Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 17, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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Plaintiffs' request for securing amount rejected; failed to prove defendants' intent to dispose assets.
Case-Laws - HC : The High Court dismissed the application filed by the plaintiffs seeking an order to require the defendants to secure an amount of Rs. 1,14,88,833/- until the disposal of the suit. The Court held that the plaintiffs failed to establish a prima facie case against the defendants to demonstrate that they were attempting to dispose of or remove movable or immovable properties from the Court's jurisdiction to prevent the plaintiffs from realizing any decretal amount that may be awarded in the future. The Court found that the plaintiffs merely made a bald statement about apprehending the defendants' potential actions, without providing any supporting documents. The dispute over the principal amount of Rs. 77,05,223/- claimed by the plaintiffs, along with interest at 18% per annum, and the defendants' defense of having returned goods worth Rs. 55,24,252/- to the plaintiff company, remains a matter for trial.
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Tax Authority Initiates Adjudication on Input Tax Credit; Court Upholds Notice Validity.
Case-Laws - HC : The High Court dismissed the writ petition challenging the show cause notice issued for wrongful availment of input tax credit by the petitioners. The Court held that the show cause notice u/s 74 of the CGST/WBGST Acts is merely initiation of adjudication and does not warrant judicial interference unless issued wholly without jurisdiction or ex-facie perverse. Relying on Supreme Court's decision in Mohd. Ghulam Ghouse case, the Court ruled that writ jurisdiction can be invoked only when the notice lacks jurisdiction, and interim relief cannot be granted bypassing the statutory adjudication mechanism. The Court found no jurisdictional error or procedural impropriety in issuing the notice and emphasized that procedural grievances can be effectively addressed during adjudication u/s 74(9). The statutory framework provides sufficient opportunity for taxpayers to raise defenses, and premature judicial intervention is impermissible.
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Petition allowed against non-speaking order demanding GST & premium; fresh demand permitted with detailed reasoning by 05.12.2023.
Case-Laws - HC : The High Court allowed the petition challenging the demand raised by the respondent Greater NOIDA Industrial Development Authority from the petitioner towards GST and premium. The demand was set aside as it was a non-speaking order, violating the principles of natural justice and being contrary to notifications, advance ruling, and the Court's judgment. The respondent was permitted to raise a fresh demand by passing a detailed speaking order considering relevant notifications, advance ruling, the Court's judgment, and subsequent notifications before 05.12.2023, indicating the petitioner's liability to pay the GST amount.
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Improperly issued tax notice without hearing opportunity quashed for violating statutory provisions.
Case-Laws - HC : The High Court held that the Summary of the Show Cause Notice along with the attachment containing the determination of tax cannot be considered a valid initiation of proceedings u/s 73 without issuance of a proper Show Cause Notice. The Summary is in addition to, but not a substitute for, a proper Show Cause Notice. The impugned order was passed without issuing a proper Show Cause Notice, in violation of Section 73 and Rule 142(1)(a). The Statement attached to the Summary is merely the determination of tax u/s 73(3), not the Show Cause Notice required u/s 73(1). The Summary did not provide an opportunity for personal hearing, contrary to Section 75(4). Consequently, the High Court set aside and quashed the impugned order dated 17.04.2024 issued by the respondent, holding it to be in violation of statutory provisions.
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Tax authority's summary notice & attachment insufficient; proper show cause notice required for tax determination.
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/SGST Acts. The impugned order was quashed as it violated principles of natural justice by not providing an opportunity of hearing u/s 75(4) before passing the order. The Court clarified that the Statement u/s 73(3) cannot be treated as a Show Cause Notice required u/s 73(1). Further, Rule 26(3) mandates authentication of the Show Cause Notice, Statement, and Order, which was not followed. Consequently, the impugned order was set aside and the petition disposed of on technical grounds of non-issuance of a proper Show Cause Notice and violation of statutory provisions.
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Intra-state Tax Liability: Onus on JV to Prove Work Ratio.
Case-Laws - HC : The High Court held that since the nature of supply was intra-state in respective states, the tax liability shall be discharged individually in each state equivalent to the work executed there. As the petitioner joint venture (JV) failed to produce the inter se agreement or evidence regarding the proportion of work executed by each partner in the respective states, the court could not determine the tax liability. The court observed that the petitioner had not provided evidence of discharging tax liability in Maharashtra. Regarding the refund claim, the court held that as per Section 12(3) of the IGST Act, the place of supply shall be both states, and the nature of supply is intra-state proportionate to the value of services rendered in each state. The demand notices were kept in abeyance till disposal of the refund application in accordance with the court's order in related writ petitions.
Income Tax
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Penalty revision in line with higher court order a must.
Case-Laws - AT : The assessing officer (AO) is empowered u/s 275(1A) to revise the penalty order by giving a reasonable opportunity of hearing to the assessee within six months from the receipt of an appellate or revision order modifying the assessment. In the event the order passed by the Tribunal is modified by the High Court, the AO is required to give effect to the High Court's judgment by invoking Section 275(1A) and revise the penalty order accordingly. The CIT(A) correctly followed the Coordinate Bench decision and deleted the proportionate penalty levied by the AO to the extent of additions not confirmed by the Appellate Tribunal. The Revenue failed to demonstrate any stay order issued by the High Court against the Tribunal's order. Hence, the CIT(A)'s order confirming the penalty to the extent of additions confirmed by the Appellate Tribunal is upheld, and the Revenue's ground is dismissed.
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Corporate guarantee invoked, no international transaction, subrogation rights.
Case-Laws - AT : The ITAT held that once the corporate guarantee given by the assessee for the benefit of its associated enterprise (AE) was invoked by the EXIM Bank, the transaction between the assessee and the EXIM Bank did not constitute an international transaction u/s 92B(2) of the Income Tax Act. The vital constituent of an international transaction is that it should be between associated enterprises. After the surety (assessee) paid the guaranteed debt, it was subrogated to the rights of the creditor (EXIM Bank) against the principal debtor (AE). However, this subrogation did not create a new debt in the books of the guarantor. Therefore, the tax authorities erred in treating the invoked guarantee as a loan to the AE and charging arm's length interest on the same.
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Software Company's Export Income Deduction Upheld Despite Delayed Filing.
Case-Laws - AT : The ITAT allowed the deduction u/s 10AA, restoring the assessee's claim. Despite the delay in filing Form 56F, a crucial certification by a Chartered Accountant attesting the correctness of the Section 10AA claim, the form was submitted before the issuance of the intimation u/s 143(1). The Tribunal held that procedural delays should not defeat substantive claims when the required documentation is available before assessment completion, considering the legislative intent to promote exports and economic activity in Special Economic Zones. The disallowance was unjustified as the delayed filing was a procedural lapse not affecting the claim's root. The deduction was restored without remand necessity.
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Undisclosed cash from lockers treated as business income, not "unexplained.
Case-Laws - AT : The assessee claimed the entire cash amount recovered from two lockers as business income, not subject to tax u/s 115BBE. The Tribunal held that since the cash from one locker was recorded in books and the source of income from the other locker was not disputed, both amounts should be treated as business income under normal provisions, not taxed u/s 69A read with Section 115BBE dealing with unexplained cash credits. The application of Section 115BBE was found to be not legal in this case.
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Delayed Final Assessment Order Quashed - Missed Time Limit Bars Tax Authority's Action.
Case-Laws - AT : The Income Tax Appellate Tribunal (ITAT) held that the final assessment order passed by the Assessing Officer (AO) u/s 144C(4) read with Section 147 of the Income Tax Act was barred by limitation and void ab initio. The assessee had received the draft assessment order on 27.05.2023, and the due date for filing objections before the Dispute Resolution Panel (DRP) u/s 144C(2) was 26.06.2023. However, the assessee filed the objections on 06.07.2023, beyond the prescribed one-month time limit. Consequently, the AO was mandatorily required to pass the final assessment order by 31.07.2023. However, the AO passed the final order on 04.03.2024, well beyond the prescribed time limit. The ITAT held that by not adhering to the mandatory time limit, the final assessment order was barred by limitation and liable to be quashed.
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Expat salary earned overseas tax-exempt in India as per tax treaty.
Case-Laws - AT : The ITAT ruled that the salary received by the assessee for an international assignment to the UK, being a resident of the UK and a non-resident of India, is not taxable in India. The Tribunal observed that the assessee had paid taxes in the UK on the salary income, and therefore, the foreign assignment salary earned by the assessee should be excluded while recomputing the income, as per Article 16(1) of the India-UK Tax Treaty.
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Tribunal Rules SanDisk India Not Permanent Establishment of SanDisk Ireland, Remits Salary Reimbursement Issue to Assess FTS Taxability.
Case-Laws - AT : The Income Tax Appellate Tribunal (ITAT) held that SanDisk India did not constitute a Dependent Agency Permanent Establishment (DAPE) of the assessee foreign company, SanDisk Ireland. Consequently, the assessee's income is not taxable in India. Regarding the reimbursement of salary expenses for seconded employees, the ITAT remitted the issue of whether it qualifies as Fees for Technical Services (FTS) to the Assessing Officer for fresh adjudication, as the relevant agreement was not available to determine if the services were for an indefinite period.
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Income Tax Settlement Commission's order can't be merit-reviewed by High Court under Article 226.
Case-Laws - HC : The High Court held that while exercising jurisdiction under Article 226 of the Constitution, it does not assume the role of an appellate authority to conduct a merit review of orders passed by the Income Tax Settlement Commission. Its role is confined to judicial review by applying well-settled principles. The Court would be concerned with the decision-making process adopted by the Commission, not the decision itself. The scope of inquiry is limited to whether the Commission's order complies with statutory provisions of Chapter XIX-A of the Income Tax Act. The Court cannot decide on facts or interpretation of documents. A defect vitiating a settlement must vitiate the whole, not merely a part. A settlement partakes the nature of a negotiated contract with a "give and take." The settlement must fail or succeed as a whole, as partial acceptance is not envisaged under the Income Tax Act. The Court must defer to the statutory finality envisaged for settlement while exercising judicial review. The Writ Appeal was dismissed.
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High Seas Sales not speculative transactions, physical delivery key: ITAT ruling.
Case-Laws - AT : The Income Tax Appellate Tribunal (ITAT) held that the assessee's transactions involving purchases and sales on a High Seas Sales (HSS) basis did not constitute speculative transactions. The ITAT observed that under the Act, the term "speculation" focuses on whether the transactions involve actual delivery, transfer, or settlement. In the assessee's case, the entire transaction involved a process where delivery of goods took place, evidenced by documents like the Bill of Lading, which was not disputed by the revenue authorities. The ITAT found that the assessee physically purchased goods from a foreign seller, sold them to an importer while on high seas, and the ultimate buyer took delivery by filing the bill of entry and complying with customs formalities. Since the factual sequence of events and documentary evidence regarding the ultimate delivery were not disputed, the ITAT concluded that the transactions did not amount to speculation. Consequently, the assessee's appeal was allowed.
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Tribunal upholds genuineness of share capital based on documentary evidence, criticizes tax officer's denial of cross-examination.
Case-Laws - AT : The Income Tax Appellate Tribunal (ITAT) dismissed the Revenue's appeal against the assessee company. The assessee had furnished all relevant documents and evidence to prove the genuineness of the share application money received, including PAN details, Memorandum of Association, Articles of Association, Audit Reports, Balance Sheets, Bank statements, share application forms, Board Resolutions, and confirmations from the investor companies. The transactions were through proper banking channels and reflected in the books of accounts. The Assessing Officer (AO) made an addition u/s 68 of the Income Tax Act treating the share capital as unexplained cash credits, solely based on statements recorded in some other case, without providing an opportunity for cross-examination to the assessee. The ITAT held that the AO had denied natural justice by not granting an opportunity for cross-examination and had made the addition without assigning valid reasons or bringing any contrary evidence on record to negate the documentary evidence furnished by the assessee. The ITAT ruled that the impugned addition was unjustified.
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Taxpayer's loan treated as income addition deleted; lender genuineness, loan repayment, lack of evidence proved.
Case-Laws - AT : The ITAT held that the addition u/s 68 treating the loan taken by the appellant as an accommodation entry was not justified. The key reasons were: 1) There was no evidence that the lender company admitted giving accommodation entries or that the funds were channelized from undisclosed income of the appellant. 2) Repayment of loans by the appellant disproved the allegation of being the final beneficiary. 3) Identity, creditworthiness, and genuineness of borrowings were proved through details and evidence submitted. 4) Denial of cross-examination of witnesses whose statements formed the basis of the addition violated principles of natural justice, making the order a nullity. Consequently, the ITAT deleted the addition made to the appellant's income.
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Adjustments to book profit: Exempt income expenses allowed, no Rule 8D disallowance. Reassessments follow Abhisar Buildwell.
Case-Laws - AT : The Income Tax Appellate Tribunal ruled that while computing book profit u/s 115JB, adjustments u/s 14A read with Rule 8D are impermissible. However, expenditure directly incurred towards generating exempt income can be added to book profit under Explanation 1(f) to Section 115JB(2), without resorting to the amount calculated u/s 14A read with Rule 8D. The matter was remanded to the Assessing Officer to verify such expenditure. Regarding additions u/s 153A, if the year is an unabated assessment year without incriminating material, no addition can be made. However, completed assessments can be reopened u/ss 147/148, subject to conditions, following the Supreme Court's decision in Abhisar Buildwell.
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Foreign Tax Credit allowed against Minimum Alternate Tax liability for taxes paid abroad on royalty income.
Case-Laws - AT : The assessee company is eligible to claim Foreign Tax Credit (FTC) against its Minimum Alternate Tax (MAT) liability u/s 115JB of the Income Tax Act for taxes paid in China on royalty income. As per Article 23(2) of the Indo-China Tax Treaty, India shall allow deduction from the tax on income equal to the income tax paid in China. The scheme of the Act does not differentiate between tax liability calculated u/s 115JB and normal provisions. Since the assessee paid tax on royalty income in India at a higher rate than in China, it is eligible for the entire Tax Credit effected in China as FTC. The assessee is also eligible for FTC in the assessment year 2008-09 even though the corresponding royalty income was offered in the previous assessment year 2007-08, as per the amended provisions of Section 199. The CIT(A)'s direction to restrict MAT credit in subsequent years is unwarranted, as the second proviso to Section 115JAA(2A) is prospectively applicable from 01.04.2018.
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Tribunal accepts doctor's family cash gifts explanation, upholds tax on anonymous donations.
Case-Laws - AT : The ITAT decided in favor of the assessee, a doctor residing in the United Kingdom. The unexplained cash deposits in the assessee's Indian bank account during the demonetization period were claimed to be gifts from the assessee's family members, who are doctors with substantial income in India. The Tribunal accepted the assessee's contention that the cash gifts could not be deposited at once due to difficulties during demonetization. The Assessing Officer failed to conduct further inquiries u/s 133(6)/131(1) to establish the identity, genuineness, and creditworthiness of the donors, despite the assessee furnishing gift certificates. The onus shifted to the Assessing Officer, who made assumptions without completing the inquiry process. Considering the family's status and income, the Tribunal found the explanation for cash gifts over three years justified. However, the Tribunal upheld the addition u/s 115BBE, as the assessee was aware of the nature of additions through the show cause notice, despite the Assessing Officer not mentioning the specific section.
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Software firm's transfer pricing case: Comparable companies' turnover, losses scrutinized; Royalty expense allowed.
Case-Laws - AT : The Tribunal held that the Transfer Pricing Officer (TPO)/Assessing Officer (AO) should exclude companies having turnover exceeding Rs. 200 crores from the comparability analysis while calculating the arm's length price (ALP) of the assessee's international transactions with its associated enterprise, after necessary verification. The companies ICRA Techno Analytics Ltd and Kals Information Systems Ltd. were found functionally different from the assessee engaged in software development services and hence cannot be included as comparables. However, Quintegra Solution Limited, being functionally similar and having similar turnover, cannot be excluded merely for showing losses due to extraordinary deductions. The AO/TPO was directed to include it as a comparable. Regarding working capital adjustment, the Tribunal remanded the matter to the AO/TPO for fresh adjudication as per law, allowing the assessee to furnish necessary details. The royalty expenses were held as revenue in nature based on earlier years' decisions. The AO was directed to correctly compute interest u/ss 234D and 244A as per provisions of law.
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Income tax tribunal upholds transfer pricing adjustment, excludes certain exporters from comparability analysis.
Case-Laws - AT : The ITAT upheld the order of the CIT(A) regarding the Transfer Pricing (TP) adjustment. The Tribunal concurred with the CIT(A)'s decision to exclude two companies with exports while determining the Arm's Length range. It also agreed that the Tested Party, M/s. Laila Nutra, which is the Associated Enterprise (AE) of the assessee, can be compared only with the comparables selected by the Transfer Pricing Officer (TPO), as they are functionally broadly similar to the AE as a Tested Party. The ITAT dismissed the Revenue's grounds of appeal, finding no infirmity in the CIT(A)'s order.
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Statements recorded during search operations presumed true unless obtained forcibly.
Case-Laws - HC : The High Court held that statements recorded u/s 132(4) of the Income Tax Act, 1961, are admissible evidence u/s 158BD read with Section 3 of the Indian Evidence Act, 1872, and Section 131. In the present case, the husbands of the assessees made statements during search operations that the total investment in constructing the house property was Rs. 15 lakhs, though only Rs. 7 lakhs was accounted for. The assessees reiterated this fact on 03.05.1999. Such statements are presumed true unless the assessees plead that they were obtained forcibly, by coercion, or undue influence. The burden lies on the assessees to establish that the admission is incorrect or wrong. As the assessees failed to discharge this burden, the Tribunal rightly set aside the order passed by the CIT (Appeals), deciding against the assessees.
Customs
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Special measures to rectify IGST refund errors on shipping bills, facilitating liquidation.
Circulars : The public notice issued by the Office of the Commissioner of Customs, Tuticorin, provides special measures to facilitate the liquidation and rectification of errors related to pending Integrated Goods and Services Tax (IGST) refunds on shipping bills. It informs exporters and stakeholders about various error codes (SB001, SB002, SB003, SB004, SB005, and SB006) that have resulted in IGST refunds being pending since July 2017 due to validation issues with data from the Goods and Services Tax Network (GSTN). The notice outlines the procedures and documents required for rectifying specific error codes, such as SB002 (EGM Error), SB006 (Gateway EGM Error), SB005 (Invalid invoice number), and PFMS Validation Errors (Bank Account Details). An IGST Refund Drive is being conducted from July 1, 2024, to July 15, 2024, to prioritize the processing of validated shipping bills where refunds have not been disbursed.
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Customs seizes foreign cigarettes offloaded from trains, to be disposed if unclaimed.
Circulars : The Principal Commissioner of Customs in Visakhapatnam issued a notice regarding the seizure of 209,400 sticks of foreign-origin cigarettes (PARIS and ESSE lights brands) at Visakhapatnam Railway Station on 13.03.2024 and 15.03.2024. The cigarettes, offloaded from Samatha Express and Swarna Jayanti Express trains, were seized u/s 110 of the Customs Act, 1962, on the reasonable belief of being liable for confiscation u/s 111. The seized goods were booked to Shri Nalluri Panduranga from New Delhi to Visakhapatnam. As the goods are perishable, the Customs department notified their intention to dispose of them by destruction or other means per the Disposal Manual, 2019. Shri Nalluri Panduranga or any other claimant was given 10 days to submit a reply with supporting documents, failing which the goods would be disposed of without further notice.
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Revised tariff values for imported edible oils, metal scraps, areca nuts & precious metals from Dec 14th.
Notifications : The Central Board of Indirect Taxes and Customs, exercising powers under the Customs Act 1962, has substituted new tables for fixation of tariff values of various imported goods like edible oils (crude palm oil, RBD palm oil, crude palmolein, RBD palmolein, crude soya bean oil), brass scrap, areca nuts, and precious metals like gold and silver. The new tariff values will be effective from 14th December 2024.
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Shipment Cost Quandary: Court Upholds Export Duty on Iron Ore Fines and Pellets.
Case-Laws - HC : The High Court dismissed the appeal and upheld the final assessment order levying export duty on iron ore fines and pellets based on the Dry Metric Tonne (DMT) basis. The Court found no dispute regarding the private test report relied upon by the assessing authority and the first appellate authority. While there were submissions questioning the timing of the test report, the Court accepted the revenue's reliance on the circular dated 17th November 2014, which prescribed the procedure for uniform, transparent, and consistent assessment of export of iron ore fines and pellets. The Court held that the contractual specifications could not be solely relied upon for determining the export duty payable, and the authorities rightly considered the private test report for final assessment.
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Importers escape hefty penalties due to faulty duty demand.
Case-Laws - AT : The CESTAT allowed the appeal and set aside the penalties imposed u/s 114A of the Customs Act. The Tribunal held that penalty u/s 114A can only be imposed when duty is payable. In this case, the duty was payable by M/s. BGH Exim Ltd (seller of goods), which had already been paid and settled under the Settlement Commission. Furthermore, the demand in the show cause notice proposing joint and several liability for duty on M/s. BGH Exim Ltd and the appellants was legally untenable, as duty cannot be demanded jointly and severally. Since the duty was confirmed only against M/s. BGH Exim Ltd, there was no reason to impose penalty u/s 114A on the appellants.
IBC
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Bank's claim over debtor's 'No Lien Account' rejected during insolvency proceedings.
Case-Laws - AT : The NCLAT held that the amount of Rs. 1 crore lying in the "No Lien Account" with the Appellant bank belongs to the Corporate Debtor and is an asset of the Corporate Debtor. Once the CIRP was initiated, the IRP/RP was obliged to take control/custody of this amount as per Section 18 of the IBC, 2016. Since the moratorium had commenced upon initiation of CIRP, the bank could not have appropriated this money. Following a previous judgment, the NCLAT found that the Adjudicating Authority rightly held that the said amount is an asset of the Corporate Debtor, and the IRP/RP has rightly claimed the said deposit for utilization in CIRP. Consequently, the NCLAT dismissed the appeal.
PMLA
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RBI approves 4 entities for Aadhaar authentication in money laundering prevention.
Notifications : The Reserve Bank of India has permitted four additional entities - Annapurna Finance Private Limited, Incred Financial Services Limited, PayU Finance India Private Limited, and Razorpay Technologies Private Limited - to perform authentication under the Aadhaar Act for the purposes of section 11A of the Prevention of Money Laundering Act, 2002. The Central Government, after consultation with the Unique Identification Authority of India and the Reserve Bank of India, has authorized these reporting entities to utilize Aadhaar authentication, having been satisfied with their compliance with privacy and security standards under the Aadhaar Act.
SEBI
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Regulating rights of investors in Alternative Investment Funds: Pro-rata & pari-passu norms.
Circulars : The circular specifies the following key points regarding pro-rata and pari-passu rights of investors in Alternative Investment Funds (AIFs): Pro-rata rights: Investors shall have rights pro-rata to their commitment in each investment and distribution of proceeds, except when an investor is excused, defaulted, or sharing returns/losses with the manager/sponsor. Certain entities like the manager, multilateral institutions, etc. can subscribe to subordinated units. Existing AIFs with priority distribution models violating pro-rata rights cannot accept fresh commitments or make new investments. Pari-passu rights: Investors shall have equal rights, except differential rights permitted by SEBI without affecting other investors' interests. SEBI has directed a Standard Setting Forum (SFA) to specify permissible differential rights. Existing AIFs must report and discontinue differential rights violating this provision or affecting other investors. Large Value Funds are exempted subject to disclosure and investor waiver. Trustees/sponsors must ensure the manager's compliance test report covers adherence to this circular's provisions. The circular is issued to protect investor interests and regulate securities markets.
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Govt fund to buy corporate bonds in market stress to boost liquidity.
Circulars : The Corporate Debt Market Development Fund (CDMDF) has been classified as a Category I Alternative Investment Fund under Regulation 3(4)(a) of the SEBI (Alternative Investment Funds) Regulations, 2012. CDMDF was set up under Chapter III-C to act as a backstop facility for purchasing investment grade corporate debt securities during market stress periods to enhance secondary market liquidity. Despite having a separate framework under Regulation 19, CDMDF falls under Category I AIF given its broader economic objective of developing the corporate bond market.
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Stricter disclosure norms for earnings calls and board diversity; eased requirements for dividends, mergers.
Notifications : The key outcomes from the amendments are: The listed entity shall promptly disclose audio and video recordings of quarterly earnings calls, with transcripts submitted within 5 working days. Listed entities ranked 1001-2000 by market cap shall endeavor to have at least one woman independent director and may constitute a risk management committee. Certain disclosure requirements were eased for dividends, share transfers, and mergers of wholly-owned subsidiaries. Time periods were revised for disclosing financial results after insolvency proceedings, fixing record dates, and intimating board meetings. Disclosure thresholds were enhanced for acquisition of shares in unlisted firms and imposition of penalties. Certain compliance requirements were relaxed for entities with approved insolvency resolution plans.
Service Tax
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Dispute on service tax calculation based on balance sheet vs returns resolved in favor of taxpayer.
Case-Laws - AT : The CESTAT held that the demand of Rs.80,61,111/- (including Education Cess and Secondary and Higher Education Cess) raised on the ground of difference between the taxable value recorded in Service Tax returns and the income shown in the Balance Sheet and Profit & Loss Account is not sustainable. The appellant had not suppressed any information from the Department, and there was no mala fide intent or intention to evade payment of tax established. Invoking the extended period of limitation was not justified as per the Supreme Court's judgment in Nirlon Ltd. case. The entire demand of Service Tax for the financial years 2007-08 to 2010-11 was set aside on the ground of limitation. The demand of Rs.46,931/- on advances received from customers was also set aside as these were refundable security deposits not liable to Service Tax. However, the appellant was eligible to avail the CENVAT Credit of Rs.69,73,243/- as the input invoices met the requirements under the CENVAT Credit Rules. Consequently, the penalties imposed u/s 78 of the Finance Act and Rule 15(2) of the CENVAT Credit Rules were also set aside.
Central Excise
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Delayed certification allowed tax exemption; Procedural lapse condoned.
Case-Laws - AT : The appellant's refund claims were allowed by the CESTAT. For notification No.12/2012-C.E., the condition inserted later in 2015 was not applicable for the relevant period of March 2013, entitling the appellant to exemption. Regarding notification No.108/95-C.E., the belated production of the required certificate was a condonable procedural lapse, and the exemption was allowed as the goods were intended for the specified use. The Chartered Accountant's certificate was accepted as sufficient proof against unjust enrichment. The impugned order was set aside, and the appeal was allowed.
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Non-adjudicated show cause notice prevents mandamus for refund of deposited service tax: High Court.
Case-Laws - HC : The High Court held that since the show cause notice is pending adjudication, the decision in the HSBC case cannot be relied upon for seeking a mandamus directing refund of the deposit made under protest for Service Tax Liability on Interchange Fees. Granting such a refund by way of writ of mandamus would render the adjudication of the show cause notice infructuous. Except in exceptional circumstances, a mandamus to act in a particular way is not typically issued. However, the Court directed the respondents to adjudicate the show cause notice along with the Corrigendum within eight weeks, disposing off the petition.
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Job worker penalized for duty evasion by not including free supply material value while clearing goods.
Case-Laws - AT : The appellant, a job worker, violated Rules 6 and 10A of the Central Excise Valuation Rules by not including the value of free supply material from the prime manufacturer while clearing job-worked goods on payment of duty. This amounted to suppression of facts with intent to evade duty, invoking the extended period of limitation u/s 11A(4). The assessable value should have included the value of raw materials supplied for job work, as per Supreme Court decisions. The benefit of Notification 214/86-CE was not admissible due to non-compliance with conditions. Rule 10A provided definiteness for valuation of goods manufactured and cleared by job workers.
Articles
News
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2024 (12) TMI 832
Requirement to furnish security in failure to attachment of bank accounts of the defendants or an order of injunction restraining the defendants from alienating or encumbering or selling the immovable properties - whether an order is required to be passed requiring the defendants to secure an amount of Rs. 1,14,88,833/- till the disposal of the suit? - HELD THAT:- In the present case, the plaintiffs have made complaint to the GST Authority against the defendants on the allegation that the defendants have made illegal uploading Form-3B in the GST Portal. On receipt of the complaint, the GST Authorities have issued notice to the plaintiffs under Section 70 of the Central Goods and Services Tax, 2017 and a show cause notice was issued to the defendants and the defendants have furnished reply to the GST Authority. After receipt of reply, the GST authorities have not proceeded the proceeding against the defendants further and the same is still pending. The allegation of the plaintiffs that the plaintiffs have got information that GST Authorities very soon will issue orders for freezing of all bank accounts and sealing of all the immovable properties of the defendants. The said statement is made by the plaintiffs in the present application in the month of June 2023 but the plaintiffs have not filed any documents to the effect that the GST Authorities have seized and sealed all the bank accounts and immovable properties of the defendants. The plaintiffs have made only a bald statement that the plaintiffs apprehend that the defendants will clandestinely or otherwise remove, encumber or dispose of the assets and properties from the jurisdiction of this Hon ble Court. The claim of the plaintiffs that the plaintiffs are entitle to get the principal amount of Rs 77,05,223/- along with interest at the rate of 18% per annum total amounting to Rs. 1,14,88,833/- and the defence of the defendants that the defendants have returned goods worth of Rs. 55,24,252/- to the plaintiff no.1 company is a matter of trial. This Court finds that the plaintiffs have even not made out any prima facie case against the defendants to say that the defendants are attempting to dispose of or remove the movable or immovable properties from the jurisdiction of this Court to prevent the plaintiffs for realization of the decretal amount, if any, passed in future. Application dismissed.
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2024 (12) TMI 831
Challenge to Show Cause cum Demand Notice - wrongful availment of Input Tax Credit (ITC) by the Petitioners on inward supplies from suppliers allegedly found to be either unregistered, non-existent or not conducting business at their registered places - violation of principles of natural justice. HELD THAT:- After providing sufficient opportunity to the petitioners to respond to the draft audit report on 21st March 2017, the respondent issued the final report on 22nd December 2017. The report addressed the petitioners rebuttals point by point, conclusively denying their claims. The allegation of violation of natural justice is therefore, baseless and untenable. Upon a thorough examination of the documents presented to the Court and taking into account the arguments put forth by the parties, this Court dismisses the writ petition on the grounds that a Show Cause Notice (SCN) issued under Section 74 of the CGST Act and WBGST Act is merely the initiation of an adjudicatory process and does not warrant judicial interference unless it is shown to be issued wholly without jurisdiction or is ex-facie perverse. This Court relied on the principles established in SPECIAL DIRECTOR VERSUS MOHD. GHULAM GHOUSE [ 2004 (1) TMI 378 - SUPREME COURT] emphasizing that writ jurisdiction can be invoked only when the SCN is issued wholly without jurisdiction wherein it has been held by the Hon ble Supreme Court that ' Whether the show-cause notice was founded on any legal premises, is a jurisdictional issue which can even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the court. Further, when the court passes an interim order, it should be careful to see that the statutory functionaries specially and specifically constituted for the purpose are not denuded of powers and authority to initially decide the matter and ensure that ultimate relief which may or may not be finally granted in the writ petition is not accorded to the writ petitioner even at the threshold by the interim protection not granted.' Therefore, this Court helds that the Petitioners failed to demonstrate that the SCN lacked jurisdiction or was perverse in its issuance. It reiterated that procedural grievances, including alleged non-consideration of the reply to FORM GST-DRC-01A, could be effectively addressed during the adjudication process as per Section 74 (9). This Court emphasizes that the statutory framework under the GST Acts provides sufficient opportunity for taxpayers to raise their defences during the adjudication process and bypassing this statutory mechanism through writ jurisdiction is impermissible. This Court finds no merit in the allegations of jurisdictional error or procedural impropriety in the issuance of the show cause notice and dismissed the writ petition, reinforcing the need for taxpayers to adhere to the statutory adjudication process rather than seeking premature judicial intervention - Application disposed off.
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2024 (12) TMI 830
Challenge to demand raised by the respondent, Greater NOIDA Industrial Development Authority from the petitioner towards GST and premium - non-speaking order - violation of principles of natural justice - HELD THAT:- In the overall fact situation of the case, the demand raised dated 28.08.2024 pertaining to the GST by the respondents being wholly non-speaking, apparently contrary to the notifications and the advance ruling and judgment of this Court, the same is set aside. The respondents would be free to raise demand by passing a detailed speaking order indicating the liability of the petitioner to pay the amount of GST after taking into consideration the notifications relied on, as noticed hereinbefore, advance ruling and the judgment of this Court and any other notifications issued subsequent thereto before 05.12.2023. Petition allowed.
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2024 (12) TMI 829
Violation of principles of natural justice - Validity of the Summary of the Show Cause Notice in GST DRC-01 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 - whether the 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. This Court had also opined above that the statement to be provided by the Proper Officer in terms with Section 73 (3) cannot be said to be a Show Cause Notice which is required to be issued in terms with Section 73 (1). Therefore, 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). This Court is of the opinion that when the statute is clear to provide an opportunity of hearing, there is a requirement of providing such opportunity. In fact a perusal of the Form GST DRC-01 enclosed to the writ petition shows that details have been given as regards the date by which the reply has to be submitted; date of personal hearing; time of personal hearing and venue of personal hearing. It is seen that in the Summary of the Show Cause Notice only the date for submission of reply has been mentioned. Whether Rule 26 (3) can be applicable to Chapter-XVIII when the said Sub-Rule on refers to Chapter-III? - HELD THAT:- This Court is of the view that the Summary of the Show Cause Notice in GST DRC-01 is not a substitute to the Show Cause Notice to be issued in terms with Section 73 (1) of the Central Act as well as the State Act. Irrespective of issuance of the Summary of the Show Cause Notice, the Proper Officer has to issue a Show Cause Notice to put the provision of Section 73 into motion. The Show Cause Notice to be issued in terms with Section 73 (1) of the Central Act or State Act cannot be confused with the Statement of the determination of tax to be issued in terms with Section 73 (3) of the Central Act or the State Act. 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 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 - Petition disposed off.
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2024 (12) TMI 828
Violation of principles of natural justice - Validity of the Summary of the Show Cause Notice in GST DRC-01 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 - whether the 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. This Court had also opined above that the statement to be provided by the Proper Officer in terms with Section 73 (3) cannot be said to be a Show Cause Notice which is required to be issued in terms with Section 73 (1). Therefore, 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). This Court is of the opinion that when the statute is clear to provide an opportunity of hearing, there is a requirement of providing such opportunity. In fact a perusal of the Form GST DRC-01 enclosed to the writ petition shows that details have been given as regards the date by which the reply has to be submitted; date of personal hearing; time of personal hearing and venue of personal hearing. It is seen that in the Summary of the Show Cause Notice only the date for submission of reply has been mentioned. This Court is of the view that the Summary of the Show Cause Notice in GST DRC-01 is not a substitute to the Show Cause Notice to be issued in terms with Section 73 (1) of the Central Act as well as the State Act. Irrespective of issuance of the Summary of the Show Cause Notice, the Proper Officer has to issue a Show Cause Notice to put the provision of Section 73 into motion. The Show Cause Notice to be issued in terms with Section 73 (1) of the Central Act or State Act cannot be confused with the Statement of the determination of tax to be issued in terms with Section 73 (3) of the Central Act or the State Act. 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 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 17.04.2024 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 - Petition disposed off.
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2024 (12) TMI 827
Violation of principles of natural justice - Validity of the Summary of the Show Cause Notice in GST DRC-01 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 - whether the 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. This Court had also opined above that the statement to be provided by the Proper Officer in terms with Section 73 (3) cannot be said to be a Show Cause Notice which is required to be issued in terms with Section 73 (1). Therefore, 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:- This Court is of the opinion that when the statute is clear to provide an opportunity of hearing, there is a requirement of providing such opportunity. In fact a perusal of the Form GST DRC-01 enclosed to the writ petition shows that details have been given as regards the date by which the reply has to be submitted; date of personal hearing; time of personal hearing and venue of personal hearing. It is seen that in the Summary of the Show Cause Notice only the date for submission of reply has been mentioned. This Court is of the view that the Summary of the Show Cause Notice in GST DRC-01 is not a substitute to the Show Cause Notice to be issued in terms with Section 73 (1) of the Central Act as well as the State Act. Irrespective of issuance of the Summary of the Show Cause Notice, the Proper Officer has to issue a Show Cause Notice to put the provision of Section 73 into motion. The Show Cause Notice to be issued in terms with Section 73 (1) of the Central Act or State Act cannot be confused with the Statement of the determination of tax to be issued in terms with Section 73 (3) of the Central Act or the State Act. 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 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 30.12.2023 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 - Petition disposed off.
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2024 (12) TMI 826
Maintainability of refund application submitted by the petitioner in view of the order of 6th respondent - jurisdiction of 6th respondent to refund the tax deducted by 4th respondent for the proportion of work executed in the State of Maharashtra - HELD THAT:- It can be observed that the tax was deducted by the 4th respondent from the bills raised in respect of works carried in both the states. However, the entire deducted tax amount has been remitted to the State of Telangana as a result of which excess amount is lying in the electronic cash ledger of the petitioner. Taking into account the excess amount in ledger, the 1st respondent had rejected the claim for refund of excess tax on the ground that the petitioner is liable to pay huge tax in terms of GST DRC 07 and thereafter, raised additional demand for payment of tax. Since the nature of supply is of the intra-state in respective States, the tax liability shall be discharged individually in each State equivalent to the work executed in respective states. As such the tax liability for the work executed in Telangana shall be payable in Telangana. It is pertinent to note that petitioner JV failed to place on record inter se agreement entered between L T and PES with regard to works allotted and executed by each partner. It is contended that JV is a pass through entity and in fact the project works were executed by the partners of JV independently. Also further contended that partners of JV raises bills in favour of the JV and which in turn raises bills in favour of 4th respondent by taking input credit. Since no material is placed on record with regard to proportion of work executed by each partner of JV independently, it is not possible for this court to determine the proportion of work executed in both States and tax liability thereof. It is contended by the petitioner that tax liability has been discharged independently for the works executed in the State of Maharashtra, however, the petitioner failed to produce any material on record evidencing discharge of tax liability in the State of Maharashtra. As far as the issue of refund for the period October, 2018 to March, 2019 and April, 2019 to July, 2019 is concerned, it is imperative to determine the place of supply of services. As Section 12 (3) of IGST Act is applicable to the present case at hand, the place of supply shall be both the States and the nature of supply is intra-state in proportionate to the value of services rendered or determined in respective States. The common order so passed in the aforesaid two writ petitions shall govern so far as the claim of the petitioner in the present writ petitions are concerned. Therefore, the demand notices dated 13.03.2020 shall be kept in abeyance till the disposal of the refund application in accordance with the order in two writ petitions i.e., W.P.Nos.6271 and 6299 of 2020 - Petition disposed off.
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Income Tax
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2024 (12) TMI 825
Procedure for settlement of cases - jurisdiction to be exercised by this Court while dealing with challenges to orders passed by the Income Tax Settlement Commission - HELD THAT:- This Court, in exercise of its jurisdiction under Article 226 of the Constitution of India, does not assume the role of an appellate authority to conduct a merit review of orders passed by the Settlement Commission. Its role is confined to one of judicial review, of the orders of the Settlement Commission, by applying the well-settled principles that inform the exercise of such a jurisdiction. Accordingly, this court would be concerned with the decision making process, adopted by the Commission, and not the decision itself. The scope of enquiry of this Court, in matters involving a challenge to orders passed by the Settlement Commission, is only to see whether the order of the Commission complies with the statutory provisions of Chapter XIX-A of the I.T. Act. Power of judicial review is not to be exercised to decide the issue on facts or on an interpretation of the documents available before the Court. In the instant case, therefore, the enquiry by this Court can only be with regard to whether or not the Settlement Commission exercised a jurisdiction that it did not have or, alternatively, if it did have the jurisdiction, whether it erred in the exercise of that jurisdiction. A defect that vitiates a settlement must be one that vitiates the whole and not merely any part of the settlement. In the spirit of settlement, and more so when the assessee does not choose to contest the rest of the terms of the settlement, the assessee cannot be permitted to contend so. A settlement partakes the nature of a negotiated contract, and there is always a certain give and take in every settlement. The test is to see whether on an overall assessment the parties to the settlement are satisfied. The settlement, must fail or succeed as a whole. A partial acceptance of a settlement is not envisaged under the I.T. Act, and the courts must defer to that scheme of statutory finality envisaged for settlement under the I.T. Act while exercising the jurisdiction of judicial review under Article 226 of the Constitution. We, therefore, see no reason to interfere with the impugned judgment of the learned Single Judge, and for the reasons stated in the said judgment as supplemented by the reasons in this judgment, the Writ Appeal fails, and is accordingly dismissed.
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2024 (12) TMI 824
Unexplained investment in the house property - husbands of the assessees, during the course of search operations, made statements u/s 132 (4) that total investment in the construction was Rs. 15 lakhs whereas only a sum of Rs.7 lakhs was accounted for - HELD THAT:-A statement recorded u/s 132 (4) is evidence within the purview of evidence u/s 158BD r/w Section 3 of the Indian Evidence Act, 1872 and Section 131 and is admissible in evidence. An admission is an extremely important piece of evidence, but the same is not conclusive as it is open for the person making admission to show that it is incorrect. In the instant cases, the husbands of the assessees made statements under Section 132 (4) of the 1961 Act during the course of search. The fact that total cost of construction was Rs. 15 lakhs was reiterated by the assessees on 03.05.1999. Once the statements were recorded on oath, the statements had an evidentiary value and the presumption is that the statements made u/s 132 (4) are true and correct unless the assessees plead that the statements have been obtained forcibly or by coercion or undue influence. Once the statements are recorded u/s 132 (4) the same can be used as evidence against the assessees. In such a case, the burden lies on the assessees to establish that the admission made in the statements is either incorrect or wrong. In the instant cases, the assessees have failed to discharge the said burden. It is not the case of the assessees that their husbands made statements either under coercion or undue influence. No attempt has been made by the assessees to explain such an admission. Therefore, in the facts and circumstances of the case, the Tribunal rightly set aside the order passed by the CIT (Appeals). Decided against assessee.
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2024 (12) TMI 823
Validity of assessment order - findings given in the assessment order, submits are self-contradictory as on the one hand, the authority held that no reply has been furnished by the petitioner and on the next breath, considered the reply dated 14.03.2024 in a cryptic manner - HELD THAT:- The proper officer opined that no reply has been furnished and on the other hand, considered the reply. The consideration is also cryptic. We find substance in the argument of the learned counsel for the petitioner that the reply and the documents filed therewith were not considered in proper perspective. There is no application of mind on the bank s confirmation letter and bank statement of Yashoda Nookaratnam. Thus, reasons have not been given for not accepting the defence of the petitioner. The reasons are held to be heartbeat of conclusions. In M/s. Kranthi Associates (P) Ltd. v. Masood Ahmed Khan [ 2010 (9) TMI 886 - SUPREME COURT] has emphasized the need of assigning reasons in administrative, quasi-judicial and judicial orders. We are not inclined to relegate the petitioner to avail alternative remedy. The assessment order is set aside. The competent authority shall re-hear the petitioner and decide the matter afresh in accordance with law. It is made clear that this Court has not expressed any opinion on merits.
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2024 (12) TMI 822
Allowance of increased TDS credit by CIT(A) - determination of correct amount of TDS credit - AO did not accept the assessee s claim for higher TDS credit and restricted it to amount as originally claimed in the return of income - HELD THAT:- As we find no infirmity in the order of the CIT(A). CIT(A) has correctly allowed the TDS credit as reflected in the updated Form 26-AS and directed the AO to verify and grant the credit. It is a settled principle of law that TDS credit appearing in Form 26-AS must be allowed when the revenue relating to such credit is already offered to tax, subject to verification. Accordingly, we dismiss the Revenue's appeal as infructuous. The AO is directed to verify the updated Form 26-AS for the relevant assessment year and grant TDS credit as determined by the CIT(A). Appeal filed by the Revenue is dismissed.
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2024 (12) TMI 821
Penalty levied u/s 271AAB(1A) and section 271AAB - Quantum addition disputes leading to penalty proceedings - HELD THAT:- As per Section 275(1A), AO is empowered in passing an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty on the basis of assessment as revised by giving effect to the orders passed by the Joint Commissioner (Appeals) or the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court or Revision Order passed u/s. 263 or 264, by giving reasonable opportunity of hearing to the assessee and within six months from the receipt of the said appellate or revision order. Thus in our considered view, in the event of the order passed by the Tribunal is modified by Hon ble High Court of Gujarat, the AO is required to give effect to the judgment passed by the Hon ble High Court by invoking provisions of Section 275(1A) of the Act and revise the penalty order accordingly. Thus we do not find any infirmity in the orders passed by Ld. CIT(A) who has duly followed Co-ordinate Bench decision of this Tribunal and deleted proportionate penalty levied by the Assessing Officer. Further the Revenue could not place on record, whether any order staying the operation of the impugned Tribunal order issued by the High Court of Gujarat. Thus we do not find any infirmity in the order passed by the Ld. CIT(A) confirming the penalty to the extent of additions confirmed by the ITAT. Ground raised by the Revenue is devoid of merits and liable to be dismissed.
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2024 (12) TMI 820
TP Adjustment - corporate guarantee - transaction with EXIM Bank - international transaction or not? - HELD THAT:- Certainly once the international transaction arising out of the guarantee given for the benefit of AE goes, then what is left is a transaction between the assessee and the EXIM Bank only, which are unrelated parties. The vital constituent of an international transaction is that the same should be between associated enterprises. Section 92B(2) of the Act outlines the circumstances under which a transaction between two persons would be deemed to be between the associated enterprises. What is important is to be examined now is if for the purpose of section 92B(2) of the Act, the assessee s transaction with EXIM Bank is an independent transaction or a prior agreement between the assessee and its AE, makes the assessee s transaction with EXIM Bank a deemed international transaction. Once the surety has paid the guaranteed debt, they are subrogated to the rights of the creditor against the principal debtor. This means that the surety can exercise all the rights that the creditor had against the principal debtor, such as the right to recover the amount paid from the principal debtor, and any security held by the creditor for the debt. The surety can also take legal action against the principal debtor to recover the amount paid as a guarantee. However, subrogation is the assumption of another party's legal right to collect debts or damages, but that does create a new debt in the books of guarantor. Thus, we are of the considered view that ld. tax authorities below have fallen in error in proceeding with a proposition that the guarantee once invoked by the EXIM Bank became a debt towards the EXIM Bank on account of AE so as to treat the same as loan to AE and to charge an arm s length interest on the same. Consequently, the grounds of the assessee are sustained. Assessee appeal allowed.
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2024 (12) TMI 819
TP Adjustment - rejecting M/s. RRB Energy Ltd. as a comparable company and making adjustment on AE purchases on account of lower margin - commercial/extraordinary parameters influencing the business of the assessee for lower margin - HELD THAT:- The assessee has challenged TPO adjustment as a downward adjustment on the AE purchases. A.O has taken two comparables i.e., Bellis India Ltd. @ 5.08% and Indo Wind Energy Ltd. (Segmental) @ 3.58% and arrived at average of net profit margin of 4.33% of comparables. AO has rejected the comparable of M/s. RRB Energy Ltd. taken by the assessee on the ground that the company is showing huge negative margin and the major portion of income is from services and there is a fluctuation in margin showing abnormal year of operation. AO computed the segmental margin of the assessee at 1.79% and compared with comparable margin of 4.33% and made adjustment of AE purchases. Assessee has objected exclusion of M/s. RRB Energy Ltd. from the comparable company and had sought proper adjustment under Rule 10B to account for the economic difference between the assessee and comparable companies. TPO and the DRP have dealt both the issues in their order and they have given reason for exclusion of M/s. RRB Energy Ltd. as a comparable company. TPO and Ld. DRP have also given reason for not giving custom duty adjustment. No infirmity in the order of AO and therefore the grounds of appeal raised by the assessee are rejected. Appeal filed by the assessee is dismissed.
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2024 (12) TMI 818
Disallowance of the deduction u/s 10AA - delay in filing Form 56F - HELD THAT:- Form 56F, filed on 22.11.2017, serves as a crucial certification by an independent Chartered Accountant, attesting to the correctness of the claim made u/s 10AA. The form was submitted well before the issuance of the intimation u/s 143(1) of the Act on 24.09.2018. This establishes that the necessary certification was available on record at the time of processing. DR's contention for remand lacks merit as no further verification is required. The legislative intent behind Section 10AA of the Act is to promote exports and economic activity in SEZs, and procedural delays should not defeat substantive claims, particularly when the required documentation is on record before the completion of assessment. We hold that the disallowance of the deduction u/s 10AA is not justified, as the delay in filing Form 56F is a procedural lapse that does not go to the root of the claim. The deduction is restored without any necessity for remand. Accordingly, the ground of appeal of the assessee is allowed.
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2024 (12) TMI 817
Addition u/s 69A r.w.s 115BBE - cash recovered from Locker - assessee claimed that the entire amount recovered from the two lockers was business income and could not be taxed u/s 115BBE - HELD THAT:- As settled principle of law, it is evident that sum recovered from Locker No.122 was mentioned in books of account. Also recovered from Locker No.125 was not mentioned in books of account. Both the amounts was claimed by appellant/assessee as business income. There is nothing on record to suggest that the assessee s explanation regarding source of income offered was doubted or disputed. As such the same cannot be subjected to tax under section 115BBE. So, application u/s 115BBE of the Act is not legal. Therefore, amount shall be treated as business income of the assessee and not u/s 69A of the Act.
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2024 (12) TMI 816
Rectification u/s 154 - denial of exemption u/s. 11 - HELD THAT:- It is settled proposition of law that debatable issues cannot be done in the rectification proceedings. More particularly, when the CPC Centre vide its Intimation allowed the claim of exemption u/s. 11 of the Act in the rectification petition without assigning any reason or debating from the view taken earlier while passing the intimation u/s. 143(1), CPC ought not to have denied the exemption to the assessee. Thus the finding arrived by CIT(A) is well within the provisions of law which does not require any interference. Thus the appeal filed by the Revenue is devoid of merits and the same is liable to be dismissed. Appeal filed by the Revenue is dismissed.
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2024 (12) TMI 815
Speculation transactions of purchases sales on High Seas Sales basis (HSS) - treating the business loss as speculative loss - CIT(A) was of the opinion that the assessee has not shown any evidence of any physical purchase and sales of goods and that the transactions are on paper only - HELD THAT:- High Seas Sale is a common trade practice where the original importer sells the goods to the buyer before the goods are entered into customs clearance of the port where the voyage ends i.e. before filing the first bill of entry, either for home consumption or for warehousing, as the case may be. Under the Act, the term speculation focuses on whether the transactions involves actual delivery, transfer, or settlement. Even if the goods or commodities involved are inherently speculative, the crucial factor remains to establish actual delivery. Thus it is clear that, when delivery of the goods are not taken, the transaction is treated as speculative in nature. But in assessee's case the entire transaction is going through a process where delivery of goods take place and documents evidencing delivery of goods related to high sea sale are Bill of Lading which has not been disputed by the revenue authorities. We find that the chain of events as laid down by the assessee, supported by documentary evidences, has not been disputed by the AO. The only point of dispute is there is no evidence of actual delivery and merely because the assessee entered into a forward contract, the transaction was considered to be speculative in nature. It is not a case, where delivery of the goods were not contemplated at all, but it is a case where goods where physically purchased by the importer from the foreign seller, who loaded the goods on the ship, and thereafter, the assessee has purchased the goods from the importer while on the high seas in transit, and thereafter, the assessee sold the goods by handing over and transfer of title documents, in favour of the ultimate buyer, which includes handing over the sale invoice, High Seas sales agreement, copy of original import invoice, and copy of bill of lading to the purchaser, while the goods were still on high seas in transit and finally, the ultimate buyer has taken delivery and physical possession of the goods by filing the bill of entry at the port of delivery in India, and complied with all the custom formalities. The authorities below do not disputed the factual sequence of events stated above, and has also not disputed the veracity of documentary evidence on record, regarding the ultimate delivery of goods being taken by the last buyer. We do not agree with the findings of the authorities below that the transaction of purchase and sale undertaken by the assessee amounts to be speculative in nature. Appeal filed by the assessee stands allowed.
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2024 (12) TMI 814
Taxation of the assessee's income in India - Dependent Agency Permanent Establishment (PE) of the assessee - income generated by the foreign company (the assessee) from operations attributable to India which was subject to tax in India - Scope of DTAA between India-USA - HELD THAT:- In simple terms, if the Indian company (SanDisk India) has not provided any services or entered into any agreement to provide services related to the sales or marketing of the foreign company's (assessee's) products, the concept of a Dependent Agency PE does not arise. As noted earlier from the observations made by the AO which were based on materials found during the survey proceedings, SanDisk India was, to some extent, involved in the sales made by SanDisk Ireland. The materials on record also indicate that there was a formal agreement between SanDisk India and SanDisk Ireland for providing market research support and services, for which SanDisk India received fees. As further observed that the survey materials used against the appellant assessee were also utilized by the Revenue Authorities in making assessments in the hands of SanDisk Ireland. Based on the same materials and employee statements from SanDisk India, the Revenue Authorities held that SanDisk India constituted a Dependent Agency Permanent Establishment (DAPE) of SanDisk Ireland, and consequently, the income of SanDisk Ireland was deemed taxable in India. Assessments were accordingly made in the case of SanDisk Ireland for the Assessment Years (AYs) 2012-13 to 2017-18. The dispute in the case of SanDisk Ireland was brought before this Tribunal in the assessee's appeals [ 2023 (8) TMI 1587 - ITAT BANGALORE] wherein after analyzing the statements recorded, referenced materials, and agreements, concluded that the activities carried out by SanDisk India for SanDisk Ireland did not constitute a DAPE. In view of the above, we hereby set aside the order of the ld. DRP/ AO with the direction not to hold M/s SanDisk India as dependent Agency PE and consequently the assessee income is not chargeable to tax in India. Hence, the ground of appeal of the assessee is allowed. Treating the reimbursement of salary expenses for seconded employees as Fees for Technical Services (FTS) - Scope of make available clause - facts of the case indicate that the assessee seconded its employees to its Indian subsidiary, SanDisk India, under a secondment agreement and SanDisk India reimbursed the salary expenses of these seconded employees to the assessee company, after deducting Tax Deducted at Source (TDS) under Section 192 - HELD THAT:- An agreement of indefinite may indicate that the recipient is dependent on the service provider, as there is no point at which the recipient is equipped to handle the services independently. In such cases, payments under the agreement are unlikely to qualify as FTS under the Make Available clause. In view of the above, we hold that the amount received by the assessee against the services rendered to SanDisk India cannot be classified as FTS under the provisions of the DTAA and therefore the same cannot be made subject to the provisions of tax in the hands of the assessee. However, in the absence of the relevant agreement to justify indefinite period, we are accordingly, inclined to set aside the finding of the DRP and remit the issue to the file of the AO for fresh adjudication as per law and in the light of above stated discussion. Hence, the ground of appeal of the assessee is hereby allowed for statistical purposes.
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2024 (12) TMI 813
Addition u/s 68 - Denial of natural justice - no Opportunity for cross-examination not provided to the assessee - HELD THAT:- The assessee company filed PAN details, copies of Memorandum of Association and Article of Association, Copies of Audit Report and Balance Sheets, Bank statement of the companies, copies of share application form along with Board Resolutions before the AO and before the CIT(A) also, which are placed on record. Assessee company also filed the confirmation of the aforesaid two companies confirming the payments made to assessee company and the same are placed on record. All the transactions are through proper banking channel and reflected in the books of account of assessee company as well as aforesaid two companies. The books of account of assessee company are audited and auditor has not made any adverse remark in maintaining of the books of account. Under these circumstances and the evidences furnished on facts of the case, we do not find any justification in observations made by the Assessing Officer that the aforesaid two companies provided accommodation entries to the assessee company. It is also admitted facts that the AO has not brought on record any contrary evidences that negates the legal evidences adduced by the assessee company. AO appears to have simply dismissed the evidences provided without assigning any valid reasons, other than the statement recorded by the Department in some other case, the contents of which were also not provided to the assessee company. In view of the above fact, the action of the AO is found to be untenable. It is also admitted facts that during the course of assessment proceedings. the assessee company s counsel had requested the Department to supply copies of the statement and other material based on which the Department had taken an adverse view against the assessee company. We find that the Department has neither provided nor had granted opportunity to cross examination. Whereas, the Assessing Officer on basis of statement of one unrelated person, proceeded to made addition to income of the assessee as unexplained cash credit under section 68 of the Act. It was incumbent on the Assessing Officer to afford the assessee an opportunity of cross-examination and in the absence of such opportunity, the impugned addition is not justified. Assessing Officer has stated that the investment made by these companies is bogus despite furnishing of all the documents in support which were available on record. Even after making such submissions and after furnishing all the relevant documents to justify the assessee company s stand, the Assessing Officer simply disagreed with the contentions of the assessee company without mentioning any concrete reason for his disagreement. We find that the Assessing Officer has not demanded any other documents that could have been produced by the assessee company which were required for his satisfaction. The Assessing Officer has also not mentioned in his order about any contrary findings or the existence of any adverse documents that were available with him which proved the transaction as bogus. The Assessing Officer also has not mentioned that the advances received by the assessee company were its own cash re routed through accommodation entries or even that the advances were accommodation entries of any other person. Therefore, merely on the basis of Third Party statements, the actual facts and evidences available cannot be denied or rejected . In the present case, the assessee company has provided all possible documents to prove the genuineness of transactions and booking advance. The assessee has also fulfilled its burden, but not a single document has been proven false and the onus was on the Assessing Officer to disprove the transactions which he has failed miserably. Appeal filed by the Revenue is dismissed.
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2024 (12) TMI 812
Addition u/s 68 - loan taken by the appellant as accommodation entry - main reason for making the addition by the AO was the source of the loan taken by the assessee from certain company alleged to having links with an accommodation entry provider who admitted such act on his part during search and seizure - HELD THAT:- There is nothing on record from the lender company admitting the loans given in the nature of accommodation entries to the company or the same have been channelized out of the undisclosed income of the appellant company. Nowhere it has been proved that the lender company was in chain in the accommodation entry cycle and the final beneficiary was the assessee company. As per the allegation of the AO, had the assessee been the final beneficiary of the accommodation entries, then no repayment of the said loans would have been made by it to the lender. On the contrary, their accounts have been settled and squared up in the subsequent year as discussed in the preceding paras of this order, which itself disproved the allegation of the AO. So far as identity of the lender is concerned, the complete address and their PAN No. besides Income Tax Return etc. have been submitted, therefore, the same does not remain in doubt. With regard to the genuineness of the unsecured loans, the lender companies have provided their bank account statements highlighting the withdrawals towards the account payee cheque given as a loan to the company. Therefore, the same cannot be doubted. The immediate sources of the lending to the assessee company have been duly explained by the lender companies. Therefore, in view of the aforesaid discussion, the identity, creditworthiness and genuineness of the borrowings have been proved from the details and evidences submitted in the assessment proceedings and does not call for any adverse inference. Denial of cross examination - It is also an admitted fact that no cross-examination was granted to the assessee though materials were considered adversely in its case. As decided in Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] held that when statements of witnesses are made basis of demand, not allowing assessee to cross-examine witnesses, is a serious flaw which makes order nullity, as it amounts to violation of principles of natural justice. Moreover, if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show-Cause Notice. AO was not justified in treating the impugned sum as unexplained credit u/s 68 of the Act and adding to the income of the assessee. The addition made is, therefore, deleted. Decided in favour of assessee.
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2024 (12) TMI 811
Addition u/s 14A r.w. Rule 8D while computing book profit as per Section 115JB - HELD THAT:- Admittedly, in the present case, there was an addition u/s 14A r.w. Rule 8D by the Ld. AO for which adjustment are not permissible while computing the book profit as prescribed u/s 115JB, in terms of principals laid down in the case of ACIT vs Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] However, adjustment qua the expenditure directly incurred towards the generating the exempt income can be made for computing the books profit u/s 115JB as per clause (f) of explanation 1 to section 115JB(2) which requires increase in the book profit by the amount or amounts of expenditure relatable to any income to which [Section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply], without resorting to the amount calculated u/s 14A r.w. Rule 8D, therefore, for verification of such facts that whether there is any expenditure incurred by the assessee in terms of exempt income earned as specified u/s 10 of the Act, the matter requires to be restored back to the files of Ld. AO, for fresh adjudication. Assessment u/s 153A - incriminating material in assessments or not? - Restore this matter back to the files of the Ld. AO to consider if the year under consideration is an unabated assessment year and no incriminating material was surfaced for the year concerned, then no addition can be made. However, the completed/unabated assessments can be reopened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. For this purpose, the principal of law laid down in the case of Abhisar Buildwell [ 2023 (4) TMI 1056 - SUPREME COURT] is binding on the revenue authorities.
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2024 (12) TMI 810
Foreign Tax Credit (FTC) for taxes paid in China by the assessee - FTC against Minimum Alternate Tax (MAT) liability - HELD THAT:- As in view of Article 12 of Indo-China Tax Treaty, SETL has deducted tax at source @ 10% while disbursing royalty in question to the assessee company. As per Article 23(2) of the Indo-China Tax Treaty, where resident of India derives royalty income which has been taxed in China, India shall allow as deduction from tax on income of that resident amount equal to income tax paid in China whether directly or by way of deduction. Accordingly, assessee is eligible to claim of such FTC in view of provisions of section 90 of the Act. As per section 115JB, if tax payable on book-profit is more than tax payable on income under normal provisions , then book profit shall be deemed to be the deemed income of such assessee and Minimum Alternative Tax shall be payable thereon (i.e. tax shall be payable at the rate prescribed u/s. 115JB ). Article 23(2) of the Indo-China Tax Treaty, provides the assessee shall get credit of tax paid in China from its tax liability in India . Thus the Scheme of the Act does not differentiate between tax liability calculated under section 115JB and under the normal provisions of Act . Accordingly, the assessee company is eligible to claim FTC against tax liability computed in accordance with Section 115JB of the Act. Quantification of claim of FTC - As per Article 23(2) of Indo-China Tax Treaty, deduction of FTC shall not exceed that part of income-tax (as computed before deduction is given) which is attributable to income which may be taxed in China. Thus effective rate of tax paid on royalty income in India (rate at which royalty income has been subjected to tax in India ) @ 11.22% for AY 2007-08 and 11.33% for AY 2008-09 Whereas the rate of tax on royalty income in China is 10%. Since assessee has paid tax on such royalty income in India at a higher rate as compared to tax paid on such royalty income in China , the assessee is eligible for entire Tax Credit effected in China as FTC. CIT(A) has rightly held that assessee is eligible for FTC vis- -vis royalty offered for tax in the A.Y.2008-09, such findings does not require any interference. Thus there is no merits in the ground raised and the Revenue appeal is liable to be dismissed. Whether FTC can be claimed in Asst. Year 2008-09, when the corresponding royalty income was been offered for tax in the previous Asst. Year 2007-08? - It is to be stated that the manner in which FTC is to be claimed is not defined under the DTAA. Hence, one needs to refer and rely upon domestic provisions. Under domestic provisions, credit for TDS has been provided for under Chapter XVII of the Act. Section 199 deals with Credit for tax deducted . Section 199 has been amended w.e.f. 01.04.08 (ie. from Asst. Year 2008-09) such that if tax is deducted and paid to the Government, then irrespective of the fact that corresponding income pertains to that previous year or any other year, the TDS credit is to be given in the year in which tax is deducted and paid to Govt. In view of the amended provisions and judicial precedents cited above, in our considered view the assessee company is eligible for TDS credit in the present Asst. Year 2008-09 even though corresponding income was offered by the assessee in the previous Asst Year 2007-08. It is well settled Principle of law and as per CBDT's Circular No. 14 of 1955, it is the duty of Tax Authority to make available to the tax-payer concerned any legitimate and legal tax relief to which such tax payer is entitled to, but was omitted to claim for one or the other reason. Accordingly, FTC in question is liable to be allowed since assessee is legitimately eligible for the same. Similarly, Article 265 of The Constitution of India, 1950 states that no tax can be levied except by Authority of Law. This further implies that any tax collected contrary to law has to be refunded. Accordingly, FTC is liable to be allowed in Asst. Year 2008-09 even though corresponding income has been offered in the Asst. Year 2007-08. MAT credit - CIT(A) failed to appreciate that second proviso to S.115JAA(2A) has been inserted by the Finance Act, 2017 w.e.f. 01.04.2018. Hence, the said proviso is applicable prospectively. Accordingly, the said proviso referred to and relied upon by CIT(A) is not applicable for the present Asst. Year 2008-09. It is well settled legal principles with respect to retrospective applicability of any amendment as held in the case of CIT vs. Vatika Township (P.) Ltd.) [ 2014 (9) TMI 576 - SUPREME COURT (LB)] - CIT(A) was not justified in directing AO to restrict the MAT credit u/s 115JAA in subsequent years to the extent of withholding tax allowed in current year. In any case, the assessee company has never claimed MAT credit as is evident from the Return of Income filed. Such direction of Ld CIT[A] is absolutely unwarranted. Assessee ground allowed.
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2024 (12) TMI 809
Validity of order passed u/s 143(3) r.w.s 144C as beyond the time limit prescribed under the Statute - HELD THAT:- The assessee received the draft order on 27.05.2023 and hence the due date for filing objections before the DRP u/s 144C(2) became 26.06.2023. However, the assessee filed the objection before the DRP on 06.07.2023. As the assessee did not file the objections within the time prescribed i.e., one month from the date of draft assessment order, the assessing officer was mandatorily required to pass the final assessment order u/s 144C(4) by 31.07.2023. AO however, passed the final order u/s. 147 r.w.s. 144 on 04.03.2024. From the factual matrix as narrated above we can only arrive at the inescapable conclusion that the AO has not followed the due and mandatory provision of adhering to the prescribed time limit for passing the final assessment order. When considered under the provisions of section 144C(3)/144C(4) of the Act, we have no hesitation to hold that the final assessment order is passed beyond the prescribed time limit and hence is barred by limitation. We accordingly, hold that the impugned Final assessment order is liable to be quashed as void ab initio. See TDK ELECTRONICS AG (FORMERLY KNOWN AS EPCOS AG) C/O. EPCOS INDIA PVT. LTD. [ 2020 (2) TMI 1277 - ITAT PUNE] - Assessee appeal allowed.
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2024 (12) TMI 808
Rejection of books of accounts - estimation of income - bogus purchases - AO based on information received from DDIT(Inv) held that the assessee has entered into bogus purchase transactions with 4 parties - Reason for the AO to make the addition by applying the GP on the entire purchase is that the assessee has recorded higher margins on the alleged bogus transactions and therefore the GP on the entire purchase should have been more HELD THAT:- Finding of the AO in our considered view is without any basis and is unsubstantiated. AO himself is recording that out of 20 sample vendors to whom the notice under section 133(6) is issued, only 2 parties have not responded. Further the sample transactions which the AO is alleging as bogus is less than 1% of the total purchases of the assessee and AO on the basis of a small sample holding the entire transaction as bogus without any basis is not justifiable. From the perusal of the CIT(A)'s order, we notice that many findings given by the CIT(A) does not pertain to the assessee and therefore there is merit in the contention of the assessee that the CIT(A) has simply confirmed the addition made by the AO without examining the appeal on merits by applying his mind. In view of these discussions we hold that the addition made by the AO deserves to be deleted. Appeal of the assessee is allowed.
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2024 (12) TMI 807
Taxability of salary received by the assessee for international assignment to UK - assessee has not paid any tax in UK - whether salary was accrued/ earned in India? - applicability of Article 16(1) of the India-UK Treaty by taxing the salary income earned in UK by a Resident of UK and a NR of India HELD THAT:- As the assessee is non-resident during impugned assessment year. The substantial salary has been received by the assessee for international assignment to UK. The prime observation of lower authorities is that the assessee has not paid any tax in UK. The UK Tax Return as filed by the assessee has been placed. Upon perusal it could be seen that the assessee s net earnings are 27042. After grossing-up for tax, the same aggregates to 30677. The assessee has paid tax of 3635. The certificate of residence has been placed. Upon perusal of the same, it is quite clear that the assessee is resident of UK during the period 06-04-2019 to 05-04-2020. Therefore, lower authorities have erred in noting that the assessee has not paid any taxes in UK. Though the tax may have been paid / reimbursed by the employer, nevertheless, the assessee has offered income on gross basis and subjected to tax in UK. Therefore, the claim of the assessee is to be allowed. Thus, we direct Ld. AO to exclude the foreign assignment salary earned by the assessee while re-computing the income of the assessee.
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2024 (12) TMI 806
Unexplained cash deposits in bank account - Addition u/s 68 r/w 115BBE - onus to prove - HELD THAT:- We find that the assessee is a doctor and a resident of United Kingdom and regularly comes to India to visit her family. Her father, mother and brother and sister-in-law are also doctors of repute in India and having substantial income which is reflected in their return of income. With respect to the deposit in India in the Federal Bank, the assessee has stated that the fund deposited in the bank account were from her parents, brother and sister-in-law given as gift. Only source of income of assessee in India is income from interest from bank deposits and capital gains. We find that the impugned cash was deposited during the demonetization period 10.11.2016 to 05.12.2016, table of which is reproduced hereinabove. We are inclined to accept the contention of the ld. counsel for the assessee that cash gift could not get deposited at one go as there were difficulties in depositing cash amount during the demonetization period. When the AO made enquiries with the assessee with regard to the deposits in the bank, the assessee gave the reply that these deposits are from the gifts received by family members in India and furnished the gift certificates from the family members, though in plain paper. In such a situation, it was incumbent upon the assessing officer to make further enquiries using its power u/s 133(6)/131(1) with the family members to find out the truth of the matter. Once the assessee has furnished her explanation, the onus shifted to the assessing officer who failed to complete the process of enquiry into the identity and genuineness of transaction as well as creditworthiness of the donors. AO failed to discharge the onus shifted on him for establishing the bogus nature of cash gift and without conducting further enquiries, he made his own deduction from surmises and conjectures. We also find from the status of the family members of the assessee in India, that they are all doctors declaring substantial incomes in their ITRs which justifies the explanation for cash gifts given over a period of time from FY 2014-15 to FY2016-17. We note that all the above cash were received in small tranche from the family members over a period of three years which was deposited in Bank during the demonetization period. The persons from whom the funds were received were not outsiders or unknown entities. In such a factual matrix, the action of the AO, sustained by the CIT(A), without making independent enquiries u/s 133(6)/131(1) does not appear to be justified. See DHEERAJ THAKRAN [ 2021 (6) TMI 97 - ITAT DELHI] Decided in favour of assessee. Addition u/s 115BBE - Assessee has taken a ground that the assessing officer has made the addition u/s 115BBE, without specifying the head of Income or relevant section of the Act i.e., u/s 68, 69A, 69B or 69C rendering the assessment arbitrary and against principle of natural justice. From the facts narrated in the case, we find that the assessee was made aware of the nature of additions to be made in the show cause issued to the assessee. In such a situation, we are of the considered opinion that non mentioning of specific section of the Act would not render the assessment order arbitrary.
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2024 (12) TMI 805
Revision u/s 263 - Addition of additional income as per provisions of section 115BBE - HELD THAT:- As evident from the record that the internal audit party raised and audit objections to the levy of the tax in the case of the assessee. AO made a proposal before ld. PCIT to initiate the provisions of section 263 to charge that additional income as per provisions of section 115BBE of the Act. This shows that proposal has been sent by the AO to review of order passed by him, though a proposal sent by the AO - PCIT has invoked the provisions of section 263 based on that proposal so submitted by the ld. AO. As is evident that review of an order passed is not permitted and are bad in law. We get support of this view from the decision so cited by the assessee in the case of Jain Carrying Corporation v. PCIT [ 2024 (3) TMI 945 - ITAT JODHPUR ] since the ld. PCIT based on the borrowed information and has not established as to how the view taken by the ld. AO is not correct when the issue raised has already been form part of the proceeding before the ld. AO. Based on the discussion so recorded we are of the considered view that the proceeding initiated u/s. 263 is merely based on the audit objection, PCIT is not agreement with the ld. AO and the observation on the stock, in the audit reportal ready filed by the assessee. Thus, there is clear absence of his satisfaction and there is no independent view of the ld. PCIT even on merits thus, the assessee which has been completed there cannot be the second inning to the revenue without justifying the twin condition to the order passed by the AO. We quash the order passed by ld. PCIT u/s 263 of the Act. Appeal of the assessee is allowed.
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2024 (12) TMI 804
TP upward adjustment - international transactions carried out with the associated enterprise - Comparable selection - whether the companies having turnover exceeding ₹ 200 crores should be excluded while calculating the ALP of the assessee? - HELD THAT:-We direct the TPO/AO to exclude the companies comparable while calculating the ALP with respect to the international transaction carried out by the assessee if they are having turnover exceeding Rs. 200 crores after necessary verification. Comparable company namely ICRA Techno Analytics Ltd and Kals Information Systems Ltd. are functionally different with the assessee company which engaged in software development services. Therefore, the same cannot be included in comparability analysis. Quintegra Solution Limited is functionally similar to the assessee company, having turnover also similar to assessee company cannot be excluded from comparable merely on the reasoning that the impugned company has shown loss on account of extraordinary deduction. Accordingly, we direct the AO/TPO to include such company namely Quintegra Solution Limited as on of the comparable. Adjustment on account of working capital difference between the assessee being tested party and comparable companies in order to compute appropriate ALP - We note that rule 10B(3) of the IT Rules provides appropriate adjustment to be made on account of differences in tested party and comparable companies which may affect the price and profitability. The Delhi Tribunal in the case of Mentor Graphics (Noida) Pvt Ltd. [ 2007 (11) TMI 339 - ITAT DELHI-H] no ambiguity that the adjustment in the working capital is required to be made in determining the ALP of the tested party. But the onus lies upon the assessee to justify the stand for claiming the adjustment towards working capital based on the documentary evidence. In the present case, the learned DRP has categorically observed that the assessee has failed to furnish the necessary details for claiming the adjustment with respect to the working capital. AR before us contended that the assessee being hundred percent working for the holding company does not require any working capital unlike the comparable companies. AR further assured to furnish the necessary details in support of the working capital adjustment if the matter is set aside to the file of the AO/TPO for necessary verification as per the provisions of law. The ld. DR also raised no objection if the matter is set aside to the file of the AO/TPO for necessary verification as per the provisions of law. Considering the above and in the interest of justice, we set aside the issue to the file of the AO/TPO for necessary verification and fresh adjudication as per the provisions of law. Hence, the ground of appeal of the assessee is allowed for statistical purposes. Nature of expenses - royalty expenses - capital or revenue expenses - HELD THAT:- We note that the revenue in the own case of the assessee in the earlier assessment year 2012-13 and in the assessment year 2015-16 held the royalty expenses as revenue in nature. Therefore, we hold that such expenses cannot be treated as capital in nature in the year under consideration. AO granting the short interest u/s 244A and erred in computing interest u/s 234D - AR before us contended that a direction can be issued to the AO for calculating the interest u/s 234D and 244A of the Act as per the provisions of law - DR raised no objection if such direction is issued to the AO for fresh calculation of interest under section 244A and 234D of the Act as per the provisions of law. Accordingly, we direct the AO to calculate the amount of interest under the provisions of section 234D and 244A of the Act as per the provisions of law.
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2024 (12) TMI 803
TP Adjustment - comparability - selection of Tested Party due to difference in the functions of the AE and the assets employed and the risks taken by the assessee - TPO rejected the assessee s segmental results of the AE since he has chosen to consider the assessee as a Tested Party - HELD THAT:- No additional evidence has been provided by the assessee before the Ld. CIT(A) in the form of segmental information which was not furnished before the Ld. AO. Therefore, we are unable to accept the contention raised in by the Revenue in its grounds of appeal. We also find that the Ld. CIT(A) has rightly excluded two companies which have exports while arriving at the Arm s Length range. Further, we also concur with the views of the Ld. CIT(A) that the Tested Party M/s. Laila Nutra which is the AE of the assessee can be compared only with the comparables selected by the Ld. TPO as they are functionally broadly similar to that of the AE as a Tested Party. From the arguments placed by the Ld. AR, we find merit in the submissions of the Ld. AR which was considered by the Ld. CI(T(A) and hence we do not find any infirmity in the order of the Ld. CIT(A) thereby dismissing the grounds raised by the Revenue.
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Customs
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2024 (12) TMI 802
Interpretation of statute (policy circular) - whether the Policy Circular Notice No. 22/2015-20 dated 29.03.2019 issued by the respondent No. 3 is applicable to the EPCG Authorisation issued prior to 5.12.2017 or not? - It was held by High Court that 'The impugned policy circular dated 29.03.2019 is therefore, beyond the jurisdiction of respondent no. 3 as respondents nos.2 and 3 have no power to deny the benefit under the EPCG Scheme under the original FTP 2015-20 in respect of the EPCG Authorisation issued prior to 5.12.2017 and such benefit of availing full value of shipping bill under the EPCG Authorisation issued prior to 5.12.2017 could not have been curtailed by respondent nos.2 and 3 by applying revised HBP 2015-20 either under the FTDR Act or FTP.' HELD THAT:- It is not required to interfere in the matter. The Special Leave Petition is hence dismissed.
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2024 (12) TMI 801
Determination of whether Export duty is payable - validity of placing reliance on the contractual specifications, where the export is being made under contract specifications - HELD THAT:- It is not found that revenue though had the test report as a document submitted for final assessment, accepted the final assessment made on basis of information obtained from the private test report. This crystalizes into a position on facts that there was no dispute regarding the private test report inasmuch as, no doubt can be cast on it. The exporter preferred appeal. Revenue supported the final assessment order. We have been shown that the first appellate authority found from the final assessment order, material relied upon to levy the demand of export duty was, inter alia, the private test report. It appears, both the assessing authority as well as the first appellate authority proceeded on DMT basis to levy and sustain demand of export duty. There have been submissions made, based on information appearing from the report dated 7th July, 2017 that on drawing of samples as on 31st March, 2017, there is indication the test was conducted in July. If that is not so, there is no indication from the report as to when the test was conducted. All this inclines to accept petitioner s contention that the report is itself doubtful. Revenue relies on circular dated 17th November, 2014. In paragraph-3 it was said that the matter had been examined. In order to bring in uniformity, transparency and consistency in assessment of export of iron ore fines and pellets, it had been decided on procedure, given in the circular. The orders made by the assessment authority, first appellate authority and the Tribunal also taken into account. There is no indication of any controversy regarding application of the circular, as appearing from said orders. The question is answered in the negative and in favour of respondent - appeal dismissed.
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2024 (12) TMI 800
Seeking waiver of penalty u/s 114 A of Customs Act - Liability of the present appellants for differential custom duty jointly and severally with another party - duty is payable by M/s. BGH Exim Ltd (seller of goods) which has already been paid and the case has been settled under settlement Commission - undervaluation of goods by BGH by bifurcating the value of imported goods - HELD THAT:- From plain reading of the Section, it is clear that penalty under Section 114 A can be imposed only when the duty is payable. As per the facts of the present case, firstly, as per the impugned order the duty is payable by M/s. BGH Exim Ltd which has already been paid and the case has been settled under settlement Commission. Secondly, the demand in the show cause notice was proposed jointly and severally on M/s. BGH Exim Ltd as well as the present appellants. As per the settled legal position, duty cannot be demanded jointly and severally and in the facts of the present case the duty was confirmed only against M/s. BGH Exim Ltd. Therefore, there is absolutely no reason to impose penalty under Section 114A. The penalties set aside - appeal allowed.
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Insolvency & Bankruptcy
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2024 (12) TMI 799
Ownership of the amount in the No Lien Account - whether the amount of Rs. 1 Crore lying in the No Lien Account with the Appellant/Bank belongs to the Appellant bank or to the Corporate Debtor? - HELD THAT:- It is admitted fact that the said amount was paid on behalf of the Corporate Debtor pursuant to an OTS proposal on 16.07.2017. The purpose of the said payment was to show bona-fide of the Corporate Debtor towards the OTS. It is also admitted fact that OTS did not materialize and the money lying in the No Lien Account was not adjusted/enchased by the Bank. Subsequently, the CIRP was initiated on 03.01.2020 and despite repeated requests of the Resolution Professional, the Appellant bank did not release the said amount. Once the CIRP was initiated, the amount lying in the No Lien Account , which on that date belonged to the Corporate Debtor, by natural corollary is an asset of the Corporate Debtor which the IRP/RP was obliged to take under his control/custody as per provisions of Section 18 of IBC, 2016. Since the moratorium had commenced, on initiation of CIRP on 03.01.2020, the Bank in any case could not have appropriated this money. Following the judgment of the Co-ordinate Bench in the case of Bank of India Vs. Vinod Kumar P. Ambavat [ 2022 (9) TMI 683 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] and on consideration of the facts of this case, we find that the Adjudicating Authority has rightly held that the said amount of Rs. 1 Crore lying in No Lien Account with the Appellant bank is an asset of the Corporate Debtor. The IRP/RP has rightly claimed the said deposit for its utilization in CIRP. There are no reason to interfere in the order of the Adjudicating Authority and accordingly, this appeal is dismissed.
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Service Tax
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2024 (12) TMI 798
Maintainability of petition - availanbility of alternative remedy - Challenge to SCN cum demand notice - jurisdiction of respondent Commissioner to issue such notice in respect of a period beyond 5 years - no proper intimation regarding personal hearing was given - violation of principles of natural justice - HELD THAT:- With respect, the parameters laid down in M/S GODREJ SARA LEE LTD. VERSUS THE EXCISE AND TAXATION OFFICERCUM- ASSESSING AUTHORITY ORS. [ 2023 (2) TMI 64 - SUPREME COURT] which in turn were based on catena of judgments would govern the field and regulate the powers of the High Court under Article 226 of the Constitution of India. It is not the issue regarding maintainability but entertainability. When there is admittedly a statutory remedy, when the petitioner had not co-operated the Commissioner pursuant to the show cause notice and had not produced anything before him, it would be a rather spacious plea now to point out the defect in the show cause notice and take exception to the order. It is not that he had allowed the Commissioner to decide something on merits but the latter was compelled to do so for want of such cooperation more importantly, non production of all the requisite record / documents / accounts. Even if it is his stand that the show cause notice is not maintainable, even that aspect can be agitated before the tribunal in the statutory appeal. Tthe petition is dimissed with liberty to the petitioner, to resort to the statutory remedy of appeal to the tribunal.
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2024 (12) TMI 797
Levy of penalty u/s 78 of Finance Act, 1994 - Non-discharge of applicable service tax on the services rendered - liability of service tax on account of diesel charges reimbursed. Whether the service tax liability of Rs.2,19,175/-, on account of diesel charges reimbursed, can be fastened to the appellants? - HELD THAT:- It is found from the agreement, in Annexure 1 Part 3 that No advance for diesel/consumables shall be paid to service provider, however bills for the same will be reimbursed on actual basis within 72 hrs. subject to verification and approval by the head of the Network O M Dept. - it is very clear that the expenses on account of diesel are reimbursable to the appellants; therefore, the cost of the same cannot be included in the assessable value for payment of service tax purposes following the decision of the Hon ble Apex Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] . Whether the appellant is required to pay penalty under Section 78 of Finance Act, 1994? - HELD THAT:- The appellants are regular assessee having registered with Service Tax Department. It is only during a certain period between 2008 to 2010, the appellants did not remit the service tax due. It is an undeniable fact that the said service tax has been recovered by the appellants from their customers. As it has been recovered from their customers, the plea of financial difficulty has no substance. The appellants should have deposited the service tax at least as and when their customers paid them. Similarly, it is very difficult to believe that resignation of a couple of officers during a particular period resulted in non-payment of service tax, more so, looking into the fact that there is nothing on record to show that other activities of the company have been hampered due to such resignations. It is beyond comprehension that only payment of service tax gets disturbed. There are considerable force in the submissions of the learned Authorized Representative for the Department that the audit did not consider the issue as the Department was otherwise seized of the same and has written number of letters to the appellant and only as a consequence, the appellants have discharged their tax liability along with interest. Argument on the basis of ST-3 Returns filed after payment of tax only after being asked to pay duty by the Department is of no avail. It is the argument of the Department that nothing is brought on record to show the bona fides of the appellants; therefore, extended period has been rightly invoked and penalty under Section 78 has been rightly imposed; no option is required to be given by the authority and it is for the appellants to avail the facility. The appellants have deposited the requisite service tax along with interest albeit after being informed by the Department by a series of letters - the interest of justice would be served if the appellant is given an option to pay 25% of the penalty - appellants have deposited 25% of the penalty as per the Miscellaneous Order dated 29.07.2013 given by this Bench and duty and interest have already been paid. The appeal is partly allowed restricting the penalty imposed under Section 78 to 25% of the amount specified in the Order-in-Original.
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2024 (12) TMI 796
Refund claim under Notification No.12/12-NT dated 18-06-2012 for the period from July 2014 to September 2014 - Requirment of registrarion - HELD THAT:- It is found that the decision quoted by the Revenue of EAGLE FLASK INDUSTRIES LIMITED VERSUS COMMISSIONER OF C. EX., PUNE [ 2004 (9) TMI 102 - SUPREME COURT] is in the context of requirement of a declaration (in non tariff notification), which was held to be not merely a procedural requirement but a substantive one by the Apex Court. The same was also in context of exemption notification. As against this in the present case the decision of a KAPU GEMS VERSUS C.C.E. S.T. -SURAT-I [ 2024 (1) TMI 1118 - CESTAT AHMEDABAD] is directly on the point and holds that refund claim on goods exported cannot be denied on account of registration not being there. This Court is also of the view that refund is permissible in law and only for verification of the same, the matter is remanded to the original authority - Appeal allowed by way of remand.
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2024 (12) TMI 795
Demand of service tax short paid - non-payment of Service Tax on advance received from customers - recovery of irregularly availed credit - difference between the taxable value recorded in S.T.-3 Return and the income shown in the Balance Sheet and Profit Loss Account - extended period of limitation - penalty. Whether the demand of Rs.80,61,111/- (including E. Cess and SHE Cess) charged on the ground of difference between the taxable value recorded in S.T.-3 Return and the income shown in the Balance Sheet and Profit Loss Account is sustainable or not? - HELD THAT:- The Appellant were registered with the Department and were filing their Returns regularly; they have not suppressed any information from the Department. Since the Show Cause Notice has been issued based on the difference noticed between the S.T.-3 Return filed by them and their income as per the audited Balance Sheet / Profit Loss Account, it is found that there is no suppression of fact with intention to evade payment of tax established in this case - it is apt to refer to the judgement of the Hon ble Apex Court in the case of Nirlon Ltd. v. Commissioner of Central Excise, Mumbai [ 2015 (5) TMI 101 - SUPREME COURT ], wherein the Hon ble Apex Court has set aside the demand pertaining to the extended period of limitation considering the fact that there was no mala fide intent on the part of the appellant - the demand raised by invoking the extended period of limitation is not sustainable. In the Financial Years 2011-12 and 2012-13, there is no additional Service Tax demand liable to be paid by the Appellant. It is observed that the Show Cause Notice in this case was issued on 04.10.2012, covering the period from 2007-08 to 2012-13. Out of this period, there is no demand of service tax for the Financial Years 2011-12 and 2012-13. The demands pertaining to the Financial Years 2007-08, 2008-09, 2009-10 and 2010-11 are barred by limitation, in view of the above finding that there is no suppression of fact with intention to evade the tax established in this case. Accordingly, the demand confirmed by invoking the extended period of limitation is not sustainable in this case. Therefore, the demand of Service Tax confirmed in the impugned order pertaining to the Financial Years 2007-08 to 2010-11 is not sustainable on the ground of limitation. Thus, the entire demand of Service Tax confirmed in the impugned order is not sustainable and hence, the same is set aside. Whether the demand of Rs.46,931/- charged on the ground of non-payment of Service Tax on advance received from customers is sustainable or not? - HELD THAT:- The Appellant have received these advances as security deposit, which is refundable along with interest and hence, no Service Tax is payable on this amount received as advances. Accordingly, this demand of Rs.46,931/- pertaining to the advances received is not liable to Service Tax. Whether the demand for recovery of irregularly availed CENVAT Credit to the tune of Rs.69,73,243/- is sustainable or not? - HELD THAT:- The said credit has been denied on the ground that the input bills/invoices are not meeting the requirements as provided under Rule 4(7) of the CENVAT Credit Rules, 2004. On verification of the bills/invoices, we observe that the bills contain all the details required in terms of Rule 9(2) of the CENVAT Credit Rules, 2004. Accordingly, there is no contravention of Rule 4(7) ibid. as alleged and they are eligible to avail the CENVAT Credit of Rs.69,73,243/-. Thus, the appellant has rightly availed the CENVAT Credit. Accordingly, the demand confirmed in the impugned order on this count. Whether the invocation of extended period of limitation is sustainable or not, consequently, the penalty imposed on the appellant is sustainable or not? - HELD THAT:- Since there is no suppression of fact with intention to evade the tax established in this case, the penalty imposed on the Appellant under section 78 of the finance act and under Rule 15(2) of the CENVAT Credit Rules, 2004 are not sustainable and hence, the same is set aside. Appeal disposed off.
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2024 (12) TMI 794
Refund of service tax - Liability of builders/developers for service tax - principles of unjust enrichment - whether the appellant is entitled to refund of service tax of Rs.1,19,146/- paid on Works Contract Service? - HELD THAT:- The learned Commissioner(Appeals) has rightly held that the appellant had registered under Works Contract Service and not registered under the Construction of Residential Complex Service . It has been held by the Hon ble Supreme Court in the case of CCE, Kanpur Vs. Flock (India) Pvt. Ltd. [ 2000 (8) TMI 88 - SUPREME COURT ] that the refund claims directly cannot be filed without challenging the assessment. The judgments cited by the learned advocate for the appellant are different from the fact and circumstance from the present case in as much as in none of the cases the issue for consideration was whether refund could be admissible without changing the classification of the service ; hence not applicable. The impugned order is upheld and the appeal filed by the appellant is rejected.
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Central Excise
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2024 (12) TMI 793
Refund of deposit made under protest for Service Tax Liability on Interchange Fees - HELD THAT:- In the instant case, the show cause notice is pending adjudication. The decision in the case of HSBC [ 2023 (11) TMI 965 - BOMBAY HIGH COURT] was rendered on these facts and the facts being distinguishable from the facts of the petitioner; in our view, the same cannot be relied upon for seeking the prayer of mandamus directing the respondents to refund the amount in the present petition. In our view, if we grant such a prayer, the adjudication of the show cause notice would become infructuous moreso the petitioners themselves have prayed for adjudication of the show cause notice. Even on this count, such prayer of granting a refund by way of writ of mandamus cannot be accepted. Even otherwise, except in some exceptional circumstances, where a clear case is made out or where the law and facts admit of no other course and authority is acting stubborn, a mandamus to act in a particular way or to exercise powers in a specific manner is not typically issued. Here, there was failure to expeditiously discharge the duty of disposing of the refund applications. Therefore, a mandamus must be issued to direct the expeditious disposal of the refund applications. But, in this case, a mandamus cannot be issued to directly refund the amount claimed, thereby denying the authorities an opportunity to examine the petitioner s refund claim following the law and on its merits. The respondents are directed to adjudicate the show cause notice dated 11 May 2015 along with the Corrigendum dated 3 June 2015 within eight weeks from the date of uploading of the present order - petition disposed off.
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2024 (12) TMI 792
Rejection of refund claim under exemption notification No.12/2012-C.E. due to non-fulfillment of conditions - Rejection of refund claim under exemption notification No.108/95-C.E. due to procedural lapses - unjust enrichment. Rejection of refund claim under exemption notification No.12/2012-C.E. due to non-fulfillment of conditions - case of appellant is that the said proviso to Sl.No.41 was brought in only by an amendment by Notification No.12/2015-CE dated 01.03.2015, and was therefore not applicable for the relevant period - Unjust enrichment - HELD THAT:- The period involved in this refund claim is March 2013 whereas the condition inserted in the proviso was by notification No. 12/2015-C.E., dated 1-3-2015, and thus would not govern the aforementioned period. During March 2013, the requirement of condition 41 was for the goods to be exempted from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under section 3 of the said Customs Tariff Act when imported into India. Thus, by the very existence of a customs exemption notification simpliciter, namely, by virtue of the exemption provided at Sl.No.507 of the notification No.12/2012-Cus dated 17-03-2012, the said condition 41 as it existed for the relevant period, stood satisfied, so as to entitle the appellant to the benefit of Sl.No.336 of the notification No.12/2012-CE dated 17-03-2012 - the learned Appellate Authority erred in placing reliance on the proviso that came to be inserted subsequently by notification No. 12/2015-C.E., dated 1-3-2015, for denying the appellant the benefit of the said Sl.No.336 of the aforementioned Notification No.12/2012-CE ibid. It is pertinent that the clearances of the goods originally were without payment of duty claiming the benefit of the exemption notification and duty was paid as per the directions of the jurisdictional superintendent. When the customer is aware of its entitlement to exemption it stands to reason that they will not entertain a request by the appellant to recoup the duty that was paid on the jurisdictional officer s directions. In such circumstances, there is no reason to disbelieve the CA certificate enclosed to the appeal paperbook to show that the duty paid has not been passed on and it merits acceptance as sufficient proof that the refund due to the appellant is not hit by the bar of unjust enrichment. Rejection of refund claim under exemption notification No.108/95-C.E. due to procedural lapses and unjust enrichment - non-production of the necessary certificate at the time of clearance of goods - non-discharge of burden of proof cast on them to overcome the bar of unjust enrichment - HELD THAT:- The excise duty certificate indicates that the appellant is a sub vendor of M/s. Shyam Indus Power Solution Pvt ltd. The excise duty certificate further certifies that the said equipment and material are intended for use by MPMKVVCL and that it is to be financed by Asian Development Bank through loan No.2732-IND duly approved by the Government of India. The certificate also states that it is issued in pursuance of the requirement under Notification No.108/95-CE dated 28-08-1995 as amended and that excise duty exemption may be allowed against the above supplies by the main contractor sub-contractor as listed in Annexure I - The fact that the appellant had not produced the said certificate at the time of clearance of goods has weighed with the learned appellate authority and he has expressed his disagreement with the appellant s contention that it is a procedural lapse while rejecting the claim. Since the exemption is to the goods supplied, the aforementioned certificate countersigned and issued in the manner stated would be the mandatory requirement that fulfills the eligibility clause and requires a strict compliance. Once such a certificate has been issued and is in existence, the production of the same before the jurisdictional officer is only of a directory nature, and which being a procedural requirement to ensure the genuine nature of the transaction and that the goods are indeed intended for use as claimed, can be fulfilled even post facto. Indisputably the certificate dated 10.01.2013 so produced was contemporaneously in existence at the time of clearance of the goods, the said clearances being made in February 2013 and June 2013. The grievance is only on its subsequent production - the belated production of the certificate is a procedural lapse that is condonable and insufficient to deny the substantial benefit of the notification given these facts that the goods have been consigned clearly indicating the consignee address as MPMKVVCL in the invoices, there is no allegation that the goods have not been received or not put to their intended use, and the said excise duty exemption certificate, complete in all respects, was issued and in existence - the benefit of the said exemption notification is required to be extended to the appellant. Unjust enrichment - HELD THAT:- The customer who is aware of its entitlement to exemption and has provided the exemption certificate has categorically asserted that excise duty will not be paid to the appellant given that the exemption is mentioned in their purchase order citing the relevant exemption Notification No.108/95 dated 28.08.1995. In such circumstances, there is no reason to disbelieve the CA certificate enclosed to the appeal paperbook to show that the duty paid has not been passed on and it merits acceptance as sufficient proof that the refund due to the appellant is not hit by the bar of unjust enrichment. The impugned order is set aside - appeal allowed.
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2024 (12) TMI 791
CENVAT Credit on capital goods - Availment of 100% CENVAT Credit on cylinders considering the same as input instead of 50% of the credit, being maximum permissible availment for capital goods in a year - HELD THAT:- Though cylinder was accepted as capital goods, it was considered as part of the printing machine and therefore, taking of full CENVAT Credit at 100% by the Appellant can t be considered as irregular, apart from the fact that such credit was never ever utilised by the Appellant to its fullest extent and proportionate interest was also paid for the expressly debarred period. The order passed by the Commissioner of Central Excise, Mumbai-III is hereby set aside - Appeal allowed.
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2024 (12) TMI 790
Levy of penalty under Rule 26 of the Central Excise Rules, 2002 ( CER ) read with Rule 15(1) of the CENVAT Credit Rules, 2004 - Cenvat credit of the service tax was inadvertently claimed by the company which related to its spinning unit on 31.03.2008,which was subsequently voluntarily reversed without utilization and well before issuance of the show cause notice - HELD THAT:- On scrutiny of the facts related to the wrong availment of the credit by the company it is observed that the company M/s. Alok Industries Limited has inadvertently availed the Cenvat credit which is meant for their own other unit. In this case there cannot be any malafide intention for availament of such credit because the same was available to the same company though in different unit, therefore, there is no gain or loss to the company M/s. Alok Industries Ltd. The company on pointing out an error by the audit party reversed the entire credit voluntarily, therefore, in this fact when the company itself cannot be alleged any malafide intention its employee remotely cannot be implicated for penal action. Considering the overall facts of the present case and nature of alleged offence the personal penalty under Rule 26 cannot be imposed, therefore, the penalty is set aside - Appeal is allowed.
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2024 (12) TMI 789
Recovery of Central Excise Duty with interest and penalty - non-inclusion of value of free supply material from prime manufacturer, while clearing the job worked goods on payment of duty - violation of provisions of Rule 6 and Rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - invocation of extended period of limitation - suppression of facts or not. Applicability of Rule 4(5)(a) of the CENVAT Credit Rules and Rule 10A of the Central Excise Valuation Rules - HELD THAT:- Rule 10 A was inserted vide Notification No 9/2007-CE (NT) dated 01.03.2007 with effect from 01.04.2007 in Central Excise Valuation (Determination of Price Excisable Goods) Rules, 2007, to provide definiteness to the manner of valuation of the goods manufactured and cleared by the job worker. The entire scheme of valuation of the goods manufactured on job work was introduced. The said rule was not under consideration of the Hon ble Supreme Court in the case of International Auto [ 2005 (3) TMI 132 - SUPREME COURT] . As per sub-clause (iii) the valuation of the goods manufactured on job work basis which were not sold as such by the prime manufacturer from the premise of job worker or his premises, i.e. (i) and (ii) of the said rules than the value of said goods for valuation of the said goods will be by application of the valuation rules mutatis mutandis. From Rule 4 (5) (a) of the CENVAT Credit Rules, 2004, it is evident that the said rule is enabling rule and procedure for clearance of the goods by the person who avails the CENVAT Credit for processing of the said goods and procedure for maintenance of records and the return of said goods. Inclusion of the value of free-supplied materials in the assessable value for excise duty - benefit of N/N. 214/86-CE - HELD THAT:- The assessable value of the goods for the purpose of payment of duty is to be determined as per section 4 of the Central Excise Act, 1944 read along with the Central Excise (Determination of Price of Excisable Goods) Valuation Rules, 2000. Rule 6 of the valuation rules has been reproduced in the impugned order which clearly provide for addition of any additional consideration received by the appellant in any form to the transaction value for arriving at the assessable value. In terms of the decision of the Hon ble Supreme Court in case of Ujjagar Prints Pawan Biscuits [ 1988 (11) TMI 106 - SUPREME COURT] and similar other decisions the value of raw material supplied for job work should have been added to arrive at the assessable value. The determination of assessable value made under the Section matter, is not subjected to admissibility of CENVAT credit to the appellant in respect of free supply material - in absence of any specific compliance with the conditions and procedure laid down as per the Notification 214/86-CE, the benefit of same cannot be allowed as claimed by the appellant. Appellant in the present case have determined the value of job worked material by excluding the value of the material supplied to them for job work by the prime manufacturer. The have determined the value on the basis of the value of the material procured by them on their own account and the job charges. The manner in which the value has been determined goes contrary to the decision of Hon ble Apex Court in case of Ujaggar Prints and other similar decisions read with the provision of rule 6 Rule 10A of Central Excise valuation (Determination of Price of Excisable Goods) Rules, 2000. Extended period of limitation - suppression of facts or not - HELD THAT:- Appellant have suppressed the value of the goods cleared in as much as they did not assess the value by not including value of materials, components, parts and similar items that were being received from the principal manufacturer and used in the manufacture of goods on job work basis for discharging the duty liability. They have also not disclosed these facts to the department. Thus the party suppressed the material facts from the department with intent to evade payment of Central Excise Duty. Hence, the extended time limit is invokable under the provisions of Section 11A (4) of the Central Excise Act, 1944. The demand of central excise duty demand for interest upheld and the penalties imposed under section 11AC of the Central Excise are justified in view of the decision of Hon ble Supreme Court in case of Rajasthan Spinning and Weaving Mill [ 2009 (5) TMI 15 - SUPREME COURT] . There are no merits in the appeal - appeal dismissed.
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Indian Laws
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2024 (12) TMI 788
Direction to appellant to handover possession of the plot in question to the respondent within three weeks from the date the amount is paid along with interest to the Indore Development Authority - default in payment and subsequent legal actions taken by the respondent - HELD THAT:- In the present case, the respondent at the first instance opted to file a writ petition before the High Court of Madhya Pradesh and a favourable order was also passed in his favour on 01.08.2006 directing the respondent to pay the balance outstanding amount within 30 days and further directed the appellant i.e. Indore Development Authority to handover the possession of the plot to the writ petitioner i.e. respondent herein. However, only a sum of Rs. 5,72,782/- through a demand draft was presented in the month of September, 2006, against the total outstanding dues of Rs. 12,02,592/-. The appellant i.e. Indore Development Authority has shown magnanimity in the matter by reducing the interest vide letter dated 17.02.2009 and the amount was reduced to Rs. 11,04,948/- which was required to be paid on or before 28.02.2009. The respondent, not being satisfied even with the reduction of amount, opted for a different route for redressal of his grievance by approaching the District Forum and the District Forum was justified in dismissing the complaint of the respondent - The State Commission by way of an interim order dated 15.12.2017 directed the appellant i.e. Indore Development Authority to accept the outstanding amount with interest and to deliver the possession of plot in question to the respondent, meaning thereby, a final relief was granted by way of an interim order and under these circumstances, the matter had reached the National Commission. In the considered opinion of this Court, final relief could not have been granted by the State Commission on an interlocutory application filed in the matter. In respect of NIT/advertisement issued on 05.10.1994, no such order could have been passed by the National Commission in the peculiar facts and circumstances of the present case i.e. after a lapse of period of 28 years. It was the respondent who committed default in depositing the balance amount as per the terms and conditions of the NIT and even after the first round of litigation before the High Court, the respondent did not deposit the amount of Rs. 12,02,592/- which was outstanding against him and, therefore, at this juncture, after a lapse of 28 years, the question of directing the appellant i.e. Indore Development Authority as has been done by the National Commission to accept the amount does not arise. Resultantly, the orders passed by the State Commission dt. 15.12.2017 and National Commission dt. 29.03.2023 deserve to be set aside and are accordingly set aside and it is made clear that the appellant i.e. Indore Development Authority shall issue a fresh tender in respect of the said plot in question and shall allot the plot only by way of auction or by following the due process as per rules. The appeal stands allowed.
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