TMI Tax Updates - e-Newsletter
December 13, 2024

Case Laws in this Newsletter:

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

TMI Short Notes

1. Reasonableness Test for Attaching Non-Proceeds of Crime: Limits on Attaching Pre-existing Property under PMLA

  Money Laundering:

2. Taxation of International Consulting Services: Navigating the Complexities

  Income Tax:

3. Customs Seizure and the Doctrine of "Reasons to Believe": Clarity or Ambiguity

  Customs:

Articles

1. Taxpayers with undisclosed Foreign Assets like real estate, bank accounts, shares, debentures, insurance policies or Foreign Income to revise their ITRs by 31st December 2024... atleast those who get e-mail or SMS

   By: Vivek Jalan

2. INTRODUCTION OF A NEW FORM GSTR-1A UNDER GST LAWS

   By: DR.MARIAPPAN GOVINDARAJAN

3. Capital Grant Subsidy from NHAI is Financial Support, Not Payment for Work

   By: Kamal Aggarwal and Aditi Vishnoi

4. CUSTOMS (ASSISTANCE IN VALUE DECLARATION OF IDENTIFIED IMPORTED GOODS) RULES, 2023

   By: DR.MARIAPPAN GOVINDARAJAN

5. Negative blocking is within the scope of provisions of Rule 86A of the CGST Rules

   By: Bimal jain

News

1. India’s FDI Journey Hits $1 Trillion

2. India and EU aiming for a balanced, ambitious, comprehensive and mutually beneficial Free Trade Agreement: Piyush Goyal

3. GNPA of PSBs declined from the peak of 14.58% in Mar-18 to 3.12% in Sep-24

Notifications

GST - States

1. 25/2024-State Tax - dated 2-12-2024 - Mizoram SGST

Amendment in Notification No. 50/2018-State Tax, vide No.J.21011/1(ii)/2018-TAX/Pt dated 25th sept., 2018

2. 24/2024-State Tax - dated 4-11-2024 - Mizoram SGST

Amendment in Notification No.J.21011/1/2017-TAX/Part(ii) dated the 29th June, 2017

3. 23/2024-State Tax - dated 4-11-2024 - Mizoram SGST

Supersession Notification Number No.J.21011/7/2021-TAX dated the 11th June, 2021 (No.22/2021-State Tax)

4. 22/2024-State Tax - dated 4-11-2024 - Mizoram SGST

Notifies the special procedure for rectification of for Input Tax Credit Orders issued under Section 73, 74, 107, 108 which confirming demand for wrong availment of input tax credit

5. 20/2024-State Tax - dated 4-11-2024 - Mizoram SGST

Mizoram Goods and Services Tax (Second Amendment) Rules, 2024.

Income Tax

6. 127/2024 - dated 11-12-2024 - IT

Amendment in Notification No. 44/2020 dated the 6th July, 2020

SEBI

7. SEBI/LAD-NRO/GN/2024/217 - dated 11-12-2024 - SEBI

Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) (Third Amendment) Regulations, 2024.

Circulars / Instructions / Orders

DGFT

1. Policy Circular No. 09/2024-25 - dated 11-12-2024

Procedure for implementation of Import Management System for import of restricted IT Hardware (viz. Laptops, Tablets, All-in-one Personal Computers, Ultra small form factor computers and Servers under HSN 8471) for the calendar year 2025

Customs

2. PUBLIC NOTICE No. 19 / 2024 - dated 4-12-2024

Clarifications on the applicability of concessional duty under IGCR Rules, 2022 in certain instances-reg.

3. PUBLIC NOTICE No. 59 / 2024 - dated 28-11-2024

Implementation of automation in the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 - reg.

4. Public Notice No. 18/2024 - dated 17-9-2024

Implementation of the Sea Cargo Manifest And Transshipment Regulations (SCMTR) - Registration of ASA, ASC, Exporters and others - Reg.

Highlights / Catch Notes

GST

• Petition Dismissed: Failure to Exhaust Remedies and Unjustified Delay in Filing Under Article 226.

  Case-Laws - HC : The petition was dismissed by the High Court as no case was made out to depart from the usual rule of exhaustion of alternative remedies. The key reasons were: 1) An alternative remedy of appeal was available against the impugned order, although the petitioner contended violation of principles of natural justice. 2) The petition was filed almost a year after the impugned orders, much beyond the statutory limitation period for appeal, without any explanation for the delay. While there is no limitation for filing a petition under Article 226, such petitions must be instituted within a reasonable period, and any delay is required to be explained. Since the petitioner failed to provide a justification for the inordinate delay, the High Court dismissed the petition.
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• Anticipatory Bail Upheld in Rs. 7 Crore Misappropriation Case Despite Grave Allegations.

  Case-Laws - HC : The High Court dismissed the petitions seeking cancellation of anticipatory bail granted to accused Nos. 1 and 2, who were alleged to have misappropriated over Rs. 7 crores by misusing credentials and withdrawing funds from accounts, instead of paying statutory dues. Despite the grave allegations of economic offenses u/ss 406 and 420 of the Indian Penal Code, the court held that the offenses cannot be categorized as heinous. With the arrest of accused No. 1 and ongoing investigation, the court opined that their presence could be secured by imposing stringent conditions, and there were no justifiable grounds to cancel the anticipatory bail.
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• High Court Quashes Consolidated GST Show Cause Notice for Multiple Years, Allows Separate Notices.

  Case-Laws - HC : The High Court set aside the show cause notice and summary issued by the respondent u/s 74 of the Central Goods and Services Tax Act, 2017 for multiple financial years spanning January 2018 to August 2022. Relying on the coordinate bench judgment in M/S. VEREMAX TECHNOLOGIE SERVICES LIMITED, the Court held that the respondent erred in issuing a consolidated show cause notice for multiple assessment years from 2017-18 to 2020-21. Though the summary segregated liabilities for each financial year, the Court found it inappropriate. The respondent was granted liberty to issue separate show cause notices for each financial year and proceed against the petitioner accordingly.
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Income Tax

• Impugned notice for income reassessment quashed; no disclosure obligation sans direct remittances received.

  Case-Laws - HC : The High Court quashed the impugned notice u/s 148 for reopening of assessment. It held that since the petitioner had not directly received any remittances from the DSNE CGHS, there was no occasion for the petitioner to make a disclosure in its Return of Income. Consequently, the reason to believe for invoking Section 147 for reassessment was unsustainable. However, the Court left it open to the respondents to initiate proceedings afresh, if otherwise permissible in law.
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• Court Orders Revenue to Refund With Interest After Unfair Offset Against Stayed Tax Demand Ruled Arbitrary.

  Case-Laws - HC : The High Court held that the Revenue's decision to adjust the refund due to the petitioner for the assessment years 2008-09 and 2017-18 against the stayed demand for the assessment year 2015-16 was arbitrary. The court noted that granting stay of recovery subject to payment of 20% of the outstanding tax demand was in accordance with the CBDT's instructions. Adjusting refunds against the stayed demand would place the assessee entitled to a refund in a disadvantageous position compared to those without refunds. There was no allegation that the petitioner was alienating assets or unable to pay the disputed demand if confirmed. The court directed the Revenue to refund the amount due with applicable interest for the assessment years 2008-09 and 2017-18 within eight weeks.
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• Tax authority's attempt to reopen assessment rejected, time limit upheld by court.

  Case-Laws - HC : The High Court held that the impugned notice issued u/s 148 of the Act was beyond the time limitation prescribed u/s 149(1). The Revenue's contention that the non-obstante clause u/s 150 permitted issuance of the notice, premised on the assumption that the High Court's previous order dismissing the Revenue's appeal contained findings and directions for commencing proceedings u/s 147, was rejected. The Court clarified that its previous order could not be construed as permitting reopening of assessments beyond the period stipulated u/s 149(1) or where necessary conditions for invoking Sections 147 and 148 were not satisfied. Consequently, the time limitation u/s 149(1) was applicable, rendering the impugned notice invalid.
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• Solar plant entitled depreciation from installation despite initial defects; business use determined by electricity generation date.

  Case-Laws - HC : The High Court held that the solar plant was put to use for the purpose of business on 20.03.2013 when it started generating electricity, despite being non-functional initially due to defects. Consequently, the assessee was entitled to claim depreciation on the solar plant from the financial year 2012-13 itself, even though synchronization with the grid took place on 20.04.2013 in the subsequent financial year 2013-14. The appeal filed by the Revenue was dismissed.
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• Transfer Pricing Dispute: CUP Prevails Over TNMM for Determining Arm's Length Price.

  Case-Laws - HC : The High Court upheld the order of the Income Tax Appellate Tribunal (ITAT) which had approved the Comparable Uncontrolled Price (CUP) method adopted by the assessee for transfer pricing adjustment for the assessment year 2018-19. The Court noted that the ITAT had consistently held the CUP method as the most appropriate method for the same assessee in earlier years, and the Transfer Pricing Officer (TPO) erred in adopting a new method, i.e., the Transactional Net Margin Method (TNMM), treating it as the most appropriate method for the year under consideration. The High Court concurred with the ITAT's order and dismissed the revenue's appeal, holding that no substantial question of law arose.
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• ITAT Deletes Addition on Bank Guarantee Classification Dispute, Rejects AO's 2.22% Rate for 0.94% Actual Cost Adjustment.

  Case-Laws - AT : The ITAT deleted the addition made by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) [CIT(A)] regarding the adjustment u/s 92CA(3) of the Income Tax Act. The issue pertained to the treatment of a guarantee/standby letter of credit issued by Standard Chartered Bank, New Delhi, as an international transaction. The CIT(A) had upheld the AO's action of adopting an average rate of 2.22% based on rates of nine banks for making the adjustment u/s 92CA(3), instead of the suo-moto adjustment made by the assessee based on the actual cost incurred. The ITAT, considering the voluntary adjustment of 0.94% made by the assessee based on the actual amount paid to Standard Chartered Bank for the bank guarantee, and the smallness of the amount involved, deleted the addition made by the AO to put an end to the litigation.
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• Tribunal Overturns Tax Commissioner's Order on Disallowance and Unexplained Cash Credits Due to Lack of Evidence.

  Case-Laws - AT : The ITAT held that the order passed by the Principal Commissioner of Income Tax u/s 263 of the Income Tax Act for disallowance u/s 40A(3) and addition on account of unexplained cash credit u/s 68 was not sustainable. The Tribunal observed that merely not mentioning the annexures or not asking for details does not render the order prejudicial or erroneous. The assessee's submissions regarding jurisdiction were not dealt with by the revenue. The Principal Commissioner did not invoke Explanation 2 to Section 263 to substantiate her view that the order was erroneous or prejudicial to the interests of the revenue. Therefore, the Tribunal disagreed with the Principal Commissioner's view without establishing how the order was erroneous or prejudicial.
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• Tax Tribunal Rulings: ESI/PF Disallowance Upheld, Sundry Creditors Claim Dismissed, IP Rights Depreciation Error Noted.

  Case-Laws - AT : Regarding the disallowance of late deposit of ESI/PF u/s 36(1)(va), following the Supreme Court's ratio in Checkmate Services, the ITAT allowed the Revenue's ground and upheld the Assessing Officer's addition. Concerning the disallowance on account of sundry creditors, the assessee had written off the credit balances during the subsequent year, and reversing the addition would amount to double taxation; hence, the ITAT dismissed the Revenue's ground. Pertaining to the disallowance of depreciation at 25% on the opening WDV of intellectual property rights, the ITAT held that the merger effectively took place in FY 2013-14, and the assets, including the patented technology's value accepted by the High Court, merged with the assessee company. The Assessing Officer erred by passing the assessment order on a standalone basis despite knowledge of the amalgamation. The tax authorities are bound to consider the assessee's state of affairs as on 01/04/2013, and the return filed reflecting the consolidated balance sheet should have been accepted. The value of the patent technology was accepted by the High Court and the Assessing Officer in the scrutiny proceedings for AY 2014-15. Therefore, the CIT.
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• Foreign Tax Credit allowed despite belated filing of Form No. 67 as per DTAA provisions.

  Case-Laws - AT : The assessee filed a belated Form No. 67 for claiming Foreign Tax Credit (FTC). The issue was whether the procedural requirement of filing Form No. 67 was directory or mandatory. The Tribunal held that since the provisions of the Double Taxation Avoidance Agreement (DTAA) override Section 90 of the Income Tax Act and are more beneficial to the assessee, and Rule 128(a) does not preclude claiming FTC in case of delay in filing Form No. 67 as FTC is a vested right, there was no justification for not allowing FTC. The Tribunal directed the Assessing Officer to allow FTC in accordance with the India-Thailand DTAA, as the assessee had filed Form No. 67 as evidence of foreign taxes paid. The assessee's appeal was allowed.
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• Tax Tribunal Invalidates 2008-09 Assessment; Exceeds 10-Year Limit, No Incriminating Evidence Found in Search.

  Case-Laws - AT : The Income Tax Appellate Tribunal held that the assessment order u/s 153A for the assessment year 2008-09 was invalid as it was beyond the period of limitation of ten years from the end of the relevant assessment year in which the search was conducted. The Tribunal observed that no incriminating material was found during the search, and initiating proceedings barred by law cannot be allowed. Furthermore, the Commissioner of Income Tax (Appeals) rightly deleted the addition made by the Assessing Officer on the grounds that the assessee was not involved in the wool business. The CIT(A) verified the documentary evidence and acknowledged that the investment in mutual funds was duly recorded in the audited financial statements and tax audit report. The Tribunal affirmed the CIT(A)'s findings that the assessee's business activity and operations were genuine for the year under consideration.
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• Tax authority's order u/s 263 quashed due to improper notice service & time limitation breach.

  Case-Laws - AT : The ITAT held that the order passed by the Commissioner of Income Tax (Appeals) [CIT(E)] u/s 263 of the Income Tax Act was quashed. The notice issued u/s 263 was not validly served on the assessee, either through registered post or email, before the hearing date. The notices were served only after the hearing date, violating the principles of natural justice. Additionally, the CIT(E)'s order was passed after the two-year limitation period prescribed u/s 263(2) had expired. Relying on the judgments of M L Chains and Tulsi Tracom (P) Ltd., the ITAT ruled in favor of the assessee, quashing the CIT(E)'s order due to invalid service of notice and the expiry of the limitation period.
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• Late filing fee u/s 234E cannot be levied for refiling of TDS return due to technical glitch on tax portal.

  Case-Laws - AT : The Tribunal held that late filing fee u/s 234E was not leviable on the assessee. The assessee had filed the relevant return within the due date on 22.10.2021, which was acknowledged by the Central Processing Centre. The subsequent filing on 26.07.2022 was due to a technical glitch on the department's portal to facilitate issuance of TDS certificates for clients. The Tribunal ruled that the return filed on 22.10.2021 cannot be ignored, and late filing fee cannot be levied on the return filed on 26.07.2022. Consequently, the late filing fee imposed was deleted, and the assessee's appeal was allowed.
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• Transfer Pricing Order Invalidated for Exceeding Time Limit; ITAT Enforces Strict Deadline Compliance.

  Case-Laws - AT : The Transfer Pricing Officer's order was held invalid as it was issued beyond the time limit prescribed u/s 92CA(3A) of the Act read with Section 153. The ITAT ruled that the limitation period prescribed u/s 92CA(3A) is mandatory, and the TPO has no authority to breach this statutory provision by passing an order after the expiry of the prescribed time, which is 60 days prior to the due date for completion of assessment u/s 153. The word 'may' used in Section 92CA(3A) should be construed as 'shall' to prevent the TPO from allowing more time to pass the transfer pricing order, thereby violating the time limit for completion of assessment by the Assessing Officer u/s 153 read with Section 92CA(3). Consequently, the Assessing Officer was not available with the extended period of limitation for passing the assessment order u/s 153(4). The case was decided in favor of the assessee.
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Customs

• Customs Clarifies MOOWR Units Can Use Concessional Duty and Deferment Benefits for Mobile Phone Manufacturing.

  Circulars : The Principal Commissioner of Customs clarified that a MOOWR (Manufacture and Other Operations in Warehouse Regulations) unit can avail the concessional duty benefit under IGCR (Imports of Goods at Concessional Rate of Duty) Rules, 2022 simultaneously with the duty deferment under MOOWR. The MOOWR unit must comply with additional conditions prescribed in the concessional notification and IGCR Rules, including time limits, in addition to MOOWR stipulations while supplying goods from its premises. The expression "for use in manufacture of cellular mobile phones" in certain notifications does not restrict the IGCR benefit only to the final manufacturer of cellular phones. Intermediate goods manufacturers operating under MOOWR and supplying value-added goods to the final cellular phone manufacturer are eligible for the concessional duty rate under IGCR Rules, 2022, subject to meeting all other conditions.
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• Customs eases IGCR-3 filing for importers until Jan 2025, online mandatory from Feb 2025.

  Circulars : The Commissioner of Customs, Chennai II (Import) issued a public notice stating that importers facing difficulties in electronically filing their IGCR-3 monthly statement can do so manually before jurisdictional officers until January 31, 2025. From February 2025 onwards, the monthly statement must be filed online. An excel utility will be provided by DG Systems, CBIC by December 15, 2024, for filing the IGCR-3/IGCR-3A statements electronically for present and past periods, to be completed by January 31, 2025. Difficulties can be brought to the notice of the Assistant Commissioner of Customs (Appraising Main), Import Commissionerate.
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• Streamlined drawback claim filing & scrutiny u/s 74 Customs Act '62.

  Circulars : The Public Notice streamlines the processing of drawback claims u/s 74 of the Customs Act, 1962. It prescribes a detailed procedure for filing and scrutiny of drawback claims, including mandatory documents required, deficiency memo process, acknowledgment process, and handling claims involving other customs locations. The aim is to standardize and expedite drawback claim processing while ensuring compliance with applicable rules and regulations.
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• Court Annuls Delayed Customs and Finance Proceedings Due to Prolonged Inaction; Stresses Timely Resolution Needed.

  Case-Laws - HC : The High Court quashed the show cause notices (SCNs) and any final orders passed in the pending adjudication proceedings initiated under the Customs Act, 1962, Finance Act, 1994. The court held that the inordinate delay by the respondents in concluding the adjudication proceedings for decades constituted a sufficient ground to annul those proceedings. Despite legislative provisions enabling the proper officers to seek extensions and conclude pending proceedings, the respondents failed to take proactive and effective steps to conclude proceedings initiated as far back as 2006. The court emphasized that matters involving financial liabilities or penal consequences cannot be kept pending for years, and the flexibility provided by the statute cannot be construed as sanctioning lethargy or indolence. The respondents were obligated to prove that it was impracticable to proceed or they were constrained by factors beyond their control. The practice of mechanically placing matters in the call book and retrieving them without proper application of mind was not acceptable.
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• Rejection of MEIS Application by JDGFT is Appealable; Court Orders Reconsideration and Hearing for Petitioner.

  Case-Laws - HC : The High Court held that the rejection letter issued by the Joint Director General of Foreign Trade (JDGFT) rejecting the petitioner's application for grant of Merchandise Exports from India Scheme (MEIS) scrip is appealable u/s 15 of the Foreign Trade (Development and Regulation) Act, 1992. The authority processing the application u/s 9 would be treated as an adjudicating authority for the limited purpose of Section 15, even if not formally designated as such. Consequently, the appeal filed by the petitioner against the rejection letter was maintainable. The High Court quashed the orders rejecting the appeal as non-admissible and the rejection letter, and remanded the matter to the JDGFT for fresh consideration after providing an opportunity of hearing to the petitioner and passing a speaking order.
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• Revoking Port NOC Quashed Over Lack of Due Process.

  Case-Laws - HC : The High Court set aside the impugned order/communication dated 16 January 2024, revoking the No Objection Certificate (NOC) to operate from all ports and for trade license to facilitate handling hazardous waste oil discharge, garbage, and scrap at JSW Jaigad Port. The revocation order suffered from violation of principles of natural justice as no show cause notice was issued, no opportunity of hearing was granted, and the order lacked reasons, merely stating violation of Customs Act, 1962 and Rules without specifying the alleged violations committed by the petitioner. Consequently, the petition was allowed.
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• Seizure Order Quashed for Violating Customs and Foreign Trade Acts; Petitioners Not Required to Exhaust Other Remedies.

  Case-Laws - HC : The High Court quashed the seizure order dated 14.08.2020, holding that it violated Sections 7, 11, 46 and 47 of the Customs Act, 1962 and Section 3(2) of the Foreign Trade (Development and Regulation) Act, 1992. The second petitioner had locus standi to challenge the seizure memo along with the first petitioner. The petitioners were not required to exhaust the alternative remedy u/s 128 of the Customs Act, as the seizure memo did not comply with Section 110 by not providing reasons. The contents of the Panchnama could not be read into the seizure memo as per the Notification dated 08.02.2017. The seizing officer failed to disclose minimal reasons in the seizure memo as required u/s 110(1A), (1B), (1C) of the Customs Act. The impugned seizure memo was unsustainable and deserved to be quashed.
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• Imported "Quick Lime" falls under mineral products, not inorganic chemicals as per Customs Tariff.

  Case-Laws - AT : The imported goods "Quick Lime" would be properly classifiable under Customs Tariff Item 25221000 and not under Customs Tariff Item 28259090 of the Customs Tariff Act. Quicklime falls under the scope of Chapter 25 covering mineral products like lime and cement, and not under Chapter 28 covering inorganic chemicals. Calcium oxide and hydroxide under heading 2825 are excluded from the scope of heading 2522 covering quicklime, slaked lime, and hydraulic lime. The Revenue's argument for classifying quicklime under heading 2825 as it occurs last is not legally sustainable. There is no case for applying Rule 3 of General Interpretative Rules. The impugned Order-in-Appeal is set aside, and the appeal is allowed.
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• Denial of Cross-Examination Opportunity Violates Natural Justice, Case Remanded.

  Case-Laws - AT : The Tribunal held that the original adjudicating authority had erred in denying the opportunity of cross-examination to the respondent during the adjudication proceedings, thereby violating the principles of natural justice. Consequently, the matter was remanded back to the original authority to reconsider the case after allowing the cross-examination of the Director of M/s Auspicious Ornaments. The Tribunal found no error in the direction given by the first appellate authority for remanding the matter, and hence, the appeal filed by the revenue was dismissed.
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DGFT

• DGFT Import Permit Process for Laptops, Tablets, Servers in 2025.

  Circulars : The Directorate General of Foreign Trade issued a policy circular outlining the procedure for implementing the Import Management System for restricted IT hardware imports (laptops, tablets, all-in-one PCs, ultra-small form factor computers, and servers under HSN 8471) for the calendar year 2025. Importers must apply for import authorization on the DGFT website from December 13, 2024, to December 15, 2025. Authorizations issued will be valid until December 31, 2025, and importers can submit multiple applications. Requests for amendments during the authorization's validity can be submitted on the DGFT website. The circular was issued with the approval of the competent authority.
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Corporate Law

• Minority shareholders' oppression claim rejected, but ordered buyout of shares at fair value.

  Case-Laws - Tri : The Company Tribunal held that Respondent No. 1 company is not a quasi-partnership due to lack of equality in shareholding since 1997 and failure to establish grounds for winding up. The alleged family settlement of 1986 was not proved. The rights issue reducing petitioners' shareholding from 15% to 7.5% was not challenged earlier, hence cannot be grounds for oppression now. Non-payment of gratuity to Petitioner No. 1 and non-appointment of Petitioner No. 2 as director cannot constitute oppression. The petition was partly allowed, directing Respondents No. 1 to 5 to buy out petitioners' shares at fair value determined by an independent valuer.
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IBC

• NCLAT Upholds Order for Lenders to Release NFB Facilities per Approved Resolution Plan, Ensuring Business Continuity.

  Case-Laws - AT : The National Company Law Appellate Tribunal (NCLAT) dismissed the appeals filed against the order of the Adjudicating Authority directing lenders to release Non-Fund Based (NFB) facilities as per the approved Resolution Plan. The NCLAT held that when a Resolution Plan is approved, it is obligatory for all stakeholders to act in a manner to implement it. Except Bank of Baroda, no other lender had issued bank guarantees or letters of credit, despite the Resolution Plan providing for roll-over of NFB facilities. The company, being an EPC contractor, requires NFB facilities to undertake contracts and generate revenue for repayment obligations under the Resolution Plan. Non-release of NFB limits would jeopardize the company's operations and impact repayment to assenting creditors. The NFB Agreement must be interpreted harmoniously with the Resolution Plan to give effect to its intent and not render its clauses unworkable.
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PMLA

• Court Grants Bail in Money Laundering Case; Stresses Joint Trial Requirement Without Charge Sheet Filed Yet.

  Case-Laws - HC : The High Court granted bail to the applicant Padam Singhee in a money laundering case under the Prevention of Money Laundering Act (PMLA). The applicant was accused of siphoning off loans by indulging in criminal conspiracy and generating proceeds of crime. Although the applicant had been granted bail in the predicate offence, no charge sheet had been submitted in that case regarding the present issue related to Punjab National Bank. The court held that the PMLA case and the predicate offence must be tried together by the same court, which was not possible at present since the predicate offence was yet to see its charge sheet. Adhering to the principle of "bail is the rule, and jail is an exception," the court granted bail to the applicant, who had been in custody since February 7, 2024, subject to furnishing a personal bond and two sureties to the satisfaction of the concerned court and fulfilling conditions imposed in the interest of justice.
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• High Court Grants Bail in Money Laundering Case, Emphasizes Due Process and Rights Against Prolonged Pre-Trial Detention.

  Case-Laws - HC : The petitioner was granted bail by the High Court in a money laundering case under the Prevention of Money Laundering Act (PMLA). The court held that the Enforcement Directorate (ED) must establish foundational facts, after which the burden shifts to the accused to rebut the presumption u/s 24 of the PMLA. Statements recorded u/s 50 of the PMLA while the accused was in custody are inadmissible against the maker and can only provide corroboration. The alleged cash payment of Rs. 1.50 crores to the petitioner was not substantiated. The court observed that prolonged incarceration before being pronounced guilty violates Article 21 of the Constitution, and constitutional courts must lean towards constitutionalism and rule of law. Considering the circumstances, the petitioner was granted bail upon furnishing a bond of Rs. 10,00,000/- with stringent conditions.
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SEBI

• Simplified norms for issuing & listing ESG debt securities in India. Green light for corporate sustainability bonds.

  Notifications : The Securities and Exchange Board of India (SEBI) has amended the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021. The key amendments are: introducing the definition of "Environment, Social and Governance Debt Securities" or "ESG Debt Securities"; allowing issuance and listing of ESG Debt Securities subject to conditions specified by SEBI; omitting regulation 26; modifying disclosure requirements related to debenture trustees in the offer document; and making other consequential changes.
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• Bank told to appeal SEBI order at SAT instead of challenging regulator's private legal views via writ petition.

  Case-Laws - HC : The High Court held that the petitioner bank should avail the alternate remedy of appeal u/s 15-T of the SEBI Act against SEBI's order dated January 11, 2023, instead of challenging SEBI's private communications expressing opinion on a legal provision through a writ petition. The Court granted liberty to the petitioner to file an appeal before the Securities Appellate Tribunal (SAT) within four weeks, and directed the SAT to dispose of the appeal on merits without considering the limitation issue. All contentions of parties on merits were left open to be decided by the SAT.
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Service Tax

• Leasing of scaffolding items attracts VAT, not service tax, rules tribunal.

  Case-Laws - AT : The CESTAT ruled that the leasing of "Scaffolding items" by the Appellant, on which VAT had been paid as a deemed sale within the meaning of Article 366(29A)(d) of the Constitution of India, did not attract service tax liability. The Tribunal held that there was a transfer of the right to use, possession, and effective control over the scaffolding items in favor of the lessees. Consequently, the transaction qualified as a deemed sale liable for VAT, and not a service subject to service tax. The Tribunal set aside the impugned order, allowing the appeal.
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• Tribunal Rules Director Commissions Exempt from Service Tax Under Reverse Charge Mechanism.

  Case-Laws - AT : CESTAT held that the commission paid by the appellant company to its Managing Director and Executive Director in addition to their salary is not liable to service tax under the reverse charge mechanism as per Sr. No. 5A of Notification No. 30/2012-ST dated 20.06.2012 as amended by Notification No. 45/2012 dated 07.08.2012. The Tribunal relied on its earlier decision in the appellant's own case, where it was held that the commission paid to Directors by the Company does not fall under the service of Business Auxiliary Service and is accordingly not liable to service tax. Considering the Tribunal's previous orders and decisions cited by the appellant's counsel, the issue stands decided in favor of the assessee, and the impugned order was set aside.
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• Machinery installation for job work not 'supply of tangible goods for use service', says CESTAT.

  Case-Laws - AT : The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dismissed the Revenue's appeal. It held that the transaction between the parties constituted a job work arrangement, not a 'supply of tangible goods for use service'. The respondent installed machinery at the client's factory premises to carry out production activities using their own machines. No lease rent or consideration was charged for the 'supply of tangible goods for use'. The charges collected were for the production process on a job work basis, as evident from the invoices. Therefore, the demand of service tax under the 'supply of tangible goods for use service' was incorrect.
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• Overseas digital services taxed; penalties waived for lack of intent.

  Case-Laws - AT : The appellant received services classifiable as online information and database access or retrieval (OIDAR) services from outside India. As the recipient of such services, the appellant was held liable to pay service tax u/ss 66A and 68 of the Finance Act, 1994, read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, for the period from October 1, 2006, to March 2008, along with interest u/s 75 of the Act. The demand for service tax and interest was upheld. However, the penalties imposed u/ss 76 and 77 of the Act were set aside, as there was no suppression of facts, and the demand arose due to interpretation of legal provisions. The appeals were partially allowed to the extent of setting aside the penalties.
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• Appellants eligible for pre-GST Cenvat credit refund despite payment under earlier tax regime.

  Case-Laws - AT : The appellants were held eligible for refund of Cenvat credit u/s 142(3) of the CGST Act, 2017. The Tribunal ruled that Section 142(8)(a) was wrongly invoked to reject the refund claim, as it pertains only to input tax credit and not Cenvat credit for the pre-GST period. Payment u/s 73(3) of the Finance Act, 1994 did not impact admissibility of the Cenvat credit. Rule 9(1)(bb) of the Cenvat Credit Rules, 2004 was inapplicable in this reverse charge scenario without any show cause notice or adjudication order. Consequently, the impugned order was set aside, and the appeal was allowed.
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Case Laws:

• GST

• 2024 (12) TMI 662
  Locus standi to file application for Advance Ruling application - applicant is a recipient of services - Seeking ruling on payment of upfront lease premium - exempt from GST or not - rejection on the ground that the appellants have no locus standi to file such an application - HELD THAT:- It is informed by respondents that pursuant to the order impugned, the Advance Ruling Authority has already passed an order and the said order is under challenge before the Appellate Authority of Advance Ruling. In view of the same, the issue arising for consideration in the Special Leave Petition(s) has become infructuous and the same is/are dismissed accordingly.

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• 2024 (12) TMI 661
  Maintainability of petition - availability of alternative remedy - requirement of pre-deposit for appeal - HELD THAT:- The circumstance that a pre-deposit must be made cannot, at least in the facts of this case, be regarded as a factor that dilutes the efficaciousness of the alternate remedy provided by the statute. Secondly, the alleged non-consideration of some of the documents cannot, at least to depart from the practice of exhaustion of alternate remedies, be considered a complete breach of the principles of natural justice. This is not a case of no notice or no opportunity, but, at the highest, the allegation is about no adequate opportunity . These are matters which the Appellate Authority best examines. For the above reasons and by keeping all parties contentions open, including the petitioner s contention about failure to consider the documents or failure of natural justice open, it is declined to entertain these petitions but relegate the petitioners to avail of the alternate remedy of appeal. Petition disposed off.

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• 2024 (12) TMI 660
  Maintainability of petition - non-availability of alternate and efficacious remedies - Violation of principles of natural justice - HELD THAT:- Admittedly, such documents were neither referred to in the show cause notice nor were the copies of these documents ever furnished to the petitioner. The petitioner came to know of these documents or, rather, came to know that such documents were being used against him only after the receipt of the impugned order. Since the documents form a substantial basis of the impugned order as stated in the impugned order itself, the petitioner should have been furnished copies or at least made aware in the show cause notice that such documents were proposed to be used against the petitioner. Since this was not done, the petitioner that there has been a failure of natural justice. Only on account of the failure of natural justice and without adverting to the merits, the impugned order dated 30 April 2024 is set aside, and the the matter remanded for fresh decision following law. However, the respondents must furnish the documents at Sr.No.1, 2 and 3 referred to in the references in the impugned order and any other material they may seek to rely upon or use against the petitioner - petition disposed off by way of remand.

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• 2024 (12) TMI 659
  Maintainability of petition - availability of alternative remedy - non-compliance with principles of natural justice - HELD THAT:- Prima facie, this does not appear to be a case of no notice/no hearing but, at the highest, a case of no adequate hearing. Besides, in this case, though Roznama reflects the signatures of the petitioner s representative, this Roznama was not enclosed with the Petition. Before grounds of failure of natural justice are raised, the petitioner must apply for and obtain the Roznama so that there is no variation between the averments in the petition and the contents of the Roznama - matters referred only to point out that this is not a fit case for departing from the practice of exhaustion of alternate remedies. This petition is dismissed but by granting the petitioner liberty.

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• 2024 (12) TMI 658
  Maintainability of petition - availability of alternative remedy - violation of principles of natural justice - delay in filing petition - HELD THAT:- Against the impugned order, the Petitioner has an alternate remedy of an appeal. However, Mr. Rastogi submits that since there is a violation of principles of natural justice, this Court should entertain the petition rather than relegate the Petitioner to the alternate remedy. This petition was filed almost a year after the impugned orders were made, i.e. much after the statutory period of appeal provided had expired. There is no explanation why this petition was not filed earlier, i.e. within the limitation period prescribed for instituting an appeal. While there can be no limitation for filing a petition under Article 226 of the Constitution of India, such petitions must be instituted within a reasonable period. In any case, the delay is to be explained. Here, there is no explanation for the delay. Thus, no case is made out in this matter to depart from the usual rule of exhaustion of alternate remedies - petition dismissed.

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• 2024 (12) TMI 657
  Seeking grant of anticipatory bail - Allegations of economic offenses against accused Nos. 1 and 2 - misuse of credentials leading to misappropriation of funds - HELD THAT:- The petitioner who is the complainant is seeking cancellation of the bail mainly on the ground that the allegations made against accused Nos. 1 and 2 are very grave. They are guilty of misappropriation of more that Rs.7 crores and the said amount is utilized by the accused persons to purchase properties in the names of their family members and relatives - It is true that accused Nos. 1 and 2 are alleged to have misused the credentials of complainant and others and withdrawn various sums from their accounts and instead of paying the same towards the dues of Income Tax, GST and other statutory authorities, have misappropriated the same. The offences alleged against the accused are punishable under Section 406 and 420 of IPC. In the present case, the charges levelled against the accused cannot be categorized as heinous offences, even through the stakes involved are very heavy. Already with the arrest of accused No. 1 in O.R. No. 17/2024-25, the concerned authorities have investigated the matter. Even where the accused indulged in tampering with the records online, it could be ascertained and it would be to their peril. By so doing they would be again involve themselves in further offences. Despite the fact that the accused persons are guilty of siphoning of money from the account of the complainant and other clients, the present complaint is for taking criminal action against accused Nos. 1 and 2. It is not a recovery proceeding. When the trial court is convinced that the presence of accused Nos. 1 and 2 could be secured by imposing stringent conditions and granted bail, this court is of the considered opinion that there are no justifiable grounds to cancel the anticipatory bail granted to them. Both the petitions filed by the petitioner under Section 439 (2) r/w Section 482 of Cr.P.C. are rejected.

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• 2024 (12) TMI 656
  Challenge to SCN and summary of SCN issued by the respondent u/s 74 of the Central Goods and Services Tax Act, 2017, for several financial years - case of the petitioner is that the respondent could not have issued one single notice for the entire period between January-2018 and August-2022 - Whether the respondent can issue one show cause notice for several financial years? - HELD THAT:- The Co-ordinate Bench of this Court, while examining the similar situation in M/S. VEREMAX TECHNOLOGIE SERVICES LIMITED VERSUS THE ASSISTANT COMMISSIONER OF CENTRAL TAX BENGALURU. [ 2024 (9) TMI 1347 - KARNATAKA HIGH COURT] has held This Court has reviewed the judgment of the Madras High Court and the scope of inquiry under Section 73 of the CGST Act. Based on the established legal principles and the precedent set by the Hon ble Apex Court, this Court finds that the respondent erred in issuing a consolidated show cause notice for multiple assessment years, spanning from 2017-18 to 2020-21. Though in the summary of the show cause notice there is segregation of the liability in respect of each financial year, in the light of the judgment of the Coordinate Bench of this Court and for the reasons stated above, it does not come to the rescue of the respondent. Thus, it is appropriate to set aside the impugned show cause notices, reserving the liberty to the respondent to issue appropriate show cause notices for each financial year and proceed against the petitioner. The show cause notice issued by the respondent (vide Annexure-A) to the writ petition is hereby set aside - the summary of the SCN issued by the respondent (vide Annexure-B) to the writ petition is hereby set aside - Petition disposed off.

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• 2024 (12) TMI 655
  Cancellation of registration of petitioner - non filing of the GST return for a continuous period of six months - petitioner contends that now the petitioner is ready to make the payment towards GST return for a period of six months as well as the penalty, interest and late fee, if any, imposed by the respondent-department - HELD THAT:- The matter is covered by the order passed in WPMS No.2285 of 2024, the present writ petition is also decided in terms of the said order. The petitioner shall be at liberty to move an application for revocation or cancellation of the order under Section 30(2) of the CGST Act, 2017, within two weeks. The writ petition is disposed of.

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• 2024 (12) TMI 654
  Maintainability of petition - requirement of pre-deposit - Challenge to order passed by Joint Commissioner Appeal under Chhattisgarh Goods and Service Tax Act, 2017 - HELD THAT:- The Hon ble Patna High Court in case of M/s Cohesive Infrastructure Developers Pvt. Ltd. [ 2023 (11) TMI 247 - PATNA HIGH COURT ] disposed of the identical cases holding that he statutory relief of stay, on deposit of the statutory amount, however in the opinion of this Court, cannot be open ended. For balancing the equities, therefore, the Court is of the opinion that since order is being passed due to non-constitution of the Tribunal by the respondent-Authorities, the petitioner would be required to present/file his appeal under Section 112 of the B.G.S.T. Act, once the Tribunal is constituted and made functional and the President or the State President may enter office. The appeal would be required to be filed observing the statutory requirements after coming into existence of the Tribunal, for facilitating consideration of the appeal. This writ petition is disposed of with a direction that the petitioner/appellant shall deposit 20% amount claimed in demand notice and shall file the appeal before the appellate tribunal within 30 days from today and as soon as the president or state president enters office of the Goods and Service Tax Appellate Tribunal constituted under the Act of 2017, the appeal that may be decided in accordance with law on its own merits. Petition disposed off.

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• Income Tax

• 2024 (12) TMI 653
  Legality of the Settlement Commission s order - Accrual of interest income - interest accrued as due on Government securities and debentures held by petitioner - as decided by HC [ 2023 (7) TMI 135 - BOMBAY HIGH COURT] would agree with the CIT (D/R) s view. Income having accrued and corresponding expenditure having been reckoned on mercantile lasts, the interest income shall be taxed on accrual basis for both the years under consideration. As Commission has not articulated as to why it did not agree with the submissions made by the assessee s representative, we direct that the matter be sent to the Interim Board for Settlement constituted for the settlement of pending applications as contemplated under Section 245 AA of the Act. The Interim Board may pass such orders as it deems fit in accordance with law after hearing the parties. HELD THAT:- We do not find any merit in the present special leave petition and, hence, the same is dismissed. Pending application(s), if any, shall stand disposed of.

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• 2024 (12) TMI 652
  Reopening of assessment - reason to believe - receipt by the petitioner from the DSNE CGHS - HELD THAT:- We had in ATS Infrastructure Limited [ 2024 (7) TMI 1441 - DELHI HIGH COURT] held that the formation opinion under Section 147 and the reasons which are taken into consideration for initiating action of reassessment cannot waiver or be one of changing hues. A reassessment action would have been permissible, provided it were established that the petitioner had failed to make a full and true disclosure of all material facts. Obviously, and once it is conceded by the respondents themselves that the petitioner had not directly received any remittances from the DSNE CGHS, there would have been no occasion for the petitioner to have made a disclosure in its Return of Income. Accordingly, and for all the aforesaid reasons, we find ourselves unable to sustain the invocation of Section 148. Writ petition is, accordingly, allowed. The impugned notice under Section 148 is hereby quashed. We, however, leave it open to the respondents to initiate proceedings afresh, if otherwise permissible in law.

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• 2024 (12) TMI 651
  Adjustment of outstanding demand against refund payable - as contended on behalf of the petitioner that the petitioner was granted stay of recovery of the demand for the AY 2015-16, subject to the payment of 20% of the outstanding tax demand - HELD THAT:- As not disputed that in terms of the instructions issued by the CBDT, in the given cases, the stay is required to be granted to the Assessee in respect of the disputed demands on the condition that the Assessee deposits an amount equal to 20% of the outstanding tax demand. In the given circumstances, the effect of the Revenue adjusting refunds against the stayed demand would essentially place the Assessee that is entitled to a refund in a disadvantageous position vis-a-vis those assesses to whom no refund is due. It is also material to note that there is no allegation that the petitioner is alienating its assets so as to frustrate the recovery of any demand or that it would be unable to pay the disputed demand in the event the same was confirmed in the appellate proceedings. In the given facts, we find merit in the contention that the Revenue s decision to adjust the refund due to the petitioner for the AYs 2008-09 and 2017-18, is arbitrary. See Eko India Financial Services (P.) Ltd. [ 2021 (8) TMI 261 - DELHI HIGH COURT] We consider it apposite to direct the Revenue to refund the amount due to the petitioner with applicable interest, in respect of the AYs 2008-09 and 2017-2018, as expeditiously as possible, and preferably within a period of eight weeks from date.

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• 2024 (12) TMI 650
  Disallowance u/s 14A read with Rule 8D - expenses incurred towards earning the exempt income - HELD THAT:- Neither the AO nor any of the appellate authorities CIT(A) or ITAT had found that the Assessee s computation of expenditure, which was allocable to earning exempt income, was erroneous or inadequate. None of the authorities had determined that the Assessee s computation of expenditure attributable to the exempt income was erroneous or had faulted the same. In the aforesaid circumstances, it was not permissible for the AO to proceed to compute disallowance under Rule 8D of the Rules. It is well settled that recourse to Rule 8D of the Rules for computing the disallowance under Section 14A of the Act is available only if the Assessee s computation of expenses attributable to earning exempt income, is found to be inadequate. In the present case, it is clear that the AO had not found fault with the Assessee s computation of expenditure allocable to exempt income and, therefore, recourse to Rule 8D of the Rules for determining the expenditure incurred for earning exempt income, was not available. It is also relevant to highlight that the learned CIT(A) had also noted that the AO had not found the Assessee s computation expenditure for earning exempt income as inadequate. Decided in favour of assessee.

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• 2024 (12) TMI 649
  Assessment u/s 147 - Applicability of the time limitation u/s 149(1) of the Act for issuing notice u/s 148 - HELD THAT:- The impugned notice has been issued beyond the period as stipulated u/s 149 (1) of the Act. However, it is the Revenue s case that the impugned notices were within the prescribed time period by virtue of the non-obstante clause u/s 150 of the Act. The said contention is premised on the assumption that the decision of this Court, dismissing the Revenue s appeal against an order passed by the learned ITAT [ 2023 (4) TMI 693 - ITAT DELHI] , is to be construed as containing findings and directions for commencing proceedings u/s 147 of the Act. The Revenue relies on the decision of Abhisar Buildwell Private Limited. [ 2023 (4) TMI 1056 - SUPREME COURT] in support of this assumption. It is material to note that in Abhisar Buildwell Private Limited [ 2023 (4) TMI 1056 - SUPREME COURT] the Hon ble Supreme Court had upheld the decisions of this Court in Commissioner of Income Tax v. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and the decision of Saumya Construction P. Ltd. [ 2016 (7) TMI 911 - GUJARAT HIGH COURT] whereby it was held that the proceedings under Section 153A of the Act could be initiated only if incriminating material had been found during the search proceedings. However, the Hon ble Supreme Court had also noted that in cases where the said proceedings could not be initiated, the Revenue was not remediless and could take recourse to Sections 147 and 148 of the Act. It is apparent from the above that the said observations cannot be read as permitting reopening of assessments, even in cases where necessary conditions for invoking Sections 147 and 148 of the Act are not satisfied. The said decision also does not permit reopening of assessments beyond the period as stipulated under Section 149(1) of the Act. We are unable to accept that the decision of this court in ITA No. 807/2023 [ 2024 (1) TMI 161 - DELHI HIGH COURT] dismissing the Revenue s appeal] can be read as findings and directions within the meaning of Section 150, to permit the Revenue to issue notices u/s 148 of the Act, beyond the period as stipulated u/s 149(1) of the Act. The contention that the time period, within which a notice can be issued u/s 148 of the Act as stipulated u/s 149(1) of the Act, is not applicable in the facts of the case, is unmerited.

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• 2024 (12) TMI 648
  Depreciation on solar plant - date of putting the solar plant to use - whether the generation of electricity had started on 20.03.2013 i.e., in the financial year 2012-13 or it only started on 20.04.2013 when synchronization took place with the grid, in the financial year 2013-14? - HELD THAT:- When the Assessee bona fide installs any machinery and to his misfortune, it becomes defective and non-functional, it cannot be said that it is not put into use for the purpose of business. See Sri. Chamundeshwari Sugar Ltd. [ 2008 (10) TMI 98 - KARNATAKA HIGH COURT ] Thus, in view of the finding of fact that the respondent-Assessee has started generating power right from 20.03.2013 which is in the financial year 2012-13, we are of the view that the appeal filed by the appellant- Revenue on the above substantial questions of law is without merit and the appeal, as such, is dismissed against the Revenue and in favour of the Assessee.

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• 2024 (12) TMI 647
  Condonation of delay in filing ITR - as submitted delay occurred because of COVID-19 pandemic situation, the petitioner was quarantine at his Noida residence for Covid related infections which caused general hardship to the petitioner - delay caused due to genuine hardship or willful and deliberate intention HELD THAT:- Where statute provides for the provisions for condonation of delay by an appropriate authority upon due consideration of the relevant facts and circumstances, then any subordinate authority under the authority prescribed before whom such an application is filed is required to redirect the assessee to the authority prescribed under the Act who has been bestowed with the power of condonation of any delay upon due consideration of the facts and the materials. The authority which rejected the application filed by the petitioner was required to refer the matter to the CBDT as the power for consideration of condonation of delay was bestowed only on the CBDT under the statute and not on any other authority. n the facts and circumstances of the case, this Court is persuaded to accept the view rendered by the Telengana High Court [ 2023 (4) TMI 955 - TELANGANA HIGH COURT] and the Orissa High Court [ 2024 (4) TMI 1209 - ORISSA HIGH COURT] and is therefore of the considered view that the hardship on medical grounds which are urged before this Court cannot be disregarded without a proper finding on that issue by the authority concerned. Prima facie it appears to the Court that the hardship suffered by the petitioner was for reasons beyond its control and for the medical conditions mentioned as the same occurred during the COVID 19 pandemic situation. Considering the submissions made by the petitioner and the averments made in the writ petition and the Judgments referred by the petitioner, this Court is of the view that the writ petition can be disposed of with a direction to the CBDT authorities to consider the claim of the petitioner for condonation of the delay on the ground of hardship and thereafter pass appropriate orders. CIT is directed to place the necessary records of the application filed by the petitioner before the CBDT and which in turn will pass necessary order thereon, as per the directions above.

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• 2024 (12) TMI 646
  TP Adjustment - MAM selection - ITAT assailing that the Tribunal has erred in upholding the CUP method followed by the assessee, and submits that the TNMM was the most appropriate method adopted by the AO for the assessment year 2018-19 - HELD THAT:- We find that the Tribunal, in the case of the assessee for the assessment years 2011-12, 2013-14 and 2014-15, held the CUP method to be the most appropriate method, and binding on the TPO, more so as the factual matrix reveals the same. In relation to the same assessee, we have decided in [ 2024 (8) TMI 1497 - PUNJAB AND HARYANA HIGH COURT] wherein we had duly examined the other aspects, relating to Rule 10 B (4) of the Income Tax Rules, 1962. However, so far as the most appropriate method adopted for the year 2009-10 in the relevant case, was the same as adopted for the year 2011-12, 2013-14 and 2014-15 and we concurred with the order passed by the ITAT. Keeping in view that the consistent method has to be followed by the assessee which it has continued, there was no occasion for the TPO to adopt a new method for the year 2018-19, treating the same as the most appropriate method. We concur the order passed by the ITAT. No question of law as substantial, arises in the present appeal.

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• 2024 (12) TMI 645
  TP Adjustment - Tribunal proceeded to recompute the net profit margin earned from unrelated transaction in non-AE segment - By the time the appeal came to be taken up by the Tribunal, it represented the second round of litigation since in the first round of proceedings before it, the appeal was disposed of and the matter remanded back to the TPO - HELD THAT:- Tribunal has taken into consideration the undisputed fact that by the time this appeal came to be taken up for consideration, the Department had taken a consistent view in AY 2007-08 to 2011- 12 insofar as comparables and controlled transactions were concerned. Tribunal noted that the TPO had proceeded far beyond the directions of remit which had been framed and undertaken an exercise to recompute the net profit margin. This becomes evident from a reading of paragraph 13, which is reproduced hereinbelow: 13. It has been observed that Ld. AO, instead of restricting himself to the directions of this Tribunal proceeded to recompute the net profit margin earned from unrelated transaction in non-AE segment, by substituting the actual cost of employee expense and cost of outsourced work in the unrelated party segments at the same level as that in the related party segment. No ground to entertain this appeal. No substantial question of law arises. The appeal, consequently, stands dismissed.

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• 2024 (12) TMI 644
  Adjustment u/s 92CA(3) - nature of Guarantee / Standby Letter of Credit, issued by Standard Chartered Bank, New Delhi and treating it as an International Transaction - CIT(A) upholding the average rate of 2.22% of nine banks, for making adjustment u/s 92CA(3) as against suo-moto adjusted by the assessee, based on actual cost incurred by the assessee - HELD THAT:- Assessee Company has given corporate guarantee for its subsidiary TEK Travel DMCC, wherein made voluntary adjustment of 0.94%. The said voluntary adjustment was in respect of actual amount paid to Standard Charter Bank for bank guarantee of Rs. 5,78,720/-. Standard Charter SLBC charge per year of 1.2% has been adjusted by the Assessee for the shorter period of nine months to 0.94%. A.O. was of the opinion that the average corporate guarantee rate at Arm s Length Price at 2.22%, thus, the difference between the actual bank guarantee cost written back at the rate of 1.2% at Rs. 5,78,720/- and computed the amount at 2.22% of Rs. 10,27,804/-, accordingly made addition of Rs. 4,49,084/-. Considering the fact that the Assessee has made voluntary adjustment of 0.94% which is claimed be made based on the actual cost incurred by the Assessee, without going into the issue raised in Ground No. 1 and 3, considering the smallness of the amount, with an intention to put an end litigation, we delete the addition made by the A.O. which has confirmed by the Ld. CIT(A) by allowing Ground of the Assessee.

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• 2024 (12) TMI 643
  Revision u/s 263 - disallowance u/s 40A (3) and addition on account of unexplained cash credit u/s 68 - HELD THAT:- Merely non mentioning the annexure and not asking the details merely itself does not hold the order prejudicial or erroneous. This could have been held so if the ld. PCIT by placing on record the relevant material based on which she is making the statement, without doing so the assessment order otherwise only not refer those annexure does not hold liable to be revision as per provision of section 263 of the Act. When the assessee in his submission has dealt with the jurisdiction aspect that has been not been dealt by the revenue in her order not at the time of hearing of the appeal we do not find any reason that the order of the ld. AO is erroneous or prejudicial to the interest of the revenue. The provision of section 263 as given in the law and the explanation 2 to that has not been invoked by the ld. PCIT to substantiate her view We also take note of the fact nowhere in the order she invoked the explanation (2) of provision of section 263 of the Act thereby she was not sure as to whether the order falls any of the criteria given vide explanation 2 of the provision of section 263 of the Act. Thus, we do not agree with the view of the ld. PCIT that without establishing that how the order is erroneous or prejudicial the law does not permit such action.

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• 2024 (12) TMI 642
  Addition of share capital/share premium u/s 68 - unexplained cash credit - no compliance to summons issued u/s 131 - HELD THAT:- All the subscribers have filed their replies before the AO confirming the investments along with source of fund with copies of ledger accounts, bank statements, ITRs and audited statement of accounts etc. However both the authorities below have failed to carry out any investigation and enquiry on the documents furnished by the assessee as well as by the subscribers and merely harped on the fact that compliance to the summons were not made. Addition cannot be made merely on the basis of the fact that there was no compliance to summons issued u/s 131 to the assessee as well as subscribers when all the corroborating evidences are furnished before the authorities. We find support from the following decisions of Orissa Corporation Pvt. Ltd. [ 1986 (3) TMI 3 - SUPREME COURT] , Orchid Industries Ltd. [ 2017 (7) TMI 613 - BOMBAY HIGH COURT] , Crystal Networks Pvt. Ltd. [ 2010 (7) TMI 841 - KOLKATA HIGH COURT] , M/s. Cygnus Developers India Pvt. Ltd .[ 2016 (3) TMI 1073 - ITAT KOLKATA] - Thus, direct the AO to delete the addition. Addition u/s 14A read with Rule 8D(2)(iii) - HELD THAT:- We note that during the year the assessee has earned dividend income only Rs. 1540/-. Therefore, disallowance in the instant case cannot be exceeded the exempt income. In view of the decision of Joint Investments Pvt. Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] We are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. The ground is allowed.

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• 2024 (12) TMI 641
  Revision u/s 263 - depreciation claim on intangible assets - HELD THAT:- We find that the assessee complied with the scrutiny assessment proceedings conducted by the Ld. AO, furnishing all supporting documents related to investments in asset additions. The value of the intangible assets and the corresponding investments was duly verified during the assessment proceedings and accepted within the scope of the limited scrutiny framework. Following a comprehensive verification process, the Ld. AO did not find it necessary to expand the scope of the scrutiny assessment from limited to full-fledged scrutiny. It is well established that the jurisdiction of the Ld. PCIT is also confined to the boundaries set by the assessment order. As decided in Mind Sports League Pvt Ltd [ 2023 (11) TMI 1319 - ITAT KOLKATA] PCIT cannot invoke Section 263 to re-examine issues already considered by the Ld. AO during the course of scrutiny assessment. No new issues can be introduced for examination under Section 263. Furthermore, we note that the issue addressed by the Ld. PCIT pertaining to depreciation on intangible assets is squarely covered by the decision of the Hon ble Supreme Court in Smif Securities Limited [ 2012 (8) TMI 713 - SUPREME COURT] as upheld the eligibility of the claimed depreciation. In the present case, the Ld. DR could not provide any contrary precedent or substantive argument against the submissions of the Ld. AR. In our considered view, for a revision under Section 263 to stand, the Ld. PCIT must satisfy two conditions: (i) the assessment order sought to be revised is erroneous, and (ii) it is prejudicial to the interest of the Revenue. In the impugned revisional order, neither of these conditions has been fulfilled. Accordingly, the revisional order passed under Section 263 is set aside and quashed. Assessee appeal allowed.

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• 2024 (12) TMI 640
  Addition made of business income - HELD THAT:- The entire facts of assessee s case under consideration are identical with facts of the other assessment years and there is no change in the modus operation of the business of the assessee. Therefore, respectfully following decisions in subsequent Assessment Year in assessee s own case for A.Yrs. 2008-09, 2009-10 and 2012-13 [ 2019 (1) TMI 1953 - ITAT AHMEDABAD ] entire addition made by the AO on account of business income is deleted. Thus the Ground no.1 raised by Revenue is devoid of merits and liable to be dismissed. Addition of Short Term Capital Gain on account of transfer of shares - assessee objected on addition on the ground that estimated sale value of project as determined by the AO is incorrect, hence such value cannot be considered - HELD THAT:- The entire addition made by the AO was only on presumption which is not sustainable in law and cannot be sustained without bringing on record evidences suggesting actual receipt of consideration over and above face value of shares. Considering the detailed discussion made by the CIT[A] held that entire addition made by the AO cannot be sustained. Thus the Ground no.2 raised by Revenue is devoid of merits and liable to be dismissed.

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• 2024 (12) TMI 639
  Disallowance of late deposit of ESI/PF u/s 36(1)(va) - HELD THAT:- As following the ratio laid down in the case of Checkmate Services [ 2022 (10) TMI 617 - SUPREME COURT] we allow the Ground of the Revenue and uphold the addition made by the A.O. u/s 36(1)(va) . Disallowance on account of Sundry Creditors - Assessee offered the said amount for taxation in subsequent year, therefore, if the addition is reversed the same will amounts to double taxation, thus, sought for dismissal of Ground - HELD THAT:- The Assessee has written off the credit balance of both the parties under consideration during Assessment Year 2017-18 which is supported by the financials produced by the Assessee. Both the ledge accounts the amount standing in the name of both the parties reflecting as written off as on 31/03/2017. Thus, we find no error or infirmity in the order of the Ld. CIT(A) and finding no merit in Ground No. 2 of the Revenue, we dismiss Ground No. 2 of the Revenue. Disallowance of depreciation @25% on opening WDV of intellectual property rights - Assessee submitted that the scheme of Amalgamation has been approved by the Hon ble High Court and once the scheme of amalgamation has been approved, no authority should be allowed to tinker with the scheme - HELD THAT:- For all practical purpose, the merger effectively took place in Financial Year 2013- 14 relevant to Assessment Year 2014-15 as effect of said amalgamation the assets and liabilities of M/s Macro Steel Engineers Pvt. Ltd. merged with Assessee Company. Further the assets included value of Patented Technology developed by M/s Micro Engineers Pvt. Ltd. The valuation of the said patent technology has been accepted by the Hon ble High Court and the Assessee has declared the same as value of its asset for Financial Year 2013-14 relates to Assessment Year 2013-14 which stood accepted u/s 143(3) of the Act and no adverse observation has been drawn in the assessment proceedings. As decided in Rohit Bal Designs Pvt. Ltd.[ 2022 (8) TMI 1555 - ITAT DELHI] A.O has committed an error by passing assessment order based on standalone basis despite fact that he had full knowledge of amalgamation while making the addition. The Ld. A.O should have considered the effect of amalgamation more so in view of the specific mandate of the Hon ble High Court. The Ld. A.O has ignored the above facts.the tax authorities are bound to take note of the state of affairs of the Assessee as on 01/04/2013 and a return filed reflecting the same cannot be ignored on the strength of section 139(9) of the Act. The merits otherwise on the return field have never been challenged by the A.O. Therefore, in our opinion the assessed income as per the return field by the appellant u/s 139(9) of the Act on the basis of consolidated Balance sheet should have been accepted by the A.O. It is also undisputed fact that the value of patent technology has not only been accepted by the Hon ble High Court of Delhi but also accepted by the A.O. in scrutiny proceedings for Assessment Year 2014-15 vide order 25/10/2016. Thus, in our considered opinion, the Ld. CIT(A), committed no error in deleting the addition Appeal of revenue dismissed.

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• 2024 (12) TMI 638
  Denial of Foreign Tax Credit (FTC) - assessee filed belated Form No. 67 - procedural/directory requirement v/s mandatory requirement - HELD THAT:- Since the provision of DTAA override the provision of Section 90 of the Act as they are more beneficial to the assessee, in view of judicial pronouncements in this regard and since Rule 128(a) does not preclude the assessee from claiming credit for FTC in case of delay in filing the required form no 67 as the credit for FTC is a vested right of the assessee and since form 67 was filed as contended by the assessee, therefore, there was no justification for not allowing the credit for FTC. See Sukhdev Sen [ 2024 (4) TMI 1208 - ITAT KOLKATA] Thus, the claim for FTC is directed to be allowed as the assessee had filed the required form no.67 as evidence of foreign taxes paid and the Ld. AO is directed to allow the FTC in accordance with DTAA between India Thailand and as per law. Appeal of the assessee is allowed.

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• 2024 (12) TMI 637
  Bogus LTCG - gain earned/arisen from transactions in penny stocks - HELD THAT:- As from the last several occasions, the assessee is not appearing on the date of hearing, despite issue of notices, hence, we are disposing of this appeal ex-parte qua assessee, after hearing the Ld. DR and perusing the records. We find that this a classic case of penny stock transaction. We further find that Ld. CIT(A) has passed a well reasoned order by taking care of each and every argument of the assessee. Hence, in our considered opinion, there is no need to interfere in the order of the Ld. CIT(A), therefore, we affirm the action of the ld. CIT(A) and accordingly, reject the grounds raised by the Assessee.

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• 2024 (12) TMI 636
  Denial of the credit of foreign tax u/s 90 - delay in filing the return of income - HELD THAT:- As decided in Anindya Sarkar [ 2024 (7) TMI 1564 - ITAT KOLKATA] since the provision of DTAA override the provision of Section 90 of the Act as they are more beneficial to the assessee, in view of the judicial pronouncements in this regard and since the rule 128(a) does not preclude the assessee from claiming the credit for FTC is a vested right of the assessee and since form 67 was filed in response to the query received from CPC as contended by the assessee, therefore there is no justification for not allowing the credit for FTC - Decided in favour of assessee.

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• 2024 (12) TMI 635
  CIT(A) dismissed the appeal of the assessee ex-parte - rejecting the books of account addition made by applying the gross profit rates and by disallowing of expenses -HELD THAT:- As per Section 250(6), CIT(A) has to state point for determination, his decision and reasoning thereof. The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating the assessment order passed by AO is upheld, and that the assessee has not submitted details/documents is not sufficient. CIT(A) is not toothless as his powers are co-terminus with the powers of the AO., which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A) and did not file the requisite details/documents during appellate proceedings to support his contentions. Thus, the assessee is equally responsible for its woes. As also observed that the assessee has raised various important issues, which are recorded in the grounds of appeal including additional grounds of appeal as well contentions raised before me, which raises mixed question of law and facts, which requires verification of facts These issues go to the root of the matter and require proper adjudication after considering/verifying the facts as they raises mixed question of law and facts. Under these circumstances and fairness to both the parties, in the interest of justice, the appellate order of CIT(A) is set aside and the matter can go back to the file of ld. CIT(A) for fresh adjudication of the appeal of the assessee on merit. Appeal of the assessee is allowed for statistical purposes.

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• 2024 (12) TMI 634
  Validity of assessment order u/s 153A - period of limitation - Assessment beyond the period of ten years - HELD THAT:- As per Panchnama placed and also order of the Ld. AO, no any incriminating document/material was found. On the basis of above fact situation, there is material substance in the submissions advanced on behalf of the assessee that in this case the A.Y. in question i.e. 2008-09 is beyond the period of ten years from the end of the assessment year relevant to the year in which search was conducted and proceeding initiated u/s 153A of the Act and the consequent assessment order passed is without jurisdiction and clearly barred by law and the Ld. AO was not authorized by law to initiate proceedings which was barred. Established legal position cannot be ignored but to be followed in strict manner and if proceedings which are knowingly, that it is barred by law, initiated by competent authority, hardly be allowed to be confirmed. Addition on the basis that the assessee is not involved in the business of wool - CIT(A) deleted addition - HELD THAT:- CIT(A) clearly held that on verification of the documentary evidences submitted by the appellant, the AO has acknowledged the purchase and sale of shares and mutual funds being duely recorded in the audited financial statements and said trading activity had also been reported by the tax auditor in from 3CD and the Ld. CIT(A), depending on above fact situation, found that it has been duely substantiated by the appellant that the investment in mutual funds referred by the AO in the assessment order has been recorded in its books of accounts. So far question regarding ground no. 4 is concerned, the Ld. CIT(A) passed detailed findings that the true facts of the case of the appellant have been duely verified by the AO himself in the remand report and not further doubt has been raised by him with report of the genuineness of the business activity / operation of appellant in the year under consideration.

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• 2024 (12) TMI 633
  Validity of Revision proceedings u/s 263 - as alleged no valid service of notice which was issued and served on the Assessee - Limitation Period - HELD THAT:- In the present case, there is no legal and valid service of notice which was issued and served on the Assessee in either of the mode of RPID and ITBA/email to the Assessee which were adopted by the CIT(E). The notices were served only after the date of hearing i.e. on 14/03/2024, thus the order of the CIT(E) passed on 29/03/2024 is not only erroneous but also in violation of principles of natural justice. The provision of Section 263(2) of the Act specifically bars for any order being passed pursing to the notice u/s 263 of the Act after lapse of two years from the end of Financial Year in which the orders sought to be revised was passed. Considering the fact that the outer limit in the statute u/s 263 which in the present case being 31-03-2024, we find no useful purpose will be served in giving opportunity to the Assessee of being heard in this stage by the Ld. CIT(E). By relying on the judgment of M L Chains [ 2023 (8) TMI 830 - ALLAHABAD HIGH COURT ] and Tulsi Tracom (P) Ltd. [ 2017 (9) TMI 1041 - DELHI HIGH COURT ] - order passed by the CIT(E) u/s 263 quashed - Decided in favour of assessee.

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• 2024 (12) TMI 632
  Deduction u/s 36(1)(vii) r.w.s. 36(2) towards bad debts written off - HELD THAT:-If a provision for doubtful debt is expressly excluded from section 36(1)(vii), then such a provision cannot claim deduction u/s 37(1). Therefore, we are of the considered view that the case law relied upon by the CIT(A) in the case of Khyati Realtors Pvt. Ltd. [ 2022 (8) TMI 1141 - SUPREME COURT ] is not applicable to the present case and further the case of the assessee is squarely covered by the decision of TRF [ 2010 (2) TMI 211 - SUPREME COURT ] We are of the considered view that the assessee is eligible for deduction for bad debts written off, upon satisfying the conditions provided u/s 36(1)(vii) r.w.s. 36(2) of the Act. CIT(A) without appreciating the relevant facts, simply sustained the additions made by the AO. Thus, we set aside the order of the CIT(A) and direct the AO to delete the additions made towards bad debts written off. Appeal filed by the assessee is allowed.

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• 2024 (12) TMI 631
  Denial of Foreign Tax Credit relief u/s 90 - assessee did not file Form No.67 for claiming foreign tax credit on or before filing of return u/s 139(1) - HELD THAT:- Since the provision of DTAA override the provision of Section 90 of the Act as they are more beneficial to the assessee, in view of judicial pronouncements in this regard and since Rule 128(9) does not preclude the assessee from the claiming credit for FTC in case of delay in filing the return of income as the credit for FTC is a vested right of the assessee and Form No. 67 was filed by the assessee, therefore, there was no justification for not allowing the credit for FTC. Hence the order of the Ld. CIT(A) is set aside and Ground Nos. 1 and 2 of the appeal are allowed and the Ld. AO is directed to allow the FTC in accordance with DTAA between India UK and as per law. Appeal of the assessee is allowed.

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• 2024 (12) TMI 630
  Late filing of fee u/s 234E - intimation/order u/s 200A for the second quarter of the Financial Year 2022-23 - HELD THAT:- In this case, it is an undisputed fact that the assessee had filed the relevant return on 22.10.2021 within the due time for which the relevant acknowledgment from CPC. In view of this fact, which was not contradicted by the ld. DR, late filing fee u/s 234E is clearly not leviable in the case of the assessee. The subsequent filing of the said return by the assessee on 26.07.2022 was due to technical glitch on the portal of the Department and to facilitate its clients for issuance of TDS Certificate for filing their return of income. Therefore, this cannot be a ground for ignoring the return filed on 22.10.2021 and levy late filing fee in respect of the return filed on 26.07.2022. Therefore, considering the entire facts in perspective, the late filing fee is not justified and the same is deleted. Grounds of appeal filed by the assessee are allowed.

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• 2024 (12) TMI 629
  Validity of TP order beyond limit prescribed u/s 153(4) - HELD THAT:- The case made out by the assessee is this that in order to adhere to the provision of Section 92CA(3A) of the Act, the TPO s order should have been issued in time, before 60 days prior to the due date for completion of assessment u/s 153 of the Act read with Section 92CA(3A) of the Act i.e. 31st October, 2019, whereas the Ld. TPO issued the order after the said date, only on 1st November, 2019. Limitation period prescribed under the provision of Section 92CA(3A) of the Act is mandatoryTPO has no authority to breach such statutory provision and to pass order beyond the prescribed time as mentioned hereinabove. Further that the word may though have been used by legislature u/s 92CA(3A) of the Act, it should be construed as shall as the TPO would otherwise to allow more time to pass the transfer pricing order by implication and this would violate the provision of Section 153 r.w.s. Section 92CA(3) of the Act prescribing the time limit for completion of assessment by the AO. Therefore, the TP order issued admittedly after the expiry of aforesaid period, is unforeseeable in the eye of law. Maintainability of the Transfer Pricing Officer s order has been decided in favour of the assessee holding the same barred by limitation since the said order was passed beyond the time-limit prescribed under Section 92CA(3A) of the Act read with Section 153 of the Act. The impugned order therein was found to have been passed violating the mandates prescribed under 92CA(3A) of the Act after expiry of 60 days to the date on which the period of limitation is referred in Section 153 of the Act for making the order of assessment and, thus, held invalid. In that view of the matter the Assessing Officer was also not made available with the extended period of limitation for passing of the assessment order in terms of provisions of Section 153(4). Decided in favour of assessee.

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• 2024 (12) TMI 628
  TP Adjustment - MAM selection - applying the Transactional Net Margin Method ( TNMM ) or Comparable Uncontrolled Price ( CUP ) method for computation of ALP - comparable selection - HELD THAT:- The assessee has successfully demonstrated that the Ld.CIT(A) committed an error in retaining M/s. Jai Hind Projects Ltd. as one of the comparables as it operated in different field. However, considering the fact that the Revenue itself has accepted CUP method as most appropriate method in Financial Years 2010-11 and 2019-20. There is no substantial change into facts and circumstances in this year. The contention of the Revenue that CUP method would not be applicable in respect of hypothetical quotation prices but same should be applicable in respect of real transaction is negated by the binding precedent rendered in the case of PCIT vs Toll Global Forwarding (P.) Ltd. [ 2015 (12) TMI 1513 - DELHI HIGH COURT ] by applying the finding of Tribunal rendered in the case of Toll Global Forwarding India (P.) Ltd. [ 2014 (11) TMI 844 - ITAT DELHI ] CUP method is the most appropriate method for computation of ALP. Objection of Revenue is with regard to applicability of CUP method that the variation payment made on hourly base - contention of the assessee is that since it paid the lowest of third parties hence, such variation becomes irrelevant - Coupled with the fact the Revenue failed to demonstrate as to why Rule of Consistency should not be followed in the present case. Strangely, the rates quoted in the quotations are not acceptable but same price actually claimed to have been paid is accepted by the Revenue in other years. And on such basis, CUP method is treated to be appropriate in the AYs 2011-12 and 2020-21. In the light of discussion herein before, the AO is hereby directed to apply CUP method for determining the ALP and if found in order, would delete the impugned addition. Appeal of the assessee is allowed for statistical purposes only.

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• 2024 (12) TMI 627
  TP Adjustment - MAM selection - whether adjustment should be applied on international transaction only or at entity level even if TNMM is treated as Most Appropriate Method? - in cross objection the assessee has stated that benefit of proviso to Section 92C(2) (+/-) 5% shall be given when that is taken into consideration then, no adjustment can be made. HELD THAT:- Tribunal order for A.Y.2012-13 instead of going on the issue, whether CUP is valid MAM qua this transaction of import of oil or not, albeit has gone on alternative plea that even if TNMM is accepted is applied as done by the by the TPO on his set of comparables, then he cannot make adjustment on the entire segment of manufacturing activities, instead adjustment should be restricted to international transaction. It was held that TPO is not justified in making adjustment to the entire segment of manufacturing activity and it was accordingly restricted to the international transaction of import of oil only even if TNMM is held to be as Most Appropriate Method is applied then TP adjustment should be restricted to international transaction only and benefit of tolerance range of +/-5% has to be granted to the assessee. SInce this issue has been settled from the stage of Hon ble High Court [ 2019 (6) TMI 1529 - BOMBAY HIGH COURT] holding that TPO cannot make adjustment to the entire segment of manufacturing activity and only to the extent of international transactions, which is also in conformity with the earlier judgments of Tara Jewels Exports Pvt. Ltd [ 2015 (12) TMI 1130 - BOMBAY HIGH COURT] and Alstom Projects India Ltd. [ 2016 (12) TMI 1408 - BOMBAY HIGH COURT] then consistent with the view, we hold that adjustment should be made only on international transaction. Further, as per law, assessee should be given benefit of proviso to Section 92C (2) of +/-5%. And if that is so, then no adjustment is left to be made then, transaction is at arm s length. Assessee appeal allowed.

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• 2024 (12) TMI 626
  Revision u/s 263 - as per CIT International transactions were accepted to be at arm s length without conducting necessary enquiry/verifications of the facts - HELD THAT:- As we are of the considered view that the TPO has made specific enquiries to which the assessee has given specific replies. Therefore, it cannot be said that no enquiry was made by the TPO and as held in the case of Clix Finance India Pvt Ltd [ 2024 (3) TMI 157 - DELHI HIGH COURT] , inadequacy of enquiry by the Assessing Officer with respect to certain claim would not in itself be a reason to invoke powers enshrined in section 263 of the Act. On merits, the ld. CIT(TP) erred in assuming jurisdiction u/s 263 of the Act. We, accordingly, set aside his order and restore that of the TPO - Decided in favour of assessee.

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• Customs

• 2024 (12) TMI 625
  Maintainability of appeal - refusal to entertain the appeal filed by the petitioner on the ground that the rejection letter issued by the Joint Director General of Foreign Trade (JDGFT) is not a decision or order passed by the adjudicating authority and since Section 15 of Foreign Trade (Development Regulation) Act 1992. Whether an appeal is provided under Section 15 against a letter rejecting the petitioner s application for grant of MEIS scrip? HELD THAT:- Section 9 of Foreign Trade (Development and Regulation) Act, 1992 provides for issuance/ suspension/cancellation of licence. Section 9(1) provides that the Central Government may levy fees in respect of application for a licence, certificate, scrip etc to be granted or renewed. Section 9(2) provides for processing of such application after making necessary inquiries for grant or renewal as the case may be of the licence, certificate, scrip etc and for recording reasons for refusal. Section 9(5) provides that an appeal against an order refusing to grant or renew or suspending or cancelling a licence, certificate, scrip etc shall lie in like manner as an appeal against an order would lie under Section 15. Section 15(1) begins with appeals from orders passed by the adjudicating authority. When Section 9 deals with issuance of MEIS scrip and the application made for the same and processing of the same, the authority who would be processing the application under Section 9 would not be an adjudicating authority. However, when Section 9(5) provides for appeal in like manner as an appeal against an order would lie under Section 15, it would contemplate an order passed by the authority who need not be an adjudicating authority as defined in Section 2 (a) read with Section 13 of the Foreign Trade (Development and Regulation) Act 1992 but has trappings of the adjudicating authority. Therefore, when there is a reference to Section 15 in Section 9(5), it would mean that an appeal filed under Section 15 refusing to grant or renew or suspend or cancel a licence, certificate, scrip, etc would mean an order passed not by the adjudicating authority as defined by Section2(a) of the 1992 Act. Therefore, it would not be correct for the respondents to contend that since the rejection order is not passed by the adjudicating authority as defined under the Act, no appeal would lie. In the instant case, while processing the application for issuance of MEIS scrip under Section 9, the authority who would be processing the application and after making inquiry as he may think fit before granting or renewing or refusing of grant or renew the licence etc. would have to be treated as an adjudicating authority for the limited purpose of Section 15 read with Section 9 because, he is the authority who is deciding the claim of grant of scrip to the applicant and if so construed, then, the letter rejecting the application for issuance of MEIS scrip will have to be treated as a decision or order by an adjudicating authority which would be appealable under Section 15 of the Foreign Trade (Development and Regulation) Act, 1992. Therefore, even on this count, the appeal would be maintainable - the ADGFT/Appellate Authority rejecting the appeal because the rejection letter is not a decision or the order passed by the adjudicating authority would not be the correct reading of the appeal provision. From any angle, the appeal was filed with the correct authority, but the correct authority rejected it on the erroneous ground that the rejection order is not the decision/order passed by the adjudicating authority, which we have already opined is incorrect. Therefore, the impugned order rejecting the petitioner s appeal as non-admissible is required to be quashed and set aside. It is a settled position that the quasi-judicial authority speaks his mind through his order, and, therefore, the order dealing with the application should have been a speaking order showing clearly the reason for coming to the conclusion. In our view, this is absent in the impugned rejection letter. Therefore, in the interest of justice, the rejection letter dated 9 December 2022 set aside and the application dated 27 January 2022 remanded back to the file of respondent no.4 for fresh consideration after giving an opportunity of hearing to the petitioner and direct the respondent no.4 to pass a speaking order deciding the application of the petitioner dated 27 January 2022. The impugned order dated 10 November 2023 rejecting the petitioner s appeal as non-admissible is quashed and set aside - the rejection letter dated 9 December 2022 passed by the JDGFT and the Order-in-Appeal dated 10 November 2023 passed by the ADGFT is quashed and set aside - petition allowed by way of remand.

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• 2024 (12) TMI 624
  Seeking quashing of the SCN and pending adjudication proceedings arising out of the Customs Act, 1962, the Finance Act, 1994 and the Central Goods and Services Tax, 2017 - inordinate delay in the finalisation of the adjudication proceedings with the writ petitioners - failure on the part of the respondents to conclude adjudication within a reasonable period of time and inordinately delaying the same for decades together would constitute a sufficient ground to annul those proceedings - the question of State of Flux - Call book and section 28 requirements - The State of Flux question - HELD THAT:- It would be pertinent to recall that the First Proviso to Section 28 (9) had stipulated that where a proper officer fails to conclude adjudication proceedings in accordance with the time frames specified in clauses (a) or (b) of Section 28 (9), any officer senior to the proper officer, having regard to circumstances which may have prevailed and prevented conclusion of pending adjudication, to extend the period so specified by a further period of six months and one year respectively. It was, however, the Second Proviso inserted in terms of the 2018 Act which brought closure to pending proceedings and dealt with the contingency where the proper officer was to fail to conclude a determination even within the extended period. In that eventuality, the Second Proviso declared that pending proceedings would be deemed to have come to an end as if no notice had been issued - the respondents while dealing with all proceedings initiated prior to 29 March 2018 were required to adhere to the precept of reasonable period and nothing further. The Legislature had thus introduced appropriate curial provisions in the shape of sub-section (11) and Explanations 2 and 4 so as to enable and empower the respondents to conclude pending proceedings. By the time Canon I came to be pronounced on 09 March 2021, both sub-section (11), as well as Explanation 4 existed on the statute book. Despite these legislative interventions, the respondents continued to abstain from taking proactive and effective steps to conclude proceedings that had been initiated as far back as 2006. Delay in adjudication and its impact - HELD THAT:- The leeway provided by the statute when it employed the phrase where it is possible to do so , could not be equated with lethargy or an abject failure to act despite there being no insurmountable factor operating as a fetter upon the power of the proper officer to proceed further with adjudication - this Court had in NANU RAM GOYAL VERSUS COMMISSIONER OF CGST AND CENTRAL EXCISE, DELHI ORS. [ 2024 (2) TMI 1481 - DELHI HIGH COURT] clearly held that placing matters in abeyance for years together or transferring them to the call book would not be liable to be countenanced as factors relevant or germane to explain an inordinate delay in adjudication. Insofar as the precept of reasonable period which would bind the respondents to conclude adjudication or to initiate action notwithstanding a statute not prescribing a period of limitation, it would be pertinent to take note of the observations of the Supreme Court in UNION OF INDIA ANR. VERSUS CITI BANK, N.A. [ 2022 (8) TMI 1107 - SUPREME COURT] , when it had held it would be unfair and unreasonable to countenance such powers being exercised in respect of transactions which had occurred more than eight years ago. Way back in 1969, the Supreme Court in STATE OF GUJARAT VERSUS PATEL RAGHAV NATHA ORS [ 1969 (4) TMI 90 - SUPREME COURT] , had held that while Section 211 of the Land Revenue Code did not prescribe a limitation period for the Commissioner to revise orders, such power must be exercised within a reasonable time, determined by the facts of a case and the nature of the order. Call book and section 28 requirements - HELD THAT:- Both in respect of cases falling under Section 28 (1) or 28 (4), the proper officer stood enabled by statute to seek further extension of time. Additionally, and if the respondents were to resort to sub-section (9-A), they were statutorily obliged to inform the importer of the reasons on account of which they were unable to conclude the adjudication. Upon such information and notice being provided, the provisions of sub-section (9) would have ceased to apply and it would have been open for the proceedings to remain suspended till the reasons, which had prompted the respondents to place proceedings in abeyance by virtue of sub-section (9-A), had ceased to exist - The disclosures made in this batch, however, establish that the respondents in each case, adopted a repetitive exercise of placing matters in the call book, retrieval therefrom, followed by those matters being transferred back to that book yet again. These actions appear to have been taken mechanically and casually based solely on the directions of the Board and without any application of mind to the facts obtaining in individual cases or the formation of requisite opinion as contemplated under Section 28 (9-A). Thus, the respondents are bound and obliged in law to endeavour to conclude adjudication with due expedition. Matters which have the potential of casting financial liabilities or penal consequences cannot be kept pending for years and decades together. A statute enabling an authority to conclude proceedings within a stipulated period of time where it is possible to do so cannot be countenanced as a license to keep matters unresolved for years. The flexibility which the statute confers is not liable to be construed as sanctioning lethargy or indolence - A statutory authority when faced with such a challenge would be obligated to prove that it was either impracticable to proceed or it was constricted by factors beyond its control which prevented it from moving with reasonable expedition. This principle would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act. The issuance of innumerable notices would also not absolve the respondents of their statutory obligation to proceed with promptitude bearing in mind the overarching obligation of ensuring that disputes are resolved in a timely manner and not permitted to fester. Insofar as the assertion of the assessees seeking repeated adjournments or failing to cooperate in the proceedings, it may only be noted that nothing prevented the respondents from proceeding ex parte or refusing to reject such requests if considered lacking in bona fides. The SCNs as well as any final orders that may have come to be passed and which stand impugned in this batch of writ petitions are quashed - petition allowed.

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• 2024 (12) TMI 623
  Direction to release articles in question (gold chains) to the concerned petitioners on their depositing custom duty with the Authorities - HELD THAT:- The respondents are directed to release the gold chains in question to the respective petitioners within one week from today without insisting for payment of any ground rent/warehouse charges. However, the respondents would be at liberty to take any permissible separate action to recover such ground rent or warehouse charges from the petitioners in accordance with law. Let the chains, accordingly, be released within one week from today - Petition disposed off.

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• 2024 (12) TMI 622
  Violation of principles of natural justice in revoking NOC without show cause notice or hearing - no reasons in the impugned order - NOC to operate from all ports - For trade license to facilitate the handling of Hazardous waste oil discharge, garbage, and scrap in the JSW Jaigad Port. - HELD THAT:- The impugned order/communication dated 16 January 2024 suffers from the violation of principles of natural justice. Firstly, no show cause notice was issued to the petitioner; secondly, no opportunity of hearing was granted to the petitioner; and thirdly, because the impugned order/communication contains no reason. Merely stating that the NOC is revoked because of violation of the Customs Act, 1962 and the Rules and Regulations established thereunder does not amount to a reason but only a conclusion. From this conclusion, it is also most difficult to discern what violations were allegedly committed by the petitioner. The impugned order/communication dated 16 January 2024 set aside - petition allowed.

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• 2024 (12) TMI 621
  Maintainability of petition - availability of alternative remedy - Rejection of petitioners applications for import license conditions - actual user conditions - HELD THAT:- Admittedly, the PRC did not hear the petitioners before rejecting their applications vide the impugned decisions/orders dated 4 April 2024. At the relevant time, paragraph 2.59 of the Foreign Trade Policy (FTP), 2023, contemplated a hearing before the PRC decided on the issue of relaxation. The same is substantially continued in paragraph 2.60 of the current FTP - The petitioners had already approached the PRC, which rejected their applications without hearing them. On the short ground that the petitioners were required to be heard, and they were not heard, the impugned decisions/orders dated 4 April 2024 set aside and the petitioners applications for relaxation/deletion/removal of the actual user conditions in their licenses to the PRC restored. The PRC must hear the petitions/their representatives and decide the petitioners applications following law and on their own merits.

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• 2024 (12) TMI 620
  Seeking a direction on the 1st Respondent i.e., Commissioner of Customs (Appeals), to admit the Petitioners appeal without insisting on a pre-deposit as stipulated in Section 129E of the Customs Act, 1962 - direction to restore the appeal which is already dismissed for want of pre-deposit - HELD THAT:- In Kotak Mahindra Bank Pvt Ltd Vs. Ambuj A Kasliwal and Others [ 2021 (2) TMI 1251 - SUPREME COURT] , the Hon ble Supreme Court has held that even the High Court should not direct the appellate authorities to admit and hear appeals unaccompanied by the minimum pre-deposit requirement under the statute. The Hon ble Supreme Court held that discretion under Article 226 of the Constitution of India cannot be exercised against the mandatory requirement of statutory provision. In MANJEET SINGH VERSUS THE UNION OF INDIA THROUGH THE SECRETARY MINISTRY OF FINANCE ORS. [ 2022 (10) TMI 893 - BOMBAY HIGH COURT ] decided by the Coordinate Bench of this Court on 18 October 2022, relief of waiver of the minimum pre-deposit of 7.5% of the penalty under Section 129E of the Customs Act was declined. This decision considers all the contentions raised in this Petition and discusses earlier precedents on the subject. Therefore, based on the decision of the Hon ble Supreme Court and this Court, no case is made to grant any relief to the Petitioners. Incidentally, the Petitioners had instituted Writ Petition in this Court to challenge the Order-In-Original without resorting to the appellate remedy. The said Petition was disposed of. It was clarified that the Petitioners would have to satisfy other requirements for filing an appeal, including the statutory requirement of pre-deposit in terms of Section 129E of the Customs Act. The Petitioners never challenged the order but chose to institute an appeal without the pre-deposit. After such appeal was not entertained, this Petition was filed, and the relief contrary to the statutory provisions was sought from this Court. Such relief cannot be granted in exercising our discretionary jurisdiction under Article 226 of the Constitution of India. Petition dismissed without any orders of cost.

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• 2024 (12) TMI 619
  Quashing of seizure order - violation of Section 7, 11, 46 and 47 of the Customs Act, 1962; Section 3 (2) of Foreign Trade (Development and Regulation) Act, 1992 - Locus standi of the second petitioner - alternative remedy under Section 128 of the Act, 1962 - reasons to believe - contents of Panchnama are the reasons for drawing up seizure memo. Whether second petitioner has locus in filing the writ petition or not? - HELD THAT:- The second petitioner has a locus to assail the seizure memo dated 14.08.2020 along with the first petitioner for the reasons that there were transactions among the petitioners as is evident from Tax Invoice, Transportation Note and Way Bill. There is minute error committed by the first petitioner in his affidavit supporting writ petition to the extent in not mentioning in the affidavit that supporting affidavit is on behalf of second petitioner, first petitioner is swearing the affidavit on his own behalf. Such error crept-in inadvertently, therefore, the contention of the respondents that the second petitioner has no locus is too technical. Thus, second petitioner has locus to file the present petition along with first petitioner. Whether petitioners were required to exhaust alternative remedy under Section 128 of the Act, 1962 or not? - HELD THAT:- For the purpose of present case, violation of statutory provision like Section 110 of the Act, 1962 has not been complied in the manner known to the law to the extent of not writing the reasons in support of impugned seizure memo dated 14.08.2020 whereby petitioners have been denied opportunity of availing alternative remedy of appeal ineffectively - contention of the respondents that petitioners are required to be relegated to appellate authority stands turndown. Whether seizure memo is to be read with Panchnama to draw inference that contents of Panchnama are the reasons for drawing up seizure memo or not? - HELD THAT:- The seizure of the memo is to be read with Panchnama as contended by the learned senior counsel for respondents. It is submitted that contents of the Panchnama reveals that certain discrepancies in which material information, in particularly, Invoice, Way Bill and Marudhar Assam Road Lines Private Limited, it was submitted that there is variation in mentioning the places like Paschim Salkumar/Badaitari/Falakata/Alipurduar, West Bengal. These are the places where the Krishna Kali Traders is trading. In the Invoice, GSTIN number of the petitioners are reflected and also Bill to Party and Ship to Party - There are every chances of re-using of bags. Therefore, these material information reflected in Panchnama was required to be taken into consideration while reading seizure memo may not be correct in the light of the fact that whatever contents of the Panchnama cannot be read into seizure memo in the light of Notification dated 08.02.2017. Whether reasons to believe under Section 110 of the Act, 1962 is complied by the Seizing Officer or not? - HELD THAT:- Panchnama cannot be read into seizure memo as held by the Delhi High Court. After taking note of Delhi High Court decision, the aforementioned Notification has been issued. That apart reading of both the seizure memo and Panchnama, one can draw inference that firstly seizure memo has been prepared and secondly Panchnama has been drawn, therefore, at the time of writing seizure memo, Panchnama was not written or existed. This is evident from reading of Panchnama - Seizing Officer cannot keep reasons in his mind and he has to disclose minimal reasons in the seizure memo - the contention of the respondents that seizure memo is to be read with Panchnama is wholly incorrect and contrary to Customs Department Notification dated 08.12.2017. Whether Section 110 (1A), (1B), (1C) of the Act, 1962 is mandatory insofar as seizing the truck bearing No. UP 31 AT 1107 or not? - HELD THAT:- In the Assam Supari Traders [ 2024 (9) TMI 1617 - PATNA HIGH COURT] , the Co-ordinate Bench has distinguished on factual aspect of the matter to the extent that the cited decision of this Court are distinguishable on facts of the case for the reasons that there is no analysis of Section 110. Further in The Commissioner of Customs (Preventive) Patna [ 2024 (3) TMI 1194 - PATNA HIGH COURT] and Santosh Kumar Murarka [ 2024 (8) TMI 1161 - PATNA HIGH COURT] , there was no occasion to consider Section 110 (1A) (1B) (1C) of the Act 1962 read with Section 128, therefore, two decisions of this Court by the learned senior counsel for respondents that they are binding in the present case has already been noticed in Assam Supari Traders case. The impugned seizure memo dated 14.08.2020 vide Annexure 6 is unsustainable and the same deserves to be quashed and set aside and is, accordingly, quashed and set aside - Application allowed.

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• 2024 (12) TMI 618
  Classification of Quick Lime imported by the appellant - to be classified under CTH 25221000 or under CTH 28259090 of the Customs Tariff Act, 1975? - HELD THAT:- It could be seen that the description of the Chapter 25 covers Salt; Sulphur; earths and stone; plastering materials, lime and cement which are basically mineral products of Section V of the First Schedule to the Customs Tariff. However the description of Chapter 28 covers inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements of isotopes which are products of chemical or allied industries falling under Section VI of the said Schedule. Further, it can be said that Chapter heading 2522, clearly provides that quicklime, slaked lime and hydraulic lime are classifiable under specific tariff items provided for therein; however, calcium oxide and hydroxide of Chapter heading 2825 are excluded from the scope of coverage under the heading 2522. Heading 25221000 covers within its scope and ambit, mainly of three specific goods such as the following: (i) first one i.e., quicklime ; (ii) the second one, slaked lime , and (iii) third one, hydraulic lime . Hence, in simple words, it can be stated that all the goods covered under the above description at (i) to (iii) above would be rightly classifiable under chapter heading 25221000. There is no dispute on the fact that the imported goods in the present case are quicklime and thus by applying GIR 1 it would be classifiable under tariff item 25221000. Further, from the exclusion provided for calcium oxide and hydroxide of heading 2825, it transpires that the quicklime as a mineral product, when subjected to certain processes or treatment, whereby if these mineral products were converted into separate chemical elements or separate chemically defined compounds, such as calcium oxide in the present case, then such products would be more appropriately classified as chemical products under heading 2825, owing to the reason that the chemical properties of the goods have been changed from the mineral product to chemical product - the scope of coverage of goods under chapter heading 2522 and 2825 are exclusive to each other. It reveals that it is not the case that the goods covered under CTH 2522 and CTH 2825 represent contending classification for applying GIR 3 as made out by Revenue. This is for the reason that quick lime cannot be referred to as containing wholly or partly of goods of CTH 2522 and CTH 2825. There is clear exclusion of calcium oxide and hydroxide of CTH 2825 from the scope of CTH 2522, and only separate chemical elements or separate chemically defined compounds are covered under the scope of CTH 2825 - it transpires from plain reading of GIR 2 and 3, that GIR 2(b) would apply for classifying goods so as to include mixtures or combination of a particular material or substance when found mixed or combines with other material. In attempting such classification of goods in terms of GIR 2(b), when one is confronted with classification under two or more contending headings, then GIR 3 would apply. As a general rule, the heading that provides most specific description would be preferred to heading which provide a more generic description - the Revenue s argument for classification of quick lime under heading 2825 as it occurs last among other classification under heading 2522 is not legally sustainable. There is no case for application of Rule 3 of GIR in this case. In view of the above, the imported goods are appropriately classifiable under CTH 25221000 - the imported goods Quick Lime would be properly classifiable under Customs Tariff Item 25221000 and not as others under the Customs Tariff Act Item 28259090. The impugned Order-in- Appeal is not legally sustainable and accordingly set aside - appeal allowed.

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• 2024 (12) TMI 617
  Confication of recovered contrabend and vehicle - levy of penalty - Violation of principles of natural justice - denial of cross-examination - whether cross objection sought by the appellant during adjudication proceedings should have been granted by the adjudicating authority or not? - HELD THAT:- Respondent had requested for the cross examination of Shri Anurag Garg and it has not be allowed by the original authority and he has placed reliance on the decision of Hon ble Supreme Court in case of NARESH J. SUKHAWANI VERSUS UNION OF INDIA [ 1995 (11) TMI 106 - SUPREME COURT ]. Evidently the case of Naresh J Sukhawani was in relation to the steatement of co-noticee whereby co-noticee has in his statement implicated himself while stating the facts about the main accused - Thus the said decision s clearly distinguishable and cannot be applied to present set of facts. In case of KI. PAVUNNY VERSUS ASSTT. COLLR. (HQ.) , C. EX. COLLECTORATE, COCHIN [ 1997 (2) TMI 97 - SUPREME COURT] Hon ble Supreme Court after considering the decision in case of Naresh Sukhawani has observed that On scanning the evidence and going through the reasoning of the learned Single Judge we find that the learned Judge was right in accepting the confessional statement of the appellant, Ex. P-4 to be a voluntary one and that it could form the basis for conviction. The Magistrate had dwelt upon the controversy, no doubt on appreciation of the evidence but not in proper or right perspective. Therefore, it is not necessary for the learned Judge of the High Court to wade through every reasoning and give his reasons for his disagreement with the conclusion reached by the Magistrate. The matter remanded back to original authority for reconsideration of matter in case of respondent after allowing the cross examination of Shri Anurag Garg, Director of M/s Auspicious Ornaments. There are no error in the direction given by the first appellate authority for which the revenue is aggrieved and have filed this appeal. Appeal filed by the revenue is dismissed.

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• Corporate Laws

• 2024 (12) TMI 616
  Oppression and mismanagement - Respondent No. 1 company is a quasi-partnership or not - Family settlements - Alleged acquisition of shares by Respondent No. 2 and Late Trimbak Bedekar with a view to reduce the petitioners to minority - Non-payment of gratuity dues of Petitioner No. 1 - Entitlement of Petitioner No. 2 to be appointed as a director of the Respondent company - Petition barred by time limitation or not - Whether Respondent No. 1 company is a quasi-partnership? - HELD THAT:- According to the petitioners, the company was incorporated in 1943 under the Companies Act, 1913. Prior to that, business was being run by the HUF of Bedekar family headed by late Vishwanath Parsharam Bedekar, the then Karta of the family. Subsequently, it was converted into a partnership business with the co-parceners (the sons of Vishwanath Parsharam Bedekar) and the current account balances of five partners of HUF (VP Bedekar and sons) were converted to the share capital of the company. It has also been claimed that from the very beginning, shareholding and the board control has been with the members of the Bedekar family only except one instance when initially Shri Chitale was inducted as a director. Admittedly, at the time of filing the petition, the petitioners jointly held only 7.5% of the shares and prior to that, it was 15% which stood reduced to 7.5% after the respondent company brought a rights issue in 1997, which was not subscribed to by the petitioners. Therefore, the facts remains that there has been unequal shareholding since 1997 as from then onwards, respondent no. 2 to 5 collectively hold 92.55% as against 7.45% of the petitioners. Thus, the fact remains that there has been no equality in shareholding since the year 1997. Therefore, this militates against the plea of the petitioners that the company is in fact quasi-partnership on account of the fact that equality in shareholding has been the primary feature of the company. The claim of the Petitioners that the shareholding was restricted to only male lineal descendants also does not seem to be correct in the light of the fact that admittedly Mukund Chitale held 50% of the shares at the time of the incorporation though he was inducted only to run the company in a professional manner. However, petitioner no.1 himself admittedly transferred shares to M/s Esquire Press which was not in any manner connected to the Bedekar family. In this regard, the plea of the Petitioners is that the shares were transferred to raise money for the company from M/s Esquire Press as otherwise as per the provision of the Companies Act, then in force, no money or loan could be availed from anybody except a member of the company. However, this plea raised by the petitioners has also not been substantiated as no worthwhile evidence led by the petitioners on record. It is the admitted case of the Petitioners that at the time of inception of business in the 1920s, it was being single handedly run by Vasudeo Bedekar. It is also not disputed by the Petitioners that after the death of Vasudeo Bedekar, managerial control was based only on majority shareholding and the minority shareholders were kept out of management and since 1986, not even a single member of the family of the petitioners has been on the Board or has held any managerial position in the company. Therefore, it has been wrongly claimed by the Petitioners that the company was a continuation of the erstwhile partnership firm, especially when there has been admittedly unequal shareholding for almost more than two decades prior to the filing of the petition. The plea of the respondent company being a quasi-partnership does not seem to have been established at all. Besides, the petitioners have also been able to make out a for winding up of the company which is sine qua non before a corporate body can be treated as quasi-partnership. Family settlement - Petitioners have alleged in the Petition itself that in the year 1986, an amicable settlement was arrived at in the Bedekar family that the property of the company would be divided not only between the existing management of five directors but also between all the branches of the Bedekar family in proportion to their shareholding which would be an equitable distribution of the assets of the company - HELD THAT:- The Respondents have emphatically denied the execution of any such family agreement. In the event of the categoric denial of the alleged family settlement of 1986, it was incumbent upon the petitioners to prove the execution of the alleged family settlement. However, the Petitioners have not led any evidence of the purported agreement. No agreement has been placed on record. It is not even clear from the pleadings whether such agreement or family settlement was reduced to writing or not. The terms and conditions of purported family settlement have also not been spelled out by the Petitioners. Thus, the Petitioners have failed to discharge the onus of proof with regard to the existence/execution of a family settlement of 1986 - the very existence of the alleged family settlement of 1986 is doubtful. Moreover, there is no explanation forthcoming as to why the Petitioners kept sleeping over a long period of time and did not take any steps to enforce these alleged family settlements of 1986. All these circumstances lead to the only irresistible conclusion that no such agreement/family settlement was ever executed between the parties nor is there any evidence of the existence/execution of such a settlement. Even otherwise, such an agreement, on the face of it, does not appear to be enforceable considering the fact that a shareholder by virtue of his shareholding cannot claim a share in the properties of the company, much less the partition of its assets. Alleged acquisition of shares by Respondent No. 2 and Late Trimbak Bedekar with a view to reduce the petitioners to minority - HELD THAT:- Admittedly, the Respondent company brought a rights issue in February 1997. The Petitioners have claimed that the act of bringing the rights issue was an act of oppression as it reduced the Petitioners shareholding from 15% to 7.5%. The Petitioners have not led any evidence that they challenged the rights issue at any point of time nor took any steps to get the alleged rights issue set aside, being illegal or oppressive in nature. The relief of cancellation of the rights issue was also not sought from any forum or court of law. The Petitioners also did not subscribe to the rights issue and it is not the case of the Petitioners that they were prevented in any manner from subscribing to the rights issue by the Respondents. Thus, having not voluntarily subscribed to the rights issue nor challenging the same before any court of law since 1997, at this belated stage, in our considered view, the Petitioners cannot be heard harping that the rights issue was illegal or prejudicial to the interest of the Petitioners in any manner. It has been repeatedly held by the Higher Courts the denial of the access of the books of the company or non-compliance of statutory formalities/compliances cannot be considered as acts of oppression and mismanagement of the affairs of the company. Non-payment of gratuity dues of Petitioner No. 1 - HELD THAT:- The Respondents have pointed out that Petitioner No. 1 had a filed suit in the Civil City Court claiming his outstanding salary and other dues including gratuity and the said suit was dismissed by the Civil City Court, Greater Bombay by the Judgment dated 24.06.2013 which is annexed with the reply as Exhibit R- 6. Therefore, the Petitioner having already availed a remedy before the Civil Court cannot now be reagitate the same in the Petition under Sections 397-398 of the Companies Act 1956. Even otherwise, non-payment of gratuity cannot be an act which can be said to be an act of oppression and mismanagement. Entitlement of Petitioner No. 2 to be appointed as a director of the Respondent company - HELD THAT:- It would be suffice to say that Article of Association do not confer any such right upon Petitioner No. 2 to be appointed as a director of company. Even otherwise, under Section 152 of the Companies Act, a director can be appointed only by the shareholders at a general meeting. Since Petitioner No. 2 does not have the requisite number of votes, he has not been legally appointed as director - reference can also be made to the law laid in G. Vijayalakshmi Alias Brinda Another v. Triupur Textiles Private Limited [ 2013 (10) TMI 31 - MADRAS HIGH COURT ] whereby it has been held that the principle of legitimate expectation cannot be extended in company law as it is mostly confined to the right of a fair hearing before a decision which results in negativing a promise or withdrawing of an undertaking. Petition barred by time limitation or not - HELD THAT:- The alleged acts of oppression and mismanagement do not constitute a continuing cause of action, it is constrained to hold that the Petition is barred by time so far as the aforesaid alleged acts of oppression and mismanagement are concerned. The Petition is only partly allowed as against the Respondents No. 1 to 5 with an order that Respondents No. 1 to 5 shall buy out the shareholding of the Petitioners on a fair value to be determined by an independent registered valuer to be appointed on the basis of consensus between the parties within a period of one month from today. In case, no consensus is arrived at between the parties within a period of one month, they will be at liberty to seek intervention of this Tribunal for appointment of an independent valuer.

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• Securities / SEBI

• 2024 (12) TMI 615
  Writ against private communications in which the SEBI has only expressed its opinion on a legal provision - Availability of alternate remedy under Section 15-T of SEBI Act - Petitioner s case is that Respondent Nos. 4 and 6 had borrowed amounts from the Petitioner bank and have defaulted in the payment of the same and involves initiating proceedings under the SARFAESI Act 2002, in which the Petitioner has already taken possession of the properties of Respondent Nos. 4 and 5. SEBI has already made an order dated 11 January 2023 prejudicing the Petitioner s interest to deal with the property of Respondent Nos. 4 and 5, the possession of which is already taken over by the Petitioner by resort to the provisions of SARFAESI Act 2002. HELD THAT:- In this case, the SEBI has made an order directing Respondent Nos. 4 and 6 in this Petition not to dispose of or alienate any of the assets, whether movable or immovable (including funds in their bank accounts), or create any interest or charge in any such assets, till such time the refunds/repayments as directed in paragraphs 61 (f) and 61 (g) are completed. This order is not challenged in this petition. Assuming this is so, there can be no ambiguity about appealing the order dated 11 January 2023 made by SEBI based on the opinion communicated by SEBI to the Petitioner vide the impugned communications. As indicated earlier, a Petition to challenge or question an opinion expressed by SEBI in its private communication to the Petitioner should not be entertained. Since the Petitioner is aggrieved by SEBI s order dated 11 January 2023, in which such opinion has been translated or reiterated, it will surely be open to the Petitioner to appeal SEBI s order dated 11 January 2023. In its return, the SEBI has, in any case, raised the issue of maintainability or entertainability by relying upon the alternate remedy available to the Petitioner under Section 15-T of the SEBI Act. Therefore, interest of justice would be met if the Petitioner is relegated to the remedy of appeal under Section 15-T of the SEBI Act. Such an appeal had to be filed within forty-five days. However, the proviso to Section 15T (3) provides that the Securities Appellate Tribunal ( SAT ) may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. Petitioner was pursuing this Petition bona fide. The Petitioner, possibly based on legal advice, may not have found it appropriate to institute an appeal against SEBI s order dated 11 January 2023 at that stage. However, it is not as if the Petitioner was not pursuing its remedies. The petitioner was not indolent or had not acquiesced with the opinion in the impugned communications, which forms the basis of the SEBI s order dated 11 January 2023. Considering the legal position and the SEBI s objection to the entertainability of this petition against the impugned communications on the grounds of the availability of alternate remedy, the interests of justice would be met if liberty, as prayed for, is now granted. Liberty in the above terms is now granted. If an appeal is instituted within four weeks of uploading this order, we request the SAT dispose of it on the merits without mentioning the limitation issue. The learned Counsel for the Respondents have also agreed that they will not raise the limitation issue and will argue the matter on the merits. Accordingly, we dispose of this Petition by granting the Petitioner liberty to avail of the alternate remedy under Section 15-T of the SEBI Act. All contentions of all parties on merits are left open to be decided by the SAT.

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• Insolvency & Bankruptcy

• 2024 (12) TMI 614
  Implementation of the Resolution Plan - release of Non-Fund Based (NFB) facilities - appellant contends that the order passed by the Adjudicating Authority is contrary to the Resolution Plan - one of contention between the parties is that although Resolution Plan contain issuance of NFB facilities after considering the projects where the agreement contains a clause which provide due consideration of the borrower and project by lenders - HELD THAT:- Present is a case where except Bank of Baroda, no other lender has issued any bank guarantee or letter of credit. Present is not a case that the company has defaulted in any of the bank guarantee or letter of credit issued by the bank. At very threshold, the lenders are not operationalising the clauses of the Resolution Plan which provided roll-over of the NBF facilities. It is also not the case of the lenders that the project for which bank guarantee or letter of credit has been asked for are not viable project nor there being any consideration and rejection of issuance of bank guarantee on the basis of evaluation of any project. Reference made to judgment of this Tribunal in STATE BANK OF INDIA VERSUS MBL INFRASTRUCTURES LIMITED, ANJANEE KUMAR LAKHOTIA [ 2023 (5) TMI 1082 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] which also arose out of the direction issued by the Adjudicating Authority for implementation of the Resolution Plan. This Tribunal in the above judgment has observed that when the Resolution Plan has been approved, it is obligatory on all stakeholders to act in manner so as to implement the Resolution Plan. The argument that on account of extension of three years and nine months in the implementation of the plan, the plan is no more viable and cannot be accepted was raised and rejected. Present is a case where Resolution Plan has already been approved by the CoC where decision was consciously taken to roll-over NFB facilities by the existing lenders. It is also not the case that the borrower has defaulted in any of the bank guarantees or letter of credit so as to give any apprehension in the mind of the lenders that borrower will not be able to honour the service the NFB facilities. Direction issued by the Adjudicating Authority is only to the effect that the lenders shall examine the project for which bank guarantees have been asked for and the Respondent shall have right to constantly monitor the business performance of the company and shall be competent to raise flag at appropriate time in case of deviation and take corrective action at that time and company shall furnish information/ documents required by the lenders for review of financial performance of the company after its first release. The company being EPC contractor has to carry out and to work the contract to earn revenue, without the company carrying any contract it cannot generate revenue. Stopping the company to not able to work any contract due to non-release of bank guarantee is akin to stopping the company from carrying out normal function which shall lead non-compliance of the repayment obligation of the company which can never be object of approval of the Resolution Plan. Counsel for the Respondent has also relied on Joint Lenders Meeting held on 26.09.2024 i.e. after passing of the order passed by the Adjudicating Authority where IDBI Bank has also flagged the issue the non-release of NFB limits may jeopardise the operations of the company which will impact the repayment of NCDs to assenting Financial Creditors. The issue that non-release of NFB limits has also been flagged before the joint lenders meeting and the lenders have to think twice before not acting as per the approved Resolution Plan. Counsel for the Appellant has relied on the judgment of the Hon ble Supreme Court in VENKATARAMAN KRISHNAMURTHY AND ANOTHER VERSUS LODHA CROWN BUILDMART PVT. LTD. [ 2024 (2) TMI 1154 - SUPREME COURT] to support his submission that the court cannot rewrite or create a new contract between the parties and has to simply apply the terms and conditions of the agreement as agreed between the parties under the contract. The NFB Agreement entered between the parties was entered to give effect to the approved Resolution Plan between the parties and the NFB Agreement has to be read in a harmonious manner to give effect to the purpose and intent of the clauses of the approved Resolution Plan. NFB Agreement clearly stipulated Recital D of the NFB Agreement: The execution of this Agreement and other financial documents by the borrower has been authorised to give effect to the terms of the approved Resolution Plan. Thus, clauses of the NFB Agreement have to be read in a manner to give effect to the Resolution Plan and not to make any clause of the Resolution Plan otiose and unworkable. There are no merit in these Appeals - Appeals are dismissed.

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• PMLA

• 2024 (12) TMI 613
  Seeking release on bail - petitioner sought bail on the limited ground of his medical condition - Money Laundering - E.D. has failed to establish the link between the generation of proceeds of crime and the bank accounts of the petitioner - HELD THAT:- In the judgment in Prem Prakash v/s. Union of India through Directorate of Enforcement [ 2024 (8) TMI 1412 - SUPREME COURT] the Hon ble Supreme Court has held that once these foundational facts are established by the prosecution the onus shifts on the person facing charge of offence of money laundering to rebut the legal presumption that the proceeds of crime are not involved in money laundering, by production of evidence which is within his personal knowledge. Admittedly, the petitioner was not named in the FIR, charge sheet or supplementary charge sheet submitted by the CBI in the predicate offence. It is trite law that prosecution cannot commence with the statement of a co-accused under section 50 of the PMLA. The Hon ble Supreme Court has held in a catena of judgments with the statement of the coaccused cannot be considered against the petitioner and is not substantive piece of evidence. Its evidentiary value has to be tested at the time of trial and not at the stage of granting bail. The statement cannot be taken as gospel truth and only broad probabilities have to be seen. In the authority in A. Tajudeen v/s. Union of India [ 2014 (10) TMI 367 - SUPREME COURT] the Hon ble Court has held that statement of the accused can under no circumstances constitute the sole basis for recording the finding of guilt against him. The E.D. has placed reliance on a voice recording of the petitioner. Whether the said recording is relevant to the present proceeding shall be decided at the appropriate stage of trial - True, the conditions laid down in section 45 of the PMLA are the guiding factors for grant of bail to an accused under the Act and the accused has to satisfy the said condition for earning an order of bail in his favour. The petitioner is in custody for considerable period of time. It is not in dispute that he was lastly interrogated by the E.D. before about eleven months. Therefore it is evident that his further custodial interrogation is not required. The E.D. intends to rely upon voluminous evidence including 180 witnesses, and 438 documents. Charges are yet to be framed. Chance of conclusion of trial in near future is bleak. The delay in trial is not wholly attributable to the petitioner - Since the case primarily depends on documentary evidence which is in custody of the E.D, there is no scope for the petitioner to tamper with the same. With regard to the apprehension that the petitioner shall influence witnesses or may abscond if released on bail, stringent conditions may be imposed upon him to address the concern. Upon consideration of the facts and circumstances of the case, submission made on behalf of the parties as well as material on record, this Court is inclined to release the petitioner on bail subject to stringent conditions keeping in mind his right to speedy trial under section 21 of the Constitution as well as his prolonged incarceration without trial - the application for bail is allowed.

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• 2024 (12) TMI 612
  Money Laundering - predicate offence - Legality of arrest and detention under the Prevention of Money Laundering Act - Alleged clandestine business of call centres being run at Godrej Waterside Building - requirement to satisfy twin conditions laid down under section 45 of PMLA - Rebuttal of presumption under section 24 - reliability of the statement of the petitioner, the co-accused and others recorded under section 50 of the PMLA - Right to life and personal liberty enshrined under Article 21 of the Constitution. Rebuttal of presumption under section 24 - HELD THAT:- It is for the E.D. to establish the foundational facts after which the onus shall shift upon the petitioner to rebut the presumption under section 24 - The Hon ble Supreme Court, in Prem Prakash [ 2024 (8) TMI 1412 - SUPREME COURT] held that once these foundational facts are established by the prosecution the onus shifts on the person facing charge of offence of money laundering to rebut the legal presumption that the proceeds of crime are not involved in money laundering, by production of evidence which is within his personal knowledge. Reliability of the statement of the petitioner, the co-accused and others recorded under section 50 of the PMLA - HELD THAT:- In the authority in Prem Prakash [ 2024 (8) TMI 1412 - SUPREME COURT ] the Hon ble Supreme Court has held that when an accused is in custody under PMLA irrespective of the case for which he is under custody, any statement under section 50 PMLA to the same investigating agency is inadmissible against the maker. The reason being that the person in custody pursuant to the proceeding investigated by the same investigating agency is not a person who can be considered as one operating with a free mind. It will be extremely unsafe to render such statements admissible against the maker. In the present case, though the predicate offence and the present proceeding have been investigated by two different agencies, the vulnerable position in which the petitioner was placed when his statement was recorded while he was in custody cannot be ignored. Also, it is trite law that statement under section 50 of the PMLA cannot be treated as substantive piece of evidence and can at best lend corroboration to the material available against the accused in course of investigation - Statement of the co-accused cannot be considered against the petitioner. Such statements cannot be taken as gospel truth and only broad probabilities have to be seen. Operation of fake call centres in the premises in question - transfer of proceeds of crime to the account of the petitioner - HELD THAT:- The payment of Rs. 1.50 crores to the petitioner in cash has prima facie not been substantiated. The said cash transaction surfaced from a purported excel sheet available in the laptop of Aditya Gupta who is neither an accused, nor a witness in the present proceeding. A comprehensive investigation appears to have been done by the E.D. resulting in overlapping of statements, documents, etc., in both the PMLA cases - There is no scope for the petitioner to tamper with the same. The witnesses cited are official witnesses who are employees of the department and it is expected that the petitioner is not in a position to influence them. The issue of the petitioner being at flight risk can be addressed by imposing stringent conditions upon the petitioner while granting him bail. Investigation has culminated in submission of charge sheet. Further detention of the petitioner is not required for the purpose of custodial interrogation. Right to life and personal liberty enshrined under Article 21 of the Constitution - HELD THAT:- The Hon ble Supreme Court has time and again held that prolonged incarceration before being pronounced guilty of an offence should not be permitted to become punishment without trial and in such a case Article 21 applies irrespective of the seriousness of the crime. The right to life and personal liberty enshrined under Article 21 of the Constitution is overarching and sacrosanct. A constitutional Court cannot be restrained from granting bail to an accused on account of restrictive statutory provisions in a penal statute if it finds that the right of the accused-under trial under Article 21 of the Constitution has been infringed. Even in the case of interpretation of a penal statute, howsoever stringent it may be, a constitutional Court has to lean in favour of constitutionalism and the rule of law of which liberty is an intrinsic part. Upon consideration of the facts and circumstances of the case, material on record as well as law on the point, this Court is inclined to release the petitioner on bail subject to stringent conditions - the petitioner be released on bail upon furnishing bond of Rs. 10,00,000/- with adequate sureties, half of whom should be local, subject to the fulfilment of conditions imposed - bail application allowed.

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• 2024 (12) TMI 611
  Seeking grant of bail - Money Laundering - proceeds of crime - siphoning off of the loans availed by indulging in criminal conspiracy and generation of Proceeds of Crime within the meaning of Section 2(1) (u) of PMLA - HELD THAT:- The applicant is in custody in connection with an offence under Prevention of Money Laundering Act. In the predicate offence he has been granted bail. The said order stands final till date - No charge sheet has been submitted in the predicate offence with regards to the present issue being committed relating to Punjab National Bank till date. The law with regards to trial is clear and well settled - The case under PMLA and the predicate offence has to be tried together by the same court which is not possible in the present case as of now since predicate offence is yet to see its charge sheet, if any. The principle of bail is a rule and jail is an exception is being consistently followed and repeatedly being reiterated and reminded by the Apex Court and other Courts - The applicant is in jail since 07.02.2024 - There are no chances of his absconding - Looking to the facts and circumstances of the case, it is a fit case for grant of bail. Let the applicant Padam Singhee, be released on bail in the aforesaid case crime number on furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court concerned with the fulfilment of conditions which are being imposed in the interest of justice - bail application allowed.

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• 2024 (12) TMI 610
  Petition instituted to grant leave to the petitioner herein to prefer an appeal against the order of acquittal of the respondents/accused under PMLA, 2002 - HELD THAT:- Undoubtedly, right of appeal against the order of acquittal by the prosecution is restricted, as the accused had the benefit of acquittal on the ground that charge against him had not been proved before the Trial Court. However, when the prosecution was not able to point out clinching ground or error resulting in miscarriage of justice or an erroneous conclusion, then the High Court would not hesitate to grant leave to the prosecution to prefer an appeal against an order of acquittal. Admissibility of ground to grant leave depends on the facts of each case. Complete justice to the parties being the objective, the prosecution in the event of raising grounds to the satisfaction of the Court, then they are entitled to secure leave from the Court to prefer an appeal against an order of acquittal. In the present case, the prosecution is able to establish that vital documents relied on by the Enforcement Directorate to prove the offence of money laundering has been treated as an inadmissible evidence, merely on the ground that the statements taken from the bank computer has not been certified nor original was filed. Admittedly, the said document Ex.P3, Forensic Audit Report was subsequently certified by the bank officials and it was produced before the Trial Court. But the Trial Court has not taken into consideration and formed an opinion that the bank statements are wholly inadmissible, which resulted in an order of acquittal - there are no hesitation in forming an opinion that the petitioner in present case is entitled to prefer an appeal against the order of acquittal. Consequently, leave is granted to the petitioner to file an Appeal against the order of acquittal of the respondents by judgment passed by the Principal Sessions at Chennai/Special Court under PMLA - Thus, the Criminal Original Petition stands allowed.

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• Service Tax

• 2024 (12) TMI 609
  Violation of the principles of natural justice - Refund of unutilized CENVAT credit - Issuance of Deficiency memo to be treated as Show Cause Notice (SCN) or not - input services having been utilized by the petitioner in connection with export of services - HELD THAT:- At the request of the learned counsel for the petitioners, matter stands adjourned by two weeks.

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• 2024 (12) TMI 608
  Entitlement for benefit of the exemption N/N. 6/2005-ST - exemption for taxable services provided under a brand name - denial of exemption on the ground that the brand TEXLA was registered in the name of Shri Amrik Singh only and not in the name of the appellants herein - whether the appellants get excluded by virtue of the proviso to this notification? - HELD THAT:- The Commissioner (Appeals), relying on a website www.indiafilings.com/index.php, concluded that the two brand names were registered only in the name of Shri Amrik Singh and therefore, allowed his appeal but did not allow the appeals of the two appellants herein (Satnam Singh and Harvinder Singh). From the copies of the certificates of registration issued by the Registrar of Trade marks produced before us, we are convinced that the two trade marks Texla and Texlavision were also registered in the name of the two appellants herein. Therefore, they were entitled to the benefit of the exemption notification. The impugned order is set aside - appeal allowed.

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• 2024 (12) TMI 607
  Levy of service tax - leasing of Scaffolding items by the Appellant, on which, admittedly VAT has been paid as Deemed sale within meaning of Article 366 (29A) (d) of the Constitution of India - HELD THAT:- There was transfer of the right to use, possession and effective control in favour of the lessees in respect of the scaffolding items so leased to the lessees. It is thus clear that the Lessee had the right to use the material, the material was to be in possession and effective control of the Lessee and the Appellant did not have any direct or indirect control over the material. Further, since the material was in the use, possession and control of the Lessee, the same was required to be insured by the Lessee and in case of theft or damage to the material, the cost thereof was to be borne by the Lessee. Lastly, upon expiry of the lease, the Lessee had to return the material to the Appellant s workshop, which itself means that during the term of the lease, the material was in use, possession and control of the Lessee. In case of Lessee s failure to return the material on expiry of the lease, the Appellant had the authority to bring back the material at the Lessee s cost. Since there was clearly a transfer of the right to use the materials in favour of the Lessee, the same was liable to Sales Tax/ VAT, being a deemed sale within the meaning of Article 366 (29A) (d) of the Constitution of India and accordingly, VAT was being discharged on the lease rent, which is apparent from the Invoices raised by the Appellant on the lessees. It is found that the Show Cause Notice and the Order-In-Original accept that the materials were to be in use of the Lessee and yet contend that there was no transfer of right to use only on the ground that there was no change of ownership. Similarly, the Commissioner (Appeals) has held against the Appellant on the ground that there was no change of ownership - the said ground is totally misconceived and untenable in law because in case of a Deemed Sale, which is liable to VAT, there would in fact be no change of ownership and only transfer of right to use. The impugned order cannot be sustained, hence the same is set aside - appeal allowed.

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• 2024 (12) TMI 606
  Refund of Cenvat credit under Section 142(3) of CGST Act, 2017 - Applicability of Section 142(8)(a) of CGST Act, 2017 for rejection of refund - Impact of Section 73(3) of Finance Act, 1994 on the refund claim - Relevance of Rule 9(1)(bb) of Cenvat Credit Rules, 2004 in the context of reverse charge mechanism. Refund of Cenvat credit under Section 142(3) of CGST Act, 2017 - Applicability of Section 142(8)(a) of CGST Act, 2017 for rejection of refund - HELD THAT:- From the plain reading of the Section 142 (8), it provides that if any duty pertaining to the period prior to 01.07.2017 is paid, the same shall not be available as an input tax credit under this Act, means CGST Act. In the present case the appellants have not claimed input tax credit in respect of the service tax paid for the period prior 01.07.2017. Therefore, on this ground, the refund was wrongly proposed to be rejected. As Section 142 (8) is only in respect of input tax credit not for Cenvat credit. For the purpose of refund of Cenvat credit which pertains to the period prior 01.07.2017, the special provision was made for cash refund under Section 142 (3) of CGST Act. Therefore, the invocation of Section 142 (8) of CGST Act, 2017 is misplaced. Impact of Section 73(3) of Finance Act, 1994 on the refund claim - HELD THAT:- Section 73(3) is admission of the service tax liability and payment made therefore will not affect the admissibly of the Cenvat credit of such service tax. Had appellant claimed the refund of service tax paid by them the same can be barred under Section 73(3) which is not the case here. After payment of service tax, the appellant is eligible for Cenvat credit. Therefore, only because they opted for payment of service tax under section 73(3), admissibility of Cenvat credit cannot be questioned - The appellant have paid service tax admittedly and opted for section 73(3) of the Finance Act, 1994. This proposal has been accepted by the department and no show cause notice was issued that means the revenue has accepted the payment of service tax under Section 73(3) which provides that the service tax paid under Section 73(3) is without having any ingredient of suppression of facts, willful misstatement , collusion , fraud, etc. Had there been an allegation of department on the above ingredients, the proposal of the appellant could not have been excepted as the same is barred in the term of Section 73(4) of Finance Act, 1994 which has not been invoked by the department. Therefore, it is an established fact in the present case that there is neither any charge of suppression of fact, willfull, misstatement, etc. nor any adjudication thereon. Relevance of Rule 9(1)(bb) of Cenvat Credit Rules, 2004 in the context of reverse charge mechanism - HELD THAT:- As the appellant have neither been issued any show cause notice nor was any order passed. In this undisputed fact Rule 9(1) (bb) of Cenvat Credit Rules, 2004 doesn t apply. Moreover, it is a settled Legal position that Rule 9 (1) (bb) is not applicable in case of payment of service tax under reverse charge basis - From the plain reading of the Rule 9 (1) (bb), it is clear that same is applicable only in case when the supplementary invoice, challan,etc., are issued by the service provider. In the present case since the service tax was paid by the appellant under reverse charge basis, there is no invoice, challan issued by the service provider on which the credit was taken. In the present case it is the appellant s own bank challan through which the service tax was paid. For this reason also Rule 9 (1) (bb) is clearly not applicable in the present case. The appellant is eligible for refund under Section 142(3) of CGST Act, 2017. Therefore, the impugned order is set aside - Appeal is allowed.

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• 2024 (12) TMI 605
  Levy of service tax - commission paid by the appellant company to its Managing Director and Executive Director in addition to their salary - reverse charge mechanism as per Sr. No.5A of N/N. 30/2012-ST dated 20.06.2012 as amended by the N/N. 45/2012 dated 07.08.2012 - HELD THAT:- The issue involved in the present case that whether the commission paid to the Directors are liable to service tax under reverse charge mechanism in the hands of the appellant has been settled in the appellant s own case SULPHUR MILLS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA-II [ 2024 (9) TMI 1549 - CESTAT AHMEDABAD ] held that it is settled beyond any doubt that the commission paid to the Directors by the Company does not fall under the service as Business Auxiliary Service accordingly, not liable to service tax. Therefore, impugned order is set-aside and the appeal is allowed. In view of the above order and also the decisions in the other cases cited by the Learned Counsel, the issue is no more under dispute and stands decided in favour of the assessee - the impugned order is set aside - appeal allowed.

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• 2024 (12) TMI 604
  Levy of service tax - Commission received - Export Sales Commission Advertisement Expenses paid - eligibility of CENVAT Credit - revenue neutrality - invocation of Extended period of limitation - HELD THAT:- There is no dispute that the appellant s records were audited under EA-2000 audit by the departmental officer from time to time, admittedly the audits were conducted in April-2009 and May-2010 the data for the purpose of this demand was taken from the books of account in EA-2000 audit. The audit of books of account is mandatory, therefore the audit party could have raised this objection right from the day one when the audit was conducted in April-2009. Therefore, it cannot be said that the appellant have any malafide intention, to suppress the fact with intent to evade payment of service tax. Moreover, as regard the service tax demand on the foreign commission and advertisement expenses, the appellant being liable to pay service tax under Section 66A as per reverse charge basis, hence they were eligible for Cenvat credit. Therefore, it is revenue neutral exercise. It is held in a catena of judgments that in case of revenue neutrality, the malafide intention cannot be attributed to the assessee and therefore, the extended period is not invokable. The entire demand being under extended period is not sustainable only on the ground of time bar - the impugned order is set aside - appeal allowed.

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• 2024 (12) TMI 603
  Refund of service tax suffered on the specified services used for the authorized operations of the SEZ - rejection on the ground of time limitation - HELD THAT:- The appellant while admitting the delay in filing the refund claims within the normal has pointed to the fact that clause 3(iii)(e) of Notification No. 12/2013-ST, allows the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise to extend the time limit however no decision was rendered to their request for extension. When a discretionary power is conferred on an Authority, the power must be exercised in a reasonable, transparent and rational manner free from whims, vagaries and arbitrariness. It is a part of the Authority s public duty to do so. It goes without saying that the discretion has to be exercised judiciously within the four-corners of the statute. The Authority empowered to use his discretion cannot ignore and remains silent when a request is made. One of the safeguards to ensure that discretion is exercised reasonably and judiciously is to give a reasoned order on the issue for which the power is being exercised. From the admission made by the appellant it is clear that there is some negligence on their part. The question is whether the degree of negligence is so high as to close the door of refund on the assessee- appellant, especially when the law permits that the normal period of filing a refund claim can be extended by the appropriate authority. To take a view that failure to comply with the time limit would result in dismissal of the appeal involving a fairly large sum is to put procedural requirement on a high pedestal and that too in this case without even attempting to examine the remedy available in law. This omission would hinder justice. No business man would knowingly file a belated claim. However long delays are also not in the interest of finalizing the rights and liabilities of both the appellant and revenue, expeditiously and statutory authorities along with the applicants are bound by the timelines as mentioned in the Act or notification under which the refund is being processed. In the instant case the Original Authority is not seen to have examined the appellants request for extension of time as permitted by the notification and to that extent the order is unthinking and arbitrary. The portion of the impugned orders in as far as they relate to rejecting the refund claims on the question of time bar are set aside and remanded to the Ld. Original Authority to examine the appellants request for considering their refund claim in terms of clause 3(iii)(e) of Notification No. 12/2013-ST afresh - Appeal disposed off by way of remand.

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• 2024 (12) TMI 602
  Admissibility of refund of service tax paid on Information Technology Software Services (ITSS), Banking and Financial Services, Business Auxiliary Service, when they have wholly consumed the said services in SEZ - HELD THAT:- The learned advocate referred to the judgments of this Tribunal rendered in their own case DELL INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE-SERVICE TAX, KARNATAKA [ 2015 (3) TMI 1301 - CESTAT, BANGALORE ] following the earlier order of the Tribunal in the case of TATA CONSULTANCY SERVICES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE ST (LTU), MUMBAI [ 2012 (8) TMI 500 - CESTAT, MUMBAI ], wherein it was observed Revenue cannot take a stand that input services specified and approved have no nexus or they have not been used in authorized operations and to deny the refund. As regards the payment of service tax in respect of services utilized entirely within SEZ, the Tribunal took the view that even though the service receiver could have obtained the services without payment of tax, it does not bar him obtaining the services on payment of tax and claiming refund. There are no merit in the impugned order - Consequently, the same is set aside and the appeal is allowed.

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• 2024 (12) TMI 601
  Levy of service tax - supply of tangible goods service - deemed sale - demand dropped on the ground that the arrangement constitutes deemed sale since machineries are under absolute control and possession of the principal manufacturers and all the terms of deemed sale are fulfilled in this case - HELD THAT:- It is found that installation of the machinery in the clients factory is to carry out their own job at the factory premises of their client. The machine was used by themselves for carrying out the production activity. In such case, there is no deemed sale whereas the entire activity is of production process on job work basis by the respondent - Since, the respondent has not collected any amount such as lease rent there is no consideration towards supply of tangible goods for use . Therefore, in absence of any consideration towards the supply of tangible goods for use service , the demand under the said head is not correct. From the rates schedule given in the agreement coupled with the invoices raised by the respondent, it is clear that the charges are for production of various items such as making of PVC trey, bristling of handles from Nylon NS Wire, making of handles from EP and SAN supplied by the client, all these activities were carried out on the machine supplied by the respondent. The aforesaid invoices clearly show that the charges were collected towards production process on job work which was carried out on their own machine. It does not remotely indicate that these charges can be considered as lease rent of the machine under the supply of tangible goods for use service . The transaction is of job work on their machine in the factory premises of their client and there is no transaction of supply of tangible goods for use service . Therefore, the contention of the Revenue to demand the service tax under the said head has on basis - despite some findings of the Commissioner (Appeals) is not flowing form the show cause notice and the Order-In-Original but despite that considering cross objection filed by the respondent, the transaction is of job work and not of supply of tangible goods for use service . Revenue s appeal is not maintainable and the same is dismissed.

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• 2024 (12) TMI 600
  Classification of services received by the appellant as OIDAR services - whether as a recipient he is liable for service tax? - the services being provided from outside India, whether the recipient is liable for service tax under Section 66A of the Finance Act, 1994 - Imposition of penalties under Sections 76 and 77 of the Finance Act, 1994. Whether the services received by the appellant are classifiable as OIDAR services and whether as a recipient he is liable for service tax? - HELD THAT:- It is clear that OIDAR service means providing of information, knowledge, facts, concepts or instructions which are being prepared or have been prepared in a formalized manner and is intended to be processed, is being processed or has being processed through the inter-connection of one or more computers or computer systems or communication device through the use of satellite, microwave, terrestrial line, wire, wireless or other communication media; and through terminals or a complex consisting of two or more interconnected computers or communication device whether or not the inter-connection is continuously maintained. The observations of the Commissioner in the impugned order that the contract specifically provides for remote use and access of the data warehouse systems of their holding company through a dedicated Internet which is nothing but a computer network and the fact that the agreement allows access for automatic global directory update with mailing interfaces, clearly establishes that the services provided under the agreement cited above squarely fall into the category of online information and database access or retrieval service cannot be ignored. The Commissioner also observed that the appellant s contention that these services are in the nature of information technology services is not acceptable in as much as the agreement not only provides for use of the reserved capacity of the regional server but also grants access to the databases on flavours, fragrances product, library EC based on the definition under section 65 (75) of the Finance Act 1994, it is clear that any information knowledge concepts or instructions which are prepared in a formalised manner and intended to be used or processed in a computer system would get covered under the aforementioned services - based on the services received by the appellant, it is clear that it is not mere Information Technology Services but the services received include whole lot of access to the data worldwide with regard to technology, production and various other services essential for day-to-day manufacturing activities. Therefore, the Commissioner agreed upon that the services received by the appellant fall under OIDAR services. The services being provided from outside India, whether the recipient is liable for service tax under Section 66A of the Finance Act, 1994? - HELD THAT:- With effect from 18.04.2006 though the service provider is outside India, the appellant being recipient of services is liable to pay service tax as per Section 66A and Section 68 of the Finance Act, 1994 read with Rule 2(1)(d)(iv) of the Service Tax Rules 1994. In view of the above, the appellant is liable for payment of service tax for the period from 01.10.2006 to 28.02.2008 and for the month of March 2008 under Section 73(1) of the Finance Act, 1994 as held by the Commissioner in the impugned order along with interest under Section 75 of the Finance Act, 1994. Imposition of penalties under Sections 76 and 77 of the Finance Act, 1994 - HELD THAT:- The Appellant had stated that they had reasonable belief that the services received by them are covered under IT services and hence, in terms of Section 80, the penalty under section 76 is not imposable and on account of interpretation of legal provisions, penalty cannot be imposed - In the instant case since the Commissioner (Appeals) has already held that there is no suppression of facts and confirmed the duty only for the normal period based on the interpretation of law, there are no reason to uphold the penalty. Hence, penalties under Section 76 and 77 are set aside. The confirmation of demand of service tax with interest is upheld in both the appeals but penalties are set aside - Appeals are partially allowed only to the extent of setting aside the penalty.

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• 2024 (12) TMI 599
  Classification of services provided to Dakshinanchal Vidyut Vitran Nigam Ltd (DVVNL) as Work Contract Services - benefit of composition scheme - reverse charge mechanism - penalty u/s 78 of FA - HELD THAT:- The issue is well settled that said service is to be treated as a work contract services. In case of Agrawal Colour Advance Photo System [ 2020 (4) TMI 799 - MADHYA PRADESH HIGH COURT] the Hon ble Madhya Pradesh High Court has held that In this view of the matter, after the 46th Amendment, there is no question of dominant nature test applying in photography service and the works contract, which is covered by Clause (29A) of Article 366 of the Constitution where the element of goods can be separated, such contracts can be subjected to sales tax by the States under Entry 54 of List II of Schedule II. Once that is so, value of photographic paper and consumables cannot be included in the value of photography service for the purposes of imposition of service tax. The services provided by the appellant to DVVNL are in nature of Work Contract Services and should be assessed accordingly, by allowing the benefit of composition scheme and partial reverse charge as per Notification No 30/2012-ST. The demand made needs to be recomputed by treating the services provided to DVVNL as work contract service. For limited purpose of re-computation of demand matter is remanded back to the original authority. The penalty imposed under section 78 is also set aside, to be recomputed after re-computation of the demand. Appeal partially allowed and the matter remanded to original authority for re-computation of demand and penalty under Section 78.

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• Central Excise

• 2024 (12) TMI 598
  Reversal of Cenvat credit for common inputs and input services used for electricity generation - procedure as per Rule 6 (3) of the Cenvat Credit Rules not followed - non-maintenance of separate records - levy of penalty - HELD THAT:- The issue involved in the present case is vis- -vis reversal of Cenvat credit availed in respect of common input and input services used for generation of electricity, which is partly consumed captively and partly wheeled out is no longer res-integra and Hon ble Supreme Court in the case of M/S. MARUTI SUZUKI LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [ 2009 (8) TMI 14 - SUPREME COURT ] have held that assessee is entitled to credit on the eligible inputs utilized in the generation of electricity to the extent to which they are using the produced electricity within their factory (for captive consumption). They are not entitled to CENVAT credit to the extent of the excess electricity cleared at the contractual rates in favour of joint ventures, vendors etc., which is sold at a price. In the present case, it is observed that appellant has reversed an amount of Rs. 44,05,397/- which has been appropriated by the Original Authority, this reversal was made even prior to issuance of show cause notice. If this reversal was the actual reversal was to be made in terms of Rule 6 (3) of the Rules and in view of the decision of Hon ble Supreme Court in the case of M/s Maruti Suzuki Ltd. then there could have been no case for imposition of penalty. The impugned order do not record anything with regard to correctness of this amount as it confirms the demand by application of 6% of the value of the electricity wheeled out. In case for ascertaining the credit amount that was to be reversed by the appellant. The matter is being remanded to the Original Authority in case the amount is within the amount already reversed, the proceedings should be closed without any final liabilities. Appellant has raised various issues which are not considered for the reason that the issue is squarely covered by the decision of Hon ble Supreme Court referred above. Appeal is partly allowed and remanded back to the Original Authority.

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• 2024 (12) TMI 597
  Rectification of mistake application regarding payment of interest on Cenvat credit - error apparent on the face of record or not - HELD THAT:- As per facts of the case, the appellant has a prima facie case of time bar, however, since the appellant are not contesting the payment of Cenvat Credit of Rs. 60,15,116/- paid under Rule 6 (3) of Cenvat Credit Rules, 2004, the said payment was mentioned, however it is clear that the entire case was time barred and for this reason only, the entire penalty was also set aside. Once, the demand itself is hit by time bar, consequential interest is also not payable. Therefore, the submission of Learned Counsel agreed to the extent this Tribunal has demanded the interest on the payment of Cenvat Credit of Rs. 60,15,116/- the order bears an error apparent on record which needs to be rectified. The appellant is not liable for payment of interest on the amount of Cenvat Credit of Rs. 60,15,116/-. Accordingly, demand of interest is set aside - ROM application is allowed.

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• 2024 (12) TMI 596
  Entitlement to interest on delayed refund under Section 11BB of the Central Excise Act, 1944 - relevant time period - Calculation of the period for which interest on delayed refund is payable - HELD THAT:- Undisputedly while remanding the matter back to the original authority in the present case of refund claim filed on 30.04.2010. While remanding the matter back to the original authority direction was given to decide the claim as per the directions contained in earlier order dated 07.10.2016 relied upon. In that order tribunal had specifically directed for grant of interest after three months from the date of filing of the refund claim therein i.e. 07.11.2007. In the present case instead of following the said direction new refund claim was got filed on 15.07.2021 after finalization of assessment and impugned order seeks to allow interest only for the period after three months from the that date. The impugned order has been passed contrary to the directions contained in the order dated 07.10.2016 and order dated 09.11.2018, and should be set aside for this reason itself. The entire proceedings in the present case emanate from the refund claim filed by the appellant on 30.04.2010 - Appellant shall be entitled for the refund for the period starting from 30.07.2010 as claimed by the appellant - appeal allowed.

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• Indian Laws

• 2024 (12) TMI 595
  Appeal against High Court order quashing resumption of plot and restoring it to allottee - allottees had failed to make payment of the remaining 75% of the premium amount as per the terms and conditions of the auction sale - lease of the auction site was cancelled by the Assistant Estate Office - HELD THAT:- Under the circumstances, despite sufficient opportunities of hearing given to the allottees to clear the outstanding dues, the respondents allottees had failed to clear the same. Hence, the High Court had committed gross error in allowing the writ petitions by holding that the tenant, i.e., M/s. Mohit Medicos was not served with the notice of resumption with regard to the plot in question. Admittedly, there was no document whatsoever produced by the said alleged tenant to show that it was the tenant of the original allottees - Manjit Kumar Gulati and Ors. When the original allottees themselves had failed to comply with the conditions of auction sale, and when the allotment itself made in favour of the said allottees was cancelled by the Statutory Authority after following the due process of law, i.e., by issuing show cause notice before cancellation of allotment, and when number of opportunities of hearing were given to the allottees to clear the outstanding dues, there was no question of serving any notice to the so called tenant, M/s. Mohit Medicos, especially when there was nothing on record to suggest that M/s. Mohit Medicos was the tenant of the original allottees - Manjit Kumar Gulati and Ors. The High Court had completely lost sight of the said factual aspects of the matter while allowing the writ petitions filed by the respondents allottees and the so called tenant M/s. Mohit Medicos. The High Court had completely lost sight of the said factual aspects of the matter while allowing the writ petitions filed by the respondents allottees and the so called tenant M/s. Mohit Medicos. The decision of FULL Bench of Punjab and Haryana High Court relied upon by the learned senior counsel for the respondent(s) - tenant has no application to the facts of the present case, inasmuch as the respondent(s) M/s. Mohit Medicos, by no stretch of imagination could be said to be a tenant of the original allottees, in absence of any material placed on record, to substantiate the same. The litigation carried forward by the said alleged tenant is nothing but a proxy litigation on behalf of the original allottees, who were the defaulters and an abuse of process of law. The impugned order passed by the High Court being erroneous is set aside - Appeal allowed.

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