikipedia and had also put forth various other contentions, the respondent has proceeded to pass the impugned order HELD THAT:- As rightly contended by learned counsel for the petitioner, a perusal of the Show Cause Notice dated 15.03.2023 will indicate that at paragraph K of the Show Cause Notice, the respondent has placed reliance on the information said to have been secured from the Wikipedia, which is impermissible in law, in the light of the judgments of the Hon ble Apex Court Ponds India Ltd.[ 2008 (5) TMI 46 - SUPREME COURT] and HEWLETT PACKARD INDIA SALES PVT. LTD [ 2023 (1) TMI 700 - SUPREME COURT] So also, a perusal of the impugned order will indicate that despite the petitioner putting forth several other contentions and producing various documents, the same have not been considered by the respondent who has mechanically / summarily confirmed the demand without considering or appreciating the material on record, thereby warranting interference by this Court.
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2024 (11) TMI 594
Value enhancement, confiscation and imposition of redemption fine and penalty - old and used worn clothing, completely fumigated - Import of goods under Tariff Item No.63090000 is restricted and their import is allowed only against the valid specific license. HELD THAT:- We find that this issue came up before this Tribunal in the case of Venus Traders [ 2018 (11) TMI 625 - CESTAT MUMBAI] uphold the confiscation of the goods under Section 111(d) of Customs Act, 1962. However, it is our opinion that the ends of justice would be served by reducing the redemption fine to 10% of the ascertained value and penalty to 5%. Thus we hold that the penalties imposed on the respondents are sufficient. Therefore, the penalties confirmed by the Adjudicating Authority are sufficient to meet the end of justice.
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Corporate Laws
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2024 (11) TMI 555
Transfer of shares - issuance of duplicate share certificate - whether a Writ would lie against Respondent No. 3-NSE? - HELD THAT:- Respondent No. 3-NSE in their affidavit-in-reply in paragraph No. 5 have stated that they have been incorporated to facilitate, promote, assist, regulate and manage the public interest and dealings in securities of all kinds, and to provide specialized, advanced, and modern facilities for trading, clearing and settlement of securities with a high standard of integrity and honour and to ensure trading in transparent, fair and open manner - The impugned communication dated 4 October 2007 states that stop transfer direction is given on account of default by trading member in not making payments to the exchange. There can be no doubt that stock exchange is an economic barometer of any economy and renders vital public duties as admitted by Respondent No. 3 in their reply. The Supreme Court in the case of K. C. Sharma Vs. Delhi Stock Exchange and Ors. [ 2005 (4) TMI 292 - SUPREME COURT ] has held that the stock exchange is covered by the definition of State under Article 12 of the Constitution of India and amenable to writ jurisdiction of the High Court - It is surprising that inspite of issue being put to rest, such a plea is being taken contrary to binding decisions. In any event, if the stock exchange acts unfairly or arbitrarily in the discharge of its public functions, an aggrieved party can invoke a public remedy, and a writ could be issued to the stock exchange. Section 23L(1) provides for an appeal to the Tribunal if a person is aggrieved by an order or decision of the recognised stock exchange. The communication impugned, in the present proceeding, dated 4 October 2007 is neither an order nor a decision but a direction to Respondent No. 5-Transfer agent to stop transfer of the shares belonging to the Petitioner - the impugned communication does not fall within the term order or decision , provisions of Section 22E of the SCRA would not be applicable and in any case a Writ Court cannot be treated as Civil Court for Section 22-E and, therefore, even on this count also the contention raised by Respondent No. 3-NSE is rejected. Respondent No. 3-NSE has failed to show any authority vested in them for issuing such communication, by which the share transfer forms on the basis of which Respondent No. 3 is basing its claim clearly demonstrate that the shares under consideration did not constitute assets of the defaulting member - the Petitioner s claim is only for the issue of duplicate share certificates of shares that the Respondent No. 4-Company admits on the affidavit, shares are still recorded in the Petitioner s name. Even dividends on these shares are issued to the Petitioner, though not actually credited to the Petitioner s account due to the objections raised by NSE. The impugned communication dated 4 October 2007 and consequential proceedings issued/taken by Respondent No. 3-NSE to/against Respondent No. 5- Transfer Agent of the shares of Respondent No. 4-Company is quashed and set aside - petition allowed.
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Insolvency & Bankruptcy
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2024 (11) TMI 554
Disqualification of Director of the Financial Creditor to sign the Section 7 Application - Rejection of Application under Section 7 signed by Vinod Sachdeva, Director of the Airwill Infracon and also Director in the Airwill JKM Infrastructure Pvt. Ltd. (the Financial Creditor herein) - Appellant submits that Infracon Company has been struck off on account of non-filing its Financial Statement for last 3 years, which attracts the disqualification of the Directors under Section 164 - HELD THAT:- The basis of the submission of the Appellant that Airwill Infracon has not filed Financial Statement for continuous last 3 years hence the Directors have become disqualified does not commend us. Further for applicability of Section 164(2), essential condition is that the Company has not filed Financial Statement or Annual Return for any continuous period of 3 Financial Years. The Company Airwill Infracon has been incorporated on 26.02.2014 and last date of filing of Balance Sheet was mentioned as 31.03.2015. In the Reply which has been filed by Financial Creditor to the I.A.5670/2023, the Financial Creditor has clearly pleaded that said condition as contemplated under Section 164(2)(a) cannot also be attracted since there can be no default for filing of Financial Statement of 3 continuous Year. Company having been struck off on 08.08.2018. The submission of the Counsel for the Appellant is that in event, disqualification under sub-Section (2) of Section 164, the Office of Director becomes vacant in all the Companies other than the Company which is in default under the sub-Section (2). The Counsel for the Appellant contended that in view of the default committed by Airwill Infracon not filing the Financial Statement under sub-Section (2) of Section 164, the Office of the Director of all the Companies including Financial Creditor, where Vinod Sachdeva is the Director shall be vacated. It is relevant to notice that proviso has been inserted by Act of 01/2018 with effect from 07.05.2018. There are two reasons for which the said submission advanced by the Appellant cannot be accepted. The default under Section 164(2) has neither been proved nor is the basis of striking off the Airwill Infracon as was contended by the Counsel for the Appellant. There is no Applicability of Section 167(1) proviso to hold the Vinod Sachdeva as disqualified in the Airwill JKM Infrastructure Pvt. Ltd., the Financial Creditor. On the date of filing the Section 7 Application, Airwill Infracon had already been struck off, and the Vinod Sachdeva could not continue as Director of the Company Airwill Infracon having been dissolved, but that shall have no effect on continuance of Vinod Sachdeva as Director in Airwill JKM Infrastructure Pvt. Ltd. Vinod Sachdeva was fully competent to file Section 7 Application and swear Affidavit in support of Section 7 Application. There are no error in the Order of the Adjudicating Authority in rejecting the application filed by the Corporate Debtor. There are no merit in any of the Appeals - Appeals dismissed.
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2024 (11) TMI 553
Dismissal of Section 95 application filed by the Appellant without appointing a Resolution Professional and without following the statutory process as per the Insolvency and Bankruptcy Code - principle of waiver - HELD THAT:- The Adjudicating Authority has not appointed even the RP as contemplated under Section 97 in the IBC and proceeded to hear the objections raised by Personal Guarantor and dismissed Section 95 application. The judgment of the Hon ble Supreme Court in Dilip B. Jiwrajka s case [ 2024 (1) TMI 33 - SUPREME COURT ] delivered on 09.11.2023, i.e. much before filing of IA No.5501 of 2023, need to be noticed. The law declared by the Hon ble Supreme Court in Dilip B. Jiwrajka s deals with entire statutory process and the nature of jurisdiction of the Adjudicating Authority to be exercised in proceedings of personal insolvency. The judgment in Dilip B. Jiwrajka was delivered by the Hon ble Supreme Court in a batch of writ petitions, in which writ petitions, various provisions of the IBC from Sections 95 to 100 were challenged. In the above context, the Hon ble Supreme Court had occasion to deal with scheme of the IBC; the submissions made on behalf of the parties and analysis of IBC and principles of natural justice. Principle of waiver - HELD THAT:- Hira Lal Patni vs. Sri Kali Nath [ 1961 (5) TMI 58 - SUPREME COURT ], was a case where there was an issue raised regarding the lack of jurisdiction by the Court granting the decree. The present is not a case where either of the parties are raising any issue regarding lack of jurisdiction of the Adjudicating Authority in deciding Section 95 application. The Adjudicating Authority has jurisdiction to decide Section 95 application as per the scheme of the IBC. The question of waiver with regard to jurisdiction of Adjudicating Authority to decide the application cannot be pressed into service in the present case. Waiver is always related to some consideration on the basis of which a party consciously abandons the existing legal right. In the present case, neither any consideration is proved, nor there is any conscious abandonment of any of its rights by the Appellant. Hence, the submission of learned Senior Counsel for the Respondent that Appellant is precluded to raise the ground to challenge the order of the Adjudicating Authority on the ground of waiver, is misconceived. The Adjudicating Authority committed error in considering the objections raised by the Respondent on the merits of the application under Section 95 filed by the Central Bank of India at the stage when RP was not even appointed. The Adjudicating Authority proceeded to enter into adjudicatory issues, which can be taken by the Adjudicating Authority only at the time of hearing of section 95 application under Section 100, as is now the law declared by the Hon ble Supreme Court in Dilip B. Jiwrajka s case. The order passed by Adjudicating Authority is set aside - appeal allowed.
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2024 (11) TMI 552
Refund of security amount - adjustment of security amount in the claim - HELD THAT:- On looking into Clause 8 of the Claim Form, in the claim itself the security amount was adjusted i.e. said amount was set off. The Adjudicating Authority has referred to judgment of Hon ble Supreme Court in Bharti Airtel Ltd. and Another vs. Vijaykumar V. Iyer and Others [ 2024 (1) TMI 187 - SUPREME COURT ], which was a case of the CIRP. However, the judgment which has been extracted itself indicate that set off of account on mutual dealing is permitted under Regulation 29. It is submitted that the Adjudicating Authority has erred in observing that the amount set off by PVVNL against anticipated claim cannot be permitted. The present is not a case of anticipated claim but the claim filed by the Appellant is with adjustment of security claim. The view of the Adjudicating Authority that there could not have been set off/ adjustment of the claim by the Appellant cannot be approved. The direction of the Adjudicating Authority to pay Rs.1,15,33,600/- could not be sustained. The Appeal is partly allowed.
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2024 (11) TMI 551
Classification of the Security Deposit as Financial Debt or Operational Debt - Security Deposit made by the Appellant with the Corporate Debtor for the purpose of the lease deed - whether the RP s treatment of the claim made by the Appellant in respect of the Security Deposit made in pursuance of the Lease Deed in the category of Other Creditor is justifiable in the facts of the present case? - HELD THAT:- The Security Deposit claimed by the Appellant is clearly a claim within the meaning of IBC. Now that it is noted the statutory construct of IBC and the provisions of the Lease Deed, it is required to examine the contention of the Appellant that they deserve to be treated as Financial Creditor and their claim of Security Deposit to be treated as financial debt qua the Corporate Debtor. The essential elements of financial debt in the context of Section 5(8) of IBC is inclusive of debt alongwith interest which disbursal must be against consideration for time value of money and also includes anything which is equivalent to the money that has been loaned as long as commercial effect of borrowing or profit is discernible. It is a well settled proposition of law as laid down by the Hon ble Apex Court in Pioneer Urban Land and Infrastructure Ltd. v. Union of India [ 2019 (8) TMI 532 - SUPREME COURT ] that any debt to be treated as financial debt, there must happen disbursal of money to the borrower for utilization by the borrower and that the disbursal must be against consideration for time value of money. The Adjudicating Authority has returned the finding that the Appellant did not fall in the category of a financial creditor nor the alleged transaction of Security Deposit fell within the ambit of financial debt in terms of the statutory provisions enshrined in Section 5(7) and 5(8) of the IBC. The above findings of the Adjudicating Authority have been predicated on the terms of Lease Deed entered between the Appellant and the Corporate Debtor. From the records and documents, the intent of the two parties was that the Security Deposit was a corpus amount of four months of lease rent kept on hold with Corporate Debtor which would be refundable to the Appellant without interest on termination of lease and after deducting dues arising on account of unpaid lease rent, utility charges and damages caused to property, if any, other than normal wear and tear. It is clear, therefore, that Security Deposit was never disbursed or deposited against consideration for time value of money. Only in the event of failure to refund the Security Deposit from the date such refund was due that the deposit was to be returned with interest of 18%. It was bereft of all elements of commercial borrowing. The essential elements in the principal clause of Section 5(8) of the IBC pertaining to financial debt was therefore not satisfied. Clearly therefore, the present transaction was not disbursement for time value of money and does not fall within the canvas of financial debt as defined under Section 5(8) of the IBC. From a plain reading of the definition of operational debt , it is clear that it must relate to a claim which is confined to either of the four categories viz. provision of goods, services, employment and Government dues. It may be pertinent to add here that the expression services has not been defined in the IBC and has to be interpreted in a broad and purposive manner. The sum of Security Deposit made in the facts of the present case which was given in the form of advance by the Appellant to the Corporate Debtor for prospective occupation of the leased premises on rent, this deposit was in the nature of advance for use of the premises - the impugned order in not treating the Appellant as an Operational Creditor suffers from legal infirmity and the same cannot be supported. The Security Deposit was in the nature of operational debt. The categorisation followed by the RP by placing the Appellant in the category of Other Creditors , cannot be agreed upon. Since the ingredients of operational debt stands satisfies, and includes all those provide or receive operational services from the Corporate Debtor. The Appellant in the present factual matrix should be accorded the status of an operational creditor. The RP is directed to admit the claim of the Appellant as an Operational Creditor and Appellant be allowed to substitute Form-C as already filled up with Form-B - appeal disposed off.
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2024 (11) TMI 550
Admission of Section 7 Application filed by the Financial Creditor - application barred by Section 10A of the Insolvency and Bankruptcy Code (IBC) or not - fresh cause of action for filing the Section 7 Application - HELD THAT:- It is already noticed that default was committed by the Corporate Debtor on 21.12.2017 29.06.2018, when accounts of the Corporate Debtor was declared by Lenders as NPA. Assignment was made in favour of the Financial Creditor in the Year 2019. Financial Creditor agreed to settle and restructure the dues of the Corporate Debtor on 26.04.2019, which was also not honoured and, hence the default was also committed prior to 10A period. In any view of the matter, Section 7 Application having been founded on the basis of default committed after Consent Decree dated 29.08.2022 was passed, Default cannot be pegged on 10A period when Application under Section 7 is founded on the basis of Consent Decree dated 29.08.2022. The observation made by this Tribunal in Samrat Restaurant Vs. `Brewcrafts Micro Brewing Pvt. Ltd. [ 2024 (10) TMI 399 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB ] was in facts of the said case and has no bearing in the fact of the present case where a Consent Decree was passed by the DRT. It is not the case of the Appellant that no default was committed by the Corporate Debtor in terms of the Consent Decree dated 29.08.2022. Thus, the Adjudicating Authority did not commit any error in admitting Section 7 Application filed by the Financial Creditor. The Section 7 Application was in no manner hit by Section 10A of the IBC. There is no merit in the Appeal - The Appeal is dismissed.
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PMLA
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2024 (11) TMI 593
Seeking grant of bail - HELD THAT:- Taking into consideration the fact that the appellant is a lady having medical ailment, it is required to set aside the impugned order and grant bail to the appellant. The impugned order stands set aside and the appellant is granted bail subject to the terms and conditions that may be imposed by the Trial Court - Appeal allowed.
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Service Tax
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2024 (11) TMI 592
Liability to pay Service Tax under reverse charge mechanism basis in terms of Rule 2 (1) (d) (EE) of the Service Tax Rules, 1994 read with Notification No. 30/2012-ST dated 20.06.2002 - whether the services provided by M/s IRIS Engineering Co. can be considered as service provided by one of the director of the appellant company? HELD THAT:- We are of the opinion that it is a settled preposition that sole proprietorship concerned is not a separate legal entity from proprietor for the purpose of taxation and for other legal purposes. In case of ANILKUMAR MAHESARIA [ 2007 (12) TMI 175 - HIGH COURT DELHI] has held that proprietor and proprietorship concerned are not separate entities and similar view has also been held in Commissioner of Customs CSI AIRPORT, MUMABI Vs. GYANCHAND JAIN [ 2015 (9) TMI 510 - BOMBAY HIGH COURT] We find that there is no difference between the proprietorship firm namely M/s IRIS Engineering Co. and Shri Chittranjanbhai D. Badheka and therefore, the provisions of the Rule 2 (1) (d) (EE) of Service Tax Rules, 1994 read with terms of Notification No. 30/2012-ST dated 20.06.2012 will be applicable and the party should have discharged the Service Tax liability on reverse charge basis on the services provided by the one of its Directors. We find that in this case the question of revenue neutrality raised by the learned Advocate is relevant as the Service Tax payable on the services received from one of the directors of the firm would have been available to the appellant as CENVAT Credit and therefore, we find that the situation becomes revenue neutral. We also find that there is no loss of the revenue in this particular case. As relying on Messers John Energy Limited [ 2018 (11) TMI 1389 - CESTAT AHMEDABAD] we held that the situation in the present case is similar to that of above Matter of revenue neutrality. We also find that there is no loss to the revenue because of Revenue neutral situation. Hence, we follow the above mentioned decision of this Tribunal and hold that impugned order in appeal is without any merit and accordingly, we set aside the same. Assessee appeal allowed.
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2024 (11) TMI 591
Service Tax liability under reverse charge mechanism - appellant in their books of account under the head legal and professional expenses booked certain expenditure of legal and professional fees - Revenue has made out a case by picking up a figure of expenditure shown in the books of account assuming that the entire expenditure shown in the books are not legal and professional expanses which is liable to service tax under reverse charge mechanism in the hands of the appellant HELD THAT:- We find that to arrive at a final conclusion whether the activity is classifiable under a particular head for which the appellant is liable to pay service tax under reverse charge mechanism has not been verified properly by the adjudicating authority and for that reason for the earlier period this Tribunal [ 2024 (9) TMI 1652 - CESTAT AHMEDABAD] remanded the matter wherein appellant has made out a prima facie case in as much as they have clearly shown the bifurcation of the expenses booked under the head of legal and professional charges in their books of account. Merely because the appellant have booked the expenses of various professional under one head that is legal and professional charges this cannot be the reason to demand Service Tax from the appellant under Reverse Charge Mechanism on the assumption that all the expenses booked under the said head is towards the legal fees. The appellant have produced the chart whereby it is explicit that the major amount pertains to various other professions such as Chartered Accountant, Chartered Engineer etc. for which the appellant is not liable to pay Service Tax under Reverse Charge Mechanism in terms of Section 68(2) read with Notification No. 30/2012-ST. however, this clear bifurcation has not been submitted by the appellant before the adjudicating authority therefore the matter needs to be reconsidered by the adjudicating authority on all the issues. The identical facts involved in the present case and it is coming out from the adjudication process that the adjudicating authority has not verified properly, the books of accounts, ledger and head of expenditure that whether the same is liable to service tax under reverse charge mechanism despite the entire documents were produced by the appellant, therefore, on the same line of the above order, this matter also to be reconsidered by passing a de-novo order.
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2024 (11) TMI 549
Payment of interest on delayed refund of service tax - beyond the expiry of three months from the date of filing of refund application for the first time, by the appellant on 29.06.2007 - second round of litigation before the Tribunal - HELD THAT:- The question with regard to payment of interest on delayed refund is categorically covered in terms of Section 11BB of the Central Excise Act as made applicable to service tax matters. The provisions concerning payment of interest on delayed refund automatically get attracted 3 months from the date of the order of the Tribunal permitting the said refund claim. This however automatically rolls back for the purpose of this Section under Sub-section 2 of Section 11B. The explanation to Section 11BB has nothing to do with the postponement with the said date. As it is an undisputed fact that the refund application was filed by the appellant on 29.06.2007, the appellant is entitled to payment of interest at applicable rates, three months from the said date of receipt of the said refund application, till the time the same was paid. The order of the Commissioner (Appeals) is set-aside and the appeal succeeds on merits. The revenue is directed to make good the shortfall in interest amount paid to the appellant.
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Central Excise
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2024 (11) TMI 548
Reversal/recovery of CENVAT Credit - clearance of input as such in terms of Rule 3 (5) of Cenvat Credit Rules, 2004 - Section 11D of Central Excise Act, 1944 - HELD THAT:- The appellant have paid the excise duty on the removal of input as such on the transaction value, the said excise duty was found to be in excess to the actual Cenvat Credit involved in such removal of input as such. From the plain reading of the section 11D, it is clear that if an assessee collects an amount in the name of excise duty and retained the same with him. The same needs to be credited into the Central Government. In the present case, there is no dispute that even though, the appellant have charged excise duty over and above the Cenvat Credit involved in inputs removed as such but the total amount collected from the customer has been paid by debiting the Cenvat account. Therefore, once any amount collected in the name of excise duty and paid to the government, the same cannot be demanded twice as provided under Section 11D of the Central Excise Act. This issue has been considered in the case of Shivam Metals [ 2008 (8) TMI 654 - CESTAT, NEW DELHI] wherein, this Tribunal has held that ' In the present case, the Appellant paid duty on the exempted goods and collected the amount from their customers as evident from the invoice. It is noted that the Appellant had not retained any amount and paid to the Government and, therefore, Section 11D of the Act cannot be invoked. So, the impugned order is not sustainable, and it is set aside.' From the above judgment, it is settled that any amount collected but paid to the Central Government, the demand of such amount cannot be raised invoking Section 11D of the Central Excise Act, 1944. Following the above judgment and the discussion made, it is opined that the demand under Section 11D in the present case is not sustainable. The impugned orders are set aside - The appeals are allowed.
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2024 (11) TMI 547
Classification of goods - bio-fungicides and bio-insecticides - to be classified under ETI 3002 90 30 as contended by the appellant or under ETI 3808 99 10 as contended by the department? - applicability of judicial precedents - HELD THAT:- When the matter had earlier come up for decision before the Tribunal against the earlier order dated 29.04.2011 passed by the Commissioner, the Tribunal noticed that though the appellant had placed reliance upon the decisions of the Tribunal in NMS Babu [ 2005 (10) TMI 18 - CESTAT, BANGALORE ] and T. Stanes [ 2008 (10) TMI 109 - CESTAT, CHENNAI ], but the impugned order had ignored these two decisions and had decided the matter independently. The impugned order was, therefore, set aside and the matter was remanded to the Commissioner for a de-novo decision in the light of the two decisions of the Tribunal. The Tribunal, however, made it clear that it was not expressing any opinion on the merits of the case. The Commissioner, instead of deciding the matter, placed the matter in the call book by letter dated 15.09.2014 for the reason that the appeals filed by the department before the Supreme Court against the orders of the Tribunal in NMS Babu and T. Stanes were pending. The Commissioner also stated that the matter will be taken up for adjudication only after the Supreme Court decided the matter. A perusal of the judgment of the Supreme Court in NMS Babu clearly indicates that the issue of classification of the products had not been raised by the department in the appeal filed by the department before the Supreme Court. What was contended by the department before the Supreme Court was in connection with only two issues. This is evident from a perusal of paragraph 2 of the judgment of the Supreme Court wherein it has been noticed that though large number of issues were decided by the Tribunal, but only two issues were raised by the learned counsel appearing for the department - The first contention of the department before Supreme Court was that the Tribunal had not dealt with the issue as to whether the respondent subsidiary company was only a dummy company, consequent to which the excisable goods manufactured by it would have to be clubbed with the holding company - The second issue that was raised by the department before the Supreme Court was regarding suppression of material facts by both the holding company and the subsidiary company. The Supreme Court noticed that neither the Commissioner nor the Tribunal had satisfactorily answered the first issue raised by the department. It is for this reason that the Supreme Court remanded the matter to the Tribunal to decide afresh as to whether any case for clubbing of excisable goods manufactured by the holding company and the subsidiary company had been made out or not. The Supreme Court also remitted the matter regarding suppression of material facts by the holding company and the subsidiary company to the Tribunal for re-determination on facts. In the instant case, though there were two binding decisions of the Tribunal on the issue that had arisen for consideration before the Commissioner and inspite of a specific direction issued by the Tribunal to decide the matter in the light of the aforesaid two decisions, the Commissioner made an attempt not to follow the two binding decisions and take an independent decision. The belief of the Commissioner that he could decide the matter on merits as the Supreme Court while dismissing the Civil Appeal filed by the department against the decision of the Tribunal in T. Stanes had left the questions of law open is tainted with mala fides. When the Supreme Court left the question of law open, it was the Supreme Court alone that was to decide the matter and the Commissioner was bound by the two decisions of the Tribunal. The Commissioner also did not attempt to examine the contention raised by the appellant that the appeal filed by the department before the Supreme Court against the decision of the Tribunal in NMS Babu was not against that part of the order of the Tribunal that decided the issue of classification and it was only on other two issues. To maintain judicial discipline, the Commissioner was bound to follow the decisions of the Tribunal in NMS Babu and T. Stanes. However, the Commissioner not only declined to follow the two binding decisions, but even went to the extent of stating that the decision of the Tribunal in NMS Babu does not expound the correct position of law and hence reliance placed thereon is not justified or proper . The Commissioner even placed reliance upon the decision of the adjudicating authority in T. Stanes, which decision had been set aside by the Tribunal in the appeal filed by T. Stanes. The order dated 13.09.2022 passed by the Commissioner deserves to be set aside and is set aside - Appeal allowed.
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2024 (11) TMI 546
Denial of utilization of Cenvat Credit for payment of duty during the defaulted period in terms of Rule 8(3A) of Central Excise Rules, 2002 - HELD THAT:- Considering the fact that the provision of Rule 8(3A) of Central Excise Rule, 2002 has been declared ultra vires by the Hon ble Gujrat High Court in the case of Indsur Global Ltd. [ 2014 (12) TMI 585 - GUJARAT HIGH COURT ] and Hon ble Punjab Haryana High Court in the case of M/S SANDLEY INDUSTRIES VERSUS UNION OF INDIA AND OTHERS [ 2015 (10) TMI 2455 - PUNJAB HARYANA HIGH COURT ]. Therefore, the Cenvat Credit cannot be denied to the appellant for utilization of payment of duty during the defaulted period. In that circumstances the demand against the appellant for recovery of Cenvat Credit during the defaulted period is not sustainable and consequently, no penalty is imposable on the appellant. The impugned order is set aside - appeal allowed.
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2024 (11) TMI 545
Area Based Exemption - substantial expansion - circumstantial evidence to prove the eligibility is on record or not - whether the appellants are eligible for the exemption contained under N/N. 49-50/2003 dated 10.06.2003? - Extended period of limitation - suppression of facts. HELD THAT:- It is found from the records that the appellant has started production on 30.03.2002 as can be seen from the application for approval of revised capacity after undertaking substantial expansion. Therefore, the contention of the Department that the increased capacity of production was effective from 30.03.2002 whereas the Notification required substantial expansion of capacity on or after 7th day of January, 2003. In view of the same, the circumstantial evidence does not indicate that the appellants have commenced increased production after substantial expansion on or after the appointed date. Coming to the declaration dated 25.11.2006, it is found that District Industry Centre vide Certificate dated 23rd November 2006 has certified the substantial expansion and increased production capacity. Therefore, even assuming that the declaration dated 25.11.2006 was not given by the appellants, substantial compliance of the conditions of the Notification and therefore has rendered themselves eligible for the exemption Notification. Learned Commissioner though acknowledges the fact of their eligibility denies the same on the basis of a letter dated 11.12.2007, purported to have been written by the appellants to the effect that they are availing SSI exemption and are not availing the said Notification - In the instant case, the appellants claim that they have filed declaration dated 25.11.2006 though they could not produce the acknowledgement for the same. This is a mere procedural violation which should not come in the way of allowing the benefit of the exemption Notification. Therefore, in the facts and circumstances of the case, it is found that the appellants are eligible for the exemption Notification from 25.11.2006. Extended period of limitation - suppression of facts - HELD THAT:- The Department did not establish evidence to allege intent to evade payment of duty. This is more conspicuous due to the fact that the appellants are otherwise eligible for SSI exemption. Therefore, the extended period cannot be invoked. Accordingly, the penalties imposed under Section 11AC are also liable to be set aside. Appeal allowed in part.
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2024 (11) TMI 544
Refund of the Cenvat duty paid through account current (PLA) in terms of the provisions of N/N. 56/2002-CE dated 14.11.2002 as amended - whether the education cess and secondary higher education cess can be paid by utilizing BED Credit by a unit availing exemption under N/N. 56/2002-CE dated 14.11.2002? - HELD THAT:- This issue has been considered by the Division Bench of this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, JAMMU VERSUS RB. JODHAMAL CO. PVT. LTD. [ 2013 (9) TMI 345 - CESTAT NEW DELHI] , wherein it has been held that a unit availing of exemption under Notification No. 56/2002-CE cannot utilize BED Credit for payment of education cess and secondary higher education cess which are not exempted under the said notification. The appellant is registered in the state of Jammu Kashmir and were availing benefit of area based exemption under N/N. 56/2002-CE dated 14.11.2002. The said notification provides mechanism to give effect to aforesaid exemption by way of refund of duty paid through PLA. As per the procedure, the manufacturer avails Cenvat Credit of duty/cess paid by them on inputs and utilizes whole of the CENVAT credit available with them on last day of the month for payment of Central Excise duty and Cess. The balance amount of duty is paid in cash and on application of refund, the refund is granted for payment of Central Excise made in cash only. The refund is granted by way of cash or by way of self credit in PLA. There is no infirmity in the impugned order vide which the refund of the education cess and secondary higher education cess has been denied - the impugned order is upheld by dismissing all the three appeals of the appellant.
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CST, VAT & Sales Tax
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2024 (11) TMI 543
Validity of the notices issued under Sections 84 and 27(1)(a) of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act, 2006) - time limitation for revising assessment orders - HELD THAT:- As far as the limitation is concerned, it is sufficient if a notice is issued for revising the assessment in time. This Court earlier had an occasion to deal with the case of TVL. VICTUS DYEINGS VERSUS THE ASSISTANT COMMISSIONER (ST) [ 2019 (8) TMI 823 - MADRAS HIGH COURT] in the context of Section 27 of the TNVAT Act, 2006., wherein the dispute related to the Assessment Years 2007-08 to 2010-2011 respectively - As per proviso to Section 22(2) of the TNVAT Act, 2006 , the assessment years were deemed to have been completed on 30.06.2012. Thus, any proceedings to revise the assessment which is deemed to have been completed under proviso to Section 22(2) of the TNVAT Act, 2006 had to be completed within six years for the deemed assessment under Section 27 of the TNVAT Act, 2006. It is a well settled principle of law that mere mentioning of a wrong provision or non-mentioning of a provision would not invalidate an order, if the court and/or statutory authority had the requisite jurisdiction therefor. The notices that were issued on 23.07.2014 were also notices issued under Section 27(1)(a) of the TN VAT, Act, 2006. There was only a typographical error in the notices and they were supposed to be issued under Section 27(1)(a) of the TN VAT Act, 2006. The tenor of the notice also make it clear that they were issued for the purpose of revision of Assessment, though Section 84 of the TN VAT Act, 2006 can be invoked only to correct errors apparent face on record - The grounds raised by the petitioner on 12.09.2014 was rejected by the Assessing Officer stating that the powers under Section 84 of the Act could not be invoked for these Assessment Years namely 2010-11 and 2012-13 which culminated in orders dated 31.07.2014. Having concluded that the notices issued in the year 2014 dated 23.07.2014 were indeed notices under Section 27(1)(a) of the TN VAT Act, it has to be held that the the Assessments completed by the second respondent dated 04.01.2021 , 31.12.2020 and on 07.01.2021 were within the period of limitation prescribed under Section 27(1)(a) of the TN VAT Act, 2006. These writ petitions stand dismissed.
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Indian Laws
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2024 (11) TMI 542
Independence and impartiality of arbitral tribunals under the Arbitration and Conciliation Act 1996 - interplay between party autonomy and independence and impartiality of the arbitral tribunal - unilateral appointment of sole arbitrator, or curation of a panel of arbitrators and mandate that the other party select their arbitrator from the panel - principle of equal treatment of parties applies at the stage of the appointment of arbitrators or not - appointment process in a public-private contract which allows a government entity to unilaterally appoint a sole arbitrator or majority of the arbitrators of the arbitral tribunal is violative of Article 14 of the Constitution. As per Dr. Dhananjaya Y Chandrachud, CJI and Pamidighantam Sri Narasimha:- HELD THAT:- Following was held: a. The principle of equal treatment of parties applies at all stages of arbitration proceedings, including the stage of appointment of arbitrators; b. The Arbitration Act does not prohibit PSUs from empanelling potential arbitrators. However, an arbitration clause cannot mandate the other party to select its arbitrator from the panel curated by PSUs; c. A clause that allows one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts as to the independence and impartiality of the arbitrator. Further, such a unilateral clause is exclusive and hinders equal participation of the other party in the appointment process of arbitrators; d. In the appointment of a three-member panel, mandating the other party to select its arbitrator from a curated panel of potential arbitrators is against the principle of equal treatment of parties. In this situation, there is no effective counterbalance because parties do not participate equally in the process of appointing arbitrators. The process of appointing arbitrators in CORE [ 2019 (12) TMI 841 - SUPREME COURT ] is unequal and prejudiced in favour of the Railways; e. Unilateral appointment clauses in public-private contracts are violative of Article 14 of the Constitution; f. The principle of express waiver contained under the proviso to Section 12(5) also applies to situations where the parties seek to waive the allegation of bias against an arbitrator appointed unilaterally by one of the parties. After the disputes have arisen, the parties can determine whether there is a necessity to waive the nemo judex rule; and g. The law laid down in the present reference will apply prospectively to arbitrator appointments to be made after the date of this judgment. This direction applies to three-member tribunals. As per Hrishikesh Roy, J. HELD THAT:- The following are the conclusions :- a) Section 18 applies to all stages of arbitration including the stage of appointment of an arbitrator. The Arbitration Act does not provide for any special treatment to the government irrespective of whether the arbitration is by or against the government. b) Unilateral appointment of Arbitrators is permissible as per the legislative scheme of the Arbitration Act. There is a distinction between ineligibility and unilateral appointment of arbitrators. As long as an arbitrator nominated by a party is eligible under the Seventh Schedule of the Act, the appointment (unilateral or otherwise), should be permissible. It is only in cases of a complete lack of consensus that the court should exercise its power under Section 11(6) of the Arbitration Act to appoint an independent and impartial arbitrator as per Section 11(8) read with Section 12 and 18 of the Arbitration Act. At the appointment stage, the scope of judicial intervention is otherwise extremely narrow. c) The independence and impartiality of the arbitrator must be examined within the statutory framework of the Arbitration Act, particularly Section 18 read with 12(5). Public Law constitutional principles should not be imported to arbitration proceedings particularly at the threshold stage of Section 11. As per Pamidighantam Sri Narasimha: Following are summarised: I. Dispute resolution through arbitration encompasses two independent yet interdependent principles: contractual freedom as party autonomy and statutory obligation as duty to constitute an independent arbitral tribunal. II. Party autonomy in making of an arbitration agreement is an essential feature of arbitration. It commences with choosing the members of the arbitral tribunal, extends to the procedure that would apply for its conduct, and concludes with the method by which an award could be challenged before a court. It is thus a brooding and guiding spirit of arbitration. Party autonomy is sufficiently incorporated in the Arbitration Act, along with a restraint on judicial intervention. III. The moment parties choose arbitration over ordinary civil proceedings for dispute resolution, their duty to establish an independent and impartial tribunal arises. The substitution of arbitration in place of civil courts as an exception under Section 28 of the Contract Act is only for a forum and not for contracting out of the most essential feature of a dispute resolution, i.e., independence and impartiality must exist in every forum. This essential feature is the inviolable public policy consideration under Section 23 of the Contract Act from which the parties cannot opt out. Arbitration agreements which are not compliant of this public policy consideration are void under Section 23 of the Contract Act. Thus, there is a statutory incorporation of duties of the parties to the arbitration agreement. IV. If an arbitration agreement is considered by the court as not enabling constitution of an independent and impartial tribunal, any submission that the said agreement is a binding contract, or it is in exercise of party autonomy is not tenable as such an agreement will be against public policy and as such not an enforceable contract. V. In view of the statutory incorporation of these duties, it is not necessary to apply public law principles evolved in constitutional and administrative laws. Sourcing these duty obligations from Contract Act and Arbitration Act is important to maintain the integrity of the party autonomy and restraint of judicial institutions. VI. The power to ensure that the arbitration agreement is compliant of the public policy requirement of establishing an independent and impartial tribunal is always of the Court. This principle is recognised and statutorily incorporated in the Contract Act and the Arbitration Act. It is the duty of the court to ensure that the arbitration agreement inspires confidence and it will enable establishment of an independent and impartial arbitral tribunal. VII. Neither public policy considerations under the Contract Act or the Arbitration Act restrain the parties to the arbitration from maintaining a panel of arbitrators in any manner. However, arbitration agreements enabling one of the parties to unilaterally constitute arbitral tribunal do not inspire confidence of independence and may violate the public policy requirement of constituting an independent and impartial tribunal. The court will, therefore, scrutinise the agreement and hold them to be invalid if it considers it appropriate. VIII. The occasion for the court to examine the constitution of the independent and impartial tribunal under the arbitration clause will arise when one of the parties makes an application under Sections 11, 14 or 34. It is not permissible for the court to give an advance declaration that all such agreements which enable one of the parties to unilaterally constitute the arbitral tribunal would be void per se. No two agreements are the same and it is necessary for the court to examine the text and context of the agreement. IX. All applications pending before the courts challenging the unilateral appointment clauses will be disposed of applying the test as to whether such a clause enables establishment of an independent and impartial tribunal.
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2024 (11) TMI 540
Dishonour of Cheque - seeking expeditious disposal of cases under the Negotiable Instrument Act, 1881 - HELD THAT:- From perusal of record, it appears that the proceeding under the Act, 1881 is pending since 2021. However, as per Section 143(2) of Act, 1881 the trial for the offence under the Act, 1881 should be conducted on day to day basis and it is further provided u/s 143(3) of the Act, 1881 that the trial should be concluded within six months from the date of filing of the complaint. The Apex Court in the case of INDIAN BANK ASSOCIATION AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 2014 (5) TMI 750 - SUPREME COURT ], has issued direction for expeditious disposal of the cases under the Act, 1881. From the above mentioned judgement of Apex Court, it is clear that the Apex Court for expeditious disposal of cases under the Act, 1881 has issued several directions which the concerned court/Magistrate has to follow while deciding the cases under the Act, 1881. From the observations of the Apex Court as well as analysis of Sections 138 143 of the Act, 1881, it is expedient that all the proceedings under the Act, 1881 should be concluded expeditiously without going into unnecessary technicality. This Court directs the Additional Chief Judicial Magistrate, Court No.8, Prayagraj, to decide the Complaint Case No.468 of 2019 (Chandrama Prasad Singh Vs. Vijendra Pratap Singh), under section 138 of Negotiable Instrument Act, 1881, Police Station-Khiri, District-Prayagraj, keeping in mind the direction of the Apex Court in above mentioned cases, expeditiously preferably within a period of six months from the date of receipt of certified copy of this order, strictly in accordance with statutory provision of Sections 143(2) and 143(3) of the Act, 1881, if there is no legal impediment. The application is disposed of.
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2024 (11) TMI 539
Exemption Scheme (Policy) to be applied with retrospective or prospective effect - Seeking direction to the respondents to refund the amount to the petitioner realized under the head of 'Tax' in respect of his Hybrid Vehicle - HELD THAT:- Admittedly, the vehicle in question has been purchased by the petitioner prior to the date of Policy, 2022, i.e. 13.10.2022 and tax itself has been paid as applicable on the said date and, therefore, it cannot be said that under the said Policy/Notification, the petitioner was entitled to the exemption as provided. Only on account of the fact that the vehicle was registered on 18.10.2022, i.e. after the date as indicated in the amendment, i.e. 14.10.2022, the petitioner cannot seek the refund from the respondents as the tax was paid prior to the date of the said Policy. It has been laid down by Hon ble Supreme Court in M/S. STAR INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) , RAIGAD [ 2015 (10) TMI 1288 - SUPREME COURT ] that the eligibility criteria laid down for exemption notification is required to be construed strictly. In that view of the matter, no case for issuing direction for refund, as prayed for, is made out - Petition dismissed.
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2024 (11) TMI 538
Seeking constitution of an Arbitral Tribunal to adjudicate the disputes between the parties - cause of action - constitution of an Arbitral Tribunal to adjudicate the disputes between the parties - Section 11 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- The understanding of the learned counsel for the respondent that the limitation period for invocation of the arbitration would begin from the date of execution of the MoU dated 14.06.2019 is ex-facie incorrect. It is only after the disputes arose between the parties that the occasion arose for the petitioner to take recourse to arbitration. In the facts of the present case, it cannot be said that the claims sought to be raised by the petitioner are ex-facie barred by the limitation so as to preclude any reference to arbitration. In any event, as held in SBI General Insurance Co. Ltd. v. Krish Spinning [ 2024 (9) TMI 606 - SUPREME COURT ], at the reference stage, all that is required to be examined is whether there exists an arbitration agreement. All other aspects touching upon the merits or maintainability of the claim/s are required to be dealt with by a duly constituted Arbitral Tribunal. Likewise, the fact that there are proceedings pending under Section 138 of the NI Act as also the fact that the petitioner, in the first instance, sought to seek resolution of the matter through pre-litigation mediation under the CC Act, would not preclude the petitioner from taking recourse to arbitration and seek adjudication of the disputes on merit - there is no impediment to constitution of an Arbitral Tribunal to adjudicate the disputes between the parties. A perusal of the arbitration agreement shows that it contemplates a three-member Arbitral Tribunal. At this stage, learned counsel for the respondent submits that a Sole Arbitrator be appointed by this Court. The same request is also made by the learned counsel for the petitioner. The learned Sole Arbitrator may proceed with the arbitration proceedings subject to furnishing to the parties requisite disclosure as required under Section 12 of the A C Act - It is agreed between the parties that the arbitration shall take place under the aegis of and under the rules of Delhi International Arbitration Centre (DIAC). The present petition stands disposed off.
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