TMI Tax Updates - e-Newsletter
December 12, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy FEMA Service Tax Central Excise Indian Laws

TMI Short Notes

1. Examining the Eligibility of Credit Co-operative Societies for Deduction on Interest from Co-operative Bank Deposits

  Income Tax:

2. Upholding Arbitral Autonomy: Supreme Court Clarifies Scope of Judicial Interference u/s 11

  Indian Laws:

Articles

1. DEMURRAGE CHARGES – WHETHER INCLUSIBLE IN THE ASSESSABLE VALUE FOR PAYMENT OF CUSTOMS DUTY

   By: DR.MARIAPPAN GOVINDARAJAN

2. How to Register a Company in India: Common Mistakes to Avoid

   By: Ishita Ramani

3. Dismissal of ITAT Appeal on opting VsV scheme which is still pending disposal

   By: LALIT MUNOYAT

4. Demand order passed is not valid when no proper time was granted to Assessee for collecting relevant document due to GST registration cancellation

   By: Bimal jain

News

1. E-Sankhyiki portal provides a comprehensive system for managing and sharing data, facilitating the easy dissemination of official statistics across the country

2. CCI approves the acquisition of certain stake in Bagmane Developers Private Limited and Bagmane Rio Private Limited (collectively, Target Entities) by BREP Asia III India Holding Co VIII Pte. Ltd. (Acquirer)

3. CCI approves acquisition of Covestro AG by Abu Dhabi National Oil Company

4. CCI approves the acquisition of shareholding in India Business Excellence Fund – IV by VVDN Technologies Private Limited

5. CCI approves the proposed acquisition of Thyssenkrupp Electrical Steel India Private Limited by Jsquare Electrical Steel Nashik Private Limited

Notifications

GST

1. 30/2024 - dated 10-12-2024 - CGST

Extension of due date for filing of return in FORM GSTR-3B for the month of October, 2024 for the persons registered in Murshidabad in the state of West Bengal

GST - States

2. G.O.Ms.No.274 - dated 22-11-2024 - Andhra Pradesh SGST

Amendment in Notification No. G.O.Ms.No.476, Revenue (CT-II) Department, dated 20th September, 2018

Income Tax

3. 126/2024 - dated 10-12-2024 - IT

Special courts u/s 280A of IT Act and section 84 of the Black Money Act - Designates the Courts in the State of Tamil Nadu, accordingly

Circulars / Instructions / Orders

Customs

1. PUBLIC NOTICE NO. 24 / 2024 - dated 4-12-2024

Export of Rice - Discontinuation of drawing of sampling and testing before Let Export Order – Regarding

2. PUBLIC NOTICE No. 23/2024 - dated 29-11-2024

Practice of assessment of Imports of Petroleum products under CTH 2710-Reg

Highlights / Catch Notes

GST

• Extended GSTR-3B filing due date till 11th Dec for businesses in Murshidabad, West Bengal.

  Notifications : The Commissioner, on the recommendations of the Council, has extended the due date for filing FORM GSTR-3B for the month of October 2024 till 11th December 2024 for registered persons whose principal place of business is in Murshidabad district of West Bengal. This extension is granted under sub-section (6) of section 39 of the Central Goods and Services Tax Act, 2017 for those required to file returns under sub-section (1) of section 39 read with clause (i) of sub-rule (1) of rule 61 of the Central Goods and Services Tax Rules, 2017. The notification is deemed effective from 20th November 2024.
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• GST shocker: Court strikes down orders for lack of fair hearing, remands case.

  Case-Laws - HC : The High Court quashed the orders dated 01.02.2022 and 24.04.2024 passed against the petitioner u/s 74 of the GST Act. The petitioner had availed input tax credit by mistake but did not utilize it. The original order was passed without providing an opportunity for personal hearing, violating the principles of natural justice and Section 75(4) of the GST Act. The matter was remanded to the adjudicating authority to pass fresh orders after granting an opportunity of hearing and allowing the petitioner to file a reply to the show-cause notice in accordance with law.
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• Bogus Invoicing Scam: Bail Granted in Fake Firms Case.

  Case-Laws - HC : The High Court granted bail to the applicant u/ss 132(1)(b), 132(1)(c) read with Section 132(1)(i) of the Central Goods and Services Tax Act, 2017. The case involved the creation of fake firms and issuance of bogus bills and invoices without any supply of goods and services. Considering the facts, nature of the offence, punishment, available material, the applicant's lack of criminal history, and the release of a co-accused with a more serious role on bail, the Court held that the applicant made out a case for bail without expressing any opinion on the merits.
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• Refund claim for IGST dismissed due to lack of territorial jurisdiction.

  Case-Laws - HC : The High Court dismissed the writ petition filed by the petitioner seeking directions to the respondents to issue a refund of Integrated Goods & Services Tax (IGST) along with interest due to lack of territorial jurisdiction. The Court held that since the petitioner's application for refund was made at the ports of export and the claim was to be dealt with by the Customs Authorities of the port, the cause of action did not arise within the territorial jurisdiction of the Rajasthan High Court. Consequently, the Court did not adjudicate on the issue of whether the petitioner was entitled to a refund of IGST despite having claimed a higher rate of duty drawback.
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• High court directs taxpayer to fulfill pre-deposit conditions, exhaust alternate remedies before challenging tax order.

  Case-Laws - HC : The High Court dismissed the petition and directed the petitioner to exhaust alternate remedies by fulfilling pre-deposit conditions. The court held that no case was made out to depart from the practice of exhausting alternate remedies. The argument that CBIC circulars were not followed could be raised before the appellate authority. Merely styling the impugned order as without jurisdiction or perverse was insufficient to circumvent exhausting alternate remedies. The court followed the reasoning in Oberoi Constructions Ltd regarding exhausting alternate remedies.
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• Excessive tax payment rectified, refund granted for GST return error.

  Case-Laws - HC : The petitioner was entitled to a refund of Rs. 53,08,494/- which was paid in excess along with the return in Form GSTR-3B for the month of March 2023. The excess payment arose due to rectification of an error committed while filing the return for January 2023, wherein the reverse charge liability was not reflected separately and was clubbed with the output tax liability. The High Court allowed the petition, holding that the petitioner had rightly rectified the error in the March 2023 return by paying the excess amount through the electronic cash ledger, and was entitled to the refund claimed, in view of the Circular No. 26/2017 and the facts of the case.
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• Court Overturns GST Registration Cancellation Due to Lack of Evidence, Orders from 2022 and 2024 Nullified.

  Case-Laws - HC : The High Court quashed the orders dated 29 December 2022, 20 February 2024, and the appellate authority's order dated 08 July 2024, cancelling the petitioner's GST registration retrospectively on grounds of fraud, willful misstatement or suppression of facts. The Court found that the authorities failed to provide cogent material indicating the registration was originally obtained through fraudulent means. Crucially, the show cause notice did not consider the amended registration certificate issued on 02 July 2019, and the petitioner was not provided the inspection report of 03 June 2022, which formed the basis for rejecting the revocation application. The cancellation orders were quashed due to lack of evidence substantiating the allegation of fraud in obtaining the initial registration.
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• Applicability of penalty under GST law questioned for GSTR mismatch without fraud allegations.

  Case-Laws - HC : The High Court expressed doubt on the applicability of Section 74 of the CGST Act, 2017 for mere mismatch between GSTR-3B and GSTR-1, as the said provision can be invoked only if fraud, willful misstatement or suppression of facts is alleged. The respondents were permitted to proceed with the impugned Show Cause Notice, but any final orders passed shall not be given effect until the next hearing date of 16.12.2024.
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• Transitional CENVAT credit allowed for claiming GST refund despite delay in Form GST TRAN-1 processing.

  Case-Laws - HC : The petitioner challenged the refund sanctioning orders u/s 54 of the CGST Act on the ground that the unutilized Input Tax Credit (ITC), including transitional credit from CENVAT, was ignored. The High Court held that the provisions of Section 54 would apply, and the authorities could not deprive the petitioner of the CENVAT credit available on 01.07.2017 merely because it was reflected in the Electronic Credit Ledger in August 2017 after processing Form GST TRAN-1. Considering the decision in M/s. Torrent Pharmaceuticals case, the High Court quashed the impugned orders and the show-cause notice, allowing the refund of unutilized ITC after considering the CENVAT credit.
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Income Tax

• Special courts designated in Tamil Nadu for Income Tax and Black Money cases.

  Notifications : The Central Government, in consultation with the Chief Justice of the Madras High Court, designated the following courts as Special Courts in Tamil Nadu for cases u/s 280A of the Income Tax Act, 1961 and Section 84 of the Black Money Act, 2015: 1) Court of I and II Additional Chief Metropolitan Magistrates in Chennai for specified districts, 2) Court of Additional Chief Judicial Magistrate in Madurai for certain districts, 3) Court of Chief Judicial Magistrate in Coimbatore for some districts, and 4) Court of Chief Judicial Magistrate in Puducherry for Karaikal and Puducherry districts.
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• Gain from unexpected transaction in Q4; no interest if advance tax paid after.

  Case-Laws - AT : The Income Tax Appellate Tribunal (ITAT) ruled that when an assessee promptly computed and paid advance tax u/ss 234A, 234B, and 234C of the Income Tax Act, and an unanticipated capital gain transaction occurred in the fourth quarter, the liability to pay advance tax on the capital gain arises only after the transaction takes place. Since the assessee discharged the advance tax liability u/s 234C on March 31, 2019, after the capital gain accrued, and the department did not allege non-payment of the entire tax due, including capital gains, no interest u/s 234C was warranted. Relying on the case of M/S HAMILTON INDUSTRIES PVT. LTD., the ITAT directed the deletion of interest of Rs. 1,18,52,988/- and partially allowed the assessee's appeal.
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• Tax Tribunal Remands Valuation, Denies Section 54F Deduction, Confirms Unexplained Cash Addition During Demonetization.

  Case-Laws - AT : The ITAT adjudicated on the following issues: 1. Cost of acquisition for computing long-term capital gains on sale of ancestral agricultural land: The assessee's valuation report was found unreliable. The matter was remanded to the Assessing Officer to refer it to the District Valuation Officer (DVO) to determine the correct market value as on 01.04.1981, after considering the assessee's objections. 2. Denial of deduction u/s 54F for purchase of new residential property: The ITAT upheld the disallowance, as the assessee failed to establish that a residential house was purchased within the stipulated time. 3. Date of acquisition of new property for Section 54F: The ITAT accepted the assessee's contention that the investment date should be considered as 26.07.2017, when the agreement was executed and full payment was made, despite delayed registration. 4. Addition for unexplained cash deposits in bank account: The ITAT treated cash deposits up to Rs. 15.48 lakhs as explained from agricultural income but confirmed the addition of Rs. 9 lakhs for unexplained cash deposits during demonetization.
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• Derivative trades on stock exchange not speculative, losses allowed set-off against business profits.

  Case-Laws - HC : The High Court held that once the provisions of Section 43(5) were amended to treat trade in derivatives carried out on a recognized stock exchange as a non-speculative transaction, the loss from such derivative transactions would be treated as a business loss for the purposes of Section 72, allowing for its set-off against profits and gains from business. The Court ruled that Section 73, which deals with losses from speculation business, was not applicable in this case since the derivative transactions were not speculative in nature. Consequently, the disallowance of the set-off by the Assessing Officer was deemed illegal, and the Tribunal's order in favor of the assessee was upheld.
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• Penalty order quashed for lack of hearing opportunity; remanded for fresh order after granting hearing.

  Case-Laws - HC : The High Court quashed the penalty order u/s 271(1)(c) passed by the National Faceless Assessment Centre against the petitioner without providing an opportunity of hearing. The matter was remanded back to pass a fresh penalty order after granting an opportunity of hearing to the petitioner in accordance with law, as the Tribunal had already granted substantial relief to the petitioner on merits in the appeals filed by both parties.
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• Reassessment Notice Invalid: Officer's Reopening of Case Lacked Jurisdiction, Constituted Mere Change of Opinion.

  Case-Laws - HC : The High Court held that the reopening of assessment u/s 147 by the Assessing Officer (AO) was without jurisdiction and amounted to a mere change of opinion. The issue of unsecured loans availed by the petitioner from Phulchand Export Pvt. Ltd. was scrutinized during the regular assessment proceedings, and the AO was satisfied with the details provided by the petitioner. The mere fact that Phulchand Export Pvt. Ltd. incurred losses cannot be grounds to doubt the creditworthiness and genuineness of the unsecured loan. Once an issue is scrutinized during regular assessment, the same issue cannot be considered for reopening the assessment, as it would amount to a change of opinion. The impugned notice was held to be issued without jurisdiction, and the decision was in favor of the assessee.
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• Excessive delay excused: High Court overturns Tribunal's refusal to admit 2208-day late appeal.

  Case-Laws - HC : The High Court quashed and set aside the Tribunal's order which had refused to condone the delay of 2208 days in filing the appeal. The High Court held that the Tribunal's finding that the order was delivered at the address mentioned in Form No. 35 was perverse and contrary to the record. The delay of 2208 days in preferring the appeal was condoned by the High Court, and the matter was remanded back to the Tribunal to be decided on merits.
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• Sale transaction complete in AY 2005-06, registered later; reassessment invalid for AY 2006-07 as no sale that year.

  Case-Laws - HC : The petitioner's transaction of sale of immovable property was complete in the assessment year (AY) 2005-06 through execution of agreement, receipt of consideration, and handing over possession, though the sale deed was registered in July 2008. As per Section 47 of the Registration Act, 1908, the sale deed relates back to AY 2005-06, not the date of registration. In AY 2006-07, neither sale nor registration occurred, precluding reassessment proceedings u/s 148 to determine capital gains. Consequently, the impugned order and notices were quashed by the High Court, holding that the correct assessment year was AY 2005-06 when the transaction was disclosed in the income tax returns.
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• Tribunal Upholds 30% Penalty for Undisclosed Income; Assessee's Arguments on Section 271AAB Rejected Due to Evidence.

  Case-Laws - AT : The Income Tax Appellate Tribunal held that the assessee's plea towards non-applicability of Section 271AAB of the Income Tax Act was devoid of rationale. The Tribunal affirmed the existence of undisclosed income discovered during the search, based on cogent evidence of unexplained liabilities and unrecorded expenditures, which met the definition of 'undisclosed income' u/s 271AAB. The Tribunal dismissed the assessee's contention regarding the non-existence of undisclosed income, stating that the assessee's conduct accepted the existence of undisclosed income. Regarding the quantum of penalty, the Tribunal observed that while the Assessing Officer imposed a 30% penalty under clause (c) of Section 271AAB(1), there appears to be a legislative aberration wherein an assessee admitting undisclosed income but failing to specify the manner of deriving it faces a higher penalty compared to an assessee who does not make any admission during the search.
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• Tax Tribunal Sides with Taxpayer, Validates Stock Option Losses Amid Speculative Disallowance by Tax Authorities.

  Case-Laws - AT : The ITAT ruled in favor of the assessee, allowing the loss incurred in stock option transactions. The Assessing Officer (AO) had disallowed the loss, alleging that the options were sold at unreasonably low prices, even below their intrinsic value. However, the ITAT observed that the AO's conclusion was based solely on conjecture without any corroborative evidence. The assessee had provided contract notes and ledger accounts proving the transactions were conducted through the Bombay Stock Exchange (BSE). Despite this, the revenue authorities neither rebutted nor challenged the authenticity of the submitted documents. The assessee discharged their burden of proof, and the onus shifted to the revenue authorities, who failed to bring any comparative data or evidence to substantiate their claims. Consequently, the ITAT set aside the impugned appellate order and deleted the addition, deciding in favor of the assessee.
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• Tribunal upholds validity of approval under Income Tax Act, dismisses appeal due to lack of evidence.

  Case-Laws - AT : The Tribunal upheld the validity of the approval granted u/s 153D of the Income Tax Act. It concurred with the CIT(A) that the normal practice of providing draft orders, assessment records, and relevant documents to the approving authority was followed. The assessee failed to demonstrate that these records were not provided to the approving authority. Consequently, the Tribunal found no infirmity in the CIT(A)'s findings regarding the jurisdictional issue of approval u/s 153D. Due to the absence of material on record, the Tribunal dismissed the assessee's appeal for the assessment year 2012-13 without adjudicating the merits of the case.
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• The bad debt was allowed as a deduction being part of the assessee's business.

  Case-Laws - AT : The Income Tax Appellate Tribunal allowed the assessee's appeal and directed the Assessing Officer to permit the deduction of bad debts claimed u/s 37(1) of the Income Tax Act. The Tribunal held that the authorities below misunderstood the facts and failed to appreciate the prevailing business scenario. Venturing into diverse sectors is common for large corporate houses. The assessee's investment in the subsidiary was part of its business, and after a long gestation period, the question of it not being part of the assessee's business was ruled out. The Tribunal relied on Supreme Court judgments to strengthen the assessee's case.
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• Tax Tribunal Remands Case for Further Review on Arm's Length Price Due to Insufficient Comparable Data by Assessee.

  Case-Laws - AT : The ITAT allowed the revenue's appeal for statistical purposes and remitted the matter back to the Assessing Officer to re-examine the issue and refer it to the Transfer Pricing Officer (TPO) for determination of arm's length price based on the most suitable method. The ITAT observed that the assessee neither provided detailed workings for the Comparable Uncontrolled Price (CUP) method to the Commissioner of Income Tax (Appeals) nor did the CIT(A) perform any such calculation. The ITAT found force in the revenue's argument that since the assessee did not provide services to any party other than its Associated Enterprises (AEs) nor awarded any sub-contract to independent entities, no internal comparables were available for working under the CUP method. The ITAT distinguished the case relied upon by the assessee, as in that case, the ALP was computed by the assessee itself following the CUP method, whereas in the present case, no precise workings were provided for either CUP or Transactional Net Margin Method (TNMM).
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• Foreign Travel Expenses Disallowance Overturned; Assessee Liable for Section 234B Interest on Tax Shortfall.

  Case-Laws - AT : The ITAT held that where the assessee entered into a unilateral Advance Pricing Agreement (APA) with the Central Board of Direct Taxes (CBDT) and complied with its terms, the Assessing Officer's disallowance of foreign travelling expenses u/s 37(1) of the Income Tax Act, which formed part of the operating expenses and cost base, was in breach of the APA's letter and spirit and liable to be set aside. The Tribunal upheld the Commissioner of Income Tax (Appeals) order and dismissed the Revenue's ground of appeal. Regarding interest levied u/ss 234B and 234C on the additional income assessed pursuant to the APA, the Tribunal dismissed the cross-objection concerning Section 234C interest as not maintainable due to the assessee's failure to raise a ground of appeal before the CIT(A). However, the Tribunal held that the assessee was liable to pay interest u/s 234B on the differential between advance tax paid and assessed tax, as Section 234B does not exclude additional tax on additional income from the assessed tax. The assessee's contentions were rejected, and authorities cited did not support the assessee's case.
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• Tax Tribunal Rules on Power Transfer Pricing & Donation Deduction; Clarifies Section 80-IA & Remands Section 80G Issue for Review.

  Case-Laws - AT : The ITAT allowed the assessee's appeal on the issue of disallowance of deduction u/s 80-IA. It held that the arm's length price for transfer of power from the captive power unit to the steel manufacturing unit should be the rate at which the State Electricity Board supplies power to industrial consumers, and not the rate at which it purchases power from suppliers. This is in line with the jurisdictional High Court's judgment in CIT v Godavari Power & Ispat Ltd and the Supreme Court's judgment in CIT v Jindal Steel and Power Ltd. Regarding the disallowance of deduction u/s 80G for donations, the ITAT restored the issue to the Assessing Officer for fresh adjudication after verifying whether the donations satisfied the conditions of section 80G. It also restored the connected issue of double disallowance of deduction u/s 80G to the Assessing Officer for re-adjudication.
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Customs

• New Sea Cargo Regulations for Mangalore Customs Enhance Transparency and Speed; Mandatory Filing by October 2024.

  Circulars : The Sea Cargo Manifest and Transshipment Regulations (SCMTR) will be implemented for Mangalore Customs (INNML1) with effect from 01.10.2024. The SCMTR aims to enhance transparency, predictability of cargo movement, and advance collection of information for expeditious risk-based Customs clearance. It stipulates obligations, roles, and responsibilities for stakeholders involved in the movement of imported/exported goods and specifies changes to formats and timelines for filing manifest declarations. Filing in the new SCMTR format will become mandatory from the effective date. Stakeholders are advised to start filing immediately in the new format on a parallel basis to ensure smooth cargo clearance. Customs officers will sensitize and assist stakeholders in filing under SCMTR.
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• Petroleum imports by trusted traders to get fast-track customs clearance pending lab test results.

  Circulars : Imports of petroleum products under CTH 2710 by Category AEO-T2 and above status holders shall be provisionally assessed on Second Check basis pending receipt of Sample Test Report from CRCL as a trade facilitation measure.
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• Rice export consignments no longer subject to routine testing in Visakhapatnam; assessment officers can order sampling case-wise. </text.

  Circulars : The Principal Commissioner of Customs at Visakhapatnam discontinued the practice of routine sampling and testing of rice export consignments before issuing Let Export Orders. This decision was taken as the export duty on all rice varieties is now nil and the export policy is 'free', except for broken rice. However, the Assistant/Deputy Commissioner of Customs in charge of assessment and examination retains the discretion to order sampling on a case-by-case basis to verify the accuracy of declarations.
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• Customs duty reassessment: Air freight cap breached, matter remanded.

  Case-Laws - AT : The Tribunal allowed the appeal by way of remand. The appellant was not entitled to the benefit of the fifth proviso to Rule 10 of the Customs Valuation Rules, 2007 regarding inclusion of air freight up to 20% of FOB value in the assessable value. The Tribunal held that the amount shown as 'Add.Recov.Freight' in the invoices represented the air freight incurred by the appellant. Since the invoices were raised on CPT basis, the CPT value was considered the de facto FOB value. The addition of 'Add.Recov.Freight' amount in the assessable value was restricted to 20% of the CPT value. The matter was remanded to the original authority for re-determining the duty payable on all Bills of Entry accordingly.
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• Tariff Quota Allocation Revision Lacks Due Process, Court Orders Review.

  Case-Laws - HC : The High Court held that the mid-year review and revision of Tariff Rate Quota (TRQ) allocations conducted by the Respondents without affording an opportunity of hearing and sufficient prior notice to the Petitioners lacked specified criteria and was procedurally flawed. The Court directed the Directorate General of Foreign Trade (DGFT) to examine the issues raised by the Petitioners and issue a fresh decision based on the review within three weeks, maintaining the current allocations until then. The petitions were disposed of.
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• DRI had jurisdiction to issue show cause notice under Customs Act, as per Supreme Court ruling. Case restored for adjudication.

  Case-Laws - HC : The High Court held that the respondent (DRI) had jurisdiction to issue the show cause notice under the Customs Act, 1962, following the Supreme Court's decision in Commissioner of Customs vs. Canon India Pvt. Ltd. The petition was disposed of by restoring the notice to the Adjudicating Authority for adjudication by a proper officer u/s 28 of the Customs Act, 1962.
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• Tribunal Restores Customs Broker License, Imposes Rs. 5,000 Penalty for Document Handling Lapses Under CBLR 2018.

  Case-Laws - AT : The CESTAT allowed the appeal in part by modifying the impugned order. It set aside the revocation of the Customs Broker's license and forfeiture of security deposit, as there was no violation of Regulations 1(4), 10(d), 10(n), and 13(12) of the Customs Brokers Licensing Regulations (CBLR), 2018. However, a penalty of Rs. 5,000 was imposed on the Customs Broker for violating Regulation 10(e) due to failure to exercise due diligence in handling documents while filing import declarations. The Tribunal held that the Customs Broker cannot be faulted for misdeclaration by the importer, as they filed the bill of entry based on documents provided. The delay in inquiry proceedings was not properly explained, and the entire blame cannot be placed on the Customs Broker.
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• Tribunal Rules Revenue Must Prove Misconduct for Duty Recovery; Dismisses Penalties and Upholds Exporters' Appeals.

  Case-Laws - AT : The CESTAT held that Section 28AAA of the Customs Act, 1962, invoked by the Revenue for recovery of duty foregone, requires establishing collusion, willful misrepresentation or suppression of facts at the time of obtaining the instrument for exemption. Mere non-repatriation of export proceeds does not automatically erase eligibility for exemption. The Tribunal found no evidence of the required ingredients u/s 28AAA to justify recovery of duty foregone or cancellation of bank realization certificates. The alleged mis-declaration of goods did not warrant confiscation u/s 113(d) as the goods were not prohibited for export. The demands for recovery of drawback, duty foregone, and confiscation of goods were quashed. Penalties imposed on individuals were also set aside due to lack of sustainable grounds. The Tribunal dismissed the Revenue's appeals and allowed the appeals of exporters and individuals.
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FEMA

• Company successfully appealed against forex penalty for import documents lapse; benefit of doubt given for bank's role.

  Case-Laws - AT : The Appellate Tribunal allowed the appeal filed by M/s Wipro Ltd. and set aside the penalty imposed for contravention of provisions u/s 10(6) of FEMA. The company had remitted foreign exchange to overseas banks for import of goods but failed to submit Bills of Entry for five instances. However, the company provided documents proving import for three out of those five remittances. For the remaining two remittances amounting to USD 38,550, the Tribunal gave the benefit of doubt to the company, considering the lapse on the part of the erstwhile ANZ Grindlays Bank in not intimating RBI or maintaining proper records. The Tribunal relied on the Delhi High Court judgment in Innovative Tech Pack Ltd. v. Special Director of Enforcement.
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Corporate Law

• Appellants' Preferential Payment Claim Rejected; Must Join Creditors for Dividends in Company Wind-Up Proceedings.

  Case-Laws - HC : The High Court rejected the appellants' application for release of the amounts deposited by the respondent company. The appellants' contention that their petition was prior in time, entitling them to preferential payment from the deposited amount, was unmerited. Since the Company Court had decided to proceed with winding up the company, the appellants would have to stand with other creditors for recovering dividends u/s 529 of the Act. Their petition was rendered infructuous once the winding up order was passed, as a company can be wound up only once. The appellants' application seeking withdrawal of the deposited amount in their disposed petition was not maintainable, as they could not have better rights than other creditors over the company's properties. The appeal was disposed of.
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IBC

• Creditor relinquishes security interest due to non-payment of liquidation costs, NCLAT upholds order.

  Case-Laws - AT : The NCLAT dismissed the appeal, upholding the order of the Adjudicating Authority. The Appellant had informed the liquidator of its decision to relinquish its security interest, rendering Regulation 21A(1) inapplicable. As the Appellant proceeded to realize its security interest without paying the proportionate liquidation costs as per Regulations 21A(2) and (3), the Adjudicating Authority rightly held that the security interest stood relinquished. The Appellant had agreed for joint sale of assets by both liquidators but failed to pay the CIRP and liquidation costs. The NCLAT found no grounds to interfere with the impugned order.
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Indian Laws

• Cheque dishonour dispute resolved through settlement, compounding offence allowed even post-conviction.

  Case-Laws - HC : The petitioner-accused and the complainant-respondent settled the matter related to dishonor of cheque. The High Court accepted the prayer for compounding the offence u/s 147 of the Negotiable Instruments Act, 1881, following the Supreme Court's guidelines in Damodar S. Prabhu v. Sayed Babalal H. Noting the non-obstante clause in Section 147, the Court held that compounding is controlled by this provision, not Section 320 of CrPC. Relying on K. Subramanian v. R. Rajathi, the Court allowed compounding even after conviction. Consequently, the conviction and sentence were quashed, and the petitioner-accused was acquitted u/s 138 of the Act.
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SEBI

• Expanding T+0 settlement cycle to top 500 stocks, open to all brokers, block deal window for quicker trades.

  Circulars : The circular enhances the scope of the optional T+0 rolling settlement cycle in equity cash markets by increasing the eligible scrips to the top 500 by market capitalization, allowing participation by all stock brokers including qualified stock brokers and custodians, and introducing a block deal window during the morning session exclusively for T+0 settlement. The measures aim to increase efficiency and enable seamless participation of investors in the optional accelerated settlement cycle.
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• Securities Regulator Consolidates Rules for Depositories, Beneficial Owners & Market Participants.

  Circulars : The Securities and Exchange Board of India (SEBI) issued a Master Circular consolidating all relevant circulars and communications pertaining to depositories up to September 30, 2024. It supersedes the previous Master Circular issued on October 06, 2023. The Circular covers provisions related to Beneficial Owner Accounts, Depository Participants, Issuers, and Depositories. Any actions taken under the rescinded circulars shall be deemed valid, and pending applications shall be processed under the new Circular. The Circular is issued under SEBI's powers to regulate the securities market and protect investor interests.
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• SEBI Updates Guidelines for Capacity Planning and Performance Monitoring for Market Infrastructure Institutions.

  Circulars : The Securities and Exchange Board of India (SEBI) issued revised guidelines for capacity planning and real-time performance monitoring framework for Market Infrastructure Institutions (MIIs) like stock exchanges, clearing corporations, and depositories. Key requirements include proactive capacity planning methodology, maintaining installed capacity at least 1.5 times projected peak load based on sustained peak trend, comprehensive quarterly stress testing, horizontal and vertical scalability testing, automated performance monitoring with predefined thresholds and alert systems, maintaining asset registers, enhancing capacity if utilization exceeds 75%, assessing impact of changes, including requirements in vendor SLAs, and having a defined policy approved by Standing Committee on Technology and Board. MIIs must submit revised guidelines to SEBI within 3 months after board approval.
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• High Court Dismisses Challenge to SEBI Notice; Allows Defenses to Be Raised Before SEBI, Stresses Fairness and Timeliness.

  Case-Laws - HC : The High Court dismissed the petition challenging the show cause notice issued by SEBI. The key findings were: the arguments of delay, laches, review, revisit, double jeopardy, and res judicata were not accepted to quash the notice at this stage, allowing petitioners to raise such defenses before SEBI. The Court found no non-application of mind by SEBI in issuing the notice based on the available material. SEBI agreed to provide certain information related to an earlier complaint within two weeks. Petitioners were granted four weeks after receiving that information to file their response to the show cause notice. The Court declined to interfere further, stating that fairness is a two-way process, and prolonging adjudication unnecessarily should be avoided. The extraordinary jurisdiction was not meant for stalling proceedings at every stage.
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Service Tax

• Tax relief amid COVID-19: Court allows belated payment under amnesty scheme.

  Case-Laws - HC : The High Court quashed the impugned Endorsement issued by the 3rd respondent rejecting the petitioner's payment made on 30.09.2020 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. Considering the prevailing COVID-19 pandemic, the court extended the benefit of the scheme to the petitioner, even though the payment was made after the prescribed deadline of 30.06.2020. The 3rd respondent was directed to accept the petitioner's payment and issue a discharge certificate in Form SVLDRS-4 within four weeks.
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• Refund Granted for Ocean Freight Service Tax: CESTAT Upholds Commissioner Decision, Rejects Revenue's Appeal.

  Case-Laws - AT : The appellant filed a refund claim for differential service tax paid on ocean freight during May 2017 and June 2017. The refund claim was rejected based on CBEC Circular No. 206/4/2017, which stated that the exemption benefit would not be available where services are rendered by a foreign shipping line not registered in India and not following the Cenvat Credit Rules, 2004. However, the CESTAT dismissed the revenue's appeal, upholding the order allowing the refund claim. The CESTAT relied on judicial precedents which held that no tax is leviable on ocean freight for services provided by a person located in a non-taxable territory for transportation of goods on a vessel from a place outside India up to the Customs station of clearance in India. The CESTAT found no grounds to interfere with the Commissioner (Appeals) order allowing the refund claim.
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Central Excise

• Tribunal Rules Undervaluation and Shortage Claims Unsustainable; CENVAT Credits Allowed, No Penalties Imposed.

  Case-Laws - AT : The CESTAT disposed of the appeal with the following key holdings: Undervaluation relating to stock transfer to their own unit and sale to sister unit was held not sustainable as it was a revenue-neutral situation. Demand of Rs.1,94,02,717/- and Rs.52,28,055/- set aside. Demand of Rs.1,15,616/- for short receipt of methanol set aside following the tribunal's earlier ruling allowing transit loss. CENVAT credit of Rs.2,50,647/- for inputs used in research and development allowed as it relates to manufacturing activity. CENVAT credit of Rs.14,86,640/- and Rs.34,88,013/- taken on endorsed invoices/bills of entry allowed following the Allahabad High Court's ruling. Demand of Rs.14,04,491/- for alleged shortage of finished goods set aside due to lack of evidence on clearances, transportation, and recipients. Consequently, no penalty was imposable on the appellant.
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• Tribunal quashes excise duty demand citing no suppression of facts or intent to evade.

  Case-Laws - AT : The Appellate Tribunal held that the extended period of limitation for demand of duty could not be invoked as there was no suppression of facts or intent to evade payment of Central Excise duty by the appellants. The manufacture, clearances, and business transactions were duly recorded in books of account maintained by the appellants. The CENVAT credit demand and interest were set aside as the credit was reversed without utilization. No penalty was imposable as there was no intention to evade duty. The personal penalty on the partner was also set aside, following jurisdictional High Court precedents that separate personal penalties on partners in a firm case are unjustified. Consequently, the appeal was allowed.
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• Excise Appeal Rejected: Mandatory Pre-Deposit Requirement Not Met.

  Case-Laws - AT : The Tribunal dismissed the appeal due to non-compliance with the statutory requirement of making the pre-deposit. After an amendment on August 6, 2014, neither the Tribunal nor the Commissioner (Appeals) had the power to waive the pre-deposit requirement u/s 35F of the Central Excise Act. The Supreme Court's decision in Narayan Chandra Ghosh vs. UCO Bank emphasized that when a statute confers the right to appeal, conditions can be imposed, and unless the condition precedent of filing an appeal is fulfilled, the appeal cannot be entertained. Since the appellant failed to make the required pre-deposit, the Tribunal could not permit the maintenance of the appeal.
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Case Laws:

• GST

• 2024 (12) TMI 591
  Maintainability of petition - availability of alternative remedy - tax demanded on items for which the tax had already been paid - violation of principles of natural justice - HELD THAT:- In the facts of the present case, there are no substantial ground to deviate from the practice of exhaustion of alternate remedies. Simply alleging a violation of natural justice or claiming that judgments of the Supreme Court or High Courts are not considered is insufficient. These contentions must be made good. By making such allegations, the parties must not try to argue the matter on merits and take chances. Prima facie, there are no apparent violations of natural justice or contradictions with clearly decided precedents on the subject. The contentions about the Petitioner being required to pay tax over items for which tax was already paid would involve investigating factual aspects which the Appellate Authority could best undertake. If the point was so plain, at least an application for rectification should have been filed within the prescribed period. This petition is declined to be entertained but the Petitioner is granted liberty to challenge the impugned orders by instituting appeals before the Appellate Authority. If appeals are instituted within four weeks from today, the same should be considered and disposed of on merits without adverting to the limitation issue - petition is disposed off by keeping all parties contentions open and by relegating the Petitioner to the remedy of appeal.

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• 2024 (12) TMI 590
  Seeking a direction to the respondents to make payment of GST @ 18% - submission was made that on account of change in rate of GST instead of 12%, the petitioner was entitled to payment of GST @ 18%, however, only 12% amount was paid to the petitioner - HELD THAT:- On 11.11.2024, time was granted to the respondents to make the payment or the Principal Secretary, Public Works Department was directed to attend the proceedings through video conferencing. Counsel for the petitioner is not in a position to dispute the submissions so made - In that view of the matter, the petition stands disposed of.

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• 2024 (12) TMI 589
  Challenge to order along with summary of order in Form DRC-07 to the extent prejudicial to the petitioner - petitioner submits that hearing in the matter has already taken place before the CGST authorities - HELD THAT:- In view of the admitted factual and legal position, the petition, filed by the petitioner, is allowed. The impugned order dated 25.08.2024 is quashed and set aside. The CGST authorities may continue with the proceedings in accordance with law.

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• 2024 (12) TMI 588
  Recovery of alleged outstanding demand for the period of 2018-19 - case of the petitioner is that petitioner is willing to deposit the statutory pre-deposit amount - HELD THAT:- To enable the petitioner to avail of the benefit of Circular dated 11.07.2024 issued by Central Board of Indirect Taxes and Customs, this petition is disposed off by directing that the Electronic Credit Ledger of the petitioner shall be unblocked to enable petitioner to make predeposit of the said amount. On petitioner making pre-desposit of said amount and complying with other requirements of Circular dated 11.07.2024, no further coercive action shall be taken against petitioner, pursuant to order dated 25.01.2024 for the tax period of 01.04.2018 to 31.03.2019. Further coercive action taken against petitioner pursuant to said assessment proceeding of blocking of the Electronic Credit Ledger and holding of bank account, shall be deemed to be quashed on petitioner making the pre-deposit. It is clarified that petitioner should first make the pre-deposit from the Electronic Credit Ledger and that only in case petitioner makes the pre-deposit, petitioner would be permitted to operate the Electronic Credit Ledger and hold on the bank account shall be lifted. Petition is disposed off.

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• 2024 (12) TMI 587
  Violation of principles of natural justice - before raising demand in the impugned notice, no opportunity of hearing was given to the petitioner - cancellation of GST registration of the petitioner-Company - HELD THAT:- The respondent-State has already been given sufficient time to seek instruction in the matter that as to whether notice has ever been served upon the petitioner before inflicting the demand, but despite opportunity no instruction has been received so far from the State Counsel - This Court is constrained to pass order in favour of the petitioner treating that the petitioner has not been served with the notice before inflicting the demand. In this view of the matter the impugned order dated 28.11.2023 is hereby quashed, however, a liberty is given to the respondent-Department to give/serve notice under Section 73 of U.K. G.S.T Act, 2017 upon the petitioner and pass appropriate order, in accordance with law, after hearing the petitioner or his authorized agent - Petition disposed off.

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• 2024 (12) TMI 586
  Dismissal of appeal preferred by the petitioner under Section 107 of GST Act - availment of ITC by mistake but the same was not utilized - order passed without providing opportunity of personal hearing - violation of principles of natural justice - HELD THAT:- From the records as produced by learned Standing Counsel, in the notice issued under Section 74 of GST Act, the date by which the reply was to be submitted was mentioned as 08.01.2022, however, date of personal hearing, time of personal hearing and venue of personal hearing were not indicated and simply the word NA was transcribed. Even in the reminder notice sent to the petitioner, in the coloumn of date of personal hearing, time of personal hearing and venue of personal hearing, NA was transcribed. Considering the fact that the original order is contrary to the mandate of Section 75(4) of GST Act and is also violative of principles of natural justice, the order dated 01.02.2022 is liable to be quashed and is accordingly quashed - As the impugned order has been quashed, order dated 24.04.2024 is also quashed. Matter is remanded to respondent no.3 to pass fresh orders after giving an opportunity of hearing and after permitting the petitioner to file a reply to the show-cause notice, in accordance with law - Petition allowed by way of remand.

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• 2024 (12) TMI 585
  Condonation of delay of 21 days in filing appeal - HELD THAT:- The writ petition should be allowed with a direction to the Appellate Authority to hear the appeal on merits and accordingly, 21 days delay in filing of the appeal is condoned while exercising powers under Article 226 of the Constitution of India. The Appellate Authority is directed to rehear the appeal and decide the same on merits. Petition allowed.

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• 2024 (12) TMI 584
  Rejection of claim of the ownership of the petitioner on the goods detained by respondent no. 5 - petitioner has failed to produce evidence regarding ownership of the goods - Section 129(3) of the Uttar Pradesh Goods and Service Tax Act, 2017 - HELD THAT:- The denial of the respondents to apply the provisions of Section 129(1)(a) of the Act, in the light of the Clarification dated 31.12.2018 and judgments of this Court, is based on the finding that the petitioner has failed to produce evidence regarding ownership of the goods. A perusal of the finding recorded would reveal that the authority observed that only consignor or consignee, whose name is indicated in the invoice and e-way bills, can be deemed as owner of the goods, however the invoices and e-way bills indicate the consignee as M/s Vishal Enterprise and that no material has been produced by Mr. Vishal Chobia pertaining to the ownership of the goods based on Aadhar Card, Pan Card etc. as his name is not indicated in the invoice/ e-way bills. The finding recorded is essentially de-hors the material available with the authority wherein the registration certificate pertaining to the GISTIN clearly indicates the status of the petitioner as proprietor of M/s. Vishal Enterprise - In view of the specific indications in the official records about M/s. Vishal Enterprise, being the proprietorship of the petitioner, turning a blind eye by the officers to the said aspect and refusing to recognize the petitioner as deemed owner of the goods being the consignee cannot be sustained. The impugned orders of penalty dated 05.11.2024 (Annexure-1) passed by respondent no. 5, are set aside. The matter is remanded back to the competent authority to pass a fresh order in terms of the observations made hereinbefore and in terms of the provisions of Section 129(1)(a) of the Act, within a period of two weeks from the date of this order - petition allowed by way of remand.

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• 2024 (12) TMI 583
  Seeking grant of bail u/s 132(1)(b), 132(1)(c) read with Section 132(1)(i) of C.G.S.T. Act, 2017 - creation of fake firms and issuance of bogus bills and invoices without any supply of goods and services - HELD THAT:- Having regard to the entire facts and circumstances of the case, the nature of the offence, the punishment and the material available on record, the fact that the applicant has no criminal history to his credit and the fact that co-accused Deepak Kumar having more serious role has been released on bail by the coordinate Bench of this Court, and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. The bail application is allowed.

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• 2024 (12) TMI 582
  Challenge to adjudication order - Violation of principles of natural justice - no opportunity of personal hearing was granted to the petitioner - HELD THAT:- Considering the facts and circumstances of the present case and the provisions of Section 73 read with Section 75(4) of the WBGST/CGST Act, 2017, this Court is of the view that proper officer is bound to afford an opportunity of hearing, where either a request in writing is received by him from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person. To afford opportunity of hearing is a statutory mandate which cannot be violated by proper officer and in the event such of violation, the order passed by the proper officer cannot be sustained. Under the circumstances, the impugned order dated 29th December, 2023 passed by the proper officer for the period 2017-2018 cannot be sustained and deserves to be quashed and the matter deserves to be remanded to the concerned authority to pass an order afresh in accordance with law after affording reasonable opportunity of hearing to the petitioner. Petition disposed off by way of remand.

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• 2024 (12) TMI 581
  Seeking directions to the respondents to issue refund of Integrated Goods Services Tax (IGST) along with the interest - objection of territorial jurisdiction has been raised on the ground that the refund pertains to the concerned ports of export. Territorial Jurisdiction for entertaining the writ petition - HELD THAT:- In the case in hand, for invoking jurisdiction of Rajasthan High Court it is pleaded that the petitioner is carrying on business in Rajasthan, registered with the GST Authorities at Rajasthan and is being assessed at Rajasthan. No further pleadings have been made for the cause of action or part of cause of action arising in State of Rajasthan - Under Rule 96 (3) the claim of refund upon receipt of information of applicant having filed valid return in FORM GSTR-3(B) shall be processed by the system designated by the Customs or the Proper Officer of the Customs. The derivative being that the claim of refund if not dealt by the system electronically has to be considered by the Customs Authorities of the port wherefrom the goods have been exported. The petitioner is aware of the position and had raised that the grievances of non-grant of refund before the Commissioner of Indian Customs (Exports) of the Ports from where the goods were exported. The reliance on the circular dated 05.07.2017 to contend that Deputy or Assistant Commissioner of Central Tax is the Proper Officer for Rule 96 is misplaced. The notification of 2017 was qua Rule 96 (6) which was deleted w.e.f. 01.07.2017. The Sub-Rule dealt with the case of passing of order by the Proper Officer of the Central Tax or the State Tax in case of withholding of refund under Sub-Rule (5). The Sub-Rule was not relevant for refund of IGST arising due to export of goods - In absence of any pleadings for cause of action or part of cause of action accruing in State of Rajasthan for non-grant of refund and in view of the fact that the application for refund was made at the ports for exports and the claim is to be dealt by the Customs Authorities of the Port, the writ petition is dismissed for want of territorial jurisdiction. Refund of IGST inspite of having claimed higher rate of duty of drawback - HELD THAT:- Having coming to the conclusion that writ petition cannot be entertained for want of territorial jurisdiction, there is no occasion for us to deal with the issue whether the petitioner is entitled to refund of IGST inspite of having claimed higher rate of duty of drawback. The writ petition is dismissed.

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• 2024 (12) TMI 580
  Excess ITC claimed in GSTR-3B not confirmed in GSTR-2A without even appreciating the fact that the original scheme of GST never came into effect for the period under dispute - Demand of tax under GST alongwith interest - HELD THAT:- It is satisfied that no case is made out to depart from the practice of exhaustion of alternate remedies based on the pleadings in this Petition or the contentions advanced by the Petitioner. The argument that CBIC circulars are not being followed can always be raised before the appellate authority. Simply styling the impugned order as being without jurisdiction or perverse is insufficient to circumvent the practice of exhausting alternate remedies. In Oberoi Constructions Ltd [ 2024 (11) TMI 588 - BOMBAY HIGH COURT] several decisions are summarised on exhausting alternate remedies. By following the reasoning in that decision instead of repeating it in this order, we are satisfied that no case is made out to depart from the usual practice of exhausting alternate remedies. It is declined to entertain this Petition and relegate the Petitioner to avail of the alternate appeal remedy by fulfilling the pre-deposit conditions - The Petition is disposed of.

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• 2024 (12) TMI 579
  Cancellation of GST registration due to failure to furnish bank details - Rule 21 (d) read with Rule 10A of the Central Goods and Service Tax Act, 2017, the petitioner had not furnished the bank details - HELD THAT:- There cannot be a dispute that respondent no. 3-appellate authority has no power to condone the delay beyond the stipulated time in an appeal under Section 107 of the G.S.T. Act. The petitioner s stand that soon after the show cause notice was received, its chairman died, as a ground for belated filing of the appeal is a plausible one. The fact remains that there was delay, which respondent no. 3-appellate authority had no power and jurisdiction to condone. The division benches of this Court in such peculiar state of affairs, noticing that absence of any power in the appellate authority to condone the delay, even in genuine cases, would result in obstruction of the fundamental right guaranteed by the constitution to carry on the business under Article 19 (1) (g), have intervened in appropriate cases. In the matter of ROHIT ENTERPRISES VERSUS THE COMMISSIONER STATE GST AURANGABAD. THE DY. COMMISSIONER STATE TAX (APPEAL) AURANGABAD. THE STATE TAX OFFICER, AURANGABAD [ 2023 (2) TMI 759 - BOMBAY HIGH COURT] , it has been demonstrated as to how cancellation of G.S.T. registration would even adversely affect the revenue of the State, expected such matters to be approached pragmatically. Following MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] , inter alia observing that the jurisdiction of the High Court under Article 226 of the Constitution of India cannot be restricted by the provision of any Act to bar or curtail remedies, had entertained the petition, particularly in light of the fact that the order of cancellation of registration on technicalities could be reconsidered. The impugned order of respondent no. 4 dated 13.06.2023, is quashed and set aside - Petition allowed.

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• 2024 (12) TMI 578
  Rectification of error in the returns in Form GSTR-3B filed for the months of January and March 2023 - refund of the excess payment of tax that the petitioner was forced to pay - reverse charge mechanism - HELD THAT:- On perusal of the Form GSTR-3B and the returns for the month of January and March 2023, it is apparent that the petitioner has, in order to rectify the error committed while filing the return in Form GSTR-3B for the month of January 2023 by not reflecting the reverse charge liability and clubbing the same in the output tax liability, rectified in the return filed for the month of March 2023 by payment of excess amount of Rs. 53,08,494/- through electronic cash ledger. The inward supply liable to reverse charge for both the months i.e. January and March 2023 would be Rs. 19,36,06,13,825/- [10,88,46,615.50 + 8,47,59,522.75]. The petitioner has therefore, paid the tax on the inward supplies of Rs. 19,36,06,13,825/- amounting to Rs.96,80,310/- through electronic cash ledger in the month of March 2023. The petitioner has already paid the tax on outward supplies for month of January 2023 amount of Rs.55,36,134/-which included the inward supply liable to reverse charge which was not shown separately. In fact, the petitioner was liable to pay Rs. 54,42,332.88 on inward supply liable to reverse charge in the month of January 2023 - the petitioner is entitled to refund of Rs. 53,08,494/- which was paid in excess along with return in Form GSTR-3B for the month of March, 2023. As the respondent-authority has not given any reason while rejecting the refund claimed by holding that there is excess payment, on going through the facts which are placed on record and it would be a futile exercise to remand the matter back to the respondent-authorities as it is apparent from the facts of the case and in view of the Circular No. 26/2017 that the petitioner is entitled to the refund claimed - Petition allowed by way of remand.

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• 2024 (12) TMI 577
  Seeking for setting aside Demand and Recovery Proceeding initiated u/s 76 of the Central Goods and Services Tax Act, 2017, and the show-cause notice issued u/s 76 (2) of the Central Goods and Service Tax Act, 2017 - HELD THAT:- Since the petitioner has already responded to the show cause notice issued by the respondents, it is not required to entertain this writ petition. However, the writ petition is disposed off by directing the respondents to consider and decide the show cause notice having regard to the jurisdiction point raised by the writ petitioner in this writ petition in addition to what have been averred in the response filed to the show-cause notice. Petition disposed off.

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• 2024 (12) TMI 576
  Cancellation of GST registration of petitioner obtained by means of fraud, willful misstatement or suppression of facts, from a retrospective date - HELD THAT:- The original SCN had proceeded on the allegation that the registration had been obtained by means of fraud and was thus liable to be cancelled. However, that notice failed to advert to or found itself upon any cogent material on the basis of which the respondents came to form the opinion that the registration itself had been obtained by practice of fraud or by the making of a willful misstatement or suppression of facts. More importantly, the Court notes that the said SCN had failed to allude to the amended registration certificate which had come to be obtained by the petitioner in the meanwhile and had been issued on 02 July 2019. That development has clearly not been borne in consideration. There is an occasion to note in the preceding parts of this order that it was these very premises which had also been searched by the authorities working under the DGGI. The respondents, in terms of a notice of 20 January 2023, however, allude to an inspection report submitted by the Deputy Commissioner, Anti-Evasion dated 03 June 2022. It is the conceded case that a copy of the said communication was neither provided to the writ petitioner nor was it ever confronted with the same. It is this material which appears to have formed the basis for the passing of the order of 20 February 2024 rejecting the application for revocation. It is found that although it was alleged that the registration was liable to be cancelled on the ground of fraud, willful misstatement or suppression of facts, none of the authorities, including the appellate authority, have rested their opinion on any material which may have even remotely indicated that the registration certificate when originally obtained was the outcome of the practice of fraud, willful misstatement or suppression of facts. The impugned orders dated 29 December 2022, 20 February 2024, as well as the order of the appellate authority dated 08 July 2024 are hereby quashed - petition allowed.

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• 2024 (12) TMI 575
  Denial of benefit of input tax credit on account of the provisions contained in Sub Section (4) of Section 16 of the CGST/SGST Acts - HELD THAT:- Having regard to the assertion of the learned counsel appearing for the petitioner that on account of notification of Sub-Section (5) of Section 16 of the CGST/SGST Acts, the petitioner will be entitled to input tax credit, which has been denied to the petitioner by Exts.P1 and P2, the writ petition will stand disposed of, setting aside Exts.P1 and P2 to the extent that it denied input tax credit to the petitioner on account of the provisions of Sub Section (4) of Section 16 of the CGST/SGST Acts and directing the competent authority to pass fresh orders, after taking note of the provisions contained in Section 16(5) of the CGST/SGST Acts and after affording an opportunity of hearing to the petitioner, within a period of three months from the date of receipt of a certified copy of this judgment.

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• 2024 (12) TMI 574
  Denial of benefit of input tax credit on account of the provisions contained in Sub Section (4) of Section 16 of the CGST/SGST Acts, for the financial year 2019-20 - HELD THAT:- Having regard to the assertion of the learned counsel appearing for the petitioner that on account of notification of Sub-Section (5) of Section 16 of the CGST/SGST Acts, the petitioner will be entitled to input tax credit, which has been denied to the petitioner by Ext.P3 order, the writ petition will stand disposed of, setting aside Ext.P3 to the extent that it denied input tax credit to the petitioner on account of the provisions of Sub Section (4) of Section 16 of the CGST/SGST Acts and directing the competent authority to pass fresh orders, after taking note of the provisions contained in Section 16(5) of the CGST/SGST Acts and after affording an opportunity of hearing to the petitioner, within a period of three months from the date of receipt of a certified copy of this judgment.

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• 2024 (12) TMI 573
  Violation of principles of natural justice - order was made ex parte - Service tax demand on construction of single residential units - HELD THAT:- Impugned order is set aside and quashed on the matter of adjudication, restored to the authority. Within two weeks from date petitioner must communicate certified copy of this order and her contention to the adjudicating authority. The authority will then consider the contention and pass fresh order. In event petitioner does not file her contention by 29th November, 2024 impugned order will stand automatically restored. Petition disposed off.

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• 2024 (12) TMI 572
  Tax discrepancies - mismatch between GSTR-3B and GSTR-1 - applicability of Section 74 of the CGST Act, 2017 - HELD THAT:- Prima facie, it is doubted how the provisions of Section 74 of the Central Goods Services Tax Act, 2017 would stand attracted on a mere allegation of a mismatch between GSTR-3B and GSTR-1. This is noted since the said provision would itself be liable to be invoked only if it be alleged that a case of fraud, wilful misstatement or suppression of facts is made out. The matter requires consideration. It is provided that while it shall be open for the respondents to proceed further with the impugned Show Cause Notice, any final orders, if passed, shall not be given effect to till the next date of hearing - Let the matter be called again on 16.12.2024.

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• 2024 (12) TMI 571
  Maintainability of petition - availability of alternative remedy - Violation of principles of natural justice - order of the adjudicating authority does not address all the issues which were raised by the petitioner in its reply - rate of GST on activities undertaken - HELD THAT:- What should be the extent or length of logic and reasoning, is not decisive as to whether writ petition should be entertained or the party should be driven to exhaust the alternative remedy available under the law. It is satisfied that the order passed by the adjudicating authority cannot be said to be of a nature that it does not speak anything or does not decide anything. Even if there may be some merits in the submissions of learned Senior Counsel appearing on behalf of the petitioner that order is wrong and illegal, that by itself, without anything more, would not impress this Court to entertain this petition despite existence of alternate and efficacious statutory remedy of appeal provided under the governing law. Present being not a case of absence of jurisdiction, violation of principles of natural justice or malice, it is not inclined to interfere with the order passed by the adjudicating authority only on that ground, though without expressing any opinion on merits. Taking into consideration that the petition was filed before expiry of period of limitation for filing appeal, it is directed that if the petitioner prefers appeal within a period of 90 days from today, the appellate authority shall examine and decide the appeal on its own merits without going into the issue of limitation - petition disposed off.

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• 2024 (12) TMI 570
  Refund of unutilized Input Tax Credit (ITC) under Section 54 of the CGST Act - refund sanctioning Orders challenged on the ground that the petitioner did not have any unutilised ITC ignoring the transitional credit in the Electronic Credit Ledger of the petitioner and therefore it was contended that the sanction of the refund was required to be withdrawn in absence of any unutilised ITC under the IGST, CGST and SGST Head in the Electronic Credit Ledger - HELD THAT:- Considering the facts of the case, the issue in this petitions pertaining to un-utilised ITC after considering the CENVAT credit as per the Form GST TRAN-1 is no more res-integra in view of the decision in case of M/s. Torrent Pharmaceuticals [ 2024 (7) TMI 408 - GUJARAT HIGH COURT ] wherein the refund was allowed. In the facts of the case, the provisions of Section 54 of the CGST Act would be applicable as the respondent-Authorities could not have adopted an hyper-technical approach by depriving the petitioner of the CENVAT credit which was available as on 01.07.2017 on the ground that such credit was reflected in the Electronic Credit Ledger only in the month of August, 2017 on processing of the Form GST TRAN-1. The impugned Orders dated 19th February, 2019 passed by the Commissioner (Appeals) and the Order-in-Original dated 29th April, 2021 passed by the Additional Commissioner as well as the show-cause notice dated 15.10.2021 are accordingly quashed and set aside. Petition allowed.

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• 2024 (12) TMI 569
  Challenge to order issued under the provisions of Section 74 of the CGST/SGST Acts - denial of input tax credit - HELD THAT:- The petitioner has not made out any case for interference with Ext.P2 order in exercise of writ jurisdiction under Article 226 of the Constitution of India. If the petitioner has a case that there has been some mistake in Ext.P2 order and as a result of which certain eligible input tax credit with reference to the invoices mentioned in the reply submitted by the petitioner had not been given to him, it is open to the petitioner to file an application for rectification under Section 161 of the CGST/SGST Acts. If, on the other hand, it is the case of the petitioner that the decision of the 1st respondent is incorrect in law, it is for the petitioner to avail statutory remedies. Instead, the petitioner has chosen to file this writ petition under Article 226 of the Constitution of India. Petition dismissed.

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• 2024 (12) TMI 568
  Challenge to summons issued u/s 70 of the CGST / SGST Acts - levy of GST - Applicability of principle of mutuality - HELD THAT:- Since only a summons / notice has been issued to the petitioners, it is premature for the petitioners to challenge the same by approaching this Court by filing a writ petition. If the petitioners have a case that services to its members are not liable to GST, it is for the petitioners to establish the same before the authorities. Any contention of the petitioners on the basis of the findings of this Court in Indian Medical Association [ 2024 (7) TMI 1448 - KERALA HIGH COURT ] can also be considered by the competent authority, in accordance with the law. These writ petitions will stand disposed of directing the competent among the respondents to consider the claim, if any, of the petitioners regarding the maintainability of the summons / notice issued to them after adverting to any reply that may be filed by the petitioners and affording to them an opportunity of hearing and in accordance with the law, as expeditiously as possible and at any rate, within a period of two weeks from the date of receipt of a certified copy of this judgment.

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• Income Tax

• 2024 (12) TMI 567
  Bifurcation of speculative loss and normal business loss - Interplay between the provisions of Section 43 and Section 73 - Treatment of carried forward loss from trading in derivatives as speculative loss u/s 73 - HELD THAT:- Once the provisions of Section 43 (5), as amended, came to treat a trade in derivatives as not a speculative transaction when it was carried out on a recognised stock exchange, then the effect of that amendment was to treat the transaction in derivatives as merely a business transaction. A loss in the derivative business would consequently be a business loss for the purposes of Section 72, and a set off of such business loss would have to be permitted against profits and gains of business as computed in terms of the I.T. Act. This was not a case where Section 73 was attracted at all since Section 73 deals specifically with losses in speculation business. As rightly found by the Tribunal in the instant case, since the transaction in derivatives was not a speculative transaction, the disallowance of the set off by the AO was clearly illegal. We find, therefore, that the impugned order of the Tribunal, inasmuch as it relates to the questions raised in the present appeal, does not require any interference. Question nos. (1) to (3) are thus answered against the Revenue and in favour of the assessee.

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• 2024 (12) TMI 566
  Penalty order u/s 271(1)(c) - petitioner was not provided with any opportunity of hearing before passing the impugned order by the National Faceless Assessment Centre - HELD THAT:- When the Tribunal has now passed the order on merits in the appeals filed by the petitioner as well as respondent-revenue granting substantial relief to the petitioner, the respondent authorities are therefore required to consider the same for levy of penalty, if any, under the provisions of the Act as the impugned order passed by the respondent No. 2 is without giving any opportunity of hearing to the petitioner ignoring the requests made by the petitioner from time to time to keep the penalty proceedings in abeyance during pendency of the appeals before the Tribunal. The impugned order is therefore liable to be quashed and set aside and the matter is required to be remanded back to the respondent No. 2, to pass a fresh penalty order if any, after giving an opportunity of hearing to the petitioner. The petition succeeds and is accordingly allowed in part by quashing and setting aside the impugned order dated 30.03.2022 passed by the respondents for levy of penalty u/s 271 (1) (c) of the Act and the matter is remanded back to the respondent for passing a fresh denovo order after giving an opportunity of hearing to the petitioner in accordance with law.

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• 2024 (12) TMI 565
  Reopening of assessment u/s 147 - reason to believe - unsecured loans was availed by the petitioner - change of opinion - HELD THAT:- The issue of availing unsecured loan from Phulchand Export Pvt. Ltd. was scrutinized during the regular assessment proceedings by the then the AO as the petitioner was called upon to furnish the details which was provided by the petitioner containing the confirmation letter, ITR and the bank statement of the said party from whom the unsecured loans was availed by the petitioner. AO having been satisfied from the details provided by the petitioner, it cannot be said that there is any failure on the part of the petitioner to disclose fully and truly all material facts. As further revealed from the facts of the case that merely because Phulchand Export Pvt. Ltd has incurred loss for the year under consideration, it cannot be the ground to reopen the assessment doubting the creditworthiness and genuineness of the unsecured loan such as having sufficient surplus savings and funds booked by capital assets to provide loan to the assessee. The law is well settled with regard to the facts of the case . Once the issue is already scrutinized during the regular course of assessment, the same issue cannot be considered for assumption of the jurisdiction to reopen the assessment as it would amount to mere change of opinion. This is a classic case of mere change of opinion by the AO for reopening of the assessment and therefore, the impugned notice is held to be issued without jurisdiction. Decided in favour of assessee.

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• 2024 (12) TMI 564
  Delay in filing appeal before the Tribunal - delay of 2208 days - HELD THAT:- Tribunal is found to be perverse as the Tribunal has recorded incorrect facts in para 10 of the order which is reproduced herein above, more particularly, by recording fact on the address mentioned in Form No. 35, order of the CIT(A) was delivered hence, the department cannot be blamed. The above findings of the Tribunal are contrary to the record as evident from the facts narrated here-in-above. In such circumstances, we are of the opinion that the Tribunal ought to have condoned the delay in preferring the appeal by the appellant and decide the case on merits. The impugned order passed by Tribunal is therefore, quashed and set aside. The questions proposed by the appellant and the substantial questions framed are answered in favour of the assessee and against the Revenue. The appeal is accordingly allowed. The delay of 2208 days in preferring appeal is hereby ordered to be condoned and the matter is remanded back to the Tribunal to be decided on merits of the case.

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• 2024 (12) TMI 563
  Deduction u/s 80P - interest income earned on deposits with Nationalized banks - HELD THAT:- As in the case of the Co-operative society engaged in carrying on the business of banking or providing credit facilities to its members, the whole of the amount of profit and gains of business attributable to any one or more of such activities would be entitled to deduction u/s 80P(1) of the Act whereas, sub clause [d] of sub-section 2 of Section 80P refers to any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income would be deducted. This Court was in the Case of State Bank of India [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] in similar facts irrespective of whether the income is surplus fund or operational fund has after referring to the decision of the Hon ble Apex Court in case of Totgar s Co-operative Saks Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] Interest earned on the investment made by the Credit Co-operative Society with the nationalized bank would not be entitled to deduction under Section 80P (2) (a) (i) of the Act. Therefore, in our opinion the CIT (Appeals) as well the Tribunal on referring and relying upon the decision of the State Bank of India [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] cannot be said to have committed any error while not allowing the deduction qua the interest income earned by the Appellant-assessee on the investment u/s 80P (2) (a) (i) of the Act while allowing the deduction under Section 80P (2) (d) of the Act qua the interest income earned on the investment in fixed deposit made by the assessee with the Co-operative Bank.

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• 2024 (12) TMI 562
  Validity of reopening of assessment - determination of correct assessment year - as dispute pending between the co-sharers, the sale consideration was less than the prevailing market prices - petitioner submits that the transaction was complete in the AY 2005-06 and here was no cause of action for the department to initiate re-assessment proceedings for AY 2006-07 - HELD THAT:- Section 47 of the Registration Act of 1908 stipulates that where registration of document was not required or not made, the document shall come into operation from the time it would have commenced to operate and not from the date or time of its registration. The undisputed facts are that the sale transaction was complete in the AY 2005-06 by execution of agreement, receipt of consideration and handling over of possession. The transaction was disclosed in the Income Tax Returns filed for the AY 2005-06. Due to the circumstances pleaded, the sale deed was registered in July, 2008. The Division Bench of this Court in Maharani Yogeshwari Kumari [ 1994 (7) TMI 33 - RAJASTHAN HIGH COURT ] held that the income derived from the property in AY in which the sale deed was executed would be taxable in the hands of the transferee, even if the registration of the sale deed was subsequent. As per Section 47 of the Act of 1908, the sale deed executed shall relate to AY 2005-06 and not to the date of registration. Another aspect is that in AY 2006-07, neither of sale of immovable property nor of registration of document had taken place, there was no occasion for the income tax authorities to initiate proceedings u/s 148 to determine the capital gains from the transaction of sale of land. Thus, he impugned order and notices are quashed.

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• 2024 (12) TMI 561
  Levy penalty u/s 271AAB - As alleged no allegation of existence of any undisclosed income by the revenue - CIT(A) modified and scaled down the rate of levy of penalty from 30% to 10% on the ground that the assessee has provided the list of creditors and thus provided the manner of deriving undisclosed income and also substantiated such manner - HELD THAT:- The plea of assessee towards non applicability of s. 271AAB, in our view, is devoid of any rationale. On the face of cogent evidences detected and admitted to be un-explainable liability, one may wonder as to what is the nature of such admitted suppression of income etc. The entries found recorded in the books as a result of creative accounting towards un-explained liabilities is noting but undisclosed income as defined in s. 271AAB of the Act. Likewise, the entries found not recorded in the books towards expenditure incurred also squarely meets the requirement of definition of undisclosed income appended in s. 271AAB - Assessee has, by his express conduct, has rather accepted the existence of undisclosed income. The plea of assessee towards non existence of any undisclosed income per se seeks to obfuscate reality and thus cannot be accepted. The existence of undisclosed income discovered in the course of search qua the specified previous year provides sound basis for applying s. 271AAB of the Act in the present case. The substantive and main ground of the assessee towards legality of imposition of penalty u/s 271AAB of the Act is thus liable to be dismissed. Legal requirement to specify the limb in the show cause notice which is claimed to be attracted in the instant case - Quantum of imposable penalty thus depends on appreciation of facts in perspective after taking the response of the assessee in account. It is, at times, difficult to pre-conceive and show cause the assessee qua the exact quantification of penalty at the initial stage of issue of show cause notice. Noticiably, for the purposes of s. 271AAB, there is no requirement in law to form any satisfaction [as contemplated under s. 271(1B) for the purposes of s. 271(1)(c)] before initiating penalty proceedings. The provisions of s. 271AAB thus can not be read pari materia with that of s. 271(1)(c) of the Act. The scheme of Act merely provides for reasonable opportunity to the assessee while imposing penalty which opportunity was duly provided and availed. It is not the case of the assessee that no opportunity was provided in the course of penalty proceedings. The assessee has not raised any objections on such aspect before the AO. The assessee was also privy to all relevant facts. There being no substance in the plea, the additional ground raised by the assessee on this score is liable to be dismissed. The cross objection raising the grievance similar to additional ground is also a damp squib. AO imposed penalty @30% on the amount surrendered under clause (c) to Section 271AAB(1) - As a corollary, a person, who for any reason, fails to specify the manner of deriving undisclosed income, despite admission at the time of search itself gets trapped by higher penalty @ 30% under clause (c) owing to admission at the time of search, which is the case in the instant appeal. To put it differently, a person who does not admit undisclosed income at the threshold in the course of search is better off under clause (b) compared to a person who extends co-operation and volunteers to admit existence of undisclosed income but subjected to harshness of clause (c) due to inability to spell out manner / substantiation etc. Hence, in the wake of attendant obligations fastened under clause(a), a searched person ends up incurring relatively far more incidence of penalty on admission of undisclosed income in the event of failure to provide manner and substantiation. A searched assessee making admission is in worser position compared to another searched person who adopts silence on admission at the time of search and consequently gets covered under clause (b) in the absence of obligation annexed in clause (b) towards manner etc. Other things being constant, a person making admission cannot be made to pay higher quantum of penalty vis a vis a searched person who declares the undisclosed income directly in the ROI without making any admission in the course of search. This militates against both common sense and spellbound logic. Hence there appears to an ex-facie legislative aberration which remained unaddressed. It is trite that legislative casus omissus cannot be supplied by the judicial interpretive process.

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• 2024 (12) TMI 560
  Disallowance of loss incurred by the appellant in stock option transactions - AO raised concerns that the options were sold at unreasonably low prices, even below their intrinsic value - HELD THAT:- As observed that the assessee sold options significantly below their intrinsic value. AO merely expressed an opinion and did not bring any comparative transactions on record to substantiate the claim in relation to the assessee s transactions. AO s conclusion appears to be based solely on conjecture, without any corroborative evidence. The transactions in question were conducted through the stock exchange, as evidenced by the contract notes as duly submitted. The entire transaction was carried out on the Bombay Stock Exchange (BSE). Additionally, the ledger account of Odyssey Broker for the financial year 2014-15 was also provided. Despite this, the revenue authorities neither rebutted nor challenged the authenticity of the submitted documents. No independent verification was conducted by the Ld. AO prior to making the addition. The assessee discharged their burden of proof by submitting all relevant documents supporting the transaction. The onus then shifted to the revenue authorities, who failed to bring any comparative data or evidence to substantiate their claims regarding the assessee s stock option transactions. Accordingly, the impugned appellate order is set aside, and the addition is hereby deleted. Decided in favour of assessee.

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• 2024 (12) TMI 559
  Delay of 100 days in filing the appeal before CIT(A) - HELD THAT:- CIT(A) without taking note of the Board Circular No. 20/2016 dismissed the appeal as time barred without taking note that e-filing of the appeal done by the assessee on 14-06-2016. Thus NFAC is not following CBDT Circular which is highly not appreciable. But the assessee is being put to task by filing unnecessary appeals for the default on the part of the Department. On the first round of litigation, CIT(A) granted only one opportunity of hearing to the assessee. In the second round without looking into the merits of the case and detailed submissions filed by the assessee also without considering the CBDT Circular No. 20/2016 dismissed the appeal as time barred. Thus for the casual attitude of the Revenue in dismissing the appeal twice is liable to pay a cost of Rs. 10,000/- to the assessee to meet the ends of justice. However in the interest of Principle of Natural Justice, we deem it fit to set aside the matter back to the file of CIT(A), NFAC with a direction to pass order on merits for the present Asst. Year 2013-14 within a period of three months from the date of receipt of this order by giving proper opportunity of hearing to the assessee. Appeal filed by the Assessee is allowed for statistical purpose.

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• 2024 (12) TMI 558
  Denial of Foreign Tax Credit (FTC) - delay in Filing of Form No. 67 - HELD THAT:- As per the provision of DTAA as well as the judicial precedent in Anindya Sarka [ 2024 (7) TMI 1564 - ITAT KOLKATA] we find no justification for not allowing the credit for FTC. The order of the Ld. CIT(A) as well as the AO for disallowing the foreign tax credit claimed in revised Indian tax return is hereby set aside. The assessee is entitled for advance of FTC. So far the other submission of the record for levying interest is concerned in view of the decision as stated above, the levying additional interest is also hereby set aside. Decided in favour of assessee.

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• 2024 (12) TMI 557
  Interest calculation u/s 234C - liability to pay advance tax - book profit includes Capital Gain income arose in the 4th quarter - HELD THAT:- There is no dispute that provisions of sec 234C is applicable in the case of book-profit/income chargeable to tax u/s 115JA/115JB of the Act; and in this case, the question raised will be answered on a reading of second proviso to section 234C. We note that there is no challenge to the fact that assessee promptly computed and paid Advance tax u/s 234A, 234B and 234C of the Act. But due to unanticipated transactions under the head capital gains arose in the case of assessee on 28-03-2019, this issue has arisen. According to the assessee, it promptly discharged its liability of advance tax u/s 234C on 31-03-2019. In such an event, we are of the view that liability to pay tax by way of advance tax in respect of transaction resulting in capital gains arises only after transaction has taken place or event has occurred. And assessee has discharged its liability of Advance Tax u/s. 234C on 31.03.2019. Since, it is not the case of the Department that assessee has not paid the whole of the amount of tax payable in respect of its total income (including capital gains, if any), as part of the remaining installments of advance tax which are due (after accrual of capital gain) or where no such installments are due, i.e., in cases of capital gain accruing after 15th of March of financial year, by the 31st day of March of the financial year, no addition of interest u/s 234C was required in this case. As relying on M/S HAMILTON INDUSTRIES PVT. LTD. [ 2022 (8) TMI 582 - ITAT MUMBAI] direct the deletion of the interest of Rs. 1,18,52,988/- (i.e. Rs. 1,48,04,175 29,51,188). Appeal filed by the assessee is partly allowed.

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• 2024 (12) TMI 556
  Challenge to order passed u/s 250 by NFAC/CIT(A) - assessee filed a letter along with a copy of Form 1 filed under Direct Tax Vivad Se Vishwas Scheme, 2024 and stated that the assessee has opted for Direct Tax Vivad Se Vishwas Scheme, 2024. HELD THAT:- In light of the above letter, we dismiss the appeal of the assessee with the liberty to reinstate the appeal if its application under Direct Tax Vivad Se Vishwas Scheme, 2024, is not accepted. Appeal filed by the assessee is dismissed as withdrawn.

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• 2024 (12) TMI 555
  LTCG - adoption of cost of acquisition of the property sold by the assessee during the year - agricultural land sold by the assessee was ancestral land and the assessee had filed a report from the approved valuer in respect of the cost of the property as on 01.04.1981 - HELD THAT:- As rightly pointed out by the Revenue there was a wide variation in the rate as per the four methods adopted by the approved valuer, which made his report unreliable. The assessee had adopted a conservative rate of Rs.70/- per sq.mtr. as on 01.04.1981, which was less than the minimum value determined by the approved valuer. If the AO was not satisfied with the report of the approved valuer and the rate as adopted by the assessee, he should have referred the matter to the DVO to find out the correct value of the property as on 01.04.1981. AO being not an expert, his suo motto adopting the value of the property at Rs.6.20/- per sq.mtr. cannot be held as correct. In the interest of justice, the matter is, therefore, set aside to the file of the Jurisdictional AO with a direction to refer the matter to the DVO to find out the correct market value of the property as on 01.04.1981. The report of the DVO should be confronted to the assessee and the objection, if any, of the assessee in this respect should also be taken into account, before arriving at the correct value of the property as on 01.04.1981. The ground taken by the assessee is allowed for statistical purposes. Deduction u/s.54F - denial of deduction as house was located on a small portion of the total land area - CIT(A) confirming the disallowance u/s.54F on the ground that the new property purchased on 09.05.2018 was beyond the two years time limit from the date of sale of original property - HELD THAT:- There is no built up residential house on the land purchased by the assessee. Further, no evidence of house tax payment by the seller has been brought on record. Since, the assessee has failed to establish that it had purchased any residential house, the deduction u/s.54F of the Act was rightly denied by the AO. In fact, the AO had been generous in considering the open structure area as fit for residence and allowed proportionate deduction u/s.54F of the Act. The ground of the assessee that 780 sq. mtrs. of land for which deduction u/s.54F of the Act was disallowed was land appurtenant to the house cannot be accepted as the existence of any house on the said land has not been established. The disallowance as made by the AO in respect of deduction u/s 54F claimed by the assessee is, therefore, confirmed. Accordingly, the Ground No.2 as taken by the assessee is rejected. Date of acquisition of the new property - contention of the assessee that investment date in the new property should be taken as 26.07.2017 when the agreement to sale/banakhat was entered and the payment was made by the assessee - Considering the fact that the banakhat was made on 26.07.2017 and the assessee had also made the entire payment on the same day, the contention of the assessee is acceptable. The delay in registration of the sale deed was due to factors beyond the control of the assessee, as explained. Therefore, the ground no.-3 as taken by the assessee is allowed. Addition in respect of cash deposited in the bank account - AR submitted that the assessee was having agricultural land and it has been disclosing agricultural income in all the years - HELD THAT:- It is not the case that the assessee had inflated its agricultural income during the current year. Even though, the AO has disputed the nature of income from sale of firewood, the correctness of the sale transaction has not been challenged. On the other hand, the assessee also has not explained as to why all the cash was kept in the house and why those were deposited in the bank account mostly after demonetization. In fact, the total cash deposit during the demonetization period is to the extent of Rs.23,54,000/-. Apart from the contention that cash was available with the assessee in respect of agricultural income, no explanation has been given in respect of excess cash as deposited in the bank account. Taking into account the opening cash balance of Rs.3,04,049/- available with the assessee as on 01.04.2016 and also the quantum of agricultural income of Rs.12,53,920/- derived by the assessee during the year, it will be reasonable to treat the cash deposits to the extent of Rs.15.48 Lakhs as explained. The balance addition of Rs.9,00,000/- in respect of unexplained cash deposits in the bank account is confirmed. The ground taken by the assessee is allowed in part.

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• 2024 (12) TMI 554
  Dismissal of appeal by the CIT(A), NFAC - proceedings under section 148 that were initiated against the assessee could not be attended due to the fact of the assessee s absence from India and accordingly, an ex parte order was passed against the assessee - violation of principles of natural justice in passing impugned orders as alleged by Assessee - AR submitted that it would be seen that not only had he filed affidavit, title deed, copy of passport and bank statement, but he had also filed a written submission with regard to the notices issued. However, the ld. CIT(A), NFAC had not bothered to go through the documents that had been uploaded along with the replies and had simply stated that evidences had not been filed by the assessee HELD THAT:- It is fairly clear that the assessee had uploaded the necessary evidences in support of his arguments, to the ld. CIT(A) in both the appeal proceedings on 15.06.2024. It is also fairly evident that the ld. CIT(A) has not considered these evidences, before finalizing his appeal order. This is clearly violative of principles of natural justice and therefore, we are of the view that the assessee deserves an opportunity to present his case, especially because consideration of his arguments and evidences go to the very root of the matter i.e. his status for the purposes of determination of taxability of investments purported to be made by him and amounts deposited by him in his bank account. Accordingly, we remand back both the appeals to the file of the ld. CIT(A) for a fresh decision on the matter, after considering the evidences already submitted by the assessee and any other that the assessee may wish to submit upon being issued further notices. We also direct the assessee to make full compliance before the ld. CIT(A), NFAC so as to enable him to determine the true facts of the case. As the appeals have been set aside to the file of the ld. CIT(A), they are deemed to be allowed for statistical purposes.

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• 2024 (12) TMI 553
  Validity of approval u/s 153D - HELD THAT:- We find that CIT(A) has observed that it is a normal practice in the department that the draft order is put up alongwith the assessment records and relied upon documents before the approving authority and the additional copy of the Appraisal report is already given to the Jt. /Addl. Commissioner. We further observed that CIT(A) noted from the records that it is nowhere evident which proves that these records were not provided to the approving authority. Hence, it has been rightly held by the CIT(A) that approving authority had approved the assessment order as per provisions u/s. 153D of the Act. In absence of any submission or material provided by the assessee, we do not find any infirmity in the findings of the CIT(A) on the jurisdictional issue of approval u/s. 153D. Accordingly, the grounds raised by the Assessee are rejected with regard to issue relating to merits of the case in absence of any material on record, we are not able to adjudicate the same. Accordingly, the appeal filed by the assessee for the AY 2012-13 stands dismissed.

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• 2024 (12) TMI 552
  Revision u/s 263 - as per CIT AO during assessment was incorrect as the assessee computed the statutory exemption of 15% u/s 11(1)(a) of the Act on Net Surplus as against Gross Receipts during the year - HELD THAT:- From the order of the ld. Pr.CIT, we find that in para 3.3 of the order ld. Pr.CIT himself has observed that the assessment order is not prejudicial to the interest of revenue. Since the ld. Pr.CIT himself is of the opinion that the assessment order may be erroneous but it is not prejudicial to the interest of revenue, therefore, as per the provisions of Section 263 of the Act, it does not satisfy the twin conditions for directing the AO for making further verification in the matter by taking shelter of Section 263 of the Act. See Max India Ltd [ 2007 (11) TMI 12 - SUPREME COURT] and Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT] . In the instant case, admittedly there was no loss to the revenue as the assessee has already granted registration u/s. 12A of the Act w.e.f. 01.04.2002 and the income was duly applied for the designated purposes as per law, thus, it does not satisfied the twin conditions as provided u/s. 263 of the Act to invoke this section. Therefore, the action of the ld. Pr.CIT in directing the Assessing Officer to decide the matter afresh, has no legs to stand. Thus, the order passed by the ld.Pr.CIT u/s. 263 of the Act is hereby quashed. Assessee appeal allowed.

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• 2024 (12) TMI 551
  Written off of loan given to subsidiary at Indonesia - allowable expense or not u/s. 37? - whether the same is wholly and exclusively for the purposes of business of the assessee? - HELD THAT:- Here we found that the facts of the case were misunderstood by the authorities below and findings in this para are a clear reflection of their misconception/ confusion about the facts of the matter. These days entering/venturing into other core areas of economy is quite common and rather the assessee entered the same in the financial year 2006-07 and faced a long gestation period to get the same matured, so after such a long period of investment, efforts and gestation the question of the revenue that the same is not the part of the assessee s business is ruled out. The assessing officer is duty bound to update him with the present business scenario going on, while framing an assessment order. These days every big corporate house is entering into the power sector as the same is the most essential cash commodity and with a growth in economy demand is also robust. Rather, to be relevant in present scenario Entrepreneurs has to think about their vertical diversification as the traditional business and business model may not be that relevant in growing competition. As astonishing for us that the Ld. DRP and the AO observed the matter in isolation without applying any knowledge of banking industry. The reference of the communication by the bank taken by the authorities below are misplaced as the facility from the Bank of India, Singapore Branch were extended on the behest of strong credentials of the assessee company and its group leader Baidyanath Group and its promoters/shareholders and directors. M/s. PT Equity Commodities and PT Bumi Bera Parkasa (PTBBP-target Company) has no value in the eyes of bankers and as the assessee wants to quit the same once for all, one has to understand their obligations and compulsions also keeping in mind the prevailing market/business practices. Based on above, we are not in agreement with the half cooked view taken by the revenue. To further strengthen the facts of matter in favour of the assessee we placed our reliance on following judicial pronouncements by the Hon ble Supreme Court as under in Industrial Development Corporation of Orissa Ltd. [ 2024 (9) TMI 35 - SC ORDER] , Adadyn Technologies (P.) Ltd. [ 2024 (7) TMI 516 - SC ORDER] , Nirma Ltd. [ 2024 (5) TMI 110 - SC ORDER] and Wadia Ghandy Co. [ 2023 (9) TMI 392 - SC ORDER] Thus issue raised by the assessee are allowed and the AO is directed to allow the bad debts claimed by the assessee u/s. 37(1) of the Act. Assessee appeal allowed.

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• 2024 (12) TMI 550
  TP Adjustment - specified domestic transactions - AO has made a reference u/s. 92CA of the Act to the TPO for determination of the ALP - Selection of MAM - CUP or TNMM - HELD THAT:- From detailed working of the CUP method had neither been provided by the assessee to the CIT(A) nor any such working was done at the end of the ld. CIT(A). It is surprising that without considering the ALP as per CUP method, how the ld. CIT(A) had reached to the conclusion that the adjustment made by the AO, towards specified domestic transaction is unreasonable/excessive. During the course of hearing, when a specific query was put forth by the Bench to the ld. AR, he was unable to point out any such calculation for determination of the ALP under CUP method which was submitted before ld. CIT(A). We are not able to comment as to whether the addition deleted by the ld. CIT(A) is correct. Further we find force in the argument of the ld. CIT-DR that the assessee has not executed any work for other party nor has awarded any sub- contract to any independent entity, so there no internal comparable available with the assessee for working the ALP under the CUP method. Admittedly, in the instant case, since the appellant-assessee itself has admitted that it is not providing services to any party other than MCL nor any work was got executed except from its AEs, the comparable uncontrolled transactions cannot be identified. Thus, how the working was done under CUP method is not explained at any stage. In the case of Calance Software Pvt. Ltd [ 2017 (6) TMI 129 - ITAT DELHI] as relied upon by assessee and ld. CIT(A), it is seen that though it is a case where back to back contracts was given to the associate enterprises, which is similar to instant case of assessee, however, the ALP was computed by following the CUP method by assessee itself whereas in the present case, the assessee has initially worked out the ALP on the basis of any other method specifically as provided under the Section 92C(i) of the Act , which was not accepted and allegedly TNMM method was adopted by TPO and thereafter the assessee has changed its stand in the appellate proceedings and admitted the CUP method as the most appropriate method. But at no stage any precise working was provided for any of the two methods adopted by the assessee. Thus, we are left with no other alternative but to send back the matter to the file of AO to re-examine the issue and refer the matter back to the TPO for determination of ALP based on the best suitable method. Needless to say, while doing so, the assessee shall be provided reasonable opportunity of being heard. Appeal of the revenue allowed for statistical purposes.

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• 2024 (12) TMI 549
  TP Adjustment - comparable selection - HELD THAT:- Empire Industries Limited - In view of the submission made by the Ld. AR, we find that this company is predominantly into trading activity and is not comparable to the assessee. Accordingly, we exclude this company from the list of comparable. India Cements - We are of the opinion that this company is not comparable with the assessee and therefore we exclude this company from the list of comparable companies. HSCC (India) Limited - The company, HSCC (India) Ltd. is primarily into construction contract activity. This company is compared with the profile of the assessee and it is clear that the assessee is comparable with the HSCC (India) Ltd. as the comparable company is also into back end services. While applying the TNMM method, this company is a comparable company with the assessee since the activities of this company are into primarily undertaking software services. Therefore in our opinion the functions of this company are similar to. Further we are of the opinion that merely the HSCC (India) Ltd. is an government undertaking that will not make it not comparable with the assessee. In view of the above, we disapprove the contention of the assessee and refuse to exclude this company from the list of comparables. Kitco Ltd. - Since in the present case, the profile of the comparable Kitco Ltd. is matching with that of the assessee and we do not find any infirmity in the order of Ld. CIT(A) and accordingly we reject the contention of the assessee to exclude this company. Not granting the additional deduction u/s.10AA claimed during the course of assessment proceedings on the amounts realised from export turnover subsequent to the filing the return of income - The entitlement of the assessee u/s. 10AA of the Act is required to examine in the light of the duty cast on the assessee to fulfil the requirements as contemplated u/s.10AA(8) r.w.s. 10A (4 5) of the Act. A concise reading of the provisions make it abundantly clear that the assessee was duty bound to file the Form no. 56F before the specified date referred to in section 44AB. However the assessee has filed the said form before us on 10.05.2024, which is filed much latter that the specified due date. In our view the delay in filing the Form no. 56F after the specified date is not permissible as held in the case of DCIT Vs. Wipro Ltd. [ 2022 (7) TMI 560 - SUPREME COURT ] wherein while deciding similar issue u/s 10B of the Act, the Hon ble Supreme Court has held that for claiming the deduction, the statutory requirement of filing of forms is strictly complied with. Since admittedly, the Form no. 56F was not filed within the specified date, we do not find any merit in the argument of Ld. AR. Accordingly the Ground of the assessee s appeal is dismissed.

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• 2024 (12) TMI 548
  Validity of assessment order u/s 144C w/o passing draft order - HELD THAT:- In our considered view, the provisions of Section 144C of the Act triggers a series of steps prescribed in sub-Section (2) to Section 12 of the Act and as can be seen from the most relevant sub-Sections (3) and (13) the assessment is completed either under sub- Section (3) or (13). A perusal of Section 144C of the Act shows that the AO shall, at the first instance forward the draft order of the proposed assessment and on receiving the said order, the assessee may approach the Dispute Resolution Panel (DRP), by raising objections. If the assesse accepts the variations, then the AO shall proceed by framing the final assessment order and if the objections are raised by the DRP, then, upon receipt of the directions issued by the DPR, the AO shall complete the assessment. However, we find that while drafting the said draft assessment order, the AO not only issued and served demand notice but has also initiated the penalty proceedings. In our considered view, the assessment order dt. 28/12/2019 when once become invalid and non-est, we do not find any provision to rectify a non-existing order. Therefore, the aforementioned effort of the AO would do no good to the revenue. Whether demand notice is an integral part of the assessment orde r in concerned, the same has been answered in the case of CIT Vs. Purshottam Das T Patel [ 1993 (8) TMI 21 - GUJARAT HIGH COURT ] held when an order in writing in respect of both these things is passed, it can be said that there is a complete order of assessment. These two steps may be taken simultaneously or separately, but it cannot be gainsaid that both of them will have to be taken within the time prescribed by the Act. Admittedly, in this case the second step was not taken within the prescribed time. After determining the total income, the Income-tax Officer possibly left the matter to his subordinates for the purpose of calculating the tax payable by the assessee on the basis of the assessed total income. Even if we assume in favour of the Assessing Officer that he approved the said calculation when the papers were put before him for signing the demand notice, and that he signed the same, the fact remains that that step was taken by him after the prescribed period was over. The Tribunal was, therefore, right in holding that the assessment in this respect was time-barred. We, therefore, answer the question in the affirmative, i.e., against the Revenue and in favour of the assessee. Thus, we are of the considered opinion that by issuing the demand notice on 28/12/2019 itself the Assessing Officer has by passed all the mandatory sub-sections of section 144C. Whether participation in subsequent proceedings would estop the assessee from challenging the validity of the order has been answered by the Hon ble Supreme Court in the case of V Mr. T.P. Firm MUAR [ 1964 (10) TMI 13 - SUPREME COURT ] held that Approbate and Reprobate is only species of estoppel. It applies only to conduct of parties as in the case of estoppel, it cannot operate against the provisions of a statute. IF particular income is taxable under the I.T. Act, it cannot be taxed on the basis of estoppel or any other equal document. Equity is out of placed in tax place. A particular income is either exigible under the Income tax under taxing statute or not. If it is not, the ITO Has no power to tax the said income. We have no hesitation to hold that the proceedings culminated on 28/12/2019, when the demand notice was issued and served upon the assessee along with the penalty notice u/s 274 of the Act and, therefore, all the subsequent proceedings and orders become non-est. Ground No. 1 is accordingly allowed.

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• 2024 (12) TMI 547
  TP Adjustment - Corporate Guarantee (CG) for the two loan arrangements between its AEs of USD 50 Millions and 45 Millions and EXIM bank - international transaction or not? - HELD THAT:- The assessee has given corporate guarantee to its step down subsidiaries while availing the loan by them in the past. In order to bench mark the transaction, it has to be evaluated every year and it cannot be held that once the guarantee is given in the past, it continued to have impact on every assessment year subsequently. In this case, the assessee has given guarantee towards the loan and primary obligation of servicing the loan to the bank when they granted loan to the step down subsidiaries. No doubt the assessee also collected fees for providing the guarantee in the past, as per records, the assessee has collected Rs. 2.7 crores in the AY 2013-14. It was adjudicated in AY 2013-14 that this transaction falls within definition of the international transaction The facts are different in this AY considering the fact that the step down subsidiaries had not serviced the obligation towards the loan taken by them and the same were classified as non-performing assets (NPA) by EXIM bank. The same was intimated to the assessee on May 2016 and initiated the recovery proceedings from the assessee being the primary guarantor. The assessee being the holding company, it is aware of the situation prior to the intimation received from the bank ie., in the previous year itself. The liability of the assessee towards the guarantee are restricted to the extent of its investments in the subsidiaries and to the extent of recovery of the assets held by the subsidiaries. Therefore, the liabilities of the assessee was converted from guarantor to the actual liabilities to the extent of default by the step down subsidiaries, absolutely nothing left for the assessee itself to recover from its subsidiaries till the bank recovers their dues. Similar submissions were made by the Ld DR and are not in agreement of the views. No doubt, as per the submissions of the Ld DR, the statutory provisions may cause hardship or inconvenience but court has no choice but to enfore it, irrespective of the situation, the transaction has to be bench marked. After considering the facts on record, what is relevance is whether the guarantee existed at the commencement of the impugned AY, in this case, in our opinion, the assessee was aware as well as the intimation received from the bank in the month of May itself, therefore, there was no guarantee existed as soon as the intimation of classification of NPA. It is crystallized/non-existence of the guarantor in the beginning of the year itself, therefore, we cannot presume that the corporate guarantee existed, hence, there is no possibility that the assessee has continued the guarantee, in our view for this AY, there is no international transaction. Therefore, the TPO was wrong in initiating proceedings to bench mark corporate guarantee as there is no international transaction at the first place. Method adopted by the TPO is proper or not, since we held that there is no international transaction existed relating to corporate guarantee in this assessment year, it is irrelevant at this stage to adjudicate on the issue of proper method adopted by the TPO or not. Accordingly, we direct the AO/TPO to delete the addition proposed in this AY.

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• 2024 (12) TMI 546
  Disallowance of foreign travelling expenses u/s 37(1) - HELD THAT:- Where the assessee given the past litigative history has tried to resolve the dispute by entering into a unilateral APA with the CBDT and has duly complied with the terms therein as so verified by the TPO, AO has continued with the stand taken by his predecessors in the earlier assessment years and has disallowed the foreign travel expenses which clearly form part of the operating expenses and the cost base and on which the assessee has reported the revenues after considering the mark up of 16.60%. Such an action on part of the AO is clearly in breach of letter and spirit of the APA which has been entered into by CBDT to resolve such disputes and cannot be sustained and liable to be set-aside. We find that the assessee has duly demonstrated the recovery of foreign travel expenses from its Associated enterprises and corresponding revenues have been offered in the return of income as modified and therefore, there cannot be any justifiable basis for holding such expenses as not incurred for the purposes of the business. For the aforesaid reasons, the order of the CIT(A) is upheld and the ground of appeal taken by the Revenue is dismissed. Levying interest u/s 234B and 234C on the additional income assessed pursuant to APA entered into by the assessee with CBDT dated 6/02/2017 - HELD THAT:- As no ground of appeal has been raised by the assessee before the CIT(A) against the levy of interest u/s 234C and therefore, in absence of the ground of appeal, there is no occasion for the CIT(A) to adjudicate the same and thus, in absence of any ground of appeal and adjudication by the CIT(A), how the order so passed by the CIT(A) can be held to be decided against the assessee giving the occasion to file the present cross-objection in respect of levy of interest u/s 234C - we are constrained to dismiss the cross objection and the grounds of appeal so taken in so far as it relates to levy of interest u/s 234C of the Act as not maintainable at the vey threshold in view of not meeting the statutory mandate of Section 253(4). Levy of interest u/s 234B - There is nothing which has either been provided or can be read in the language of section 234B as excluding the additional tax on the additional income from the assessed tax. In view of the same, on the differential between advance paid and assessed tax, the assessee would still be liable to pay interest under Section 234B of the Act. The only leeway is that such interest shall be calculated subject to provisions of sub-section (2) since the assessee has paid the tax on the additional income before the date of completion of assessment. The situation in the present case is akin to what has been envisaged in sub- section (3), as discussed supra, which talks about the additional tax liability pursuant to re-assessment and re-computation u/s 147 and 153A of the Act. In the instant case, only difference is that there has been negotiated settlement with the tax authorities and pursuant to signing of APA and as per terms of the APA, the assessee has filed the modified return of income and paid the taxes instead of the AO initiating any reassessment proceedings. In the ultimate analysis, we find that there is still a shortfall between the payment of advance tax and the assessed tax and the assessee is liable for payment of interest u/s 234B of the Act and various contentions raised by the ld AR cannot be accepted. Further, none of the authorities quoted at the Bar support the case of the assessee as the facts and findings therein are limited to examining the first situation as so envisaged in section 234B which as we have discussed above, is not applicable in the instant case and there has been no findings or discussions as regarding the second situation and the concept of assessed tax.

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• 2024 (12) TMI 545
  Disallowance of deduction u/s 80-IA - downward adjustment in arm s length price for transfer of power from captive power unit ( eligible unit ) to stee manufacturing unit ( non-eligible unit ) - HELD THAT:- Since the issue is duly deliberated upon by the Hon ble Jurisdictional High Court of Chhattisgarh in the case of CIT v Godavari Power Ispat Ltd. [ 2013 (10) TMI 5 - CHHATTISGARH HIGH COURT ] wherein Hon ble Court has decided that the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier; it should have been compared with the market value of power supplied to a consumer . Whereas, in the present case, against the binding judgment of the Hon ble High Court, the Arm s Length Price (ALP) adopted for transfer of power from eligible unit to non-eligible unit at the rate at which power generating company supply powers to power distribution company by the Ld. AO on the recommendation of Ld. TPO which was further approved by Ld. DRP instead of the rate at which Chhattisgarh State Power Distribution Company Ltd. supplies the power to its consumers. The view of Hon ble Jurisdictional High Court was subsequently affirmed by the Apex Court in the case of CIT Vs. Jindal Steel and Power Ltd. [ 2023 (12) TMI 417 - SUPREME COURT ] as held the market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board s rate when it supplies power to the consumers have to be taken as the market value for computing the deduction under section 80-IA of the Act. Thus ground no. 1 of the assessee s present appeal is allowed. Disallowance of deduction u/s 80G and double disallowance of deduction u/s 80G - allowability of expenditure incurred for donation out of the amount designated for CSR expenses which were disallowed by the assessee as per provisions of section 37 - HELD THAT:- As in the present case admittedly the donations extended by the assessee are to Shri Marwadi Pathshala Samiti (Bitti Committee) and Rajashthan Gokalyan as discernible from assessment order and such parties does not fall under the exception carved out u/s 80G(2)(iiihk) and (iiihl), thus, the assessee is entitled for claim of donations paid under the provisions of Section 80G in respect of payments made towards donations which formed part of the spend towards CSR. Consequently, we concur with the contention raised by the assessee in the present appeal in its ground no. 2, however, for the purpose of verification of facts that such donations which the assessee have made satisfies the conditions of Section 80G of the Act for which no specific finding is emanating from the orders of authorities below, we restore this issue back to the file of Ld. AO for fresh adjudication in terms of our aforesaid observations. Error on the part of Ld. AO in making double disallowance of deduction claim u/s 80G - As the issue regarding donation u/s 80G in ground no. 2 is restore to the file of Ld. AO, we find it appropriate to restore ground no. 3 having connected issue for verification of the facts and to re- adjudicate, in terms of the error pointed out by the assessee.

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• Customs

• 2024 (12) TMI 544
  Legality of the mid-year review and revision of Tariff Rate Quota (TRQ) allocations - Petitioners have not been afforded any opportunity of hearing, and without sufficient prior notice, a mid-year review of the TRQ allocations has been conducted by the Respondents - HELD THAT:- In the opinion of the Court, there is significant merit in the contentions raised by the Petitioners. While Paragraph No. 7 of the Minutes of Meeting dated 15th April, 2024 does indicate that a review exercise would be conducted based on the imports up to September 2024, however, as correctly pointed out by the petitioner, this review can be deemed a blind review, given that no criteria were specified in the said Minutes with respect to the potential allocation - this public notice pertains to FY 2023-24, and there is no such public notice informing the Petitioners or the general public about such a criteria for FY 2024-25. The Court understands that the intent behind the review exercise is to ensure that the TRQ allocations are specifically adhered to. Therefore, the Respondents objective in conducting the review appears to be solely to ensure that the TRQ imports under the India-UAE CEPA are fully met - the Court is of the opinion that it would be more appropriate at this stage, without delving deep into the merits of the case, to direct the DGFT to examine all the issues raised by the Petitioners in the present petitions and issue a fresh decision on the basis thereof. Furthermore, it is undisputed that as of today, no re-allocations have been made pursuant to the impugned Minutes of Meeting in the present proceedings. Therefore, it is directed that the current allocations be maintained until a decision is made following the review process. The above exercise shall be carried out within three weeks from today. The present petitions are disposed of.

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• 2024 (12) TMI 543
  Jurisdiction of respondent (DRI) to issue the notice - HELD THAT:- The Hon ble Supreme Court in case of Commissioner of Customs Vs. Canon India Pvt. Ltd. [ 2024 (11) TMI 391 - SUPREME COURT (LB)] has held that the respondent No. 3 would have jurisdiction to issue the show cause notice under the provision of Customs Act, 1962 and therefore, the petition may be disposed of in terms of the directions issued by the Hon ble Apex Court in the aforesaid decision. The petition is disposed of by restoring the notice to the Adjudicating Authority for adjudication by a proper officer under Section 28 of the Customs Act, 1962. In view of the above, this petition stands disposed of.

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• 2024 (12) TMI 542
  Rejection of appellant s appeals against 70 self-assessed Bills of Entry - entitlement to the benefit of the fifth proviso to Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - inclusion of air freight incurred to the extent of 20% of FOB value in the assessable value - determination of FOB value. Entitlement to the benefit of the fifth proviso to Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - HELD THAT:- The Distribution Agreement does not restrict it to sale only on CFR New Delhi airport. Therefore, the submission of the learned authorised representative is not correct.In fact, if the submission of the learned authorised representative that the additional amount paid by the appellant to its supplier is not for freight is accepted, then this amount cannot be included in the assessable value at all because nothing has been brought on record by the Revenue to show that this amount is relatable to some other costs which are includable in the assessable value. It must be noted that only such costs and services as are covered by rule 10 of the Valuation Rules can be included in the assessable value. The additional amount paid by the appellant is towards air freight according to it. Revenue has neither any contrary assertion or evidence regarding the nature of this amount paid by the appellant but its assertion is that it is not for freight. If that be so, it is not includable in the assessable value and it will result in lowering the assessable value and the duty liability far below what the appellant is claiming and he appellant will be entitled to much larger amount as a refund. Whether, based on the documents available on record, it can be said that the amount of freight is ascertainable so as to bring the assessment of these Bills of Entry within the ambit of the fifth proviso to rule 10(2) (a) of the Valuation Rules? - HELD THAT:- The explanation of the appellant is that Add.Recov.Freight referred to is the additional recovery towards air freight. There is no assertion by the Revenue as to what this amount pertains to and how it is includable in the assessable value - During the relevant period, the CPT value per unit is indicated as Rs. 696.54 which is only slightly higher than the FOB value for the subsequent period. Based on these documents, we are satisfied that the CPT values for the relevant period were for transport by ship or rail. Air transport is far more expensive. Whether the contention of the appellant that the amount shown in the invoices as Add.Recov.Freight is the cost of air freight is correct or to accept the contention of the Revenue that it is not for air freight? - HELD THAT:- If the contention of the Revenue is accepted that it is not towards air freight and air freight has already been included in the CPT price, then, this amount cannot be included in the assessable value at all as there is no assertion by either side that it represents some other cost which is includable in the assessable value as per rule 10. This will reduce the duty payable on the goods - it is convincing that this amount represents the air freight incurred by the appellant and of this only an amount equal to 20% of the FOB value can be included in the assessable value. How to determine the FOB value since the invoices were raised on CPT basis? - HELD THAT:- According to the appellant, this value on CPT basis was for transport by ship and although the goods were not transported by ship but were flown through air cargo for which an additional amount was paid, the appellant had paid the full amount indicated as CPT for the cigarettes to PMSA. If that be the case, the price has effectively been increased and the so called CPT price has become the defacto FOB price. The addition of the amount shown under Add.Recov.Freight in the assessable value may be restricted to 20% of the CPT value shown in the invoices. The matter remanded to the original authority for re-determining the duty payable on all the Bills of Entry in the manner indicated - appeal allowed by way of remand.

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• 2024 (12) TMI 541
  Contravention of Regulations 1(4), 10(d), 10(e), 10(n) and 13(12) of CBLR, 2018 - fulfilment of prescribed time under CBLR for timely completion of inquiry proceedings - whether the appellant Customs Broker has fulfilled all his obligations as required under CBLR, 2018 or not? - HELD THAT:- The specific sub-regulations which were alleged to have been violated by the appellants are Regulations 1(4), 10(d), 10(e), 10(n) and 13(12) of CBLR, 2018, and hence there are certain distinct charges framed against the appellants in the present case. The Regulation 10 ibid, provide for the obligations that a Customs Broker is expected to fulfill during their transaction with Customs in connection with import and/or export of goods. The imports in respect of Tempered glass screen protector for which B/E No. 2640242 dated 05.02.2021 and No. 2697872 dated 09.02.2021 were filed by the appellants as Customs Broker, was preceded with the appellants CB seeking from the importer, through their logistics intermediary M/s Ibrahim Hirani, all requisite basic documents such as commercial invoice, packing list, authority letter and other relevant documents for KYC verification in handling the imports with customs. Further, there is no case of mis-declaration with respect to the documents submitted along with the B/Es, and such misdeclaration were identified by Customs, only upon physical examination of the goods - the appellants have duly filed the bill of entry as per the documents given by the importers and hence the appellants CB cannot be found fault for the reason that they did not advise their client importer to comply with the provisions of the Act. Hon ble Supreme Court had held in the cased of NORTHERN PLASTIC LTD. VERSUS COLLECTOR OF CUSTOMS CENTRAL EXCISE [ 1998 (7) TMI 91 - SUPREME COURT ] holding that the declaration of the description of goods given correctly and fully in the Bill of Entry/classification declaration laying claim to some exemption was in the nature of a claim made on the basis of the belief entertained by the appellant and therefore, cannot be said to be a mis-declaration for the purpose of Customs Act. In the absence of any specific evidential document or factual record, it cannot be stated that the appellants had prior knowledge about misdeclaration of description, quantity of imported goods by the importer, and these have been withheld by the appellants. Thus, it is not feasible to sustain such a charge on the appellants, that they did not exercise due diligence to impart correct information to their clients and thus the conclusion arrived at by the Principal Commissioner of Customs (General) is without any basis of documents or facts, in the impugned order with respect to Regulation 10(e) ibid, is not sustainable. There is definitely delay in conduct of inquiry proceedings and that too for the import transactions for which the offence was detected in February, 2021, the order of revocation of appellant s CB license has been passed on 12.05.2023. The learned Principal Commissioner explained that the delay is on account of the inquiry proceedings in which the appellants CB had taken time to give their written submissions, but such delay cannot be fatal to outcome of injury and cannot neutralize the actions of omission and commission already committed by the CB. The prescribed time under CBLR for timely completion of inquiry proceedings right from the beginning i.e., issue of SCN within a period of 90 days from the date of receipt of offence report, submission of inquiry report within 90 days of issue of SCN, passing of order by the Principal Commissioner of Customs within 90 days of receipt of inquiry report was neither followed nor given credence to. The inordinate delay in the inquiry proceedings in this case has not been properly explained in the impugned order; and the learned Principal Commissioner had put the entire blame on the appellants CB. The impugned order is modified by setting aside the same in respect of revocation of CB license of the appellants and for forfeiture of security deposit as there was no violation of Regulations 1(4), 10(d), 10(n) and 13(12) of CBLR, 2018 of CBLR, 2018. Further, by modifying the impugned order for imposition of penalty, a penalty of Rs.5,000/- is imposed on the appellants for violation of Regulation 10(e) ibid on account of their failure to handle documents exercising due diligence, in filing import declarations - appeal allowed in part.

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• 2024 (12) TMI 540
  Recovery of duty drawback and duty foregone based on non-repatriation of export proceeds - cancellation of the bank realization certificates - Applicability of Section 28AAA of Customs Act, 1962 for recovery of duty foregone - levy of penalties - HELD THAT:- Section 28AAA of Customs Act, 1962, deployed in the appeals of Revenue as authority for recovery of duty foregone, has been set upon the plinth of collusion, willful misrepresentation or suppression of facts therein that, just as absence of timely remittance does for drawback, ab initio erases eligibility to exemption from duties of customs entitled by possession of instrument for such exemption; a plain reading of this provision makes it clear that there should be sufficient grounds to determine that the said ingredients are established in stages leading to issuance of the instrument and, furthermore, two purposes are intended by this provision, viz., that the exemption was deemed to be not extended ever and recovery of duty foregone from either the actual importer or the person who held the instrument originally is not estopped. A general narrative of an interesting tale of interplay among characters unknown to the transactional engagement within the purview of Customs Act, 1962, i.e, import of goods or export of goods, does not satisfy as ingredients specified in section 28AAA of Customs Act, 1962 for recourse thereto; one of three should have existed when the application was made to the licencing authority and a state of mind, imagined to be fit for strategem and spoils, as put forth on behalf of Revenue, being in the realm of speculative fiction and anathema to the contingencies that authorize invoking of the conferment therein, is not acceptable alternative. Indeed, the grievance at having been deceived thereby should have been that of the licencing authority and remediable under the law that authored the existence of such authority. Such authority is vested with powers to determine that licence has been inappropriately obtained and such finding activates the contingencies contemplated by section 28AAA of Customs Act, 1962. It is alleged in the show cause notice that the goods were mis-declared but it is section 113(d) of Customs Act, 1962 that has been invoked for confiscation of goods and held by the adjudicating authority to be so liable for enabling imposition of penalties under section 114 of Customs Act, 1962. Such confiscation is valid if goods prohibited for export are brought into a customs area. There are no justifiable reason for confiscation as it has not been evidenced that the goods, as described in the shipping bills, were prohibited for export. The decision in KI Pavunny [ 1997 (2) TMI 97 - SUPREME COURT] does not authorize substitution of valuation mechanism with testimony of persons. Indeed, we find it conveniently opportunistic for customs authorities to sanctify declarations made by overseas parties or determination by customs authorities overseas as, respectively, honourable and appropriate while discarding the declarations made at load port, as well as assessment thereto, as dishonored without even venturing, by recourse to adjudicatory jurisdiction set out in law, to justify such oversimplified prioritization. In such circumstances, even if the ascertainment of movement and ultimate destination of the consignments had extended to all 13008 consignments, instead of the 75 referred to overseas missions, any outcome thereof would not matter a whit as export concludes once the goods are landed at the first destination and ceases to conform to export, as set out in section 2(18), or export goods, as set out in section 2(19) of Customs Act, 1962, to thus exclude revision from the purview of Customs Act, 1962 except in circumstances of the clearance effected in section 51 of Customs Act, 1962 having been established either for incorrect discharge of duty liability or for being prohibited - as erroneous. With the quashing of cancellation of bank realization certificate , the sole ground of distinguishment from the other exports vanishes. The demands for recovery of drawback and duty foregone, such as it is, sustained for that reason alone in the impugned order lacks factual support. These consignments revert to the fold of the larger numbers that are covered by appeal of Revenue. That has been held to be without merit on the lack of evidence to advance recourse to recovery of drawback, recovery of duty foregone and confiscation of goods. Levy of penalties - HELD THAT:- The appeal of Shri Nitin Gupta of M/s Oak Shipping Services Pvt Ltd impugns the penalty imposed on him for having been ventured upon without notice, without service of documents and without being heard. That should suffice for setting the detriments aside but in the light of lack of sustainability of any of proposals in the notice insofar as confiscation of the exported goods is concerned, nothing remains for recourse to penal provisions against him. Likewise, the penalties imposed on the other individual appellants fail on the non-sustenance of recovery, both undertaken and proposed, and of the liability of the goods to confiscation. The appeals of Revenue are dismissed and appeals of the exporters and of the individuals allowed.

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• Corporate Laws

• 2024 (12) TMI 539
  Rejection of appellants application for release of the amounts deposited by the respondent - HELD THAT:- The appellants herein did not take any steps, at that stage, for seeking release of the amount deposited by the Company with the Registry of this Court and in our view, rightly so, the appellants were not entitled to any preferential payment, once the learned Company Court had decided to proceed with the winding up of the company. The contention advanced by the appellants that since their petition was prior in point of time and an amount was deposited during the course of the said petition, they would have a right to recover the amount deposited in precedence to other creditors, is unmerited. It is necessary to bear in mind that the petition filed by the appellants was for winding up of the Company. In a sense their stand was vindicated, and they had effectively succeeded in their petition as the learned Company Court had proceeded to initiate steps for winding up of the Company. Accordingly, the appellants would now have to stand with other similarly placed creditors for recovering their dividends in accordance with Section 529 of the Act. The winding up petition that was admitted, Company Petition No. 885/2015, ultimately culminated in the order for winding up the Company. Clearly at that stage, the petition filed by the appellants would have been rendered infructuous. This is for obvious reason that a company can be wound up only once. In terms of Rule 101 of the Company Court Rules 1959, the appellants also have a right to pursue the Company Petition No. 885/2015 if for any reason the petitioner in that case sought to withdraw from the same. The application filed by the appellants now seeking withdrawal of the amount deposited in this Court in a disposed of company petition, is clearly not maintainable. Although, the appellants have faulted their counsel for not pursuing their interest with due diligence, however, it cannot be accepted that the appellants could have any better right with respect to the properties of the Company, than other similarly placed creditors of the Company. Appeal disposed off.

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• Securities / SEBI

• 2024 (12) TMI 538
  Validity of Show cause notice - scope of judicial review of a show cause notice SEBI power to review or revisit its earlier decisions - argument about delay or laches - whether the Petitioners have made out a case to secure the quashing of the impugned show-cause notice or nip the proceedings in the bud? Delay or laches - HELD THAT:- The principle on which the relief to the party on the grounds of laches or delay is denied is that the rights which have accrued to others by reason of the delay in filing the Petition should not be disturbed unless there is a reasonable explanation for the delay. The real test to determine the delay in such cases is that the Petitioner should come to the writ Court before a parallel right is created and that the lapse of time is not attributable to any laches or negligence. The test is not a physical running of time. Where the circumstances justifying the conduct exist, the manifest illegality cannot be sustained on the sole ground of laches. The argument about the complaint against the Petitioners being hit by delay and laches would have to be examined in the above light. Such examination or evaluation would involve delving into factual aspects, determining prejudice, creating parallel rights, etc. Therefore, in this case, the impugned show cause notice cannot be set aside by alleging delay or laches. In any event, this plea can always be raised in response to the impugned show cause notice, and there is no reason to assume that the SEBI would not consider the same. Review, revisit, double jeopardy and res judicata - By simply alleging that this is a case of review, revisit, double jeopardy or res judicata, no case is made out to interfere with the impugned show cause notice. Undoubtedly, it would be open to the Petitioners to raise all such defences. If such defences are raised, we are sure they will be considered following the law based upon the material the Petitioners produce to support such contentions. The issue of whether principles of res judicata or double jeopardy apply to such proceedings can also be considered if raised. However, this case does not call for quashing the impugned show cause notice based on such grounds. Non application of mind - From the material placed before us, it is difficult to say that Arya s complaint was thoroughly examined and closed. There is no clarity on whether Arya s complaint contained substantially the same allegations as in the 2019 complaint. There is no material about thorough investigation as claimed by the Petitioners. Therefore, at this stage, it is too premature to quash the impugned show notice based upon such pleas or the Petitioners understanding of Clause 12 of SEBI s circular dated 18 December 2014. Again, the petitioners are free to raise all permissible pleas in response to the impugned show-cause notice, and there is no good reason to assume the SEBI cannot or will not consider such pleas. In this petition, we are only to consider whether the Petitioners have made out a case to secure the quashing of the impugned show-cause notice or nip the proceedings in the bud. Upon considering the material placed and the contentions advanced, no such extraordinary case is made out. Non-furnish of information/documents - We have no reason to believe that the SEBI would act unfairly or breach the law enshrined in the Court s decisions. If there is any actual prejudice, such grievance can always be made, even in a challenge to the SEBI s decision, should the same adversely affect the Petitioners. However, based on the advanced arguments, no case has been made to quash the show cause notice. In this case, the material relied upon the show cause notice has been furnished to the Petitioners. We thought that the Petitioners could be furnished the information referred to in paragraph 4(i) of the proceedings for inspection of documents held on 4 October 2024. This was in the context of Arya s complaint dated 12 August 2014. Mr Doctor, on instruction but without prejudice, agreed to provide that information to the Petitioners within 2 weeks of uploading this order. The statement is accepted, and the SEBI will have to abide by the same. Upon receipt of this material, the Petitioners must not further delay in filing a response to the impugned show cause notice if they wish to file a response. Response must be filed within 4 weeks of the receipt of the information/documents which the SEBI has now agreed to furnish to the Petitioner. Regarding the information/documents for inspection of documents at least prima facie, we think that the Petitioners are only trying to create a base so that, in future, they can allege failure of natural justice. This is only a prima facie opinion; therefore, it is open to the Petitioners to complain about the non-furnish of this documents/material, demonstrate prejudice, if any, and urge failure of natural justice. However, exercising our extraordinary jurisdiction, we do not think that we should or could assist the Petitioners in unnecessarily prolonging the adjudication of the impugned show cause notice by interfering at every stage and over every matter. The extraordinary and discretionary jurisdiction cannot be invoked for such purposes. The impugned show-cause notice was issued on 20 August 2024. To date, the petitioners have not filed a proper reply. Mr. Doctor pointed out that the Petitioners have also submitted settlement proposals, so no final orders can be made on the impugned show-cause notice until the settlement applications/proposals are disposed of. This Petition was filed in November 2024, and a stay was sought on further proceedings under the impugned show-cause notice. All this suggests that this Court s extraordinary jurisdiction is being invoked to stall or delay the proceedings to the extent possible. At this stage, just as there may be no presumption of wrongdoings by the Petitioners, so also we cannot presume that the SEBI would not give the Petitioners a fair hearing or fair opportunity. However, fairness in such matters is not a one-way street but two-way traffic. Even the Petitioners must cooperate with the expeditious disposal of the show cause notice so that if they are clean, they need not suffer on account of such prolonged adjudication. The earlier the air is cleared, the better it is for all concerned, including the system that the SEBI must regulate. Thus, we decline to interfere with the impugned show-cause notice and dismiss this Petition. This is subject to our recording SEBI s statement about furnishing information in terms of Clause 4 (i) of the proceedings for inspection dated 4 October 2024 and the grant of some additional time to the Petitioners to respond to the impugned show-cause notice.

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• Insolvency & Bankruptcy

• 2024 (12) TMI 537
  Compliance with Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016 - agreement for joint sale of the assets by both the liquidators - non-payment of CIRP and liquidation costs by the Appellant. Compliance with Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016 - HELD THAT:- In the present case, there are ample materials to indicate that Appellant has informed the liquidator of its decision to relinquish its security interest. Letter dated 10.01.2020 relied by the Appellant is referred, thus, there is no applicability of Section 21A(1) in the present case. Reliance which has been placed by the liquidator is on sub-regulations (2) and (3) of Regulation 21A - In the present case, the Appellant after informing the liquidator on 10.01.2020 proceeded to realise its security interest by issuing notice under Section 13(2) on 20.08.2021 which was already intimated to the liquidator on 10.01.2020. Present is a case where liquidator has communicated the Appellant twice for payment of proportionate share of the liquidation costs on 16.02.2023 and 29.05.2023 although communication was sent in response to the said letter by the Appellant but fact remains that no payment was made by the Appellant towards liquidation costs. Submission of the Counsel for the Appellant that Appellant is ready and has never denied to make the payment shall not make the sub-regulation (3) of Regulation 21A inapplicable. When Appellant has proceeded to realise its security interest it was required to pay the amount as referred to in Regulation 21A (2)(a). The Adjudicating Authority thus, has rightly referred to and relied on Regulation 21A (2) (3). The submission of the Counsel for the Appellant as well as Counsel for the Respondent agreed upon that present is a case where Appellant has communicated its intention to realise its security interest, hence, there is no applicability of Regulation 21A(1). Appellant in Joint Lenders Meeting has agreed for joint sale of the assets by both the liquidators - HELD THAT:- All the stakeholders agreed to the suggestion of the liquidator towards joint sale of the assets. Another Joint Lenders Meeting relied by the Counsel for the Respondent is the Joint Lenders Meeting dated 12.04.2024 where again two representatives of Suraksha were present which is reflected from Annexure R-6 of the reply. In the minutes, it was noted that Suraksha although having agreed in the Joint Lenders Meeting held on 12.04.2024 for joint sale has filed the appeal against the order passed in IA No.1069 of 2023. The representatives of Appellant intimated that they have no instructions from the apposite parties so they are unable to comment on the matter. In the said meeting, even the modalities of the joint sale and appropriation of proceeds to the liquidation estates was mentioned. Non-payment of CIRP and Liquidation Costs by the Appellant - HELD THAT:- The submission of the Respondent also noted that certain issues regarding 32 acres of land claimed by Gujarat NRE Coke Ltd. is pending consideration before the Adjudicating Authority. Suraksha has not paid the CIRP costs or the liquidation costs - The liquidator did not commit any error in communicating decision dated 29.05.2023 to the Appellant that on account of non-payment of liquidation costs, security interest of the Appellant stood relinquished in terms of Regulation 21A (2) (3) of the Liquidation Regulations. Adjudicating Authority after considering the submissions of the parties has rightly refused to grant any relief to the Appellant. This is not a fit case to exercise our Appellate jurisdiction in interfering with the impugned order passed by the Adjudicating Authority - The Appeal is dismissed.

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• 2024 (12) TMI 536
  Application for prayer to set aside the order of admitting the Corporate Debtor into CIRP proceedings under Section 7 of I B Code - Section 7 application was preferred with malicious intention or not - allegation of malice and fraud - appeal against the approved Resolution Plan - HELD THAT:- Since the Resolution Plan itself which has been approved by the Impugned Order dated 28.05.2024 satisfies the test of Section 30(2) to be read with Section 30(6) of the Insolvency and Bankruptcy Code and since it does not suffer from any defect which could be at all be agitated by the Appellant when he himself has independently agitated the proceedings under Section 7 of the Insolvency and Bankruptcy Code, the Appeal is held to be devoid of merit and the same is accordingly rejected. Appeal dismissed.

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• FEMA

• 2024 (12) TMI 535
  Penalty imposed for contravention of provisions of 10(6) of FEMA - Remittance of Foreign Exchange to Overseas Banks for the import of various goods[Computer electronic Goods, Floppy drive, CD-ROM, Dot matrix Print Head, electronic goods etc] but the said Company failed to submit Bills of Entry for the said import - HELD THAT:- It is an admitted fact that during the investigation of the case, the appellant has managed to trace the documents of import qua the thirty remittances, and accordingly, the complaint was filed before the Adjudicating Authority for the remaining five instances pertaining to only ANZ Grindlays Bank. Out of the said five remittances, the appellant was able to furnish the invoices, packing list and airways bill copies for the three remittances, to prove the import of electronic goods which are annexed with the present appeal. Out of the said bunch of documents, the Air Way Bills Air Cargo Arrival Notice-cum-Invoices clearly reflects the name of consignee as ANZ Grindlays Bank Ltd. and also notified to importer M/s Wipro Ltd. Therefore, it points towards a direction that said bank was duly intimated regarding the import of consignments, qua three remittances. The lapse on the part of the said bank (if any) for not intimating the RBI is no ground to presume the contravention on the part of the Appellant Company, simply because the Appellant Company was unable to trace out the remaining import documents of the 2 remittances for USD 30000 and USD 8550 (total USD 38550), as the matter pertains 13-14 years prior to the passing of the impugned order. Appellant M/s Wipro Ltd. cannot be penalized for the negligence on the part of the erstwhile ANZ Grindlays Bank for not sending the intimation to RBI regarding the import of goods, or, alternatively, lapse on the part of the RBI for not noting the information received from the concerned bank and for not properly maintaining its records, seeing the fact that out of 35 instances complained by RBI, the Appellant Company is able to prove the import of goods with respect to 30 instances during the investigation of the case. Just because Appellant Company is unable to trace out and file the proof qua the remaining two instances for total sum of USD 38550, benefit of doubt needs to be given to the Appellant Company on account of lapse on the part of the concerned bank i.e. erstwhile ANZ Grindlays Bank, in light of Judgment of Innovative Tech Pack Ltd. v. Special Director of Enforcement [ 2017 (1) TMI 826 - DELHI HIGH COURT ] Accordingly, the present appeal is hereby allowed and thereby the impugned order is hereby set-aside for imposing penalty for the remaining five remittances of erstwhile ANZ Grindlays Bank.

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• Service Tax

• 2024 (12) TMI 534
  Violation of principles of natural justice - Opportunity of personal hearing not provided to the petitioner - services provided by the petitioner falls within the realm of Reverse Charge Mechanism or not - invocation of extended period of limitation - HELD THAT:- Learned advocate Mr. Sahil Rao who personally appeared for the petitioner before the respondent No. 2 made a statement at bar that no opportunity was given to the petitioner and communication was not made to the petitioner by the respondent-Authority for fixing the date of hearing. Thus, there are contradictory statements of fact regarding opportunity of hearing provided to the petitioner. This is a classic case of raising disputed question of fact challenging the Order-in-Original. This petition is declined to be entertained only on that ground. The petition is accordingly dismissed with a liberty to the petitioner to approach the Appellate Authority challenging the impugned Order-in-Original in accordance with law.

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• 2024 (12) TMI 533
  Seeking quashing of the impugned Endorsement passed by the 3rd respondent - seeking direction to the respondents to accept payment paid by the petitioner towards Sabka Vishwas (Legacy Dispute Resolution) Scheme, Rules, 2019 - petition is opposed by the respondents who contend that since the petitioner did not deposit / pay the amount indicated in SVLDRS-3 on or before the last date i.e., 30.06.2020, the respondents were fully justified in issuing the impugned Endorsement, thereby denying the benefit of SVLDRS in favour of the petitioner and consequently, the impugned Endorsement does not warrant interference in the present petition. HELD THAT:- The undisputed material on record will indicate that pursuant to the application in Form SVLDRS-1 submitted by the petitioner, the respondents issued Form SVLDRS-3, pursuant to which, the petitioner was entitled to make payment up to 30.06.2020. In this context, it is relevant to state that on account of the prevailing covid-19 pandemic, the Apex court extended the period of limitation in [ 2020 (5) TMI 418 - SC ORDER ]. So also, under identical circumstances, the Madras High Court and the Bombay High Court have held that though the Notification dated 14.05.2020 extended the time limit for payment under the SVLDRS up to 30.06.2020, having regard to the prevailing covid-19 pandemic, the petitioners-assessees therein would be entitled to extension of time in Apnaa Projects s case [ 2022 (9) TMI 1003 - MADRAS HIGH COURT ], N. Sudararajan s case [ 2023 (11) TMI 899 - MADRAS HIGH COURT ] and Cradle Runways s case [ 2024 (8) TMI 155 - BOMBAY HIGH COURT ]. A perusal of the impugned Endorsement at Annexure-D dated 13.01.2022 will indicate that the sole ground on which the payment made by the petitioner on 30.09.2020 was rejected by the respondents is by stating that the same was beyond the maximum time limit of 30.06.2020 as per the Notification dated 14.05.2020. However, in the light of the judgments of the Apex Court with regard to extension of limitation and the judgments of the Madras High Court and Bombay High Court granting the benefit of the SVLDRS in favour of the petitioner / assessees therein on the ground of the prevailing covid-19 pandemic even in cases where payments were made subsequent to 30.06.2020, it is opined that the impugned Endorsement issued by the 3rd respondent deserves to be quashed and necessary directions are to be issued to the concerned respondents to accept the payment made by the petitioner and issue a discharge certificate in Form SVLDRS-4 within a stipulated timeframe. Insofar as the judgments relied upon by the learned counsel for the respondents are concerned, the effect of the covid-19 pandemic and the orders of the Apex court extending period of limitation have not been considered in the said judgments and consequently, no reliance can be placed upon the said judgments by the respondents in support of their defence. The impugned Endorsement at Annexure D dated 13.01.2022 issued by respondent No. 3 is hereby quashed - Respondent No. 3 is directed to accept payments vide Annexures B and B1 made by the petitioner on 30.09.2020 towards SVLDRS Scheme and proceed to take necessary steps to issue the Discharge Certificate in Form SVLDRS-4 in favour of the petitioner in accordance with law, within a period of four weeks from the date of receipt of a copy of this order - petition allowed.

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• 2024 (12) TMI 532
  Valuation of service tax - inclusion of reimbursements received by the appellant in the assessable value for service tax purposes - grants-in-aid received by the appellant constitute consideration for taxable services. Inclusion of reimbursements received by the appellant in the assessable value for service tax purposes - HELD THAT:- It is not in dispute that the appellants are receiving grants-in-aid for the propose of providing training to government staff. The appellants have discharged the service tax liability on the said amounts. The appellants are also receiving certain amounts as reimbursement against expenses made on Hotel accommodation, Dinner charges, Local transportation, programme folder, Stationary Charges etc. These demands relates to the inclusion of the amounts received under the heads of Hotal accommodation, dinner charges, local transportation, programme folder, Stationary Charges etc. The appellants are claiming are that these expenses are in nature of reimbursement and the appellants are acted as pure agents. Therefore, in terms of Rule 5 of the Service Tax (Determination and Valuation) Rules, 2006. The value of such reimbursements are not includable in the assessable value. Whether the grants-in-aid received by the appellant constitute consideration for taxable services? - argument of the appellant is that there is no service provided by the appellant to the government as all the amounts are received as grants-in-aid - HELD THAT:- In the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] , the nature of expenses was Hotel stay, transportation, etc. which are similar to the expenses made in the instant case. Thus decision of Hon ble Apex Court is squarely applicable to instant case - it was held by Supreme Court that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. . There are no merit in the impugned order. Relying on the decision of Hon ble Apex Court in the case of Intercontinental Consultants Technocrats Pvt. Ltd., the impugned order is set aside - Appeals are allowed.

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• 2024 (12) TMI 531
  Classification of service - service of supply of tangible goods or not - giving a Gas Engine on rent basis to Gujarat Insecticides Ltd - HELD THAT:- The appellant have given Gas Engine on rent to M/s. Gujarat Insecticides Ltd under an MOU dated 04.01.2011. It is the submission of the appellant that they have transferred effective control and right to possession to M/s.Gujarat Insecticides Ltd., they have also paid the VAT on the said rental amount. Therefore, the transaction is of deemed sale. On the basis of the aforesaid undisputed fact, since, the appellant have discharged the VAT on such transaction, it is deemed sale in terms of Article 366 (29A) of Constitution of India. From the definition of input service which is effective from 01.07.2012 as per clause (ii) of Clause (a) of sub section (44) of Section 65B of the Finance Act, 1994 the deemed sale within the meaning of Clause (29A) of Article 366 of the Constitution is excluded from the definition of the service that means it is in the negative list. Accordingly, the same is not liable to service tax. The impugned order is set aside - appeal allowed.

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• 2024 (12) TMI 530
  Refund of Service tax paid on Ocean Freight during May, 2017 and June 2017 - rejection of refund claim filed by the respondent on ground of CBEC Circular No. 206/4/2017 dtd. 13.04.2017 stating the benefit of the exemption would not be available in case where the services are rendered by a foreign shipping line as much as the said shipping lines are not registered in India and do not follow the provisions of Cenvat Credit Rules, 2004. HELD THAT:- The appellant filed refund claim for differential service tax paid on ocean freight during may 2017 and June 2017, since they have paid service tax on full value of the transportation service of goods in vessel without availing of exemption under Sr. No. 10 of Notification No. 26/2012-ST dtd. 20.06.2012 as amended. It is found that Vide Notification Nos. 15/2017-S.T. and 16/2017-S.T. respectively dated 13th April, 2017, the importer of goods as defined in the Customs Act, 1962 has been made liable for paying service tax in cases of services of transportation of goods by sea provided by a foreign shipping line to a foreign charterer with respect to the goods destined for India. This change has come into effect from 23rd April, 2017. The Shipping/steamer agents are no longer liable to pay the service tax for the services provided on or after 23rd April, 2017. Thus in view of the Notification No. 16/2017 ST dtd. 13.04.2017 read with Notification No. 15/2017 ST dtd. 13.04.2017, the importer was liable for payment of Service tax @1.4% on the CIF Value of the imported goods. As regard the disputed condition of Sr. No. 10 of Notification No. 26/2012-ST dtd. 20.6.2012 it is found that the said condition provide that CENVAT Credit on inputs, Capital Goods and input services, used for providing the taxable services, has not been taken under the provisions of the Cenvat Credit Rules, 2004. Ld. Commissioner (Appeals) in this context has considered the Judgment of Hon ble Apex Court in the case of SRF Ltd [ 2015 (4) TMI 561 - SUPREME COURT] vis-a-vis disputed condition and dealt with the applicability of the said condition in the present matter. There are no reasons to interfere with the impugned order. It is found that on the identical dispute allowing the refund claim on service tax paid on ocean freight the Tribunal in the matter of Panasonic Energy India Co. Ltd. Vs. Commr. Of Cus. C.Ex. CGST, Indore [ 2021 (8) TMI 630 - CESTAT NEW DELHI] held that It is thus eminently clear from the aforesaid observations made in the impugned order that the duty, which was paid by the petitioner, which was otherwise not payable on the exported goods and therefore, rebate of such duty was not admissible in terms of Rule 18 of the Central Excise Rules. However, the duty, which was paid by the petitioner is held to be treated as voluntary deposit. As per Section 142(3) of the GST Act, every claim for the refund filed by any person before, on or after the appointed day i.e. 1-7-2017 for refund of any amount of Cenvat credit, duty, tax, interest or any other amount paid under the existing law, should be disposed of in accordance with the provisions of existing law and any amount eventually accruing to such person should be paid in cash. It is also found that High Court of Gujarat in Mohit Minerals Pvt. Ltd. v. Union of India 1 ors.[ 2018 (2) TMI 770 - GUJARAT HIGH COURT] held that no tax is leviable under the Integrated Goods and Services Tax Act, 2017, on ocean freight, for services provided by a person, located in a non-taxable territory, by way of transportation of goods on a vessel from a place outside India up to Customs station of clearance in India. However, the said judgment is pertaining to the GST but ratio of said judgment also applicable in Service tax matter. Thus, no grounds have been made to interfere with the order passed by the Learned Commissioner (Appeals). Accordingly, the appeal filed by revenue is dismissed.

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• 2024 (12) TMI 529
  Availment of cenvat credit on common input services - failure to maintain separate accounts as per Rule 6(3) of Cenvat Credit Rules, 2004 in respect of the said exempted services despite having availed 100% Cenvat credit on input services - HELD THAT:- It is settled law that when the credit amount availed in respect of services utilized, towards exempted product have been paid along with interest, conditions prescribed under Rule 6(3)(ii) read with Rule 6(3A) are considered to have been sufficiently complied with. It has been held that main objective of Rule 6 ibid is to ensure that Cenvat credit on input or input services utilized in respect of exempted services is not availed of. In the case of JOST S ENGINEERING CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III [ 2013 (8) TMI 463 - CESTAT MUMBAI ], the Tribunal held as unsustainable the confirmation of demand to pay an amount of 5%/10% of the value of exempted goods when the appellant reversed not only the credit taken on input services used in the manufacture of exempted goods but also the credit taken on input services used in the manufacture of dutiable goods along with interest thereon. The apex court, in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT ], had held that the reversal of credit availed on common inputs, though post clearance would absolve the assessee of liability to pay 10% of their price by virtue of such reversal of credit and paying interest thereon. There is no merit in the appeal filed by the department and the same is therefore liable to be dismissed. The order of the lower authority is upheld.

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• Central Excise

• 2024 (12) TMI 594
  Eligibility of CENVAT Credit on inputs and input services used for trading activities - invocation of extended period of limitation - exempt service or not - appellants have filed this appeal on the sole ground that the proviso clause appended to Section 11A of the Central Excise Act, 1944 cannot be invoked against the appellants, inasmuch as there is no element of suppression, willful mis-statement, collusion etc., with the intent to evade the Government revenue. HELD THAT:- It is found that based on the Books of Account maintained by the appellant, the Audit Wing of the Department had pointed out the mistake regarding irregular availment of the CENVAT Credit on the inputs used in the trading activity. Since the appellants have maintained adequate records to capture the details of CENVAT Credit, it cannot be said that availment of CENVAT Credit on the trading activity was owing to the reason of fraud, collusion, willful mis-statement etc. Hon ble Madras High Court in the case of Shriram Value Services Pvt. Ltd. [ 2019 (8) TMI 1174 - MADRAS HIGH COURT ] has also held that in the facts and circumstances of the case, extended period of limitation cannot be invoked for confirmation of the demands beyond the normal period provided under Section 11A of the Act 1944. The judgment of Hon ble Delhi High Court in the case of Lally Automobiles Ltd. [ 2018 (7) TMI 1679 - DELHI HIGH COURT ] relied upon by the learned AR for the Revenue is distinguishable from the facts of the present case, inasmuch as in the said decided case, the assessee-appellant did not maintain any record to demonstrate taking of CENVAT Credit of central excise duty paid on the inputs, which were used for providing the trading activity. In the case in hand, since the appellants had maintained their Books of Accounts, capturing the details of CENVAT Credit taken on the inputs, the show-cause notice was required to be issued for the normal period provided under subsection (1) of Section 11A of the Central Excise Act, 1944 and the extended period of limitation cannot be invoked for effecting such recovery. There are no merit in the impugned order, insofar as it has confirmed the adjudged demands by invoking the extended period of limitation. Therefore, the impugned order, to that extent, it has confirmed the adjudged demands beyond the normal period of limitation, is set aside and the appeal to such extent is allowed in favour of the appellants. Appeal allowed.

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• 2024 (12) TMI 593
  Denial of CENVAT Credit - input services - direct sale points in Kolkata can be considered as place of removal for the goods manufactured in the factory premises or not - HELD THAT:- The issue as to whether the factory premises of the appellant or the direct shop at Kolkata would be the place of removal of the goods was the issue that arose for consideration before the Allahabad Regional Bench of the Tribunal in M/S INDIA YAMAHA MOTOR PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE CGST, GAUTAM BUDH NAGAR [ 2023 (10) TMI 1464 - CESTAT ALLAHABAD] where it was held that Once it is established that the appellant were paying duty on the value at which the bikes were sold from the direct shop at Kolkata then there cannot be any reason for not allowing the Cenvat Credit in respect of the services received at depot. The factual position in the appeal decided by the Allahabad Bench and the present appeal is identical. In fact, the appellant in both the appeals is India Yamaha Motor Private Limited. There are no good reason to take a different view from the view taken in Allahabad Bench of the Tribunal and, accordingly, it is held that the place of removal would be the direct shop at Kolkata and not the factory premises. The impugned order dated 31.10.2016 passed by the Commissioner is, accordingly, set aside - the appeal is allowed.

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• 2024 (12) TMI 528
  Process amounting to manufacture or not - strapping together of tyres , tubes and flaps , referred to as TTF , at the premises of another for despatch of this particular combination of goods to dealers for catering to replacement market for bus/lorry operators - CESTAT had set aside the demand - HELD THAT:- The Customs, Excise And Service Tax Appellate Tribunal has not committed any error in law or fact. The Civil Appeals are accordingly dismissed.

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• 2024 (12) TMI 527
  Undervaluation relating to stock transfer to their own unit - Undervaluation relating to sale to sister unit, M/s Aarem Chemicals Private Limited - Demand confirmed on short receipt of methanol and have taken cenvat cedit on quantity shown in the invoices - Denial of CENVAT Credit on the ground that this input has been used for manufacture of final product, hence do not qualify as input in terms of Rule 2 (k) of the Cenvat Credit Rules, 2004 - Demands sought to be confirmed by way of impugned order by disallowing the cenvat credit, which was taken on the basis of endorsed invoices/Xerox copies/endorsed bills of entry - Demand confirmed against the appellant on account of shortages of finished goods found during the course of physical stock verification - Revenue neutrality - Penalty on appellant. Undervaluation relating to stock transfer to their own unit - HELD THAT:- The appellant is clearing the goods for sale to their sister unit and clearing a some part of the goods for captive consumption to their own unit for stock transfer. Therefore, the decision in the case of IOCL [ 2023 (5) TMI 436 - CESTAT KOLKATA] is squarely applicable to the facts and circumstances of the case and the duty cannot be demanded in terms of Rule 8 of the Valuation Rules, accordingly, the demand of Rs.1,94,02,717/- is not sustainable. Moreover, it is a situation of revenue neutrality. Undervaluation relating to sale to sister unit, M/s Aarem Chemicals Private Limited - HELD THAT:- The fact is further noted that the value of Formaldehyde and Melamine has been taken incorrectly by the Department as the cost prices which kept fluctuated and the Department took the balance sheet figures, which included miscellaneous overhead, but the Adjudicating Authority has taken the balance sheet figures, which does not represent appropriate value, the said figures are much lesser than the actual figures adopted by the appellant for some of the financial years in question and the Revenue has taken the higher figures shown in the balance sheet for whole of the period and there was a decrease in conversion cost for strong bond M-3 due to market forces as BIFR proceedings are going against the appellants. In that circumstances, the goods were sold on price justified by the Chartered Accountant on the basis of the records and the prices taken by the Adjudicating Authority without going any justification on higher figures found during the year, are not sustainable - The fact is also noted that whatever duty has been paid by the appellant, the same is available as cenvat credit to their sister unit. In that circumstances, it is a situation of revenue neutrality. Therefore, the demand is not sustainable as no malafide intention can be alleged against the appellant. Therefore, the demand of Rs.52,28,055/- is also not sustainable. Demand confirmed on short receipt of methanol and have taken cenvat cedit on quantity shown in the invoices - HELD THAT:- The said issue has been examined by this Tribunal in the case of Hindustan Petroleum Corporation Limited [ 2015 (1) TMI 24 - CESTAT MUMBAI] , wherein this Tribunal has held there may be variation in the transportation of the quantity of the goods accordingly, transit loss is allowable. Hence, I hold that the appellant is entitled for input credit as shown in the invoices. Accordingly, the impugned order is set aside and the appeal and stay application are allowed with consequential relief, if any. - the demand confirmed in the impugned order amounting to Rs.1,15,616/- is also not sustainable and hence, set aside. Denial of CENVAT Credit on the ground that this input has been used for manufacture of final product, hence do not qualify as input in terms of Rule 2 (k) of the Cenvat Credit Rules, 2004 - HELD THAT:- This input has been received by the appellant for research and development purposes in their factory itself. The research and development activity is also a part of the manufacturing activity, therefore, it cannot be said that the said input has not been used for manufacture of their final product as held by this Tribunal in the case of Sudarshan Chemicals Industries Limited [ 2010 (5) TMI 746 - CESTAT MUMBAI] , wherein this Tribunal has observed the appellants are entitled for CENVAT credit availed on such inputs which went for testing and analysis to manufacture the final product. The CENVAT credit on capital goods used in R D section is also entitled as the same has been used in or in relation to the manufacture of the final product - the Cenvat Credit of Rs.2,50,647/- cannot be denied to the appellant. Accordingly, the demand confirmed against the appellant is set aside. Demands of Rs.14,86,640/- and Rs.34,88,013/- sought to be confirmed by way of impugned order by disallowing the cenvat credit, which was taken on the basis of endorsed invoices/Xerox copies/endorsed bills of entry - HELD THAT:- It is found that the appellant s sister unit, M/s Aarem Chemicals Private Limited has imported the goods and endorsed the bills of entry and issued invoices in favour of the appellant and the appellant has taken the cenvat credit thereon. The similar issue came up before the Hon ble Allahabad High Court in the case of Uni Cast Private Limited [ 2015 (10) TMI 375 - ALLAHABAD HIGH COURT] , wherein the Hon ble High Court has observed The fact that the invoice did not indicate the name of the appellant was only a procedural lapse, which was rectified by the endorsement made by the manufacturer in favour of the applicant. Such endorsement made cannot make the document invalid and, consequently, we are of the opinion that endorsement made by the manufacturer in favour of the applicant on the bills raised by the supplier does not make the invoice invalid and the applicant is entitled to avail Modvat credit. As it is not disputed by the Revenue that the appellant has not received the goods against the endorsed Bills of Entry/Xerox copies of the Bills of Entry/endorsed Invoices and the same has been used in the manufacture of final product and there is no allegation of diversion of the said goods pertaining in the above documents, the cenvat credit cannot be denied to the appellant, therefore, the appellant is entitled to take the cenvat credit of Rs.14,86,640/- and Rs.34,88,013/- on the basis of endorsed Bills of entry/endorsed invoices/Xerox copies of Bills of Entry. Demand confirmed against the appellant on account of shortages of finished goods found during the course of physical stock verification - HELD THAT:- It is found that method of stock verification has been disputed by the appellant as stock verification, was not done physically, it was done on estimation basis by dip method and no Panchnama or weighment slips has been prepared to show the physical stock taking by the investigating team and in such a short span of time, stock verification of huge quantity is not possible. In that circumstances, the allegation of shortage of finished goods is not sustainable. It is also found that during the course of investigation, certain updation of books of accounts were also not considered as 158 MTs Formaldehyde is attributable to non-updation of books of accounts on the date of physical stock taking, as a result thereof, the quantity issued for captive consumption being 155 MTs could not be considered by the Department - the allegation of shortages of the finished goods is not sustainable in the absence of any corroborative evidence brought on record by the Revenue i.e. how much clearances were made and what is the method of transportation and what are the mode of the recipient of the goods - In that circumstances, the demand of Rs.14,04,491/- is not sustainable. Penalty on appellant - HELD THAT:- As the demand of duty is not sustainable against the appellant, no penalty is imposable on the appellants. Appeal disposed off.

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• 2024 (12) TMI 526
  Levy of duty on cash discount which is declared in the invoice even though in some cases the discount was not availed by the buyer and the same was not passed on - HELD THAT:- The issue in hand is no longer res integra. In view of the Hon ble Supreme Court judgment in the case of Purolator India Limited [ 2015 (8) TMI 1014 - SUPREME COURT] , the issue in the appellant s own case has been decided by this Tribunal in M/S. GUJARAT GUARDIAN LTD VERSUS C.C. E-BHARUCH [ 2019 (8) TMI 869 - CESTAT AHMEDABAD ] where it was held that cash discount which is not at or prior to clearance of goods being contained in agreement of sale between assessee and buyers must, therefore, be deducted from sale price in order to know the value of excisable goods at time. Thus, the issue is no longer res Integra, accordingly the demand of duty is not sustainable. The impugned order is set aside - appeal allowed.

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• 2024 (12) TMI 525
  Invocation of extended period of limitation - suppression of facts - failure to obtain Central Excise registration by not observing the other statutory formalities required under Central Excise Law - CENVAT Credit demand - levy of penalty - Personal penalty imposed upon the partner. Invocation of extended period of limitation - suppression of facts - failure to obtain Central Excise registration by not observing the other statutory formalities required under Central Excise Law - HELD THAT:- In this matter the show cause notice is dated 06.01.2016 and demand of duty pertains to the period December 2010 to June 2015. The extended period has been invoked on the ground that the Appellants had suppressed the material facts from the knowledge of the Department by not obtaining Central Excise registration and by not observing the other statutory formalities required under Central Excise Law. Thus, it appears that Appellant has deliberately and consciously suppressed material fact as to manufacture and clearances of excisable goods, contravened the provisions of Central Excise Act, 1944 and Rules, all with intent to evade payment of Central Excise Duty. However, the facts on record do not support the case of the Department for suppression. It is found that based on books of account and records maintained by Appellants, Revenue has raised impugned demand of duty on goods manufactured and cleared. It is not disputed by the department on clearances of goods appellant also issued invoices showing appropriate VAT payment. This is not the case of the department is that appellant have not issued invoices during the disputed period. Appellants are also registered under the provisions of The Gujarat Value Added Tax Act, 2003, (VAT Act) and are assessee under the Income Tax Act, 1961 - It is not the case of the Revenue that appellants have indulged into clandestine manufacture and clearances of goods. When manufacture and clearances of goods and all other business transactions are duly recorded in the books of account and when books of account and other records are maintained by appellants, it cannot be alleged that non-payment of the duty is on account of deliberate and conscious suppression of material facts as to manufacture and clearance of excisable goods with intent to evade payment of excise duty as contemplated u/s. 11A(4) of the Act and larger period could not be invoked in such case. It is now well-settled that for invoking the proviso to Section 11A(4), there must be suppression of facts, fraud, mis-statement, etc., with an intention to evade payment of duty, the same are absent in this matter. It is found that the appellant admittedly paid the Sales Tax/VAT on the entire transaction and also issued invoice/bills to customer for the clearance of the goods. The said invoices also account for in their books of account and department during the investigation also admitted the said facts. Therefore, the entire activity of appellant is very much on record - thus, no suppression or mis-declaration can be attributed to the appellant for invoking extended period of demand. Accordingly, the demand for longer period is not sustainable. CENVAT Credit demand - HELD THAT:- Cenvat credit was availed in the month of September, 2015 and the same was also reversed in the month of September 2015 by the appellant as evident from the ER-1 return for the month of September, 2015. Appellant had taken the credit, they never utilized it and when the irregularity was pointed out the credit was reversed without demur. In these circumstances, it is found that neither cenvat demand nor interest demand is sustainable and this issue is squarely covered by the judgment of this Bench in the case of PAGE APPARELS PVT. LTD. VERSUS COMMISSIONER OF C. EX., BANGALORE [ 2006 (9) TMI 65 - CESTAT, BANGALORE] wherein it was held that the interest would not be payable when there is no utilization of Modvat credit. Further, the Hon ble Supreme Court in the case of COMMR. OF C. EX. CUS. (APPEALS), AHMEDABAD VERSUS NARAYAN POLYPLAST [ 2004 (11) TMI 112 - SUPREME COURT] held that once the credit was reversed, it amounted to not taking the credit at all. Levy of penalty - HELD THAT:- As the appellant had no intention to evade duty, the appellant is also not liable for penalty. Accordingly, the entire penalty involved in the present case is set aside. Personal penalty imposed upon the partner - HELD THAT:- It is found that since there is no malafide in nonpayment of duty by the appellant s partnership firm as discussed, question of personal penalty upon the partner under Rule 26 does not arise. Moreover, it is settled in this jurisdictional High Court of Gujarat judgments in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS JAI PRAKASH MOTWANI [ 2009 (1) TMI 501 - GUJARAT HIGH COURT] that in a case against partnership firm separate personal penalty on it s partner is not justified and hence not sustainable. Appeal disposed off.

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• 2024 (12) TMI 524
  Request for adjournment not accepted - non prosecution in terms of Rule 20 of CESTAT Procedure Rules, 1982 - Applicability of Section 35C (1A) of the Central Excise Act, 1944 - HELD THAT:- In case of ISHWARLAL MALI RATHOD VERSUS GOPAL AND ORS. [ 2021 (9) TMI 1301 - SUPREME COURT] condemning the practice of adjournments sought mechanically and allowed by the Courts/Tribunal s Hon ble Supreme Court has observed the court shall be very slow in granting adjournments and as observed hereinabove they shall not grant repeated adjournments in routine manner. Time has now come to change the work culture and get out of the adjournment culture so that confidence and trust put by the litigants in the Justice delivery system is not shaken and Rule of Law is maintained. There are no justification for adjourning the matter beyond three times which is the maximum number statutorily provided - The Appeal is dismissed for non prosecution in terms of Rule 20 of CESTAT Procedure Rules, 1982.

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• 2024 (12) TMI 523
  Maintainability of petition - non-compliance of the statutory requirement of making the pre-deposit - failure to remove defects in the appeal - HELD THAT:- It would be seen from a bare perusal of section 35F of the Central Excise that after August 06, 2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 35F on August 06, 2014 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. The Supreme Court in Narayan Chandra Ghosh vs. UCO Bank and Others [ 2011 (3) TMI 1478 - SUPREME COURT] , examined the provisions contained in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statute confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. The Supreme Court, therefore, held that deposit under the second proviso to section 18(1) of the Act, being a condition precedent for preferring an appeal, the Appellate Tribunal erred in law in entertaining the appeal. The Supreme Court also held that the Appellate Tribunal could not have granted waiver of pre-deposit beyond the provisions of the Act. The appellant has not made the pre-deposit. In view of the aforesaid decisions of the Supreme Court, the Delhi High Court and the Madhya Pradesh High Court, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit. Appeal dismissed.

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• Indian Laws

• 2024 (12) TMI 592
  Dishonour of Cheque - compounding of offence - parties have entered into compromise with their free will - conviction for offence under Sections 138 of N.I. Act 1881 - HELD THAT:- Since the parties have entered into compromise at the stage of revision, therefore, law laid down by the apex Court in the case of Damodar S. Prabhu Vs. Sayed Babalal H. [ 2010 (5) TMI 380 - SUPREME COURT ] will be applicable in this case, where it was held that It must be kept in mind that Section 147 of the Act does not carry any guidance on how to proceed with the compounding of offences under the Act. We have already explained that the scheme contemplated under Section 320 of the CrPC cannot be followed in the strict sense. In view of the legislative vacuum, we see no hurdle to the endorsement of some suggestions which have been designed to discourage litigants from unduly delaying the composition of the offence in cases involving Section 138 of the Act. . Considering the fact that the parties have amicably settled their dispute and have entered into compromise before this Court in the revision and decided to avoid further litigation, hence, the applicant is liable to pay 3% of the cheque amount of Rs.2,00,000/-i.e. Rs.6000/- by way of cost to be deposited with the State Legal Services Authority Indore - Subject to payment of cost at the rate of 3% of the cheque amount with the State Legal Services Authority Indore, within a period of 10 days from today, the applicant be released from the jail, the applicant shall be acquitted from the charges under Section 138 of N.I. Act on the basis of compromise. The revision disposed off.

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• 2024 (12) TMI 522
  Dishonour of cheque - Compounding of offence under Section 138 of the Negotiable Instruments Act - compromise between the parties - Sections 438 and 442 of Bhartiya Nagarik Suraksha Sanhita - HELD THAT:- Having taken note of the fact that the petitioneraccused, during the pendency of the instant petition, has deposited the entire amount of compensation of Rs.1,15,000/- in the Registry of this Court, as full and final settlement of the claim, and the complainant has no objection in compounding the offence, therefore, this Court sees no impediment in accepting the prayer made on behalf of the accused-petitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon ble Apex Court in Damodar S. Prabhu V. Sayed Babalal H. [ 2010 (5) TMI 380 - SUPREME COURT] wherein the Hon ble Apex Court has held Section 147 of the Negotiable Instruments Act, 1881 is in the nature of an enabling provision which provides for the compounding of offences prescribed under the same Act, thereby serving as an exception to the general rule incorporated in sub-section (9) of Section 320 of the CrPC which states that No offence shall be compounded except as provided by this Section . A bare reading of this provision would lead us to the inference that offences punishable under laws other than the Indian Penal Code also cannot be compounded. However, since Section 147 was inserted by way of an amendment to a special law, the same will override the effect of Section 320(9) of the CrPC, especially keeping in mind that Section 147 carries a non obstante clause. In K. Subramanian Vs. R. Rajathi [ 2009 (11) TMI 1013 - SUPREME COURT] , it has been held by the Hon ble Apex Court that in view of the provisions contained in Section 147 of the Act read with Section 320 of Cr.P.C., compromise arrived at can be accepted even after recording of the judgment of conviction. Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has deposited the entire amount of compensation of Rs.1,15,000/- in the Registry of this Court, as full and final settlement of the claim, prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon ble Apex Court - Therefore, in view of the detailed discussion made as well as law laid down by the Hon ble Apex Court, the application is allowed and matter is ordered to be compounded. The present matter is ordered to be compounded and impugned judgment of conviction and order of sentence dated 16.01.2024, passed by learned Judicial Magistrate 1st Class, Court No. 2, Paonta Sahib, District Sirmour, H.P. in CIS Regn. No. 379 of 2019, and affirmed vide order dated 10.07.2024, passed by learned Additional Sessions Judge, Sirmour at Nahan, H.P., in Criminal Appeal No. 31 of 2024, are quashed and set-aside and the petitioner-accused is acquitted of the charge framed against him under Section 138 of the Act - Petition disposed off.

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• 2024 (12) TMI 521
  Dishonour of Cheque - compounding of offence on the basis of compromise deed - complainant-respondent have settled the matter - HELD THAT:- Having taken note of the fact that the petitioner - accused and the complainant-respondent have settled the matter and the complainant has no objection in compounding the offence, therefore, this Court sees no impediment in accepting the prayer made on behalf of the accusedpetitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon ble Apex Court in Damodar S. Prabhu V. Sayed Babalal H. [ 2010 (5) TMI 380 - SUPREME COURT] , wherein the Hon ble Apex Court has held that Offences to be compoundable Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable under this Act shall be compoundable. At this point, it would be apt to clarify that in view of the non-obstante clause, the compounding of offences under the Negotiable Instruments Act, 1881 is controlled by Section 147 and the scheme contemplated by Section 320 of the Code of Criminal Procedure (CrPC) will not be applicable in the strict sense since the latter is meant for the specified offences under the Indian Penal Code, 1860. In K. Subramanian Vs. R. Rajathi [ 2009 (11) TMI 1013 - SUPREME COURT] , it has been held by the Hon ble Apex Court that in view of the provisions contained in Section 147 of the Act read with Section 320 of Cr.P.C., compromise arrived at can be accepted even after recording of the judgment of conviction. Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has compromised the matter with the complainant, prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon ble Apex Court - in view of the detailed discussion made hereinabove as well as law laid down by the Hon ble Apex Court, the application is allowed and matter is ordered to be compounded. The present matter is ordered to be compounded and the impugned judgment of conviction and order of sentence, dated 08.07.2016, passed by learned Judicial Magistrate 1st Class Anni, District Kullu, H.P., in Case No. 14-3 of 2016, and affirmed by learned Sessions Judge, Kinnaur Sessions Division at Rampur Bushahr, H.P., vide judgment dated 06.03.2019, in Criminal Appeal No. 15 of 2018, are quashed and set-aside and the petitioner accused is acquitted of the charge framed against him under Section 138 of the Act. Bail bonds, if any, stand discharged. Petition disposed off.

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