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TMI Tax Updates - e-Newsletter
December 10, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI Short Notes
Highlights / Catch Notes
GST
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Bank's improper use of Escrow fund for loan recovery led to GST non-payment, Court allows writ challenging it.
Case-Laws - HC : The High Court held that the writ petition challenging the respondent Bank's actions in not releasing amounts deposited in an Escrow Account for payment of statutory liabilities like GST from 2017 onwards is maintainable, despite other disputes being adjudicated before the Debts Recovery Tribunal. The Bank's adjustments to the receivables in the Escrow Account for loan repayment, resulting in non-compliance with statutory requirements like filing GSTR-3B and non-payment of GST, constituted a breach of the Escrow Agreement. The petitioner Company did not have control or the right to operate the Escrow Account, which was to be operated by the respondent Bank as per the Agreement. Consequently, the writ petition was allowed.
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Construction contract across states: Tax liability split based on work value in each state.
Case-Laws - HC : The High Court held that for a works contract involving construction of a barrage across two states, Telangana and Maharashtra, the place of supply would be determined proportionately based on the value of services rendered in each state as per Section 12(3) of the IGST Act. Consequently, the supply would qualify as an intra-state supply u/s 8 of the IGST Act in proportion to the work executed in the respective states by the contractors registered there. The tax liability must be discharged individually in each state commensurate with the work executed therein. The petitioner's refund claim for TDS was rejected due to lack of evidence regarding discharge of tax liability in Maharashtra. However, the High Court allowed the petitioner to approach the adjudicating authority with relevant documents proving tax payment in Maharashtra for reconsideration of the refund claim after due opportunity to both parties.
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Private firm's challenge to tax notice dismissed; CAG audit jurisdiction limited.
Case-Laws - HC : The High Court dismissed the petition filed by the Petitioner challenging the show cause notice issued by the Respondents. The Court held that the Comptroller and Auditor General (CAG) or its officials do not have jurisdiction to audit private companies like the Petitioner. Since the impugned show cause notice was not based on any audit undertaken by CAG/CERA, the Court did not delve into the issue of quashing the notice or prohibiting the Respondents from proceeding further. The Court found no infirmity in invoking the extended period of limitation as allegations of suppression or non-declaration were made in the show cause notice. The Court rejected the contention that the documents submitted or explanation offered by the Petitioner were not considered, stating that a show cause notice merely records a prima facie opinion and is not a judgment after adjudication.
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Discrepancies in notice & assessment order violated natural justice; petitioner granted chance to present case.
Case-Laws - HC : The High Court set aside the impugned order and treated it as a Show Cause Notice due to discrepancies between the Show Cause Notice and the assessment order, thereby violating principles of natural justice by denying the petitioner an opportunity to present their case. The petitioner was granted four weeks to file objections with supporting documents, which the respondent must consider after affording a reasonable opportunity of hearing, and pass orders in accordance with law. The writ petition was disposed of.
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High Court quashes GST assessment orders citing time limits & lack of personal hearing opportunity, remands for reassessment.
Case-Laws - HC : The High Court allowed the petitions challenging the assessment orders for 2017-18, 2018-19, and 2019-20 on the grounds of limitation and violation of principles of natural justice. Regarding limitation, the court held that the extended due dates for filing returns fell within the limitation period after excluding the period from 15.03.2020 to 28.02.2022 as per the Supreme Court's directions due to the COVID-19 pandemic. The assessment orders were set aside for violating the statutory mandate of providing an opportunity for personal hearing u/s 75(4) of the GST Acts. The matters were remitted to the respective Assessing Officers to issue notices for personal hearing, hear the assessees if they appear, and pass orders within three months from the judgment date or the remaining limitation period, whichever is later.
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Petitioner's challenge to tax demand stayed pending constitution of appellate tribunal.
Case-Laws - HC : The High Court disposed of the petitioner's appeal challenging the impugned order and consequent summary of demand in Form GST APL-04. The court held that the petitioners may file an appeal once the president or state president of the appellate tribunal constituted u/s 107 of the Act of 2017 assumes office. Subject to depositing 20% of the remaining disputed tax amount, if not already deposited, in addition to the earlier deposit u/s 107(6) of the BGST Act, the petitioner must be granted the statutory benefit of stay u/s 112(9) of the BGST Act. The petitioner cannot be deprived of this benefit due to the respondents' failure to constitute the tribunal.
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Improper revival of tax proceedings after initial satisfaction violates natural justice principles.
Case-Laws - HC : The High Court held that the proceedings initiated u/s 74 of the CGST Act, 2017 were vitiated as the Proper Officer had previously dropped the proceedings u/s 61(2) after finding the reply satisfactory. Initiating proceedings u/s 74 after dropping Section 61 proceedings violated the principles of natural justice. Consequently, the High Court quashed the order dated 14.06.2023 passed u/s 74(1) and the notice dated 21.04.2023 issued u/s 74(1) of the CGST Act.
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Insurance premium & reinsurance commission not 'supply' - Refund due on deposits made pending litigation.
Case-Laws - HC : The High Court held that the co-insurance premium and reinsurance commission would not be considered as supply and thus, the petitioners are entitled to a refund. The amounts deposited by the petitioner were not towards discharge of tax liability, but merely deposits pursuant to the court's order pending final adjudication. Since the utilization of these amounts for tax payment was deferred, they do not fall under the exclusions from refund under Schedule III of the CGST Act. Consequently, the impugned orders were set aside and the petitions allowed.
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Taxpayer's plea dismissed; instructed to appeal against assessment order to Appellate Authority.
Case-Laws - HC : The High Court dismissed the petition on the ground of availability of an alternative statutory remedy of appeal against the assessment order. The petitioner challenged the assessment order citing limitation and violation of principles of natural justice. However, the Court held that whether the extended period of limitation applies and principles of natural justice were violated are mixed questions of fact and law best examined by the Appellate Authority. No serious jurisdictional error warranting interference by the High Court was established. The alleged procedural improprieties can be adequately addressed by the Appellate Authority. Consequently, the Court relegated the petitioner to avail the statutory alternative remedy.
Income Tax
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Charitable Society Wins Tax Battle: Court Upholds Tax Exemption Despite Activities Beyond Core Objects.
Case-Laws - HC : The High Court upheld the Income Tax Appellate Tribunal's order setting aside the cancellation of registration granted u/s 12A to the assessee-society. The Court held that the Commissioner of Income Tax did not have retrospective jurisdiction to cancel the registration from 2004-05 as the power was conferred only by the 2010 amendment. Even prospectively, cancellation was not warranted as the society's activities of constructing buildings and establishing a college and hospital were incidental to its charitable objects. Transferring funds to another society for establishing hospitals in other districts could not be a ground for cancellation. The cancellation of registration can only be prospective, not retrospective. The Revenue's appeal was dismissed.
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Late TDS return filing for Q3 FY13 - Tribunal deletes late fee & interest for pre-June '15 period.
Case-Laws - AT : The assessee failed to file the quarterly returns of TDS within the prescribed time for the period Q3 of FY 2012-2013. Consequently, the Deputy Director of Income Tax, Centralized Processing Cell-TDS, imposed a late fee u/s 234E and computed interest u/s 220(2). The CIT(A) upheld the action, stating that payment of late fees for late filing of TDS is mandatory as per statutory provisions inserted by the Finance Act, 2012. However, the Tribunal, relying on a coordinate bench decision, held that no late fee u/s 234E can be imposed for periods prior to June 1, 2015. Since the late fee was levied for a period before June 1, 2015, the Tribunal directed the AO/CPC-TDS to delete the late fee u/s 234E and the consequential interest u/s 220(2), allowing the assessee's appeal.
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Revenue authorities ordered fresh assessment after earlier order set aside due to lack of fair hearing.
Case-Laws - AT : The Income Tax Appellate Tribunal set aside the assessment order for the assessee and restored the matter to the Assessing Officer for a de novo assessment after providing the assessee with a due opportunity of hearing. This decision aligns with the Tribunal's earlier ruling in the case of the co-owner, Dhirendra Nath Das, for the same assessment year. However, the Tribunal upheld the penalty imposed u/s 271(1)(b) for non-compliance with the notice issued u/s 142(1), considering the assessee's awareness of their responsibility as an employee of Indian Oil Corporation and the lack of a plausible explanation for non-compliance.
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Taxpayer allowed to set off past losses against current income despite belated filing.
Case-Laws - AT : The assessee was entitled to set off brought forward losses from assessment years 2021-22 and 2022-23 against income in assessment year 2023-24, even if the return for 2023-24 was filed belatedly u/s 139(4). There is no requirement that the return for the year in which losses are set off must be filed within the due date u/s 139(3). The Assessing Officer was directed to verify if returns for 2021-22 and 2022-23 were filed within the due dates u/s 139(3), and if so, allow set off of brought forward losses against income in 2023-24. Interest u/ss 234B and 234C is consequential to income determined after set off of losses. The appeal was allowed subject to verification of timely filing of the 2021-22 return.
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Interest income treated as business income despite lack of NBFC license.
Case-Laws - AT : The Income Tax Appellate Tribunal held that the interest income receipts of the assessee should be treated as "business income" and not "income from other sources". The Tribunal found no infirmity in the assessee's explanation of incurring losses in the business during the year, nor any finding by the Department on the assessee's contention of making efforts to obtain an NBFC license from RBI. The mere absence of an NBFC license does not affect the character of income earned, as the license only makes the activity legal. The fact that the assessee consistently returned identical income as business income strengthened their case. Consequently, the assessee's appeal was allowed, treating the interest income as business income with all claimed expenses allowed against the same.
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Bank's rural branch deduction claim upheld; Census data interpretation corrected.
Case-Laws - AT : The ITAT held that the assessee bank was eligible for deduction u/s 36(1)(viia) for its rural branches. The Assessing Officer had erroneously rejected the rural branch status for five branches based on district-wise data from the 2011 Census. However, the assessee appropriately relied on the final village-wise data from the 2001 Census to claim the deduction, as the 2011 Census lacked village-level population figures. The ITAT found no error in the impugned appellate order allowing the deduction and dismissed the revenue's appeal.
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Income Tax Penalty Upheld - Search Seizure Led to Additional Income.
Case-Laws - AT : The Tribunal upheld the penalty imposed u/ss 271(1)(c) and 271AAB of the Income Tax Act for additional income brought to tax owing to a search and seizure action. The Tribunal observed that the income was assessed based on material seized during the search, supported by a declaration u/s 131. The assessee's contention of voluntary surrender was rejected, as the additional income came to light solely due to the search action. The Tribunal relied on Supreme Court precedents, including MAK Data Pvt Ltd and K P Madhusudan, which established that penalty is leviable when income is finally assessed higher than the returned income, irrespective of whether the variation arose from voluntary surrender or otherwise. Accordingly, the Tribunal set aside the CIT(A)'s orders for the relevant assessment years and restored the penalty orders.
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ITAT upholds taxpayer's interest calculation u/s 234B against AO's adjustments.
Case-Laws - AT : Computation of interest u/s 234B of the Income Tax Act. Section 234B(2)(i) provides for adjustment of interest computed u/s 234B(1) by reducing the amount of interest paid u/s 140A at the time of filing the return. The Tribunal held that the rule of appropriation in the Explanation to Section 140A(1) applies only at the time of payment of self-assessment tax, not during regular assessment u/s 143. The assessing officer cannot change the interest paid u/s 234B at the time of filing the return. Relying on the Patson Transformers Ltd case, the Tribunal accepted the appellant's computation of interest u/s 234B and deleted the levy of interest under that section. The assessee's appeal was allowed.
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Corporate guarantee fee transfer pricing adjustment restricted to 0.5% for foreign loan.
Case-Laws - AT : The Appellate Tribunal partly allowed the assessee's appeal concerning the transfer pricing adjustment on corporate guarantee fees for international transactions. The Tribunal rejected the Transfer Pricing Officer's benchmarking based on Indian bank rates since the Associated Enterprise obtained a loan from a Saudi Arabian bank. Considering the consistent approach of coordinate Benches, the Tribunal directed the Assessing Officer to restrict the arm's length price adjustment to 0.5% for the corporate guarantee fees.
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Tax Tribunal remands case for fresh adjudication on Transfer Pricing & Business Promotion expenses after admitting new evidence.
Case-Laws - AT : The ITAT allowed the assessee's appeal for statistical purposes and remanded the matter to the Assessing Officer/Transfer Pricing Officer for fresh adjudication. Regarding the Transfer Pricing adjustment, the ITAT admitted additional evidence filed by the assessee and directed the TPO to determine the Most Appropriate Method for computing Arm's Length Price after considering the new evidence. Concerning the disallowance of business promotion expenses, the ITAT remitted the matter back to the Assessing Officer for fresh adjudication after the assessee agreed to file evidence.
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Tax penalty cancelled for honest mistakes in disclosing interest income.
Case-Laws - AT : The Tribunal allowed the assessee's appeal and held that the penalty u/s 270A for under-reporting of income was not justified. The assessee had offered an additional amount under the head 'income from other sources' in the return filed in response to a notice u/s 148. However, the Tribunal observed that the assessee did not fall under any of the circumstances specified in Section 270A(2) for considering income as under-reported. The non-disclosure of interest on income tax refunds was an inadvertent and bona fide error, which does not attract penalty as per the Supreme Court's decision in Price Waterhouse Coopers Pvt. Ltd. case. Consequently, the Tribunal concluded that the Commissioner of Income Tax (Appeals) was not justified in sustaining the penalty levied by the Assessing Officer u/s 270A.
Customs
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Exporter's bank guarantee enforced for missing export target. High Court upheld demand for interest and penalty.
Case-Laws - HC : The petitioner had defaulted in achieving the export target, and the bank guarantee executed by the petitioner was enforced. The High Court upheld the order of the Foreign Trade Development Officer (FTDO) demanding interest and proposing penal action u/s 11(2) of the Foreign Trade (Development and Regulation) Act, 1992, for failure to remit interest within 30 days. The High Court relied on the Supreme Court's judgment in Rexnord Electronics and Controls Limited v. Union of India and Others, which held that evasion of duty is bound to result in payment of duty and interest in terms of the Bond executed by the parties. The writ appeal was allowed, reversing the order of the writ Court.
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No redemption fine when exported goods unavailable.
Case-Laws - AT : The CESTAT allowed the appeal against the imposition of redemption fine u/s 125 of the Customs Act, 1962. The Tribunal held that when the exported goods are unavailable, confiscation cannot be ordered, and consequently, no redemption fine can be imposed. The redemption fine is conditional upon the assessee seeking redemption of the confiscated goods by paying the fine. Since the exported rice was unavailable, there was no question of redemption, rendering the redemption fine imposition incorrect and illegal. The matter was remanded to the adjudicating authority for reconsideration.
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Duty exemption for mobile parts aimed at manufacturing new products under HS Code 39 or 73.
Case-Laws - AAR : The Advance Ruling Authority held that the 'Front Cover of Mobile' refers to the external protective panel covering the front face, while 'Assy Case Front of Mobile' refers to the fully assembled front portion encompassing the external cover and integrated components. The goods imported as inputs or parts for manufacturing a new final product are subject to duty exemption under Notification No. 9/2024 dated 30-1-2024, provided the final product falls under HS Code 39 or 73 and fulfills the conditions specified in the Integrated Goods and Services Tax Rules.
IBC
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Apex court condones 12-day delay in insolvency appeal filing, matter remitted to NCLAT for merits decision.
Case-Laws - SC : The Supreme Court allowed the appeal and held that the delay of around 12 days (not of 17 days) in filing the appeal was within the condonable limit of 15 days u/s 61(2) of the Insolvency and Bankruptcy Code, 2016. The application for condonation of delay should be decided on merits by the NCLAT. The matter will be listed before the NCLAT on 29.01.2025 for further proceedings.
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CCD holders can initiate insolvency proceedings against defaulting companies as CCDs involve time value of money, hence 'financial debt'.
Case-Laws - AT : The NCLAT held that Compulsory Convertible Debentures (CCDs) issued by the Corporate Debtor constituted a 'financial debt' u/s 5(8) as the transaction involved time value of money. The debenture subscription agreement contemplated redemption and conversion was at the option of the investor. Considering the clauses, the CCDs reflected time value of money, making it a financial debt. The NCLAT dismissed the appeal, upholding the adjudicating authority's order allowing the respondent's application.
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Debt default acknowledged, CIRP initiated against corporate debtor on bank's plea.
Case-Laws - AT : The National Company Law Appellate Tribunal (NCLAT) dismissed the appeal, upholding the order admitting the Section 7 application filed by ICICI Bank against the Corporate Debtor for initiating the Corporate Insolvency Resolution Process (CIRP). The key findings were: The direction issued by the Reserve Bank of India (RBI) to ICICI Bank to initiate CIRP against the Corporate Debtor is relevant for determining default u/s 3(12) of the Insolvency and Bankruptcy Code (IBC). The scheme of arrangement to transfer the debt under Bucket 2B to a Special Purpose Vehicle was not approved, leading to default by the Corporate Debtor in servicing the debt. The Master Restructuring Agreement did not cover the facilities for which the Section 7 application was filed. The Corporate Debtor's One-Time Settlement proposal acknowledged the debt and default. The Financial Creditor brought sufficient material on record to prove debt and default by the Corporate Debtor.
SEBI
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Financial firm fails to maintain net worth, settlement rejected despite opportunities.
Case-Laws - HC : The High Court rejected the petition challenging SEBI's decision to not accept the settlement applications. The petitioner's documents were deficient, and it failed to maintain the required net worth for the financial years 2019-2021, despite being granted multiple opportunities for compliance. The court held that SEBI fairly considered the settlement proposal, provided ample opportunities, and no breach of natural justice occurred. The decision-making process was not arbitrary or defective. The court upheld SEBI's decision, finding no grounds to interfere with the impugned communication rejecting the settlement applications due to the petitioner's persistent non-compliance.
VAT
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Outstanding Dues Conundrum: Court Rejects One-Time Settlement, Clarifies Tax Status.
Case-Laws - HC : One Time Settlement Scheme for Recovery of Outstanding Dues, 2023. The Court held that the amount deposited by the petitioner, which was categorized as disputed tax, cannot be considered for the one-time settlement application. The mere observation by the Court that all payments made by the petitioner would be subject to the final outcome does not make the entire amount a disputed tax. Since the petitioner was not granted interim relief, the amount has to be treated as an admitted tax to be paid in full. If the petitioner's writ petition is ultimately dismissed, the assessed amount would have to be deposited, and the same would be considered for one-time settlement. However, if the writ petition is allowed, the petitioner can claim a refund. The authorities' decision to reject the application based on insufficient payment was justified. The petitioner was advised to deposit the remaining amount, treating it as an admitted tax, if they wish to pursue the one-time settlement application further.
Service Tax
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Promotional Expenses Not Part of Taxable Franchise Services.
Case-Laws - AT : The CESTAT ruled that the amount paid by the appellant towards advertisement and promotion of its own franchise outlets cannot be included in the value of taxable franchise services received from overseas franchisors for service tax purposes. The Tribunal observed that for a consideration to qualify as taxable, it must flow from the service recipient to the service provider. However, in this case, the promotional expenses were incurred by the appellant for its own business benefit. The Tribunal held that the demand of service tax on such promotional amounts was incorrect and liable to be set aside. Additionally, the show cause notice invoking Rule 5 of the Valuation Rules, 2006 was declared invalid as the said rule was previously held ultra vires by the Delhi High Court. The Tribunal also found the show cause notice to be time-barred and vague, rendering the entire demand unsustainable. Consequently, the appeal was allowed.
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Customs tribunal rules pamphlets/leaflets are books, exempt from service tax under "Print media.
Case-Laws - AT : The held that "pamphlets/leaflets" fall within the definition of "book" under sub-section 1 of section 1 of the Press and Registration of Books Act, 1867, as referred to in Explanation 2 of section 65(zzzm) of the Finance Act, 1994. Consequently, the appellant's advertisement activity through pamphlets/leaflets is covered under "Print media" which is excluded from taxable service. The impugned order was set aside and the appeal was allowed.
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Case Laws:
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GST
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2024 (12) TMI 455
Challenge to action of the respondent Bank in not releasing the amounts which is deposited in an Escrow Account, for payment of statutory liabilities including GST from the year 2017 onwards till date - maintainability of petition considering that on other disputes arising from the projects, the matter is pending adjudication before the Debts Recovery Tribunal - adjustments made by the respondent Bank to the receivables deposited in the Escrow Account, constitute a breach of the Escrow Agreement or not - petitioner Company had control or the right to operate the Escrow Account or not. Whether the writ petition is maintainable considering that on other disputes arising from the projects, the matter is pending adjudication before the Debts Recovery Tribunal? - HELD THAT:- The grievance of the writ petitioner shorn of all other accompanying circumstances, incidents and details is basically with the action and conduct of the Bank in not adhering to the agreed order of withdrawals to satisfy payments for different purposes enumerated therein - Further, the pointed defence taken by the respondent Bank that as the proceedings are pending before the Debts Recovery Tribunal, the writ petition will not be sustainable, is disregarded. This is in view of the fact that the instant writ petition had been instituted against the breach of the Escrow Agreement, as far back as on 13.05.2022, whereas the Original Application No. 103/2023, before the Debts Recovery Tribunal was filed only on 11.03.2023. Therefore, the instant writ petition having been entertained by this Court much prior to the institution of the recovery proceedings by the Bank against the petitioner, it is held that the same is maintainable in its present form. Whether the adjustments made by the respondent Bank to the receivables deposited in the Escrow Account, constitute a breach of the Escrow Agreement? - HELD THAT:- GSTR-3B is a summarized return and does not provide itemized invoice details, but is essential for finalizing monthly tax payments and compliance, and the failure to file GSTR-3B for two consecutive tax periods, can lead to a restriction on filing of GSTR 1, impacting compliance and input tax credit for buyers. In the considered opinion of this Court, the GST liabilities arising from the Banks adjustment to loan repayment have resulted in the non-compliance of the statutory requirements, and apart from worsening the financial challenges faced by the petitioner, has also led to the initiation of proceedings against the petitioner by the GST authorities on the non-filing of GSTR-3B and nonpayment of GST under Section 70 of the Central Goods and Services Tax Act, 2017. As such therefore, the action of the respondent Bank in not adhering to the order of payment or withdrawal, as given in the Escrow Agreement is clearly a breach of the same, and the Bank is held liable. Whether the petitioner Company had control or the right to operate the Escrow Account? - HELD THAT:- It is seen that the respondent Bank had been adjusting amounts since 2017, from the receivables deposited in the Escrow Account, and also from the statement of the Bank itself on affidavit, whereby it has maintained that the Bank was well within its right to adjust any reasonable amount as deemed fit and proper towards debt repayment. Further, the Escrow Agreement having provided for the Escrow Account to be operated by the respondent Bank, which was required to pay such statutory dues is confirmed by the Bank - in view of the fact that as in the compilation of the Index of Disbursement of Funds as supplied to this Court, it is seen that on 11.06.2019, a request has been made by the petitioner for grant or permission to operate the account, and even as far back as on 22.06.2015, the petitioner had requested the respondent Bank for permission for viewing the account, in order to enable the petitioner to keep track of the accounts and amounts, which have been credited. As such, there is no doubt that the petitioner Company had no control or any right to operate the Escrow Account. The writ petition is allowed.
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2024 (12) TMI 454
Jurisdiction of CAG or its officials to audit private companies like the Petitioner - Validity of the show cause notice based on CERA audit - invoocation of extended period of limitation. HELD THAT:- The Court pointed out that the statutory scheme clearly states that the CAG shall, from the accounts compiled by it or by the Government or any person responsible for preparing in each year accounts showing under the respective heads, the annual receipts and disbursement for the purpose of the Union, each State or each Union Territory and shall submit the same to the President or the Governor or the Administrator, as the case may be. It is in such context that the provisions of Section 16 pertaining to audit of all receipts which are payable into the Consolidated Fund of India and each State and of each Union Territory is required to be construed with respect to the accounts maintained in the Government departments / Corporations belonging to the Government. The impugned show cause notice is not based upon any audit undertaken by CERA/CAG and the CERA/CAG has undertaken no audit of the Petitioner, there is no necessity to go into the issue of whether the impugned show cause notice could be quashed or the writ of prohibition could be issued to the Respondents from proceeding any further in this matter. The argument about the impugned show cause notice being issued with a pre-determined mindset is also entirely misconceived. By simply making an allegation of this nature without any concrete or serious material to support the same, the show cause notice cannot be questioned. A show cause notice, which only records a prima facie opinion, is not like a judgment or an order made after the completion of the adjudication proceedings. Therefore, the contention that the documents submitted by the Petitioner or the explanation offered by the Petitioner have not been considered is misconceived and based upon the same, no case is made out to quash the impugned show cause notice. There is also no infirmity in invoking the extended period of limitation. It is not as if no allegations of suppression or non-declaration were made in the show cause notice. Such allegations are contained in paragraphs 12 and 12.2 of the show cause notice. At this stage, there is no question of pronouncing whether such allegations are correct. No case has been made to entertain this Petition - Petition dismissed.
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2024 (12) TMI 453
Maintainability of petition - availability of alternative remedy - Confiscation of goods alongwith vehicle - It is the case of the petitioner that confiscation of goods and vehicles and imposition of penalty is illegal, inasmuch as, the vehicle of the petitioner was on way for weighing of the goods in the weighing machine within the declared principal place of business - HELD THAT:- In view of the availability of the alternate remedy available to the petitioner, the writ petition is accordingly dismissed, however, the petitioner is relegated to avail the remedy of appeal available to him under Section 107 of the Act of 2017.
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2024 (12) TMI 452
Excess availment of Input Tax Credit - Notification dated 08.10.2024 was presented, providing a special rectification procedure under the CGST Act - HELD THAT:- In view of the development of the notification, which is also concurred to by the petitioner, it is provided that the petitioner shall avail of the special procedure for rectification of order to be filed before the competent authority, within a period of 2(two) weeks. Thereafter, it is expected that the matter shall be processed and disposed of expeditiously by the respondents. Petition disposed off.
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2024 (12) TMI 451
Dismissal of appeal preferred by the petitioner on the ground of time limitation - no opportunity of hearing was granted to the petitioner - violation of principles of natural justice - HELD THAT:- The issue with regard to non grant of hearing was considered by the Division Bench of this Court in the case of M/S. ATLAS CYCLES HARYANA LTD. VERSUS STATE OF U.P. AND ANOTHER [ 2024 (2) TMI 942 - ALLAHABAD HIGH COURT] and held that the provisions of Section 75(4) of the GST Act are mandatory. Without going to the arguments with regard to limitation and considering the submissions on the ground of non-grant of opportunity of hearing, the petition is allowed. Both the orders are quashed.
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2024 (12) TMI 450
Cancellation of registration of petitioner for reason of his business being found non-existent - HELD THAT- In the present case, the petitioner submits that he has paid the up-to-date dues, if not, the petitioner shall pay it within a period of one month from today. On payment of the upto-date dues, the petitioner s registration shall stand restored. The petitioner shall appear before the Assessing Officer on 20.12.2024, producing the documents to show the dues having been satisfied fully. If dues are still payable and the petitioner desires to file an appeal from the assessment order passed, an undertaking to that effect shall be made, and in that circumstance, the registration shall be restored on payment of 10 per cent of the total amounts. Petition allowed.
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2024 (12) TMI 449
Short payment of tax on outward supplies - excess availing of Input Tax Credit (ITC) - no specific details or evidence of discrepancies were provided to the petitioner - Violation of principles of natural justice - HELD HAT:- Upon a thorough examination of the documents presented to the Court and taking into account the arguments put forth by the parties, this Court allows the writ petition as statutory provisions on limitation should be interpreted liberally in cases where genuine hardships are demonstrated, particularly in light of judicial precedents supporting such relief. This court finds the petitioner s case to be meritorious. Accordingly, the writ petition is allowed and the appellate order dated July 9, 2024 is quashed.
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2024 (12) TMI 448
Violation of principles of natural justice - SCN issued without providing an opportunity for a personal hearing - HELD THAT:- Upon a thorough examination of the documents presented to the Court and taking into account the arguments put forth by the parties, this Court allows the writ petition as statutory provisions on limitation should be interpreted liberally in cases where genuine hardships are demonstrated, particularly in light of judicial precedents supporting such relief. This court finds the petitioner s case to be meritorious. Accordingly, the writ petition is allowed and the appellate orders dated September 30, 2024 is quashed.
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2024 (12) TMI 447
Challenge to SCN mainly on the submission that GST is not leviable on import of services - levy of GST on import of services - HELD THAT:- Present is not a case where the authority concerned lacks jurisdiction. It is not a case where mala fides have been alleged. In the absence of there being a case of violation of principles of natural justice, this Court should not enter into the merits of the dispute with regard to leviability of tax at this stage. Interest of justice would be served if the petitioner is granted liberty to file reply to show cause notice taking all the grounds available to it under the law and the authority concerned should decide the matter after due application of mind. Petition dismissed.
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2024 (12) TMI 446
Challenge to impugned order issued pursuant to the show cause notice - availability of alternate and efficacious remedy - petitioner states that the Petitioner has already filed an appeal since recovery proceedings were initiated - HELD THAT:- The Petitioner should file a compliance report about the cost payment within four weeks from today. Petition dismissed.
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2024 (12) TMI 445
Short payment of taxes - Whether the work executed by petitioner JV falls under Section 12 (2) (a) or 12 (3) of IGST Act? - Place of Supply - Works Contract (Construction of Barrage) falling in two states - determination of place of supply - inter-state supply or intra-state supply - maintainability of refund application submitted by the petitioner. HELD THAT:- Regarding the Place of supply: As per the explanation to Section 12 (3), when an immovable property is located in more than one State, then the place of supply of service shall be determined by the service supplied in each State in proportionate to value of services collected or determined in terms of contract. Place of supply of service in both the States can be assessed/determined only on the basis of actual works executed in both Telangana and Maharashtra States and also as per the terms of the agreement as specified in the explanation to Section 12 (3) of IGST Act. As per Section 8(2) it can be observed that subject to Section 12 of the IGST Act, the supply of service shall be an intra-state supply when location of supplier and place of supply are in the same State. The issue whether the nature of supply is intra-state or inter-state under Sections 7 and 8 of the IGST Act, is dependant on the location of supplier and place of supply. Since the place of supply is determined depending on the proportion of work executed by L T PES and location of supplier in both the States, it falls under the category of intra-state supply under Section 8 of the IGST Act with respect to the proportion of works executed in respective States by the contractors registered in the respective States. Now it is clear that the nature of supply is intra-state supply in proportion to the works carried out in each State. When the nature of supply is intra-state, the tax liability shall be discharged individually in each State to the extent of proportion of the works executed therein. Discharge of GST Liability: S ince the nature of supply is of the intra-state, proportionate to the services rendered in respective States, the tax liability shall be discharged individually in each State for the proportion of work executed therein, as such tax liability should be discharged according to GST in each State. It is contended by the petitioner that tax liability has been discharged independently for the works executed in the State of Maharashtra. However, the petitioner has not placed on record any material evidencing discharge of tax liability in the State of Maharashtra. Refund of TDS: In the absence of material, information and documents to substantiate their contention, it would be difficult for this Bench in exercise of writ jurisdiction to grant any relief to the petitioner. Nonetheless it is an admitted fact that TDS has been deducted for the entire amount released and the said entire TDS amount stands deposited with the State of Telangana. If the State of Telangana has not transferred the tax liability to the extent of work executed in the State of Maharashtra to the Tax Authorities in the State of Maharashtra, there are no reason on the part of Joint Commissioner in not granting refund, upon the petitioner providing relevant material, proof evidencing discharge of tax liability in the State of Maharashtra. The grounds taken by the Joint Commissioner while rejecting the claim for refund does not seem to be proper and justified. However, the petitioner shall be at liberty to approach the adjudicating authority with relevant material and on such submission, the adjudicating authority shall consider the same and pass appropriate orders for refund of TDS amount in the event of petitioner furnishing appropriate, cogent documents in proof of discharge of liability in the State of Maharashtra after duly affording opportunity to both the parties. Petition disposed off.
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2024 (12) TMI 444
Maintainability of appeal - whether the appeal filed by the petitioner could be dismissed for non-prosecution? - HELD THAT:- The petitioner had filed an appeal on 18.05.2022 against the order dated 29.06.2021 passed by Assistant Excise and Taxation Officer under Section 20 of the IGST Act, 2017 read with section 129 (1) (a) of the HGST Act, 2017 whereby the tax amount was calculated at Rs. 2,65,362/- and penalty amount of the same figure was added for a total demand of Rs. 5,30,724/-. The order passed by the appellate authority is not in conformity with law. In case relating to administrative appeal, the approach has to be adopted differently from that being adopted by the regular courts. Since the memo of appeal containing all the submissions and ground were available before the appellate authority, if it had reserved the case on 13.12.2023, it should have examined the appeal on merits and decided the same. Petition allowed.
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2024 (12) TMI 443
Appeal against order under CGST and KGST Acts - It is the contention of the petitioner that during the pendency of the appeal before the second respondent, the second respondent has issued an endorsement and thereafter passed the order dated 31.08.2024 (Annexure-J1 to the writ petition) rejecting the appeal - It is further contended that the petitioner had no notice of the orders that were passed by the Appellate Authority - HELD THAT:- The endorsement dated 20.08.2024 does not notify the petitioner of a date of hearing of the appeal and hence the second respondent-Appellate Authority erred in passing the subsequent order dated 31.08.2024. It is just and proper that the petitioner be afforded an opportunity of hearing in the appeal filed by him before the second respondent in terms of Section 107 (8) of the KGST Act and consequent to the same, the Appellate Authority be permitted to conduct further proceedings in accordance with law. The endorsement bearing No. JCCT(Appeals)/ BGV/2024-25/B-291 dated 20.08.2024 issued by the second respondent (Annexure-J) is quashed - he order dated 31.08.2024 passed in Appeal No.GST-165/2024-25/B-338 by the second respondent (Annexure-J1) is quashed - Petition allowed in part.
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2024 (12) TMI 442
Rejection of application for revocation of cancellation - It is the grievance of the petitioner that sufficient opportunity of hearing was not given to the petitioner - violation of principles of natural justice - HELD THAT:- From the perusal of the documents attached with the petition, it appears that a show cause notice for cancellation of registration was issued by the department on 08.05.2023, in response to which reply was filed by the petitioner on 09.06.2023. Thereafter, another show cause notice was issued on 08.08.2023, in response to which order dated 22.08.2023 was passed, by which his registration was cancelled. When appeal was preferred, then appellate authority dismissed the appeal vide order dated 29.02.2024. Therefore, it is not a case where opportunity of hearing was not provided to the petitioner. It was very much provided but thereafter order was passed. The impugned orders dated 29.02.2024 (Annexure P/1) and dt.22.08.2023 (Annexure P/2) are hereby set aside and the petitioner is directed to submit all the pending GST returns specially for the period when the registration was cancelled and if such pending returns are submitted before the authority, then authority shall consider the case for revocation of registration. Petition allowed.
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2024 (12) TMI 441
Challenge to writ petition on the premise that it traverses beyond the Show Cause Notice thereby denying the petitioner's opportunity to put forth his case - Violation of principles of natural justice - discrepancies between GSTR-3B and GSTR-2A/GSTR-2B - HELD THAT:- The respondents would submit that in view of the apparent discrepancies between the Show Cause Notice and the order of assessment, the petitioner may submit their response treating the impugned order as Show Cause Notice and submit its reply along with supporting materials within a period of two weeks. The impugned order is set aside and the same shall be treated as a Show Cause Notice. The petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material. If any such objections are filed, the same shall be considered by the respondent and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner - Petition disposed off.
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2024 (12) TMI 440
Challenge to assessment orders of 2017-18, 2018-19 and 2019-20, primarily on the ground of limitation - extension of limitation, as provided under Section 73 (10) of the Central Goods and Services Tax Act, 2017 and the Bihar Goods and Services Tax Act, 2017 - extension beyond the period of three years from the 31st of December of the subject year - Requirement to issue SCN - principles of natural justice. HELD THAT:- The extended date of filing of return under Section 44(10) of the GST Act for the years 2017-18, 2018-19 and 2019-20 were respectively on 07.02.2020, 31.12.2020 and 31.03.2021. The three-year period under Section 73 (10) of GST Act hence commences from such dates and would have normally expired respectively on 07.02.2023, 31.12.2023 and 31.03.2024. For the year 2017-18 the period between 15.03.2020 to 28.02.2022; 2 years minus 14 days come within the period of limitation. Hence the period of 1 year, 11 months and 16 days have to be excluded for the year 2017-18, which would take the limitation period to 21.01.2025. In the financial year 2018-19, the period between 01.01.2021 and 28.02.2022 should be excluded from the three-year period commencing from the extended date of filing amended returns for that year; i.e: between 31.03.2020 to 31.12.2023. The 01 year 02 months so excluded would extend the limitation from 31.12.2023 to 28.02.2025, for the assessment year 2018-19. Likewise, for the financial year 2019-20 the extended due date of filing of return falls on 31.03.2021 and the limitation under Section 73 (10) of the GST Act extends upto 31.03.2024. The period excluded for reason of the Covid-19 pandemic, coming within the period of limitation, hence would be 11 months which would enable extension of limitation under Section 73 (10) of the GST Act from 31.03.2024 to 28.02.2025. The extended dates as per the notifications fall within the period of limitation; when the exclusion enabled by the Hon ble Supreme Court; between 15.03.2020 and 28.02.2022 is applied. Requirement to issue notice - HELD THAT:- When a reply has been submitted to the notice issued under Section 73 and if any adverse order is contemplated, without even a request for personal hearing, the Assessing Officer has to issue a notice providing an opportunity of hearing. This is the statutory mandate, from which there is no escape. The assessment orders impugned have been passed without granting a personal hearing under Section 75 (4) of the GST enactments, in which circumstance, the orders are set aside on violation of the statutory mandate for notice of personal hearing and the matters are remitted to the respective Assessing Officers to issue notice for affording an opportunity of personal hearing, to hear the assessees if they appear on the date notified or once adjourned and pass orders within three months from the date of this judgment or within the limitation period provided, if not expired, whichever falls later. Petition allowed.
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2024 (12) TMI 439
Dismissal of appeal filed by the petitioner - challenge to impugned order and the consequent summary of demand in Form GST APL-04 - HELD THAT:- These petitions may be disposed of permitting the petitioners to file an appeal as and when the president or the State President as the case may be enters office of the appellate Tribunal constituted under Section 107 of the Act of 2017. This preposition has not been disputed by any of the parties appearing in the writ petitions. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non-constitution of the Tribunal by the respondents themselves. Petition disposed off.
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2024 (12) TMI 438
Challenge to proceedings initiated by the State Goods and Service Tax [SGST] authorities by issuance of the Show Cause Notices - it is contended that once the said authority had commenced an investigation, it would be impermissible for the State GST authorities to examine the said period or to pass any order of assessment pursuant thereto - HELD THAT:- The impugned order is quashed - petition allowed.
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2024 (12) TMI 437
Challenge to Ext.P6 order issued under the provisions of Section 74 of the Central Goods and Services Tax/State Goods and Services Tax Acts - HELD THAT:- Technically the learned Senior Government Pleader may be right in contending that since the petitioner did not submit any reply to the notice issued under Section 74 of the CGST/SGST Acts, the officer proceeded to complete the proceedings on the basis that the petitioner had not submitted any reply. However, in the peculiar facts and circumstances of this case, it must be noticed that the show cause notice under Section 73 of the CGST/SGST Acts was issued on 22-12-2023, to which the petitioner had filed a reply on 17-01-2024. In the meanwhile, on 08-01-2024, a fresh notice had been issued invoking the provisions of Section 74 of the CGST/SGST Acts. Since the notice was issued by the same officer and on the same issue and since the petitioner had submitted a reply on 17-01-2024, which was after the date on which the show cause notice under Section 74 of the CGST/SGST Acts was issued, the officer could not have proceeded on the basis that no reply had been submitted by the petitioner to the show cause notice issued under Section 74 of the CGST/SGST Acts. Ext.P6 order set aside on the short ground that it proceeds on the basis that the petitioner had not submitted any reply to the show cause notice issued under Section 74 of the CGST/SGST Acts - petition disposed off.
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2024 (12) TMI 436
Interpretation of Sections 61 and 74 of the CGST Act, 2017 - Validity of proceedings initiated under Section 74 after dropping proceedings under Section 61 - violation of principles of natural justice - HELD THAT:- The sine qua non for initiating proceedings under Section 74 are that the concerned officer should reach to a conclusion that the ITC has been wrongly availed or utilized by reason of fraud or any wilful mis-statement or suppression of facts to evade tax. It is found that once, the notice was issued to the petitioner under Section 61(1) of the Act, he filed his reply and explained how ITC had been claimed as against the business conducted with the concerned parties. The same was assessed by the concerned officer and the Proper Officer passed an order independently dropping the proceedings under Section 61(2) of the Act, 2017. However, from Section 61(3) of the Act, 2017, it is found that the said proceedings are only consequential i.e. when the Proper Officer reaches to a conclusion that the reply is not satisfactory. In the letter issued on 23.02.2023, while ascertaining the liability of the petitioner under Section 74 (5) of the Act, the concerned Proper Officer also mentions that reply to notice under Section 61 is not found satisfactory. Question regarding violation of principles of natural justice are not required to be gone into - the provisions of Section 75(4) of the Act are mandatory in all cases where there are proceedings for imposition of tax. Be that as it may, considering that the proceedings drawn under Section 74 (1) of the Act and passing of order thereto on 14.06.2023 have been held to be vitiated, it is not needed further to delve upon the said aspect and accordingly, this writ petition is allowed by quashing and setting aside the order dated 14.06.2023 and notice issued under Section 74 (1) dated 21.04.2023 - petition disposed off.
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2024 (12) TMI 435
Dismissal of petition on the ground that the same is made in violation of principles of natural justice - discrepancies between GSTR-3B, GSTR-1, GSTR-2A and e-way bills - HELD THAT:- It is trite law that adequacy or inadequacy, sufficiency or insufficiency of evidence is not something which could be examined under Article 226 of Constitution, more so, when there is effective alternate remedy by way of an appeal. Petition dismissed.
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2024 (12) TMI 434
Whether the Co-insurance premium and Reinsurance commission would be treated as supply or would be liable to pay the GST? - Refund - HELD THAT:- The amounts deposited by the petitioner is not the amount paid towards the discharge of tax liability, and only upon the direction of this Court, the amounts stated supra have been deposited. Therefore, the amount so deposited cannot be considered as the amount paid for the purpose of discharge of tax liabilities. The amount so deposited can be utilized for the payment of tax only upon the final adjudication of the present Writ Petitions. There is no doubt that the amount, which was deposited subsequent to the order of this Court, would be the amount for discharging the output tax liabilities, however, the utilisation of the said amount has been deferred till the disposal of these petitions. As per the inclusion of Item Nos.9 and 10 to the Schedule III of CGST Act, 2017 read with Circular dated 11.10.2024, the amount, which was paid or utilized for the discharge of tax liabilities, would not be refunded by the Department. However, in this case, the utilisation of amount, which was deposited subsequent to the order passed by this Court, has been deferred till the disposal of these petitions and hence, as on date, the said amount is only a deposit. Therefore, as per the aforesaid inclusion of Item Nos.9 and 10 to the Schedule III of CGST Act, 2017, this Court is of the considered view that the co-insurance premium and re-insurance commission would not be considered as supply and thus, the petitioners are certainly entitled for refund. The impugned orders are liable to be set-aside - Petition allowed.
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2024 (12) TMI 433
Maintainability of petition - availability of alternative remedy - Challenge to assessment order based on limitation period and mode of service of show-cause notices - violation of principles of natural justice - HELD THAT:- Whether or not the petitioner has suppressed the fact, and whether extended period of limitation can be applied or not, is a mixed question of fact and law. The Appellate Authority is the best suited to examine this aspect, as well as the aspect of procedural impropriety, violation of principles of natural justice, un-reasoned order and other aspects raised by the learned counsel for the petitioner. In U.P. STATE SPINNING CO. LTD. VERSUS R.S. PANDEY AND ANR. [ 2005 (9) TMI 634 - SUPREME COURT] it was held that unless serious jurisdictional error is pointed out and it is established that if the petitioner is relegated to avail the alternative remedy, it will cause palpable injustice to him, no interference can be made. We are constrained to observe that we have repeatedly asked the learned counsel for the petitioner as to why we should not relegate him to avail alternative remedy, no answer was forthcoming - the Apex Court has considered the entire legal journey on the aspect of entertaining a Writ Petition despite availability of alternative remedy. In no uncertain terms, it was made clear that rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion. In the instant case, no jurisdictional error is pointed out during the course of hearing by the learned counsel for the petitioner. The alleged breach of principles of natural justice and flaw in decision making process can be examined by the appellate authority. There are no reason to bypass the alternative remedy and deem it proper to relegate the petitioner to avail the said remedy - petition disposed off.
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Income Tax
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2024 (12) TMI 461
Denial of Exemption u/s 11 - registration granted to the assessee-society u/s 12A cancelled holding that it was not working for the objects for which it was created - scope of Retrospective application of amendments to Section 12AA(3) - HELD THAT:- In the present case, as per the object, the order passed takes into consideration the new clause of objects of the PIMS Society and also takes into consideration that the assessee had complied with the provisions of Section 11 (2) of the Act and had set apart funds in furtherance of its objects within the stipulated time and has proceeded to notice that the order of cancellation passed u/s 12AA (3) of the Act has been made with retrospective effect from 2004-2005. Thus, the CIT, who was given the jurisdiction only by an amendment made under the Finance Act 2010, has exercised the power as in the year 2004-2005. Retrospective jurisdiction cannot be given in cases where the right is already vested with any of the person. As in the year 2004-2005, the jurisdiction was not available to cancel the registration granted u/s 12A of the Act. We also find after considering all the aspects, as above, and the record that the assessee which is a Government organization cannot be said to be engaged in other activity. In the present case, the argument advanced by learned counsel for the Revenue that the construction of the building and the process of establishment of the College and Hospital cannot be said to be a charitable activity, is misconceived. If for advancement and furtherance of charitable activity other activities are done, which are incidental and necessary, and funds are invested for the said purpose, it cannot be said that the purpose for granting registration u/s 12A was wrongful or unjustified. The cancellation, therefore, is found to be without basis and is not based on sound principles, deserves to be set aside even prospectively. While the ITAT has set aside the order of cancellation dated 24.10.2013 on the ground that the power was not available retrospectively, having noticed all the facts as above, we find that even as on 24.10.2013 prospectively too the registration could not have been cancelled. Contention of the Assessee that the funds have been transferred to another society and for establishment of hospital in various other districts and for the said purpose the funds had been utilized and not for the same society, cannot be a ground to cancel the registration of the society. Cancellation of registration can only be in prospective and not retrospective. The Bombay High Court, therefore, upheld the amendment made in the Finance Act 2010. In the present case, we are not examining the validity of the amendment made in Section 12AA of the Act but are only examining two aspects. Firstly, the cancellation can be done with effect from the earlier year; and Secondly whether in the fact of the present case the said cancellation was warranted. We also note the judgment passed in Sri Vidyaranya Seva Sangha [ 2016 (5) TMI 1221 - ITAT BANGALORE] which proceeded on a wrong interpretation of Bombay High Court judgment (supra) and upheld the registration being cancelled with retrospective effect. However, such power being not available, the judgment is erroneous and cannot be relied upon. Revenue by passing the order failed to take note of the aims and objects, which were added by the Assessee in October 2009. The order passed by the ITAT, therefore, does not warrant any interference. Revenue appeal dismissed.
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2024 (12) TMI 460
Late fee u/s 234E - failure of the assessee to file the quarterly returns of T.D.S. within the prescribed time and charged interest u/s. 220(2) - HELD THAT:- It is an admitted fact that because of late filing of the quarterly TDS return in Form-26Q, for the period Q3 of F.Y. 2012-2013 the Dy. Director of Income Tax, Centralized Processing Cell-TDS, Vaishali, Ghaziabad has imposed late fee u/s. 234E of the Act and thereby, computed interest u/s. 220(2). We find the CIT(A) upheld the action of the CPC on the ground that as per the statutory provisions inserted by the Finance Act, 2012 payment of late fee for filing TDS late is mandatory. Therefore, the demand raised for levy u/sec. 234E for the period prior to 01.06.2015 is very well valid and the levy of late fee u/sec. 234E of the Act cannot be assailed. We find under identical circumstances, the Coordinate Bench of the Tribunal in the case of Dhairya sheel Pralhad Pawar, Kolhapur [ 2023 (2) TMI 1354 - ITAT PUNE] has held that no late fee u/sec.234E can be imposed for the periods prior to 01.06.2015. Since admittedly in the instant case, the AO/CPC-TDS has levied late fee u/sec.234E for the period prior to 01.06.2015. Direct the AO CPC to delete the late fee u/sec.234E and the consequential interest u/sec.220(2). Appeal of assessee is allowed.
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2024 (12) TMI 459
Revision u/s 263 - under-assessment of income on account of non-disallowance of expenses u/s 14A - HELD THAT:- We find that the factual matrix of the instant case shows that there is no dispute that during the year the assessee did not earn any exempt income from tax. Since there is no exempt income earned by the assessee during the year, there cannot be any disallowance u/s 14A r.w.r 8D. Delhi High Court in the case of Era Infrastructure India Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT ] as held the explanation to section 14A to be applicable from AY 2022-23, no addition u/s 14A can be made where the assessee has not earned any exempt income. We therefore hold the PCIT invocation of section 263 was invalid. Accordingly, the Ground raised by the assessee is allowed.
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2024 (12) TMI 458
Reopening of assessment - holding that right under the Joint Development Agreement is to be construed as transfer of a capital asset within the meaning of section 2(47) - HELD THAT:- As in the case of other co-owner namely Dhirendra Nath Das, ITAT decided the appeal bearing [ 2024 (8) TMI 1495 - ITAT KOLKATA] for A.Y. 2015-16. The Tribunal has set aside this order to the file of ld. Assessing Officer for read-judication after giving due opportunity of hearing to the assessee. Interests of justice will be well-served if the assessee is given an opportunity to present his case before the Assessing Officer. In view of this, the impugned order of the Assessing Officer is set aside and the matter is restored to the file of the Assessing Officer for de novo assessment. Penalty u/s 271(1)(b) - non-compliance of notice u/s 142(1) - On due consideration of the facts and circumstances, we find that the assessee is an employee of Indian Oil Corporation. He is well aware about responsibility to file return etc. He has filed his return declaring total income of Rs. 13,57,830/-. He should have responded to the notices served upon by AO. There is no plausible explanation given by the assessee for his non-compliance. Therefore, penalty imposed under section 271(1)(b) is hereby confirmed. Decided against assessee.
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2024 (12) TMI 457
Deduction u/s 80G - expenses incurred on account of Corporate Social Responsibility ( CSR ) - payments forming part of CSR do not form part of the profit and loss account for computing Income under the head, Income from Business and Profession - HELD THAT:- As decided in M/s Ratna Sagar Pvt. Ltd [ 2024 (8) TMI 1496 - ITAT DELHI] section 80G(2) lists down the sums on which deduction shall be allowed to the assessee. Section 80G falls in Chapter VIA, which comes into play only after the gross total income has been computed by applying the computation provisions under various heads of income, including the Explanation 2 to section 37(1) of the Act. Thus, there is no correlation between suo-moto disallowance in section 37(1) and claim of deduction u/s 80G of the Act. As with regard to the reasoning that CSR expenditure are not voluntary but mandatory in nature due to penal consequences, we are of considered view that voluntary nature of donation is by nature of fact that it is not on the basis of any reciprocal promise of donee. CSR expenditures are also without any reciprocal commitment from beneficiary being philanthropic in nature. The Act permits deduction of donations as per Section 80G of the Act, even though, assessee is not gaining any benefit out of any reciprocity from donee. Similar is the case of CSR expenditure. Thus the reasoning of learned Tax Authority, the CSR expenditure is mandatory, does not justify disallowance of these expenditures u/s 80G, if other conditions of section 80G are fulfilled. There is no allegation of Revenue that other conditions of Section 80G are not fulfilled. We set aside the orders of the authorities below and accordingly decide the issue in dispute in favour of the assessee.
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2024 (12) TMI 456
Penalty levied u/s. 271G - breach of section 92D - asseesee has only furnished the entity level margins in spite of having been given the opportunity to furnish segment account HELD THAT:- There is no breach of section 92D in conjunction with Rule 10(B)(1) of the Rules. The ld. TPO did not make any adjustments during the Transfer Pricing Study. We have relied respectfully on the case of the assessee in [ 2018 (12) TMI 1589 - ITAT MUMBAI] . Hence, there is no violation of Section 92D of the Act, and consequently, the penalty has been waived. We do not find it necessary to intervene in the decision of the appeal. Decided against revenue.
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2024 (12) TMI 432
TP Adjustment - comparable selection - whether Infosys BPO Ltd. was required to be excluded as a comparable entity for conducting the bench marking analysis for determining the ALP u/s 92CA? - HELD THAT:- In the present case, as noted, this court had examined the question of comparability of entities on merit and in accordance with the statutory framework u/s 92CA of the Act read with Rule 10B (1) (e) of the Income Tax Rules, 1963. It is also material to note that the question of suitability to include Infosys for the purpose of benchmark analysis in normal cases was considered by this court in Evalueserve.com (P.) Ltd. [ 2024 (11) TMI 319 - DELHI HIGH COURT ] this court had reiterated the earlier decision.
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2024 (12) TMI 431
Revision u/s 263 - Addition u/s 68 - as argued there is no specific allegation as to how the assessment order was erroneous and prejudicial to the interest of the revenue and reasons recorded for re-opening the assessment u/s. 147 and the very reason for re-opening the case of the assessee u/s. 147 was that the assessee was a beneficiary of suspicious transaction and the assessee was required to furnished details of unexplained credits in his bank account - HELD THAT:- The first fact which we observe on reading of 263 order is that the PCIT has not recorded any satisfaction/has not given any specific finding as to how the assessment order is erroneous and prejudicial to the interest of Revenue. A perusal of 263 order shows that the only basis of issuance of notice u/s. 263 of the Act is that in case of similar labour payments to one Shri Mahindrakumar Shantilal Mathukiya for AY 2013-14 from Mr. V N Nitin and M/s. Kiran Gems Pvt Ltd. an addition was made u/s. 68 of the Act. However, in our considered view in order to invoke the provisions of section 263 of the Act, the foundation/ basis of initiation of 263 proceedings must emanate from the findings given by the AO in his assessment order of the assessee itself and 263 cannot be initiated on the basis of borrowed satisfaction (i.e on the basis of findings in assessment done in case of a third person). Therefore, in our considered view, the very basis of initiation of 263 proceeding in the present case is fallacious and for this reason u/s. 263 proceedings are liable to be set-aside. Secondly, we observe from the contents of the 263 order that the Ld.PCIT has not given any specific findings or observation nor has pointed any defect in the assessment order so as to make the assessment order erroneous and prejudicial to the interest of Revenue. Further, there is also no specific observation in 263 order that there was any lack of inquiry by the AO, during the course of assessment proceedings. From the contents of the 263 order it is seen that the Ld.PCIT has only asked the AO to make the further inquiries on the basis of additions made in the case of a third person, who had received similar payments from Mr.V Nitin and M/s.Kiran Gems Pvt. Ltd. and in the 263 order and there is no specific finding/observation as to how the assessment order is erroneous and prejudicial to the interest of Revenue. Therefore, for this reason as well, the order u/s. 263 of the Act is liable to be set-aside. Whether there is lack of inquiry on the part of the AO, while finalizing order u/s. 147? - The details of correspondence between the AO and the assessee have been reproduced in earlier part of the order. It is also observed that the assessee had also furnished various details including copy of bank statements, confirmation of ledger account from M/s. Kiran Gems Pvt. Ltd., tax audit report, copy of bank statement, copy of form 26AS which demonstrates that all payment to the assessee were subject to tax deduction at source etc. Therefore, the facts as coming from the case records itself shows that there is no lack of inquiry on the part of the AO, looking into this case. In the assessment order for M/s. Kiran Gems Pvt. Ltd. which has been produced before us for our perusal for this very assessment year 2013-14, no disallowance was made in the case of M/s. Kiran Gems Pvt. Ltd. with respect to payment made to various parties (including the assessee) towards labour charges which also lends support to the argument of the assessee that since no disallowance with respect to aforesaid payment to various parties including the present assessee, was made in the assessment of M/s. Kiran Gems Pvt. Ltd., therefore for this reason as well the order passed u/s. 147 of the Act in the case of assessee is not erroneous and prejudicial to the interest of Revenue. In view of the above discussion, we are of the considered view that the assessment order in the instant case is not erroneous and prejudicial to the interest of Revenue and hence the order passed by Ld.PCIT u/s. 263 of the Act, is liable to be set-aside. Assessee appeal allowed.
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2024 (12) TMI 430
Determining the total income without setting off losses pertaining to the earlier years - HELD THAT:- Addl./Jt. CIT(A) has not specified which of the two returns of A.Ys. 2021-22 and 2022-23, were not filed within the due date as required u/s 139(3) of the Act, so that the losses for those years could not be set off during the current year while we note that the return for A.Y. 2022-23 stated to be filed on 23.09.2022 was filed within the due date and the loss had to be allowed to be carried forward for being set off in subsequent years as per law. There is no requirement in section 80 of the Act that for setting off losses of the earlier years, the return for the assessment year in which the loss is to be set off has to be filed within the due date specified u/s 139(3) of the Act. Accordingly, if the returns for A.Ys. 2021-22 and 2022-23, were filed within the due date specified u/s 139(3) of the Act, the assessee was entitled to set off the brought forward loss in A.Y. 2023-24, even if the return for A.Y. 2023-24 has been filed u/s 139(4) of the Act. AO is directed to verify the date of filing of return of A.Y. 2021-22 and in case, this return also has been filed within the due date specified u/s 139(3) of the Act, allow the set off of brought forward losses for both the assessment years against the income of A.Y. 2023-24. Ground nos. 1, 2 3 are allowed, subject to the verification of the date of filing of return of A.Y. 2021-22 and the same being within the due date specified u/s 139(3) of the Act. Charging of interest u/s 234B and 234C is consequential to the income determined after setting off the losses claimed and the Ld. AO is directed to recompute the interest, if required.
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2024 (12) TMI 429
Addition u/s 40(a)(ia) - interest paid on loans - assessee did not deduct TDS - HELD THAT:- An identical issue came up before the Tribunal in the case of Smt. Kanta Yadav .[ 2017 (5) TMI 1565 - ITAT NEW DELHI] wherein the Tribunal restricted the disallowance u/s 40(a)(ia) to 30%. Similar view has been taken in the case of Priyamda Media Infotainment Private Limited vs. DCIT [ 2023 (12) TMI 882 - ITAT DELHI ]. Facts being identical respectfully following above, AO is directed to restrict the disallowance u/s 40(a)(ia) of the Act in respect of interest on loans to 30% of interest.
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2024 (12) TMI 428
Ex-parte dismissal of appeal by the CIT(A) - addition of cash deposited during the demonetization period - CIT(A) has upheld the assessment order by holding that he does not want to interfere with the assessment order - HELD THAT:- There is no independent application of mind by ld. CIT(A) and the appellate order passed is not a speaking and reasoned order. Both the parties before the Bench agreed that the matter can be restored back to the file of ld. CIT(Appeals) for deciding the appeal on merits afresh on merits in accordance with law. CIT(A) has not even dealt with the contentions of the assessee that cash deposited in the bank account in SBN during demonetized period were from earnings, gifts during marriage and from advance from land. There is no enquiry conducted by ld. CIT(A), and even assessment records were not called by ld. CIT(A) to verify the contentions/evidences submitted by the assessee during the course of assessment proceedings. CIT(A) simply dismissed the appeal of the assessee by upholding the assessment order passed by the AO by holding that he do not want to interfere with the assessment order passed by the AO. The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253. The appellate order passed by ITAT is subject to further appeal before Hon ble High Court u/s 260A. The judgment and order passed by Hon ble High Court is also subject to challenge before Hon ble Supreme Court. Thus, the appellate order passed by ld. CIT(A) is not a final order, as it is subject to challenge before higher appellate authority. Thus, Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issues are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues. If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not comply with the notices issued by ld. CIT(A), in limine without adjudicating issues arising in the appeal on merits, such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6), and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits. The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating the assessment order passed by AO is upheld and that do not want to interfere with the assessment order is not sufficient, and that the assessee has not submitted details/documents is not sufficient. The ld. CIT(A) has to make independent enquiries, which were not done, not even assessment records were called for by the ld. CIT(A). Appeal of the assessee is allowed for statistical purposes.
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2024 (12) TMI 427
Correct head of income - interest income receipts - income from other sources OR business income - HELD THAT:- Neither it does controvert nor point out any infirmity in the explanation of the assessee of having earned losses in the impugned business during the year nor is there any finding of the Department on the contention of the assessee that he had made all efforts to obtain licence as a NBFC with the RBI. The only basis we find by the Revenue for rejecting the assessee s contention is that the assessee s explanation for incurring such huge losses is not plausible and that it does not have a NBFC licence. Both these reasons, we do not find impinge in any way on the character of income earned by the assessee and we find that the reasoning that the assessee has no plausible reasons for incurring loss is incorrect. As noted above, the assessee did give an explanation for the same. As for the fact that he did not have any NBFC license, mere absence of licence does not affect the character of income earned by the assessee. The licence only makes the activity carried out by the assessee to be legal activity. In the absence of the licence, may be the activity is illegally carried out but that does not take away the fact that the assessee carried out the activity as its business. The absence of license has no effect on the character of the income. The fact that the assessee has been returning identical income as business income from year-to-year, strengthens the case of the assessee. We, therefore, for the assessee that the interest income earned by it to be treated as business income and all the claim of expenses be allowed against the same. Appeal of the assessee is allowed.
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2024 (12) TMI 426
Penalty u/s 270A - under-reporting in consequence of misreporting - assessee has offered an additional amount under the head 'income from other sources' in the return of income filed against notice issued u/s. 148 - HELD THAT:- The provisions of sec.270A(2) gives the circumstances under which a person shall be considered to have under-reported his income. From the report of the Assessing Officer, it is crystal clear that neither any intimation was passed u/s. 143(1) nor any order u/s. 143(3). Under these circumstances, the assessee, in our opinion, does not fall under any of the categories i.e., clauses (a) to (g) of sub-sec.(2) of sec.270A of the Act. Once it is held that assessee has not under-reported his income, the question of mis-reporting does not arise. Also admitted fact that the income tax refund along with interest on such refunds were adjusted against the outstanding demand for earlier years and no amount was received by the assessee in it s bank account. We, therefore, find merit in the arguments of the Learned Counsel for the Assessee that it is an inadvertent and bonafide error in not disclosing the interest on income tax refund. As in the case of Price Waterhouse Coopers Pvt. Ltd. [ 2012 (9) TMI 775 - SUPREME COURT] observed that a bonafide and an inadvertent error does not attract penalty u/sec.271(1)(c )- we hold that the Ld. CIT(A), in the instant case, is not justified in sustaining the penalty levied by the Assessing Officer u/sec.270A - Appeal of the assessee is allowed.
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2024 (12) TMI 425
Eligibility for deduction u/s 36(1)(viia) - reliability on census data for classification of rural branches - whether the census data relied upon was provisional or final? - HELD THAT:- We have respectfully considered the decisions in State Bank of Mysore [ 2015 (1) TMI 1328 - KARNATAKA HIGH COURT] but note that the facts in those cases are distinguishable. The assessee utilized village-wise population data for its rural branches, where the population was less than 10,000, to determine eligibility for deduction u/s 36(1)(viia). In contrast, the Ld. AO relied on district-wise data from the 2011 Census, which led to the erroneous rejection of the rural branch status for five branches of the assessee. Due to the absence of village-wise data in the 2011 Census, the assessee appropriately relied on the final data from the 2001 Census to claim the deduction. AO, acting on an incorrect assumption, disallowed the deduction and made an addition to the income. Upon review, we find no error in the impugned appellate order, which appropriately addressed the matter. Accordingly, the revenue's appeal is dismissed.
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2024 (12) TMI 424
Deduction u/s 80IC - delayed submission of Form 10CCB/after filing the return of income - HELD THAT:- As decided in Green Dot Health Foods Pvt. Ltd. [ 2023 (2) TMI 516 - ITAT DELHI] as relying on G Knitting Industries (P.) Ltd [ 2015 (11) TMI 397 - SC ORDER] held even though Form 10CCB was not filed along with the return of income but when the same was filed before the final order of assessment was made, assessee was entitled to claim deduction. Decided in favour of assessee.
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2024 (12) TMI 423
Assessment u/s 153A - incriminating material found during search or not? -Introduction of own funds by way of bogus share capital receipt through shell companies - pendrive that was received from the directorate of enforcement subsequent to search action and which will help establishing certain incriminating facts - whether in spite of their being nothing emanating in the form of an admission of fact disclosing incorrect reporting of income or undisclosed income, merely the circumstances surrounding the existence of certain documents found during search, alone can be considered as incriminating material ? HELD THAT:- As observed from the impugned assessment order that assessing officer has laid more emphasis on the examination of the reasons for investment, financials of the investor companies, their assets, taxable income etc., for drawing a conclusion that investor companies were shell companies and based upon this conclusion a backward flip is taken to draw an inference that existence of the disputed documents and the possession with the assessee makes these disputed documents incriminating material for purpose of section 68 of the Act. We are of considered view that it is only after establishing that seized material is incriminating the same can be relied for the purpose of seeking an explanation from an assessee for the purpose of section 68 of the Act. However, here in the case in hand the assessing officer has first examined the veracity of the investment and then concluded that the seized material is incriminating material. Thus, whatever submissions the learned spl. counsel for the Department has made bringing forth as to how the disputed documents have in themselves certain contents which make them incriminating material has not at all been examined and brought on record in the assessment order. On the contrary the assessing officer has preferred to complete the search assessment on the basis of principles of preponderance of probabilities and circumstantial evidence. We find that the five shareholders had sold all their shares in the company to Mr. Shushant Gupta in AY 2014-15 and Mr Shushant Gupta had further sold the shares to DMGFI in AY 2016-17. However, the Ld. AO proceeded on the premises that the five shareholders had directly sold the shares to the DMGFI, so it was the money of assessee which was infused as capital receipt through shell companies. In fact, Ld. Spl. counsel appearing for the Department was not able to rebut the fact asserted by Ld. counsel of assessee that the Department has accepted the sale of shares at ₹ 10 each share in the hands of Mr. Shushant Gupta, and no addition is made under section 56 of the Act, to allege that there was bogus share premium at any stage earlier. Admittedly the search is of 02.1.2020, while the investor companies had sold the shares in AY 2014-15. Thus if any blank documents were found, in search in the year 2020, then the Ld. Assessing officer was supposed to establish as to how keeping any of these blank documents would have been part of the transaction initiated in AY 2011-12, of introducing undisclosed income of assessee, by way of capital receipts through alleged shell companies, while these alleged shell companies had sold the shares further to Mr. Sushant Gupta. As a matter of fact, the scrutiny assessment of M/s Spiral E-Systems Pvt. Ltd., for AY 2013-14 has been completed u/s 143(3) of the Act on 18.03.2016 wherein income has been accepted as the returned income after examination of share capital issued including justification of higher share premium. Scrutiny assessment of M/s Spiral E-Systems Pvt. Ltd., for AY 2013-14 has been completed u/s 143(3) of the Act on 18.03.2016 wherein income has been accepted as the returned income after examination of share capital issued including justification of higher share premium. The assessee received the application money in the impugned assessment year 2011- 12, but, share capital was allotted n AY 2013-14. Therefore, the issue of share capital was examined by the AO in AY 2013-14 u/s 143(3) proceedings. Hence, the argument of ld. Spl. Counsel for Revenue that the original investors were never subjected to any examination, the AO, falls flat. AO could have verified from the records of Spiral E Systems, which AO was having which was not done. This only indicates that AO had only approached the issue with pre-conceived notion in order to reach a predetermined finding and destination, so for that reason the assessment order is not a speaking order but parrot like version of how bogus transactions are generally effected. We are of the firm view that the impugned order before us requires no interference by way of either reversal of findings or setting aside the issue to the files of either of the two of the learned tax authorities below. The grounds raised cannot be sustained. Consequently the appeal of revenue fails and same is dismissed.
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2024 (12) TMI 422
Penalty u/s 271(1)(c)/271AAB - additional income brought to tax owning to search action - income is assessed on the basis of material seized in search seizure action carried out u/s 132 - addition is buoyed by the declaration on oath u/s 131 of the Act - HELD THAT:- As in the similar facts and circumstance, where the income of the assessee is assessed in variation to income returned, the Hon ble Supreme Court in the case of MAK Data Pvt Ltd [ 2013 (11) TMI 14 - SUPREME COURT] observed that, the explanation to section 271(1) raises a presumption of concealment when income is finally assessed in variation of returned income, and it was in this factual scenario where the income reported by the assessee in the return filed was lower than the income finally assessed and brought to tax, it is held that the penalty was rightly leviable irrespective of the fact whether such variation was on account of voluntary surrender or surrender of income or otherwise. Glaringly, the sum surrender to pay tax on the sum of sub-contracting expenditure sprung out upon respondents failure to prove veracity genuineness which came to light solely on account of search action. Therefore, it is not a case wherein a disclosure was voluntarily made; indeed, it was out of search action. Otherwise, bogus expenditure claimed earlier could have continued to hold field of deduction. In any case, so-called voluntary disclosure/surrender of sub-contract expenditure claimed earlier by furnishing inaccurate particulars of income cannot alter the consequences in the light of decision of the Hon ble Apex Court in the similar facts and circumstances in view of former judicial precedents, irrespective of the fact as to how much of such bogus/sham sub-contact/expenditure has actually been brough to tax in the course of assessment by the Ld. AO, as the same is subject matter of revision under the provisions of law. Given section 274 provides that, no order imposing a penalty shall be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. The requirement of section 274 of the Act since shown complied and remained undisputed, and the penal provisions being a civil liability calling no act of or ingredient for wilful concealment as laid in the case of UOI Vs Dharmendra Textile Processors [ 2008 (9) TMI 52 - SUPREME COURT] the penalty imposed u/s 271AAB also deserves to be sustained on similar observation. Nothing contrary has been shown to us in the present facts which would warrant diversion from the view fortified in K P Madhusudan Vs CIT [ 2001 (8) TMI 8 - SUPREME COURT] MAK Data Pvt Ltd [ 2013 (11) TMI 14 - SUPREME COURT] Apropos, in view of the aforesaid discussion and former judicial precedents (supra) the impugned orders of CIT(A) for AY 2013-14 2014-15 are set-aside in its entirety and for AY 2019-20 to the extent it relates to penalty on unexplained sub-contracting expenditure brought to tax u/s 69C of the Act. The respective orders of penalty are thus restored accordingly.
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2024 (12) TMI 421
Computation and levy of interest u/s 234B - default/delay in payment of advance tax - HELD THAT:- Section 234B(2)(i) of the Act provides for adjustment/reduction of the aforesaid amount. As noted hereinabove, the computation of interest under Section 234B of the Act is based upon assessed income (and not tax on returned income). Section 234B(2)(i) of the Act provides for adjustment of the amount of interest computed and payable u/s 234B(1) of the Act [computed on the basis of the assessed income] by the amount of interest computed on the basis of returned income and paid u/s 140A of the Act before filing return of income. Thus, we accept the contention of the Appellant that the rule of appropriation contained in Explanation to Section 140A(1) of the Act would be attracted only at the time of payment of self assessment tax at the time of filing return of income. While giving effect to the provisions contained in Section 234B(2)(i) of the Act the aforesaid amount shall be reduced from the interest computed under Section 234B(1) of the Act. Our view also draws support from the provisions contained in Section 140A(2) of the Act which, inter alia, provides that after regular assessment u/s 143 of the Act amount paid under Section 140A(1) of the Act as self assessment tax is deemed to have been paid towards such regular assessment. That being the case, the question of changing the appropriation of amount paid at the time self assessment under Section 140A of the Act between interest and tax on determination of income under Section 143(1)/(3) of the Act does not arise. The Assessing Officer cannot change the amount of interest paid under Section 234B of the Act at the time of filing return of income under Section 140A of the Act on determination of income under Section 143(1)/(3) As relying on Patson Transformers Ltd [ 2005 (11) TMI 388 - ITAT AHMEDABAD] we accept the computation of income under Section 234B of the Act made by the Appellant and delete the levy of interest u/s 234B of the Act. Assessee appeal allowed.
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2024 (12) TMI 420
TP Adjustment - international transactions - Benchmarking of corporate guarantee fees - bank rates adopted by the TPO pertaining to the Indian banks are not accepted - contention of the assessee did not find any favour with the TPO who proposed adjustment of corporate guarantee @1.80% HELD THAT:- We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that AE, NESMA TPL has taken a loan from Alawwal Bank which later merged with Saudi British Bank in Saudi Arabia. Therefore, at the very outset, the bank rates adopted by the TPO pertaining to the Indian banks are not accepted. We find that the Co- ordinate Benches across the country have been consistently taking the guarantee fee charged in the range of 0.25% to 0.50%, We direct the AO to restrict the ALP adjustment to 0.5%. Appeal of the assessee is partly allowed.
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2024 (12) TMI 419
Final assessment order passed by the Ld. AO not as per DRP directions - HELD THAT:- As order u/s 144C (5) of DRP contained certain directions with regard to TP adjustment u/s 144C(13). Final order of assessment was to be passed by Ld. AO within one month from the end of the month in which DRP directions were received i.e. 30/11/2014. As the order giving effect from TPO was not received, the Ld. AO passed order dated 27/11/2014 u/s 144C. In the meanwhile, AO received order giving effect dated 27/11/2014 from the TPO on 02/12/2014, so Ld. AO passed order u/s 154/143(3) r.w.s 144C on 04/12/2014. Thus, the Ld. AO had made a technical lapse with regard to section 144C of IT Act. It is a fact that assessment order dated 27/11/2014 was issued within period of limitation i.e., 30/11/2014. After receiving order giving effect dated 27/11/2014, Ld. AO made necessary corrections of Rs. 1,46,24,889/- in place of Rs. 4,18,05,854/- and passed order dated 04/12/2014 u/s 144C. Thus, as per ratio of judgment of M/s S. G. Asia Holdings (India) Pvt. Ltd. s [ 2019 (8) TMI 661 - SUPREME COURT] the issue is remitted back to the file of Learned AO to pass an order incorporating the DRP direction which have been given effect by the TPO. Appeal of Assessee is allowed for statistical purposes.
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2024 (12) TMI 418
TP Adjustment - MAM selection - Admission of additional documents - TPO rejecting Resale Price Method [RPM] as Most Appropriate Method [MAM] and application of Berry Ratio at the profit level indicator - HELD THAT:- On perusal of the additional evidences, we find that the assessee filed Appendix 1 to 6 consisting of determination of dealer prices across various regions, letter of intent, etc. DR reported no objection in remanding the matter to the file of TPO for fresh consideration in view of the finding of the ITAT in AY 2011-12. Therefore, we deem it proper to remand the matter to the file of the AO/TPO with a direction to admit the above said additional evidences and determine the most appropriate method for adopting the ALP in the facts and circumstances of the case. Thus, ground Nos. 3 4 raised by the assessee are allowed for statistical purposes. Disallowance of business promotion expenditure - assessee debited an amount under the head other expenses relating to business promotion expenses - HELD THAT:- Considering the submissions of both the parties and taking into account the undertaking given by the ld. AR that the assessee is ready to file evidences before the Assessing Officer, in the interest of justice, we deem it proper to remit the matter back to the file of the Assessing Officer for fresh adjudication.
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Customs
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2024 (12) TMI 417
Seeking release of goods for re-export - Rejection of declared classification of the goods classified under CTH 25182090 - Aluminum Dross - rejection of declared value - re-determination of value - penalties under Section 117 of the Customs Act, 1962 - HELD THAT:- All contentions of the Petitioner and the Respondents regarding the proposed penal action under Section 117 of the Customs Act, 1962, are kept open. The concerned Respondent must not delay the implementation of the O-I-O dated 2 August 2024 because of the communication/notice dated 15 October 2024 since it was admitted that this issue was independent.
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2024 (12) TMI 416
Challenge to order of the Foreign Trade Development Officer (FTDO) - petitioner had defaulted in achieving the export target and the bank guarantee executed by the petitioner was thus enforced - remission of differential duty on the import of the machineries originally imported on concessional rate - HELD THAT:- The binding in nature of the clauses under the Bond has come up for consideration in matters both before the Supreme Court in Rexnord Electronics and Controls Limited v. Union of India and Others [ 2008 (3) TMI 8 - SUPREME COURT ] as well as this Court. The Supreme Court, considering an identical question as arising in this matter, has crystallised the issue, as to whether the term ' interest ' will include within its fold interest payable under the bond furnished by the appellant before the DGFT at paragraph 16 of that judgment. In that case as well, there was a levy of interest for default of licence conditions. The issue was decided in favour of the revenue and against the assessee - The Supreme Court categorically held that evasion of duty is bound to result in payment not only of the duty, but also interest in terms of the Bond executed by the parties. There are nothing untoward in either the demand for interest or in the proposal under impugned communication dated 22.04.2002 for penal action under the provisions of Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992, in the event of failure to remit interest within 30 days from the date of issue of that order. It is declined to interfere in the impugned show cause notice dated 22.04.2002 - The order of the writ Court dated 30.10.2012 is reversed and this writ appeal is allowed.
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2024 (12) TMI 415
Export of rice - Basmati rice or other than Basmati rice i.e. non Basmati rice - whether the penalty under Section 114 (iii) and 114 AA of the Custom Act, 1962 are imposable if the rice is found other than the Basmati rice? - whether in absence of the availability of the goods since the same has been exported whether redemption fine of Rs. 6,00,000/- in lieu of confiscation under Section 125 of the Customs Act, 1962 is correct or otherwise? - HELD THAT:- The adjudicating authority and the first appellate authority have concluded that the rice exported by the appellant is not Basmati rice, only on the basis of the percentage of the other rice, however, it prima facie appears that the only criteria to decide whether it is Basmati rice or other rice, is length and breadth of the rice which as per test report in the present case, length and breadth of the rice is in accordance with the parameter fixed by the foreign trade policy. As regard the issue whether the redemption fine of Rs.6,00,000/- is correct or otherwise, it is found that admittedly the goods had been exported and was not available either at the time of issuing the show cause notice and at the time of adjudicating thereof. In such condition, the confiscation of goods cannot be ordered and consequential redemption fine cannot be imposed. The imposition of redemption fine is conditional as when the assessee wants to take the redemption of goods, he needs to pay the redemption fine. In the present case, when the goods are not available, there is no question of redemption of said goods. Consequently, no redemption fine requires to be paid. Accordingly, the imposition of redemption fine is absolutely incorrect and illegal. This issue has been considered in various judgments relied upon by the Ld. Counsel. The redemption fine is not imposable. Accordingly, the redemption is set aside - the matter is remanded to the adjudicating authority for reconsideration thereof - Appeal allowed by way of remand.
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2024 (12) TMI 414
Benefit of Custom Duty Exemption under the N/N. 9/2024-Cus., dated 30-1-2024 - ASSY-CASE-FRONT can be named in lieu of FRONT COVER or not? - HELD THAT:- It is rightly being provided by the Commissionerate that the Front Cover of Mobile refers to the external protective panel that covers the front face of the mobile device. It primarily focuses on the aesthetic and protective aspects of the front-facing surface, which usually includes the display screen, front-facing camera, and sometimes sensors and speaker grilles. The front cover is often a separate piece that can be removed or replaced independently of the rest of the casing. While, Assy Case Front of Mobile refers to the fully assembled front portion of the mobile device s casing or enclosure. This encompasses not only the external front cover but also all components that are integrated into or attached to the front face of the device, such as the display screen, touch panel, sensors, buttons, and other internal elements. It includes both the structural and functional aspects of the front part of the device As such the goods imported as Inputs and/or parts for manufacture of new Final product comes under manufacturing activity and its duty free import is subject to fulfilment of IGCR Rules and conditions specified therein. However as per the condition of the Notification as given in Table above, the benefit of Notification No. 9/2024, dated 30-1-2024 under Sl. No. 6E is permissible only when the final product emerged out of the Inputs and/or parts, falls under the HS Code 39 or 73.
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Securities / SEBI
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2024 (12) TMI 413
Settlement Applications rejected by SEBI - documents submitted by the Petitioner were deficient and that the Petitioner did not maintain its worth for the Financial years ended March 31, 2019, March 31, 2020, and March 31, 2021 - number of opportunities granted to the Petitioner and the lack of compliance HELD THAT:- As noted earlier, the petitioner has not even alleged any mala fides or breaches of the SEBI Act or the Settlement Regulations. The argument based upon alleged unfairness is not supported by the record. The petitioner cannot be assisted in simply keeping its settlement application pending and disabling the SEBI from effectively passing final orders on the show-cause notices issued to the Petitioner. Despite the indulgence on the first occasion, the Petitioner persisted in supplying deficient documentation and did not comply with the net-worth requirements. Court held that the question as to whether a dispute should be resolved by a consensual settlement does not merely involve a private lis between the violator and the regulator but involves a consideration of wider issues of public interest. The Court also held that the whole purpose of the settlement guidelines which were the subject matter of the said decision was to ensure that the time and effort of the regulator is devoted to cases which duly merit trial and enforcement. SEBI has devoted sufficient time to the Petitioner s settlement proposal. The same was rejected earlier but, by way of indulgence, the Petitioner was granted further opportunity in March 2024. From April to October, the Petitioner supplied documents or certificates that were found to be deficient upon examination. The impugned communication also refers to the inter se correspondence, which gives an idea of the time spent by SEBI in considering the Petitioner s settlement proposal. At this stage, Mr Doctor, on behalf of SEBI, is therefore justified in contending that enough was enough and no further indulgence was deserved by the petitioner. We are satisfied that the Petitioner s proposal was fairly considered and rejected. There is no arbitrariness involved. The petitioner was given ample opportunities; in that sense, no breach of natural justice was involved. The decision-making process was not defective. Accordingly, we are satisfied that no case has been made to interfere with the impugned communication.
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Insolvency & Bankruptcy
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2024 (12) TMI 412
Dismissal of application for condonation of delay of 17 days on the ground that delay only up to a period of 15 days can be condoned under the proviso to Section 61(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- By order dated 29.04.2024, while issuing notice, it was recorded that 29.07.2023 was a gazetted holiday and 30.07.2023 was a Sunday and the appeal was preferred on 31.07.2023. It is also brought to notice that the appellant, Bhupendra Jivrajbhai Surani, had applied for a certified copy of the judgment/order dated 14.06.2023 on 27.06.2023 and the same was prepared and delivered on 30.06.2023. Hence, the total period which has to be excluded for computation of limitation would be 5 days. This being correct, the period of delay in the filing of the appeal would be about 12 days, which is within the condonable limit of 15 days. The error made in the impugned judgment passed by the NCLAT, as is apparent, had arisen on account of the fact that in the application for condonation of delay, the above facts were not mentioned, and delay of 17 days was sought to be condoned - the application for condonation of delay should be decided on merits. The matter will be listed before the NCLAT on 29.01.2025, when the next date of hearing will be fixed. If required, the NCLAT will issue notice to the respondent - Appeal allowed.
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2024 (12) TMI 411
Financial Debt or not - Compulsory Convertible Debentures (CCDs) issued by the Corporate Debtor - whether there is time value of money in respect of the debt, which is reflected by debenture? - HELD THAT:- For finding nature of transaction, the documents entered between the parties are the best guide to find out nature of debt, as to whether there was time value of money or not. On looking into the clauses of DSA pertaining to the present case, we are of the considered opinion that the transaction, which was entered between the parties has time value of money and the redemption of debenture was also contemplated and conversion of debenture was operational at the option of Investor. The Issuer has raised the amount by issuance of debenture, which was clearly a financial debt within the meaning of Section 5, subsection (8). There are no good ground to interfere with the order of the Adjudicating Authority, allowing the Application of Respondent No.1. There is no merit in the Appeal - The Appeal is dismissed.
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2024 (12) TMI 410
Admission of Section 7 Application by commencing Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - relevancy of direction issued by the Reserve Bank of India dated 14.08.2018 to ICICI Bank to initiate CIRP process against the Corporate Debtor for determining default by Corporate Debtor within meaning of Section 3(12) of the IBC - scheme of arrangement was framed to transfer the debt or not - default on part of the Corporate Debtor with regard to debt under Bucket 2B or not - sufficient material brought on record by Financial Creditor to prove debt and default on the part of the Corporate Debtor or not. Whether the direction issued by the Reserve Bank of India dated 14.08.2018 to ICICI Bank to initiate CIRP process against the Corporate Debtor is not relevant for determining default by Corporate Debtor within meaning of Section 3(12) of the IBC? - HELD THAT:- Application by Financial Creditor has to be filed in Form-1. Part V of Form-1 refers to financial debt documents, records and evidence of default. Thus, Financial Creditor is fully entitled to file documents, records and evidence of default. When direction has been issued by the RBI which is a regulator of banking companies directing for initiation of the CIRP against the Corporate Debtor, the said direction cannot be disregarded or ignored while determining application under Section 7 filed by the Financial Creditor against the Corporate Debtor. The direction issued under Section 33AA of the Banking Regulations Act by the RBI are relevant for determining default by Corporate Debtor within the meaning of Section 3(12). Whether under the Resolution approved in JLF meeting held on 22.06.2017 for debt of Rs.11833.55 Crore (including interest) a scheme of arrangement was framed to transfer the above debt along with land parcel of equivalent value to an SPV, namely Jaypee Infrastructure Development Ltd., which debt was referable to Bucket 2B, and the Section 7 application filed by the ICICI Bank related to debt of Bucket 2B only? - Whether Master Restructuring Agreement entered on 31.10.2017 between JAL and lenders also covered the facilities, default of which was claimed by the ICICI Bank in application under Section 7 filed against the Corporate Debtor on 06.09.2018? - HELD THAT:- Under the Restructuring Plan approved in JLF meeting held on 22.06.2017 for debt of Rs.11833.55 Crore (including interest) a scheme of arrangement was framed to transfer the above debt along with land parcel of equivalent value to an SPV, namely Jaypee Infrastructure Development Ltd., which debt was referable to Bucket 2B, and the Section 7 application filed by the ICICI Bank related to debt of Bucket 2B only - Master Restructuring Agreement entered on 31.10.2017 between JAL and lenders did not cover the facilities, default of which was claimed by the ICICI Bank in application under Section 7 filed against the Corporate Debtor on 06.09.2018. Whether the Scheme of Arrangement which was to come into effect w.e.f. 01.07.2017 having not been approved, there is default on part of the Corporate Debtor regarding not servicing the debt of Bucket 2B? - Whether the fact that 1st motion petition, CP (CAA) No.174/ALD/2017 was approved vide order dated 08.12.2017 by NCLT and Second motion petition CP (CAA) No.19(ALD)2018 filed on 23.01.2018 being pending, there shall be no default on part of the Corporate Debtor with regard to debt under Bucket 2B and Section 7 application filed by the ICICI Bank on 06.09.2018 deserved to be rejected? - HELD THAT:- The Scheme of Arrangement which was filed before the NCLT for approval having not been approved, there is default on part of the Corporate Debtor regarding not servicing the debt of Bucket 2B - The fact that 1st motion petition was approved by the NCLT on 08.12.2017 and Second motion petition was filed on 23.01.2018 which remain pending cannot be a ground to hold that there shall be no default on part of the Corporate Debtor with regard to debt under Bucket 2B and Section 7 application filed by the ICICI Bank on 06.09.2018 did not deserve to be rejected on the above ground. Whether the Corporate Debtor before Adjudicating Authority by filing reply to Section 7 application and other materials had proved that there was no default on part of Corporate Debtor, hence the application under Section 7 did not merit admission? - Whether there were sufficient material brought on record by Financial Creditor to prove debt and default on the part of the Corporate Debtor? - HELD THAT:- MRA dated 31.10.2017 did not cover the facilities for which Section 7 application was filed. Clause 2.2 of the MRA has no applicability and the default for which Section 7 application was filed cannot be treated to be waived by the lenders - The OTS having been submitted by the Corporate Debtor offering upfront amount and the total amount, it does not lie in the mouth of the Corporate Debtor to contend that no default has been committed by the Corporate Debtor. In the OTS proposal submitted on 23.06.2024 to the ICICI Bank, lenders have offered to give upfront payment of Rs.500 Crores (200+300) and total amount of Rs.16,016 Crores. The copy of the OTS proposal dated 23.06.2024 submitted on behalf of the Corporate Debtor has been filed as Annexure R- 18 to the Reply of the Respondent No.1. The OTS proposal submitted both before the Adjudicating Authority as well as before this Tribunal on behalf of the Corporate Debtor contains the clear acknowledgment of debt and default - the findings returned by the Adjudicating Authority on the debt and default are based on materials on record and are affirmed. Thus, no ground has been made out in this Appeal to interfere with the impugned order - appeal dismissed.
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Service Tax
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2024 (12) TMI 409
Valuation - amount paid as contribution towards advertisement - promotion of franchise outlets - includable in the value of Franchise Services for service tax purposes or not - time limitation - HELD THAT:- Section 67 of the Finance Act talks about valuation of taxable services for charging service tax. The provision defines consideration to include any amount that is payable for the taxable services provided or to be provided. The expression considerations was decided by Hon ble Supreme Court in the case of SONIA BHATIA VERSUS STATE OF UP. [ 1981 (3) TMI 250 - SUPREME COURT] in reference to U. P. Imposition of ceiling on land building Acts 1961. Since, the Act was not defining consideration its meaning as defined from expression in Section 2(d) of the Contract Act 1872 for consider with a reference to its meaning in Black s law dictionary it was held that the consideration means a reasonable equivalent for other valuable benefit passed on by the Promisor to the Promissee or by the transferor or by the transferee. A Larger Bench of the Tribunal in M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI-LB] observed that implicit in the legal architecture is the concept that any consideration whether monetary or otherwise, should have flown or should flow from the service recipient to the service provider and should accrue to the benefit of the latter.'' Apparently and Admittedly, the appellant is paying service tax under RCM with respect to royalty fee and even on advertisement fee for advertising the trade name of Costa/IFHL. The amount in question is an amount for advertising the Costa/ IFHL outlets which are operated by appellant for its own Business Department has not produced anything to falsify these observations. Hence, the amount is question is an amount towards promotion of appellant s own outlets in this arrangement presence of the two people to Constitute Service rendered by one received by another is are missing vis-a-vis the promotion the promotional activity for the appellant operated outlets. Hence, the said amount has wrongly been included in gross value towards franchise service received by the appellant from the two overseas Franchisors. The confirmation of demand of service tax on this amount is therefore, liable to be set aside. The show cause notice is also held to have wrongly invoked. Rule 5 of the Valuation Rules, 2006 as the said Rule has already been held ultra vires by Hon ble High Court Delhi in the case on INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. [ 2012 (12) TMI 150 - DELHI HIGH COURT] where it was held that 'It purports to tax not what is due from the service provider under the charging Section, but it seeks to extract something more from him by including in the valuation of the taxable service the other expenditure and costs which are incurred by the service provider in the course of providing taxable service . What is brought to charge under the relevant Sections is only the consideration for the taxable service. By including the expenditure and costs, Rule 5(1) goes far beyond the charging provisions and cannot be upheld.' The show cause notice is time bared and is vague also. The demand based on such show cause notice is not sustainable - appeal allowed.
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2024 (12) TMI 408
Refund of the amount deposited in terms of Section 35F of CEA - refund claim rejected as time barred - HELD THAT:- Undisputedly the amount has been deposited by the appellant as directed by the CESTAT under Section 35F for consideration of the appeal filed by the appellant and would qualify as pre-deposit. Hon ble Gujarat High Court has in case of Ghaziabad Ship Breakers [ 2010 (10) TMI 151 - GUJARAT HIGH COURT ] observed ' it is an undisputed position that the amount in question had been deposited by the respondent during the pendency of the appeal before the Supreme Court. In the circumstances, it is apparent that the amount so deposited would squarely fall within the ambit of Section 129-E of the Act and has to be treated as pre-deposit. Thus, the contention raised on behalf of the appellant that the amount has been paid by way of duty and not pre-deposit, being contrary to the provisions of section 129E of the Act, does not merit acceptance.' It is settled position in law that amount deposited for hearing of the appeal needs to be refunded to the appellant without going into any integrities of Section 11B. Thus, refund should have been granted alongwith the applicable interest to the appellant as per Section 35FF as it existed at the time when deposit was made - Appeal is allowed.
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2024 (12) TMI 407
Interpretation of the definition of book under the Finance Act, 1994 - whether pamphlets fall within the definition of book as per sub-section 1 of section 1 of Print and Registration of Books Act, 1867? - HELD THAT:- When Explanation 2 of section 65 (zzzm) defines print media to include book as defined in sub-section 1 of section 1 of the Press and Registration of Books Act, 1867; it is not permitted to look into and take support of other provisions of the said Act or Oxford dictionary as has been done by the department. Reliance is rightly placed on the decision of tribunal in the case of Media World Enterprises supra wherein on comparable facts, tribunal upheld the findings of first appellate authority holding that ' There is thus no doubt that the word book occurring in clause 105(zzzm) of section 65 of the Finance Act, 1994 has to be understood in the context of the extended definition given in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867 (25 of 1867) and not in terms of any other definition in a dictionary or as understood in common parlance.' Thus, it follows that advertisement activity of the appellant through pamphlets/leaflets falls within the definition of Print media which is excluded from taxable service. As a result, impugned order cannot be sustained and the same is liable to be set aside. The impugned order is set aside - appeal allowed.
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Central Excise
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2024 (12) TMI 406
Denial of benefit of exemption N/N. 67/1995-C.E. dated 16-03-1995 as amended - Short physical removal of goods - Revenue was of the view that though there was no physical removal of goods, the factum of sale indicates a transfer of ownership of the goods and that certainly amounted to nothing short of physical removal of goods and therefore the appellant ought to have paid the duty along with applicable interest - HELD THAT:- In the instant case when the Appellant manufactured the tools, they attract the levy of excise duty. Be that as it may, since the tools are not removed and are used within the factory, in view of the explanation appended to Rule 5, the date when such tools are issued for use within the factory, becomes the date of removal of such tools by virtue of the explanation to Rule 5, thereby giving rise to the requirement to discharge the duty liability thereupon. The Central Government has, in exercise of the powers conferred by sub-section (1) of Section 5A, being satisfied that it is necessary in the public interest so to do, exempted, inter-alia, capital goods as defined in Cenvat Credit Rules, 2002 manufactured in a factory and used within the factory of production by way of the notification No.67/95-CE dated 16-03-1995 as amended. It is the benefit of this notification to which the appellant has staked claim. Since the said notification providing for exemption from duty is a beneficial exemption that the Central Government has notified in public interest, we find that the claim for exemption made by the appellant in respect of the tools manufactured in the factory and used within the factory is tenable, given that admittedly there is no physical removal of the said tools from the factory. The appellant is entitled to the benefit of the notification No.67/95 dated 16-03-1995 as amended, as claimed and the demands of duty, appropriate interest and penalties imposed by the original authority as upheld by the learned appellate authority, are untenable. Having found that the appellant herein has succeeded on merits, there is no necessity to examine the claim of limitation raised and have not done so. The impugned order is set aside - appeal allowed.
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2024 (12) TMI 405
100% EOU - rejection of refund claim - invocation of Section 3(b)(ii) ibid r/w Rule 17 of the Central Excise Rules, 2002, indicating that education cess and other cess would be chargeable again on the aggregate duties of customs, even though these were paid by the appellant under protest - HELD THAT:- The issue is no more res integra since the very same issue has been addressed to and answered in favour of the taxpayer by the Larger Bench of the Tribunal in the case of KUMAR ARCH TECH PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II [ 2013 (4) TMI 482 - CESTAT NEW DELHI - LB] , which order has in fact been followed by this very Bench in the case of M/S. SKM EGG PRODUCTS EXPORT (INDIA) LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, ANAIMEDU, SALEM [ 2024 (6) TMI 1173 - CESTAT CHENNAI] . In the said order, this Bench has referred to the findings at para 5 of the Larger Bench order and held that the impugned order is not in accordance with law. The impugned order cannot sustain for which reason the same is set aside - Appeal allowed.
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2024 (12) TMI 404
Eligibility to avail and utilize the input service credit - appellant is not a manufacturing unit - Availment of credit on the strength of the invoices issued for distribution of service tax credit - HELD THAT:- The matter is no longer res-integra as in the case of Sweety Industries vs. CCE C-Anand [ 2024 (2) TMI 768 - CESTAT AHMEDABAD] has held that Input Service Distributor is also entitled to distribute Cenvat credit of various input services to its job work units. The impugned order-in-original is devoid of any merits therefore, we set-aside the same. The appeal is accordingly, allowed.
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2024 (12) TMI 403
Valuation of Excise Duty - inclusion of freight charges collected from customers (shown separately in Invoice) in the course of sale of excisable goods, in the assessable value for the purpose of valuation under Section 4 of Central Excise Act, 1944 - HELD THAT:- From the invoice, it can be seen that the freight amount has been shown separately and the nature of supply is ex-factory supply. Therefore, the freight is not includable in the assessable value in terms of Rule 5 of Central Excise Valuation Rules 2000. From Rule 5, it is clear that when freight is shown separately in the invoice, the same is not includable in the assessable value. Therefore, the fact of the present case is directly covered by the condition for exclusion of freight provided in Rule 5 of Central Excise Valuation Rules, 2000. Therefore, the freight in the fact of the present case is not includable in the assessable value. The demand is not sustainable. Hence the impugned orders are set aside. Appeals are allowed.
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2024 (12) TMI 402
Irregular availment of Cenvat Credit of education cess and secondary and higher education cess on CVD which was debited from DEPB - It is the case of the Revenue that the exemption notification allow Cenvat Credit of CVD leviable under Section 3 of Custom Tariff Act but does not allow the credit of EC/SHEC on such CVD - HELD THAT:- The said issue has been dealt by this Tribunal in the case of M/S. LASER SHAVING (I) P. LTD. VERSUS CCE, HYDERABAD [ 2016 (6) TMI 868 - CESTAT HYDERABAD] wherein it was held that ' the contention of the appellants that Education Cess and Secondary Higher Education Cess payable on that part of CVD which is equal to the basic excise duty is a part of CVD itself is not without substance.' As issue is squarely covered by the decision of Laser Shaving (I) P. Ltd. (Supra) therefore, it is held that the Respondent is entitled to avail Cenvat Credit of additional duty quantified in respect of duty of Excise levied under different enactments is available is terms of Rule 3(7) of Cenvat Credit Rules, 2004 read with condition No. 6 of Notification No. 85/2005 Custom dated 4th October, 2005. As Rule 3(7) of the Cenvat Credit Rules specifically covers of CVD quantifies with respect to EC SHEC levied under Section 93 and Section 138 of the Finance Act, 2004 and Finance Act, 2007 respectively. Respondent has correctly taken the Cenvat Credit of Education Cess and Secondary Higher Education Cess on the imported goods in question. Therefore, there are no infirmity in the impugned order. The same is upheld and the appeal filed by the Revenue is dismissed.
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CST, VAT & Sales Tax
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2024 (12) TMI 401
Rejection of applications moved by the petitioner for one time settlement of outstanding dues under the Haryana One Time Settlement of Outstanding Dues Act, 2017 and Haryana One Time Settlement Scheme for Recovery of Outstanding Dues, 2023 - whether merely because the High Court had while declining interim relief, made observations that all the proceedings taken by the respondents and deposits made by the petitioner, would be subject to final order of this Court, can it be said that the entire amount was a disputed tax? - HELD THAT:- The petitioner s claim that the amount, which it has deposited in the category of disputed tax, may be considered for considering the OTS application is wholly misconceived and cannot be sustained. The mere stating of this Court that all the payments which the petitioner has to make would be subject to final outcome is merely a reiterating the theory of lis pendens . Since the petitioner was not granted any interim relief, the amount has to be treated to be admitted tax to be paid by the petitioner in full. It is also noticed that if ultimately the petitioner s writ petition is dismissed, it would be the amount which has been already assessed that the petitioner would have to deposit and in One Time Settlement also the same would, therefore, be considered. However, if the writ petition is allowed, the petitioner can always claim refund. The decision of the authorities, in rejecting the application on the basis of the amount being less than what was required to be paid, cannot be said to be unjustified or illegal. The petitioner would be well advised to deposit the remaining amount, if it so wants to further pursue the OTS application treating it as an admitted tax . All the writ petitions are dismissed.
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