TMI Tax Updates - e-Newsletter
December 14, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise Wealth tax Indian Laws

Articles

1. APPLICABILITY OF GST ON PENALTIES IMPOSED BY RESERVE BANK OF INDIA

   By: DR.MARIAPPAN GOVINDARAJAN

2. Advance is taxable in year of receipt

   By: Vivek Jalan

3. Writ Petitions Not Admissible for Challenging SCN Without Jurisdictional Grounds

   By: Kamal Aggarwal and Aditi Vishnoi

4. Order released without giving opportunity to reply is contrary to the principles of natural justice

   By: Bimal jain

News

1. New Nyaya Sanhita

2. CONSUMER PRICE INDEX NUMBERS ON BASE 2012=100 FOR RURAL, URBAN AND COMBINED FOR THE MONTH OF NOVEMBER 2024

3. Shri Piyush Goyal urges industry leaders to empower divyangjans through skill training and employment opportunities

4. India participates in the 2nd meeting of the Supply Chain Council (SCC) as Vice-Chair, under India-Pacific Economic Framework (IPEF)

5. MOU signed between Investor Education and Protection Fund Authority (IEPFA) and Association of Chartered Certified Accountants (ACCA) to Empower Financial Literacy Across India

6. DFS Secretary Shri M. Nagaraju chairs review meetings to address key operational challenges and enhance efficiency of resolution mechanisms through NARCL and NCLT

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/PoD2/P/CIR/2024/174 - dated 13-12-2024

Classification of Corporate Debt Market Development Fund (CDMDF) as Category I Alternative Investment Fund

2. SEBI/HO/AFD/AFD-POD-1/P/CIR/2024/175 - dated 13-12-2024

Pro-rata and pari-passu rights of investors of AIFs

3. SEBI/HO/DDHS/DDHS-PoD-1/P/CIR/2024/173 - dated 13-12-2024

Relaxation from the ISIN restriction limit for issuers desirous of listing originally unlisted ISINs (outstanding as on December 31, 2023)

DGFT

4. CORRIGENDUM - dated 13-12-2024

Corrigendum to Public Notice no. 30/2024-2025 dated 01.11.2024 on amendment in 4.59 of Handbook of Procedures, 2023 and modification in Standard Input Output Norms (SION) M- 1 to M-8 for export of jewellery

5. Policy Circular No. 10/2024-25 - dated 13-12-2024

EPCG Scheme - Applicability of amendment to Para 5.10(c) of Hand Book of Procedures 2015-20 (Mid-Term Review)

Customs

6. PUBLIC NOTICE No. 57/2024 - dated 26-11-2024

Extension of validity of CAVR Order No. 01/2023-Customs under the Customs (Assistance in Value Declaration of Identified Imported Goods) Rules, 2023 in respect of Linear Alkyl Benzene.

Highlights / Catch Notes

GST

• Court Upholds GST Registration Cancellation Due to Late Appeal and Non-Compliance with Filing Requirements.

  Case-Laws - HC : The High Court dismissed the petition challenging the rejection of appeal against cancellation of GST registration for non-compliance with GST REG 2017. The petitioner failed to furnish returns u/s 39 of the CGST Act, 2017. The show cause notice was issued on 15.01.2023, and the GST registration was cancelled vide order dated 15.01.2023. However, the petitioner filed an appeal on 28.03.2024, with a delay of 403 days, exceeding the statutory limitation period of three months u/s 107(1) of the CGST Act, 2017. The Court held that the petitioner was not entitled to relief due to the delay, lethargy in approach, and non-compliance with GST REG 2017 by not filing returns regularly. The Court found no perversity in the cancellation order or necessity for interference with the appellate order filed beyond the limitation period.
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• Court Orders Decision on Tax Ruling for Land and Building Sale in 90 Days Despite Pre-Show Cause Notice.

  Case-Laws - HC : The High Court held that respondent No. 3 cannot avoid deciding the petitioners' application dated 20 December 2023 seeking an advance ruling on the taxability of sale of land and buildings, based on the subsequent issuance of a pre-show cause notice dated 22 October 2024 by respondent No. 2 u/s 73(5) read with Rule 142(1-A) of the State Goods and Services Tax Act. The Court directed respondent No. 3 to dispose of the petitioners' application within three months, considering the provisions of Section 98(6) requiring the authority to pronounce the advance ruling within 90 days of receiving the application. The Court observed that if the advance ruling authority rules in favor of the petitioners, such ruling will bind not only respondent No. 2 but also the petitioners, as per Section 103(1). However, the Court cautioned against prematurely rushing to the Court, bypassing alternate remedies, before the authorities have an opportunity to examine the cause and make a decision.
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• Tax evasion case: 100% penalty set aside, deposit Rs 25 lakh ordered for ITC discrepancies.

  Case-Laws - HC : The High Court set aside the impugned assessment orders imposing a 100% penalty u/s 74 of the Tamil Nadu Goods and Services Tax Act, 2017, for excess claims of Input Tax Credit and short payment of tax due to discrepancies in sale invoices and turnover reported. The petitioner was directed to deposit a sum of Rs. 25,00,000/- in addition to the amount of Rs. 11,36,408/- already paid within three weeks.
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• Tribunal allows refund of pre-GST taxes paid despite unfulfilled export obligation.

  Case-Laws - HC : The High Court dismissed the appeal and upheld the Tribunal's order allowing the assessee to claim refund of Rs. 3,28,75,733/- towards Central Value Added Tax credit, Customs Duty, and Special Additional Duty paid after the appointed day under the CGST Act. The Tribunal rightly relied on Section 142(3) of the CGST Act to entertain the refund claim for amounts paid under the existing law prior to the GST regime, despite non-fulfillment of export obligation under the advance authorization scheme. The High Court found no perversity in the Tribunal's legal interpretation and conclusion.
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• Multinational firm denied High Court intervention, directed to exhaust statutory appeals against tax authority's order.

  Case-Laws - HC : The High Court declined to entertain the petition challenging the Order-in-Original issued by the Principal Commissioner of CGST and Central Excise, Pune. The Court held that no case was made out to deviate from the usual practice of requiring the party to exhaust the alternate statutory appeals available. Regarding the requirement of pre-deposit, the Court observed that the petitioner, being a multi-national company, cannot bypass the alternate remedy on such grounds. However, the Court granted liberty to the petitioner to challenge the notification dated March 31, 2023, if the occasion arises after exhausting the statutory remedies, keeping all contentions of parties open in this regard. The petition was disposed of.
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• Tax credit blocked by authorities, High Court intervenes. Petitioner to deposit 25% tax, submit objections within 4 weeks.

  Case-Laws - HC : The High Court set aside the impugned order dated 27.11.2023 which had blocked the input tax credit availed by the Petitioner based on invoices raised by their Supplier u/s 17(5). The Petitioner agreed to deposit 25% of the disputed tax within four weeks. The impugned order shall be treated as a show cause notice, and the Petitioner shall submit objections along with supporting documents/material within four weeks from the receipt of the order. The petition was disposed of.
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• Impugned tax order set aside for lack of due process; ITC case involving alleged bogus invoices reopened for petitioner's objections.

  Case-Laws - HC : The High Court set aside the impugned order dated 08.04.2024 for violation of principles of natural justice due to non-service of show cause notices and assessment order. The case involved availment of input tax credit on alleged supplies from bill traders based on bogus invoices without actual goods involvement. Considering the petitioner had remitted the disputed taxes, the Court granted them a final opportunity to file objections within two weeks, treating the impugned order as a show cause notice. The petition was disposed of accordingly.
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• Flawed tax demand notice quashed; authorities can restart process afresh.

  Case-Laws - HC : The High Court held that the Summary of Show Cause Notice along with the attachment containing tax determination cannot substitute a proper Show Cause Notice as mandated u/s 73 of the CGST/AGST Act, 2017. The impugned order was passed without issuing a proper Show Cause Notice, violating the principles of natural justice and Section 75(4) which requires granting an opportunity of hearing when requested. The court quashed the impugned order dated 31.12.2023 for being contrary to Sections 73 and 75(4), and Rule 142(1)(a). However, liberty was granted to the authorities to initiate de novo proceedings u/s 73 for the relevant financial year.
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• Failure to amend invoice & e-way bill leads to 200% GST penalty for discrepancies.

  Case-Laws - HC : The petitioner failed to amend the invoice and e-way bill to reflect the actual goods loaded on the vehicle, resulting in discrepancies in GST documentation. The High Court upheld the levy of penalty u/s 129(3) of the TNGST Act, 2017, amounting to 200% of the tax payable, due to the irregularity committed by the petitioner. The petitioner was unable to substantiate their case with records before the respondents. The Writ Petition was dismissed, but the petitioner was granted liberty to file a Statutory Appeal before the Appellate Authority u/s 107 of the TNGST Act, 2017.
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Income Tax

• Tax Appeals Dismissed: Expenses Disallowed for Non-Deduction u/s 195, Circular Exception Not Met.

  Case-Laws - HC : The High Court dismissed the appeals filed by the Revenue as withdrawn, holding that the appeals did not fall under the exception carved out in Circular No. 3.1(l) dated 15.03.2024. The Court ruled that the exception in Clause 3.1(l) applies only to cases where the deductor failed to deduct tax at source and the tax was sought to be recovered from the payer. However, in the present case, the issue pertained to the disallowance of expenses claimed by the assessee due to non-deduction of tax at source u/s 195. The Court clarified that litigation arising from regular assessments u/s 143(3) and failure to deduct tax at source are treated separately under the Act. Consequently, the enhanced monetary limits specified in the Circular applied retrospectively, rendering the tax effect in the appeals below the prescribed threshold, leading to their dismissal.
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• Petitioner Eligible for Tax Settlement Under VSV Act Due to Pending Appeal, Rejection Overturned for Review.

  Case-Laws - HC : The High Court held that the petitioner was entitled to apply under the Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act) as an appeal regarding disputed tax was pending before the Income Tax Appellate Tribunal (ITAT) on the date of filing the application. The eligibility to apply under the VSV Act is not contingent on the merits of the maintainability of the appeal. The mere pendency of an appeal concerning any disputed tax before the ITAT or the Commissioner of Income Tax (Appeals) is sufficient to file a declaration u/s 4(1) of the VSV Act. The impugned communication rejecting the petitioner's declaration was set aside, and the designated authority was directed to consider the petitioner's declaration and undertaking in accordance with the applicable law.
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• Assessment Orders Invalid Without Proper Notice; Errors in Notice Issuance Compromise Jurisdiction and Legality.

  Case-Laws - HC : The High Court held that the assessment order u/ss 144 and 144B cannot be completed without issuing a notice u/s 143(2). Reliance on the petitioner's PAN database or an alternate email address cannot substitute for statutory compliance. Procedural irregularities in issuing and serving notices undermine the jurisdiction and legality of the entire assessment process. Consequently, the assessment order passed by the respondent authorities without issuing a proper notice u/s 143(2) was declared bad in law and set aside. The High Court quashed the impugned assessment order, demand notice, and penalty notices, directing the respondent authorities to issue fresh notices, if deemed necessary, strictly adhering to statutory provisions and ensuring proper service to the petitioner.
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• Court Rules Amendment to Income Tax Act's Section 50C Not Retrospective; Pre-2009 Transfers Excluded from New Terms.

  Case-Laws - HC : The High Court held that the amendment introducing the words "or assessable" in Section 50C of the Income Tax Act, effective from October 1, 2009, cannot be applied retrospectively. Prior to the amendment, Section 50C was applicable only to transfers where the value was adopted or assessed by the stamp valuation authority. The inclusion of the phrase "or assessable" brought transfers where the value is assessable by the stamp valuation authority within the ambit of Section 50C. This introduction of a new class of transactions can only have prospective application and cannot be applied to transfers made before the amendment. Consequently, the assessee's transfer, which occurred before the amendment, cannot be subjected to Section 50C. The decision was in favor of the assessee.
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• Tax Tribunal Upholds Decision: Penalty Canceled Due to Domestic Transactions, Not International Dealings.

  Case-Laws - AT : The Income Tax Appellate Tribunal dismissed the department's appeal against the Commissioner of Income Tax (Appeals) order cancelling the penalty u/s 271AA imposed on the assessee for non-maintenance of documents relating to international transactions. The Tribunal observed that the assessee did not have any international transaction during the relevant year, but only had domestic transactions with an associated enterprise. The Tax Audit Report and purchase ledger extracts confirmed the assessee's purchases were from a domestic company, not a foreign enterprise as alleged. The Tribunal also noted that the provisions related to specified domestic transactions u/s 92BA were not applicable to the assessee for the relevant assessment year after the omission of Section 40A(2)(b) by the Finance Act, 2017. Consequently, the penalty imposed u/s 271AA was not sustainable.
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• Penalty waived for Covid-19 delays in responding to income tax notice.

  Case-Laws - AT : The Income Tax Appellate Tribunal deleted the penalty levied u/s 271(1)(b) for non-compliance with a notice issued u/s 142(1) during reassessment proceedings. Considering the extraordinary circumstances of the Covid-19 pandemic, lockdowns, and the suffering caused, the Tribunal held that the department should have taken a liberal view in condoning the default. The assessee's non-compliance was covered u/s 273B, read with Section 271(1)(b), as Section 271(1)(b) is subject to Section 273B. The assessee's appeal was allowed, and the penalty was deleted.
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• Appellant Failed to Prove Authenticity of Transactions; Case Remanded for Recalculation of Bogus Purchase Impact.

  Case-Laws - AT : The appellant failed to prove the genuineness of the purchase transactions, and the goods were received from parties other than those from whom they were shown to have been purchased. The appellant deposited the input tax credit availed on the invoices from two entities, indicating that the goods were not received from those entities. The appellant inflated the expenditure by showing higher purchase prices through fictitious invoices from bogus suppliers. Since no sale can occur without purchase, and the appellant indulged in bogus purchases, a percentage of the bogus purchases can be added to arrive at the net income. The matter was remanded to the Assessing Officer for recalculations regarding the percentage of bogus purchases and/or gross profit, after providing an opportunity to the appellant to produce relevant and admissible material, in accordance with the law.
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• Tax tribunal allows appeal, directs reconsideration on merits over GST/CENVAT refund adjustment.

  Case-Laws - AT : The Income Tax Appellate Tribunal allowed the assessee's appeal for statistical purposes. It set aside the CIT(A)'s dismissal of the rectification application and directed the CIT(A) to decide the grounds of appeal raised by the assessee on merits as per Section 250(6) of the Act. The Tribunal held that the CIT(A)'s action of not interfering with the CPC's adjustment regarding GST/CENVAT refund on the ground of requiring verification of books of accounts was akin to "missing the woods for trees". The Tribunal emphasized that rules of procedure should promote justice, not obstruct it, relying on the Supreme Court's observation in MV Vali Perov. Fernandeo Lopez case.
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• Tribunal Rules Assessee as "Developer" Eligible for Deduction u/s 80-IA(4) for Airport Terminal Project.

  Case-Laws - AT : The assessee was held to be a "developer" and not merely a "works contractor" for the purposes of claiming deduction u/s 80-IA(4) of the Income Tax Act. The Tribunal allowed the assessee's claim for deduction u/s 80-IA(4) on the ground that the assessee had deployed its own funds, equipment, and had undertaken the risk and liability from the inception of the project till its transfer to the Airport Authority of India. The Tribunal concluded that a new infrastructure facility, in the form of a New Expandable Modular Integrated Terminal Building at Raja Bhoj Airport, Bhopal, had come into existence, similar to the case of NCC-MSKEL JV, where a new domestic arrival block at Sardar Vallabh Bhai Patel International Airport, Ahmedabad, was held to be a new infrastructure facility eligible for deduction u/s 80-IA(4).
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• ITAT Rules Foreign Enterprise's Software and Engineering Service Receipts from India Are Non-Taxable Under DTAA.

  Case-Laws - AT : The Income Tax Appellate Tribunal (ITAT) held that the receipts received by the assessee, a foreign associated enterprise (AE), from HCLT for providing software, engineering, and infrastructure services were not taxable in India. The Assessing Officer (AO) had contended that the nature of these receipts should be considered "fees for technical services (FTS)" under Explanation 2 to Section 9(1)(vii) of the Income Tax Act and taxable under the Act and the India-Singapore DTAA. However, the ITAT agreed with the assessee's contention that HCLT was required to treat the entire sale proceeds received from foreign clients as export turnover under Explanation 2 to Section 10AA by raising a single consolidated invoice. The ITAT distinguished the facts from other cases cited by the Revenue and held that the assessee rendered services to foreign customers outside India, and the services were utilized in their businesses outside India, making the receipts non-taxable. The issue of taxability under DTAAs was left open for determination. The appeal was decided in favor of the assessee.
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• Tribunal Backs Partial Disallowance of Purchases, Rejects Full Disallowance Proposal as Unjustified by Tax Commissioner.

  Case-Laws - AT : The Appellate Tribunal allowed the assessee's appeal against the invocation of Section 263 by the Principal Commissioner of Income Tax (PCIT) for disallowing the entire purchases of Rs. 102,43,73,377/-. The Tribunal held that the Assessing Officer (AO) had reasonably disallowed only 10% of the purchases after duly considering the details furnished by the assessee during the assessment proceedings u/s 143(3). The PCIT's action of proposing to disallow the entire purchases against the basic principle of business, without appreciating that the assessee had achieved a turnover of Rs. 132,12,33,622/-, was erroneous. The Tribunal ruled that the AO's order cannot be termed erroneous to invoke Section 263, as it is not every error that should induce the PCIT to exercise powers under that section, especially when the AO has considered the issue carefully and cautiously.
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• Tribunal Invalidates Tax Notice; ITAT Rules in Favor of Assessee Due to Improper Issuance and Unjustified Additions.

  Case-Laws - AT : The Tribunal held that the notice issued u/s 148 by the Jurisdictional Assessing Officer (JAO) was invalid as it should have been issued by the Faceless Assessing Officer (FAO) who conducted the assessment proceedings, relying on the Bombay High Court's decision in Hexaware Technologies Ltd. The reopening was based on incorrect information that the assessee had purchased goods from a Pvt. Ltd. company, whereas the facts revealed that the assessee had sold goods worth Rs. 85,69,197/- to same company. The Tribunal further held that the addition made u/s 68 was unjustified as the assessee had already offered the sales for taxation and had discharged its onus by producing overwhelming evidence of the sales recorded in the books of account. Consequently, the ITAT allowed the assessee's appeal.
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• Fixed Deposits, Silverware Gifts Exempt; Undisclosed Income & Travel Expenses Upheld; Marriage Costs Adjusted.

  Case-Laws - AT : Addition of fixed deposits and interest thereon in wife's name was deleted as the Revenue could not controvert that the deposits belonged to the assessee's wife from her marriage gift. Addition of silverware weighing 33 kgs was deleted as the assessee's wife owned these assets gifted by her father. Estimated marriage expenses were restricted to Rs. 3 lakhs instead of Rs. 5 lakhs estimated by AO. Personal drawings addition was limited to Rs. 2.7 lakhs for rental payments instead of Rs. 8.05 lakhs estimated by AO. Advance tax payments of Rs. 1.3 lakhs, foreign trip expenses, and bank deposits additions were upheld. Investment of Rs. 3 lakhs in Himalaya Benefit Fund and consequential interest of Rs. 4.77 lakhs were confirmed as undisclosed income. Additions based on materials from Enforcement Directorate regarding transponder hire charges of Rs. 2.24 crores, transponder hire facility payments, purchase of equipment abroad and Malaysian Ringgits were deleted as relatable to the company.
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• Taxpayer's claim for deduction upheld; PCIT's revision order quashed on agricultural land sale.

  Case-Laws - AT : The ITAT quashed the order passed by the Principal Commissioner of Income Tax (PCIT) u/s 263 of the Income Tax Act. The assessee was eligible for deduction u/s 54EC as the land was used for agricultural purposes in the preceding two years before its sale, as evident from the 7/12 extracts. The ITAT held that the Assessing Officer's conclusion accepting the assessee's claim was reasonable and not erroneous, and the PCIT failed to establish that the order was prejudicial to the Revenue's interests. The reference to the Valuation Officer was not mandatory, and the PCIT lacked authority to direct such a reference. The ITAT ruled in favor of the assessee, allowing the grounds raised.
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• ITAT Directs TPO to Reassess ITeS Classification and Remove Cost Contribution Additions for Fair Transfer Pricing.

  Case-Laws - AT : The ITAT provided the following rulings: Regarding TP adjustment for comparable selection and treatment of IT support services as ITeS, the issue requires examination by the Transfer Pricing Officer (TPO) based on the specific nature of services rendered by the assessee. Concerning the TPO's separate benchmarking analysis for cost contribution charges and determining arm's length price at 'Nil', making an adjustment of the entire amount, the ITAT ruled in favor of the assessee. The Tribunal held that the TPO remained oblivious to Rule 10B(1)(a) stipulating 'comparable' and 'uncontrolled' transactions while applying the CUP method, and the TPO's general observation was incorrect. The ITAT directed the TPO to delete additions made on account of cost contribution charges and notional interest on outstanding receivables from Associated Enterprises (AEs).
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Customs

• Customs authorities extend CAVR order for Linear Alkyl Benzene imports under HS 38170011 for 1 year from Sep 26, 2024.

  Circulars : The Central Board of Indirect Taxes and Customs extended the validity of CAVR Order No. 01/2023-Customs dated 18th September 2023, issued under the Customs (Assistance in Value Declaration of Identified Imported Goods) Rules, 2023 in respect of Linear Alkyl Benzene falling under HS Code 38170011, for a period of 1 year with effect from 26th September 2024 up to 25th September 2025.
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• Not the Importer, Not the Owner: Appellant Cleared in Imported Car Seizure Case.

  Case-Laws - SC : The Supreme Court held that the appellant was neither the importer nor the owner of the imported car in question under the Customs Act, 1962 and the Motor Vehicles Act, 1988 respectively. The original importer remained the legal owner as the vehicle was not registered in the appellant's name. Consequently, the initiation of proceedings against the appellant by issuing a show cause notice, seizing, and confiscating the vehicle was unlawful. The Supreme Court quashed the impugned judgments, show cause notices, and other proceedings against the appellant, and restored the order of the Appellate Tribunal.
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• High Court Affirms Acquittal in Contraband Gold Case Due to Lack of Corroboration and Retracted Confession.

  Case-Laws - HC : The High Court upheld the trial court's acquittal of the accused in a case involving the seizure of contraband gold by the Directorate of Revenue Intelligence (DRI). The prosecution's case primarily relied on the testimonies of two DRI officers involved in the search and seizure operation. However, the court found their evidence lacking corroboration from independent witnesses or panchas present during the operation. The accused had retracted her confessional statement, which was recorded in English despite her knowledge of only Urdu. The court held that resting the prosecution's case solely on the retracted confession and the officers' testimonies fell short of proving the accused's guilt beyond reasonable doubt. Consequently, the High Court dismissed the appeal and upheld the acquittal.
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• Importers can seek goods release per CESTAT order despite Revenue Dept's appeal in Supreme Court.

  Case-Laws - HC : The High Court held that the mere pendency of an appeal before the Supreme Court against the CESTAT order would not entitle the Revenue Department to insist on provisional assessment of the imported goods. Since there was no stay on the CESTAT order classifying the goods under CTH 851770, the Petitioner shall be entitled to seek release of goods as per the CESTAT order, subject to the final decision of the Supreme Court and compliance with any directions issued therein. Consequently, the writ petition was disposed of.
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• Customs Duty Dispute: Replenishment Scheme Misuse Alleged.

  Case-Laws - HC : The High Court held that the appeals were maintainable as the show cause notice issued by the Adjudicating Authority raised issues pertaining to mis-declaration of description and value addition to wrongly claim benefit under the replenishment scheme, applicability of Notification No. 57/2000-Customs and Circular No. 27/206-Customs, and the Foreign Trade Policy 2015-20. The Court found no substantial questions of law arising for consideration, as the demand for duty on the quantum of gold received under the replenishment scheme was not disputed, and the findings of fact were properly appreciated based on the available record. Consequently, the appeals were dismissed.
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• Customs broker's penalty reduced for assisting export of mis-declared goods; forged docs penalty set aside.

  Case-Laws - AT : The penalty imposed u/s 114(i) of the Customs Act, 1962 on the appellant (a Customs Broker) for abetting the clearance of undeclared/mis-declared export goods was reduced to Rs. 10,00,000/-. However, the penalty imposed u/s 114AA was set aside as the appellant was not responsible for forging any documents and the ingredients specified in Section 114AA were not present. The CESTAT held that the Customs Broker Licensing Regulations, 2013 provide for penal action upon the Customs Broker for failing to fulfill obligations, and penal proceedings could have been initiated under the relevant provisions of the said Regulations.
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• Shipping Bills Conversion Allowed Beyond Time Limit.

  Case-Laws - AT : The respondent's request for conversion of shipping bills from NFEI to EOU/other schemes was made after a period of three months, exceeding the time limit. However, it was held that Section 149 of the Customs Act, 1962 does not specify any time limit for such conversions. The Tribunal and High Court have allowed conversions even when the request was filed beyond three months, as the time limit prescribed by the Board Circular is not binding, being a non-statutory provision. Since the conversion had no revenue implication and the respondent did not claim any export incentive schemes, the impugned order was upheld, and the Revenue's appeal was dismissed.
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DGFT

• DGFT circular on export obligation under EPCG scheme set aside, amendment prospective only.

  Circulars : The Division Bench of the Hon'ble High Court of Ahmedabad set aside Policy Circular No. 22/2015-20 dated 29.03.2019 issued by DGFT regarding the applicability of amendment to Para 5.10(c) of Hand Book of Procedures 2015-20 (Mid-Term Review) on third party exports under the EPCG Scheme. Subsequently, the SLP filed by the Union of India before the Hon'ble Supreme Court was dismissed. Consequently, the amendment to Para 5.10(c) is prospective in nature and applicable only to third party exports made against EPCG Authorisations issued on or after 05.12.2017. For exports prior to 05.12.2017, the earlier provisions would govern the counting of third party exports towards fulfilment of export obligation.
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IBC

• NCLAT Upholds CoC's Use of Swiss Challenge Method in Resolution Plan, Dismissing Appeal as Meritless.

  Case-Laws - AT : The NCLAT dismissed the appeal challenging the approval of the resolution plan by the Committee of Creditors (CoC) and the Adjudicating Authority. The key findings were: The adoption of the Swiss Challenge Method by the CoC for value maximization was an outcome of its commercial wisdom, which cannot be interfered with. The appellant's contention questioning the Swiss Challenge method lacked merit. The Resolution Professional (RP) conducted the Corporate Insolvency Resolution Process (CIRP) fairly and transparently, providing equal opportunity to all resolution applicants. The CoC duly considered and evaluated the revised resolution plan of the successful resolution applicant (SRA) before approval. The appellant's claim of denial of effective participation in CoC meetings was unfounded. The Adjudicating Authority did not err in approving the SRA's resolution plan, as no grounds u/s 61(3) of the Insolvency and Bankruptcy Code (IBC) were established to interfere with the CoC's commercial decision. The NCLAT upheld the primacy of the CoC's commercial wisdom and found no irregularities in the CIRP conduct by the RP.
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Indian Laws

• Termination dispute non-arbitrable, falls under statutory authority's jurisdiction.

  Case-Laws - SC : The Supreme Court set aside the High Court's judgment and order appointing an arbitrator u/s 11(6) of the Arbitration and Conciliation Act, 1996. It held that the dispute regarding non-payment of wages and the legality of the termination order was non-arbitrable as it fell under the jurisdiction of the statutory authorities under the Payment of Wages Act. The alleged violation of the non-disclosure obligation was an afterthought not raised in the show cause notice, inquiry report, or termination order, rendering it non-existent. Consequently, the respondent's petition u/s 11(6) was dismissed.
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PMLA

• High Court Upholds Order in Money Laundering Case, Cites Prima Facie Evidence of Illicit Mining and Rs. 261.89 Crore Proceeds.

  Case-Laws - HC : The High Court dismissed the criminal revision petition filed by the petitioners challenging the order rejecting their discharge petition in a money laundering case. The court held that there were prima facie materials showing illicit mining and generation of proceeds of crime valued at Rs. 261.89 crores. It observed that u/s 3 of the Prevention of Money Laundering Act, concealment of the proceeds of crime itself constitutes the offence of money laundering. The prosecution need not demonstrate the money trail or identify the proceeds of crime if they have been concealed. The court invoked the presumption u/s 24(b) of the Act against the petitioners, considering the quantum of money involved and the nature of allegations. The petitioners have to rebut the presumption during the trial. The High Court found no grounds to interfere with the well-reasoned order of the lower court rejecting the discharge petition.
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SEBI

• SEBI relaxes ISIN limit for listing unlisted bonds post Dec 2023 to promote transparency.

  Circulars : The Securities and Exchange Board of India (SEBI) issued a circular providing relaxation from the International Securities Identification Number (ISIN) restriction limit for issuers desirous of listing originally unlisted ISINs outstanding as on December 31, 2023. Unlisted ISINs outstanding as on December 31, 2023, which are converted to listed ISINs pursuant to Regulation 62A(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, shall be excluded from the maximum limit of ISINs to mature in a financial year specified in the Master Circular for issue and listing of Non-convertible Securities. This relaxation aims to encourage issuers to list their grandfathered outstanding unlisted ISINs.
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Service Tax

• Dealer's discounts & incentives from carmaker not taxable as services.

  Case-Laws - AT : The appellant was held not liable to pay service tax on discounts and incentives received from the manufacturer, as these related to sale and purchase of goods (cars, spare parts, and accessories) and not rendition of any service. The Tribunal set aside the impugned order, allowing the appeals, as the provisions of the Finance Act cannot be made applicable to such transactions between the appellant, manufacturer, and customers involving transfer of goods. The discounts and incentives offered by the manufacturer were in relation to sale and purchase of goods, passed on to the ultimate consumers, and did not constitute any service rendered by the appellant.
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• Tribunal Rules Airport Services as 'Works Contract,' Grants 67% Abatement; Service Tax Demand Set Aside Due to Exemptions.

  Case-Laws - AT : The Tribunal held that the services rendered by the appellant to the Airports Authority of India (AAI) were composite services involving service elements as well as the element of sale of goods, classifiable as 'Works Contract Services' and not merely 'Management, Maintenance or Repair Services'. The appellant was entitled to avail the benefit of 67% abatement under the relevant notification. The demand of service tax on the service element was wrongly confirmed as the services provided to airports are exempted. The services provided to the Central Public Works Department (CPWD), a non-commercial government organization, were also held to be non-taxable. The show cause notice was held barred by limitation as there was no willful misstatement or suppression by the appellant. The Tribunal set aside the impugned order confirming the service tax demand.
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• Partner's 64% Iron Ore Share Ruled as Profit Distribution, Not Taxable Service Payment by CESTAT.

  Case-Laws - AT : The appellant, being a partner in the partnership firm M/s. Sree Gavisiddeshwara Minerals, was entrusted with extracting iron ore from the leased mine. As a managing partner, the appellant received 64% of the extracted ore as a share of profit, while the other partners received 36%. The Revenue alleged that service tax was payable on the value of the 64% ore received by the appellant, classifying it as "Mining of Mineral, Oil or Gas Services." However, the CESTAT held that the appellant's receipt of 64% ore was merely a profit share as a partner and not consideration for rendering services. Relying on the Gujarat High Court's judgment in Cadilla Healthcare Ltd., the CESTAT ruled that a partner's profit share cannot be considered a consideration for services rendered to the partnership firm. Consequently, the CESTAT set aside the impugned order, allowing the appellant's appeal.
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• Appellants' services deemed export, eligible for CENVAT refund, remanded for calculation based on FIRCs.

  Case-Laws - AT : The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the appellants did not render intermediary services for their foreign principal. The services provided by the appellants were classified as export of services, making them eligible for refund of unutilized CENVAT credit. However, the matter was remanded to the original authority to calculate the eligible refund amount based on actual foreign remittances received during the respective quarters, as the appellants failed to submit certain Foreign Inward Remittance Certificates (FIRCs). The appeals were disposed of accordingly.
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Central Excise

• Tax Tribunal Quashes Order Denying CENVAT Credit Due to Defective Show Cause Notice.

  Case-Laws - AT : The Appellate Tribunal allowed the appeal and set aside the impugned order. The Tribunal held that the Show Cause Notice did not discuss the unavailability of CENVAT credit to the appellants, nor did it propose to deny the availment of CENVAT credit. The Show Cause Notice focused on recovering duty paid on finished goods utilizing CENVAT credit, but it did not refer to Rule 14 of the CENVAT Credit Rules or allege that the credit was wrongly taken or inadmissible. Since duty was not payable on the final products cleared by the appellants, it was immaterial whether such duty was paid through cash or CENVAT credit. The Tribunal concluded that the impugned order exceeded the scope of the Show Cause Notice.
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• Company's Fraudulent CENVAT Credit Claims Exposed; Tribunal Upholds Duty Recovery, Interest, and Penalties.

  Case-Laws - AT : The appellant Kaizen Organics Pvt. Ltd. was found guilty of fraudulently availing CENVAT credit and cash refund by showing fictitious manufacturing of excisable goods purportedly supplied to them by Koolmint. The Tribunal held that there was no credible evidence of actual manufacturing activity by Koolmint, and the claims of electricity consumption from DG sets lacked merit. The entire transaction appeared to be a sham to wrongfully avail duty benefits. Section 11D of the Central Excise Act was rightly invoked to recover Rs. 95,60,962 collected by Koolmint under the guise of excise duty. The extended period of limitation was correctly applied as the fraud vitiated all statutory records ab initio. The appeal was dismissed, upholding the Commissioner's order demanding duty, interest and penalties.
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Case Laws:

• GST

• 2024 (12) TMI 730
  Jurisdiction - power of Officers of the G.S.T. to seize cash at the time of raid of the premises of the assessee in exercise of their powers under Section 67 (2) of the G.S.T. Act - interpretation of expression and seize or may himself search and seize such goods, documents or books or things - HELD THAT:- Exemption Application is allowed. Issue notice, returnable in four weeks.

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• 2024 (12) TMI 729
  Cancellation of registration for noncompliance of GST REG 2017 - rejection of appeal on the ground of limitation itself - failure to to furnish a return under section 39 of the CGST Act, 2017 - HELD THAT:- It appears that a show cause notice was issued to the petitioner on 15.01.2023 which clearly indicates the reason for issuing the show cause notice was that the petitioner has not complied with GST REG 2017 issued to it within the stipulated period - It further transpires from record that the GST registration of the petitioner was cancelled vide order dated 15.01.2023 (Annexure-8) in Form GST REG 2019; however, petitioner filed appeal on 28.03.2024 with a delay of 403 days i.e. more than a year; whereas the normal period for filing appeal is three months as prescribed under section 107 (1) of CGST Act, 2017. There are no hesitation in holding that the petitioner firm is not entitled for any relief on the ground of delay and latches coupled with the fact of being lethargic in approach, inasmuch as, on the one hand, the petitioner did not file return regularly and thus has not complied with GST REG 2017 issued to him in any manner; and on the other hand, the petitioner filed an appeal after a delay of 403 days which is admittedly beyond the period of 3 months limitation fixed for filing appeal under the Act. Having regard to the admitted facts and circumstances, neither there is any perversity in the order of cancellation of GST registration; nor is there any necessity for interference with the appellate order, inasmuch as, the same has been filed beyond the statutory period of limitation. Petition dismissed.

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• 2024 (12) TMI 728
  Challenge to pre-show cause notice in Form DRC-01 A issued by respondent No. 2 to the petitioner under Section 73 (5) read with Rule 142 (1-A) of the State Goods and Services Tax Act (SGST) - seeking advance ruling on advance ruling on taxability of sale of land and buildings - HELD THAT:- The respondent No. 3 cannot avoid deciding the petitioners application dated 20 December 2023 on merits based upon subsequent issues of the pre-show cause notice dated 22 October 2024. This is more so because the proviso to Section 98 (2) is quite clear, and it uses the expression already pending or decided . The phrase already pending would mean and imply that it is pending on the date of filing the application seeking an advance ruling. Directions have been issued to respondent No. 3 to dispose of the petitioners application within three months from today. This direction is based on the statement made on behalf of respondent No. 2 and also upon considering the provisions of Section 98 (6), which require the authority to pronounce the advance ruling in writing within 90 days of receiving the application. In any event, the scope of interference with pre-show cause or even show cause notice is minimal. If, ultimately, the advance ruling authority rules in favour of the petitioner, then it was pointed out by Petitioner in terms of Section 103 (1) that such advance ruling will bind not only respondent No. 2 but also the petitioner. As a matter of routine, the Petitioners must not rush to this Court bypassing alternate remedies or by filing pre-mature petitions just because they can afford to do so. There is, of late, an increased tendency to rush to this Court and take a chance to see if proceedings before the authorities are stalled even before the authorities have an opportunity to examine the cause shown and make some decision. The same applies to bypassing alternate remedies. Petition disposed off.

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• 2024 (12) TMI 727
  Cancellation of GST registration of the petitioner - petitioner has not filed return for a continuous period of six months - non-service of SCN - violation of principles of natural justice - HELD THAT:- In the circumstances of the case wherein, the claim made by the petitioner is that it is covered under Section 10 of the Act, 2017 and as such, issuance of notice itself is incorrect, and the order impugned dated 15.3.2024 ordering for cancellation of registration is non speaking, the same is quashed and set aside. The matter is remanded back to the jurisdictional authority, the petitioner would appear before the said authority and file response to the show cause notice dated 6.2.2024 raising all pleas as sought to be raised in the present petition, including the fact that it is registered under the provisions of Section 10 of the Act, 2017 - Petition disposed off by way of remand.

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• 2024 (12) TMI 726
  Excess claims of Input Tax Credit (ITC) - short payment of tax - defects related to the discrepancies in sale invoices and differences in turnover reported between GSTR 3B and TDS received from the Government Departments - penalty at 100% imposed u/s 74 of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017 - HELD THAT:- Considering the submissions made by the learned counsel on both sides, the impugned assessment orders dated 29.02.2024 and 09.03.2024 respectively are hereby set aside - The petitioner shall deposit a sum of Rs. 25,00,000/- apart from the amount i.e., Rs. 11,36,408/-, already paid by the petitioner on 29.05.2024, within a period three weeks from the date of receipt of a copy of this order. The writ petition stands disposed of.

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• 2024 (12) TMI 725
  Jurisdiction of adjudicating authority u/s 142 (3) of the CGST Act to entertain the claim of refund - Refund of duty paid under advance authorisation due to non-fulfillment of export obligation - HELD THAT:- Admittedly, the assessee had paid the amount of CVD and SAD between the period August 2018 March 2019 by way of regularisation of shortfall in fulfilment of the export obligation. The Tribunal has relied on Section 142 (3) of the CGST Act and has held that the same provided that every claim for refund by any person before, on or after the appointed day for refund of any amount of central value added tax credit/duty/tax/interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of the existing law. The Tribunal, by taking into account the provisions of sub sections (3), (5) and (8A) of Section 142 of the CGST Act, has held that the assessee is entitled to claim refund of CVD and SAD paid after the appointed day. Accordingly, the assessee had been held to be entitled to refund of central value added tax credit of Rs. 3,28,75,733/-. The aforesaid finding is in consonance with law and the same cannot be termed as perverse. No substantial question of law arises for consideration in this appeal. The appeal fails and is hereby dismissed.

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• 2024 (12) TMI 724
  Maintainability of petition - availability of alternative remedy - Challenge to Order-in-Original made by the Principal Commissioner of CGST and Central Excise, Pune - Requirement of pre-deposit - Limited challenge to the notification dated 31 March 2023. Maintainability of petition - availability of alternative remedy - Challenge to Order-in-Original made by the Principal Commissioner of CGST and Central Excise, Pune - HELD THAT:- No case is made out to deviate from the usual practice of requiring the party to exhaust the alternate statutory appeals available to them. Recently, in Oberoi Constructions Ltd. vs. The Union of India Ors. [ 2024 (11) TMI 588 - BOMBAY HIGH COURT] the decisions on alternate remedies are surveyed. Reference also made to the trend of attempting to deviate from this practice and take chances by filing petitions in this Court. By adopting the reasoning in the said decision instead of repeating it, this petition is declined to be entertained. On perusal of petition, it is found that a grant of any relief would involve examination into various agreements referred to in the petition itself. This is an exercise best undertaken by the authorities under the Act. Requirement of pre-deposit - HELD THAT:- The same cannot be grounds for not availing of alternate statutory remedies provided by the Statute. There is not even an averment that the petitioner cannot arrange for a pre-deposit amount. The petitioner is a multi-national company, and in any event, based on such ground, there is no question of by-passing the alternate remedy provided by the Statute. Limited challenge to the notification dated 31 March 2023 - HELD THAT:- Should the petitioner not succeed by recourse to the remedy available under the Act, and if occasion arises to challenge the final determination, the petitioner is granted liberty to press the challenge to the notification dated 31 March 2023. All contentions of all parties in this regard are kept open. The petition not entertained - petition disposed off.

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• 2024 (12) TMI 723
  Eligibility of ITC availed by the Petitioner based on the invoices raised by their Supplier - blocked credit under Section 17(5) - petitioner is ready and willing to pay 25% of the disputed tax - HELD THAT:- The impugned order dated 27.11.2023 is set aside and the petitioner shall deposit 25% of the disputed tax within a period of four weeks from the date of receipt of a copy of this order. The impugned order shall be treated as show cause notice and the petitioner shall submit its objections within a period of four weeks from the date of receipt of a copy of this order along with supporting documents/material. Petition disposed off.

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• 2024 (12) TMI 722
  Violation of principles of natural justice - neither the show cause notices nor the impugned order of assessment have been served by tendering to the petitioner or by registered post, instead it was uploaded in the common portal - Availment of Input tax credit in respect of alleged supplies from bill traders on the strength of bogus invoices without actual involvement of goods - HELD THAT:- Taking into account the peculiar facts of the case, wherein, the petitioner has already remitted the entire disputed taxes, this Court is of the view that the petitioner may be granted one final opportunity to put forth his objections, which was not objected to by the learned Special Government Pleader for the respondent. The impugned order, dated 08.04.2024 is set aside. The impugned order shall be treated as a show cause notice and the petitioner shall filed their objections within a period of two (2) weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (12) TMI 721
  Violation of principles of natural justice - Validity of Summary of Show Cause Notice as a substitute for a proper Show Cause Notice - It is the grievance of the petitioner that the petitioner was not provided with the opportunity of hearing as provided under Section 75 (4) of the CGST/AGST Act, 2017 before passing of the order - attachment of SCN. Whether the said attachment can be said to be a Show Cause Notice as per the mandate of both the Central Act as well as the State Act and the Rules made therein under? - HELD THAT:- This Court is of the view that the Summary of the Show Cause Notice along with the attachment containing the determination of tax cannot be said to be a valid initiation of proceedings under Section 73 without issuance of a proper Show Cause Notice. The Summary of the Show Cause Notice is in addition to the issuance of a proper Show Cause Notice. Under such circumstances, this Court is of the opinion that the impugned order challenged in the instant writ petition is contrary to the provisions of Section 73 as well as Rule 142 (1) (a) of the Rules as the said impugned Orders were passed with issuance of a proper Show Cause Notice. Whether the determination of tax as well as the order attached to the Summary to the Show Cause Notice in GST DRC-01 and the Summary of the Order in GST DRC-07 can be said to be the Show Cause Notice and order respectively, this Court duly dealt with what would constitute a Show Cause Notice, the Statement as per Section 73 (3) as well as the Summary to the Show Cause Notice in GST DRC-01 and Summary of the Statement in GST DRC-02 - the submission of the respondents that the statement attached to the Summary of the Show Cause Notice is the Show Cause Notice is completely misconceived and contrary to Section 73 (1) and 73 (3). Whether Rule 26 (3) can be applicable to Chapter-XVIII when the said Sub-Rule on refers to Chapter-III? - HELD THAT:- In the case of M/S. SILVER OAK VILLAS LLP VERSUS THE ASSISTANT COMMISSIONER (ST) , THE ADDITIONAL COMMISSIONER OF CENTRAL TAX, STATE OF TELANGANA, UNION OF INDIA, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS [ 2024 (4) TMI 367 - TELANGANA HIGH COURT] , the learned Division Bench of the Telangana High Court had applied Rule 26 (3) of the Rules of 2017 even to Chapter-XVIII of the Rules of 2017. In the case of AV BHANOJI ROW VERSUS ASSISTANT COMMISSIONER ST VISAKHAPATNAM [ 2023 (2) TMI 1224 - ANDHRA PRADESH HIGH COURT] the learned Division Bench of the Andhra Pradesh High Court held that the signatures cannot be dispensed with and Sections 160 and 169 cannot save an order, notice, communication which did not contain a signature. This Court has duly perused the Summary of the Show Cause Notices wherein the petitioner was only asked to file his reply on a date specified. There was no mention as to the date of hearing and the Column was kept blank. However, the petitioner had sought for an opportunity of hearing which was however not given - if this Court takes note of Section 75 (4) of both the Central Act as well as State Act, it would be seen that it is the mandate of the said provision that an opportunity of hearing should be granted when a request is received in writing from the person chargeable with tax or penalty or when any adverse decision is contemplated against such person. The mandate of Section 75 (4) of both the Central and State Act are safeguards provided to the assessees so that they can have a say in the hearing process. In the instant writ petitions, the attachment to the Summary of Show Cause Notice in GST DRC-01 is only the Statement of the determination of tax in terms with Section 73 (3). The said Statement of determination of tax cannot substitute the requirement for issuance of the Show Cause Notice by the Proper Officer in terms with Section 73 (1) of the Central or the State Act. Under such circumstances, initiation of the proceedings under Section 73 against the petitioners in the instant batch of writ petitions without the Show Cause Notice is bad in law and interfered with - The issuance of the Summary of the Show Cause Notice, Summary of the Statement and Summary of the Order do not dispense with the requirement of issuance of a proper Show Cause Notice and Statement as well as passing of the Order as per the mandate of Section 73 by the Proper Officer. As initiation of a proceedings under Section 73 and passing of an order under the same provision have consequences. The Show Cause Notice, Statement as well as the Order are all required to be authenticated in the manner stipulated in Rule 26 (3) of the Rules of 2017. Accordingly, this Court is of the opinion that the Impugned Order challenged in the writ petition are in violation of Section 75 (4) as no opportunity of hearing was given. The impugned order dated 31.12.2023 issued by the respondent no.3 is hereby set aside and quashed. This Court also cannot be unmindful of the fact that it is on account of certain technicalities and the manner in which the impugned order was passed, this Court interfered with the impugned order and hence set aside and quashed the same - this Court while setting aside the impugned Order-in-Original dated 31.12.2023, grants liberty to the respondent authorities to initiate de novo proceedings under Section 73, if deemed fit for the relevant financial year in question. Petition disposed off.

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• 2024 (12) TMI 720
  Levy of penalty u/s 129(3) of the TNGST Act, 2017 being 200% of the tax payable - discrepancies in GST documentation - HELD THAT:- It appears to be an irregularity committed by the petitioner in not having the invoice and the e-way bill amended to correspond with the goods that were loaded on the vehicle. Whether the payments were received for the other two items or not is also not clear - Be that as it may, it was for the petitioner to produce all the records to substantiate the case before the respondents. Therefore, the impugned order cannot be found fault with. This Writ Petition is liable to be dismissed - However, liberty can be given to the petitioner to file a Statutory Appeal before the Appellate Authority under Section 107 of the TNGST Act, 2017.

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• 2024 (12) TMI 719
  Violation of principles of natural justice - order passed without assigning any reason and considering the submissions made by the petitioner - discrepancy due to double taxation on goods purchased in auction after being imported - HELD THAT:- Issue Notice, returnable on 18.12.2024. In the meanwhile, by way of ad-interim relief, no coercive action shall be taken by the respondents against the petitioner during the pendency of this petition. Direct service through E-mail is permitted.

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• 2024 (12) TMI 718
  Refund claim - applicability of period of limitation of two years as prescribed under Section 54 of the Central Goods Services Act, 2017, is March, 2018 - HELD THAT:- This case is squarely covered by the order passed in the case of M/s Shri Laxmi Industries Vs. Union of India Ors. [ 2024 (7) TMI 1565 - RAJASTHAN HIGH COURT] where it was held that It would be appropriate to note that under section 54 of the Act, the application for refund is to be filed in a prescribed manner, within two year from the relevant date. In the present case, the relevant date is March, 2018. As per section 54 of the Act, the application could have been made till March, 2020. This petition is allowed on the same terms and conditions - impugned order set aside.

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• Income Tax

• 2024 (12) TMI 717
  Maintainability of appeal on low tax effect - submission of the assessee as appeals would have to be withdrawn as admittedly the tax effect is less than the revised monetary limits specified in the Circular 9/2024 which revision of limits has a retrospective effect - HELD THAT:- As noted earlier, initially the exceptions were only of three categories but subsequently increased to five and, thereafter, the present Circular increased the same to thirteen. Whether an appeal should be filed irrespective of the monetary limits involved has to be made when the appeal is filed and it is only the exceptions that are then prevalent that would be applicable - Any exception introduced thereafter would have no application whatsoever in determining whether an appeal should be filed. This would be a normal way of construing the circular and, in any event, the language of Para 10 makes it abundantly clear that such was the intention. In fact whenever the Board has enhanced the scope of the exception, it has always made it prospective. However, when it comes to increasing the monetary limits, the Board, having regard to the avowed objects of reducing litigation, has made it explicitly clear both in Circular No. 9 of 2024 as well as in Circular No. 3 of 2018 that the enhanced monetary limits will apply even in respect of all pending appeals. We are therefore of the view that having regard to the Circulars, the present appeals must be dismissed as withdrawn and the Revenue cannot prosecute the appeals by relying upon any exception created in para 3.1(l) of the Circular dated 15.03.2024 which by virtue of para 10 is to be applied only to appeals to be filed henceforth. The argument of the Revenue that both the Circulars dated 15.03.2024 and 17.09.2024 have to be read in a holistic manner and both must be given retrospective effect is contrary to the plain terms of the said Circulars. Payments made by the assessee for sales and marketing services rendered outside India are not liable for Tax Deducted at Source (TDS) - Revenue s case does not fall in the exception carved out in para 3.1(l) of the Circular dated 15.03.2024 for the following reasons. According to us, Clause 3.1 (l) excludes appeals arising out of proceedings taken against a deductor for failure to deduct tax at source and recovery of the tax from the payer that was omitted to be deducted. If there is an obligation to deduct tax at source on a payer in terms of the provisions contained in Chapter XVII-B of the Act and the payer fails to discharge such obligation, it is liable for several consequences. The first and the foremost being that it could be treated as a Respondent in default for failing to deduct taxes and, accordingly, the tax which ought to have been deducted could be recovered from it by passing an order under section 201. Consequently, there would be a levy of interest in terms of section 201(1A) as well as a levy of penalty under section 271C, if such failure was without reasonable cause. The amount of tax that could have been recovered from the payer would be equivalent to the amount that he would have had to deduct. Another collateral consequence that would flow is that the payer would suffer a disallowance of the expenditure that he had claimed as a deduction having regard to the provisions of section 40 (a) (i) or section 40 (a) (ia). In such circumstances for the assessment years that one is concerned with in the present appeals, the consequence would be that the expense that was claimed as a deduction on which tax was not deducted would be disallowed. Whether the respondent is entitled to a deduction of the expenses incurred by it by way of making a payment to Marriott International Inc. because it had not deducted tax at source under section 195 on such payment? - In our opinion, this issue would not fall within the scope and ambit of clause (l). This is brought out by the manner in which the tax effect has to be determined. The appeals arising from regular assessments where an expense is disallowed or a claim for an allowance is disallowed or an amount is sought to be assessed as income is dealt with in para 5.1. In these circumstances, the tax effect is calculated by taking the difference of tax on the total income assessed and the tax would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which the appeal is intended to be filed. The following example relied upon by the learned Senior Advocate for the assessee appealed to us. In the present appeals, the original order which was passed arises from an assessment framed under section 143 (3) and, therefore, the exclusion contemplated in para 3.1. l would not apply and, accordingly, the appeals must be dismissed as withdrawn. Litigation that commences from orders passed u/s143 (3) and orders passed under section 201 is also under different provisions. Section 246A (1) gives a right to an assessee to file an appeal if it is aggrieved by any of the orders specified therein. Clause (a) of the said provision refers to inter alia an order of assessment under section 143 (3). The right to file an appeal from an order passed under Section 201 (1) is to be found in clause (ha). This again is indicative of the fact that the Act treats litigation commencing from disallowance in an assessment under section 143 (3) and failure to deduct tax at source separately and, accordingly, the exception carved out in the instruction dated 15.03.2024 have to be construed accordingly. No hesitation in dismissing the appeals as withdrawn.

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• 2024 (12) TMI 716
  Validity of final assessment order passed u/s 144C w/o waiting for the decision of Dispute Resolution Panel - Assessee contends that the AO could not have extinguished the right of the Assessee to get its objections disposed of by the DRP by passing the impugned Final Assessment Order - HELD THAT:- This Court is of the opinion that it is not necessary to examine this controversy as it is an admitted position that, notwithstanding the lack of information with the AO, if an objection has been filed and is pending before the DRP, the Assessment Order passed in ignorance of the said objections, is required to be set-aside. The present petition is allowed. The impugned Final Assessment Order passed by the AO in respect of AY 2022-23 is set-aside.

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• 2024 (12) TMI 715
  Denial of benefit of Direct Tax Vivad Se Vishwas Act, 2020 - there was no disputed income/penalty/interest relevant to assessment year (AY) 2009-10 - whether the petitioner was entitled to apply under the VSV Scheme on the ground that a dispute was pending on the date when it filed its application? - Scope of expression disputed penalty and disputed tax - HELD THAT:- A plain reading of the provisions of the VSV Act indicate that no distinction is drawn as to the nature of the dispute that is pending. The eligibility to apply under the VSV Act, is not contingent on the merits of the maintainability of the appeal. Thus, if an appeal in respect of any disputed tax is pending before the learned ITAT or the learned CIT(A), the assessee would be entitled to file a declaration under Section 4 (1) of the VSV Act. It is material to note that the petitioner had succeeded before the learned ITAT in its appeal and the order of the learned CIT(A) rejecting the petitioner s appeal on the ground of limitation was set aside. ITAT has issued specific directions for the learned CIT(A) to decide the dispute on merits. It is also material to note that the Revenue has not challenged the order dated 09.02.2023 passed by the learned ITAT. However, sensu stricto this may not be relevant at this stage. All that was necessary to be considered is whether on the date when the petitioner had made declaration under Section 4 of the VSV Act, an appeal before the learned CIT(A) or the learned ITAT was pending. Undisputedly, the petitioner s appeal before the learned ITAT was pending on the said date. As not the Revenue s contention that the petitioner s case falls in any of the exclusions mentioned in clauses of Section 9 of the VSV Act. As noted above, the only reason why the petitioner s declaration under Section 4 of the VSV Act has been rejected is that there was no dispute regarding tax. This, as we noticed above, is unsustainable. Thus, the impugned communication is set aside. The designated authority is directed to consider the petitioner s declaration and undertaking in accordance with law as applicable on the date on which the declaration and undertaking was filed.

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• 2024 (12) TMI 714
  Assessment u/s 144B - Exemption from income tax u/s 10(25)(ii) - persuant to notification of Faceless Assessment Scheme u/s 143(3A), the petitioner s assessment for the Assessment Year 2018-19 was selected for scrutiny of assessment - Request for additional time to respond to SCN due to Covid-19 situation - HELD THAT:- The petitioner has placed materials to show that it responded to Ext.P11 notice by filing its response on 20.4.2021 itself (Ext.P13). The screenshot of the e-filing proceedings would show that the competent authority has duly received the response. The e-proceedings response acknowledgment shows the receipt of the response with the date 20.04.2021, as evidenced by Acknowledgment. The respondents passed Ext.P16 assessment order on 20.4.2021 confirming the draft assessment order on the ground that no reply has been filed by the assessee to the show cause notice dated 10.4.2021. As petitioner has produced relevant materials to show that it had submitted the response. Therefore, Ext.P16 order is liable to be set aside. It is ordered accordingly. Liberty is given to respondent No.1 to pass fresh assessment orders in accordance with law after giving sufficient opportunity of hearing to the assessee.

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• 2024 (12) TMI 713
  Assessment u/s 144 and 144B - assessment order cannot be completed without issuance of a notice u/s 143 (2) - HELD THAT:- The respondent s reliance on the petitioner s PAN database or an alternate email address cannot substitute for statutory compliance. Procedural irregularities in issuing and serving notices undermine the jurisdiction and legality of the entire assessment process. The assessment order cannot be completed without issuance of a notice u/s 143 (2). As such the assessment order passed by the respondent authorities without issuing proper notice u/s 143(2) the assessment proceedings as well as the assessment order passed by the AO is bad in law and is set aside. Writ petition is allowed, and the impugned assessment order, demand notice and penalty notices are hereby quashed. The respondent authorities are directed to issue fresh notices, if deemed necessary, strictly adhering to the statutory provisions and ensuring proper service to the petitioner.

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• 2024 (12) TMI 712
  Eligibility of scheme of Direct Tax Vivad se Vishwas Act, 2020 on Short remittance - as submitted that though the petitioner had remitted substantial amounts, there is an admitted short remittance of a sum of Rs.12,565/-, making the petitioner ineligible for settling the matter in terms of the provisions contained in the Scheme. HELD THAT:- While the learned Senior Standing Counsel may be right in contending that strict compliance with the provisions of the Scheme is mandatory, it is seen from the facts of the case that the petitioner had substantially complied with the terms of the Scheme and had remitted a sum of Rs.19,57,182/- before the last date specified. The doctrine of substantial compliance was considered in CCE v. Hari Chand Shri Gopal [ 2010 (11) TMI 13 - SUPREME COURT ] Thus, the petitioner should not be denied the benefit of the Scheme for the short remittance of a sum of Rs.12,565/-. It is also not disputed that the shortfall was made up and later remitted by the petitioner. Writ petition is allowed by directing that if the petitioner has, by now, remitted the full amount required to be remitted by the petitioner in terms of the provisions of the Direct Tax Vivad se Vishwas Act, 2020, the liability of the petitioner for tax, penalty and interest for the assessment year 2009-2010 will be treated as settled and the petitioner will be eligible for all benefits under the Direct Tax Vivad se Vishwas Act, 2020 (including any immunity from prosecution).

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• 2024 (12) TMI 711
  Demanding interest u/s 220 (2) - owing to the claim petition filed, the amount received by sale of the property of the deceased husband of the petitioner came to be adjusted against the arrears only on 07-06-1991 - HELD THAT:- The statement filed by Income Tax Department shows that an amount of Rs.12,01,000/- was received by the Income Tax Department on 07-02-1989 from the sale of the property of the late husband of the petitioner. Since there were amounts in excess of the demands under the 1961 Act at that point of time, the Income Tax Department remitted a sum of Rs.3,03,288/-in court in proceedings initiated by the aforesaid Mrs. Jolly Thomas. It does not appear from the statement that there was any interdicting order preventing the Income Tax Department from adjusting the balance of the amount against the demand outstanding at the relevant time. Therefore, the petitioner cannot be mulcted with any liability for interest u/s 220 (2) for the period from 07-02-1989 to 07-06-1991. Therefore, this writ petition is allowed by directing that the amount of Rs.1,00,000/- paid by the late husband of the petitioner before the Tax Recovery Officer against the demand for the assessment year 1987-88 along with interest u/s 244A shall be refunded to the petitioner without undue delay and at any rate, within a period of three months from the date of receipt of a certified copy of this judgment. Any demands made on the late husband of the petitioner / the petitioner for interest u/s 220 (2) for the period from 07-02-1989 to 07-06-1991 will stand quashed for reasons indicated above. If the amount demanded as interest u/s 220 (2) has been adjusted from any refund due to the petitioner, the said amount shall also be refunded to the petitioner along with applicable interest (if any) due on the said amount.

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• 2024 (12) TMI 710
  LTCG - applicability of Section 50C - HELD THAT:- Applicability of Section 50C of the Act, as amended with effect from 01.10.2009, has been decided in R.Sugantha Ravindran [ 2013 (3) TMI 271 - MADRAS HIGH COURT] we are of the firm view that the insertion of words or assessable by amending Section 50C with effect from 01.10.2009 is neither a clarification nor an explanation to the already existing provision and it is only an inclusion of new class of transactions namely the transfers of properties without or before registration. Before introducing the said amendment, only the transfers of properties where the value adopted or assessed by the stamp valuation authority were subjected to Section 50C application. After introduction of the words or assessable after the words adopted or assessed , such transfers where the value assessable by the stamp valuation authority are also brought into the ambit of Section 50C. Thus such introduction of new set of class of transfer would certainly have the prospective application only and not otherwise. Hence the assessee s transfer admittedly made earlier to such amendment cannot be brought u/s 50C. Decided in favour of assessee.

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• 2024 (12) TMI 709
  TP Adjustment - asserted deferral of payments would fall within the ambit of clause (c) of Explanation (i) placed at the end of Section 92B or not? - HELD THAT:- We note that in Kusum Health Care [ 2017 (4) TMI 1254 - DELHI HIGH COURT ] apart from the aspect of deferred payments ultimately transforming into a pattern, the Court had also taken a note of those deferred payments having an impact on the working capital of the assessee. As we go through the order framed by Transfer Pricing Officer TPO in these two appeals, the authority has clearly failed to examine or answer the issue of international transactions bearing in mind Explanation (i)(c) of Section 92B of the Income Tax Act, 1961 Act in the aforesaid light. In any case and in light of the factual findings which stand mirrored we find no justification to interfere with the ultimate view expressed by the Tribunal.

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• 2024 (12) TMI 708
  TP Adjustment - AO made adjustment by denying the 8% markup charged by the AE on the supply of capital goods and disallowed the depreciation also to that extent - assessee contested that the purchase of capital goods cannot be benchmarked separately and main argument was the depreciation do form a component of operating cost and hence cannot be given separate treatment. HELD THAT:- As would be manifest from the principal contentions which were urged before the Tribunal, it was the consistent stand of the appellants that since the purchase of capital goods had already been taken into consideration while benchmarking the transactions pertaining to the CSD Segment as a whole, there was no occasion for any separate benchmarking exercise being undertaken. It was also pointed out to us from the Transfer Pricing Report that the depreciation of fixed assets as well as payments made to the group employees formed part of the cost base and had been duly benchmarked. Tribunal, however, sought to rest its opinion on the decision rendered by a Coordinate Bench in Honda Motorcycle Scooters India Pvt. Ltd. [ 2015 (4) TMI 502 - ITAT DELHI ] wherein was principally concerned with transactions which were not closely linked. It was in the aforesaid context that the aforenoted observations had come to be rendered. We note that it was never the case of the assessee that it had been denied an opportunity either by the Transfer Pricing Officer TPO or the Dispute Resolution Panel DRP. Bearing in mind the disclosures which were contained in the Transfer Pricing Report and the consistent stand which was taken by the appellant in respect of the purchase of capital goods and depreciation having already been factored in, in our consideration opinion, there was no justification for the matter being remitted to the DRP. We, accordingly, allow the instant appeal and set aside the order of the Tribunal insofar as Ground Nos. 3 to 3.9 of the appeal before the Tribunal are concerned.

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• 2024 (12) TMI 707
  Penalty u/s. 271AAA - non-maintaining documents as specified in section 92D r.w.r. 10D - HELD THAT:- We observe that no transfer pricing adjustment were made by the TPO. Primary contention of assessee that during the impugned year under consideration, the penalty was initiated for non-maintenance of documents on an incorrect assumption of fact that the assessee had international transaction with an Associated Enterprise. However, while passing the order, CIT(A) has correctly taken note of the fact that the assessee did not have any international transactions, but had only transactions with a domestic associated enterprise. On perusal of the Tax Audit Report and also the relevant extract of purchase ledger, submitted by the assessee before the TPO, it is observed that the assessee had made purchases from Priya Blue Industries Pvt. Ltd., a domestic company and not from Best Oasis Ltd. a foreign enterprise, as alleged. So far as applicability of specified domestic transaction, within the meaning of Section 92BA of the Act is concerned, we observe that the provisions of Section 40(A)(2)(b) of the Act have been omitted by the Finance Act, 2017 w.e.f. 01.04.2017 and the same would not apply to the impugned assessment year. We also observe that the AO has also not made out a case for applicability of specified domestic transaction to assessee s set of facts, while imposing penalty u/s 271AA of the Act. Appeal of the Department is dismissed.

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• 2024 (12) TMI 706
  Penalty u/s 271(1)(b) - non-compliance of notice issued by the AO u/s 142(1) during reassessment proceedings, on account of Covid-19 pandemic - HELD THAT:- Under the extra-ordinary circumstances, when the whole humanity across globe including India were suffering from Covid-19 pandemic, disease and deaths, and the lockdowns, the department ought to have taken a liberal view in condoning such default of non compliance of notice issued by the AO u/s 142(1) during reassessment proceedings, but it is unfortunate that the penalty was levied against the assessee by the AO which was later confirmed by ld. CIT(A). Keeping in view the facts and circumstances on record, delete the penalty levied by Assessing Officer against the assessee u/s 271(1)(b) which was later confirmed by ld. CIT(Appeals) as the assessee has shown reasonable cause for non compliance of notice issued by the AO u/s 142(1) during reassessment proceedings, and the case of the assessee is covered by Section 273B r.w.s. 271(1)(b), as section 271(1)(b) is subject to Section 273B. The assessee succeeds in this appeal. The appeal of the assessee is allowed.

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• 2024 (12) TMI 705
  Disallowance u/s 14A r/w Rule 8D - HELD THAT:- As it is clear that assessee do not have sufficient funds for making investments during the year under consideration. The principal thus stated in case of CIT vs Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT ] will not come to any assistance. Thus proportionate disallowance is to be made in respect of interest expenditure, in the hands of assessee. However, the Ld.AO is directed to first reduce the interest income earned by the assessee that is offer to tax before computing proportionate disallowance which will be in the ratio exempt income earned to the total income of assessee. Disallowance that is to be made under the 3rd limb of Rule 8D, we direct the Ld.AO to consider only such investments that yielded exempt income for the year under consideration. In support reliance was placed on the decision of Cheminvest Ltd [ 2015 (9) TMI 238 - DELHI HIGH COURT ] and in case of CIT vs Corrtech Eergy Ltd., [ 2014 (3) TMI 856 - GUJARAT HIGH COURT ] MAT Computation - As there is no relation of disallowance u/s 14A while computing the book profit under section 115JB. The reason is that explanation (1) of Section 115JB adjustment is to be worked out as clause (f) where the amount of expenditure in relation to any exempt income other than specified income is required to be added to the book profit. Therefore, there is a separate mechanism provided for adjustment to the book profit of this kind of expenditure. Accordingly, lower authorities were not correct in adding notional expenditure as computed under section 14A and increasing the book profit by that sum under Section 115JB. This issue is also covered by case of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] Disallowance made u/s 41 (1) - As noted that, these creditors are reflected under the trade payables. Further in the subsequent assessment years 2013-14 at Page 75 and assessment year 2014-15 these parties stand under the head trade payables. It is noted that, these parties remain to be outstanding creditors up to assessment year 2016-17 the details of which are place. In the subsequent assessment year being 2017-18 and 2018-19 these parties has been paid the outstanding balance has become nil. We find no reason to confirm the addition made by the authorities below to hold that the assessee just continued it has an entry the books of account without any intention to pay back the same is directed to be deleted.

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• 2024 (12) TMI 704
  Revision u/s 263 - whether receipt of interest of related to the additional compensation granted under Land Acquisition Act is a part of exempt income u/s 10(37) or not? - HELD THAT:- The very same question regarding as to whether interest on enhanced compensation partakes the character of Income from Other Sources u/s 56(2)(viii) of the Act or not has been decided in the case of Inderjit Singh Sodhi (HUF) [ 2024 (4) TMI 408 - DELHI HIGH COURT] wherein as held that interest, whether on compensation or enhanced compensation shall be considered as income from other sources and shall be taxable accordingly. The Jurisdictional High Court has also held that the Tribunal has erred in relying on the decision of Ghanshyam (HUF) [ 2009 (7) TMI 12 - SUPREME COURT] by taking into consideration of Finance(No.2) Act, 2009, which came into effect in the year 2010. The view taken by the A.O. that the interest on enhanced compensation is part of the compensation and not the interest per say and allowing the same as exempt u/s 10(37) of the Income Tax Act cannot be called as plausible view . Thus, we find no merit in the grounds of Appeal of the Assessee, accordingly, we are of the opinion that the Ld. CIT(A) has committed no error in setting aside the assessment order and directed the A.O. to frame fresh assessment in accordance with law. Appeal of the Assessee is dismissed.

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• 2024 (12) TMI 703
  Deduction u/s. 80P(d) - interest earned from cooperative bank - HELD THAT:- As can be seen from the aforesaid observations of the Coordinate Bench, though, the Bench was conscious of the contrary view expressed in case of PCIT Vs. Totgars Cooperative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] relied upon by the First Appellate Authority, however, having taken note of the fact that the same Hon ble High Court in the case of the same assessee in an earlier decision [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and SBI [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] have allowed deduction u/s. 80P(2)(d) of the Act in respect of similar nature of income, accepted assessee s claim. The Coordinate Bench, while coming to such conclusion has further observed that, in view of conflicting decisions of different High Courts, the view favourable to the assessee is to be taken. Therefore, respectfully following we allow assessee s claim of deduction u/s. 80P(2)(d) of the Act in respect of interest income earned on investment made with other cooperative banks. Assessee appeal allowed.

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• 2024 (12) TMI 702
  Set off of short term capital loss against long term capital gain - HELD THAT:- When the transactions relating to purchase and sale of shares are beyond doubt and are not in the nature of sham transaction even there is no such allegation by the Assessing Officer, the short term capital loss derived by the assessee from sale of shares cannot be prevented from being set off against the long term capital gain by alleging adoption of colorable device. There is no requirement under the law that the assessee has to pay more tax. If the assessee arranges her affairs within the legal framework and through legitimate means to reduce its tax liability, the Assessing Officer cannot prevent her from doing so. When there is no evidence on record to doubt the genuineness of the transactions entered into by the assessee, the resultant capital loss derived out of such transaction cannot be disallowed. More so, when the AO has not expressed any doubt or dispute regarding the nature of loss, being capital. Even, as rightly observed by the learned First Appellate Authority, the AO has accepted the computation of short term capital loss made by the assessee. It is further relevant observe, the long term capital gain shown by the assessee on sale of bonus shares of M/s Mindtree Ltd. have been accepted in subsequent assessment year i.e. A.Ys. 2017-18 and 2018-19. See ADAR CYRUS POONAWALLA [ 2018 (11) TMI 1339 - BOMBAY HIGH COURT] - Decided against revenue.

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• 2024 (12) TMI 701
  Estimation of income - bogus purchases - HELD THAT:- The appellant failed to discharge its onus to prove genuineness of the subject purchase transactions, and rather the goods were received from the parties from whom same are shown to have been purchased. Furthermore, the assessee, on being confronted by GST authorities with the allegations levelled on the basis of information received, deposited by way of reversal, the ITC availed of on the basis of the invoices portrayed to have been issued by the abovesaid 2 entities. This goes to show that as a matter of fact, the goods were not received from the said 2 entities, but, were received from different source, exclusively to the knowledge of the assessee. Y 5 6U6CIT(A) upheld the reasons recorded by the AO. Having regard to the sale of the goods, which was not doubted by the authorities below, it is evident that the assessee inflated the expenditure in question by showing higher amount of purchase price through fictitious invoices in the names of the 2 entities bogus suppliers. As per settled law no sale of goods can take place without purchase, and in a case an assessee is found to have indulged into bogus purchases, a percentage of the bogus purchases can be added to arrive at the net income of the assessee-appellant. Taking into consideration aspect of inflation of purchases and saving of taxes, duties, compliance costs etc. by both buyer and seller etc., when we have not taken on record the documents sought to be produced for the first time in the course of hearing, for being considered on the aspect of percentage of bogus purchases of goods and/or Gross profit, in the interest of justice, we find it to be a fit case where matter needs to be remanded to the AO for the purposes of recalculations in view of the findings recorded above and having regard to the well settled law on the point of percentage of bogus purchases and/or Gross Profits of course, after providing opportunity to the assessee-appellant to produce there all the relevant and admissible material, in accordance with law. As a result, the appeal is disposed of, and the matter is remanded to the Assessing Officer for the purposes of recalculations in view of the findings recorded above and having regard to the well settled law on the point percentage of bogus purchases and/or Gross Profit of course, after providing opportunity to the assessee-appellant to produce there all the relevant and admissible material, in accordance with law, so as to enable the AO to give effect to the decision.

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• 2024 (12) TMI 700
  Disallowing the benefit of foreign tax credit (FTC) - claim was not made in the original return of income - HELD THAT:- Tribunal, in the case of Basavalinga Sadasivaiah Ajaikumar [ 2024 (11) TMI 852 - ITAT BANGALORE] dealt with identical facts and circumstances and decided the issue in favor of the assessee stating in admittedly, the assessee has revised the return of income claiming the foreign tax credit much before the intimation generated u/s 143(1). Thus, in our considered view, the Revenue should have allowed the benefit of foreign tax credit to the assessee. Assessee has filed Form 67 for claiming the benefit of foreign tax credit, which is directory in nature. Thus, even there was no Form 67 filed by the assessee with the original return of income, yet the Revenue should have accepted the claim made by the assessee in the revised return of income - Assessee appeal allowed.

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• 2024 (12) TMI 699
  Rectification application dismissed by CIT(A) since it requires verification of books of accounts of the assessee - adjustment in respect of the GST/CENVAT refund challenged - HELD THAT:- The impugned action of the Ld.CIT(A) can be said to be akin to missing the woods for trees . If the argument of the Ld.CIT(A) not to interfere with the CPC is accepted, (i.e. issue raised by the assessee needs verification) then the Ld.AR wondered as to how CPC in the first place made such an adjustment and merely because assessee didn t file appeal against the intimation order u/s.143(1) of the Act and proceeded under alternate procedure u/s.154 of the Act, the assessee should not be denied its claim, on hyper technical ground. It must be borne in mind that in the case of Owners Parties interested in MV Vali Perov. Fernandeo Lopez [ 1989 (9) TMI 383 - SUPREME COURT] it was observed by Hon ble Apex Court that Rules of procedure are not by themselves an end, but means to achieve the ends of justice. Rules of procedure are tools forged to achieve justice and are not hurdles to obstruct the pathway to justice. Construction of a rule of procedure which promotes justice and prevents its miscarriage by enabling the Court to do justice in myriad situations, all of which cannot be envisaged, acting within the limits of permissible construction, must be preferred to that which is rigid and negatives the cause of justice. Procedure is meant to subserve and not rule the cause of justice. Thus we don t accept the impugned action of the Ld.CIT(A) and therefore, we set aside the same and restore the appeal back to his file with a direction to decide the grounds of appeal raised by the assessee on merits as contemplated under sub-section (6) of sec.250. Assessee appeal allowed for statistical purposes.

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• 2024 (12) TMI 698
  Short allowance of TDS credit by CPC in the computation u/s 143(1) - CPC restricted the TDS credit by computing TDS credit in ratios of Turnover as per P L and Turnover as per 26AS resulting into short allowance in TDS credit amount - HELD THAT:- Deduction of TDS and the extent of allowance of the TDS credit is a subject matter of verification as to under which category the two buyers i.e. Suzuki Motors Gujarat P. Ltd. and Maruti Suzuki India Ltd. have made the payment to the assessee respectively, i.e. whether the GST was indicated separately in the respective bills as claimed by the assessee or whether the payment was made to the assessee by the purchaser was earlier than the credit. This has not been done either the CPC or by the Ld. Addl./JCIT(A)-2, Coimbatore, in this case. Further, the claim of the assessee that the two deductors i.e. M/s Suzuki Motors Gujarat Pvt. Ltd. and M/s Maruti Suzuki India Ltd. have deducted TDS on purchase values inclusive of GST also needs verification by the AO. We, therefore, set-aside the order of the Ld. Addl./JCIT(A)-2, Coimbatore and restore the matter to the file of the AO for verification and to allow the TDS credit after due verification as mandated of the CBDT Circular (No.13 of 2021 dated 30th June, 2021 on the subject Guidelines under section 194Q of the Income Tax Act, 1961 ) and as per law after affording due opportunity of being heard to the assessee. Ground no.1 of the appeals is allowed for statistical purpose.

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• 2024 (12) TMI 697
  Deduction u/s. 80-IA(4) - assessee to be treated as a developer or works contractor - Assessee submitted that assessee is a developer and is deploying its own funds, equipments and has taken risk and liability from the inception of project till the project is transferred to AAI(owner of the Airport) for operating and maintaining - HELD THAT:- A new infrastructure facility by way of construction of New Expandable Modular Integrated Terminal Building at Raja Bhoj Airport, Bhopal has come into existence as in the case of NCC-MSKEL JV [ 2024 (1) TMI 1224 - ITAT AHMEDABAD] a new infrastructure facility by way of a new domestic arrival block at Sardar Vallabh Bhai Patel International Airport at Ahmedabad has come into existence , and Tribunal has allowed the claim of deduction u/s 80IA(4). As documents filed by the assessee which are part of record, contentions raised before us as well case laws relied upon the assessee, clearly point out that the assessee is a developer and not merely works contractor and is eligible and entitled for deduction u/s. 80-IA(4) of the Act. Thus, assessee is a developer within the meaning of section 80-IA(4) and is eligible for deduction u/s. 80-IA(4).Thus, we allow the claim of the assessee for deduction u/s 80IA(4) - Decided in favour of assessee.

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• 2024 (12) TMI 696
  Income deemed to accrue or arise in India - receipts from HCLT by the assessee, one of the foreign AEs, on account of software, Engineering and Infrastructure service provided by the assessee - AO s contention is that the actual conduct of the assessee and its AEs and not the legal contract between them, determine the nature of transactions and its taxability - as per AO nature of receipts is considered to be fees for technical services (FTS) as per the meaning of Explanation-2 to section 9(1)(vii) of the Act and is taxable under the provisions of Income-tax act as well as under the provisions of relevant DTAA (in this case India-Singapore DTAA). HELD THAT:- We agree with the contention of the assessee that HCLT has a computational requirement of the deeming fiction under Explanation 2 to section 10AA to treat the entire amount of sale proceeds received from the foreign clients as export turnover as it raises a single consolidated invoice. The contention that HCLT treats the payments made to its AEs as expense and claims deduction u/s 10AA on net profit basis, has not been controverted by DR. DR has also not controverted the key assertion of the assessee that no deduction under section 10AA of the Act has been effectively claimed by HCLT in respect of payment received from end customers on behalf of the Appellants notwithstanding that such receipts were considered as part of export turnover of HCLT. DR could not controvert the fact that the TPO in the case of HCLT has not invoked sub-section (9) of section 10AA read with sub section (10) of section 80IA of the Act, while computing the deduction. The assessee, therefore, in our considered opinion succeed in rebutting the ld DR objections on this count. We again agree with the submission of the assessee that the facts in the case of Hariharan Subramaniam [ 2020 (11) TMI 520 - ITAT DELHI ] and Subhatosh Majumdar [ 2020 (2) TMI 1368 - ITAT KOLKATA ] which the Revenue claims has not been considered, is clearly distinguishable from the facts of the assessee. Whereas in the case of Hariharan Subramaniam and Subhatosh Majumdar [ 2020 (2) TMI 1368 - ITAT KOLKATA ], the assessee solely was privity of contract with the Indian client. It was the assessee who engaged the foreign attorneys and paid them in discharge of his professional obligations in India. On that ground alone, it was held that source of income for the assessee was the assessee itself and thus was taxable in India. In the instant case, the ITAT has held that the assessee has rendered the services to the foreign customers who are entirely outside India and the services were also utilized by the foreign customers in their businesses located outside India, and hence not taxable in India. With the rendering of the decision of the jurisdictional High Court in the case of International Management Group [ 2024 (7) TMI 287 - DELHI HIGH COURT ] the issue of the ITAT decision in the assessee case, being per-incuriam and sub-silentio, no longer remains valid. In similar facts as that of the assessee, the hon ble High Court in the case of International Management Group, held that the assessee rendered services to BCCI for IPL event held outside India. The services were utilized by BCCI for a business carried out outside India and payment made by BCCI was for the purpose of earning income from a source outside India. In such facts, the High Court held the same to be not taxable as FTS under section 9(1)(vii)(b) of the Act. The assessee, therefore, in our considered opinion succeeds in rebutting the ld DR s objections on this count also. Since receipts of the foreign AEs from HCLT are held to be not taxable in India under the provisions of the Act, the grounds raised qua taxability of the impugned receipts under DTAAs, was considered as academic in nature and no findings were returned and same were left open for determination. We hold so similarly for this appeal also. Decided in favour of assessee.

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• 2024 (12) TMI 695
  Revision u/s 263 - unexplained and bogus purchases - addition of only 10% of purchases made by CIT - HELD THAT:- We noted that the PCIT has simpliciter carried out unnecessary exercise by obtaining the information from the AO s order in assessment records, which are entirely considered by the AO in his original assessment u/s. 143(3) - PCIT without appreciating the fact that the assessee has achieved a turnover of Rs. 132,12,33,622/- (Net of GST), proposed to make a disallowance of entire purchases of Rs. 102,43,73,377/- is against the basic principal of business. Assessee cannot sell the goods without purchases and hence the AO s action of reasonable disallowance cannot be disapproved under the garb of Section 263 of the Act. Therefore, the view taken by the AO, after considering the entire details furnished by the assessee sought, obtained and duly considered during the assessment proceedings, cannot be termed as erroneous to invoke the powers u/s. 263 of the Act. The factual matrix stares in the face of the record in the light of the legal requirement of a satisfaction that for invoking the powers u/s. 263 of the Act, necessarily presupposes the statutory satisfaction that although there is some error with regard to the completed assessment but the order passed by the officer has to be erroneous in so far as prejudicial to the interest of the Revenue. The plain language of the provision is more than abundantly clear that it is not every error or mistake that should induce the PCIT to resort to exercise the powers u/s. 263 of the Act. Where the factual matrix shows that it is a marginal situation and when by a careful and cautious judgment the AO has considered the issue in hand, the exercise of the power u/s. 263 by the PCIT is not proper. Though the provisions of section 263 vests power in PCIT in subjective terms, the PCIT has blindly considered the issue of purchases as a reason for invoking the powers of section 263 - Appeal of the assessee is allowed.

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• 2024 (12) TMI 694
  Revision u/s 263 based on audit observations - as per CIT AO though held the entire transaction of sale of shares as bogus failed to make addition of the entire sale consideration and erred in allowing the cost of acquisition of shares as a deduction - HELD THAT:- Details with regard to the cost of acquisition was part of examination conducted by the AO who still proceeded to bring to tax the net capital gain as addition u/s 68. The Co-ordinate Bench in the case of Shri Anil Goyal [ 2024 (8) TMI 1498 - ITAT MUMBAI] has considered the decision of Smt. Renuka Philip [ 2018 (12) TMI 129 - MADRAS HIGH COURT] wherein it was held that assumption or jurisdiction under section 263 of the Act on a small issue based on the larger issue is unsustainable. In assessee s case the assessee is in appeal before the CIT(A) on the addition made by the AO towards alleged bogus LTCG and the revision under section 263 of the Act is exercised by the PCIT on allowing cost of acquisition and commission pertaining to the same alleged bogus LTCG. PCIT has held that in alleged bogus transactions the commission in the range of 3% to 5% is always paid and that the AO failed to make the addition towards the same which is erroneous. In our view the said observations of the PCIT is not based on any factual finding and merely based assumptions. We hold that the order of the PCIT under section 263 is without jurisdiction and is to be quashed. Assessee appeal allowed.

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• 2024 (12) TMI 693
  Denial of foreign tax credit - delay filling form number 67 for claiming FTC for the tax deducted at source on the salary received from SBI, Germany - HELD THAT:-Taking note of the fact that the said delay was on account of technical difficulties faced by the tax payers for filing Form 67 on the Income Tax portal. Even otherwise, case of the assessee is squarely covered by the decision of this Tribunal in the case of Vineet Bahety [ 2024 (2) TMI 1483 - ITAT KOLKATA] wherein held it is not the case of violation of any of the provisions of the act but of the rule which does not provide for any consequence if not complied with. Therefore respectfully following the decisions of the coordinate bench on this issue we hold the assessee is eligible for foreign tax credit as she has filed form number 67 before completion of the assessment though not in accordance with rule 128 (9) of The Income Tax Rules which provided that such form shall be filed on or before the due date of filing of the return of income. Thus we hold that the assessee is eligible for foreign tax credit as he has filed a valid form number 67 for claiming FTC for the tax deducted at source on the salary received from SBI, Germany. Accordingly grounds of appeal raised by the assessee are allowed.

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• 2024 (12) TMI 692
  Reopening of assessment by non jurisdictional officer - Legality of notice issued by Jurisdictional Assessing Officer - notice is challenged by the assessee stating that JAO could not have issued the notice u/s. 148 but by the Faceless Assessing Officer who conducted the assessment proceedings - addition u/s 68 - HELD THAT:- As relying on Hexaware Technologies Ltd. [ 2024 (5) TMI 302 - BOMBAY HIGH COURT ] notice could not have been issued by the Jurisdictional Assessing Officer, the notice issued by the learned JAO cannot be upheld. Accordingly, notice u/s. 148 of the Act issued on 27.03.2022 by the Jurisdictional Assessing Officer is bad and invalid. The reassessment proceedings carried out on the basis of invalid notice cannot be sustained. Therefore, we quash the assessment order passed by the learned Assessing Officer. Sales transactions with M/s Sonu Monu Telecom Centre Pvt. Ltd. - Coming to the issue of reopening, we find that information received was that assessee has purchases goods from M/s. Sonu Monu Telecom Pvt. Ltd. of Rs. 76,47,675/-. Thus, the information was that M/s. Sonu Monu Telecom Pvt. Ltd. has executed sales of Rs. 76,47,675/- to M/s Vinayak Traders. However, the correct facts were found that assessee has sold goods worth Rs. 85,69,197/- to M/s. Sonu Monu Telecom Pvt. Ltd. Thus, the reopening is based on incorrect information. Reasons for reopening also shown the same reason that the assessee has purchased goods from M/s. Sonu Monu Telecom Pvt. Ltd., which is incorrect. Therefore, as the information received it is not correct, reopening made on that basis is invalid. Bogus purchases - when the assessee is found to have sold goods to M/s. Sonu Monu Telecom Pvt. Ltd., the directions suggested by the CBIC clearly shows that entities from whom purchases have been made by the M/s. Sonu Monu Telecom Pvt. Ltd., addition to the extent of 2% of such purchases can be made. However, the learned Assessing Officer has made addition of 100% sales already recorded in the Profit Loss Account as income of the assessee, added the same amount to the total income of the assessee. This addition was made u/s. 68 of the Act. Addition u/s. 68 of the Act could be made only when the assessee fails to show that the nature and source of credit in the books of account. Here in this case, the nature of credit in the books of account is sale of goods, such sale of goods is supported by sale bill, stock register, and availability of goods from the principal, receipt of consideration by cheque. Therefore, the nature of credit in the books of account is sales. When all these details are placed before the learned Assessing Officer, he did not make any enquiry but rejected the evidences produced by the assessee. When the assessee discharges its onus by producing overwhelming evidences of the sales already recorded in the books of account, the rejection of the arguments and submission of the assessee without making any enquiry and then making an addition is not correct. It is case of the assessee that assessee has recorded this sales in the P L account and resulted profit thereon have already been offered for taxation. Details of s carriage cost and godown etc was disputed in the case of assessee for sale of 85 lakhs where the assessee has sold goods worth Rs 35 Crores. Thus, this reason does not support the case of revenue. Therefore, addition of the above sum once again by the Assessing Officer, which is confirmed by the learned CIT(A), is not sustainable. Assessee appeal allowed.

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• 2024 (12) TMI 691
  Addition of deposits and interest thereon - deposit was in the name of the wife - HELD THAT:- Assessee read out from the assessment order that admittedly the FDR made with Sri Ram Group of Companies by Smt. B. Subhashri, the wife of assessee and this is accepted by her by filing a letter claiming the receipt of marriage gift and made deposit out of such marriage gift but the AO has added in the hands of the assessee instead of assessing the same in her name. When a query was put to Revenue, he could not controvert the above fact situation that the FDR was in the name of assessee s wife. The assessee in his sworn statement admitted that the FDR is made by his wife out of her own sources i.e., gift received by her at the time of her marriage and it is her money only. Even, assessee s wife claimed the ownership of FDR of Rs. 10 lakhs made with Sri Ram Group of Companies on 17.10.1994 and claimed receipt of marriage gift and made deposits out of such marriage gift. Lack of evidence or proof does not give entitlement to Revenue to make addition in the hands of the assessee as the ownership lies with the wife of the assessee. As revenue could not brought on records any evidence that this amount was invested by assessee out of his own funds despite the fact that income tax department had carried out search on the assessee, this addition, if at all, is to be made in the hands of assessee s wife and not in the hands of the assessee. Decided in favour of assessee. Addition on account of silverware weighing about 33 Kgs - As noted that the assessee before AO and even before search party admitted that the silverware/ silverware articles were presented to his wife by her father and his friends. The assessee s wife also owned up these articles by filing a letter dated 23.09.1997. The assessee has furnished the name of assessee s father-in-law Dr.Vinodhagan but he expired on 19.03.1993. Admittedly, Dr.Vinodhagan s elder son Shri Mahadevan denied the gifted article, but that is of no evidentiary value because he was not party to the gift. Hence, as admitted by assessee s wife Smt. B. Subhashri vide letter dated 23.09.1997 owning up these assets is to be considered as owner of the asset and addition in any case, is to be made in her hands only. Hence, in view of the above, we delete the addition and allow this issue of assessee s appeal. Addition of estimated marriage expenses - As there is no information or incriminating documents available with the Department that how much was the expenditure, AO estimated marriage expenses at Rs. 5 lakhs and considered as unaccounted expenditure for the assessment year 1995-96 falling in the block period. We noted that this is purely an estimate and there is no evidence how much is the expenditure incurred by assessee on marriage expenses. AO simply estimated without any incriminating material or any material that assessee has incurred expenditure of marriage. However, going by the fact that marriage happened and some expenditure might have been incurred for that, we restrict the estimate at 60% what was estimated by AO. Hence, we direct the AO to recompute the income for the block period after estimating the marriage expenses at Rs. 3 lakhs instead of estimated by him at Rs. 5 lakhs. Hence, this issue is partly-allowed. Addition of estimated personal drawings - We noted that only personal expenditure for the year 1995-96 noted by AO i.e., rent of Rs. 15,000/- per month paid by assessee for his rental accommodation. This amount of Rs. 15,000/- for 12 months and for the year 1997-98 upto September for six months at the rate of Rs. 15,000/- per month can be estimated. It means that for 1 years rent at the rate of Rs. 15000/- per month, estimation of addition can be made at Rs. 2,70,000/-. Hence, we direct the AO to recompute the addition on account of personal drawings at Rs. 2,70,000/- as against estimated at Rs. 8,05,000/-. Hence, we partly-allow this issue of assessee s appeal. Addition of advance tax payment - We noted that the assessee has made payment of advance tax of Rs. 10,000/- on 31.03.1995 and advance tax of Rs. 1,20,000/- on 01.08.1996. Admittedly, these evidences are available with the Department and assessee is unable to show source for this advance tax and hence, the AO has rightly added the same and we confirm the same. This issue of assessee s appeal is dismissed. Addition of foreign trip expenses - As assessee during the course of earlier proceedings admitted two trips to be pleasure trips and third one was claimed to be in connection with the business of J Jay TV Pvt. Ltd. Assessee is unable to prove source and even now before us, when queried whether as regards to third trip which claimed to have been in connection with the business of J Jay TV Pvt. Ltd., any evidence is there that this is in relation to business trip of J Jay TV Pvt. Ltd., the assessee could not adduce any evidence and hence, no infirmity in the AO s order making addition in the block assessment. This issue of assessee s appeal is dismissed. Addition of bank deposits - As assessee could not adduce any evidence to explain the source and moreover this bank account was found during the course of search and assessee being a non-filer, this can be treated as incriminating material. Hence, we find no infirmity in the order of AO and the addition made by AO as undisclosed income for assessment year 1993-94 falling in the block period is upheld. This issue of assessee s appeal is dismissed. Addition on account of investment made by assessee in Himalaya Benefit Fund while completing the block assessment - On query from the Bench, assessee could not explain the source of deposit of Rs. 3 lakhs made on 02.03.1994 in Himalaya Benefit Fund Ltd., Tiruchirapalli and it was also not disclosed whether consequential interest for assessment years 1994-95, 1995-96, 1996-97 1997-98 i.e., upto 24.09.1996 in aggregate amounting to Rs. 4,77,529/- is disclosed in the return of income filed or not. Since the assessee failed to explain, even now before us failed to explain the source of deposit, we feel that the AO has rightly treated the income as undisclosed and hence, we confirm the order of AO and this issue of assessee s appeal is dismissed. Additions made based on materials apparently collected from ED-Generally [Enforcement Directorat] - As in the present case before us, there is no evidence that the assessee has made payment of transponder hire charges abroad, i.e., off the record in US$ 6,80,000, rupees equivalent to Rs. 2.24 crores. As there is no evidence linking the assessee, we delete the addition and allow this issue of assessee s appeal. However, we clarify here that this addition can be considered in the hands of J Jay TV Pvt. Ltd., in case, there are evidences and in accordance with law. Hence, this addition is deleted and allowed in favour of assessee. Payment towards transponder hire facility and uplinking facility - We noted that these payments are in equivalent to Indian for AY 1995-96 1996-97 i.e., in each of the years. It means that these are the payments made for installation payable as per agreement by J Jay TV Pvt. Ltd., if at all. We feel that this being quarterly installment payable, the same cannot be treated as payment made by assessee individually. Hence, these additions are deleted by allowing this ground. However, we want to clarify that the assessment for assessment year 1995-96 is pending in the case of J Jay TV Pvt. Ltd., for adjudication before the AO. This addition, if at all or any evidence suggests as payment made by J Jay TV Pvt. Ltd., can be considered in the hands of J Jay TV Pvt. Ltd., in accordance with law. Hence, this issue of assessee s appeal is allowed. Purchase of equipment abroad and payment made on behalf of the same - Assessee was not allowed the opportunity to cross examine Shri Ramachandran or to examine the person incharge of Tai Yen Electronics, so that the assessee can establish that he has not made any payment. Actually, even the Revenue admits that these payments are for purchase of equipments for and on behalf of J Jay TV Pvt. Ltd. Even Tai Yen Electronics also issued invoices in the name of J Jay TV Pvt. Ltd., only. Hence, in our view and discussion carried out in earlier issues, we are of the view that the AO while completing block assessment and without any incriminating material just on surmises made this addition. Hence, addition is without any basis and hence, deserves to be deleted. Hence, addition is without any basis and hence, deserves to be deleted. Purchase of Malaysian Ringets - We noted that this issue has not been examined by the AO and no finding is given as to how these bills found from the business premises of J Jay TV Pvt. Ltd., are relatable to assessee. The AO has noted in his assessment order that the bills seized from the residence of assessee are in the name of assessee himself, which fact needs verification. Hence to examine these aspects and for a detailed enquiry, we set aside this issue to the file of the AO and after enquiry may decide the issue afresh as per law. In term of the above, this issue of assessee s appeal is set aside and we direct the AO to re-examine this issue. Addition of purchase of car - Determination of real owner - The dispute regarding ownership remains whether it is in the name of assessee or Shri O. Kasimayan. It is also not clear whether the payment is made by Shri O. Kasimayan and gifted to assessee. Even block assessment order notes that the protective addition under the Gift Tax Act was made in the hands of assessee and assessee has filed appeal against the gift tax order. On query from the Bench neither Senior Standing Counsel nor assessee Counsel could point out what is the status of gift tax proceedings - this issue needs to be reconsidered by the AO afresh after taking into various consideration, who is the owner of the vehicle, whether any gift is given by Dr. Balakrishnan and consider relevant documents, the AO will reframe the assessment. This issue of assessee s appeal is allowed for statistical purposes. Assessment u/s 153C - In the present case, going by the satisfaction note purely, there is no incriminating material found during the course of search in relation to the assessee and hence, we confirm the order of CIT(A) holding the assessment framed u/s. 153C of the Act as bad in law and hence, quashed. Accordingly, we uphold the order of CIT(A) and dismiss this appeal of Revenue.

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• 2024 (12) TMI 690
  Revision u/s 263 by CIT - eligibility of deduction u/s 54EC - PCIT noted that the assessee purchased REC Bonds in the year 2015 i.e., two years before the said transaction. Thus exemption claimed under section 54EC of the Act is said to be not allowable to the assessee - HELD THAT:- As is apparent from the order passed under section 263, the learned PCIT himself has noted that 7/12 extract for the financial year 1980 81, 2011 12, 2016 17 and from 2017 18 to 2019 20, was available. The plot of land was sold on 22/03/2017 and the copy of 7/2 extract dated 18/03/2017, was a part of sale deed. Thus, it is crystal clear that the land was used for agricultural purpose for the financial year 2016 17. The land is consistently used for agricultural purpose. It is beyond the scope of wildest imagination that usage of land is ambulatory even when character of land is agricultural. As in the past assessment years agricultural activities were carried out is not disputed by PCIT as is evident from the order under section 263 of the Act at Para 4. The agricultural land can be reasonably said to have been used for agricultural purpose in between the years in the absence of anything contrary on record. In view of above conclusion of Assessing Officer at the time of original assessment that agricultural land was used for preceding two years is reasonable conclusion and cannot be said to be an erroneous decision. We also find that the issue in hand is covered in favour of the assessee by the judgment of the Hon ble Jurisdiction High Court rendered in CIT v/s Mr.Subhash Vinayak Supnekar [ 2017 (1) TMI 58 - BOMBAY HIGH COURT ] Reference to the Valuation Officer - The entire details of expenditure amounting to Rs. 1.12 crore, was placed on record before the Assessing Officer. The fact was also mentioned in registered sale deed. Reference to the Valuation Cell is not compulsory as it is left to discretion of the Assessing Officer under section 142A of the Act. Thus no reference to Valuation Officer by Assessing Officer. It is worthwhile to note that in order under section 155(15) of the Act, the Assessing Officer has accepted the claim of assessee at Rs. 112 lakh in set aside proceedings. The learned PCIT has no authority to direct reference to the Valuation Cell, because he does not have the power. A.O. while passing the regular assessee u/s 143(3) has made due enquiries before accepting the claim of assessee. AO has made appropriate enquiry by issuing notice u/s 142(1) and after obtaining compliances of the same and having verified as noted in the assessment order that it is verified at Para 2 of assessment order. Thus, it cannot be said that there is no enquiry or lack of inquiry made by Assessing Officer before accepting the claim of assessee. It is equally seen that learned PCIT has not carried out any independent enquiry by herself to show that the conclusion made by Assessing Officer after making due enquiry is not in accordance with law. On the facts and record it cannot be said that order passed by Assessing Officer under section 143(3) on 21/09/2019 is erroneous or prejudice to the interest of Revenue. PCIT has pathetically failed to invoke the twin conditions an absolute sine qua non for triggering the provisions of section 263 of the Act. Thus, we have no hesitation in quashing down the impugned order passed by the learned PCIT under section 263 of the Act in its entirety, as the necessary grounds are absent. Accordingly, grounds raised by the assessee are allowed.

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• 2024 (12) TMI 689
  Unexplained income relates to the HUF - assessee has failed to establish during the course of assessment proceedings that the unexplained income relates to the HUF whereas the AO established the same as relating to the assessee - HELD THAT:- As clearly been mentioned on the top Projected profile , and even the area as per seized agreement having an area of 9.34 acres have been mentioned which tallies with the agreement as seized and even it has clearly been mentioned that Prop. is planning to set up a PUDA approved colony and no corroborated evidence have been found during survey that the assessee having received any amount from the prospective buyers and as per above facts as mentioned in Brief Synopsis, is clearly prove that such were rough projected figures and even a bare look at different pages as seized clearly demonstrate that these are not actual figures and besides that there are so many cuttings and no signatures of the concerned Chartered Accountant and the facts as mentioned in Brief Synopsis, proves the contention of the assessee. Reliance by assessee on the judgment of Ravi Kumar [ 2007 (7) TMI 45 - HIGH COURT, PUNJAB AND HARYANA] is clearly applicable to the facts and circumstances of the case that in the absence of any evidence or any other corroborated evidence, no addition could be made in the hands of assessee. DR during the course of hearing has not been able to rebut the agreement of the Ld. Counsel either and, thus, we hold that the document as found belongs to Darshan Kumar HUF and the CIT(A) has rightly deleted the addition and even no adverse view could be drawn as these are only projected figures.

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• 2024 (12) TMI 688
  TP Adjustment - Comparable selection - treatment given by TPO to IT support services as ITeS - HELD THAT:- In our opinion, this issue requires to be examined at the end of the ld. TPO and he has to see the specific character of the services rendered by the assessee and decide accordingly. In the result, ground raised by the assessee are partly allowed for statistical purposes. Action of the TPO in conducting a separate benchmarking analysis for the payments made towards cost contribution charges and determining the arm s length price at Nil and making an adjustment of the entire amount - This issue came for consideration before this Tribunal in assessee s own case for the assessment year 2010-11 [ 2016 (4) TMI 202 - ITAT BANGALORE] held that the assessee had evidence and that the contents of thereof were found to be supportive of the assessee s claim. The TPO had rejected TNMM and adopted CUP method for determining ALP. The Tribunal held that the remained oblivious to the fact that Rule 10B(1)(a) stipulates comparable and uncontrolled transactions while applying the CUP method. a general observation was made by the TPO that no independent pat would have made payment in uncontrolled circumstances.Tribunal is right in directing the TPO to delete the additions made on account of cost contribution charges and notional interest on outstanding receivables from AE s. Decided in favour of assessee.

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• Customs

• 2024 (12) TMI 687
  Undervaluation - Evasion of Customs Duty - allegation of deliberate misdeclaration of model and the year of manufacture, along with tampering with the chassis number of the imported car for the purpose of under invoicing and under valuation of the vehicle - demand of differential duty - Confiscation - redemption fine - owner of the vehicle - importer of the car in question. Whether the appellant herein is the importer of the car in question? - HELD THAT:- On a reading of the definition of the expression importer under clause (26) of Section 2 of the Customs Act, an importer can include an owner, a beneficial owner or any person holding himself out to be the importer. But these personae would fall under the above definition only during the time between the importation of goods and the time when they are cleared for home consumption. Admittedly, the appellant was not the importer of the car in question, nor was the appellant involved in the process of importation of the car. The car was neither imported for his benefit nor on his behalf. It was Sri Jalaludheen Kunhi Thayil who was the importer from whom no recovery of the differential duty had been made. The appellant herein is only a subsequent purchaser of the said vehicle from a person who had purchased the same from the importer. Thus, the appellant cannot be charged for paying customs duty under Section 28 of the Customs Act as an importer or owner of the goods within the meaning of the definition of importer. Owner of the vehicle - HELD THAT:- On reading of provisions of the Motor vehicles Act, 1988, which defines owner under Section 2(30) of the said Act, would indicate that when a motor vehicle stands registered in the name of a person, he would be the owner of the said motor vehicle. Section 49 of the Motor Vehicles Act, 1988 deals with the necessity for registration. Admittedly, in the instant case, the car in question has not been registered in the name of the appellant herein but the registration certificate continues to be in the name of the original importer Sri Jalaludheen Kunhi Thayil. Therefore, the latter is the owner of the vehicle in law. It may be that there has been a transfer of the vehicle from Sri Jalaludheen Kunhi Thayil to Sri Shailesh Kumar from whom the appellant has purchased the vehicle. However, there is no ownership in law which can be recognized insofar as the appellant herein is concerned inasmuch as his name has not been entered in the registration certificate concerning the vehicle in terms of the provisions of the Motor Vehicles Act, 1988. Hence, the appellant herein cannot be construed to be the owner of the vehicle and hence, he does not fall within the scope and ambit of Section 125 of the Customs Act, 1962 - in the instant case, it is an admitted position that the ownership of the vehicle in law is still with the importer Sri Jalaludheen Kunhi Thayil and thus, the owner of the vehicle is known. Confiscation of vehicle - HELD THAT:- The very initiation of the proceedings against the appellant herein under the provisions of Customs Act by summoning him by issuance of Show-Cause Notice and subsequent seizure and confiscation of the vehicle in question are not in accordance with law and are unlawful. The impugned judgment of the High Court, Show- Cause Notices and other proceedings initiated against the appellant herein being not in accordance with law stand quashed. The order of the Appellate Tribunal dated 23.09.2008 stands restored. Appeal allowed.

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• 2024 (12) TMI 686
  Legality of the search and seizure operation conducted by the Directorate of Revenue Intelligence (DRI) - Confiscation of contrabend - Gold - corroboration for the retracted confession - conviction based merely on the confessional statement of the accused which has been subsequently retracted - HELD THAT:- Though under the provision of Section 397 of the Code of Criminal Procedure, 1973, The Court cannot embark upon the exercise of re-appreciation of evidence, but in order to decide the challenge to the impugned judgment of acquittal dated 14.10.1998, to that extent case of prosecution and the evidence will have to be seen. Keeping this aspect in mind in the present case it is seen that the entire case of prosecution relies upon the evidence of PW-1 and PW-2 who were the Officers of DRI who carried out the search and seizure operation. PW-1 is the Superintendent of DRI whereas PW-2 is a retired Superintendent of Central Excise who was working as Senior Intelligence Officer with the DRI at the then time - Both the witnesses are Officers of DRI and therefore if their oral evidence is required to be believed it ought to have been duly corroborated and supported by evidence of independent panchas and witnesses who were present at the time of search and seizure. The learned Trial Court has returned a categorical finding that while prosecuting the case the prosecution tried its level best to find out the panchas and witnesses but they could not be traced and summons were not served upon them. This finding of the Trial Court is based upon the report filed by the prosecution stating the above reason for not examining the independent panchas and witnesses to the entire search and seizure operation in the present case - The learned Trial Court has held that prosecution has not provided any cogent evidence to prove that accused was occupying the subject premises solely. There are no statements of any of the neighbors or building residents recorded to prove this fact. That apart there were several other women/police woman present at the time of the raid, but statements of none of those present who participated in the entire operation were recorded. When Respondent No. 1 had retracted her confessional statement, it was incumbent upon the prosecution to prove its case beyond all reasonable doubts against the Respondent No. 1. The defence had argued that the confessional statement was recorded under threat given to accused to harm her minor son. That apart, the confessional statement was recorded in English language whereas the accused had knowledge of Urdu language only - Resting the prosecution case only on the basis of confessional statement and the twin depositions of prosecution Officers undoubtedly has fallen short of proving the prosecution case and guilt of Respondent No. 1 beyond all reasonable doubts. The impugned judgment of acquittal of the Trial Court dated 14.10.1998 is upheld. Resultantly the Appeal fails - Appeal dismissed.

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• 2024 (12) TMI 685
  Entitlement to exemption under N/N. 24/2005 dated 1st March, 2005 - Classification of imported goods - It is the Petitioner s grievance that despite the issue of classification having been settled in favour of the Petitioner, the Revenue Department is insisting on goods being released provisionally subject to Petitioner s furnishing of bonds - pending appeal before Supreme Court - HELD THAT:- There is no other ground urged by the Department except the fact that the appeal is pending before the Hon ble Supreme Court for the CESTAT order dated 18th December, 2023 [ 2024 (1) TMI 683 - CESTAT MUMBAI ]. In the opinion of this Court, the mere pendency of the appeal would not entail the department to insist on provisional assessment of the goods. Since there is no stay of the order of CESTAT, the goods would have to be released in terms of the CESTAT order dated 18th December 2023 as per the classification as directed by the CESTAT i.e., CTH 851770 - the Petitioner shall be entitled to seek release of goods as per the CESTAT order, subject to the final decision of the Supreme Court in the pending Appeal and any directions that may be issued therein, which would have to be complied with. The writ petition is disposed of.

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• 2024 (12) TMI 684
  Maintainability of appeal before High Court - appropriate forum - interpretation of policy circulars, notifications, and Foreign Trade Policy - mis-declaration of description of export goods and value addition in the export documents and without complying with the norms specified in Foreign Trade Policy - evasion of customs duty on gold under replenishment scheme - HELD THAT:- In the instant case, from perusal of the show cause notice dated 31.08.2018, it is evident that the same was issued on the ground that the respondent has mis-declared the description and value addition so as to wrongly claim the benefit under the replenishment scheme. From the order passed by the Adjudicating Authority as well as the Tribunal, it is evident that the issue with regard to mis-declaration as well as applicability of Notification No. 57/2000-Customs, dated 08.05.2000, and the Circular No. 27/206-Customs, dated 10.06.2016, issued by the Central Board of Excise Customs as well as the Foreign Trade Policy 2015-20 was also involved. Therefore, the appeals before this Court are maintainable. The issue in the instant appeals pertains to demand of duty on quantum of gold given under replenishment scheme received from the LLP. It is not the case of the appellant that matching quantum of gold has not been exported as required under N/N. 57/2000-Customs - The findings of fact are recorded on the basis of proper appreciation of material available on record. The findings have not even been assailed on the ground that the same are perverse. Thus, no substantial questions of law arise for consideration in these appeals - appeal dismissed.

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• 2024 (12) TMI 683
  Levy of penalties u/s 114 (i) and 114AA of the Custom Act, 1962 - mis-declaration of export goods - failure to fulfil obligations of the Customs Broker Licensing Regulations, 2013 - HELD THAT:- Custom Broker Licencing Regulations are complete code in itself and provide for penal action upon the Custom Broker for failing to fulfill his obligations under the said regulation. For the alleged failure to comply with the said Regulation 11, penal proceedings could have been initiated under the relevant provisions of the Custom Broker Licencing Regulations, 2013, leading to revocation of the licence of broker along with the penalties as prescribed therein. The facts stated by the appellant in his statement have been corroborated by the statements of other co-noticees. Cross examination as sought by the appellant was also denied by the original authority. However, as is evident from para 34.7 of the order in original, the said request was denied by the competent authority vide letter dated 05.04.2018. The appellant has not challenged the said denial of the cross examination much before the adjudication was done before any authority. Hence it would not be justified to reopen the issue at this stage. From the evidences as adduced in the orders of lower authority it is evident that appellant has in manner abetted in clearance of undeclared/ mis-declared goods for export. For that penalty is imposable under Section 114 (i) of the Customs Act, 1962 without establishing an element of mens-rea. However taking note of the fact that commissioner (Appeal) has vide two order referred by the appellant, dropped the proceedings against the two departmental officers, holding their acts of omission and commission as act of innocent negligence, the penalty imposed on the appellant as excessive and reduce the same to Rs 10,00,000/-. There are no reason for invocation of Section 114AA, for the reason that the appellant had filed the shipping bills as per the documents provided to him be the exporters in the case. He himself was not responsible for forging any documents for the clearance of the said goods for export. Section 114AA is very specific in nature and needs to be invoked only in case where the ingredients as specified therein are present. In absence of such ingredients invocation of said section against the appellant cannot be justified and hence the penalty imposed under Section 114AA is set aside - penalty imposed under Section 114 (i) is reduced to Rs.10,00,000/- and penalty imposed under Section 114AA is set aside. Appeal allowed in part.

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• 2024 (12) TMI 682
  Conversion of Shipping Bills from NFEI to EOU/other schemes - Non-compliance with time limit for conversion request - request for conversion by the respondent was made after a period of three months - HELD THAT:- It is an admitted fact that this conversion has no revenue implication since the conversion was allowed only on the ground that the respondent does not claim any export incentive schemes. The only ground taken by the Revenue is that the request for conversion was filed beyond three months and this issue is no more res integra as it is covered by various decisions of the Tribunal and the Hon ble High Court where such conversions were allowed even in cases where the request was filed beyond three months since the Section 149 of the Customs Act, 1962 does not specify any time limit. In the case of THE PRINCIPAL COMMISSIONER OF CUSTOMS, MUNDRA VERSUS M/S LYKIS LIMITED [ 2021 (2) TMI 261 - GUJARAT HIGH COURT ], the Hon ble Gujarat High Court observed It is settled law that the time limit prescribed by the Board Circular is not binding as same is not statutory provision in terms of section 49 of the Customs Act, 1962. The impugned order is upheld and the appeal filed by the Revenue is dismissed.

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• Insolvency & Bankruptcy

• 2024 (12) TMI 681
  Irregularities in the conduct of CIRP by RP - Existence of evidence of irregularity in the conduct of CIRP proceedings by the RP or not - Appellant in their capacity as suspended management was prevented from effectively participating in the CoC deliberations or not - Adoption of the Swiss Challenge Method by the CoC - approval of resolution plan of the SRA - Denial of effective participation to the Appellant in the Committee of Creditors (CoC) meetings. Adoption of the Swiss Challenge Method by the CoC - HELD THAT:- The Challenge Mechanism envisaged under Regulation 39(1A) by its nature envisages multiple rounds of challenge so as to enable Resolution Applicants to improve their Plans. Regulation 39(1A) does not prohibit CoC from negotiating with Resolution Applicants or asking Resolution Applicants to further increase the Plan value. Any such step taken by the CoC to follow the Swiss Challenge Method cannot be said to be arbitrary or in violation of any statutory provisions of the IBC - The CoC had noted that the process has been carried on by the RP and his team in a completely fair and transparent manner which process was also well explained to all the PRAs. The declaration of the Anchor Bidder was also made in a transparent manner and all the other PRAs were given opportunity to improve the consideration in two rounds of discussions held in the COC meeting on 09.05.2024. This contention of the Appellant questioning Swiss Challenge method clearly lacks merit as the adoption of Swiss Challenge for value maximization was the outcome of the commercial wisdom of COC. The Adjudicating Authority has not committed any error in holding at para 30 of the impugned order that a perusal of the 52nd CoC Meeting reveals that the agenda qua adoption of the Swiss Challenge Method and the Anchor Bidding system were duly approved by the CoC in its commercial wisdom. Denial of effective participation to the Appellant in the Committee of Creditors (CoC) meetings - HELD THAT:- The RP apprised the members of CoC that despite being the highest bidder, Truflair Buildwell has further improved the offer by Rs 1.50 cr and cured their plan by removing the conditional clause. Thus, clearly this is a case where the revised resolution plan of the SRA was duly considered, evaluated and approved by the CoC before the RP placed the same for the approval of the Adjudicating Authority and hence the ratio of the judgement of the Hon ble Supreme Court in M.K Rajagopalan [ 2023 (5) TMI 344 - SUPREME COURT ] is clearly not applicable in the present factual matrix. The CoC members were fully aware of the details of the plan proposals submitted by the PRAs. At this stage, all PRAs were asked to send their best possible offers in a closed envelope and password protected soft copy by 21.05.2024 for consideration of the CoC. This modality was equally applicable on all the PRAs in terms of the decision taken by the CoC. The resolution plans received from PRAs other than the anchor bidder were opened up during the first session of the 54th meeting and was displayed through shared screen during the said meeting. Thereafter the resolution plan submitted by the anchor bidder for approval of CoC was also shared on screen by the RP and then the same was thoroughly evaluated by COC. When the CoC, inspite of being the stakeholder whose interests were most critically affected, had evinced no complaints about the fairness and transparency of the process which had been followed by the RP, there are not much force in the contention of the Appellant that there were irregularities in the process followed by the RP. Whether the Adjudicating Authority had erred in approving the resolution plan of the SRA? - HELD THAT:- The Hon ble Supreme Court in a catena of judgments has laid down that commercial wisdom of CoC has to be given paramount importance and cautioned time and again about the need of minimal interference in the commercial decision of CoC to approve the Resolution Plan. It has been held that the opinion expressed by the CoC after due deliberations in the meetings through voting, as per voting shares, is the collective business decision and that the decision of the CoC s commercial wisdom is non-justiciable, except on limited grounds as are available for challenge under Section 30(2) or Section 61(3) of IBC. The Hon ble Supreme Court has consistently held that it is not open to the Adjudicating Authority or the Appellate Authority under IBC to take into consideration any other factor other than the ones specified in Section 30(2) or Section 61(3) IBC in questioning the decision of the CoC - No sufficient ground has been made out within meaning of Section 61(3) of the IBC to interfere with the decision of the Adjudicating Authority approving the Resolution Plan of the SRA. The Adjudicating Authority did not err in approving the resolution plan of the SRA. We are also of the considered view that the Adjudicating Authority did not commit any error in rejecting the interlocutory application of the Appellant objecting to the approval by the CoC of the resolution plan of the SRA. In result, the impugned order does not warrant any interference. Appeal being devoid of merit is dismissed.

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• PMLA

• 2024 (12) TMI 680
  Money Laundering - proceeds of crime - scheduled offences - criminal conspiracy and illegally quarried granite stones from the nearby lands and non-lease patta lands and transported more minerals than permit obtained quantity - HELD THAT:- There are prima facie materials to show that illicit mining had taken place. The prosecution in respect of the scheduled offences is still pending. The evaluation report of the Department of Geology and Mining indicates that the proceeds of crime were valued at Rs. 261.89 crores. It is not known as to what happened to the said amount. The learned counsel for the petitioners would claim that identification of the proceeds of the crime is sine qua non and in its absence, no complaint in respect of the offence of money laundering can lie. This argument has no merit. The learned Additional Solicitor General of India pointed out that Section 3 of the Prevention of Money Laundering Act which defines the offence of money laundering clarifies that a person shall be guilty of the offence of money laundering, if such person is involved in concealment of the proceeds of crime. When concealment of the proceeds of crime itself would constitute the offence of money laundering, it cannot be contended that unless the proceeds of crime are identified, the complaint will not lie. The Hon ble Supreme Court in Rana Ayyub v. Directorate of Enforcement [ 2023 (2) TMI 236 - SUPREME COURT] observed that Section 3 comprises of two essential limbs, namely : (i) involvement in any process or activity; and (ii) connection of such process or activity to the proceeds of crime. The expression proceeds of crime is defined in Section 2(1)(u) to mean any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. Thus, it is enough if the prosecution establishes that there was generation of proceeds of crime and the accused was involved in any process or activity in connection with the proceeds of crime. If by a Houdini trick, they vanish thereafter, the Enforcement Directorate need not establish the money trail. Since concealment of the proceeds of crime is an offence, the accused can be held guilty of the same. The Enforcement Directorate need not demonstrate where the money eventually went. The accused after engineering a disappearing act cannot be heard to contend that they must be exonerated because proceeds of crime has not been identified. If a rat has escaped into a hole, one can only point to the hole. The rat might even have exited through another end. The defence cannot argue that unless the rat is found, there cannot be a prosecution. Section 24(a) of the Act will apply if charges have been framed against the accused. Section 24(b) of the Act will apply in the case of any other person. While Section 24(a) of the Act is a mandatory presumption, Section 24(b) is a discretionary presumption. Taking into account the quantum of money involved and the nature of allegation, this is a case in which the presumption under Section 24(b) has to be necessarily invoked. It is for the petitioner herein to rebut the presumption. But that can be done only during trial. The court below had approached the issue from a correct perspective and rightly dismissed the discharge petition filed by the revision petitioners herein. The court below had come to the conclusion that there is sufficient ground for proceeding against the petitioners herein. The court below has recorded convincing reasons for doing so. In exercise of revisional jurisdiction, interference with the said order is not warranted. This criminal revision petition is dismissed.

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• Service Tax

• 2024 (12) TMI 679
  Challenge to rejection of application made under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - duty demand was not quantified before 30 June 2019 - HELD THAT:- Under Section 126 of SVLDR Scheme, the Designated Authority has the power to verify the figures mentioned in the declaration and give a counter-offer to the declarant of the correct amount. However, in this case, the Petitioner s application was thrown out at the threshold itself and, therefore, this stage did not arise. Today, the Scheme has come to an end and the Petitioner has stated that he is willing to substitute the figure of Rs. 28,72,603/- in place of Rs. 23,82,188/- and is willing to pay interest on the balance. In view thereof, we are of the view that Petitioner s declaration was rejected wrongly by invoking the provisions of Section 125 (1) (e) of the SVLDR Scheme. However, since the Petitioner is eligible and has now offered to pay the difference along with interest and in the light of subsequent fact that the Scheme has come to an end, it is proposed to accept the request made by the Petitioner. Rejection of SVLDRS-1 dated 8 November 2019 and 30 December 2019 are hereby quashed and set aside and the Respondents are directed to accept the same - the Respondents to re-calculate the amount payable under the Scheme by taking the figure of Rs. 28,72,603/- as duty quantified on or before 30 June 2019 (as reduced any pre-deposit or payment made) and intimate the same to the Petitioner to make the payment along with interest at the rate of 6% per annum from 1 January 2020 till date of such intimation. Petition disposed off.

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• 2024 (12) TMI 678
  Refund of CENVAT Credit on export of Business Support Services (BSS) - Classification of services provided by the appellant as Intermediary Services - non-submission of FIRC certificates. Whether the appellants have rendered intermediary services in respect of services provided by them? - HELD THAT:- CBIC vide Circular No.159/15/2021-GST dated 20.09.2021 clarified Intermediary Services while making it clear that there is broadly no change in the scope of intermediary services in the GST Regime vis- -vis Service Tax Regime, except addition of supply of securities in the definition of Intermediary in the GST Law - on going through the clauses of the agreement, it is clear that the word Customer refers to M/s Saxo Bank Netherlands themselves and not to their customers. It is made very clear in the service level agreement that it is between the customer (M/s Saxo Bank Netherlands) and the provider. To that extent, it is found that the findings of the learned Appellate Commissioner are beyond the Show Cause Notice and the Original Order. It is also found that the Show Cause Notice just refers to the definition of Intermediary and assumes that the services rendered by the appellants are in the nature of intermediary, without going into the various clauses of the agreements - it is not correct for the appellate authority to hold that the appellants are rendering services to the customer of their foreign principal. On going through the different clauses of the agreement that there is nothing to indicate that the appellants are working as Intermediary as there is no mention of any service to be rendered by the appellants to any third party. Thus, either in respect of ITSS Services or BSS Services, the appellants acted as Intermediary. Whether the non-submission of FIRC certificates would dis-entitle them to the claim of refund? - HELD THAT:- The impugned order holds that the appellants have not submitted some of the FIRCs though the appellant has calculated the entire receipt of foreign exchange as service exports on the basis of auditor s certificate while holding that the appellant is eligible for refund of unutilized credit in proportion to the remittances received by the appellant during the respective quarters - Learned Commissioner further finds that the appellant has not produced any proof of missing remittances/ FIRCs before him which were also not produced before the adjudicating authority and that auditor s certificate cannot be evidence of receipt of remittance - as far as the rejection of refund of Rs.6,49,068/- is concerned, the issue must travel back to the original authority in order to calculate eligible refund amount in accordance with the actual remittances received during respective quarters on the basis of the evidence that may be submitted by the appellants. The the appellants have not rendered the services of ITSS or BSS as an Intermediary and as such, the services rendered by the appellant can be classified as export of services. The appellant shall be eligible for the refund of the same - appeals disposed off.

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• 2024 (12) TMI 677
  Recovery for alleged non-payment of Service Tax - extra charges collected i.e. mark up for the freight income (ocean freight/air freight) - period of dispute in the matter pertains to 2010-11 to 2014-15 and 1st April 2015 to 30th June 2017 - HELD THAT:- In identical circumstances, the Tribunal vide its order in the case of MARINETRANS INDIA PVT. LTD. VERSUS CST, HYDERABAD - ST [ 2019 (4) TMI 534 - CESTAT HYDERABAD] had held that buying and selling of cargo space in a ship, does not amount to rendering a service and any profit and income earned through such transactions would not be leviable to Service Tax. Under the circumstances, when the appellant is acting on a principal to principal basis, as regards purchase and selling of space from shipping line/airline and selling to importers/exporters we are of the view that the said act would not amount to an activity liable to Service Tax. This is particularly so when they are not acting as an agent/intermediary for promoting the business of the shipping lines/ and airlines and the transactions of the appellant are independent of both backward and forward integration of the activities performed. The order of the lower authority is set aside - the appeal is allowed

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• 2024 (12) TMI 676
  Liability of service tax - discounts and incentives received by the appellant from the manufacturer - applicability of negative list under section 66D of the Finance Act, 1994 - HELD THAT:- It is noted that the appellate authority, while confirming the demand, has not rendered any express findings on the pleas as made out by the appellant, despite noting that the reimbursements made by the manufacturer to the appellant were with regard to sale and purchase of goods . The fact that the appellants are engaged in sales of cars and spares is largely a trading activity pertaining to the sales of goods - it is failed to appreciate the logic to hold that when it was categorically held supra, that there was no liability to Service Tax on activity relating to sale of spare parts for the car, how per se the activity relating to car sales could be taken as one leviable to Service Tax. It is not disputed that the amount reimbursed by virtue of credit notes actually relates to target incentives and discounts offered by HCIL passed on to the customers through the appellant related to its business of sale of cars, spare parts and accessories and not on account of rendition of any service. It therefore belies logic to include the said activity relating to sale of goods within the ambit of section 66B of the act ibid. - the provisions of the Finance Act cannot be made applicable to such transactions between the appellant and the HCIL and between the appellant and/or its customers. The discounts and incentives are offered by the manufacturer in relation to sale and purchase of the goods passed on to the ultimate consumers while transferring the possession and ownership of the goods. The appellant in support of their contention, drew our attention to this Tribunal s decision in the case of M/S JM FINANCIAL SERVICES PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I [ 2013 (7) TMI 151 - CESTAT MUMBAI ], wherein the amount received by way of reimbursement of electricity and office expenses was held as not liable to Service Tax, as no service was rendered therein. The order impugned herein is not in accordance with law and requires to be set aside - Accordingly, the impugned order is set aside, and the appeals are allowed.

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• 2024 (12) TMI 675
  Levy of service tax - Interest free advances received against property - Advances received against Projects, viz., Advances received for sale of plot - Other advances and rectification entries - Extended period of limitation. Interest free advances received against property - HELD THAT:- In the instant case, it has been observed in the impugned order that the MoU is not registered with any competent authority. However, it has been noted that the said MoU does not have any signature and date. This is required as both the parties have to understand and accept the duties responsibilities cast on the First Second party as per the clauses in each page of the MoU. The termination date has also not been mentioned, due to which also MOU cannot be accepted as a legal document/arrangement between two parties. There is no mention of payment of any amount as advance to the appellant. In this context, it is noted that the Ld Counsel has submitted that it was a preliminary understanding between the two parties, prior to entering into a contract - the appellant has not submitted any other evidence before this Tribunal to substantiate the veracity of the said MoU. Further, it is noted that there is a percentage of the purchase consideration which is paid as fee to the appellant, which in the impugned order has been held to be in the nature of consideration for the taxable service provided by them - it is found appropriate to remand this matter to the original authority to examine the contentions of the appellant, regarding revenue recognition and adjustment from advances received for projects. Advances received against Projects, viz., Advances received for sale of plot - HELD THAT:- The impugned order has taken note of the documents submitted by the appellant during the course of hearing. It has been noted that the appellant has submitted documents only for Rs. 36,41,336/- and could not produce the documents for the remaining amount. In this context, appellant has submitted the indication of service tax/Sales tax in the agreement is not evidence that service tax has been collected. It is agreed that this would have to be substantiated by documents. Consequently, this aspect of the case also requires to be remanded back to the original authority for verification. Other advances and rectification entries - HELD THAT:- The impugned order has stated that the appellant has not submitted any averments in this regard, and has concluded the same to exigible to service tax. This is not acceptable. Service tax can be charged only when the amount is received as consideration for service rendered by a service provider to a service recipient. Consequently, this issue also requires to be remanded to the adjudicating authority to examine relevant documents and consider the submissions of the appellant before passing the order. Invocation of extended period - HELD THAT:- Since it is held that the matter need to be remanded for re-consideration as discussed above, it is not deemed necessary to consider these submissions. Matter remanded back to the original adjudicating authority for reconsidering the submissions made by the appellant before this Tribunal - appeal allowed by way of remand.

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• 2024 (12) TMI 674
  Classification of service - manpower supply service or not - activity of deputing officials to subsidiary companies - Refund of service tax - rejection on the ground that the appellant has no locus standi to file the refund claim - applicability of provisions of Section 11B of Central Excise Act, 1994 - HELD THAT:- The issue of supply of manpower was settled by the Hon ble Supreme Court in their decision in the case of Commissioner Of Custom Central Excise Services Tax- Bangalore (Adjudication) etc Vs M/s Northern Operating Systems Pvt Ltd [ 2022 (5) TMI 967 - SUPREME COURT] . In the context of the present case, it is noted that the dispute relates to the period 2008-09 to 2010-11. Consequently the definition for the relevant period is required to be considered. - In the said case it was held that the assessee was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service, or a taxable service, for the two different periods in question (In relation to which show cause notices were issued). In the context of the above decision, the arrangement between the appellant and its subsidiary M/s Power Finance Corporation Consulting Ltd (hereinafter referred to as PFFCL) is required to be considered. An overall reading of the facts of this case shows that the employees of the appellant were employed on secondment basis with PFFCL for their skills to run the subsidiary company viz., PFFCL. Such seconded employees had the option to return to the appellant. It is also on record that the appellant charged the salary, allowances etc from PFFCL. It is also on record that that there was a markup of 36% charged by the appellant in lieu of other expenses - the payment of service tax on such service is correct and no refund is due to the appellant. The impugned order has rejected the refund on the grounds that the appellant had collected the service tax from M/s PFFCL, hence no refund can be claimed by them. The impugned order has also rejected the claim of refund of interest. It is also noted that the impugned order has also held that service tax was rightly paid, hence there is no question of refund. The impugned order is upheld and the appeal is dismissed.

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• 2024 (12) TMI 673
  Short payment/non paymnet of service tax under Reverse Charge Mechanism on Man Power Recruitment or Supply Agency Service - contravention of provisions of Section 66B and Section 68 of the Act read with Rule 6 of the Service Tax Rules, 1994 and the Notification No.30/2012-ST dated 20.06.2012 - appellant failed to submit the relevant documents in support of their contentions that no service tax liability can be imposed on them - revenue neutrality - extended period of limitation - penalties. Demand of differential duty with interest - HELD THAT:- It is a settled principle of law what is admitted need not be proved. Further, the Certificate of Chartered Accountant has no potential value in view of the Audit Report, which has been accepted by the appellant. Journal Voucher dated 1.7.2017 placed on record by the appellant is not really foolproof as the changes sought to be pleaded having been made are only hand written without any authentication. Moreover, had it been so, the appellant would have submitted the same on 15.04.2019 at the time of the audit instead of agreeing to pay differential service tax amount. Here the service tax liability was calculated on the basis of audit conducted by the departmental officers, however, the appellant did not provide any reply to the audit report which resulted in issuing of show cause notice and, thereafter, also the appellant failed to co-operate and did not submit any documents to counter their tax liability - Appellant is liable to pay the differential service tax amount as confirmed by the Authorities below. Consequently, the appellant is also liable to pay the interest, which is automatically leviable under Section 75 of the Act. Invocation of Extended period of limitation - Penalties - HELD THAT:- In the present case, the appellant was aware that they were liable to discharge service tax liability on Man Power Service under the reverse charge mechanism but short paid the same and had the officers of the Central Excise Audit not scrutinized the records of the assessee, the short payment would have remained un-detected. Thus, the assessee suppressed the material facts from the Department with intent to evade payment of tax, therefore, the extended period of limitation has been rightly invoked. Similarly, no interference is called for on the imposition of penalties on the appellant. Revenue Neutrality - HELD THAT:- Revenue has contested the submissions relying on the decision of this Tribunal in BCCI Vs. Commissioner of Service Tax [ 2018 (9) TMI 41 - CESTAT MUMBAI ], where the plea of revenue neutrality was rejected observing that if the argument of revenue neutrality is accepted as permissible defense, the entire scheme of payment of taxes on reverse charge basis will become otiose. It is opined that the said plea raised by the appellant has no substance. There are no merits to interfere with the impugned order and the same is hereby affirmed - The appeal is, accordingly dismissed.

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• 2024 (12) TMI 672
  Classification of services - services rendered by the appellant to AAI, providing services in relation to construction, renovation, repair, maintenance, completion and finishing etc. of the buildings or the civil structures - Works Contract Services or Management, Maintenance or Repair Service? - time barred SCN. Whether the services rendered by the appellant to AAI amounts to rendering Works Contract Services or amounts to Management, Maintenance or Repair Service ? - HELD THAT:- The services rendered by the appellants were not services simpliciter of Maintenance, Management and Repair but were the composite services involving service element as well as the element of sale of goods. Service Tax can be charged only on the service element. The value of goods if defined clearly has to be deducted from the total value - Since in present case, it is indivisible composite contract, the assessee is entitled to avail benefit of abatement of 67% under the Notification No. 1/2006-ST dated 01.03.2006. The gross amount charged for rendering composite service/WCS has been wrongly taken for calculating service tax liability and that the impugned services are wrongly alleged as that of Maintenance, Management and Repair Service. Hon ble Apex court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ] had held that when the activities undertaken under various contracts involved providing of services along with providing the material for the same, the services are not simpliciter services but are the composite services called as Works Contract Service . The Hon ble Apex Court had also held that the Works Contract Services got identified in statute with effect from 1.6.2007 hence any contract for rendering the composite services cannot be levied to tax prior to 1.6.2007. The activity of the appellant rendered to AAI should be classified as Works Contract Service with effect from 1.6.2007. For the period i.e. from March 2006 to May 2007, the activity still cannot be called as Maintenance Management or Repair service. Though it could be Commercial or Industrial Construction Service as defined under Section 65(105) (zzq) of Finance Act, 1994, that too was not the service simpliciter, in the present case. Service Tax on service element - HELD THAT:- Any area assessable for landing and taking off area for aircrafts for runways, for maintenance of aircrafts, for facilities of passengers and for aerodrum all are defined as airport. Resultantly R.G. Bhawan as well as Safdarjung is held to be covered under Airport . The Works Contract Services being provided to airports since are exempted. The demand of service tax on the service element also is held to be wrongly confirmed. Service tax on Services provided to CPWD - HELD THAT:- It is observed that CPWD works under Ministry of Urban Development, Government of India for developing civil structure of the country. It is denied to have any commercial purpose by the appellant i.e. CPWD doesn t work for commerce. The Hon ble Apex Court in the case of Gannon Dunkerley Co. Madras Ltd. Vs. State of Madras [ 1954 (4) TMI 30 - MADRAS HIGH COURT] has observed about trade and commerce that If a person buys goods with a view to sell them for profit, it is an ordinary case of trade. If the transactions are on a large scale it is called commerce. Nobody can define the volume of business, which would convert a trade into commerce. But everybody understands the distinction between the two with sufficient vagueness. Hence, profit motive can be considered to be an important aspect for determining a transaction as a transaction for commerce or industry. Even under the common parlance the expression commerce and industry is associated with trade and business, which is generally carried out with the intention of making profits - The civil structures raised and maintained by CPWD since are for the government premises CPWD is held to be a non-commercial organization. Service tax liability for any services to such an organization does not arises. Therefore, demand confirmed is definitely liable to be set aside. Whether the show cause notice is barred by time? - HELD THAT:- The appellant is not liable to pay service tax as confirmed against him, for the services being provided to airport and non commercial governmental authority hence there is no willful, misstatement when Nil return has been filed by the appellant. No other evidence has been produced by the department to prove any other positive act of the appellant resulting into alleged suppression nor any evidence is produced to prove the mala fide act of the appellant committed or omitted with an intent to evade payment of service tax. With these observations, the extended period of limitation has wrongly been invoked by the department. The demand for the period 2006-07 to 2011-12 has wrongly been raised vide the show cause notices - the show cause notice is held barred by limitation. Both the appeals have wrongly confirmed the demand. The order under challenge dated 18.06.2013 is accordingly, hereby set aside - Appeal allowed.

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• 2024 (12) TMI 671
  Classification of services - Clearing and Forwarding Agent services or Cargo Handling Service? - extended period of limitation - HELD THAT:- It is found that the appellant has a case as regards the sustainability of the demand on limitation. The issue of payment of service tax on reimbursements was decided by the Hon ble Apex Court in the judgement of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] - It is found that the service tax demand along with interest and imposition of penalties under the provisions of the Finance Act, 1994 during the relevant period are not sustainable. The impugned order is set aside and the Appeal is allowed.

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• 2024 (12) TMI 670
  Classification of service - Mining of Mineral, Oil or Gas Services or not - extracting ore, operating mine and otherwise exercising all the powers and rights of the lessee under mining licence - whether the appellant are required to pay service tax on the said services involving the period 30.06.2010 to 31.07.2017? Revenue alleged that the 64% of the extracted ore received by the appellant even though the appellant is a partner in the partnership firm M/s. Sree Gavisiddeshwara Minerals, service tax is required to be discharged on the value of the quantity of ore received when sold by the appellant in the market being the consideration towards rendering of services classifiable under the taxable category of Mining of Mineral, oil or gas services. HELD THAT:- A plain reading of the reconstituted partnership of M/s. Sree Gavisiddeshwara Minerals which was originally registered on 27.08.2007 comprising of the seven partners which included the appellant as one of the partners. Later, the appellant was entrusted the work to extract the Iron Ore from the leased mine belonging to the partnership firm and for that, the appellant being one of the partners of the partnership firm was allowed a profit of 64% of the extracted ore and the other partners of 36% of the extracted ore. Therefore, the facts are squarely covered by the ratio of the judgment of the Hon ble Gujarat High Court in the case of Cadilla Healthcare Ltd. [ 2022 (5) TMI 800 - GUJARAT HIGH COURT ]. Their Lordships referring to the judgment of the Punjab Haryana High Court, held that The High Court observed that a partnership is an agreement between two or more persons to place their capital, labour and skill, or some or all of them for the purpose of carrying on a joint business for their common benefit and dividing its profits in certain proportions. The privilege of profit sharing imposes on each partner the obligation to advance the interests of the partnership business, to apply his time and attention to the management of its affairs, and to devote his knowledge. skill and ability to the success of the enterprise. In the present case, the appellant being the Managing Partner received 64% of the extracted Ore as share of his profit in the partners firm. Also, it is absurd to say that for extraction of 36% of the Ore for the partners, the consideration for such service was equivalent to the value of 64% of the Iron Ore extracted and retained by the Managing Partner, the appellant. There are no merit in the impugned order - Consequently, the same is set aside and the appeal is allowed.

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• Central Excise

• 2024 (12) TMI 669
  Maintainability of petition - availability of alternative remedy - Compliance with directions issued by the Customs Excise Service Tax Appellate Tribunal in the impugned order - absence of the cross-examination of the witnesses - violation of principles of natural justice - HELD THAT:- It was incumbent upon the respondent No. 2 to comply with the directions issued by the Tribunal, irrespective of the delay in conduct of cross-examination. The Tribunal has categorically observed that the adjudicating authority is to grant cross-examination of the persons as has been indicated in paragraph No. 4 of the order and subsequently, grant four weeks time to the petitioners to file a detailed reply. Both the directions of the Tribunal are not followed by the respondent No. 2 in letter and spirit and as such, the impugned order-in-original is liable to be quashed and set aside only on that ground. Availability of alternative efficacious remedy to challenge the impugned order - HELD THAT:- It is true that alternative efficacious remedy to challenge the impugned order would be to prefer an appeal before the Tribunal, however, as the respondent No. 2 has failed to comply with the directions issued by the Tribunal and the matter is pending before this Court since 2022, the matter is heard on merits and requested learned advocate of Respondent to take instructions for disposal of the matter, if remand is made by this Court. The impugned order-in-original is hereby quashed and set aside and the matter is again remanded back to the respondent No. 2. The respondent No. 2 shall comply with the directions of the order dated 01.05.2024 passed by the Tribunal and as the matter is very old, give priority to the same and pass fresh denovo order after giving an opportunity of hearing to the petitioners and compliance of the directions given by the Tribunal within a period of six months from the date of receipt of copy of this order. Petition disposed off by way of remand.

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• 2024 (12) TMI 668
  Process amounting to manufacture or not - process of coating uncoated paper - denial of CENVAT credit availed by the appellants when tax (duty) itself was not payable - impugned order exceeded the scope of the Show Cause Notices or not - interest and penalties. HELD THAT:- There is no discussion in the Show Cause Notice on the unavailability of CENVAT credit to the appellant. Utilization of CENVAT credit was not disputed by the Department at any given point of time. There is a reference while recording the statement of Shri D.N. Ram, Deputy Manager (Excise) and Authorized Signatory of the appellant, as to why the appellants were taking full CENVAT credit on those inputs which are used in the goods which they claim as not amounting to manufacture, there is no discussion in the Show Cause Notice as to why the appellants are not eligible to avail credit and there is no proposal to deny the availment of CENVAT credit to the appellants. Interestingly, instead of countering the submissions of the appellant and instead of highlighting any allegations in the SCN, on the issue of inadmissibility of credit, Commissioner observes that this response from the noticee only blandly refutes the allegation of SCNs but does not present any cogent legal argument in support of the contention that the noticee was eligible to take the credit and use it for the purpose for which it actually got used; on the other hand, the reply makes incorrect assertions; it is incorrect for the noticee to state that the SCNs have no alleged that the CENVAT has been incorrectly taken; the SCNs have made the point that the CENVAT has been incorrectly taken and utilized and have raised a demand under Sec 11A accordingly. There is no reference to Rule 14 which empowers the Department to recover CENVAT credit wrongly taken or erroneously refunded. The entire tone of the Show Cause Notice was to recover the duty paid on the finished goods utilizing the CENVAT credit. This being the position, it is correct on the part of the appellants to say that the impugned order has travelled beyond the Show Cause Notice. When the duty was not payable on the final products cleared by the appellants, it is immaterial whether such duty was paid through cash or by CENVAT credit - the Show Cause Notice does not refer to Rule 14 of CENVAT Credit Rules and does not even speak the language of the Rule that such and such amount of credit is not admissible to the appellants. The impugned order is set aside - appeal allowed.

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• 2024 (12) TMI 667
  Refund of CENVAT balance lying as unutilized credit on the date of exercising the option of exemption notification shown in RG23A Part I and II registers since July 2004 - Denial of Refund claim on the ground that the amount had lapsed as per Rule 11(3) of the CENVAT Credit Rules, 2004 - whether the amended Rule 11(3) will apply to the CENVAT credit balance available in the appellant books prior to insertion of Rule 11(3)? HELD THAT:- CENVAT schema is in the nature of a benefit/ concession provides for assessee s to avail credit of duty paid on goods and services, as provided for in the statute. The credit accumulated can be set off on final duty to be paid against goods and services. Once the assessee avails of the scheme then rights to avail of the credit accrue to the assessee. Unless the provision of law is specifically modified taking away this right, the assessee cannot be denied the same. In the present case, there are nothing in the amended provision of Rule 11 of CCR, 2004, to show that the intention of the legislature was to effect the existing rights of the assessee s to enjoy the credit already accumulated. In the case of EICHER MOTORS LTD. VERSUS UNION OF INDIA [ 1999 (1) TMI 34 - SUPREME COURT ], it has been held that the rights of credit facilities accrued under existing law are not to be altered. Furthermore, in COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. [ 1999 (8) TMI 920 - SUPREME COURT ], the Hon ble Supreme Court held that It should also be noted that there is no corelation of the raw material and the final product, that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. The impugned order is set aside and the appeal is allowed.

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• 2024 (12) TMI 666
  Recovery of cenvat credit with interest and penalty - manufacture of Excisable goods or not - applicability of section 11 D of the Central Excise Act, read with the provisions of rule 25 /or rule 27 of the Central Excise Rules 2002, read with section 11 AC of the Central Excise Act, 1944 - whether the appellant actually received the excisable goods from Koolmint at its factory on which credit was availed and whether they could be subjected to the provisions of section 11 AC read with rule 15 of the Central Excise Rules? - invocation of Extended period of limitation. HELD THAT:- There is no satisfactory explanation emanating from the evidence on record or the response of Koolmint to such a wide variation of consumption data, except for a bland statement stating that wherever the average consumption of electricity per KG was higher, it indicated the use of DG set for longer period of time. That being so, we note from records that in March 2003, the average consumption of electricity per KG was 810KWH, while the 50 KW generator was made use of for 30.10 hours and 8KW generator for 11.20 hours, likewise in January 2004, average consumption of electricity was 18744 KWH per KG, while both the 50 KW generator and 8KW generator were operational merely for 25 hours. That being the factual position, on record the argument of the appellant is not borne out to be true and is therefore clearly unsustainable and lacking merit. For the reason, the appellant s plea is unacceptable. The premise, therefore that electricity consumption was low and refuting it by claiming consumption of electricity produced by the DG sets is not at all satisfactorily forthcoming. The appellant have not placed any other argument to refute the said contention of the department. The plea of the appellant that they used to work on electricity generated from the DG sets is a bland statement and lacks any evidence/credence in support. The show cause notice clearly makes meticulous recordings of the time period for which the generator was run incorporating even law timelines of 5, 10, 15 or 20 minutes. The fact that that casts a strong shadow of doubt on the veracity of these figures is that at all places these figures are recorded in odd numbers and multiples of 5. Isn t it quirky that not even on a single occasion did the DG set operate for a length of time in a multiple of an even integer - There is no worthwhile claim of any manufacturing activity being undertaken, out of power generated by the operation of the DG sets. Moreover, the said statement of Sri Agarwal has neither been refuted, nor retracted till date. Thus the submission by the appellant does not lend any credence to the argument made in defence by them rather goes into strengthen the department s claim casting serious aspersions on the appellants claim for manufacture of finished goods used as inputs by their family concern. This is moreso when an analysis of stated manufacture is undertaken with energy source being power generated by DG sets vis a vis that supplied by Assam State Electricity Board. The thick web of mutuality of interest is therefore quite evident between the different businesses of noticees. No formal agreement of any quantity discounts are placed on record, particularly so when almost the entire quantity (99%) said to be produced was indicated as sales to only one firm i.e. the appellant Kaizen Organics Pvt. Ltd. - While there is no significant and satisfactory evidence, to establish the to and fro movement of raw materials and finished goods, the availment of cash refund and Cenvat credit by the appellant amounts to extreme misuse of policy provisions in good measure. To further accentuate their undue pecuniary gains by way of illegal reflection of quantity and recourse to discounts not backed by a shred of evidence, is a clear pointer to the ill machinations and sinister design of the appellant and reinforces the common saying that greed and deceit have no ends and are a bottomless pit. Extended period of limitation - HELD THAT:- The fact that the basic foundation of such database was set up on the edifice of fraud and deception, treachery and deception renders such reports/returns as ab initio void and a nullity in law. No shelter can be claimed under the guise of having tendered such returns to the department. For its contumacious conduct the appellant despite filing of such returns shall indeed be liable to all consequences in law including that of imposition of penalties. On the principle that fraud vitiates everything and in view of the matter, no illegality surfaces out of the department s action in the matter and the department was completely justified in invoking extended period of limitation. Applicability of Section 11 D of the Central Excise Act - HELD THAT:- There are no hesitation in stating unequivocally that the appellant is certainly guilty of all charges that have been made out against them. The false and manipulated receipt and dispatch entries, cannot plug-in and come to the rescue of the appellants. Such record keeping is ab initio null and void. It stems from falsehood and forgery. There is no merit in the appellant s plea as regards the proposition of Section 11 D of the Central Excise Act as it is established from records that the amount of Rs.9560962 was collected by the appellant Koolmint under the guise of Central Excise duty and therefore the provisions of section 11 D ibid are squarely applicable. The goods said to be manufactured were not manufactured, there being no requisite infrastructure to undertake said manufacture, the appellant could not have collected any duty in terms of section 3 of the Central Excise Act and the amount so collected is clearly recoverable from the appellant. There are no infirmity, or any illegality in the order passed by the learned Commissioner, The impugned order is required to be maintained - appeal dismissed.

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• 2024 (12) TMI 665
  CENVAT Credit - input services - Business Support Service - Management Consultancy Service - Guest House Service - Event Management Service - Outdoor Catering Service - Commercial or Industrial construction Service - Real estate Service - credit claimed on photocopy of invoices and invoices issued on Bangalore address, but credit claimed at Ahmedabad - Credit availed without valid documents - Credit availed on invoices with different address. Credit on Business Support Service - demand has been confirmed in the impugned order holding that there needs to be a service provider and a service receiver providing services as described in the definition of Business Support Service, in return of a consideration - HELD THAT:- The issue is not res-integra in as much as the Tribunal in the case law relied upon by the appellant in the matter of M/S AMARA RAJA POWER SYSTEMS LTD. ANOTHER. M/S AMARA RAJA ELECTRONICS LTD. VERSUS THE COMMISSIONER C C. E, TIRUPATHI [ 2015 (12) TMI 1558 - CESTAT HYDERABAD] has decided in the favour of the assessee and held that The said issue, whether the transactions are services or not, should be agitated by the department against service providers viz. ARBL and MPPL, from whom the service tax has been collected. Credit cannot be denied at the service recipient s end, alleging that no service has been provided. When ARBL and MPPL have paid service tax under the category of BAS/BSS, the strong inference that can be drawn is that they have provided services as per the invoices raised by them. Revenue has not been able to adduce any evidence that there is no service rendered. The said issue, whether the transactions are services or not, should be agitated by the department against service providers viz. ARBL and MPPL, from whom the service tax has been collected. Credit cannot be denied at the service recipient s end, alleging that no service has been provided - thus, it is now settled law irrespective of the fact whether or not the impugned service was eligible to Cenvat Credit in any matter where the question involved is whether or not the impugned service/ inputs were liable to tax, if the tax paid by the service provider/ supplier of inputs is not questioned at the end of service provider/ supplier of inputs, the same cannot be challenged at the recipient s end - Credit allowed. Credit on Management Consultancy Service - HELD THAT:- The issue is not res-integra as the same has already been decided in the assessee s favour by coordinate bench of this Tribunal in the matters of PAREKH PLAST (INDIA) PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, VAPI [ 2011 (6) TMI 595 - CESTAT, AHMEDABAD] , MODERN PETROFILS VERSUS COMMISSIONER OF C. EX., VADODARA [ 2010 (7) TMI 319 - CESTAT, AHMEDABAD] , that when the invoices are in the name Head Office, the credit cannot be denied to the unit where the services have been utilized. It is further found from the invoices produced by the appellant that in the invoices raised by the service providers, the service provided to the appellant unit has been separately mentioned - Further, it is already a settled law that the credit cannot be denied merely on the ground that the assessee had taken credit on photo-copies, where the veracity of credit itself was not disputed. Thus, the credit of Rs. Rs. 91,43,339/- impugned in the appeal has been correctly availed by the appellant and the impugned order is set aside on this count. Credit claimed on photocopy of invoices and invoices issued at different address- Rs. 47,85,079/- - HELD THAT:- It has already been held that the Cenvat credit cannot be disallowed on these grounds. Accordingly, the demand on this count is quashed. Credit claimed without valid documents - HELD THAT:- The coordinate bench of this unit in the matter of PIRAMAL GLASS PVT LTD VERSUS C.C.E. S.T. -SURAT-I [ 2021 (9) TMI 1198 - CESTAT AHMEDABAD] has already decided that the claim cannot be denied if the credit on common services has entirely been used in one unit. There is no allegation in the impugned order that the impugned services were not eligible for Cenvat credit. The credit cannot be denied to the appellant merely for the reason that the GAR -7 challan is in the name of Bangalore unit, which is also their head office. Credit on Guest House Service - HELD THAT:- The term input service contained in Cenvat Credit Rules, 2004, contains certain exclusion clause. Clause (C), inter alia, excludes travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily, for personal use or consumption of any employee. Accordingly, if the guest houses were utilized by the Assessee for extending benefit to the employees, for the personal use or consumption, the Assessee was not entitled to avail Cenvat credit thereof. This, even Assessee does not dispute. The case of the Assessee, however, is that, none of the guest houses were used for the personal use or consumption of the employees. In order to test this premise, Tribunal itself formulated the test that those guest houses which are situated next to the manufacturing unit of the Assessee, would qualify for the benefits - even the coordinate bench of this Tribunal has held the Cenvat credit on Guest House service eligible in the case law MAFATLAL INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, AHMEDABAD [ 2020 (6) TMI 61 - CESTAT AHMEDABAD] cited by the appellant. Accordingly, Cenvat credit on this ground is allowed and impugned order is set aside. Credit on Event Management Service - HELD THAT:- Revenue has no locus-standi to deny the Cenvat credit in de-novo proceedings. Accordingly, Impugned order is set aside on this ground. Credit availed on invoices with different address - HELD THAT:- On going the through the invoices, it is found that some of the invoices have been raised in the name of units which are their sister concerns but have different identity. Accordingly, it is held that only invoices which are in their own name or their Bangalore Head Office are eligible for Cenvat credit. Cenvat Credit on other invoices is disallowed. The appellant will produce the necessary documents for verification. The Cenvat credit taken against the invoices which do not pertain to them, or their head office cannot be considered to be bonafide and accordingly, the appellant will also pay the applicable interest and equal penalty under Section 78 of the Finance Act, 1994. Outdoor catering Service - HELD THAT:- The appellant has engaged services of outdoor catering to their employees and submitted that as their factory is located 35 km away from the city. that there are no eating arrangements around factory area and hence they availed the service of outdoor catering to provide food to the employees. However, the Cenvat credit on these services was denied on the ground that the services provided was only a welfare activity and no nexus to the manufacturing activity - the impugned order is set aside. Credit on Commercial or Industrial Construction Service - HELD THAT:- The appellant has submitted that they have already reversed the demand of Rs. 22,590/- confirmed in the order. However, the appellant will be required to pay the interest applicable under Section 75 and penalty under Section 78 of the Finance Act, 1994 if not paid earlier. Credit on Real estate Service - it has been alleged that this real estate service has no nexus to the business activity - HELD THAT:- The matter has already been decided in favour of the assessee by CESTAT Mumbai bench in the case of DBOI GLOBAL SERVICES PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [ 2016 (11) TMI 521 - CESTAT MUMBAI] holding that real estate services for leasing renting etc. are related to business activities. Accordingly, the impugned order set aside on this ground. The demand of Cenvat credit of Rs 1,01,671 availed on invoices with different address and the demand of Rs. 2,590 on account of Commercial or Industrial Service is confirmed - Rest of the demands as raised in the impugned order-in-original is set-aside. The impugned order-in-original is modified to the above extent and the appeals are disposed of.

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• Wealth tax

• 2024 (12) TMI 664
  Ex parte order passed in the Wealth Tax Appeals - failure to make compliance, during the course of the appeal - seeking to recall the ex parte order passed - HELD THAT:- As there is no delay in terms of Rule 24 and 25 of the Income Tax (Appellate Tribunal) Rules, 1963 in seeking to recall the ex parte order passed in the Wealth Tax Appeals and furthermore, in the instant case, considering that the assessee is based in London, the erstwhile representative assessee was a super senior citizen who was based at Lucknow and died during the course of the proceedings, we feel that there are sufficiently compelling circumstances which explained the failure to make compliance, during the course of the appeal and the first set of misc. applications in Allahabad. With regard to Ld Sr DR s argument that there was a considerable gap between the dismissal of the miscellaneous applications in 2018 and the filing of these miscellaneous applications, we observe that the circumstances indicate that the representative assessee was unaware of such disposal and recall the Hon ble Supreme Court s observation in the case of Collector of Land Acqusition vs. Mst. Katiji Ors [ 1987 (2) TMI 61 - SUPREME COURT] that ordinarily a litigant does not stand to benefit in lodging an appeal date and refusing to condone a delay can result in a meritorious matter being thrown out at the very threshold and the cause of justice being defeated and further that, there is no presumption that delay is occasioned deliberately on account of culpable negligence or on account of malafide, because a litigant does not stand to benefit by resorting to delay. In view of the fact that we have already held that this is not a case of rectification of mistake, but of recall of an order decided ex-parte and without consideration of merits, in accordance with the provisions of Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 for which no timelines are prescribed, we recall the orders passed. Applications of the assessee is allowed.

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• Indian Laws

• 2024 (12) TMI 663
  Appointment of an arbitrator by the High Court of Madras under Section 11(6) of the Arbitration and Conciliation Act, 1996 - violation of non-disclosure obligations under clause 19 of the appointment order leading to the order of termination - Nonpayment of wages and the legality and validity of the order of termination dated 21.01.2021. Appointment of an arbitrator by the High Court of Madras under Section 11(6) of the Arbitration and Conciliation Act, 1996 - violation of non-disclosure obligations under clause 19 of the appointment order leading to the order of termination - HELD THAT:- In the order impugned, the High Court has proceeded to note an arbitration agreement and therefore, appointed an advocate as the arbitrator - The issue relating to violation of the non-disclosure obligation under clause 19 is only an afterthought. This was evidently not the ground when the respondent issued the show cause notice on 04.09.2020, nor was it a part of the inquiry report. This is also not a part of the charge memo dated 25.11.2020. Crucially, the termination was not based on any such allegation as is evident from the termination order dated 21.01.2021 - It can be concluded that there is no dispute about violation of nondisclosure obligations and Section 11(6) petition, to this extent is non-existent. Nonpayment of wages and the legality and validity of the order of termination dated 21.01.2021 - HELD THAT:- The appellant approached the Authority under the PW Act much before the order of termination and the said authority would exercise jurisdiction under Section 15(2) of the PW Act to the exclusion of civil courts and these disputes are non-arbitrable - It was clearly intended to threaten the appellant for having approached the statutory authorities under the PW Act and the ID Act. There is no basis for invoking clause 19 of the agreement and demanding compensation of Rs. 14,02,822/- when that fact situation did not arise. The Section 11(6) petition has two facets. The first relates to disputes that were anyway pending before the statutory authorities, and they related to non-payment of wages and legality and propriety of termination which are non-arbitrable. The second facet relates to the alleged violation of clause 19 relating to nondisclosure obligation, which was not raised in the show cause notice, inquiry report, chargesheet and termination order and as such is non-existent. The judgment and the order passed by the High Court set aside - the petition under Section 11(6) filed by the respondent under the Arbitration and Conciliation Act dismissed.

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