TMI Tax Updates - e-Newsletter
November 18, 2023

Case Laws in this Newsletter:

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

Articles

1. COMPENSATION FOR DELAY IN DELIVERY OF GOODS

   By: DR.MARIAPPAN GOVINDARAJAN

2. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

3. Refund allowed in case of inverted duty structure on account of Multiple Input having higher GST rate than output

   By: Bimal jain

4. Reply filed by Assessee be taken into consideration while passing Impugned Order

   By: Bimal jain

News

1. 60th Network Planning Group Meeting on Sectoral Plan for Efficient Logistics (SPEL)

2. Shri Piyush Goyal participates in Partnership for Global Infrastructure and Investment (PGII) & Indo-Pacific Economic Framework for Prosperity (IPEF) Investors Forum

3. Indo-Pacific Economic Framework for Prosperity (IPEF) Supply Chain Agreement signed by the 14 IPEF Partners

Notifications

Customs

1. 84/2023 - dated 16-11-2023 - Cus (NT)

Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Supersession Notification No. 81/2023-Customs(N.T.), dated 2nd November, 2023

Circulars / Instructions / Orders

DGFT

1. Trade Notice No. 34/2023-24 - dated 16-11-2023

Notice for Calcined Petroleum Coke(CPC) Manufacturers regarding import of Raw Pet Coke.

Customs

2. PUBLIC NOTICE No. 34/2023 - dated 27-10-2023

Container Scanning Operations and Examination revised procedures.

3. PUBLIC NOTICE NO. 96 / 2023 - dated 20-10-2023

Query reply pending with Exporters/IEC Holders against the Drawback Shipping Bills - reg.

Highlights / Catch Notes

GST

• Flavoured Milk Misclassified: GST Council's Incorrect Recommendation Highlighted by Court Decision.

  Case-Laws - HC : Power of GST Council to issue clarification regarding classification of goods under GST - classification of flavoured milk - The power of GST council is recommendatory only - The GST Council has wrongly clarified that “Flavoured Milk” is classifiable under heading 2202 of Harmonious System of Nomenclature (HSN) based on Chapter Note 1 to Heading 0402 - Specifically it is stated that the flavoured milk will come within the purview of heading 0402 99 90. - HC
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• Deceased Taxpayer's Registration Canceled Retroactively, Aligning with Business Closure and Filing Cessation.

  Case-Laws - HC : Cancellation of deceased tax payer’s registration with retrospective effect - Since the Proper Officer was informed of the demise of the tax payer and the stoppage of business, the question of filing the returns after the demise did not strictly arise. - It is considered apposite to direct that the registration of the deceased tax payer be cancelled from the date of the application for cancellation of registration filed by the petitioner, that is from 30.04.2022 - HC
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• GST Exemption for Works Contractors Limited; Not Applicable to Their Suppliers Due to Lack of Specific Notification.

  Case-Laws - AAR : Scope of exemption from GST - As the exemption notification have to be strictly construed, the exemption extended to a works contractor is not applicable for his procurement of works contract - Therefore in sum and substance the exemption extended to a works contractor supplying the works contract services to Government or local bodies is not extendable to a taxable person who is supplying services to such works contractor in absence of any entry or notification under Sec11 (1) of the CGST Act. - AAR
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Income Tax

• Tax Assessment Reopening: Reasons Must Be Based on Initial Material Facts, Not Enhanced by Later Affidavits or Arguments.

  Case-Laws - HC : Reopening of assessment - Reasons to believe - The reasons itself indicates that the material fact was picked up from the Profit & Loss Account Notes 26 and the statement of computation of income while arriving at the income as per normal provisions. - It is settled law that what is not there in the reasons cannot be improved upon in the affidavit or during the course of argument. - HC
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• Penalty Imposed for Late Audit Report Submission; Unawareness Argument Rejected Due to Knowledge of Related Requirements.

  Case-Laws - AT : Penalty u/s 271B - delayed submission of the audit report - assessee’s only case is that it was not aware of the requirement of law - The explanation is not valid on facts as well. The assessee could validly argue non-conduct of tax audit under the Act, stating to have obtained the said report for the first time, only where it had furnished the other audit report, i.e., under the Kerala Act, of which it was aware, by the due date, i.e., 31.10.2013. The requirement of filing both the audit reports emanates from s. 44AB. It could not thus possibly be that the assessee is aware of one requirement and not of the other. - AT
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• Valuation Report Invalid: Filed Late Beyond Deadline, Barred from Legal Use Due to Timing Violation.

  Case-Laws - AT : Validity of valuation report submitted by the DVO - Period of limitation - the valuation report is dated 28.10.2016 which is beyond the prescribed time of 30.09.2016. Hence, it is evident that the said valuation report of Id. DVO is barred by limitation and, hence, cannot be relied upon by either party in the eyes of law. - AT
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• TDS Not Applicable: Transaction for Flexi Packaging Materials Deemed a Sale, Not a Works Contract u/s 194C.

  Case-Laws - AT : TDS u/s 194C - works contract - purchase of packing materials - The entire material of flexi packaging were purchased by the suppliers on their own and paid Excise Duty and VAT - It is a case of sale and not “works contract” and section 194C will not be applicable - AT
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• Taxability of Explained Cash Transactions: AO's 19.40% GP Rate Upheld, PCIT Cannot Revise u/s 263.

  Case-Laws - AT : Revision u/s 263 - taxability of cash transactions - entire explained cash transaction should not be brought to tax - AO not erred in applying the GP rate of 19.40% after holding that the aforesaid sum represented unaccounted cash sales of assessee. AO took one of plausible/possible view looking into the instant facts of the case and the ld. PCIT cannot take recourse to proceedings u/s. 263 of the Act only with a view to supplant/substitute his own view - AT
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• 50% Depreciation Claim Approved for Temporary Flat Used Under 180 Days in First Year, No Revenue Dispute.

  Case-Laws - AT : Depreciation on sample flat - number of days asset used - the revenue has allowed the claim of 50% of the depreciation claimed by the assessee in the first year when the sample flat was put use for less than 180 days and nothing has been brought on record to show that the said claim is disputed by the revenue. Considering the facts that the revenue has not disputed the fact that the sample flat is a temporary structure and no contrary findings being brought on record in present case we hold that the assessee's claim of 50% of the cost of construction for the year under consideration be allowed. - AT
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Customs

• Update on Foreign Currency Exchange Rates for Customs Transactions: Ensure Compliance with Latest Rates.

  Notifications : Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Notification
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• Exemption Benefits Granted for Extra Virgin Olive Oil Imports Under DFIA Scheme; No Sensitivity Classification Required.

  Case-Laws - AT : Eligibility for benefit under DFIA Scheme - Benefit of exemption - import of Extra Virgin Olive Oil - Neither the imported goods viz., Olive oil nor Salad oil/Vegetable Oil are specified as sensitive input under Para 4.29 of FTP. Therefore as per Board Circular No. 46 of 2007 and DGFT Policy Circular No. 50 of 2008, no correlation is required to be established for technical specification, quality and characteristics of inputs used in export goods and imported goods. - Benefit of exemption allowed - AT
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• Customs Valuation via Rule 7 Upheld Due to Unascertainable Value of Identical and Similar Goods at Import.

  Case-Laws - AT : Undervaluation - Since the value of identical and similar goods at the contemporary import time was also could not be ascertained, we feel that the resorting the valuation under Rule 7 of the Customs Valuation Rules by the Department is legally sustainable in the facts and circumstances of this case - AT
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• 10% Valuation Variation Allowed Despite Lack of Prior Approval; Standing Order Seen as Guideline, Not Strict Rule.

  Case-Laws - AT : Valuation - If all other conditions are satisfied such as import of the goods from the manufacturer then merely because the procedure of prior written approval cannot come in the way of allowing the 10% variation from the PLATTS rate to arrive at the valuation - the standing order itself is a guideline and not an Act or Rules made under Customs Act. - The noncompliance of standing order is only a procedure lapse, for which the substantive benefit of the 10% variation cannot be denied - AT
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• Anti-Dumping Duty Exemption for Non-Domestically Produced Colour Coated Aluminium Coils.

  Case-Laws - AT : Exclusion of product ‘colour coated aluminium coils’ from imposition of anti-dumping duty - if the domestic industry does not manufacture/produce colour coated coil, this product would have to be excluded from scope of the product on which anti-dumping duty has been imposed - AT
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DGFT

• Import Alert: CPC Manufacturers Must Detail RPC Imports for DGFT Allocation Update on Tax and Regulations.

  Circulars : Notice for Calcined Petroleum Coke(CPC) Manufacturers regarding import of Raw Pet Coke. - Requisite details to be provided for for allocation of imported Raw Petroleum Coke (RPC)
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IBC

• Court rules on asset auction rights post-acquisition approval; suspended director's appeal dismissed.

  Case-Laws - AT : CIRP - Auction of the assets of corporate debtor as per Acquisition Plan - Liquidation - whether the Successful Auction Purchaser can prosecute the avoidance application after approval of the acquisition plan? - Appellant being the suspended Director - Now allowed - Appeal dismissed - AT
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• Corporate Insolvency Resolution Process Application Dismissed Over Limitation Issues; OTS Offer to Be Addressed.

  Case-Laws - AT : Dismissal of Application u/s 7 for initiation of CIRP - Period of limitation - In the Application, which was filed u/s 7, the Appellant has not brought on record the OTS offer given by the Corporate Debtor and for the first time in the Appeal, the said document has been brought on record. The Corporate Debtor has no opportunity to file a reply to the OTS offer or to make its submission on the said letter - the ends of justice be served in granting opportunity to the Corporate Debtor to file a reply with regard to OTS offer dated 08.07.2021, which is brought on the record in this Appeal. - AT
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Service Tax

• Liquidation Halts Tribunal Proceedings Without Liquidator's Application Under IBC 2016.

  Case-Laws - AT : Abatement of appeal - Initiation of CIRP under IBC - when the company is in the process of liquidation under IBC Code, 2016 and a liquidator is appointed, where no application for continuance of the proceeding before this Tribunal is filed by the liquidator, the proceedings before this Tribunal abate. - AT
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• Export Service Classification: Intermediary Role and Place of Provision in India-Germany Transaction.

  Case-Laws - AT : Export of service - intermediary services - place of provision of services - In absence of any documentary evidence that the appellant had acted as an intermediary between the overseas entity and its Indian customer and that the location of the service receiver is in Germany, the transaction in our considered view, should appropriately be considered as the export of service. - AT
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Central Excise

• Penalty Must Match Duty Evaded When Extended Limitation Period Is Invoked; No Discretion Allowed by Authorities.

  Case-Laws - AT : Quantum of penalty - It is a settled law that in a case where demand has been confirmed invoking extended period of limitation penalty equivalent to duty evaded needs to be imposed and there is no discretion to any authority as held by the Hon’ble Supreme Court - AT
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VAT

• Order Invalidated: Court Sets Aside Impugned Decision Due to Errors in Handling TDS Processing Charges Beyond Notice Scope.

  Case-Laws - HC : Validity of order beyond the scope of Show cause notice - Statutory time limit for filing of appeal already expired - Though the impugned order was passed on 10.05.2022 and the time limit to file the appeal was also expired at the time of filing this petition, this Court feels that the respondents had committed a serious error in its decision making process while dealing with the issue pertaining to a sum of Rs. 76,62,986/- towards the processing charges liable to TDS and impugned order is not sustainable and the same is liable to be set aside. - HC
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Case Laws:

• GST

• 2023 (11) TMI 602
  Correctness of SCN - it is alleged that noticee did not declare correct tax liability while filing the annual returns of GSTR 09 - petitioner-noticee was asked to submit its reply by 28.10.2023 - HELD THAT:- Having regard to the issue involved in this writ petition, it is observed that if no order has been passed on or before 28.10.2023 or subsequent thereto till date, status quo as regards the proceedings stated to be drawn up vide the Show Cause Notice dated 28.09.2023, be maintained till the next date of listing.

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• 2023 (11) TMI 601
  Power of GST Council to issue clarification regarding classification of goods under GST - Prayer for Certiorarified Mandamus calling for the records of the decision of the 3rd respondent GST Council s Minutes of Meeting taken on 22nd December, 2018 - classification of flavoured milk - to be classified under HS Code No. 2202 instead of HS Code 0402 - contrary to the decision of the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE VERSUS M/S AMRIT FOOD (A. DIVISION OF AMRIT CORPORATION LTD) [ 2015 (9) TMI 1269 - SUPREME COURT ], Articles 279 A (4), 14, 19(1) (g) and Article 265 of the Constitution of India. Whether the petitioner is justified and questioning the wisdom of the GST Council whose decision has been accepted by the Authoritty for Advanced Ruling IN RE: M/S. BRITANNIA INDUSTRIES LIMITED [ 2021 (8) TMI 193 - APPELLATE AUTHORITY ADVANCE RULING, TAMILNADU ]? HELD THAT:- Second Schedule to Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 prescribes 6% CGST on goods specified therein. Sl.No.50 to Second Schedule to Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 prescribes 6% CGST on Beverage Containing Milk . Sl.No.50 to Second Schedule to Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 relates to goods under Chapter Heading 2202 90 30 - The impugned recommendation of the GST in its meeting held on 22.12.2018 has concluded that flavoured milk is classifiable under HSN Code 2202 and thereby has suggested that flavoured milk will be liable to tax at 6% CGST. Consequently, flavoured milk will be classifiable under Heading 2202 of HSN. The function of the GST is not to determine the classification under the provisions of the Customs Tariff Act, 1975. The rule of interpretation of First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification - Since, no standalone enactment has been contemplated under the present regime, for rates and for classification of the goods and service , the Parliament and State Legislatures have left it to the wisdom of respective Governments to fix rate of tax under Section 9(1) of respective GST enactments on the recommendations of GST Council. Entry 50 to the Second Schedule to the Notification No.1/2017- Central Tax (Rate) dated 28.6.2017 has not seen any major changes. Entry 8 to the First Schedule to the Second Schedule to the Notification No.1/2017-Central Tax (Rate) dated 28.6.2017 benefit of which is claimed by the petitioner for flavoured milk has also not seen any major changes since its inception - As per Sl.No.50 to the Second Schedule to Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017, rate of tax is 6%. According to the petitioner, flavoured milk is classifiable under Sl.No.8 to the First Schedule to Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017 and therefore liable to tax at 2.5%. The Hon ble Supreme Court in AMRIT FOODS VERSUS COMMISSIONER OF CENTRAL EXCISE, UP. [ 2005 (10) TMI 96 - SUPREME COURT ] had earlier set aside the order of the Tribunal in AMRIT FOODS CO. LTD. VERSUS COMMISSIONER OF C. EX., MEERUT-I [ 2002 (11) TMI 170 - CEGAT, COURT NO. IV, NEW DELHI ]. Pursuant to a remand order of the Hon ble Supreme Court in Amrit Food Vs. Commissioner of Central Excise , [ 2005 (10) TMI 96 - SUPREME COURT ] , the Tribunal had rendered its decision in Amrit Food Vs. Commissioner of Central Excise , [ 2006 (3) TMI 523 - CESTAT, NEW DELHI ] , which was appealed before the Hon ble Supreme Court. It is in this background, the Hon ble Supreme Court rendered its decision in COMMISSIONER OF CENTRAL EXCISE VERSUS M/S AMRIT FOOD (A. DIVISION OF AMRIT CORPORATION LTD) [ 2015 (9) TMI 1269 - SUPREME COURT ]. Flavoured Milk of Animal Origin was however brought within the purview of valuation with reference to its retail price under Section 4A of the Central Excise Act, 1944 by Notification No.49/2008- CE (NT) dated 24.12.2008 as amended by Notification No.11/2011- CE(NT) dated 24.03.2011. Classification of Flavoured Milk continued to be under sub-heading 2202 9030. IN Notification No.49/2008-CE (NT) dated 24.12.2008 as amended by Notification No.11/2011-CE(NT) dated 24.03.2011 the description of Flavoured Milk was again Flavoured Milk of Animal Origin against tariff sub heading 2202 90 30 and was liable to tax at 1% with reference to its Maximum Retail Price(MRP) - By Notification No.17/2008-C.E. (N.T.) dated 27.03.2008, special exemption was given to Flavoured Milk of Animal Origin under Section 11C of the Central Excise Act, 1944. It was issued in view of the prevailing trade practice and confusion that prevailed for period between 28.02.2005 and 14.06.2007. The Tribunal in NESTLE INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI [ 2017 (3) TMI 1409 - CESTAT NEW DELHI ] had held that HSN notes also make it clear that the products would fall under Chapter 1901 only when natural milk constituents are added with other items such as cereal, groats, yeast, etc., or the milk constituent is replaced by another substance such as oleic acid. The Tribunal concluded that addition of small quantity of artificial flavouring substance does not change the essential nature of the product from what is covered under 0404 of the tariff. The test that whether an artificial flavouring substance will not jettison the product from chapter 4 to Chapter 19 is not a relevant test under the GST regime. The rival entries in the Customs Tariff Act, 1975 namely heading 0402 and heading 2202 of the First Schedule to the Customs Tariff Act, 1975 have been reproduced in paragraph No.51 of this order. The 3rd respondent GST Council has wrongly clarified that Flavoured Milk is classifiable under heading 2202 of Harmonious System of Nomenclature (HSN) based on Chapter Note 1 to Heading 0402 - Specifically it is stated that the flavoured milk will come within the purview of heading 0402 99 90. The expression milk therefore in heading 2202 90 of the First Schedule to Customs Tariff Act, 1975, can include only milk from other vegetables products such as coconut milk, almond milk, peanut milk, lupin milk, hazelnut milk, pistachio milk, walnut milk or seed based milk such as sesame milk, flax milk, hemp milk, sunflower milk, or pseudo cereal based milk such as quinoa milk, teff milk, amaranth milk, etc. - It has to be therefore construed that Beverage Containing Milk will not include flavoured milk made out of dairy milk. Beverage Containing Milk , Non-Alcoholic Beverages can include only plant / seed based Milk . The impugned recommendation of the 3rd respondent GST Council cannot be upheld. Classification ought to have been independently determined by the Assessing Officer. Petition allowed.

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• 2023 (11) TMI 600
  Seeking issuance of mandamus directing the Respondents to respond to the representations submitted by the Petitioner on 21 December 2022, 24 March 2023 and 2 May 2023 - Classification of dialysis machine - HELD THAT:- An affidavit has been filed by the Respondents. However, the same is not on record. Learned Counsel for Respondents are directed to ensure that the affidavit is placed on record. The prayer of the Petitioner stands answered.

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• 2023 (11) TMI 599
  Revocation of GST registration of petitioner - SCN did not specify any reason for proposing to cancel the petitioner s GST registration - violation of principles of natural justice - HELD THAT:- The petitioner s contentions that the SCN did not specify any reason for proposing to cancel the petitioner s GST registration, and that the impugned order cancelling its registration is void as not informed by reason, is merited. The impugned order cancelling the petitioner s GST registration does not reflect any reason for the same. The petitioner s contention that it was required to issue a notice to the petitioner prior to any inspection is merited, however, it is the petitioner s case that he had shifted its principal place of business. Thus, even if a prior notice of inspection had been issued, no effective purpose would be served as admittedly the petitioner is not carrying on its business from its stated place of business. The petitioner s request for amendment was rejected on the ground that the petitioner had failed to provide the requisite information - it is considered apposite to set aside the order dated 09.05.2023 whereby the petitioner s application for amendment of the GST registration was rejected. Petition disposed off.

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• 2023 (11) TMI 598
  Cancellation of GST registration of petitioner - registration obtained by means of fraud, wilful misstatement or suppression of facts - Vague SCN - Principles of natural justice - HELD THAT:- There is no explanation as to why the buyers and suppliers have been found to be suspicious. Merely because the petitioner s shop was found closed, absent anything more, is not a ground for cancellation of petitioner s GST registration. The impugned order cancelling the petitioner s GST registration is set aside - Petition allowed.

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• 2023 (11) TMI 597
  Cancellation of deceased tax payer s registration with retrospective effect - failure to furnish the returns for a period of six months - HELD THAT:- It is material to note that the impugned SCN did not propose to cancel the GST registration with retrospective effect. Although the Proper Officer is empowered to cancel the GST registration with retrospective date, the said power cannot be exercised arbitrarily and without any reason for cancelling the GST registration with retrospective effect. In the present case, the allegation against the deceased tax payer is of non-filing of returns. Obviously, a failure to furnish returns for a period of six months, absent any other reason, does not warrant cancellation of the GST registration with retrospective effect. Since the Proper Officer was informed of the demise of the tax payer and the stoppage of business, the question of filing the returns after the demise did not strictly arise. It is considered apposite to direct that the registration of the deceased tax payer be cancelled from the date of the application for cancellation of registration filed by the petitioner, that is from 30.04.2022 - petition disposed off.

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• 2023 (11) TMI 593
  Seeking grant of Regular Bail - no single document or instrument is recovered or discovered from the present applicant which can connect the applicant with the alleged offence which speaks volumes - HELD THAT:- This Court is of the opinion that, discretion is required to be exercised to enlarge the applicant on regular bail. This Court, prima facie, is of the opinion that, this is a fit case to exercise the discretion and enlarge the applicant on regular bail. Hence, present application is allowed and the applicant is ordered to be released on regular bail subject to conditions imposed. Bail application allowed.

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• 2023 (11) TMI 592
  Scope of exemption from GST - Claim of exemption for services provided by sub-contractor to main contractor - The services provided by the Main Contractor claimed as exempted from GST - covered by Notification No. 12/2017-Central Tax (Rate), dated 28th November, 2017 as amended by Notification No 2/2018 - Central Tax (Rate) dated 25/01/2018 or not HELD THAT:- Though the Notification 12/2017 as amended by Notification 2/2018-Central Tax (Rate), Dt. 25-01-2018 exempt works contract with value of supply of goods less than 25% when the said supply is made to the Central Government, State Government or Local Authority etc., it does not make any mention of the supplies made by the sub-contractor to the works contractor as was done in Notification 11/2017. As the exemption notification have to be strictly construed, the exemption extended to a works contractor is not applicable for his procurement of works contract - Therefore in sum and substance the exemption extended to a works contractor supplying the works contract services to Government or local bodies is not extendable to a taxable person who is supplying services to such works contractor in absence of any entry or notification under Sec11 (1) of the CGST Act.

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• Income Tax

• 2023 (11) TMI 596
  Escapement of income of trust - assessment year selection - as alleged petitioner had sold an immovable property and income arising there from was not offered to tax under the head Capital Gains in the return of income - as per assessee transfer of lease hold rights was duly offered to tax by petitioner on its own in the year of transfer - HELD THAT:- In the affidavit in reply filed through one Mr. P. N. Nair, Joint Commissioner of Income Tax (OSD) affirmed on 30th May 2022 it is admitted that the assessment for Assessment Year 2018-19 was completed on 27th August 2021 while the notice under Section 148 of the Act was issued on 31st March 2021. Respondent as agreed to a query posed by the court that if the amount has already been considered in the subsequent assessment years and assessment order has been passed, the question of escapement of income for the same amount in the previous year will not arise. We are also informed that there is no change in the rate of tax. Reopening order set aside - Decided in favour of assessee.

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• 2023 (11) TMI 595
  Reopening of assessment - Reasons to believe - assessee case was selected for scrutiny under CASS and the assessment was completed u/s 143(3) after accepting the returned income - HELD THAT:- This was a case where petitioner had filed its return of income for Assessment Year 2014-15 admitting NIL income. The proviso to Section 147 provides that notice to reopen can be issued only if there is failure to truly and fully disclosed if the notice is being issued after the expiry of four years from the end of relevant assessment year. The assessment year is A.Y. 2014-15 and the notice is dated 30th March 2021. Hence the proviso will apply. From the reasons as quoted above, it is quite clear that the material on which A.O has relied upon are those available from the documents filed by petitioner. The reasons state As seen from the Profit Loss Account (Notes 26 Movement Employee Benefits Expenses), assessee had debited provision for employee related disputes to the extent of Rs. 3,10,00,000. However, in the statement of computation of income, while arriving at the income as per normal provisions, the remaining provision debited in the Profit Loss Account of Rs. 30,00,000 needs to be brought to tax. In the affidavit in reply filed through one Ms. R.P. Anuradha affirmed on 30th October 2023 it is admitted that assessee has furnished complete details, information, documentary evidences and explanation as required by the learned A.O. during the assessment proceedings but strangely it is stated that the requisite material fact as noted in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the A.O. This is nothing but a bald statement because the reasons itself indicates that the material fact was picked up from the Profit Loss Account Notes 26 and the statement of computation of income while arriving at the income as per normal provisions. The reasons does not also state that the material fact was embedded in such a manner that material evidence could not be discovered. It is settled law that what is not there in the reasons cannot be improved upon in the affidavit or during the course of argument. Decided in favour of assessee.

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• 2023 (11) TMI 594
  TDS u/s 195 - payments made by the assessee for marketing services to the US Company as taxable in India as FTS [Fee for Technical Services] - US Company does not have any permanent establishment in India - order under Section 201(1) 201(1A) - India- USA DTAA - HC held that [ 2023 (3) TMI 422 - KARNATAKA HIGH COURT] scope of the work is to generate customer leads using/subscribing customer data base, market research, analysis, and online research data and rightly held that the service provider has not made available any technical knowledge, experience, knowhow, process or develop and transfer technical plan or technical design - HELD THAT:- UPON hearing the counsel the Court made the following. Delay in filing the special leave petition is condoned. The special leave petition is dismissed. Pending application(s), if any, shall also stand disposed of.

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• 2023 (11) TMI 591
  Jurisdiction of Tribunal - situs of the Assessing Officer - determination of territorial jurisdiction of various Benches of the Tribunal - HELD THAT:- We are of the opinion in light of the STANDING ORDER UNDER INCOME-TAX (APPELLATE TRIBUNAL) Rules, 1963 notification w.e.f. 01/10/1997, defining territorial jurisdiction of various Benches of the Tribunal, and more particularly 4th para thereof stipulating that The ordinary jurisdiction of the Bench will be determined not by the place of business or residence of the assessee but by the location of the office of the Assessing Officer read with various landmark decisions i.e. MSPL Ltd. v. PCIT [ 2021 (5) TMI 739 - BOMBAY HIGH COURT] upheld the [ 2023 (4) TMI 1181 - SC ORDER] and CIT v. ABC Paper Ltd [ 2022 (8) TMI 863 - SUPREME COURT] that the tribunal s Benches at Pune have no jurisdiction to entertain this Revenue s appeal for want of situs of the Assessing Officer in very terms. We, accordingly, reject the Revenue s instant appeal as returned with liberty to be instituted afresh at the appropriate Bench(s) of the Tribunal as per law. Ordered accordingly.

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• 2023 (11) TMI 590
  Penalty u/s 271B - delayed submission of the audit report - assessee, a primary agricultural credit society (PACS) registered under Kerala Act filed it s audit report u/s. 44AB on 21.06.2014 as against the due date specified therein, i.e.,31.10.2013 - assessee s only case is that it was not aware of the requirement of law - HELD THAT:- The law implies a State policy, and to which the citizen is subject. Would it, one may ask, possible for an assessee to contend that it was not aware of the Act, and that therefore income earned attracts tax thereon? This is particularly so in the instant case where the assessee is presumably (i.e., going by the nature and volume of its business) an assessee (i.e., under the Act) for long. The explanation is not valid on facts as well. The assessee could validly argue non-conduct of tax audit under the Act, stating to have obtained the said report for the first time, only where it had furnished the other audit report, i.e., under the Kerala Act, of which it was aware, by the due date, i.e., 31.10.2013. The requirement of filing both the audit reports emanates from s. 44AB. It could not thus possibly be that the assessee is aware of one requirement and not of the other. The explanation is accordingly not tenable either in law or on facts. We may next consider the assessee s argument of the audit report being available at the material time, i.e., at the time of assessment, which should thus be regarded as insufficient compliance of section 44AB. The furnishing of the audit report/s u/s. 44AB stands delinked from the obligation to file return a default where-under is subject to penalty under a separate provision, by Finance Act, 1995, w.e.f. 01.07.1995. Even if, therefore, the assessee is not required to as where he has no income for the relevant year, or otherwise does not his file return of income, he is yet obliged to furnish the audit report in time. Delinked thus from the obligation of filing the return, it is so from the ensuing assessment proceedings, if any, as well. Why, as posed by the Bench during hearing, to no answer by Shri Sivadas, the learned counsel for the assessee, there may be no assessment proceedings in a given case. For all we know, the information furnished through the audit report may be collated to furnish information that could guide policy framework for selecting and/or indeed the selection of returns for being subject to verification procedure under the Act, i.e., form the basis for initiating assessment proceedings. The argument is thus sans any basis in law as also on facts. Its observation, alluding to Hindustan Steel Ltd vs. State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT] that the explanation was not malafide and there was no conscious disregard of it s statutory obligation by the assessee, is in that context, and is to be therefore read accordingly and not divorced there-from. Independent of it, reference to the decision in Hindustan Steels Ltd. (supra) would amount overlooking the clear provisions of section 271B r/ws. 273B of the Act, impermissible under any cannon of interpretation of statutes. Section 273B provides for the necessary leeway to account for cases where, despite due care, the lapse occurs. It may also not be out of context to state that the decision in Hindustan Steel Ltd [ 1969 (8) TMI 31 - SUPREME COURT] is premised on the consideration that penalty, which in that case was under the Sale Tax Act, is a result of quasi criminal proceedings. The Hon ble Apex Court per it s decision in UoI v. Dharmendra Textile Processors [ 2008 (9) TMI 52 - SUPREME COURT] has clarified the penalty under section 271(1)(c) of the Act to be a civil liability. The same would hold equally for penalty u/s. 271B, which is though subject to s. 273B. We confirm the levy of the impugned penalty. Decided against assessee.

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• 2023 (11) TMI 589
  Unexplained cash credit u/s. 68 - addition towards bogus Share Capital including premium - only contention raised by revenue is that the director of the subscriber company did not appear in response to the summons issued u/s 131 - HELD THAT:- The assessee having furnished all the details and documents before the AO and the AO has not pointed out any discrepancy or insufficiency in the said evidences and details furnished by the assessee before him. As observed assessee having discharged initial burden upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, the burden shifted upon the AO to examine the evidences furnished and even made independent inquiries and thereafter to state that on what account he was not satisfied with the details and evidences furnished by the assessee and confronting with the same to the assessee. In view of this, even applying the ratio laid down in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd.[ 2019 (3) TMI 323 - SUPREME COURT] impugned additions are not warranted in this case wherein held once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then the AO is duty bound conduct to conduct an independent enquiry to verify the same In the case of Commissioner of Income-tax vs. Manish Build Well (P.) Ltd. [ 2011 (11) TMI 35 - DELHI HIGH COURT] has held that the CIT(A) is statutory first appellate authority and has independent power of calling for information and examination of evidences and possesses co-terminus power of assessment apart from appellate powers. However, a perusal of the impugned order of the CIT(A) shows that the CIT(A) has not discussed anything about the material facts of the case. He has not pointed out any defect and discrepancy in the evidences and details furnished by the assessee but simply upheld the order of the AO in mechanical manner. The order of the ld. CIT(A) is a non-speaking order. The same is not sustainable as per law. Decided in favour of assessee.

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• 2023 (11) TMI 588
  TP Adjustment - action of the TPO charging mark-up on the third party costs incurred by the assessee - TPO examined whether reimbursement of expenses without any mark-up is justified in this case - According to the assessee, these expenses were not germane to the main services provided to the assessee - TPO opined that the agreement between the assessee and its associated enterprises (AEs) covers all the activities on which the assessee is expected to provide the services to its AEs HELD THAT:- As found by the ld. CIT, there were certain expenses like advertisement publicity, business promotion and participation in trade events which were undertaken by the assessee at the request of the overseas entity. The budget in this regard is also controlled by the AE. The risk and outcome of these expenses were borne or attributed to the AE. The expenses relating to advertisement were on buying of advertisement space in the newspapers; that in such activities, the cost involved is too high and the effort required to buy such space is not much. On these reasoning, ld. CIT (A) held that they should be treated as pass through cost. From the above, we are of the opinion that ld. CIT (A) rightly held that other than these three items, all other items should be considered as part of the cost base of the appellant and should be marked up. Thus, we hold that the TPO s order in this regard has no cogent basis. The reference to ITAT order for AYs 2002-03 2003-04 [ 2019 (12) TMI 1221 - ITAT DELHI ] is also not germane as in those cases, ITAT found that the agreement was not before the authorities below. Accordingly, in the background of the aforesaid discussion, we uphold the order of the ld. CIT (A) in this regard. Foreign exchange loss being operational in nature - TPO opined that as the assessee company is a captive service provider all costs inclusive of any loss arising out of forex fluctuations and interest cost should have been marked up - assessee contended that the forex loss partakes the nature of interest cost and all the financial charges are excluded in the hands of the comparable company while calculating the PLI of the company, therefore, they should be excluded while computing the PLI of the assessee - HELD THAT:- CIT(A) correctly held Most important aspect of benchmarking analysis is treating the com parables on the same footing as in the case of the assessee and if certain expenses are excluded in the hands of the comparable same should be excluded in the hands of the tested party - in this case the tested party is the appellant. Financial charges are normally excluded while arriving at the operating margins. This matter was subject matter of adjudication for the AY 2003-04 [ 2019 (12) TMI 1221 - ITAT DELHI ] The Ld. predecessor also has held that these expenses as non operating in nature. Thus forex fluctuation loss and interest expenses should be excluded while computing the PLI of the assessee.

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• 2023 (11) TMI 587
  Unrecorded/unaccounted income - Validity of valuation report submitted by the DVO - Period of limitation - valuation difference of hotel building - difference in the cost estimated by the DVO and the cost declared by the assessee - Addition is only the valuation report furnished by the DVO which has been obtained by the Id. AO during the course of search assessment proceeding - since the assessee has not fully disclosed the above-mentioned transactions/receipts in its books of accounts, the same were treated as unrecorded/unaccounted and therefore, the difference was added to the income of the assessee as undisclosed income to be taxed u/s 115BBE - assessee has submitted that the Ld. CIT(A) has erred in not appreciating the fact that the overall difference in the valuation report for all the years taken together is less than 10% and cannot be taken as a base for making the addition as the valuation report is just an estimate and cannot be taken into consideration for making the addition HELD THAT:- Admittedly, the sole basis of the addition is only the valuation report furnished by the DVO which has been obtained by the Id. AO during the course of search assessment proceedings. As per the provisions of section 142A (6) of the Act, it apparently clear that the valuation report has to be furnished by the Id. DVO within six months from the end of the month in which reference is made by the Id. AO. This issue is now well settled in case of Sargam Cinema [ 2009 (10) TMI 569 - SC ORDER ] and in the case of CIT vs. Nirmal Kumar Aggarwal [ 2018 (10) TMI 2002 - SC ORDER ] - Admittedly, in the present case, the valuation report is dated 28.10.2016 which is beyond the prescribed time of 30.09.2016. Hence, it is evident that the said valuation report of Id. DVO is barred by limitation and, hence, cannot be relied upon by either party in the eyes of law. Consequentially, in our view, no addition per se can be made by the Revenue by placing reliance on an invalid valuation report. Alternative plea that the valuation report considered by the CIT(A) cannot be relied upon as the DVO report which has been made on the basis of CPWD rated instead of PWD rates - Counsel in this regard, placed reliance upon the binding judgment of Sunita Mansingha [ 2017 (4) TMI 303 - SUPREME COURT] wherein, it has been held that for the purpose of valuating the property, the local rate should be applied and not CPWD rates and normally, there is difference of about 25% with respect to rate of CPWD and PWD rates. Thus, the addition has been made without providing the benefit of rate difference between CPWD and PWD rate. Considering the factual matrix of the case and judicial pronouncements, we hold that the order passed by the Ld. CIT(A) is infirm and perverse to the facts on record in confirming the addition based on invalid report of DVO and further without allowing benefit of the difference in the value as per law. Accordingly, the addition sustained by the Ld. CIT (A) is bad in Law and as such, same is deleted. Assessee appeal allowed.

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• 2023 (11) TMI 586
  TDS u/s 194C - works contract - purchase of packing materials - assessee in default for non-TDS u/s 201(1) - HELD THAT:- The assessee made purchase of the printed packing materials from six parties as mentioned in the assessment order. It is not a case of the Revenue that assessee s own material given to the suppliers for getting any particular work or a job or printing done from them. Further there is no agreement between the assessee and suppliers of goods as being in the nature of job work. Thus it is not a works contract, but it is an outright purchase which is not hit by Section 194C of the Act. The entire material of flexi packaging were purchased by the suppliers on their own and paid Excise Duty and VAT. The assessee submitted sample bills from each of the suppliers, wherein the above facts are proved which is not disputed by the Assessing Officer. Further the above issue was considered in the case of Girnar Food [ 2006 (2) TMI 160 - GUJARAT HIGH COURT] and clearly held that it is a case of sale and not works contract and section 194C will not be applicable. Respectfully following the above decision, Ground No. 1 raised by the Revenue is devoid of merits and the same is hereby dismissed. Discounts given by the assessee is to be treated in the nature of commission u/s 194H - HELD THAT:- Plain reading of the definition of section 194H makes it clear that the said section applies only if the nature of the payment is for acting on behalf of another person or for rendering of services. However, in the case of the assessee, the discounts were allowed to assessee s own buyers/parties to whom goods are sold. None of the parties were assessee s agents and none of them had rendered any services to the assessee. For buying goods from the assessee, they paid sales consideration. They had also not sold the goods supplied to them on behalf of assessee, but they had sold the same in their own rights as independent parties. Thus, all the 12 parties were not the agents and had not rendered any services to the assessee, therefore section 194H does not apply in the present case. As seen that all the credit notes are by way of sales price difference allowed to said parties for specific reasons as stated therein. The said credit notes therefore rightly would reduce the gross sale consideration charged at the time of raising the original invoices and supplying of the goods to them. All the said 12 parties were the buyers/customers of the assessee. Therefore, the provision of section 194H would not apply in the above transaction. The said issue is squarely covered in favour of the assessee as relying on case of M/s. Gujarat Narmada Valley Fertilizer and Chemicals Ltd. [ 2019 (4) TMI 1723 - GUJARAT HIGH COURT] - Thus we do not find any merits in the ground no. 2 raised by the Revenue and the same is hereby rejected. Charging of interest u/s. 201(1A) of the Act which is consequential of non-deduction of TDS to be set aside - Revenue appeal dismissed.

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• 2023 (11) TMI 585
  Revision u/s 263 - taxability of cash transactions - as per CIT AO had made addition of GP rate @ 19.40 of the total financial transactions with M/s National Shroff, who is an Angadia, therefore, there was no scope to treat the said transaction as trading turnover but the said transactions were liable to be treated as cash transactions only - PCIT held that the Assessing Officer ought to have considered the total amount as unexplained cash transactions and the aforesaid transactions amount should have been taxed u/s. 115BBEE - HELD THAT:- AO had examined this issue in detail during the original assessment proceedings and had made due inquiries and detailed analysis of the material available on record in respect of transactions which was the subject matter of revision in 263 proceedings. AO on the basis of discussion with partner of National Shroff (Angadia), concluded that the amount in question represented cash sales/out of book sales carried out by the assessee during the year under consideration. Accordingly, the AO calculated the GP rate @ 19.40% on the aforesaid cash sales. Thus AO had examined the issue in detail during the course of original assessment proceedings and also had taken a view which was a legally plausible view. We are unable to accept the proposition that the entire explained cash transaction should be brought to tax in the hands of the assessee, since it is a settled principle of law only the real income may be subject to tax in the hands of the assessee and nor the entire receipts. Accordingly, AO not erred in applying the GP rate of 19.40% after holding that the aforesaid sum represented unaccounted cash sales of assessee. AO took one of plausible/possible view looking into the instant facts of the case and the ld. PCIT cannot take recourse to proceedings u/s. 263 of the Act only with a view to supplant/substitute his own view with that of the Assessing Officer on the ground that alternate view should have been taken by the Assessing Officer. As decided in Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue unless the view taken by the Income Tax Officer is unsustainable in law. Assessee appeal allowed.

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• 2023 (11) TMI 584
  Addition u/s 14A - sufficiency of own interest-free funds or not? - as alleged assessee had paid huge interest to various persons on unsecured loans during the year under consideration - Addition made as it was not possible for the assessee to prove it s contention that interest free funds have been utilized for making investment for the purposes earning exempt income, since, assessee was having mixed funds - CIT(A) partly allowed the appeal of the assessee by restricting the disallowance u/s. 14A of the Act to the amount of exempt income earned by the assessee - HELD THAT:- The Gujarat High Court in numerous decisions has consistently taken the position that if interest-free funds available with the assessee exceed the investments made in funds yielding exempt income, then no disallowance is called for under section 14A of the Act. In the case of Hitachi Home and Life Solutions (I) Ltd. [ 2013 (7) TMI 359 - GUJARAT HIGH COURT] held that where assessee s interest free funds exceeded investment made for earning exempted dividend income, disallowance under section 14A was not justified. Also in case of Gujarat Fluoro chemicals Ltd. [ 2020 (10) TMI 252 - GUJARAT HIGH COURT] again reiterated that where interest free funds available with assessee were far more than gross investment, it could safely be harboured that interest bearing funds was not invested by assessee and, thus, no disallowance under section 14A to be made. Thus no disallowance is called for in respect of interest expenses under section 14A of the Act, when the assessee is having sufficient interest-free funds at its disposal, in excess of investment made in instruments yielding exempt income . Decided in favour of assessee.

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• 2023 (11) TMI 583
  Characterization of income - compensation, enhanced compensation, solatium and interest on such enhanced compensation on account of compulsory acquisition of assessee s rural agricultural land by Government of Gujarat - Income from other sources or exempt income - HELD THAT:- Assessee was granted additional compensation and the statutory interest as per Section 28 of Land Acquisition Act, 1894. Hon ble Apex Court in the case of Ghanshyam (HUF) [ 2009 (7) TMI 12 - SUPREME COURT] while considering the taxability of compensation on acquisition of asset held that interest paid on excess amount under section 28 of Land Acquisition Act, 1894 is a part of amount of compensation, however, interest under section 34 is only for delay in making payment after compensation is determined interest under section 28 of Land Acquisition Act, 1894 a part of enhanced value of land. Thus, this statutory interest awarded by Ld. Principal Senior Civil Judge, Gondal is the component of compensation. No interest under section 34 is awarded to assessee as per the judgment of Ld. Principal Senior Civil Judge, Gondal, therefore, the interest component is not taxable income. NFAC/Ld. CIT(A) restricted the allowed only 50% relief to assessee without any basis or reasoning. Coordinate bench of Delhi Tribunal in DCIT Vs Dinesh Sharma [ 2017 (4) TMI 1503 - ITAT DELHI] by following the decision of Hon ble Apex Court in the case of Ghanshyam (supra) also held that where compensation received under compulsory acquisition of land was enhanced by Court on appeal of assessee land owner, interest received on enhanced compensation would be calculated under section 28 of land acquisition act and such interest would be exempted from tax . In view of factual and legal position, the ground raised by assessee is allowed.

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• 2023 (11) TMI 582
  Disallowance u/s 14A - AO did not accept the submissions of the assessee that own funds are more than the investments - AO hold that all investments including purchase of shares for gaining control over the investing company to be considered for making disallowance u/s 14A and therefore held that the total current and non-current investments are more than the shareholders funds as of 31.03.2015 as well as 31.03.2016 - HELD THAT:- The submission of the Ld.AR in order to substantiate the claim that assessee s own funds are more than the investments earning tax free income, with the breakup of own funds and investments to be considered for the purpose of section 14A is extracted in the earlier part of this order. From the perusal of the said details it is clear that the investments made by the assessee are funded out of the own funds of the assessee. It is a settled principle that when the own funds are more than the investments, no disallowance is warranted towards operating cost and therefore, we see no infirmity in the order of CIT(A) deleting the disallowance made under section 8D(2)(ii) read with section 14A. Disallowance u/s 8D(2)(iii) r.w.s. 14A, the Special Bench in the case of Vireet Investments Private Ltd ( 2017 (6) TMI 1124 - ITAT DELHI ) wherein it has been held that only those investments which yielded exempt income during the year are to be considered for computing the average value of investment. Respectfully following the Special Bench decision, we see no merit in the ground raised by the Revenue. MAT computation - Disallowance u/s 14 A of the act cannot be added to the book profit under section 115JB. Disallowance of Director s Salary handover facilities - AO did not accept the submissions of the assessee and disallowed 50% of the expenses towards capitalization to the cost of project - CIT(A) held that the directors salary and handover facility expenses are incurred year after year and they are related to the business of the assessee in general and not project specific expenses - HELD THAT:- CIT(A) correctly held that these expenses are neither capital in nature nor deferred revenue expenditure. CIT(A) relied on the decision of the co-ordinate bench in assessee s sister concern s case M/s Lodha Palazzo [ 2014 (12) TMI 1272 - ITAT MUMBAI] and held that director s salary and handover facility expenses had to be allowed in the year of spending as the same is in the nature of overhead cost not specific to any project. TP Adjustment - ALP of guarantee commission - HELD THAT:- As similar view has been held by the co-ordinate bench in assessee s own case [ 2023 (5) TMI 153 - ITAT MUMBAI] where the co-ordinate bench upheld guarantee commission @0.3523%. Respectfully following the above decisions of the co-ordinate bench, we do not see any infirmity in the findings given by the CIT(A). Depreciation on sample flat - number of days asset used - assessee submitted that the depreciation @ 50% was claimed during AY 2015-16 since the asset was put to use for less than 180 days and that the balance 50% is claimed during the year consideration - assessee also made an alternate claim before the AO that since the expenses incurred towards sample flat is for the purpose of business the same should be allowed as a deduction under section 37(1) - CIT(A) has allowed the claim stating that the depreciation claim in terms rate etc., can be questioned only in the first year of claim and once allowed in the first year cannot be disturbed in the subsequent year - HELD THAT:- From the perusal of the assessment order we notice that the assessing officer has not disputed the fact that the sample flat is a temporary structure since the AO himself is holding that the gestation period is four years based on the assessee s submission that the sample flat is demolished in 2020. Taking note of the fact that temporary structures are entitled to depreciation at the rate of 100% as per the depreciation rates under Income-tax Rules, 1962, as per rule 5, Appendix-I, and considering the fact that the structure being temporary not controverted by the Revenue, we see no infirmity in the claim of the assessee to the entire amount of expenditure on construction of temporary flat as sample flat is eligible for depreciation at 100% . Further the revenue has allowed the claim of 50% of the depreciation claimed by the assessee in the first year when the sample flat was put use for less than 180 days and nothing has been brought on record to show that the said claim is disputed by the revenue. Considering the facts that the revenue has not disputed the fact that the sample flat is a temporary structure and no contrary findings being brought on record in present case we hold that the assessee s claim of 50% of the cost of construction for the year under consideration be allowed. The disallowance made in this regard is deleted. Capitalization of foreign exchange loss to work-in-progress - HELD THAT:- As relying on own case [ 2023 (5) TMI 153 - ITAT MUMBAI] we hold that the foreign exchange loss cannot be included in the cost of project and accordingly should be allowed as a deduction. The accounting treatment of the assessee is supported by the authoritative pronouncement of the Institute of chartered accountants of India as well as the Ministry of corporate affairs. In view of this, we do not find any substance in the findings of the lower authority that foreign exchange loss on purchase of material should be included in the cost of project. Accordingly, the foreign exchange loss incurred by the assessee is revenue expenditure and cannot be included in the cost of project - The ground of the revenue in this regard is rejected.

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• 2023 (11) TMI 581
  Revision u/s 263 by CIT - inadequate enquiry made by AO - whether at all any enquiry was carried out by the Ld. AO on the allowability of expenses towards Event management, Package Tour, purchase of air tickets etc. ? - HELD THAT:- From the given details more particularly the details of various expenses in tabular form enclosed it is clearly found that the assessee had given the nature of expenditure, the entire details of the client for whom the said expenditure has been incurred; expenditure incurred on the various heads together with the respective amounts thereon. Hence, it is clear that assessee had furnished the client wise income and corresponding expenses incurred thereon client wise, before the Ld. AO. AO after making enquiries of the same and being satisfied with the details furnished by the assessee, concluded that the claim of the assessee to be genuine. Accordingly, he had decided not to make any disallowance of expenses thereon. Even if Explanation-2 is being sought to be invoked by the Ld. PCIT by stating that in the opinion of the Ld. PCIT, the requisite enquiries had not been carried out by the Ld. AO, then it is bounden duty of the Ld. PCIT to atleast state what are the requisite enquiries that are to be carried out by the Ld. AO and where the Ld. AO has failed in his duty. In the instant case, no such recording of facts and no finding thereon is given by the Ld. PCIT in his order with objective reasons. Thus more than adequate enquiries were indeed made by the Ld. AO while completing the assessment and if the Ld. PCIT is of the opinion that the enquiries carried out by the Ld. AO were inadequate, then it is the duty of the Ld. PCIT to conduct an enquiry before proceeding to treat the order of the Ld. AO as erroneous. Thus no hesitation in quashing the revision order passed by the Ld. PCIT u/s 263 - Decided in favour of assessee.

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• 2023 (11) TMI 580
  Deduction u/s 80IC for Unit-III - premises owned by sister concern, the assessee had carried out the manufacturing activity - HELD THT:- We find that the assessee had furnished the rent agreement entered into between the assessee and the sister concern. Further from the P L Account of the assessee of the eligible Unit-III, we find that the assessee had debited rent expenses - This entire rent expenditure has been allowed as deduction by the Ld. AO. Admittedly, this rent includes the rent paid in the factory premises to sister concern. Proof of acquisition of plant and machinery for the new Unit No. III. - The assessee company has provided the bills/vouchers for the same vide submission dated 08/01/2016 which had been duly verified by the Ld. AO. This fact clearly goes to prove that the entire bills and vouchers for acquisition of new plant and machinery were indeed filed by the assessee before the Ld. AO in the re-assessment proceedings for AY 2011-12 and the said fact was also submitted before the Ld. CIT(A) during the impugned appellate proceedings. Furnishing of evidence of the approval obtained from the competent authority such as Department of Industries, Govt. of Himachal Pradesh for setting up of the Unit. - A license in the prescribed form to manufacture that pharmaceutical drugs was granted to the assessee on 29/03/2010 by State Drugs Controlling-Cum- Licensing Authority of Himachal Pradesh at Baddi and the said license validity period was from 29/03/2010 to 28/03/2015. Further, the assessee has also obtained Pollution Control Licence by making an application on 27/03/2010 and obtained No Objection Certificate (NOC) from Himachal Pradesh State Pollution Control Board on 07/04/2010. Apart from this, the assessee had also incurred electricity expenses for Unit-III. Apart from other expenses, this electricity expenses was also allowed as deduction by the Ld. AO. Hence, 3rd objection raised by the lower authorities also has no legs to stand. The assessee would be duly eligible for deduction u/s 80-IC of the Act in respect of Unit-III at Baddi. Sales promotion expenses of gift items, air tickets, foreign trips and hotel expenses spent on the Medical Practitioners - lower authorities had held that the same would be falling under the ambit of Explanation to section 37 of the Act as incurrence of the said expenditure were in violation of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 - HELD THAT:- This issue on merits is no longer res-integra in view of the decision of the Hon ble Supreme Court in the case of Apex Laboratories Pvt. Ltd. [ 2022 (2) TMI 1114 - SUPREME COURT] wherein it was held that since acceptance of freebies by Medical Practitioners was prohibited as per Circular issued by the Medical Council of India under Medical Council of India (MCI) Regulations, 2002, gifting of such freebies by assessee pharmaceutical company to medical practitioners would also be prohibited by law and thus expenditure incurred in distribution of such freebies would not be allowed as deduction in terms of Explanation to section 37(1) of the Act. It is not in dispute that the unit is eligible for deduction u/s 80-IC of the Act and that the said sales promotion expenditure has been incurred by the assessee only in the eligible unit. In view of the CBDT Circular No.37/2016 dated 02/11/2016, pursuant to this disallowance, the deduction u/s 80IC of the Act would automatically get enhanced and thereby making the entire issue revenue neutral. This is because the disallowance of the aforesaid expenditure would only go to increase the business profit of the assessee from the eligible unit. When the said profits are eligible for deduction u/s 80IC of the Act, in view of the aforesaid circular, the same would be eligible for enhanced deduction u/s 80-IC of the Act for the assessee. Accordingly, Ground No.1(i) and (ii) are allowed. Disallowance towards the purchase of capital assets and granted deduction in respect of salary expenses paid to IT Staff - AR before us argued that this expenditure also was incurred in the eligible unit of the assessee and hence, the same would be consequentially eligible for enhanced deduction u/s 80-IC in view of the CBDT Circular No.37/2016 dated 02/11/2016 - HELD THAT:- It is not in dispute that the manufacturing unit of the assessee is eligible for deduction u/s 80-IC of the Act. However, there seems to be some confusion as to whether the aforesaid expenditure towards the purchase of capital assets were incurred in such manufacturing division or not. - Matter restored back to AO - The ld. AO is directed to give a clear finding in this regard as to whether it pertains to eligible unit or not and decide the issue.

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• Customs

• 2023 (11) TMI 579
  Monetary amount involved in the appeal - low tax effect - it is submitted that in view of the circular dated 02.11.2023 issued by Ministry of Finance, Department of Revenue Central Board of Indirect Taxes Customs, the monetary limit for matters before the Supreme Court has been raised to Rs.2 Crores even in the cases pertaining to indirect taxes and customs. HELD THAT:- The appeal stands dismissed on account of the reason owing to law tax effect.

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• 2023 (11) TMI 578
  Classification of export goods - Ilmenite upgraded (processed) - to be classified under Tariff Item 2614 00 20 (as beneficiated/processed Ilmenite) or under Customs Tariff Act 2614 00 10 (as unprocessed Ilmenite)? - it was held by CESTAT Chennai that the goods which are upgraded/processed Ilmenite are classifiable under 2614 00 20. HELD THAT:- There are no merit in this appeal - The Civil Appeal stands dismissed.

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• 2023 (11) TMI 577
  Permission for clearance of consignment for re-export on the entire costs which will be borne by the Petitioner - direction to issue Detention and Demurrage Waiver Certificate in respect of consignment covered. The Petitioner submitted that it has made a representation on 4th September 2023 to Respondent Nos.2 and 3 for considering the request to re-export of the goods which were wrongly sent to India. The said request is pending as of today in spite of various reminders by the Petitioner. The Petitioner further submitted that the present petition can also be treated as representation in addition to the letter dated 4th September 2023 and suitable directions be given to the Respondents to decide the same. HELD THAT:- The Respondents are represented here and they have no objection to the prayer made by the Petitioner. Present petition and letter dated 4th September 2023 be treated as representation by the Petitioner to Respondent No.3 on the issues as raised by the Petitioner - Speaking order to be passed after hearing the petitioner. Petition disposed off.

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• 2023 (11) TMI 576
  Legality of Auction Notices - sale of goods on an alleged High Sea transaction to Respondent No.7 contrary to the terms and conditions of contract between the Petitioner and Respondent No.5. The Petitioner contends that the representation dated 16th March, 2023 has not been decided by the Respondent No.3 and therefore, suitable directions be issued to Respondent No.3 to decide the same. The Petitioner has further submitted that in addition to the representation dated 16th March 2023, the present petition may also be treated as additional representation objecting to the aforesaid IGM. HELD THAT:- All the Respondents are represented before this Court and have no objection to the aforesaid limited prayer as made by the Petitioner being granted. Respondent No.3 would treat the present Writ Petition along with letter dated 16th March 2023 as representation of the Petitioner on the issue in question - Petition disposed off.

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• 2023 (11) TMI 575
  Entitlement for amendment in the shipping bill - HELD THAT:- In light of this advisory, if the petitioner makes an application to the competent authority for seeking the amendment of Shipping Bills, the portals shall accept such amendment in light of the aforesaid advisory and grant the rewards that the petitioner would otherwise be eligible under the Scheme. Petition allowed.

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• 2023 (11) TMI 574
  Eligibility for benefit under DFIA Scheme as per Notification No. 25/2023-Cus dated 01.04.2023 - import of Extra Virgin Olive Oil Denial of exemption on the ground that in terms of Para 4.12 of FTP (2015-20) 2023 only input together with quantity which has been used in manufacturing the export product shall be allowed for import of DFIA - It further stated that there is no evidence to show that Extra Virgin Olive Oil is used in Export goods. HELD THAT:- The appellant has relied upon two technical opinions of IIT, Kharagpur. The one opinion dated 23.02.2023 confirms that Olive Oil can be considered for usage in edible purpose like cooking, in salads and in the preservation of food like specific pickle items , the other opinion dated 05.09.2023 inter alia confirms that It may be seen from the above referred list of edible vegetable oils the consumers are free to choose the fats and oils as per easy availability and affordability for the consumption in food as well as baked products such as biscuits/cookies/crackers and savoury items. In view of the potential health benefits of different olive oils on account of its composition as the richest source of monosaturated vegetable oil alongwith its minor constituents like polyphenols and tocopherols . In the face of the aforesaid technical opinions and facts as recorded, it is found that the imported goods viz., Extra Virgin Olive Oil is fully covered by the Transferable DFIA s produced by the appellant. On a conjoint reading of Para 4.12 (i) and 4.12 (ii) and para 4.29 of the FTP(2023) as specified in Custom Notification No. 25/2023-Cus dated 01.04.2023, it reveals that it is only in respect of inputs specified in para 4.29 that the material permitted in the authorization shall be of the same quality and technical characteristics and specifications as the materials used in the resultant product are permitted for import - neither the imported goods viz., Olive oil nor Salad oil/Vegetable Oil are specified as sensitive input under Para 4.29 of FTP. Therefore as per Board Circular No. 46 of 2007 and DGFT Policy Circular No. 50 of 2008, no correlation is required to be established for technical specification, quality and characteristics of inputs used in export goods and imported goods. The appellant is entitled to claim exemption from Basic Customs Duty under Notification No. 25/2023-Cus dated 01.04.2023 for their import of Extra Virgin Olive oil under the Transferable DFIA s against Export of Vegetable Pickles and Biscuits. As regards the revalidation of DFIA s in question, we direct the lower authorities to issue a certificate in terms of Para 2.20 (c ) of Hand book confirming the period of dispute , in case such a request is made by the appellant. Appeal allowed.

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• 2023 (11) TMI 573
  Gross Undervaluation - meaning of value and transaction value - order is challenged on the ground that provisional assessment is in itself is an evidence that Appellants had not voluntarily accepted the value @Rs 1799/- per piece - HELD THAT:- Section 14(1) is a deeming provision as it talks of deemed value of such goods. Therefore, normally, the Assessing Officer is supposed to act on the basis of price which is actually paid and treat the same as assessable value/transaction value of the goods. This, ordinarily, is the course of action which needs to be followed by the Assessing Officer. This principle of arriving at transaction value to be the assessable value applies. That is also the effect of Rule 3(1) and Rule 4(1) of the Customs Valuation Rules. The authority is thus bound to accept price actually paid or payable for goods as the transaction value - In order to invoke such a provision it is incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected; to establish that the price is not the sole consideration; and to give the reasons supported by material on the basis of which the Assessing Officer arrives at his own assessable value. In COMMISSIONER OF CUSTOMS, CALCUTTA VERSUS SOUTH INDIA TELEVISION (P) LTD. [ 2007 (7) TMI 9 - SUPREME COURT] , the Court explained as to how the value is derived from the price and under what circumstances the deemed value mentioned in Section 14(1) can be departed with and held that Once the Department discharges the burden of proof to the above extent by producing evidence of contemporaneous imports at higher price, the onus shifts to the importer to establish that the invoice relied on by him is valid. Therefore, the charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. It is found that the Assessing Officer was having a valid and enough evidence for rejection of the transaction value as declared by the appellant in their bill of entry by resorting to Rule 3 (4) of the Customs Valuation Rules, 2007. Since the value of identical and similar goods at the contemporary import time was also could not be ascertained, we feel that the resorting the valuation under Rule 7 of the Customs Valuation Rules by the Department is legally sustainable in the facts and circumstances of this case - it is also observed that in the present case also there is sufficient admission of the authorized representative of the appellants for the value of contemporaneous import of similar goods shown by the department. There is no infirmity in the order-in-original under challenge - Appeal dismissed.

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• 2023 (11) TMI 572
  Principles of natural justice - ex-parte order - Levy of Customs Duty - raw material used and contained in the excess shrinkage and waste generated in the manufacture of excisable goods in the appellant s EOU - HELD THAT:- The impugned order was passed ex-parte. From the observation made by the Adjudicating authority in the impugned order, it is clear that the appellant have neither availed the hearing given on various dates nor even filed the reply. It was also noted that the company was closed and all the hearing notices were returned. Now it is found that since the appellant are before us by filing the appeals and also effectively made present on the date of hearing and argued their case, through their Advocates the appellant are very much in contact. Accordingly, one opportunity can be given to the appellant to present their case before the Adjudicating authority. The matter remanded to the Adjudicating Authority for passing a fresh order after allowing the personal hearing and for filing reply/ submission to the appellant - appeal allowed by way of remand.

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• 2023 (11) TMI 571
  Valuation of imported goods as per PLATTS rate - variation up to 10% form PLATTS rate would be considered with the prior written approval of the jurisdictional Additional/ Joint Commissioner - HELD THAT:- The standing order No. 15/2012 dated 10.09.2012 provided for valuation of 10% from PLATTS rate in a case where the plastic products were imported form the manufacturer - the 10% variation is provided from that PLATTS rate, if the goods are imported form the manufacturer. In the present case, there is no dispute that the goods were imported form the manufacturer. The contention of the department is that the appellant have not obtained the prior approval of the jurisdictional additional/ joint commissioner. The appellant have admittedly submitted a letter on their letterhead. Even though the said letter was signed by agent since the custom agent is authorized person of the appellant, the letter must be considered as if submitted by the appellant only. Therefore, the said letter submitted by the appellant is a proper compliance of the standing order. Even if the said letter is not considered as proper compliance the prior written approval is only a procedural requirement. If all other conditions are satisfied such as import of the goods from the manufacturer then merely because the procedure of prior written approval cannot come in the way of allowing the 10% variation from the PLATTS rate to arrive at the valuation - the standing order itself is a guideline and not an Act or Rules made under Customs Act. The noncompliance of standing order is only a procedure lapse, for which the substantive benefit of the 10% variation cannot be denied - in the facts of this case the appellant is entitled for the 10% variation from the PLATTS rate to determine the correct value. The impugned order set aside - appeal allowed.

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• 2023 (11) TMI 570
  Scope of Anti Dumping duty when similar goods are not manufactured in India - Exclusion of product colour coated aluminium coils from imposition of anti-dumping duty - modification in the consequential customs notification 6-12-2021 issued by the Central Government to exclude colour coated aluminium coils from imposition of anti-dumping duty retrospectively w.e.f. 6-12-2021 and for refund of the excess/additional duty so collected on the import of colour coated aluminium coils w.e.f. 6-12-2021. HELD THAT:- Anti-dumping duty has been levied on imports of flat rolled products of aluminium originating in or exported from China PR. The appellant is a manufacturer of Aluminium Composite Panel sheets in India, and uses different types of colour coated coils as a raw material to manufacture the finish goods i.e. ACP. Thus, imposition of anti-dumping duty on colour coated coils would work to the prejudice of the appellant. What also needs to be noticed is that in the earlier final findings dated 29-5-2009 relating to safeguard duty investigation in respect of import of aluminium flat rolled products and aluminium foil to India from China PR, which concerned Hindalco also a domestic producer, it was sought to be contended by the interested parties that aluminium colour coated coils are not manufactured by the domestic industry and, therefore, cannot be included in the ambit of product under consideration. It would be seen from the aforesaid final findings recorded by the designated authority that it was not a case set up by Hindalco that it manufactures colour coated coil - In the case of coating by fluorine carbon, the aluminium coil is subjected to fluorine carbon resin, pigment and it is after high temperature roasting and baking that the paint is solidified with dry films with super weather resistance. The inevitable conclusion that follows from the aforesaid discussion is that Hindalco does not manufacture/produce colour coated coil as it has failed to produce any evidence before the designated authority or before the Tribunal to substantiate that it has even the capacity to manufacture/produce colour coated coil, much less produce colour coated coil in commercial volumes. Thus, if the domestic industry does not manufacture/produce colour coated coil, this product would have to be excluded from scope of the product on which anti-dumping duty has been imposed under the customs notification dated 6-12-2021 issued by the Central Government on the basis of the final findings dated 7-9-2021 issued by the designated authority - The customs notification dated 6-12-2021 is, accordingly, modified by excluding the colour coated coil from imposition of anti-dumping duty. Appeal allowed.

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• 2023 (11) TMI 569
  Classification of imported goods - Chromecast with Google TV - to be classified under sub-heading 8517 62 90 of Customs Tariff Act, 1975 - or under Tariff Item 8517 69 60 of the First Schedule to the Customs Tariff Act, 1975? - matter of classification of own similar device is pending decision before Honourable Tribunal, CESTAT - HELD THAT:- In the instant case the principal or primary function of Chromecast with Google TV is not distinctly different from the functionality of Google Chromecast . Hence on this basis Chromecast with Google TV device cannot be treated as an apparatus that is entirely different from Google Chromecast the classification of which is under legal dispute over classification under Customs Tariff Act, 1975. Thus, Chromecast with Google TV cannot be treated as an altogether generically different product qualifying for a different classification under Customs Tariff Act, 1975 - against the claim of the applicant, as declared at Sr. No. 11 of the CAAR-I application, the matter of classification of their own similar device is pending decision before Honourable Tribunal, CESTAT - in view of provisions of Section 28-I of the Customs Act, 1962, it is refrained from passing an order till the matter in dispute has been settled.

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• Insolvency & Bankruptcy

• 2023 (11) TMI 567
  CIRP - Auction of the assets of corporate debtor as per Acquisition Plan - Liquidation - whether the Successful Auction Purchaser can prosecute the avoidance application after approval of the acquisition plan? - Appellant being the suspended Director - HELD THAT:- The Regulation 44A deals with treatment of transaction avoidance which itself contemplates that there can be a position regarding prosecution of avoidance application even after resolution or closure of liquidation process and the manner in which the proceeds, if any, from such proceedings shall be distributed. Regulation 44A relied on by Learned Counsel for the Appellant does not support his submission that avoidance application cannot be pursued by Successful Auction Purchaser. In the present case, the only issue concerning as to whether Successful Auction Purchaser can pursue the avoidance application. The question as to whether the Successful Resolution Applicant can be allowed to prosecute the application came for consideration before this Tribunal in Kapil Wadhawan Vs. Piramal Capital Housing Finance Ltd. Ors. [ 2023 (5) TMI 663 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ]. In the above case also, Successful Resolution Applicant filed an application for substituting its name in place of Administrator/Resolution Professional which was allowed by the Adjudicating Authority. The Suspended Director of the Corporate Debtor had challenged the Order in this Tribunal. This Tribunal after considering the respective submissions, provisions of the Code as well as Regulations and the Judgment of Delhi High Court in TATA Steel BSL Limited Vs. Venus Recruiter Pvt. Ltd. [ 2023 (1) TMI 644 - DELHI HIGH COURT ] held that Any positive monetary recovery received by the Corporate Debtor as a result of orders passed in relation to the Avoidance Transactions hall be distributed, net of costs and expenses (including taxes), to the Financial Creditor pro rata to the extent the Financial Debt for Financial Creditors, provided that, the CoC may in its discretion adopt a different manner of distribution (which may take into account the order of priority amongst Financial Creditors as laid down in Section 53(1) of the Code) and such decision of the CoC shall be accepted by the Successful Resolution Applicant, subject to there being no change in the Total Resolution Amount. The issue as to whether the Successful Auction Purchaser can prosecute the avoidance application in place of Resolution Professional by substituting its name was not subject matter of the issue in the aforesaid case of 63 Moons Technologies Ltd. [ 2022 (1) TMI 1287 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH ] hence on the ground that civil appeal is pending before the Hon ble Supreme Court, hearing of the matter need not be deferred. Thus, no grounds have been made out at the instance of the Appellant to interfere with the order impugned - appeal dismissed.

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• 2023 (11) TMI 566
  Dismissal of Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - committing error in refusing to extend the benefit of Section 14 of the Limitation Act - HELD THAT:- The winding up petition was filed by M/s Oswal Minerals Ltd. in the Bombay High Court. The said proceeding was initiated by third party. The period during which the winding up petition remained pending, cannot come to rescue of the Appellant, nor Section 14, sub-section (2) of the Limitation Act is attracted in the present case. The benefit of Section 14, sub-section (2) of the Limitation Act can be extended when the Applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal and such proceeding is prosecuted in good faith in a court which, form defect of jurisdiction or other cause of a like nature, is unable to entertain it. A winding up petition was filed and thereafter a civil application. Based on that benefit of Section 14 was sought, which was denied as noted above. Present is a case where winding up petition was filed by the third party - Adjudicating Authority has rightly distinguished the judgement of the Hon ble Supreme Court and rightly took the view that the Appellant is not entitled to take the benefit of judgment of the Hon ble Supreme Court in Sesh Nath Singh [ 2021 (3) TMI 1183 - SUPREME COURT] . In the Application, which was filed under Section 7, the Appellant has not brought on record the OTS offer given by the Corporate Debtor and for the first time in the Appeal, the said document has been brought on record. The Corporate Debtor has no opportunity to file a reply to the OTS offer or to make its submission on the said letter - the ends of justice be served in granting opportunity to the Corporate Debtor to file a reply with regard to OTS offer dated 08.07.2021, which is brought on the record in this Appeal. Section 7 Application revived before the Adjudicating Authority and direct the Adjudicating Authority to consider afresh the claim of State Bank of India raised in the Appeal on the strength of One Time Settlement offer dated 08.07.2021, which needs to be decided in accordance with law - The Corporate Debtor is allowed one month s time to file reply, insofar as One Time Settlement offer made by the Appellant is concerned. The Adjudicating Authority may hear the parties and decide Section 7 Application afresh in accordance with law - appeal allowed in part.

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• Service Tax

• 2023 (11) TMI 565
  Abatement of appeal - non-service of SCN - HELD THAT:- It is found from the record that the official liquidator Sh. Sumit Binani was appointed by the NCLT vide order dated 11.01.2018. However, in spite of notice by the Registry, no response has been received. Thus, there are force in the contention of the ld. AR for the Revenue. The Mumbai Bench of this Tribunal in Alok Industries Ltd [ 2022 (10) TMI 801 - CESTAT MUMBAI] in similar circumstances held that the appeal abates. This principle has been followed subsequently by the other benches of this Tribunal. In the result, the appeal abates as per Rule 22 of CESTAT (Procedure) Rules, 1982.

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• 2023 (11) TMI 564
  Abatement of appeal - Initiation of CIRP under IBC - no application for continuance of the proceeding before this Tribunal is filed by the liquidator - CENVAT Credit - outward freight for transportation of goods sold at the factory gate - place of removal - HELD THAT:- The service tax paid on transportation of the goods from the factory gate to the premises of the customer has been taken as credit under Cenvat Credit Rules by the appellant - as per the decision of the Hon ble Apex Court in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT ] and the Board s Circular No. 999/6/2015-CX dated 28/02/2015, Cenvat credit is not available from the place of removal to the place of delivery of the goods. The appellant was declared as insolvent consequent to the proceedings under the Insolvency and Bankruptcy Code, 2016 and a liquidator has been appointed. Hence, a notice was sent to the liquidator intimating the adjourned date of hearing i.e., 08.09.2023. However, the liquidator has not attended the hearing nor sent any communication seeking adjournment. As regards the continuation of the proceeding, in this case, the liquidator has to apply to this Tribunal for continuation of the proceeding with the approval of the Hon ble NCLT - in the present case no such application has been filed by the liquidator for the continuance of the proceedings before this forum and hence the appeal stands abated by the operation of this rule. Hence, when the company is in the process of liquidation under IBC Code, 2016 and a liquidator is appointed, where no application for continuance of the proceeding before this Tribunal is filed by the liquidator, the proceedings before this Tribunal abate. Thus, the appeal abates as per Rule 22 of CESTAT Procedure Rules,1982.

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• 2023 (11) TMI 563
  Refund claim - laying of pipeline for the project of Gujarat Water Supply Sewerage Board (GWSSB) - taxable under Industrial or Commercial Construction Service or not - HELD THAT:- As per the fact the appellant have provided the service of laying of pipeline for the project of Gujarat Water Supply Sewerage Board (GWSSB). The laying of pipeline for the government cannot be considered as Industrial or Commercial Construction Service. This issue has been considered in the various judgments - In the case of THE COMMISSIONER OF CGST AND CENTRAL EXCISE, SURAT VERSUS M/S BMS PROJECTS PRIVATE LTD. [ 2017 (9) TMI 1386 - GUJARAT HIGH COURT] the Hon,ble Gujarat High Court has held that The usage charges recovered by the Board from Gram Panchayats, Nagar Palikas and Nagar Panchayats are at highly subsidized rates and therefore, cannot be considered as an industry in the sense that the said word is used in the definition of taxable entry. The Board was sustaining on the grants released by the State Government. It was therefore concluded that the pipelines were not laid to facilitate any commercial or industrial activity. Thus, it is settled that service of laying of pipeline for Gujarat Water Supply Sewerage Board (GWSSB) is not falling under the service of industrial or commercial construction service. In the present case also since the appellant is not liable to pay the service tax they are legally entitled for the refund of service tax already paid - there are no infirmity in the order of the Commissioner (Appeal) - appeal of Revenue dismissed.

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• 2023 (11) TMI 562
  Non-imposition of penalty u/s 78 of FA - Non-payment of service tax - transportation services - cargo handling services - HELD THAT:- No case is made out of deliberate breach of the provisions of service tax and the Rules thereunder. Further, the appellant is engaged in the business of transportation and cargo handling services as a sole proprietor and located in the district of Chhindwara, which is a backward place of Madhya Pradesh. Further, admittedly, the appellant have deposited the tax prior to issue of show cause notice. The appellant is entitled to benefit of Section 80 of the Finance Act - Penalty u/s 78 set aside - appeal allowed.

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• 2023 (11) TMI 561
  Export of service - intermediary services - place of provision of services - Rule 6A of the Service Tax Rules, 1994 - HELD THAT:- The agreement dated 01.10.2011 entered into between the appellant and its parent company located abroad. The said agreement has provided that the appellant should cater to the requirements such as making customer relations, customer visits, developing relationship with customers, obtaining market intelligence about products, identify potential opportunities for new business etc. for and on behalf of the parent company. On reading of the clauses in the agreement, it transpires that the appellant s scope of work is confined to promoting the parent company in India by way of providing marketing, administrative, technical support services. It is an admitted fact on record that the appellant has not facilitated or assisted the parent company in connection with supply of goods or services. Further, there was no contractual obligation on part of the appellant to ensure the participation of the appellant to provide services or goods between the overseas parent company and any other defined party /customer. Therefore, in the absence of necessary pre-requisites of facilitating actual supply of goods or services between two or more identifiable persons, the transaction made by the appellant should not qualify as an intermediary service, rather, the services rendered by the appellant qualify as business and marketing support service. In the present case, none of the ingredients, itemized in the definition of intermediary service are fulfilled by appellant, inasmuch as it is not a facilitator between the parent company and its customers located in India with regard to either supply of goods or provision of service. The conditions prescribed under sub-rule (1) of Rule 6A of the Service Tax Rules, 1994 have been duly fulfilled by the appellant inasmuch as the service recipient was located outside India, the payment towards provision of service has been received in convertible foreign exchange. Thus, the place of provision of service in this case would be governed by Rule 3 of Place of Provision of Services Rules, 2012. In absence of any documentary evidence that the appellant had acted as an intermediary between the overseas entity and its Indian customer and that the location of the service receiver is in Germany, the transaction in our considered view, should appropriately be considered as the export of service. There are no merits in the impugned order, insofar as it has upheld confirmation of the adjudged demands on the appellants - appeal allowed.

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• Central Excise

• 2023 (11) TMI 560
  Non-payment of Interest and penalty - by an interim order, while issuing notice in the appeal, this Court had granted an order of stay with regard to payment of penalty - HELD THAT:- This Court by interim order dated 26.03.2010 had granted stay of payment of penalty and also the fact that the issues which arise in this appeal were a subject matter of controversy up to this Court and thereafter settled in the case of COMMISSIONER OF CENTRAL EXCISE, INDORE VERSUS M/S GRASIM INDUSTRIES LTD. THROUGH ITS SECRETARY [ 2018 (5) TMI 915 - SUPREME COURT] and also the fact that the sum of Rs.69,650/- only has also been paid by way of duty by the appellant herein and what remains is a sum of Rs.82,955/- being the interest amount to be paid, we set aside the order imposing penalty in the instant case. The appellant is directed to pay the interest calculated up to date of deposit being Rs.82,955/- to the respondent-department. The said amount shall be paid within a period of three months from the date of this Order. The said time frame has been given having regard to the fact that learned counsel for the appellant submitted that the appellant-company may have been dissolved or in the process of dissolution and therefore, some time may be granted to pay the aforesaid sum. Appeal allowed in part.

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• 2023 (11) TMI 559
  Short payment of duty - division of total value of Modem viz. value of hardware and value of software - it is alleged that such bifurcation of value is with intention to evade payment of duty as the software was invoiced as software for PC - HELD THAT:- The learned Commissioner (A) has held held that The above fact of not including the value of software in the assessable value in the impugned two months was kept under wraps till they paid duty for the said clearances only on 20.07.2004. Here the facts to be noted are the appellants had adopted the above practice only for a short period which was discontinued on their own obviously on the premise that the practice is wrong. However, the duty for the impugned period was paid much after. No contrary evidence has been placed by the appellant to rebut the aforesaid findings of the learned Commissioner (A). Also, there are no merit in the pleading of the learned advocate for the appellant that harbouring a bona fide belief, on the basis of the judgment in the case of PSI DATA SYSTEMS LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 1996 (12) TMI 47 - SUPREME COURT] the appellant had split the value of Modem into Hardware and software. The evidence on record is otherwise. Even though the purchase orders by the customers were for the total value of the Modem, and the software is embedded to the Modem being indispensable, it is the appellant who has knowingly split the value of modem artificially as value of Hardware and value of Software so as to evade payment of duty. There are no merit in the contention of the learned advocate for the appellant that the Appellant were under a bonafide belief in declaring the value of software separately. Appeal dismissed.

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• 2023 (11) TMI 558
  Quantum of penalty - it is claimed that penalty equivalent to the duty confirmed under Section 11AC of the Central Excise Act should be imposed - HELD THAT:- The duty has been confirmed against appellant by invoking the proviso to Section 11A (1) of the Central Excise Act,1944 and respondent has been held liable for penalty under Section 11 AC for the duty confirmed at both the premises i.e the registered premises of M/s Harsh Trader, 165, Deep nagar, RDSO, Manak Nagar Lucknow and unregistered premises at Little Care Public School, Behind RDSO, Gurudwara, Surya Nagar, Lucknow. However while imposing the penalty under Section 11 AC penalty has been imposed only in respect of the duty confirmed at the registered premises of M/s Harsh Trader, 165, Deep nagar, RDSO, Manak Nagar Lucknow. It is a settled law that in a case where demand has been confirmed invoking extended period of limitation penalty equivalent to duty evaded needs to be imposed and there is no discretion to any authority as held by the Hon ble Supreme Court in the case of UNION OF INDIA VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS AND COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VERSUS M/S. LANCO INDUSTRIES LTD. [ 2009 (5) TMI 15 - SUPREME COURT] . The appeal of the Revenue is having merits and needs to be allowed - Appeal filed by the Revenue is allowed.

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• 2023 (11) TMI 557
  Recovery of duty alongwith interest and penalty - correctness of denial of exemption under notification no. 10/1997-CE dated 1st March 1997 (at serial no. 2) on cables supplied - HELD THAT:- It would appear that the denial of the exemption was consequent to the finding that the goods supplied by the appellant, viz., cables are not scientific or technical instruments , apparatus or accessories or parts or consumables which alone are eligible. The end-use by institution otherwise eligible as well as the validity of the certification produced for compliance with the said notification, have not been disputed in the impugned order. The eligibility of cables for the benefit of notification has been decided by the Tribunal in Cable Corporation of India Ltd [ 2020 (2) TMI 3 - CESTAT MUMBAI] holding that the appellants are eligible to avail the notifications 10/97 and 6/2006 in view of the certificates issued by the competent authority. Having held that the appellants are eligible for the exemption claim, on merits we are not going into the other issues like limitations etc. As the issue stands squarely covered, the impugned order set aside - appeal allowed.

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• 2023 (11) TMI 555
  Levy of Excise Duty - footwear items falling under Chapter 64 from various vendors were sold after affixing their brand name Fab India without payment of duty - levy of service tax on the penalty amount. Whether the activity conducted by the assessee was chargeable to Central Excise duty? - HELD THAT:- The law on the issue is well settled that excise duty is on the manufacture of goods and the liability to pay is on the manufacturer. In terms of the definition of manufacture as provided in section 2 (f) of the Act, a person who undertakes any of the activities specified therein is a manufacturer and as interpreted, a job worker engaged in any of the said activities is liable to pay duty on the goods manufactured by him unless exempted. Consequently, by virtue of the Notification No 214/86 dated 15.3.1986, the liability of the job worker to pay excise duty is passed on to the principal manufacturer subject to the condition that the principal manufacturer gives a declaration/ undertaking to pay the duty. The authorities below have erred in observing that in terms of the definition of manufacture under section 2 (f)(iii) of Central Excise Act, the appellant appears to be involved in deemed manufacture and thereby liable to pay excise duty - reference made to the decision of the Larger Bench of this Tribunal in MAYO INDIA LTD. VERSUS COMMISSIONER OF C. EX., AURANGABAD [ 1999 (3) TMI 636 - CEGAT NEW DELHI] , where the appellant entered into agreement for manufacture of medicine as per their specifications, requirement and bearing their trademark and brand name for which they supplied the raw material. The learned Counsel for the appellant has alternatively relied on the Notification No. 214/86-CE dated 25.3.1986 to say that incidental activity of manufacture carried out by vendors on behalf of the appellant was as job workers then the liability has to be on the job worker and the appellant cannot be made liable to pay the duty - it is felt that no reliance can be placed on the notification since the raw material supplied by the appellant was not under the provisions of the notification. Whether the penalties recovered by the assessee from the vendors were chargeable to service tax? - HELD THAT:- A perusal of the contents of the agreement executed by the appellant with their vendors does not show that the agreement is for providing any services for which any consideration has to be paid and as noticed in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI] the contract may provide for penalty provisions for breach of the terms of the contract but that would not make the same consideration for a contract as has been noted, that there is a mark distinction between condition of a contract and consideration for a contract - The present case is squarely covered by the aforesaid decisions of the Tribunal and in that view no liability of Service Tax under Section 66E(e) can be fastened on the appellant. The learned Counsel for the appellant has referred to Circular No. 178/10/2022-GST dated 3.08.2022 whereby it has been clarified that any penalty or compensation received for any loss or damage caused by breach or non performance of the terms of the contract is not by way of consideration for any independent activity rather the same is in the course of performance of the contract, hence not taxable under the GST regime including the erstwhile serves tax regime - The controversy for levy of service tax on the penalty amount received by the appellant gets resolved in favour of the appellant also by virtue of the said Circular. The impugned order set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (11) TMI 556
  Demand to deposit 10% of the balance tax demanded for the years, 2014-15 2015-16 - validity of Ext. P6 conditional order - HELD THAT:- It is evident from a bare perusal of first proviso to sub-section (1A) of Section 60 of the KVAT Act that the pre-deposit amount, if any, already remitted under Section 55, (ie; at the time of filing of the first appeal), shall be adjusted towards the amount to be remitted under the sub-section. Since the petitioner had submitted that he had already remitted 20% of the amount demanded during the filing of first appeal, he has to be exempted from paying any further amount. Hence, we are of the considered opinion that the Original Petition (TAX) is to be allowed. The condition imposed by the third respondent in Ext. P6 to deposit 10% of the balance tax demand for both the years is set aside, if the petitioner had already remitted the amount under section 55 of the KVAT Act - Petition disposed off.

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• 2023 (11) TMI 554
  Validity of order beyond the scope of Show cause notice - Statutory time limit for filing of appeal already expired - No reply filed to the SCN - the issue regarding processing charges liable for TDS under Section 13(1) of the Act, not raised in SCN, but is included in the impugned order - violation of principles of natural justice - HELD THAT:- If a notice was issued with regard to any aspect, the same has to be answered by the Assessee and it is for the Department to raise all the issues or queries by virtue of a show cause notice or by any other form and sought for the reply of the Assessee. However, in the present case, the Department had brought up the aforesaid issue of a sum of Rs. 76,62,986/- towards processing charges which liable for TDS, only in the impugned order and the same was not at all raised in the show cause notices. Thus, the said impugned order is not in accordance with law. Though the impugned order was passed on 10.05.2022 and the time limit to file the appeal was also expired at the time of filing this petition, this Court feels that the respondents had committed a serious error in its decision making process while dealing with the issue pertaining to a sum of Rs. 76,62,986/- towards the processing charges liable to TDS and impugned order is not sustainable and the same is liable to be set aside. Thus, this Court is inclined to set aside the impugned order dated 10.05.2022 and remit the matter back to the respondent for re-consideration. Petition disposed off.

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• 2023 (11) TMI 553
  Constitutional validity of levy of entry tax - power of the state legislature - Article 304(a) of the Constitution - non-obstante clause - interpretation - concept of compensatory tax - HELD THAT:- This appeal is dismissed in view of the majority judgment passed in JINDAL STAINLESS LTD. AND ANR. VERSUS STATE OF HARYANA AND ORS. [ 2016 (11) TMI 545 - SUPREME COURT] by taking note of the fact that notice in this appeal was limited only to the question of levy of entry tax and no other issue is to be considered in the appeal. Application disposed off.

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• Indian Laws

• 2023 (11) TMI 568
  Dishonour of Cheque - acquittal of the accused - cheque issued towards legally enforceable debt - Whether the judgment of acquittal passed by the trial Court is perverse and arbitrary so as to call for any interference by this Court? - HELD THAT:- In the instant case, the accused has raised a defence of financial capacity. No doubt, accused has not raised this defence by replying to the notice. However, in TEDHI SINGH VERSUS NARAYAN DASS MAHANT [ 2022 (3) TMI 797 - SUPREME COURT] , the Hon ble Apex Court has clearly observed that the accused inspite of non-issuance of reply notice can raise a defence of financial status by leading cogent evidence, on the basis of cross-examination of complainant or pleadings made in the complaint itself. In the instant case, the complainant nowhere asserted that she mobilized such a huge amount of Rs. 1,50,000/- in 2007. As rightly observed by the trial Court she has not even examined her husband to prove the financial status of her husband or the financial assistance made by her husband. Further, accused is not required to prove his defence on the same standard as that of complainant by proving the same beyond all reasonable doubt. He can prove his defence only on the basis of the preponderance of probability. The view taken by the learned Magistrate in view of challenging the financial status of the complainant is a possible view and in view of the full bench decision of Apex Court in M/S. KALAMANI TEX ANR VERSUS P. BALASUBRAMANIAN [ 2021 (2) TMI 505 - SUPREME COURT] case the view taken by the learned Magistrate cannot be disturbed. Further, when two conclusions are possible, the view favourable to the accused shall prevail. The point under consideration is answered in the negative - the appeal being devoid of any merits, does not survive for consideration - Appeal dismissed.

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