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TMI Tax Updates - e-Newsletter November 29, 2023 Case Laws in this Newsletter: GST Income Tax Customs PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles Section 206C of the Income Tax Act, 1961 High Court disposes 245 writ petitions by remanding the matter to Appellate Authority under Amnesty Scheme The saga of “Voluntary Payment” in GST: DRC-03 Recommendations of the 52nd GST Council can be considered for the computing Time Limit for filing an Appeal News Indian Institute of Corporate Affairs (IICA) concludes two-day familiarisation programme for Independent Directors to bolster corporate governance in India Notifications Customs 86/2023 - dated 28-11-2023 - Cus (NT) Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver GST - States 38/1/2017-Fin(R&C)(18/2023-Rate)/3748 - dated 18-10-2023 - Goa SGST Amendment in Notification No. 38/1/2017-Fin(R&C)(2/2017-Rate), dated the 30th June, 2017 20/2023-State Tax (Rate) - dated 23-11-2023 - Maharashtra SGST Amendment in Notification No.05/2017-State Tax (Rate) 19/2023-State Tax (Rate) - dated 23-11-2023 - Maharashtra SGST Amendment in Notification No.04/2017-State Tax (Rate) 18/2023-State Tax (Rate) - dated 23-11-2023 - Maharashtra SGST Amendment in Notification No.02/2017-State Tax (Rate) 15/2023-State Tax(Rate) - dated 3-11-2023 - Mizoram SGST Amendment in Notification No. 15/2017-State Tax (Rate), dated the 7th July, 2017 14/2023-State Tax(Rate) - dated 3-11-2023 - Mizoram SGST Amendment in Notification No. 13/2017-State Tax (Rate), dated the 7th July, 2017 13/2023-State Tax (Rate) - dated 3-11-2023 - Mizoram SGST Amendment in Notification No. 12/2017-State Tax (Rate), dated the 7th July, 2017 G.O. Ms. No. 46 - dated 14-11-2023 - Puducherry SGST Puducherry Goods and Services Tax (Fourth Amendment) Rules, 2023 F.12(11)FD/Tax/2023-Pt-I-62 - dated 9-11-2023 - Rajasthan SGST Seeks to notify a special procedure for condonation of delay in filing of appeals against demand orders passed until 31st March, 2023 G.O.Ms.No. 121 - dated 15-11-2023 - Tamil Nadu SGST Amendment in Notification No. II(2)/CTR/532(d-15)/2017 dated 29th June, 2017 G.O.Ms.No. 120 - dated 15-11-2023 - Tamil Nadu SGST Amendment in Notification No. II(2)/CTR/532(d-14)/2017 dated 29th June, 2017 Circulars / Instructions / Orders Customs Public Notice No. 101 /2023 - dated 9-11-2023 M/s TG Terminals Private Limited, located at Village: Veshvi, Post: Dighode, Tal: Uran, District: Raigad, Maharashtra - 410 206, was appointed as “Custodian” under Section 45 of the Customs Act, 1962 and also approved as “Customs Cargo Service Provider” under rule 10 of the Handling of Cargo in Customs Areas Regulations, 2009 vide CFS Notification No.05/2016 dated 01.09.2016 for an area admeasuring 60,650 SQM. Public Notice No. 100 /2023 - dated 7-11-2023 Amnesty Scheme for One Time Settlement of Default in Export Obligation by Advance Authorization and EPCG license Holders-reg. Highlights / Catch Notes GST Refund of accumulated Input Tax Credit (ITC) - Turnover of Zero-rated supplies - mistake in submission of documents through common portal while filing applications in form GST RFD -01 - GST officer observed that, Shipping bills were not signed by appropriate authorities or obtained sanctioned from higher official as such those shipping bills cannot be accepted as “valid proof of export - Matter restored back to reconsider the matter afresh - HC Visit to Get Source Refund of unutilized Input Tax Credit (ITC) - zero-rated supply - Clubbing of invoices - The clubbing or taking into account of this particular bill was without authority of law. Even if a portion of the claim was rejected, the simultaneous recovery was impermissible. - HC Visit to Get Source Income Tax Compounding of offences - period of limitation - Validity of period of 12 months from the date of launching of prosecution - the CBDT is not empowered to fix the time limit for filing the application for compounding of offences, which is contrary to the provisions of Section 279(2) of the IT Act - HC Visit to Get Source Validity of Reopening of assessment - not charging interest @ 12% on the loans advances - Only because the assessee company did not charge the advance made to the other loans and advances, such Assessing Officer even otherwise could not have made the notional addition on the basis of the income accrued in the regular course of assessment and such on the basis of the principle of real income. - Notice for reopening quashed - HC Visit to Get Source Exemption u/s 11 - charging of guarantee fees for services by the assessee trust - the impugned findings returned by the Ld. CIT(A) that “since the assessee is charging guarantee fee on substantial scale, it is not carrying out any charitable activities, hence not entitled for benefit of section 11 & 12 of the Act”, are not sustainable, hence set aside. - AT Visit to Get Source Appealable Orders before the Appellate Tribunal - As an order passed by a Commissioner u/s 119(2)(b) of the Act does not find any mention in the list of orders that are appealable before the Appellate Tribunal, therefore, we are constrained to observe that the present appeal filed by the assessee is not maintainable before us. - AT Visit to Get Source Validity of reopening of assessment - ‘reason to believe’ v/s 'reason to suspect' - allegation of issue of shares on premium to paper companies - Since AO has not carried out even the preliminary enquiry after taking note of assessee collecting share capital with premium, the AO cannot be said to be possessing the requisite reason to believe, escapement of income. - AT Visit to Get Source Income taxable in India - Royalty receipts - benefit of DTAA - non-resident corporate entity - the amount received by the assessee towards reimbursement of cost of software is not taxable as royalty income under the treaty provisions. - AT Visit to Get Source Setoff / adjustment of interest expenditure with interest received from partnership firm - There is direct link with the loan creditors and the capital introduced in the partnership firm. Therefore, it establishes that the funds borrowed by the assessee is directly introduced in the partnership firm. - AT Visit to Get Source Treatment to income surrendered during survey on account of excess stock - business income or unexplained stock u/s 69B r.w.s.115BBE - the value of article/stock of the impugned investment was being fully disclosed in the books of account, being regularized by way of surrender of business income as accepted by the AO, would certainly not fall in the mischief of section 69B. - AT Visit to Get Source Exemption u/s 11 - rejection of registration u/s 12AA as applicant trust has been formed to implement the CSR activities and not amenable to public charity - in the present case the Ld. CIT(E) has neither pointed out any defect in the objects of the trust nor doubted the activities carried out to achieve these objects, and therefore, the application for registration cannot be rejected - AT Visit to Get Source Unexplained investment for purchase of land - Assessee contended that the investment has been made by him out of the disclosure made by the partnership firm which has already suffered to tax - Revenue could not prove the contrary - Additions deleted - AT Visit to Get Source Addition u/s. 69A - income surrendered during survey - undisclosed business income or income from other sources - What has been found during survey is excess stock of the business of the assessee. The assesses case, in fact, we find on a better footing since the assessee has disclosed investment made by way of purchases for the excess stock not only in its business books of accounts but also in the VAT return filed to the VAT authorities. - CIT(A) has rightly treated the same as being derived from the undisclosed business income - AT Visit to Get Source Customs Refund of the value of the goods that were seized and confiscated - Auction of goods by the Customs Department - the order of seizure were set aside - petitioner claims for a refund of the complete value of the goods and not the value as per the auction - Petitioner directed to pursue the matter first to decide the correct value that is to be claimed - HC Visit to Get Source Levy of ADD - import of horizonal plastic injection moulding machines in the guise of “parts and components” - The process involved for completion of the manufactured goods since, have taken place post importation of the goods in question, the provisions of Rule 2(a) of GIR shall not be applicable for change in classification of the imported goods and to bring such goods under the purview of Rule 9A ibid, for the purpose of levy of ADD thereon. - AT Visit to Get Source Indian Laws Dishonour of Cheque - Oreder of conviction and sentence of accused - insufficient funds - Neither at the time of handing over the cheques nor at the time of seizure nor at the time when the payments became due under the cheque, the petitioner had the sufficient amount in his account. It is not the defence of the petitioner that he wanted to make arrangement with his bank so as to honour the cheques. - Revision petition dismissed - HC Visit to Get Source Service Tax Extended period of limitation - In this era of self-assessment, the facts would not have been revealed had investigations into the appellants’ activities not been initiated by the officers of DGCEI. The issue relating to the suppression of facts is dependent on the facts of each case. This being so the extended period for issue of SCN has rightly been invoked under the proviso to sub-section (1) of section 73 of FA 1994. - AT Visit to Get Source Refund of service tax paid - SEZ Units - Failure to fulfill the conditions of exemption notification - the exemption notifications issued under the Finance Act, 1994 are redundant because service tax was already exempted by the Parliament by section 26 of the SEZ Act. Any conditions in such notifications are also, therefore, irrelevant and need not be fulfilled - AT Visit to Get Source Central Excise Recovery of CENVAT Credit wrongly availed - allegation of non-receipt of material - it is a settled law that where there are tangible documentary evidence in favour of the assesse and even there are overall statements of third party contradicting the documentary evidence, such tangible documentary evidence must be given primacy over the overall statements. - AT Visit to Get Source Invocation of Extended period of Limitation - Even if there was any additional duty payable by the appellant, the same would be admissible as CENVAT credit to its own Raigarh unit. Such CENVAT credit would have been utilized by the Raigarh unit for payment of central excise duty at its end. Therefore, the entire exercise of demanding any further excise duty would be revenue neutral. - Demand set aside - AT Visit to Get Source VAT Recovery of tax dues of the partnership firm from the retired Partner - it is apparent that the Department could not have proceeded against the appellant for realisation of the tax dues of the firm for the assessment year falling after the date of retirement - HC Visit to Get Source Case Laws: GST 2023 (11) TMI 1113 Refund of accumulated Input Tax Credit (ITC) - Turnover of Zero-rated supplies - mistake in submission of documents through common portal while filing applications in form GST RFD -01 - GST officer observed that, Shipping bills were not signed by appropriate authorities or obtained sanctioned from higher official as such those shipping bills cannot be accepted as valid proof of export - HELD THAT:- The applicant has uploaded the documents which are required by the Circular. Only mistake was made by the petitioner is that he had uploaded the quadruplicate copy of the shipping bills which was countersigned by the Inspector of Customs. Subsequently, when it came to know about the anomalies, the petitioner has submitted the triplicate copy which was countersigned by the Superintendent of Customs before the Authority for consideration but without considering the same the respondent no. 2, has filed the appeal against the sanctioned order of refund issued by the adjudicating officer without verifying the said shipping bills from the Customs Department. Appellate authority has also not considered all these aspects while coming to a final conclusion - Accordingly, judgement and order dated 12.12.2022 passed by the Appellate Authority under Section 107 (2) of the GST Act is hereby set aside. Respondent No. 4 is directed to reconsider the issue after thorough scrutiny of documents and verification of shipping bills submitted by the writ petitioner and shall take afresh decision within four months from this date after consulting with all other relevant departments concerned. Respondent No. 4 shall also give an opportunity being heard to the petitioner or his authorized representatives. No coercive action shall be taken against the writ petitioner by the respondents concerned till the final decision. Petition disposed off by way of remand. 2023 (11) TMI 1112 Refund of unutilized Input Tax Credit (ITC) - zero-rated supply - Clubbing of invoices - HELD THAT:- Admittedly the refund claim was for an aggregate amount of Rs. 10,09,000/-. The refund has been allowed only for Rs. 6,86,121/-. There has also been deduction on account of an invoice being no. EXP/2021-22/005 for Rs. 4,76,626/- - In such view of the matter the Appellate Authority in clubbing the refund claim of the petitioner with the invoice no. EXP/2021-22/005 dated 28 February, 2022 and in passing the impugned order has acted contrary to law. The clubbing or taking into account of this particular bill was without authority of law. Even if a portion of the claim was rejected, the simultaneous recovery was impermissible. The portion of the order whereby Output Tax Invoice no. EXP/2021- 22/005 for Rs. 4,67,626/- has been denied and simultaneously recovered and/or adjusted is set aside - matter is remanded back to the Appellate Authority to consider the claim only in respect of the aforesaid amount of Rs. 4,76,626/- in accordance with law and positively within a period of eight weeks from the date of communication of this order. Petition allowed by way of remand. Income Tax 2023 (11) TMI 1114 Power of the appellate authority to allow the claim of deduction which was not claimed in the return of income - whether AO erred in not allowing the deduction u/s 24(b), 80C and 80D merely for the reason of clerical error in the return of income? - revenue cannot take advantage of mistake/ignorance of the assessee by placing reference to the Circular No. 14 of 1955 dated 11.04.1955 issued by the CBDT in which stated that the officers of the department must not take advantage of the ignorance of the assessee about his rights and it is their duty to assist the tax payer in every reasonable way particularly in the matter of claiming and securing relief - HELD THAT:- Since the assessee has failed to claim sum for interest of housing loan u/s 24(b), u/s 80C and u/s 80D respectively and the assessee in order to substantiate its claim placed before the ld. CIT(A) as well as before the Tribunal. The copy of Form No.16 showing of deduction u/s 24(b), 80C and 80D respectively, certificate from Axiz Bank in support of payment of interest of housing loan (deduction restricted upto and principal payment of housing loan as per certificate from the bank in support of deduction u/s 24(b) - We, therefore, direct the revenue to allow the claim of assessee as stated above. We respectfully consider the order of Goetz India Ltd, [ 2006 (3) TMI 75 - SUPREME COURT] Here, two issues are formulated, weather the unclaimed deduction can be claim before the assessing authority without filing the revised return and weather the power of the appellate authority can allow the claim of deduction which was not claimed in the return of income. We adjudicate the second issue. In our opinion the appellate authority has coterminous power to accept the deduction which was not claimed in ITR. So, the entire claim u/s 80C is eligible claim of deduction. During the hearing the assessee had submitted all relevant documents which are also considered by the appellate authority. We accept the claim of assessee related to deduction u/s 24(b), 80C 80D of the Act. Accordingly, we set aside the order of the ld CIT(A) with a direction to allow the deduction, claimed by the assessee. Appeal of the assessee is allowed. 2023 (11) TMI 1111 Ceasure of income tax settlement commission - restriction to the filing of the application before the Interim Board for Settlement - by Finance Act, 2021, which was notified on 01.04.2021, the ITSC was abolished and an Interim Board was constituted only to deal with applications pending as of 01.02.2023 - revenue restricted the filing of the application before the Interim Board for Settlement only by the assesses who were eligible to file the application for settlement on 31.01.2021 - case of the Writ Petitioners that their statutory remedy of approaching the ITSC , cannot be taken away retrospectively - as argued Department is entitled to prescribe the last date even beyond the original cut-off date as prescribed by the legislation. Accordingly, when it has extended the last date from 01.02.2021 to 30.09.2021, it can only extend the deadline but cannot introduce a new concept of eligibility as on 01.02.2021 which is not there in the Act itself. Writ of declaration, declaring the amendment to the Income Tax Act in Section 245-A by inserting Sub-Clause (da), (ea) and (eb), 245B, 245BC,245BD, proviso to 245C, 245D, 245DD, 245F, 245G, 245H and insertion of new Section 245AA and 245M by way of Sections 54 to 65, Finance Act, 2021 with retrospective effect from 01.02.2021 as arbitrary, illegal and void and infringing the fundamental rights conferred under Article 14,19(i)(g), 20, 20 (2) and 21 of the Constitution of India, 1950, thus unenforceable and unconstitutional - Scope of circular 28.09.2021 in as much as it restricted the filing of the application before the Interim Board for Settlement only by the assesses who were eligible to file the application for settlement on 31.01.2021. According to the petitioners, they are eligible and their cases are complex in nature and it would be uncertain to pursue the regular remedies and it would be beneficial for them to settle the issue - Whether or not paragraph No.4(i) of the Circular, dated 28.09.2021 is bad in law inasmuch as it imposes a condition of eligibility to file application for settlement as on 31.01.2021 ? HELD THAT:- As considering the fact that the Finance Act, 2021 was retrospective in nature. Those who have had a right to approach ITSC i.e., those who had a case pending against them would have missed the bus in not actually filing the application before the ITSC as the same was retrospectively made inoperative. Only for the said action of filing the application, the circular extend the date by 30.09.2021, even though as per the Act , it was only 01.02.2021. In that context, when paragraph No.4 categorically states that only those assessees who are eligible to file an application for settlement as on 31.01.2021, it cannot be said that it introduces an additional clause of eligibility which is not found in the statute. On the other hand, if only such clause 4(i) is not there, it would render violence to the Finance Act, 2021. Therefore, we are unable to accept the contentions on behalf of the writ petitioners that the circular imposes an additional condition of eligibility which is not there in the statute. Even though there is no specific provision regarding eligibility, the right to approach the ITSC can be exercised so long as the ITSC is operational in law. When ITSC itself has been made inoperative with effect from 01.02.2021, it cannot be said that clause 4(i) of the circular runs counter or imposes an additional condition to the statute. Accordingly, Question No.i is answered. Constitutionality of the impugned enactment is that it is retrospective in nature and that it takes away the vested rights of the petitioners - At the material time, i.e., during the interregnum period of 01.02.2021 upto 31.03.2021, the petitioners had a case within the definition of Section 245A(b). Their applications were very much pending applications as per the definition of 245A(eb). As a matter of fact, their applications were dealt with as per Section 245D and on a perusal of Section 245M, it can be seen that these applications were also to be transferred to the Interim Board to be dealt with in accordance with the procedure laid down to the board. But, however, without amending the definition of case pending applications etc., Section 245C(5) simply provides that no application shall be made under the Section on or after the first day of February, 2021. The right to file application before ITSC is very much existent and has been exercised till 31.03.2021. The retrospective legislation by way of legal fiction attempts to make it as if it is unavailable. When we consider the instant case, the purpose of the retrospective legislation is to make the ITSC inoperative right from the date of the introduction of the Bill and to send all the pending applications to the Interim Board. Therefore, fixing the last date for filing the applications alone travels beyond the purpose and results in more retrospectivity than which is needed and thus, runs counter to the other parts of the Act . As a matter of fact, as per the principle of lex prospicit non respicit (law looks forward not back) it can be seen that the purport of the legislation is only to do away with the policy of resolution through ITSC. As a matter of fact, the Central Government has to make a Scheme for the purposes of Settlement in respect of pending applications by the Interim Board as per Section 245D(11) and such scheme had to be placed before the Parliament. Thus, neither there is any intent nor it is within the purpose to do away with the pending applications in respect of matters in which the cases arose from 01.02.2021 to 31.03.2021. Thus, we find that it is just and necessary to read down the last date mentioned for filing applications in Section 245C(5) as 31.03.2021 and consequently the last date mentioned in paragraph No.4(i) of the Circular should also read as 31.03.2021. The Question No.ii is answered accordingly. Reliefs, the petitioners are entitled - As reading down the statute in respect of the date as 31.03.2021, the petitioners:(i) all the applications in respect of the petitioners even in respect of the cases arising between 01.02.2021 to 31.03.2021 shall be deemed as pending applications for the purposes of consideration by the Interim Board; (ii) Wherever they are rejected on the ground that they did not have a case pending as on 31.01.2021, such orders shall stand set aside and the applications shall be deemed to be pending applications for the consideration by the Interim Board, if otherwise in order and eligible, and shall be dealt with in accordance with law on merits in accordance with the scheme that may be framed by the Central Government as in respect of the other cases which arose prior to 31.01.2021. Order: (i) Section 245C(5) of the Income Tax Act, 1961 (as amended by the Finance Act, 2021) is read down by removing the retrospective last date of 1st date of February, 2021 as 31st day of March, 2021; (ii) Consequently the last date of eligibility mentioned paragraph 4(i) of the impugned circular dated 28.09.2021 shall also be read as 31.03.2021; (iii) all the applications in respect of the petitioners even in respect of the cases arising between 01.02.2021 to 31.03.2021 shall be deemed be pending applications and shall be deemed to be pending applications for the purposes of consideration by the Interim Board; (iv) Wherever they are rejected on the ground that they did not have a case pending as on 31.01.2021, such orders shall stand set aside and the applications shall be deemed to be pending applications for the consideration by the Interim Board, if otherwise in order and eligible, and shall be dealt with in accordance with law on merits in accordance with the scheme that may be framed by the Central Government as in respect of the other cases which arose prior to 31.01.2021. All miscellaneous applications shall stand closed. 2023 (11) TMI 1110 Compounding of offences - period of limitation - application rejected for the reason that the same was filed beyond the prescribed time limit, i.e., a period of 12 months from the date of launching of prosecution fixed fixed vide circular F.No. 285/08/2014-IT(Inv.V)/147 dated 14.06.2019 - petitioner contend that as per Section 279(2) of the IT Act, there is no provision with regard to the fixation of time limit for filing the application for compounding of offences HELD THAT:- Since the idea of the Legislation was that the compounding of offences is permissible either before or after the institution of the proceedings, the CBDT cannot issue a circular contrary to the object of the said provisions. The explanation, which empowers the CBDT to issue circular, is only for the purpose of implementation of the provisions of the Act with regard to the compounding of offences and not for the purpose of fixing time limit for filing the application for compounding of offences and the same is contrary to the provisions of the Act and hence, it is not permissible in terms of Section 279(2) of the IT Act. Therefore, this Court is of the view that the CBDT is not empowered to fix the time limit for filing the application for compounding of offences, which is contrary to the provisions of Section 279(2) of the IT Act. Thus in terms of Section 279(2) of the IT Act, the petitioner can file the application for compounding of offences either before or subsequent to the launching of the prosecution. As far as the citation provided by the learned counsel for the petitioner is concerned, in all those citations, the respective High Courts had struck down the provisions of Clause 7(ii) of the said circular dated 14.06.2019 with respect to the prescribed time limit of 12 months and held that at any point of time the application for compounding of offences can be filed i.e., even after the filing of the prosecution and before the disposal of the case. Thus this Court is of the considered view that the order passed by the respondent, rejecting the application for compounding of offences on a sole ground that it is barred by limitation, is liable to be set aside. 2023 (11) TMI 1109 Validity of Reopening of assessment - petitioner was selected for scrutiny assessment under CASS for limited scrutiny to verify the low income compare to high loans/advances/investment in shares and high interest expenses relatable to exempt income u/s 14A during the previous year - HELD THAT:- It appears that the respondent has recorded the reasons for reopening only on the basis of the material available during the course of the original assessment and there is no fresh material to form a reason to believe that income has escaped assessment. The assessee has disclosed all material facts during the course of the original assessment and even in response to the notices issued u/s 143(2) and 142(1) of the Act. The assessment order is passed after considering the details provided by the assessee and therefore it cannot be said that the assessee has withheld any information during the course of the original assessment. Merely because the AO was of the opinion the assessee ought to have charged interest at the rate of 12% on the loans advances vis-a-vis the interest paid on the borrowed funds would not have been the basis of reopening the assessment, as such inference is based without any material in support thereof. It is also emerging from the record that the assessee has not mentioned any exact income u/s 14A which might have given a reason to believe to the respondent AO that the income has escaped assessment by not charging the income interest on the loans advances by the assessee. Only because the assessee company did not charge the advance made to the other loans and advances, such Assessing Officer even otherwise could not have made the notional addition on the basis of the income accrued in the regular course of assessment and such on the basis of the principle of real income. We are of the opinion that when the AO did not have any jurisdiction to issue the impugned notice in absence of any basis except assumptions and presumptions accorded in the reasons recorded to come to the conclusion that he has reason to believe that the income has escaped assessment. Petition succeeds and is accordingly allowed 2023 (11) TMI 1108 Levy of penalty u/s. 271(1)(c) - AO completed assessment u/s. 143 r.w.s. 153A determining the total income on account of unexplained money u/s. 69 based on seized materials - CIT(A) upholding the penalty levied on the ground that assessee has concealed the particulars of commission income - HELD THAT:- Addition is sustained by the ld. CIT(A) is based on seized materials, during the course of search. There is no estimation of income by the ld. CIT(A). Thus, case laws relied upon by the assessee are not applicable to the facts of the present case. CIT(A) as considered the Supreme Court judgment in the case of Mak Data Pvt. Ltd. [ 2013 (11) TMI 14 - SUPREME COURT] wherein as observed that the AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO is not required to record his satisfaction in a particular manner or reduce it into writing. The scope of section 271(1)(c) has also been elaborately discussed by this Court in Union of India Vs. Dharmendra Textile Processors [ 2008 (9) TMI 52 - SUPREME COURT] and CIT vs. Atul Mohan Bindal [ 2009 (8) TMI 44 - SUPREME COURT] Thus, this contention of the appellant is not accepted. Also in case of Sunita Transport Pvt. Ltd. [ 2012 (12) TMI 981 - HIGH COURT OF GUJARAT] held since there was nothing on record showing that in original return assessee was unaware about gross concealment of income, impugned penalty order passed by authorities below was to be upheld. Levy of penalty is hereby upheld and the grounds of appeal raised by the assessee dismissed. 2023 (11) TMI 1107 Exemption u/s 11 - charging of guarantee fees for services by the assessee trust - charitable activity u/s 2(15) - as per revenue assessee trust is engaged in the advancement of general public utility and is charging fee in relation to the services rendered to trade, commercial etc. - CIT(A) has also denied the claim of the assessee trust seeking benefit u/s 11 on the ground that since the assessee trust is charging guarantee fee, which amount is substantial, the assessee trust is not carrying out any charitable activity - HELD THAT:- Assessee trust having been established by the Government of India with the object and purpose of ameliorating the difficulties of the small scale industries and micro enterprises in availing credit facilities from financial as well as banking institutions without having collateral security and/or third party guarantee which is being provided by the assessee trust with cost to cost or with a small mark up is pursuing the activity of advancement of general public utility without having an iota of activity of trade, commerce or business. Mere charging of guarantee fees for services by the assessee trust ipso facto is not sufficient to invoke the proviso to section 2(15) of the Act, that too without establishing that the object and purpose of the assessee is profit motive. Had it been so the assessee trust would not have been running into deficit of about Rs. 400 crores every year. So in these circumstances the impugned findings returned by the Ld. CIT(A) that since the assessee is charging guarantee fee on substantial scale, it is not carrying out any charitable activities, hence not entitled for benefit of section 11 12 of the Act , are not sustainable, hence set aside. Ground No. 2 is determined in favour of the assessee. Provision for guarantee claims - assessee is following mercantile system of accounting qua its receipts as well as payments - As per AO since the assessee is a registered trust under section 12A of the Act the application is to be allowed on actuarial basis and no provision is allowable and that the assessee has itself recognized guarantee fee income on payment basis as such provision for guarantee claim cannot be allowed - CIT(A) has confirmed the disallowance on the disallowance of deduction claimed by the assessee trust - HELD THAT:- When we peruse the explanation to section 11 it has come on record that w.e.f. 01.04.2022 any some payable by the trust shall be considered as application of the previous year in which the payment is made irrespective of the year of incurring of expenditure. The AO proceeded on the wrong premise that the amount spent on the object of the trust is considered as application of the income in the case of trust by holding that the assessee is following cash system of accounting whereas assessee trust is proved to be following the mercantile system of accounting. So in these circumstances the amount not paid by the assessee trust cannot be treated as application of the trust. Hon ble Supreme Court of India in case of Rotrock Control India Pvt. Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] held provision on account of warranty in respect of product sold by the assessee as legitimate deduction. When the provision for guarantee claim made by the assessee is otherwise proved to be legitimate deduction, the correct income of the assessee cannot be calculated and as such claim of the assessee for deduction of provision for guarantee claim is an allowable deduction. So the AO is directed to allow the amount. Denial of claim of set off of brought forward deficit of the previous years against the current year income, due to the denial of benefit of section 11 12 - Since the assessee is found to be entitled for benefit of section 11 12 as per findings returned under the head ground No.2 in the preceding paras the AO is directed to process the claim of set off of the assessee trust accordingly, this ground being consequential in nature. 2023 (11) TMI 1106 Delayed deposit of the employees share of contributions towards EPF/ESIC u/s. 36(1)(va) - adjustments carried out u/s 143(1) - HELD THAT:- The aforesaid issue had been looked into in the case of Satpal Singh Sandhu [ 2023 (5) TMI 1274 - ITAT RAIPUR] and Gurmeet Singh Hora [ 2023 (8) TMI 1383 - ITAT RAIPUR] . The Tribunal while deliberating at length on the aforesaid issue had after drawing support from the orders of Kalpesh Synthetics (P) Ltd. [ 2022 (5) TMI 461 - ITAT MUMBAI] and P.R. Packaging Service [ 2022 (12) TMI 841 - ITAT MUMBAI] had held that no such disallowance of the delayed deposit of the employee s share of contribution towards labour welfare fund could have been made in the hands of the assessee company while processing its return of income u/s. 143(1)(a) Disallowance u/s. 43B(a) of the Act towards service tax paid beyond the due date specified for filing of return of income u/s. 139(1) - HELD THAT:- We may herein observe that in the case of M/s. Ganapati Motors[ 2017 (4) TMI 1613 - CHHATTISGARH HIGH COURT] had held that in a case where the assessee had not charged VAT to its profit and loss account, then, despite the fact that the liability may still be unpaid it could not have been added u/s. 43B of the Act as the same was not claimed as a deduction in the books of accounts. Thus no addition can be made of an assessee s unpaid VAT tax liability that was not charged to the profit and loss account, there is substance in the claim of the Ld. AR that based on the same analogy there was no justification for the A.O to have made an addition u/s. 43B of the amount of service tax payable as the same was not charged to the latters profit and loss account. Thus no means could have been dubbed as an incorrect claim and brought within the realm of the adjustments contemplated in clause (a) of Section 143(1) Appeal of assessee allowed. 2023 (11) TMI 1105 Revision u/s 263 - adjustment of LTCG twice - As per CIT assessee has wrongly adjusted the long term capital loss twice, once with LTCG and again with STCG in its computation of total income as per the normal provisions of the Act - HELD THAT:- Admittedly, it is a fact on record that it occurred due to an inadvertent mistake on the part of the assessee. Further, it is evidently demonstrated that this does not have a bearing on the income-tax liability for the year under consideration. The effect is on the availability of MAT credit in subsequent year for which assessee submitted to make the course correction. Thus, in this context, it is a settled law that scope of section 263 to revise an assessment is different from scope of section 154 to rectify any mistake apparent from record. Provisions of section 263 give jurisdictional power whereas provisions of section 154 gives power of rectification. It will not be correct to say that rectification is equal to revision under the Act. Term erroneous used in the section 263 is to be read relating to jurisdictional error on the part of the Assessing Officer in exercise of his powers vested under the law. It cannot be read as to a mistake which is rectifiable under the provisions of section 154 either suo moto or on the application of the assessee. Rectification u/s 154 can be done suo motto either by Assessing Officer himself or by the assessee on application. In the instant case, all the documents and details related to the impugned transaction were on record. We need to understand if such a mistake can lead to holding the order erroneous for the purpose of assuming jurisdiction u/s. 263 to invoke revisionary proceedings. The matter was open before Ld. AO to take appropriate measures for rectification of mistake apparent from records. Thus we find that on this issue, present case is purely on facts which are verifiable from the records of the assessee, examination and verification of the original computation of income and tax vis- -vis the revised computation of income and tax placed on record. Also considering the judicial precedent in the case of Malabar Industries Ltd [ 2000 (2) TMI 10 - SUPREME COURT ] we find that it is case of bonafide mistake committed by the assessee, which effectively does not result into prejudice caused to the revenue in the year under consideration. Liability of tax for the year under consideration is duly discharged by the assessee which has been evidently demonstrated from the two computations placed on record. Accordingly, on this issue raised by the Ld. Pr. CIT in the revisionary proceeding, no action u/s. 263 of the Act is justifiable. DDT on the proposed dividend - Case of assessee is not selected for regular assessment u/s. 143(3) and where no income-tax is payable by the assessee on its total income - CIT has also noted the fact of payment of DDT which is reflected in the Annual Tax Statement in Form No. 26AS but the details of DDT were not quantified in the return furnished by the assessee - HELD THAT:- In absence of any regular assessment undertaken of a domestic company u/s. 143(3), if no income-tax is payable on its total income but if domestic company has distributed profits and there is a demand on its distributed profits u/s 115O and 115P, then, for recovery of the same, the assessee is to be held as assessee in default which can happen only by passing an order to that effect is required by invoking the provisions of section 115Q. For this DDT liability, after holding the assessee as an assessee in default , a notice of demand u/s. 156 pursuant to this order would make the assessee liable for the same and the provisions of collection and recovery of tax will follow, accordingly. If we go by the contentions made by the Ld. CIT, DR to accept that provisions relating to DDT liability forms part of the assessment of total income made u/s. 143(3), then, in our considered view, section 115Q is rendered otiose and would not have any occasion for its application. As clearly appears from the scheme of the Act that an order of assessment passed u/s 143(3) is an assessment of total income of the assessee which is separate and distinct from any other order. DDT liability is distinct and separate from the liability to pay income-tax on the total income of an assessee which is created by charging section 4. Revision of an order u/s. 263 pre-supposes existence of an order. In view of the above discussion, levy of interest u/s. 115P and any liability of DDT u/s. 115O does not arise out of conduct of assessment proceedings and making an assessment of total income u/s. 143(3), therefore, Ld. Pr. CIT could not have invoked revisionary proceedings to direct the ld. AO for imposing DDT liability on the assessee in reference to assessment order passed u/s. 143(3). There is no separate order in existence, fastening the assessee with DDT liability by holding it as an assessee in default , contemplated u/s. 115Q. Thus, in absence of the same, in our view, Ld. Pr. CIT is not justified in invoking the revisionary proceeding u/s. 263 and passing an order thereon. Thus, even on this issue, we hold that passing of revisionary order u/s. 263 is not justifiable. Appeal of the assessee is allowed. 2023 (11) TMI 1104 Orders appealable before the Appellate Tribunal - order passed by a Commissioner u/s 119(2)(b) - Condonation of delay in filing of the audit report in Form No. 10BB r.w Rule 16CC of IT Rules, 1962 rejected - HELD THAT:- The captioned appeal filed by the assessee appellant is not maintainable before us. We say so for the reason that an assessee is not vested with any right to assail an order passed by a Commissioner u/s 119(2)(b) of the Act by preferring an appeal before the Appellate Tribunal. As an order passed by a Commissioner u/s 119(2)(b) of the Act does not find any mention in the list of orders that are appealable before the Appellate Tribunal, therefore, we are constrained to observe that the present appeal filed by the assessee is not maintainable before us. Our aforesaid view is supported by the judgment of Rasida Ibrahimbhai Vohra [ 2014 (3) TMI 30 - GUJARAT HIGH COURT] wherein as observed that as an order passed by the Commissioner u/s 119(2)(b) is an administrative order; therefore, the same is not appealable before the Tribunal. High Court based on its aforesaid observations had set-aside the order of the Tribunal, observing, that the latter had erroneously entertained the appeal against the order passed by the Commissioner u/s 119(2)(b) of the Act and had restored the matter to his file to re-adjudicate the matter afresh. Thus the captioned appeal filed by the assessee appellant is dismissed as not maintainable. 2023 (11) TMI 1103 Validity of reopening of assessment - reason to believe v/s 'reason to suspect' - allegation of issue of shares on premium to paper companies - HELD THAT:- Adverse information may trigger reason to suspect , which is not sufficient to re-open an assessment because the requirement of law is reasons to believe escapement of income and not reason to suspect . This fine distinction should be borne in mind and when an AO receives an adverse information against an assessee, then he must make reasonable inquiry and collect material which would make him believe that there is in fact escapement of income. It is also settled position of law that when the validity of the reasons recorded is tested, then it should be examined on a standalone basis. Nothing can be added or subtracted. The AO should speak through the reasons recorded and the assessee should not be guessing as to what was the reasons for which the AO has reopened the assessment. Issue of shares at premium - allegation of accomodation transactions - From an analysis of the reasons recorded by AO, it is discerned that in the relevant year under consideration the assessee company had issued shares for a premium of Rs. 40 per share and in that process assessee has collected share- premium of Rs. 52 Lakhs which have escaped assessment. In this factual context it is noted that the settled position of law is that adverse information against an assessee would trigger only reason to suspect . Once the AO found that the assessee had issued 1,30,000 shares of face value of Rs. 10/- for share premium of Rs. 40 per share, then, he ought to have conducted a preliminary inquiry from which he should have found as a matter of fact who were the investors of these 1,30,000 shares; and whether those investors were paper companies providing only accommodation entry etc. And thereafter, he should have recorded the reasons as to whether the assessee had engaged in taking accommodation entry from the entry operators as reveled from search operation conducted at RK Kedia Group/Entry Operators as stated in para 2 3 of reason recorded. Since AO has not carried out even the preliminary enquiry after taking note of assessee collecting share capital with premium, the AO cannot be said to be possessing the requisite reason to believe, escapement of income . AO in the recorded reasons failed to provide the name of the investors which AO suspects to be entry operators [ which names of investors we find from the re-assessment order that there were four (4) companies ]. Thus, the AO failed to even mention the name of the investor/accommodation entry operators/paper companies, in his recorded reasons to believe escapement of income and bring out the nexus of these investors with the entry operators. AO had only information which can raise reasons to suspect and not reasons to believe which is not sufficient for usurping the reopening jurisdiction u/s 147 - Decided in favour of assessee. 2023 (11) TMI 1102 Income taxable in India - reimbursement of expenses from the India subsidiaries - Royalty receipts - benefit of DTAA - assessee is a non-resident corporate entity incorporated in United States of America ( USA ) - Claiming that cost-to- cost reimbursement of software license expenses is not taxable in India under the provisions of India USA DTAA the assessee did not offer it to tax - HELD THAT:- Assessee has entered into a separate agreement with Indian subsidiary, in terms of which, the Indian subsidiary provides certain back office support services to the assessee and gets remunerated at cost plus 15% mark-up. A reading of the draft assessment order certainly gives an impression that the AO has mixed up both the transactions and under a misconceived notation that the assessee has received markup over the cost of software, has proceeded to treat the receipts as royalty. Neither the Departmental Authorities have brought on record any material to establish that the reimbursement of cost to the assessee is inclusive of markup, nor at the time of hearing before us ,DR could place any evidence on record to demonstrate that the reimbursement of cost includes element of markup. Therefore, in our view, the cost-to-cost reimbursement of price paid towards software cannot be treated as royalty. Also the assessee has brought shrink-wrapped softwares, such as, Microsoft Windows, MS Officer etc. from third party vendors and distributed amongst other group entities located in various countries. Thus, the aforesaid fact itself demonstrates that the third party vendors are the real owners of the software having ownership over the IPR. The assessee has simply bought the softwares, which are copyrighted articles without having any right over the copyright. Therefore, when the assessee itself does not have any ownership over the copyright engrained in the software, there is no question of assessee transferring such right or right to use the copyright to the group entity. Thus, what the assessee has sold to the group entities are copyrighted articles and not right to use copyright, Therefore, assessee s case is clearly covered by the ratio laid down in case of Engineering Analysis Centre of Excellence Pvt. Ltd. (supra). 2021 (3) TMI 138 - SUPREME COURT] Thus we hold that the amount received by the assessee towards reimbursement of cost of software is not taxable as royalty income under the treaty provisions. Accordingly, we direct the AO to delete the addition. Decided in favour of assessee. 2023 (11) TMI 1101 Interest claimed against remuneration from the Partnership firm under the head income from business profession - Setoff / adjustment of interest expenditure with interest received from partnership firm - main source of income to the assessee is only the remuneration and profit earned from the partnership firm - as per assessee he has claimed interest expenditure against the above remuneration for the reason that assessee has borrowed funds and introduced the same in the partnership firm and since the borrowing has a direct connection with the funds introduced in the partnership firm it is a claimable expenditure against the income earned by the assessee from the firm - HELD THAT:- The main source of income is only from these firms and income from other sources. The assessee has also brought to our notice the funds received from loan creditors and also transferring the same amount to the partnership firm. Since the main source of income to the assessee is only the remuneration and profit earned from the partnership firm and whatever the capital borrowed by the assessee was directly introduced in the partnership firm. By looking at the balance sheet, submitted before us, we observe that assessee has own capital and borrowings from family members which is equivalent to the property owned by the assessee. There is direct link with the loan creditors and the capital introduced in the partnership firm. Therefore, it establishes that the funds borrowed by the assessee is directly introduced in the partnership firm. Whether the assessee can claim the interest expenditure against the remuneration received from the firm? - As salary or remuneration received from the firm is no doubt compensation for the services rendered but it is considered as income from business otherwise as a return of share of profits to the partners of the firm. Therefore, the partner should be entitled to all the deductions which he was entitled while computing his share of profits in the firm including the deduction in respect of interest paid on monies borrowed for investment in the firm as capital u/s. 67(3) . As relying on Santosh Kumar Agrawal [ 2000 (7) TMI 971 - ITAT MUMBAI] assessee has introduced the capital in the firm by borrowing funds from various loan creditors, it has direct nexus with the remuneration and other profits earned by the partners. In this case, assessee has earned only remuneration income from the firm and incurred interest expenditure, therefore should be allowed to claim the interest expenditure. CIT(A) has not addressed the issue under consideration and took it to a different dimension questioning the genuineness of the loan borrowed by the assessee. No concrete findings were given by the Ld.CIT(A) on the borrowings and also did not proceeded to make proper investigation to reach a logical conclusion, rather he proceeded to confirm the additions made by the Assessing Officer. Assessee appeal allowed. 2023 (11) TMI 1100 Nature of loss - Loss arising on account of write off of part of loans and advances given by the appellant to the joint venture - allowable u/s 28(i) r.w. section 36(1)(vii) or 37(1) as a normal business loss - CIT(A) observing that the loss did not arise during the course of business of the assessee and that it did not occur during the year - As argued by assessee assessee company has never claimed the said expenditures u/s 36(2) rather the said expenditures are allowable as business loss under section 28 or 37 of the Act, as the same have been incurred during the normal carrying on of business - HELD THAT:- As observed that the assessee vide its letter filed before the Ld. AO had claimed that the chances of recovery of the impugned sum is nil and the same is allowable as an expense under section 37(1) - AO ignored the assessee s claim in both the years. Before the Ld. CIT(A) the assessee submitted that it has written off in each of the two years being 20% of the total loan/advance given to JV Company in its audited financials. It was also asserted that nowhere the assessee has claimed the said amount as bad debt in the profit and loss account. Also the loss is allowable under section 28(i) r.w. section 36(1)(vii) or 37(1) as a normal business loss. Support was derived from the decision of Hon ble Supreme Court in Madnani Development Corporation Pvt. Ltd. [ 1986 (7) TMI 2 - SUPREME COURT ] wherein it is held that business losses are allowable on ordinary commercial principles of computing profits, provided they are of non-capital nature. Reliance was also placed on the decisions Mahendra N. Shah [ 2005 (10) TMI 37 - GUJARAT HIGH COURT ], Turner Morrison Co. Ltd. [ 2000 (3) TMI 34 - CALCUTTA HIGH COURT ] Thus we are of the considered view that it would be appropriate and expedient as also in the interest of justice and fair play to set aside the order of the Ld. CIT(A) in both the AYs and restore the matter back to the file of the Ld. AO to decide the issue afresh. Disallowance being bad debt written off - said sum comprised of debit balances of suppliers written off and being loans to employees written off - AO made the disallowance for the reasons that conditions laid down under section 36(2) were not fulfilled - HELD THAT:- It is not in dispute that the loans/advances were given by the assessee in the course of carrying on of its business. These became irrecoverable due to which the assessee has written them off in its books of account. It is observed that neither the Ld. AO nor the Ld. CIT(A) had doubted the genuineness of the amounts written off. The assessee knows its interest best. If in the best judgment of the assessee, the amounts became irrecoverable and wrote them off in its books of account, it is an allowable deduction in computing the business income of the assessee. We, therefore, direct the Ld. AO to delete the impugned disallowances in both the AYs. 2023 (11) TMI 1099 Treatment to income surrendered during survey on account of excess stock - business income or unexplained stock u/s 69B r.w.s.115BBE - AR argued that during scrutiny assessment proceedings, the AO has accepted the business income declared by the appellant in return of income on account of excess stock during survey proceedings but tax the same u/s 69B - HELD THAT:- Since, the excess stock found during the survey primarily pertains to the business carried out by the assessee, and secondly surrendered as business income during survey as accepted by the AO and hence, the excess stock would only be treated as income under the head business income and not as deemed income. In our view, the ld. CIT(A) was wrong in confirming the action of the AO regarding the applicability of the provisions of section 115BBE in case of the excess stock which was not separate or part of another lot of stock. Accordingly, the value of article/stock of the impugned investment was being fully disclosed in the books of account, being regularized by way of surrender of business income as accepted by the AO, would certainly not fall in the mischief of section 69B. Respectfully following judgment in the case of M/s. D. N. Singh v. CIT, Central [ 2023 (5) TMI 746 - SUPREME COURT] we hold that in the given facts of the present case, the excess stock would not fall in the mischief of section 69B - Decided in favour of assessee. 2023 (11) TMI 1098 Exemption u/s 11 - rejection of registration u/s 12AA as applicant trust has been formed to implement the CSR activities and not amenable to public charit y - charitable activity u/s 2(15) or not? - HELD THAT:- Main aim and object was of course to implement the CSR activities of the Financing/ parental company, but surely per se to the benefit of general public at large. The observations given by Worthy CIT(E) are vague in the view of the judgment of Nanak Chand Jain Charitable Trust ( 2018 (2) TMI 874 - ITAT DELHI ) that at the time of granting the registration u/s 12AA CIT (exemption) need not go beyond two parameters that the object being charitable in nature and activities being genuine. All other activities are the matters to be taken care of by the Assessing Officer at the time of assessment for granted exemption under section 11 r.w.s 13 of the Act. Social enterprises cannot be a direct recipients of money from corporate as it is a profit making Company - This reason by the CIT (E) is not in conformity with any of the provisions of the Income Tax Act. A profit-making Company can grant certain donation to the charitable trust, how can the activities of the trust become not charitable with this act. In our view, the fact that the CSR expenditure are not allowable expenditure under section 37 of the Act is relevant only for the taxability of the company incurring such expenditure. From the perception of the assessee trust the amount received as donation whether will be eligible for exemption under section 11 depends on the application of such fund for the charitable activities by the trust only. CIT(E) is empowered to satisfy himself only about two factors i.e. the objects of the trust and the genuineness of the activities of the trust or institution and such powers does not extend to the eligibility of the trust/institution for exemption u/s 11 r.w.s 13 of the Income Tax Act, 1961 which falls in the domain of the AO. In our view, in the present case the Ld. CIT(E) has neither pointed out any defect in the objects of the trust nor doubted the activities carried out to achieve these objects, and therefore, the application for registration cannot be rejected. Our view gets support from the decision in the cases of CIT vs. IILM Foundation Academy [ 2016 (9) TMI 920 - PUNJAB AND HARYANA HIGH COURT] and Cyberstar Educational Society vs. CIT (Exemptions) . [ 2019 (6) TMI 1628 - ITAT AMRITSAR] CIT(E) is directed to grant registration to the appellant Trust u/s 12AA of the Act from the date of application. Appeal of the assessee is allowed. 2023 (11) TMI 1097 Validity of assessment u/s 144C - issuing the demand notice and the penalty notice along with the draft assessment order - HELD THAT:- As per the provisions of the Act, the draft assessment order in no way culminates to arriving at the demand and also the levy of penalty. It can be inferred from the act of the A.O. in issuing the demand notice along with the draft assessment order that the demand got crystalised on passing of the draft assessment order thereby converting the draft assessment order to be the final assessment order passed by the A.O. The intention of the legislature is clear where it has proposed a draft assessment order for the purpose to show cause the assessee whether he accepts or objects to the proposed addition. Assessee has placed reliance on the decision of the Tribunal in the case of Aker Powergas P. Ltd. [ 2022 (6) TMI 1118 - ITAT MUMBAI] wherein the Tribunal by placing reliance on the decision of Atlas Copco India Ltd. [ 2019 (8) TMI 1415 - ITAT PUNE] has held that on identical facts, the assessment order was held to be null and void. As decided in the case of Vijay Television (P.) Ltd. vs. DRP [ 2014 (6) TMI 540 - MADRAS HIGH COURT] held that the omission on the part of the A.O. to follow the mandatory procedures is not a curable defect nor was it a procedural irregularity. We would also like to place reliance on the decision of Lion Bridge Technologies Private Limited [ 2018 (12) TMI 764 - BOMBAY HIGH COURT] wherein it was held that failure to follow the mandatory procedures will render the assessment order null and void. We hereby hold the assessment order to be null and void. As the assessment order has been held to be invalid, we do not find it necessary to adjudicate the other grounds raised by the assessee and the Revenue. TP Adjustment - comparable selection - assessee has objected to the inclusion of the comparable namely Eclerx Services Ltd. selected by the TPO for the reason that the said comparable company was a KPO - HELD THAT:- As decided B C Management Services P. Ltd. [ 2017 (5) TMI 1501 - ITAT DELHI] wherein it was held that the comparables with different business model and no segmental business available, was to be rejected. Eclerx Services Ltd. is not held to be a comparable for the reason that it is functionally different from that of the assessee. Thus to exclude Eclerx Services Ltd. from the list of comparables while benchmarking the international transaction of the assessee for the year under consideration. Appeal filed by the assessee is allowed. 2023 (11) TMI 1096 Addition u/s 68 or 56 - unexplained cash deposits - a dvance money received from Late buyer of property against the sale of property and subsequently returned - CIT(A) deletes the additions so made by the AO u/s 68 and has again brought the amount to tax under section 56(1) for non-availability of information on face of the balance sheet - HELD THAT:- We couldn t find any show-cause issued on record or information sought from the assessee in this regard which has again prejudiced the case of the assessee by denying an opportunity before any adverse view is taken against her. In our analysis of the explanation so submitted by the assessee and material available on record in terms of entries in the cash book dated 23.12.2011, the agreement to sell dated 23.12.2011 which talks about earnest money out of total sale consideration of Rs 4.60 Cr, and the receipt issued by the assessee acknowledging receipt of Rs 30,00,000/- in presence of witness, thus we find that the assessee has reasonably explained the nature and source of cash deposit of Rs 30 lacs, being the advance towards the sale of the property owned by her. The property ownership and the agreement to sell has not been doubted by the Revenue. Mere non-appearance of the buyer who has since expired couldn t be held against the assessee. Assessee has also explained the refund of the said amount to the buyer due to non-materialization of the sale transaction and subsequently getting a better deal at a higher sale consideration with another buyer vide registered agreement for a total consideration of Rs 4.80 Cr and out of which, an amount of Rs 30 lacs was refunded to the original buyer. The breakup of total consideration of Rs 4.80 Cr has been duly given in the registered sale deed dated 22.05.2012 and has been duly recorded in the books of accounts. AR has stated at the Bar that the sale consideration of Rs 4.80 Cr has been duly offered to tax in the subsequent assessment year. It is also not the case of the Revenue that there is any on-money received by the assessee over and above the declared sale consideration of Rs 4.80 Cr which also forms the basis for paying the stamp duty. In our overall analysis, we find that there is no basis for making the addition either under section 68 or under section 56(1) of the Act and the same is hereby directed to be deleted. Decided in favour of assessee. 2023 (11) TMI 1095 Unexplained investment for purchase of land - Assessee contended that the investment has been made by him out of the disclosure made by the partnership firm which has already suffered to tax - HELD THAT:- Thus being a close nexus between the assessee and the firm, the contention raised by the assessee cannot be rejected without any strong reason. As such, the onus shifted upon the revenue to prove that the contention of the assessee is wrong, and the income disclosed by the partnership firm has been used for some other purpose but what we find that no such detail is forthcoming from the other of the authority below. In addition to the above, we also note that the assessee along with other partners has made disclosure of the income of the firm in pursuance to the search u/s 132. Had there been no nexus between the assessee and Om Corporation, there was no occasion for the assessee to make the disclosure along with the other partner under his signature on behalf of the firm. Thus, in such fact and circumstances the contention of the assessee cannot be rejected. It is equally important to note that there was no information available on record about the utilization of the money disclosed by the partnership as income except the investment made by the assessee which is also evident from the financial statement of Om Corporation in the year ending 31/03/2011. As such, we have perused the financial statement of OM Corporation for the year ending as on 31/03/2011, we note that the M/s Om Corporation has shown an advance for the sum which makes abundantly clear that the disclosure made by the firm has been utilized in the investment of land as discussed above. Accordingly, we do not find any infirmity in the finding of the CIT(A). Hence, the ground of appeal of the Revenue is hereby dismissed. Addition on account of cash found during the search operation - AO during the assessment proceedings found that there was cash found as on the date of search, the source of which was explained by the assessee out of the agriculture - assessee has also submitted the agriculture bills in support of his claim - AO found that the agriculture bills were not pertaining to the period in dispute and therefore he treated the same as undisclosed income of the assessee - HELD THAT:- Admittedly, it is the onus upon the assessee to justify his stand based on the documentary evidence that he has earned agriculture income in the year under consideration. Indeed, the assessee failed to discharge the onus cast upon him based on the documents. However, because the assessee in the earlier AY has disclosed the agricultural income, the possibility of having agriculture income in the year under consideration cannot be ruled out. Therefore, in the interest of justice and fair play and to put an end to the ongoing dispute, we are of the view that justice will be served to the assessee and the revenue if 50% of the allege agriculture income is treated as income from the agriculture activity. Accordingly, we direct the AO to restrict the addition being 50% of agriculture as income from undisclosed sources. Hence, the ground of appeal of the assessee is hereby partly allowed. 2023 (11) TMI 1094 Ex-parte order u/s. 144 - disallowance made u/s. 36(1)(va) of the Act and estimation of turnover - non-cooperation ny assessee as Today is the 5th time of hearing of the above appeal, None appeared on behalf of the assessee in spite of service of notices - HELD THAT:- It is seen from the assessment records, the assessee has not responded to the various notices and not filed relevant documents or materials before the AO. Therefore the AO passed an ex-parte order u/s. 144 of the Act. Even before the Ld. CIT(A), seven opportunities of hearing were given to the assessee from 22-01-2021 till 18-082022, the assessee neither filed written submissions nor requested for any adjournment of the hearings. Therefore the Ld. CIT(A) passed an ex-parte appellate order, confirming the disallowance made u/s. 36(1)(va) of the Act and estimation of turnover in the absence of material evidences. We do not find any infirmity in the order passed by the Ld. CIT(A) on merits. Though the assessee has not availed as many opportunities given by the Ld. Assessing Officer and Ld. CIT(A) but failed appear, but very promptly filed statutory appeals within time, which clearly shows the malafide intention of the assessee. As relying on Ashokji Chanduji Thakor [ 2018 (6) TMI 1546 - GUJARAT HIGH COURT] case wherein held as assessee was non cooperative. Number of opportunities were given to the assessee to represent his case, however none remained present on behalf of assessee. Thereafter, the learned CIT(A) correctly proceeded further with the appeal ex-parte and decided the appeal on merits and confirmed the order passed by the AO confirming additions of unexplained investment. Thus we have no other option than to dismiss the appeal filed by the assessee. Exempt Agricultural income treated as income from other sources and addition on account of unexplained/unsecured loan - In this case also, the assessee before the Assessing Officer in spite of seven notices was not responded and not furnished any details. During the appeal before the Ld. CIT(A), there was a delay of 236 days which was condoned by the Ld. CIT(A). However the assessee has not appeared for the hearing of the appeals and also not filed any details, thereby the Ld. CIT(A) dismissed the appeal for non-prosecution. We don t find any good reason/ground to interfere with the orders passed by the lower authorities. Decided against assessee. 2023 (11) TMI 1093 Addition u/s. 69A - income surrendered during survey - undisclosed business income or income from other sources - CIT(A) treated it as being in the nature of business income and thus allowing deduction of interest and salary paid to partners against the same - HELD THAT:- CIT(A) has rightly applied the decision of Fashion World . [ 2010 (2) TMI 1171 - ITAT AHMEDABAD] wherein in identical set of facts, as analysed the provisions of section 69A, 69B, 69C etc. and held that for invoking the said provision, there are two conditions to be satisfied; (i) that investment or expenditure is not recorded in the books of the assessee, and (ii) nature source of acquisition of assets or expenditure are not explained or are not explained satisfactorily. Thereafter the meaning of nature was elaborated upon stating that it would require the assessee to explain the description of the investment or the expenditure and to explain the corpus or funds from where investment or expenditure has been met. Where the assessee is able to explain the nature and source of investment or expenditure, and if they are recorded in the books of accounts, then such investment or expenditure will not be treated as deemed income, but if these conditions are not fulfilled, the same would be treated as deemed income of the assessee. ITAT, thereafter went on to hold that the important aspect that emerges was that for invoking deeming provisions under sections 69,69A, 69B 69C there should be clearly identifiable asset or expenditure, and thereafter they held that in a scenario where excess stock of the business is found, there is no physical distinction between the accounted and unaccounted stock, and such assets found cannot be said to be distinct or separate assets. Difference in stock has no independent identity of its own and is part and parcel of the entire lot of stock. The difference is only a mathematical expression in terms of value and not a separate independent identifiable asset, and therefore, it could not be stated that there is an undisclosed asset existing independently ; that once it was so held, then what was not declared to the department was receipt from business and not any investment. ITAT thereafter went to distinguish the decision of Fakir Mohmed Haji Hasan ( 2000 (8) TMI 44 - GUJARAT HIGH COURT ) pointing out that in the said case what was found was separate and distinguishable asset or investment, source of which remained unexplained, and was therefore treated as deemed income of the assessee. Thus CIT(A), has rightly applied the said decisions to the facts of the present case which are identical as in what has been found during survey is excess stock of the business of the assessee. The assesses case, in fact, we find on a better footing since the assessee has disclosed investment made by way of purchases for the excess stock not only in its business books of accounts but also in the VAT return filed to the VAT authorities. Therefore undoubtedly the assessee has demonstrated the excess stock as relating to its business. And therefore, the l.d CIT(A), we hold, has rightly treated the same as being derived from the undisclosed business income of the assessee. Decided against revenue. Customs 2023 (11) TMI 1092 Refund of the value of the goods that were seized and confiscated - Auction of goods by the Customs Department - the order of seizure were set aside - petitioner claims for a refund of the complete value of the goods and not the value as per the auction - HELD THAT:- No material is placed by the petitioner before the Court to arrive at any conclusion that the estimated value stated in the order of seizure is also a determined value of the goods at the time of its seizure. As it is the petitioner who had procured the goods which were seized and confiscated and later on put up on auction, he would be the best person to have the knowledge about the actual value of the goods as it may have been. The same would also be in conformity with provision of Section 106 of the Indian Evidence Act, 1872. But as a dispute has been raised by the petitioner that he is entitled to the value of the goods as it stood on the date of seizure, the basic material to adjudicate the said issue would be what would be the value as may be determined as on the date when the goods were seized. In the absence of such material being available, it would be futile to decide the issue as to whether in a circumstance where the goods were sold by public auction, the petitioner would be entitled to a refund of the value of the goods as it stood on the day it was seized. In the meantime, liberty is granted to the petitioner to assail the auction of the goods that may have been done by the respondents in the Customs Department as regards the valuation of the goods and we are clarifying that the liberty to challenge the auction would be confined to a challenge to the value of the goods as determined in the auction - Petition disposed off. 2023 (11) TMI 1091 Validity of provisional assessment order - direction to execute bond and furnish bank guarantee for release of the goods imported by the petitioner - Violation of Customs Act or not - HELD THAT:- The order impugned cannot be said to be without jurisdiction even if the order can be said to be against some provisions of the law. When there is provision of appeal, this Court would not assume the jurisdiction of the Appellate Authority on the ground that the order passed by the Assessing Authority is against the law. If the order impugned is not without jurisdiction or it is not in violation of the principles of natural justice, this Court would not entertain the writ petition merely on the ground that in the opinion of the petitioner, the order runs contrary to some provision of the Customs Act, 1962. The petitioner is permitted to file appeal against the impugned order within a period of fifteen days from today and the appellate authority should consider the same expeditiously in accordance with the law - petition dismissed. 2023 (11) TMI 1090 Seeking grant of anticipatory bail - bar of Section 82 Cr.P.C. - proclamation issued under Section 82 Cr.P.C. to be published in the manner prescribed under sub Section (2) of Section 82 Cr.P.C. - smuggling of contraband goods of foreign origin like gold - non-cognizable and bailable offence - HELD THAT:- There is nothing on record to indicate that the steps mentioned in sub section (2) and (3) of Section 82 Cr.P.C. have been taken in the present case. Therefore, the proclamation issued under Section 82 (1) Cr.P.C. had not been published in the manner provided under sub Section (3) of Section 82 Cr.P.C. No further statement was signed by the Court as provided in sub Section (3) of Section 82 Cr.P.C. There is no bar against the application for anticipatory bail being considered by this Court on its merits, hence, the merits of the present case is examined. Keeping in view the fact that the alleged recovery was made on 19.12.2019 but the F.I.R has been lodged on 10.08.2022 and there is no explanation for the delay in lodging the F.I.R.; that the substantive offence allegedly committed by the applicant is non-cognizable, bailable and carries a maximum punishment of imprisonment up to 3 years; that although the C.B.I. has alleged commission of offences under the Prevention of Corruption Act, 1988, the applicant is not a public servant; that the applicant has no other criminal history and that a co-accused person Ajeet Kumar and Khalid Anwar have already been granted bail and without making any observations which may affect the outcome of the case, the aforesaid facts are sufficient for making out a case for granting anticipatory bail to the applicant. The anticipatory bail application of the applicant is allowed subject to conditions imposed. 2023 (11) TMI 1089 Redemption for the purpose of Re-export - Absolute Confiscation - Gold bars - goods are not available for redemption and re-export as the Customs Authority already disposed off the gold bars - HELD THAT:- It is admitted that before this order came to be passed on 30.11.2018 in Ext.P10, the Customs has already disposed of seized two gold bars of the petitioner. Therefore, the direction issued by the Principal Commissioner in Ext.P10 order for redemption for the purpose of re-export the gold on payment of redemption fine of Rs.25,00,000/- and reduced penalty of Rs.8,00,000/- are impossible to comply with inasmuch as the goods are not available for redemption and re-export. This fact of disposal of the two gold bars by the Customs Authority was not before the Principal Commissioner Ex-Officio, Additional Secretary to Government of India, the Revisional Authority and therefore, the order impugned came to be passed. This is an important fact which must be brought to the notice of the Revisional Authority for passing a fresh order in accordance with law. Therefore, the present writ petition is allowed, impugned order is set aside and the matter is remitted back to the file of the Revisional Authority/ 1st respondent to pass a fresh order after taking note of the fact that the two gold bars of two kilograms(one kilogram each) which were seized from the possession of the petitioner had already been disposed of before Ext.P10 order came to be passed. Petition allowed by way of remand. 2023 (11) TMI 1088 Validity of a Seizure Memo and SCN - respondents have called upon the petitioner to show cause why the gold jewellery and ornaments weighing approximately 20,756 grams should not be confiscated - HELD THAT:- On a holistic consideration of the SCN, the contention cannot be accepted that the same is a manifestation of a predisposed state of mind of the respondents - also it is a well settled principle that courts should desist from entertaining challenges to SCNs and interference being warranted only in exceptional circumstances and where it be found that the same is questioned on jurisdictional grounds. The challenge as mounted in terms of the instant writ petition clearly fails to meet the aforesaid tests as formulated. The challenge laid to the impugned SCN is negativated - the writ petition is disposed off by observing that the competent authority shall endeavour to dispose of and conclude the SCN proceedings within a period of two months from today. 2023 (11) TMI 1087 Levy of ADD - import of horizonal plastic injection moulding machines in the guise of parts and components - rejection declared classification of the imported goods under CTI 8477 9000 / 7318 1100 - to be classified under CTI 8477 1000 for the purpose of assessment and levy of ADD or not - HELD THAT:- In the case in hand, the imported goods were not presented by the appellant in un-assembled condition as alleged by the department for the purposes of convenience of packing or handling or transportation. Rather, the post importation activities do not merely involve assembly of the imported goods, but involved procurement of the essential components/parts for ultimate manufacture of PIMM in India, the facts of which have also been endorsed by the Chartered Engineers in their respective certificates (referred supra). The process involved for completion of the manufactured goods since, have taken place post importation of the goods in question, the provisions of Rule 2(a) of GIR shall not be applicable for change in classification of the imported goods and to bring such goods under the purview of Rule 9A ibid, for the purpose of levy of ADD thereon. It is concluded that the appellants herein had not imported the complete PIMM in order to fall within the purview of the notification(s) referred supra for levy of ADD. In this case, admittedly since the PIMM, complete in all respects was manufactured in India by using the domestically procured goods also, such imported equipment, should not be subjected to levy of ADD. Therefore, the adjudged demands confirmed in the impugned order cannot be sustained for judicial scrutiny. Since, manufacturing activity undertaken by the appellants and payment of Central Excise duty on such activity was acknowledged and not disputed by the jurisdictional Central Excise authorities, the same cannot be questioned by the Customs department without any clinching evidence that such machine in question was imported into India as such or in un-assembled condition, and no further activities were undertaken thereto to complete the process of manufacture and installation etc. There are no merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellants. Therefore, by setting aside the impugned order, the appeals (excepting Appeal No. C/85991/2017) are allowed in favour of the appellants - appeal allowed. 2023 (11) TMI 1065 Principles of natural justice - impugned complaint for the alleged commission of the offences punishable under Sections 135(1)(a), 135(1)(b) and 135(1)(c) read with 135(1)(i)(A) of the Customs Act, 1962, passed in a mechanical manner, without observing any reasons - summoning order passed without giving any reasons for the same - HELD THAT:- Considering the contentions raised by the learned senior counsel appearing for the petitioner, especially the fact that the summoning order has been passed without giving any reasons for the same, this Court is of the opinion that prima facie, the matter requires consideration. Further, in the opinion of this Court, considering that the petitioner has been exonerated by the learned CESTAT on the same set of facts and this fact has not been disclosed before the learned Trial Court, the petitioner herein has been able to make out a case for grant of interim protection. Accordingly, the operation of the impugned order passed by the Ld. Additional Chief Metropolitan Magistrate - 01, Patiala House Courts, New Delhi in Ct. Cases No. 2012/2022 and all proceedings emanating therefrom pending before the ACMM-01, shall remain stayed qua the petitioner, till the next date of hearing - Accordingly, renotify on 21.02.2024. PMLA 2023 (11) TMI 1086 Seeking permission to withdraw the present special leave petition - HELD THAT:- In view of the statement made, the special leave petition is dismissed as withdrawn. 2023 (11) TMI 1085 Money laundering - predicate offence - some of the FIRs are compromised, while the scheduled offence continues to exist - HELD THAT:- In the present case, the two FIRs, i.e., FIR No. 16/2018 dated 24.01.2018 and FIR No. 49/2021 dated 12.03.2021 registered at PS EOW, have been compounded and quashed, respectively, on the ground of compromise. It is pertinent to note that the State has not challenged the aforesaid orders on the ground that the matter was not settled with all the complainants. It is also noted that the remaining complainants, if any, have also not challenged the aforesaid orders on the ground that settlement was not arrived at with them. It is pertinent to note that the aforesaid FIRs were registered at the instance of investors who were aggrieved by the non-completion of a project by the company. A perusal of the aforesaid list of dates reflect that although the impugned ECIR was registered initially on the basis of scheduled offences registered vide FIR No. 16/2018 dated 24.01.2018 which stood compounded vide order dated 19.11.2019, the second FIR No. 49/2021 which was registered on 12.03.2021 was taken on record in the impugned ECIR by the department and the proceedings continued under the same. The department chose not to register a separate ECIR, but took on record the scheduled offences registered vide FIR No. 49/2021 in the same ECIR, inter-alia, on the ground that it related to the same transaction and involved the same accused persons. The fact that FIR No. 49/2021 was taken on record by the department in the present ECIR despite an order of compounding and acquittal was not challenged by the petitioner. Hon ble Supreme Court in Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT] has held that there is no corresponding provision to Section 154 of the CrPC in the PMLA requiring registration of an offence of money laundering. In the peculiar facts and circumstances of the case, ECIR cannot be quashed in view of registration of FIR No. 55/2023 dated 10.07.2023 under Sections 409/420/120B of the IPC at PS EOW as this would constitute scheduled offences legitimizing the existence of the said ECIR. However, since scheduled offences in FIR No. 16/2018 dated 24.01.2018 under Sections 420/406/120B of the IPC and FIR No. 49/2021 dated 12.03.2021 under Sections 420/406/120B of the IPC, registered at PS EOW have been compounded and quashed, respectively, the department cannot initiate or continue any proceeding including investigation in connection with the said two FIRs. Accordingly, the proceedings undertaken with respect to the said two FIRs qua the present petitioner in the present ECIR stand quashed. Petition allowed in part. 2023 (11) TMI 1084 Seeking ex-parte ad-interim stay of the proceeding - applicant/petitioner submit that the proceedings in the said ECIR ought to be stayed against the petitioner as the predicate offence for the said ECIR are the proceedings under Section 135 of the Customs Act, 1962 which has already been stayed by this Court - HELD THAT:- A perusal of the Provisional Attachment Order No.06/2023 dated 03.11.2023 issued by the Deputy Director, ED, particularly the material placed before the Authority (para 2(i)) and the cause of action under the PMLA (para 4.1) reveals that the present ECIR dated 17.07.2023 was recorded by the respondent ED, as Section 135 of the Customs Act, 1962 is a scheduled offence under the PMLA, whereunder the complaint was registered for the illicit export of foreign currency. The facts also reveal that dismissal of the adjudication proceedings against the petitioner vide order in PAWAN MUNJAL VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2022 (4) TMI 212 - CESTAT NEW DELHI] has led to the petitioner being absolved of all charges. In fact, the Division Bench of this Court in CUSAA No.3/2023 has affirmed the same vide order dated 05.10.2023. Considering what is borne out from the aforesaid and finding merit in the submissions made by the learned senior counsels for the petitioner, especially the peculiar facts and circumstances involving the common set of facts forming the genesis of all the three proceedings, being the proceedings before the CESTAT, the complaint case pending before the learned ACMM-01, Patiala House Court and the present ECIR, against the petitioner and taking note of the earlier order dated 03.11.2023 passed by this Court wherein the proceedings initiated by the Department of Revenue have been stayed, this Court is of the prima facie opinion that there is sufficient materials to stay the proceedings qua the petitioner. Accordingly, till the next date of hearing, ECIR/DLZO-I/39/2023 dated 17.07.2023 and all proceedings emanating therefrom, including the summoning order dated 10.11.2023, shall remain stayed qua the petitioner - Renotify on 21.03.2024. 2023 (11) TMI 1083 Money Laundering - continuation of ECIR instituted under the PMLA against the petitioner - petitioner stands acquitted of the charges in a duly constituted criminal trial of the allegations of committing the predicate offence - HELD THAT:- The Hon ble Supreme Court in VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. [ 2022 (7) TMI 1316 - SUPREME COURT] has clearly observed that such property which is derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence can be recorded as proceeds of crime but the authorities under the 2002 Act cannot resort to action against any person for Money Laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum and in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (schedule offence) against him their can be no action for money laundering against such a person or person claiming through him in relation to the property link to the stated scheduled offences. The order passed by the learned Session Judge, Patna whereby cognizance of offence under Section 4 of the Act has been taken and the petitioner has been summoned is hereby quashed - Petition allowed. Service Tax 2023 (11) TMI 1082 Failure to pay service tax - Jurisdiction of the Adjudicating Authority - Mining service - Supply of tangible goods service - Site formation service - extended period of limitation - No penalty imposable. Jurisdiction of the Adjudicating Authority - HELD THAT:- The jurisdiction vested in an authority may be classified into (i) territorial or local jurisdiction (ii) pecuniary jurisdiction (iii) jurisdiction over the subject matter etc. The list is not exhaustive. The Central Board of Excise and Customs in exercise of powers conferred by sub-rule (1) of rule 3 of the Central Excise Rules, 2001, may based on the requirement, invest an officer of the central or state government with jurisdiction only over a subject matter like investigation culminating in the issue of a show cause notice to the parties concerned, without investing that authority with the power to adjudicate that matter. If the notice is made answerable to another Central Excise Officer having jurisdiction in the matter there is nothing in law that stops that officer from adjudicating the notice. Neither is the principle of natural justice violated. In fact, the initial officers mentioned in the section were Deputy Commissioner / Assistant Commissioner which was replaced by the words Central Excise Officer - The words the preceding Central Excise Officer thus stands for the Central Excise Officer who is empowered to issue a notice / adjudicate the matter as per law. It clearly excludes any other Central Excise Officer from doing the same and hence the phrase the Central Excise Officer appears both in Section 73(1) (2) of FA 1994. Hence it is clear that both the SCN and the impugned order does not suffer from the vice of jurisdictional error - there are no merit in this argument. Mining Service - Exigibility of minor mineral - In relation to mining alone is taxable - Constitution exempts the property and income of a State from Union taxation - Sand is excisable goods classifiable under Central Excise Tariff Heading 2505 and can t be taxed under service tax - The sand is sold hence VAT is applicable and not Service Tax - The appellants services are covered under works contract - Exemption for services rendered to a governmental authority - Mining services in case of Neyveli Lignite Corporation - HELD THAT:- The appellant has made a multi-pronged plea against the exigibility of their activities in relation to mining to service tax. Exigibility of minor mineral - HELD THAT:- From the activities of the appellant it is clear that they are rendering taxable service to PWD in the quarrying and loading of the mineral i.e. sand which is leviable to service tax. The tax is sought to be levied on the taxable service in relation to mining and not on the goods that have been quarried - In SHREEM COAL CARRIERS (P.) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2015 (6) TMI 20 - CESTAT MUMBAI ], a coordinate Bench of this Tribunal held that the same relates to mining of sand from the riverbed and transporting the same to the Western Coalfield s mining area. Sand is a minor mineral and therefore, mining of sand from riverbed comes within the definition of mining service and will not come within the scope of Cargo Handing Service as the main activities is of mining and therefore, demand of Service Tax on mining of sand is not sustainable in law - Even if the State Government is the owner of the mineral deposits in the lands which vest in the state, it will not be immune to the tax which is imposed by the Center. In relation to mining alone is taxable - HELD THAT:- The Division Bench of the Hon ble Delhi High Court in Retails (India) Ltd. Vs Union of India Ors. [ 2011 (9) TMI 46 - DELHI HIGH COURT] examined a similar issue whether an attempt has been made through the introduction of Section 65(105)(zzzz) to levy service tax on renting of immovable property as opposed to the levy of service tax on the service provided in relation to renting of immovable property - Similarly in the case of quarrying for sand the tax is on the value added activity and not on the sand per se. In other words, what is sought to be taxed is the activities in relation to mining and not mining itself. Hence this plea does not succeed. Constitution exempts the property and income of a State from Union taxation - HELD THAT:- The appellant s activity of quarrying/ earth work excavating of sand / wet sand and loading in the lorries/ tippers of the consumer by the appellant being covered under the taxable service as defined under Section 65 (105) (zzzy) of FA 1994. Sand is excisable goods classifiable under Central Excise Tariff Heading 2505 and can t be taxed under service tax - HELD THAT:- The Hon ble Supreme Court in IN RE: THE BILL TO AMEND S. 20 OF THE SEA CUSTOMS ACT [ 1963 (5) TMI 57 - SUPREME COURT ] has contrasted sales tax with excise duty and observed that in case of sales tax, the taxable event is an act of sale. Therefore, though both excise duty and sales-tax are levied with reference to goods, the two are very different imposts; in one case the imposition is on the act of manufacture or production while in the other it is on the act of sale - As per the facts of this case the appellant is engaged in rudimentary processing of goods which is not amounting to manufacture or production of goods and is a taxable service in relation to mining, hence they are liable to pay service tax. The sand is sold hence VAT is applicable and not Service Tax - HELD THAT:- The taxable event is each exercise / activity undertaken by the service provider and each time service tax gets attracted. Hence it is possible to distinguish service tax from VAT. This satisfies the law that one transaction can be either a service or a sale hence both VAT and Service Tax cannot be levied on the same transaction, in the impugned case also. In the instant case as per the statement of Shri M Palaniswamy (appellant) dated 22/01/2015 he has not paid VAT/ sales Tax on the service charges amount received from CPWD since no sales of goods were involved. The statement has not been retracted. This fact of non-payment of VAT / Sales Tax has also been confirmed by PWD as stated at para 7 of the SCN dated 09/10/2015 itself. Since the appellant is only rendering service in relation to the mining of sand and no sale of sand is done by him requiring payment of sales tax / VAT, the appellant s plea fails. The appellants services are covered under works contract - HELD THAT:- The appellant had no rights over the land and the sand, nor was any VAT/ sales tax paid for the said activity as per the various statements given by PWD officials. If a contract is primarily a contract of work and labour and materials are supplied in execution of such contract , it is a works contract. In the appellants case no materials are supplied in execution of such contract. There is only pure service rendered by him by engaging his own laborers and the question of works contract does not arise. The substance of the contract entered into by the appellant is hence one of service, hence the service cannot be classified as a works contract - in the absence of any exemption granted, a sub-contractor has to discharge tax liability. The service recipient i.e. the main contractor can, avail the benefit of the provisions of the CENVAT Rules. Exemption to PWD for the statutory functions as defined by statue which were covered under 243 W/243G for the impugned activities relating to mining are examined below. Exemption for services rendered to a governmental authority - HELD THAT:- PWD are doing the statutory functions as defined by statue which were covered under 243 W/243G of The Constitution and hence the activity of PWD is outside scope of service / exempted - none of the activities relating to mining is mentioned in the list above as highlighted by the appellant from the appendix to Articles 243 G and W of the Constitution. Hence this plea of theirs fails. Mining services in case of Neyveli Lignite Corporation - HELD THAT:- As per section 67(2) of FA 1994, where service tax is not separately recovered from the customer, the cum-tax benefit shall be granted and the tax shall be excluded from the value of the service on which service tax is to be calculated. Hence if the benefit of cum-tax calculation has not been given by the department to the appellant the same should be given. Leasing services - HELD THAT:- In the case of vehicles supplied without a contract it was for the appellant to show the terms of engagement of vehicle by their clients, to the investigating officers. Both the customers of the appellant and Shri M Palaniswamy (appellant) in his statement dated 22/01/2015 have stated that no written agreements were executed in respect of the vehicles leased out for a short term. The appellant stated that they supplied their vehicles on a long-term basis to Shri A Senthil Kumar, Coimbatore and to M/s Senthil Kumar Building Materials Co, Coimbatore. Investigations by the officers at TAMIN revealed that the appellant supplied excavators and rock breakers at hourly rates to TAMIN. The appellant provided the operators for the machines, took care of the day-to-day repair and maintenance and also insured the vehicles - Statements given during the investigation have also not been retracted. Once a query has been raised by Revenue adverse inference could be drawn against the assessee if they are not able to provide a satisfactory reply. The initial burden of rebuttal is on the assessee because the basic facts are within their special knowledge. Even as per section 106 of the Indian Evidence Act, the fact within the knowledge of a person must be proved as the burden of proof is cast upon him. For re-working out the correct demand, the cases has to go back to the Original Authority. The duty may be worked out by bifurcating the demand made on the value of supply of vehicles covered by Agreement / contract and amounts received for supply of vehicles without an agreement/contract, by the department and informed to the appellant who shall pay the same for supply of vehicles without a contract including those leased out to TAMIN. Site formation clearance excavation, earthmoving and demolition services - HELD THAT:- The work is of a composite nature involving site formation. Further the appellant has not been able to show that the work was executed in the formation of a road for the general public. Their activities have been described above by the recipients of service and are consisting of activities related to site formation service. Hence the failure of the appellant to satisfactorily respond to the query raised by Revenue on basic facts which are within their special knowledge, has led to the inference of the appellant providing the taxable service of site formation. Even at this appeal stage they have not been able to demonstrate by way of documents that their principal activities were towards the construction of roads for use by the general public. Thus, the appellant can make a claim for exemption under the said provision of the notification if taxable services were provided by them to a Governmental Authority etc. Services provided to NAPC, L T, GVR etc. will not get the benefit of this exemption as the taxable service is not provided by the appellant to Government, a local authority or a governmental authority nor are the principal activities meant for construction of roads etc. The activities hence get covered under the definition of taxable service as per Section 65(105)(zzza) of FA 1994 and are liable to discharge duty accordingly without the benefit of exemption under Sl. No. 13 of Notification 25/2012 dated 20.6.2012. Extended Period not Invokable - HELD THAT:- In the present case, the period covered by the impugned order is from 2010 to 2015. The Show Cause Notice is dated 9.10.2015. Therefore, the maximum period upto which the demand can be imposed is only till October 2013 and the demand from 2010 to October 2013 merits to be set aside. There was never a suppression of facts to the department. Audit has been conducting periodical verification of accounts during the alleged period. They have been filing ST-3 returns and TR6 forms regularly in which they have disclosed all requisite information. Therefore, the extended period cannot be invoked. Suppressing these facts by not filing their complete Returns, even after having collected the tax from their customers, is a clear case of suppression of vital information with i7ntention to evade payment of duty. There is a positive act of suppression on the side of the appellant showing willful suppression on their part. Hence suppression of information with intention to evade payment of duty is established. In this era of self-assessment, the facts would not have been revealed had investigations into the appellants activities not been initiated by the officers of DGCEI. The issue relating to the suppression of facts is dependent on the facts of each case. This being so the extended period for issue of SCN has rightly been invoked under the proviso to sub-section (1) of section 73 of FA 1994. No penalty imposable - HELD THAT:- The question regarding the adjudication by the Commissioner on a SCN issued by the Additional Director General DGGI does not have a bearing on their nonpayment of tax. Similarly, their plea that no tax is payable on mining activity, is also not correct. Relevant statutory provision admits no ambiguity. The grammatical meaning of the taxing provision is in conformity with its legal meaning. Having had the experience of 12 years in the field and when they did not pay sales tax / VAT they should have paid Service tax or sought clarification from the department on the matter. Raising numerous, and at times contradictory, pleas does not mean that there was a substantial interpretation of law involved. Hence there is no reasonable cause involved to invoke the benefit of Section 80 of the FA 1994 - the Supreme Court, in its decision in UNION OF INDIA AND OTHERS VERSUS DHARMENDRA TEXTILE PROCESSORS AND OTHERS [ 2008 (9) TMI 52 - SUPREME COURT ], held that a section prescribing mandatory penalty should be read as penalty for a statutory offence and the authority imposing penalty has no discretion in the matter of imposition of penalty and the adjudicating authority in such cases was duty bound to impose penalty equal to the duties so determined. Application disposed off. 2023 (11) TMI 1081 Disallowance of CENVAT Credit u/r 14 of CCR - input services - nexus with the output services - Information Technology services Information Technology Enables services (IT ITES) - HELD THAT:- The proceedings under Rule 14 and Rule 5 of CCR are similar in nature. Further, taking into notice the Order of the Commissioner (Appeals) dated 18.09.2017, it is found that the issue involved in these Appeals has been already adjudicated in detail and allowed in favour of the Appellants. This Order of the Commissioner (Appeals) also includes the period of dispute in the present Appeals. The impugned order set aside - appeal allowed. 2023 (11) TMI 1080 Exemption from Service Tax - services provided to the Chief Engineer, Military Engineer Services - applicability of N/N. 25/2012-ST dated 20.06.2012 - suppression of facts on the part of the appellant or not - extended period of limitation - HELD THAT:- It was possible for the Appellant to hold that on the activity carried out by them service tax was not payable on such activity since the services were provided to central government for discharge of sovereign function. Whether the demand of service tax is required to be set aside on the ground of limitation? - HELD THAT:- It is undisputed fact in the present matter that the entire issue has arisen on the basis of comparison of the income disclosed by the appellant in their financial statements and disclosed the value of taxable services in their periodical returns. It is also undisputed fact that the entire income was recorded as a income in the financial statements of the appellant. Therefore it is not a case where the income was also not recorded in financial statement and the revenue authorities found out the rendition of services on the part of the appellant basis on some other sources. It can be seen from the above that Ld. Commissioner has only observed that since the appellant did not disclose the revenue for these project in their periodical return and therefore the Ld. Commissioner has justified the invocation of extended period of limitation to confirm the demand of service tax in the present matter. Learned Commissioner has not given any ground to show that there was a deliberate attempt on the part of the appellant to suppress or to miss declare the value of service - Ld. Commissioner has not even examined the various ingredients for invocation of extended period of limitation as provided in first proviso to section 73(1) of the Finance Act 1994 - It is obsereved that on the basis of the above analysis of Section 73(1) of the Finance Act, 1994 and various decision of these tribunal and settled principle of law, the demand of service tax in the present matter beyond the period of limitation is not sustainable. The demand in the present matter is for the period 2016-17 and April 2017 to June 2017 and the show cause notice is issued on 27.08.2020. Therefore the entire demand is liable to be set aside on the ground of limitation - the impugned order is set aside - Appeal allowed. 2023 (11) TMI 1079 Levy of interest and penalty - Non-payment of service tax - reimbursement received on various headings - principles of natural justice - HELD THAT:- It has been held by the Hon ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] wherein the Hon ble Supreme Court has held that reimbursable amount is not part of the consideration received and hence is not liable for Service Tax payment - Even the Co-ordinate Benches of the Tribunal at Bangalore and Ahmedabad have held in the case of the same Appellant (CISF) that medical expenses and other reimbursable expenses are not liable for Service Tax. Therefore, the Appellant is not required to pay Service Tax Rs. 1,29,625/- on account of medical expenses reimbursement received in 2009-10 and Service Tax of Rs. 1,70,049/- on account of medical expenses reimbursement received in 2010-11 - interest and penalty on these amounts set aside. Balance confirmed Service Tax amount of around Rs. 30.00 Lakhs - Appellant claims that they have taken the correct turnover while discharging the Service Tax, but due to some clerical and typographical error, the correct figures have not been reflected in the ST-3 Returns, which has resulted in confirmation of this amount in the Order-in-Original - HELD THAT:- This fact is required to be verified by the adjudicating authority - matter remanded to the adjudicating authority for the limited purpose of getting this fact verified in respect of payments made by them vis- -vis the turnover taken by the Department to confirm the demand in the impugned Order-in-Original. He is directed to follow the principles of natural justice and give opportunity to the Appellant to provide all the documentary evidences, Chartered Accountant Certificate etc. in support of their submissions. Appeal disposed off. 2023 (11) TMI 1078 Refund claim - time limitation - claim rejected on the ground of time bar holding that the refund claim has not been filed within one year as is required under section 11B of the erstwhile Central Excise Act - HELD THAT:- The bare perusal makes it clear that Section 142(5) of CGST Act, 2017 provides that the refund claim of service tax paid under the existing law (Central Excise Act, 1944) in respect of services not provided shall be disposed of under the existing law and has to be paid in cash. It states that such refund is subject to provisions of sub-section (2) of section 11B of Central Excise Act, 1944 only. In the present case, refund has been rejected on the ground of being filed beyond the period of one year as stipulated in sub-section (1) of section 11B. The contract having been annulled on 9.8.2018, it cannot be expected of the appellant to file the refund claim within a period of one year from the date (6.6.2017) of payment of service tax. Further, section 142(5) expressly states that the limitation provided in sub-section (1) of section 11B is not applicable - Thus it is only in case of unjust enrichment to the appellant that he can be denied the refund of the amount which was available to him under existing/ erstwhile law. The appellant was eligible for Cenvat Credit of the amount paid in terms of Rule 6 (3) of the erstwhile statute had there been no cancellation of the contract for providing the service, the adjudicating authority below have held that the assessee in the present case has not been unjustly enriched. In the present case from the apparent admission for the fact that the agreement for providing service was got cancelled at the stage when no service was yet provided, there remains no scope for any service to be provided in future. Thus, there remains no occasion for any tax liability on the appellant and no authority with the Government to collect such an amount. In view thereof and in view of Article 265 of Constitution of India, the authority cannot retain the said amount. Thus, it is held that there was no reason with the adjudicating authority to invoke section 11 B and the amount was to be refunded notwithstanding anything contrary in the erstwhile law. As it is held that refund claim has wrongly been rejected, the order under challenge is therefore set aside - appeal allowed. 2023 (11) TMI 1077 Refund of service tax paid - SEZ Units - various input services which it had received from its corporate office through ISD invoices - Service Tax exemption notification No. 12/2013-ST - Claim rejected since filed after one year from the date on which the service tax was paid to the service provider and hence they did not meet the time limit set in the exemption notification - what is the meaning of an authorised operation and what is the meaning of prescribed under the SEZ Act and what are such prescriptions and whether they have been fulfilled? - interest on delayed refund. HELD THAT:- While the SEZ Act itself provided for exemption from service tax (as well as Central Excise duty and Customs duty), exemption notifications were also issued by the Government under the respective laws. These exemption notifications were also issued with some conditions. Thus, there is duplication inasmuch as the goods and services provided to authorised operations of developers and units in the SEZs are exempted from Customs duty, Central Excise duty and the service tax by the SEZ Act itself (subject to the manner which may be prescribed) and there are also exemption notifications under the respective tax laws which are also subject to some conditions. The exemption notification in dispute in this case is service tax exemption notification ST-40/2012 dated 20.6.2013. Thus, the legal position is that SEZ Act overrides any other law because of section 51 of the SEZ Act. The question is what part of the tax law have been overridden by the SEZ Act. To answer this question, we proceed to examine the requirement under the Constitution of India to levy taxes and the relevant legal provisions of the Central Excise Act and Customs Act and Chapter V of the Finance Act, 1994 under which Service Tax is levied - The charging sections, having been overridden by the SEZ Act, no legal authority to levy and collect central excise duty, customs duty or service tax for goods or services supplied for authorised operations of SEZ developers and units covered by section 26 remains. Without such a legal authority, no tax or duty can be either levied or collected in view of article 265 of the Constitution of India. Service tax was levied under Chapter V of the Finance Act, 1994 under section 66 on taxable services. The list of taxable services was defined under section 65(105) and this list was expanded from time to time. If the taxable service was provided as a part of a works contract which involved both rendering the service and transfer or deemed transfer of goods, exemption notifications were issued by the Government towards abatement of the value of the goods used in the services. Later, on 1.6.2007, works contract service, itself was introduced as a service - the exemption notifications issued under the Finance Act, 1994 are redundant because service tax was already exempted by the Parliament by section 26 of the SEZ Act. Any conditions in such notifications are also, therefore, irrelevant and need not be fulfilled - The question is, therefore, answered in favour of the appellant and the appellant is eligible to refund of service tax. Claim of interest by the appellant on delayed payment of refund - HELD THAT:- As far as the claim of interest by the appellant on delayed payment of refund under section 11BB of the Central Excise Act, 1944 as made applicable to service tax by section 83 of the Finance Act, 1994 is concerned, it is found that once the SEZ unit is out of the purview of the Finance Act, 1994 itself, the provisions for payment of interest under it also do not apply to the refunds in question. The question of grant of interest is, therefore, answered against the appellant. The appellant is entitled to refund in all the eight applications - refund must be sanctioned and paid in all cases where it has not already been paid - appellant is not entitled to interest on any of the refunds - appeal disposed off. 2023 (11) TMI 1076 Part refund rejected - Air Travel Agent services - Banking and Financial services - Business Support services - Chartered Accountant services - - Custom House Agent services - General Insurance services - Facility Management Services - Management, Maintenance Repair services - Management or Business Consultant services - Rent-a-Cab services - Telecommunication services - rejection on the ground that there is no nexus between input services and the output services exported by the Appellant - period of dispute is from April 2011 to September 2011. Air Travel Agent services - HELD THAT:- These services are in connection with services provided by the air travel agent to book air tickets for employees travelling for the purpose of visiting clients or conducting business meetings. The service is also required for the purpose of travelling abroad for getting training to execute the work effectively and train others. Therefore, travelling is essential and is used by the appellant directly in connection with the export of output services - Reliance can be placed in Appellant s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [ 2017 (1) TMI 658 - CESTAT HYDERABAD] . Banking and Financial services - HELD THAT:- These services were received to provide employees with the foreign currency to enable them to meet the expenditure during overseas tour to meet the client and hence, directly connected with the rendering and export of output services by the Appellant - Reliance can be placed in Appellant s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [ 2017 (1) TMI 658 - CESTAT HYDERABAD] . Business Support services - HELD THAT:- These services are in connection with photocopying, including record maintenance services, required to maintain proper documentation and hence, essential for proper functioning of the Appellant - Reliance can be placed in Appellant s own cases in Final Order No. A/30012/2015 passed for the period January 2010 to March 2010 and October 2010 to December 2010 [ 2016 (8) TMI 40 - CESTAT HYDERABAD] . Chartered Accountant services - HELD THAT:- These services were in connection with the issuance of certificate in connection with foreign currency remittances, statutory and tax audit including transfer pricing study - Reliance can be placed in Appellant s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [ 2017 (1) TMI 658 - CESTAT HYDERABAD] . Courier services - HELD THAT:- These services are for sending documents to customers and/or vendors, which is an integral part of the appellant s business. Also such courier facility was not used for employees for their personal use and the same was exclusively used by the appellant for their business purposes - Reliance can be placed in Appellant s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [ 2017 (1) TMI 658 - CESTAT HYDERABAD] . Custom House Agent services - HELD THAT:- These services were availed in connection with import of IT equipment s where the Custom House agents assist the appellant in the customs clearance process relating to the imported goods. These services are eligible considering that they are in relation to import of goods which in turn are used in the development of software for export - Reliance can be placed in Appellant s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [ 2017 (1) TMI 658 - CESTAT HYDERABAD] . General Insurance services - HELD THAT:- These services were for the purpose of insuring the office premises from fire and burglary, without which the appellant cannot render the taxable service - Reliance can be placed in RMZ Infotech Private Limited Vs. CCT, Bangalore East [2021-VIL-822- CESTAT-BLR-ST] [ 2021 (11) TMI 1108 - CESTAT BANGALORE] . Facility Management Services - HELD THAT:- These services are essentially in relation to day to day maintenance of the facility including security, cleaning and housekeeping services so that the work can be conducted in the business premises efficiently and flawlessly - Reliance can be placed in Appellant s own cases in Final Order No. A/30012/2015 passed for the period January 2010 to March 2010 and October 2010 to December 2010 [ 2016 (8) TMI 40 - CESTAT HYDERABAD] . Management, Maintenance Repair services - HELD THAT:- These services are procured in relation to the office maintenance, maintenance or repair of IT equipment and other machinery like computer servers, air conditioning systems etc. which are required for efficient functioning of business without which the appellant cannot perform its output service - Reliance can be placed in Appellant s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [ 2017 (1) TMI 658 - CESTAT HYDERABAD] . Management or Business Consultant services - HELD THAT:- These services are in connection with the accounting, payroll, tax and regulatory services rendered by the management consultants. These services are very essential in functioning, compliance with the statutory and legal requirements and making the operations of the Appellant more cost-efficient - Reliance can be placed in Appellant s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [ 2017 (1) TMI 658 - CESTAT HYDERABAD] . Rent-a-Cab services - HELD THAT:- These services are availed in order to provide transportation to employees from their place of residence to work place and back and hence, essential for the provision of output services by the company and hence, eligible for credit and refund. Further, the Appellant has taken Cenvat credit on the rent-a-cab services which were used prior to April 1, 2011 - Reliance can be placed in Appellant s own cases in Final Order No. A/30012/2015 passed for the period January 2010 to March 2010 and October 2010 to December 2010 [ 2016 (8) TMI 40 - CESTAT HYDERABAD] . Telecommunication services - HELD THAT:- These services in the nature of tele-conference facilities, telephone connections and mobile phone facilities are required in order to communicate with customers and vendors and hence, essential for the functioning/business of the appellant - Reliance can be placed in Appellant s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [ 2017 (1) TMI 658 - CESTAT HYDERABAD] . Thus, in view of the facts and circumstances of the case and considering the relied upon case laws, the Appeal filed by the Appellant is allowed and the Impugned Order set aside - appeal allowed. 2023 (11) TMI 1075 Condonation of delay in filing appeal - appeal not presented within the period of two months nor within the extended period of one month -satisfactory reason for delay presented or not - HELD THAT:- A perusal of sub-section (3A) of section 85 clearly indicates that an appeal shall be presented within two months from the date of receipt of the order of the adjudicating authority in relation to Service Tax, interest or penalty. It further provides that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, allow it to be presented within a further period of one month. The discretion of the Commissioner to condone the delay is, therefore, circumscribed by the condition set out in proviso and the delay can be condoned only if the appeal is presented within a further period of one month after the expiry of the statutory period of two months. In the present case, admittedly, the order dated 29.12.2016 of the adjudicating authority was received by the appellant on 06.01.2017, but the appeal was presented before the Commissioner (Appeals) on 27.12.2017. It was clearly not presented within the period of two months nor within the extended period of one month. Section 35 of the Central Excise Act, 1944 provides that any person aggrieved by any decision or order passed under the Act, may appeal to the Commissioner (Appeals) within sixty days from the date of the communication to him of such decision or order provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of thirty days. The provisions of section 35 of the Central Excise Act, 1944 are pari materia with section 85(3A) of the Finance Act. The Supreme Court in SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] held that the period upto which the prayer for condonation can be accepted is limited by the proviso to sub-section (1) of section 35 of the Act and the position is crystal clear that the appellate authority has no power to allow the appeal to be presented beyond the period of thirty days after the expiry period of sixty days. In other words, the appellate authority can entertain the appeal by condoning the delay only upto 30 days beyond the normal period for preferring the appeal, which is 60 days. It is, therefore, not possible to accept the contention advanced by the learned counsel for the appellant that the Commissioner (Appeals) should have condoned the delay as satisfactory explanation had been offered. The Commissioner (Appeals) was, therefore, justified in dismissing the appeal on the ground of limitation. Appeal dismissed. 2023 (11) TMI 1074 Levy of Service Tax - amount received from the resident/members of the Society against supply of water and maintenance of water filtration, lifting, storage system under the Contract - HELD THAT:- The issue has been decided by the Gujarat High Court in SPORTS CLUB OF GUJARAT LTD VERSUS UNION OF INDIA 3 [ 2013 (7) TMI 510 - GUJARAT HIGH COURT] , Jharkhand High Court in RANCHI CLUB LTD. VERSUS CHIEF COMMISSIONER OF CENTRAL EXCISE SERVICE TAX [ 2012 (6) TMI 636 - JHARKHAND HIGH COURT] and also by this Tribunal in M/S FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY, M/S ELECTRONIC AND COMPUTER SOFTWARE EXPORT PROMOTION COUNCIL VERSUS CST, DELHI [ 2014 (5) TMI 183 - CESTAT NEW DELHI] . The same have been followed in a later order by the Principal Bench in CST, DELHI VERSUS DLF GOLF RESORTS LIMITED AND VICE VERSA [ 2015 (11) TMI 1663 - CESTAT, NEW DELHI] , inter alia, observing that the services provided to its members are not taxable under the category of Management, Maintenance or Repair as per Section 65(64) of the Finance Act. The present case is squarely covered by these decisions and does not call for any further interpretation. Thus, the appellant is not liable to pay service tax under Section 73(2) of the Finance Act and, therefore, the demand of interest under Section 75 and penalty under Section 78 is not sustainable - the impugned order set aside - appeal allowed. 2023 (11) TMI 1073 Service of SCN - recovery notice was delivered late - Appeal rejected on the ground of limitation - appellant alleged to have not declared and discharged service tax towards income from various types of commission and some other taxable heads - HELD THAT:- The Order-in-Original dated 30.7.2020 was served upon the appellant by two different modes one by speed post which apparently has not returned back undelivered ; two that the order was delivered to one of the employee of appellant namely Shri Prateek Rao. He admittedly is the employee of appellant as service supervisor - it is opined that issuance of copy of order by speed post does not amount to service thereof as such. Because it will be mere dispatch of the order. As per section 85 of Finance Act, 1994, period two months for filing appeal before the Commissioner (Appeals) has to reckon not from the date of Order-in-Original but from the date of receipt of the said order by the assessee. No doubt in section 37C, speed post is the mode of service but proof of dispatch is still mandatory. In the absence of proof of receipt of the O-I-O to the appellant sent by speed post, the same cannot be held to have been served. With respect to second mode of service, it is observed that Shri Prateek Rao, who admittedly received the order is an employee of the appellant in their workshop. In addition, ld.CA has placed on record an affidavit of Shri Prateek Rao, wherein he deposed that he received notice but he failed to bring it to the notice of the appellant. The contents of said affidavit are fully corroborated by partner of the appellant, Shri Abbas Ali Ghasswala. The present appeal shall not be thrown at the threshold and shall be decided on the merits of the case - this is a fit case to be remanded to the Commissioner (Appeals) with the direction to decide the appeal on merits of the case after giving reasonable opportunity of hearing to the appellant - appeal allowed by way of remand. Central Excise 2023 (11) TMI 1072 Validity of SCN - Recovery of Refund claim - Issuance of impugned notices for return of the Cess, since earlier it had been refunded on the basis of then valid law, as laid down by the Supreme Court. HELD THAT:- When the matters were taken up for final consideration, it was reported to this Court that, the same issue was pending before the Supreme Court, and as such, all these matters were adjourned on many dates, to await the outcome thereof. The matters before the Supreme Court were then disposed of vide order dated 04.07.2022, whereby the subsequent decision of the Supreme Court overruling M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI [ 2017 (11) TMI 655 - SUPREME COURT] in the case of M/S. UNICORN INDUSTRIES VERSUS UNION OF INDIA OTHERS [ 2019 (12) TMI 286 - SUPREME COURT] was held, to not have any bearing on past decisions, which attained finality. These writ petitions are disposed of, and accordingly the show-cause/demand/recovery notices appearing in all these connected writ petitions stand quashed and set aside. 2023 (11) TMI 1071 Recovery of CENVAT Credit wrongly availed - disputed quantity of inputs of 9.857 MTs waste and scrap purchased by the Respondent, Arsh Alloys from various ship breaking units during the period from April 2007 to August 2010 - It is the case of department that Respondent has received only invoices from ship breaking units without actual receipt of inputs. HELD THAT:- It can be seen that case of the department is not solely based on statements of various third parties but also other material viz. bazaar scrap, note book showing details of transactions with the ship breakers found at the premises of Respondent and discrepancies noticed in transport documents viz. quantity transported beyond permissible limit and absence of chantiwala (scrap sorter) engaged by the Respondent. As regards, bazaar scrap found during search at the premises of Respondent, learned Commissioner has observed that it is not possible to identify the nature of scrap from the photographs and that Panchnama does not disclose educational qualification and work experience of witnesess and hence they could not have been considered as experts for forming opinion on the nature of scrap - Mere fact that Respondent has also been buying bazaar scrap on which no duty is paid itself is not enough to hold that all 1366 consignments of duty paid inputs were not received by the Respondent during the period April 2007 to August 2010 and that the final products cleared during this period on which duties were admittedly paid were entirely manufactured out of bazaar scrap. As regards Respondent having not engaged any chantiwala (scrap sorter) the show cause notice in para 6.3.21 relies upon the statement of brokers which are found to be not reliable by the commissioner in absence of any corroborative evidence and further, some have been retracted/sought to be corrected by brokers by way of filing affidavits. Be that as it may, no question was put forth to the partner of Arsh Alloys in the statements dated 18.11.2010 and 13.03.2012 that in absence of Chantiwala having been engaged how they were able to purchase the scrap - no inference can be drawn on that basis to hold that inputs in question were not received by the Respondent. The next contention of the department is that evidence of cash flow back viz. note book has not been considered by the Learned Commissioner. Reliance has been placed by the department on the statements dated 7-9-2011, 16- 3-2012 and 16-4-2012 of broker namely Kalpesh Prabhudas Mehta who appears to have confirmed that the said entries in the note book pertain to cash amount paid back to the ship breakers against cheques issued by Respondent - There is no investigation undertaken or evidence gathered at the premises of re-rolling mills to whom goods were allegedly diverted. Similarly, reliance has been placed on the statement dated 16-3-2012 of broker named Priyesh Bharatbhai Parekh is also misplaced which in first place does not refer to the Respondent but Ahmed steel. It appears, the brokers have opined based on the statement of vehicle owners and entries of the note book and not based on perusal of the records of transaction maintained by them. There are otherwise no records of brokers investigated. Since, the statements are not supported with records maintained by the brokers with regard to the transactions in question; not even one entry in the note book stands corroborated with the records of the brokers, such statements of brokers were rightly discarded by the Learned Commissioner. Learned Commissioner has also discarded the statements of owner of vehicles and statements of authorized persons of rerolling mills being inadmissible evidence on account of absence of any investigation or records of such third parties brought in support of their statements - it is a settled law that where there are tangible documentary evidence in favour of the assesse and even there are overall statements of third party contradicting the documentary evidence, such tangible documentary evidence must be given primacy over the overall statements. Thus, there is no infirmity in the Order of Learned Commissioner and the same has to be upheld. In the result, impugned order is upheld and appeals of the appellant/revenue are dismissed. 2023 (11) TMI 1070 CENVAT Credit - sulphuric acid (by- product) - common input used for manufacture of taxable as well as exempt goods - non-maintenance of separate records - reliance placed upon Explanation (1) introduced w.e.f. 01.03.2015 and Board circular dtd. 25.04.2016 to demand the amount in terms of Rule 6(3) of Cenvat Credit Rules, 2004. HELD THAT:- A perusal of Rule 6(1) clearly shows that the manufacturer has to manufacture dutiable goods as well as exempted goods. It has to be seen that though the said explanation puts forward a deeming provision that non-excisable goods cleared on payment of consideration are also to be considered as exempted goods, there is no corresponding amendment made in sub-rule (1) of Rule 6 so that the goods that emerged out of process of manufacture falling in clause (1) are also to be considered as exempted goods. As per the settled decisions, the disputed goods which are not consciously manufactured by the appellant and which emerged unavoidably in the process of manufacture of other goods cannot be considered as goods manufactured by the appellant. Since disputed goods is not manufactured goods but the by-product which emerges/comes into existence in the process of manufacture of copper products, and therefore the production of Sulphuric Acid cannot be held to be manufacture of exempted goods. From para 3.7 of Chapter 5 of Circular dtd. 25.04.2016, it is clear that any input/input services contained in any by-product/waste/refuse, Cenvat Credit cannot be varied or denied. With this statutory clarification demand under Rule 6 in respect of by-product is not applicable - Once it is established that the product in question is by-product then it is settled that in respect of by-product demand under Rule 6 will not sustain. Accordingly, in the present case also, Sulphuric Acid being a by-product, no demand under Rule 6 shall sustain. Appeal of assessee allowed. 2023 (11) TMI 1069 Invocation of Extended period of Limitation - Recovery of central excise duty on coal extracted and cleared by Jindal Steel Power Ltd. - suppression of material facts from the department - additional value of coal was not included by the appellant in the invoices for payment of excise duty and this fact was not disclosed in the statutory ER-1 returns - revenue neutrality - HELD THAT:- In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT ], the Supreme Court examined whether the department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Central Excise Act. The proviso to section 11A of the Central Excise Act which was considered by the Supreme Court carved out an exception to the provisions that permitted the department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It would transpire from the aforesaid decision that mere suppression of facts is not enough and there must be a deliberate and wilful attempt on the part of the assessee to evade payment of duty. In the absence of any intention to evade payment of service tax, which intention should be evident from the materials on record or from the conduct of the assessee, the extended period of limitation cannot be invoked. In the present case, the show cause notice merely alleges that because the appellant did not pay central excise duty on additional levy at the rate of Rs. 295 /- per MT, the appellant suppressed material facts. There is no allegation in the show cause notice that such suppression was with an intent to evade payment of central excise duty. This was an important aspect, which was required to be not only alleged in the show cause notice, but also to be proved by the department before the extended period of limitation of five years could have been invoked. However, it has neither been alleged nor proved - In such circumstances, it is not possible to hold, even if there was suppression of facts, that the appellant had any intent to evade payment of central excise duty. Revenue Neutrality - HELD THAT:- Even if there was any additional duty payable by the appellant, the same would be admissible as CENVAT credit to its own Raigarh unit. Such CENVAT credit would have been utilized by the Raigarh unit for payment of central excise duty at its end. Therefore, the entire exercise of demanding any further excise duty would be revenue neutral. It, therefore, follows that the extended period of limitation could not have been invoked in the facts and circumstances of the case. As the entire demand of central excise duty has been confirmed after invoking the extended period of limitation, the confirmation of the demand would have to be set aside - In this view of the matter, it would not be necessary to examine whether the additional levy of Rs. 295/- per MT was actually required to be added to the cost of production. Appeal allowed. 2023 (11) TMI 1068 Disallowance of CENVAT Credit - inputs and capital goods - process of making electronic capacitor grade metalized dielectric plastic film (MPP film), falling under Chapter 3920 2090 of the CETA, 1985, amounts to manufacture or not - HELD THAT:- The issue whether the process of making MPP film amounts to manufacture or not is no longer res integra - under similar facts and circumstances, the Coordinate Bench of this Tribunal at Mumbai in the case of Paper Products Ltd., vs CCE, Mumbai [ 2014 (3) TMI 521 - CESTAT MUMBAI ] have distinguished the ruling of Hon ble Supreme Court in the case of Metalex India Pvt Ltd., vs CCE [ 2004 (2) TMI 387 - SUPREME COURT ] and have held that under similar facts and circumstances, the process amounts to manufacture. It is further found that Coordinate Bench in Chandigarh in the case of Dhruv Industries Ltd., vs CCE, Delhi-III [ 2018 (4) TMI 1492 - CESTAT CHANDIGARH ] have also, under similar facts and circumstances, distinguished the ruling of Metalex and held that a new product comes into existence by use of the various raw materials viz., Poly Propylene, Polyester Films of Aluminium Zinc, which is coated and further the process required use of capital goods/ machinery involving substantial cost and such process of manufacture takes about 36 hours. It was held that a new product comes into existence. Thus, the process of making MPP Films, capacitor grade from plain plastic film would amount to manufacturing process during the relevant period and the MPP, classifiable under CETH 3920 2090 would still be a manufactured good under Section 2(f), irrespective of absence of any chapter note specifically declaring the said activity as a manufacturing activity. Once the process is considered as manufacturing process, the credit becomes admissible. The Appellant is entitled to Cenvat credit - appeal allowed. CST, VAT & Sales Tax 2023 (11) TMI 1067 Maintainability of appeal - appellant was relegated to pursue his alternative remedy under the statute - Recovery of tax dues of the firm for the assessment year 2002-2003 - appellant retired from the partnership with effect from 17.10.2000 and the fact of his retirement was intimated to the Department - HELD THAT:- It is not in dispute that the retirement deed that showed the appellant as having retired from the partnership firm in the year 2000 was received by the Department well before the assessment year 2002-2003. It is also not in dispute that in the penalty proceedings initiated for the said period, the appellant was not shown as partner of the firm that was proceeded against. Still further, in the assessment proceedings against the firm, the partner who was admitted to the partnership in lieu of the appellant was also shown as a partner of the firm that was proceeded against - the said actions on the part of the Department would by themselves indicate that the Department was in the know of things and in particular of the fact that the appellant had ceased to be a partner of the firm in 2000 itself. The acceptance by the Department of the retirement deed, and their knowledge with regard to the fact of retirement of the appellant, are sufficient to conclude that the object of Rule 5(8) of the KGST Rules was met in the facts of the instant case. If that be so, then it is apparent that the Department could not have proceeded against the appellant for realisation of the tax dues of the firm for the assessment year 2002- 2003. Thus, it was unnecessary for the learned singe judge to have relegated the appellant to pursue his alternative remedy under the statute - the assessment orders/revenue recovery notices impugned in the writ petition is set aside - appeal allowed. Indian Laws 2023 (11) TMI 1066 Dishonour of Cheque - Oreder of conviction and sentence of accused - insufficient funds - seizure of account - payment stopped by Court order - payment stopped by drawer - evidence led by the petitioner-accused regarding the reason behind the dishonour of cheque or not - rebuttal of presumption - seeking dismissal of all the revision petitions - HELD THAT:- It is in the light of the legal position that it is required to be seen that whether accused has been able to probabilise his defence. Here itself, it may be noted that the accused is not required to prove his defence on the standard of proof beyond reasonable doubt and rather, he is simply required to probabilise his defence. The presumption under Section 139 of the Act can be rebutted even by evidence led by the complainant; and it is not required for the defence to lead evidence to rebut presumption, as has been held in PAWAN KUMAR VERSUS SUNIL KUMAR [ 2016 (9) TMI 1663 - PUNJAB AND HARYANA HIGH COURT] by this court and also by the Hon ble Supreme Court in SHIV KUMAR VERSUS RAMAVTAR AGARWAL [ 2020 (2) TMI 1584 - SUPREME COURT] . Contention of ld. counsel for the petitioner is that in the present case also, the cheques in question had been given to the complainant in January/February 2015 as per his Statement. The cheques were payable during June to September 2015, but before the cheques became payable, the account of the petitioner was seized on 10.03.2015 as per Ex.CW2/3. As per the contention, petitioner was left with no control over his bank account either to deposit the funds or to make arrangement with the bank by entering into any agreement with the Bank and that act of attachment of the bank account was not the voluntary act on the part of the petitioner and so, he cannot be held liable - Neither at the time of handing over the cheques nor at the time of seizure nor at the time when the payments became due under the cheque, the petitioner had the sufficient amount in his account. It is not the defence of the petitioner that he wanted to make arrangement with his bank so as to honour the cheques. Thus, it is held that simply because drawer of the cheque is unable to pay the cheque amount, due to the fact that account stood freezed cannot be the reason to exonerate the liability of the accused-petitioner. In present case, as per trial court record, the accused was produced in the Court of ld. JMIC, Gurgaon for the first time on 23.12.2015 pursuant to the production warrants issued for him. There is nothing on record to suggest that at any point of time, petitioner-accused ever pleaded before the Court that though he had not received the legal notice, but he was ready to make payment of the cheque amount or that he be allowed to make necessary arrangement with the Bank so as to make payment of the cheque amount. No attempt appears to have been made on the part of the accused to move appropriate application before the concerned Court for getting his account released. In fact, the seizure of the account by the Court in the criminal case came as a boon for the petitioner because he factually did not have any amount in his account at any point of time so as to honour the cheque and on account of seizure of the account, he got the excuse to plead before the Court that his account has been seized. The last contention raised on behalf of the petitioner is that cheques had been misused as these were issued as a security cheque. The contention is again without any merit as it has been specifically testified by CW1 complainant that all the particulars in the cheques were filled in by the accused himself. Even if it is presumed for the sake of arguments that cheques were issued as a security, the dishonour thereof will still attract Section 138 of the NI Act - In SHALINI ENTERPRISE AND ORS. VERSUS INDIABULLS FINANCIAL SERVICES LTD. [ 2012 (9) TMI 1213 - PUNJAB AND HARYANA HIGH COURT] , similar plea of security cheque was taken. It was held by this Court held that the argument of the learned counsel for the petitioner that on dishonouring of a security cheque no offence punishable under section 138 of the Negotiable Instruments Act is made out. This court finds no merit in any of these revisions. Same are dismissed.
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