TMI Tax Updates - e-Newsletter
December 18, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. For easy life of senior citizens - need to liberlize exemption from advance tax payable.

   By: DEVKUMAR KOTHARI

2. WHETHER THE COLLECTOR IS COMPETENT TO EFFECT RECOVERY OF AMOUNT TO THE CENTRAL GOVERNMENT BY INVOKING STATE ACT?

   By: DR.MARIAPPAN GOVINDARAJAN

3. Same rate of tax applicable on Mobile Phone and Charger sold together as one unit under Karnataka VAT Act

   By: Bimal jain

4. Form 12BB for employees to submit decalation and Investment proof to save their taxes

   By: Sparsh wadhwa

5. Director is not liable for payment of tax amount when it is not determinable that the Company is unable to pay the tax amount during liquidation proceedings

   By: Bimal jain

News

1. Sovereign Gold Bond Scheme 2023-24 (Series III) will be opened for subscription during the period December 18-22, 2023

2. Saint Lucia’s Tax Inspectors without Borders (TIWB) programme launched in partnership with India

Notifications

Customs

1. 91/2023 - dated 15-12-2023 - Cus (NT)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

DGFT

2. 53/2023 - dated 15-12-2023 - FTP

Amendment in Export Policy of Food Supplements containing botanicals

Highlights / Catch Notes

GST

• High Court Rules Against Denial of ITC for Supplier's GST Non-payment; Supreme Court Dismisses Revenue's Appeal.

  Case-Laws - SC : Denial of Input Tax Credit (ITC) - requirements of Section 16(2) of GST / WBGST Act fulfilled or not - Failure of the supplier to pay GST to the government - High Court while allowing the petition of the assessee, directed the GST authorities to first proceed against the fourth respondent (supplier) and only under exceptional circumstance as per CBIC circular - Supreme Court dismissed the SLP filed by the Revenue - SC
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• Blending and packing processes for tea maintain its status as an agricultural product, keeping it exempt from GST.

  Case-Laws - HC : Exemption from GST - Services related to agricultural produce - Merely by blending i.e. mixing or combining different teas and/or packing, such processes would not change the basic character of tea as an ‘agricultural produce’. Again by undertaking packing, it cannot be countenanced that the essential characteristic of tea to be an agricultural produce would undergo any change. It is ill-conceivable that the packs of tea cannot be sold in marketable lots, acceptable packages for its marketing. - HC
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• Approval Required for GSTR-1 Amendments Due to Genuine Errors; Emphasis on Preventing Irreversible Incorrect Returns.

  Case-Laws - HC : Seeking approval to modify / amend FORM GSTR-1 - The proviso ought not to defeat the intention of the legislature as borne out on a bare reading of subsection (3) of Section 37 and sub-section (9) of Section 39 in the category of cases when there is a bonafide and inadvertent error in furnishing any particulars in filing of returns, accompanied with the fact that there is no loss of revenue whatsoever in permitting the correction of such mistake. Any contrary interpretation of sub- section (3) of Section 37 read with sub-sections (9) and (10) of Section 39 would lead to absurdity and / or bring a regime that GST returns being maintained by the department having incorrect particulars become sacrosanct, which is not what is acceptable to the GST regime, wherein every aspect of the returns has a cascading effect. - HC
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• Assam cess on agricultural produce ruled unconstitutional under GST laws, violating CGST and AGST Acts, 2017.

  Case-Laws - HC : Levy and collection of cess by the respondent authorities under the provisions of the Assam Agricultural Produce Market Act, 1972 post the GST regime - the levy of cess by the Respondent Board or the Market Committee after the said notifications had come into effect was unconstitutional as well as ultra vires to the provisions of CGST Act, 2017 and the AGST Act, 2017. - HC
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• "Risky Exporter" Status Halted If Verification Delays Persist; Completion Deadline Extended by One Month.

  Case-Laws - HC : Revocation of tagging/naming the petitioner as “risky exporter” - On the lapse of three weeks from today in the event, verification is not completed in terms of procedure at Annexure-A, alert and E.O. remark classifying exporter as “risky” for grant of refund would stand stayed, which would not come in the way of verification as per law which must be completed within a period of one month thereafter. - HC
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• Appellant Exempt from GST Registration as Tax Deductor for Security Services, Not Classified as Governmental Agency.

  Case-Laws - AAAR : Local Authority or not - GST on procurement of security services - The appellant is neither a department nor establishment of the Central/State Government, nor a local authority as we have already held above nor persons or category of persons notified under notification No. 50/2018-CT - the appellant cannot deduct tax & hence is not required to be registered as deductor under GST. As far as 'Governmental agencies' are concerned, it is found that this has been dealt with in para 21.2 of the impugned order in detail. The Appellant has not produced anything to interfere with the findings of the GAAR. - AAAR
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• Frozen Chicken Tax Rates: 2.5% CGST/SGST Intra-State, 5% IGST Inter-State, Complies with Legal Metrological Act 2009.

  Case-Laws - AAR : Classification of goods - frozen chicken - The Applicant has stated that the impugned frozen chicken is pre-packaged and labelled. Accordingly, adhering to other provisions of Legal Metrological Act, 2009, the rate of duty for the impugned frozen chicken is of 2.5% -CGST, 2.5% - SGST, in ease of intra-state supply, and 5% IGST in case of supply to inter-state, is payable. - AAR
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• Employer-Provided Subsidized Food to Employees Classified as 'Supply of Service' Under GST Act, Subject to GST Charges.

  Case-Laws - AAR : Supply or not - recovery of subsidised value from employees for providing canteen facility - The supply of food by the employer, i.e, the applicant to their employees is composite supply of food held as 'Supply of service' as per Schedule-II of the GST Act and the amount collected by the Applicant is a 'Consideration' on which GST is liable to be paid. - AAR
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• Applicant Ineligible for ITC on BCD, CVD, and SAD Paid Due to Unmet Export Obligations Under EPCG Scheme, AAR Rules.

  Case-Laws - AAR : Input tax credit (ITC) on Basic Customs Duty (BCD), Countervailing Duty (CVD) and Special Additional Duty (SAD) - In case of the Applicant, Basic Customs Duty (BCD), Countervailing Duty (CVD), Special Additional Duty (SAD) along with interest has been paid towards non-fulfilment of prescribed export obligation on import of capital goods under EPCG scheme, which commenced before the implementation of GST and concluded post the implementation of GST. - Credit not available - AAR
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Income Tax

• Domain Registration Fees Not Classified as Royalties Under Tax Law for Registrar Services.

  Case-Laws - HC : Income accrued in India - Royalty receipts - as the appellant/assessee is only acting as a Registrar and thus offering its services to its customers for having their domain names registered.The aforementioned principle may have been attracted if the appellant/assessee had granted rights in or transferred the right to use its domain name, i.e., Godaddy.com, to a third person. Therefore, the fee received by the appellant/assessee for registration of domain names of third parties, i.e., its customers, cannot be treated as royalty. - HC
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• Unrecorded transactions clarified by assessee, not deemed unexplained; revision order u/s 263 set aside.

  Case-Laws - AT : Revision u/s 263 - No doubt, these transactions were not recorded at the time of survey thus qualify as unrecorded transactions satisfying one of the essential conditions, at the same time, the assessee has provided the necessary explanation about the nature and source of such unrecorded transactions and the necessary nexus with assessee’s business has been established, thus, it cannot be said that these are unexplained transactions thus, doesn’t satisfy the second condition for invoking the deeming provisions of section 69-69B - Revision order set aside - AT
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• Exemption Denial Reversed: Technical Issues Overcome, Assessee Wins Appeal by Filing Required Form 10B.

  Case-Laws - AT : Exemption u/s 11 - Claim denied on non-filing of Form 10B - The assessee could not attend the communication due to IT-website technical glitches, however has eventually filed the audit report in Form No 10B on 04.08.2022 and complied with the condition laid in section 12A(1)(b) so as to entitle for a claim of exemption envisaged under sections 11 and 12 of the Act, hence we delete the disallowances made by the AO and allow the appeal of the assessee. - AT
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• Gifted Property Holding Period Affects Tax Exemptions; Previous Owner's Tenure Matters for Section 54 and 54EC Eligibility.

  Case-Laws - AT : LTCG - Exemption u/s 54 and 54EC - The property was received by the appellant as a 'gift'. The provision of subsection (1) of Section 49 of the Act is squarely applicable. Consequentially, the period of holding of the previous owner, as specified in clause (42A) of Section (2) of the Act will also apply. Accordingly, the exemption u/s 54 and 54EC of the Act cannot be denied to the appellant. - AT
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• Section 56(2)(viib) Inapplicable: Unsecured Loans Converted to Equity Shares at Premium Not Taxable.

  Case-Laws - AT : Addition under the Head "Income from Other Sources" u/s 56(2)(viib) - It is apparent that there is no case of application of Section 56(2)(viib) to the facts of appellant's case where pre-existing unsecured loans of partners/shareholders were converted into equity shares at premium and the facts of assessment order do not indicate any case of tax abuse involved in such share conversion. Even the AO's decision to substitute DCF method of share valuation by NAV method is not in accordance with the Rule 11UA of IT. Rules. - AT
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• Tax Center Can Correct Errors, Notify Taxpayers; 30-Day Response Period Before Adjustments Proceed.

  Case-Laws - AT : Validity of Intimation passed u/s 143(1) - Rectification of arithmetical error or prima facie incorrect claim - CPC is entitled to make adjustments as per 1st proviso of Section 143(1)(a) by giving an intimation to the assessee either in writing or in electronic mode before making such adjustments. In response to first proviso, when the assessee replies the same shall be considered before making any adjustments u/s. 143(1)(a) and in case, the assessee fails to response within 30 days of issue of such intimation, the CPC is empowered to make such adjustments. - AT
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• Income Tax Act: Section 154 Mistakes Can't Revisit Approved Exemption Claims u/s 54F.

  Case-Laws - AT : Rectification of mistake u/s 154 - claim of exemption u/s 54F - under the law no one is permitted to review own order, the provision of section 154 of the Act does not permit to revisit the claim that has already been allowed. - AT
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Customs

• Court Rules BOA Must Fulfill Duties Regardless of Product Viability in EOU Wastage Norms Case.

  Case-Laws - HC : 100% EOU - Fixation of wastage norms for the downstream products of the Petitioners - It is for the petitioner to decide whether the production of the products in question is commercially viable to it or not. The commercial viability of the products cannot be a ground for the BOA to refuse to exercise the jurisdiction and duty vested in it - HC
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• Firm Allowed to Challenge Duty Drawback Decision; Tribunal's Jurisdiction Not Initially Disputed by Revenue.

  Case-Laws - HC : Jurisdiction of tribunal to entertain appeal related to duty drawback - In the peculiar facts of this case where the Revenue originally had not taken any objection on the appeal being heard by the learned CESTAT, and had also, following the order of the learned CESTAT, sanctioned refund of the Drawback, the Firm should not be left remediless - opportunity granted to the Firm to prefer a revision, under Section 129DD of the Customs Act, against the order dated 14.05.2018 passed by the Commissioner (Appeals). - HC
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• Refund Claim for CVD Not Time-Barred; Assessment Order Rectification Required for Refund Eligibility.

  Case-Laws - AT : Refund claim for differential CVD - Period of limitation - re-assessment/modification of Bills of Entry - the question of refund would arise only when the assessment order is rectified - the Commissioner (Appeals), therefore, committed no illegality in holding that the refund claims were not barred by time. - AT
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• Commissioner (Appeals) must stick to issues raised in appeals; improper directions exceed appeal scope, royalty issue settled.

  Case-Laws - AT : Power of the Commissioner (Appeals) - The Commissioner (Appeals) cannot examine and pronounce upon any issue beyond the factum of the appeal. It is imperative that all actions of public functionaries be guided by reason and not by whim or caprice - it is found that the directions given in the impugned order is improper and travels beyond the appeal. The issue of royalty not being related to the impugned goods during the said period has become final as no cross objections have been filed on the issue by Revenue. - AT
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• Commissioner (Appeals) Cannot Remand Cases Under Amended Section 128A, Must Conclude Classification Dispute.

  Case-Laws - AT : Power of commissioner (appeals) to remand back the case - There are no piece of evidence to take a contrary view to the finding of the first appellate authority as to the classification of the imported goods as ‘Superior Kerosene Oil’ by rejecting the uncorroborated classification as LAWS by the appellant - the Commissioner (Appeals) should have closed the case instead of remanding the matter back to the file of the original authority, which is against the amended provisions of Section 128A of the Customs Act, 1962, which has withdrawn the power of the Commissioner (Appeals) to remand the case for fresh adjudication except for those issues mentioned at Section 128A(3)(b), which does not cover the impugned issue. - AT
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• Valuation Error in Imported Used Office Furniture Due to Unreliable Inspection Report Leads to Incorrect Assessment.

  Case-Laws - AT : Valuation of imported goods - used office furniture - rejection of declared value - Admittedly, the imported goods were used goods/equipment and not new equipment, as observed in the Inspection Report. Hence, the Inspection Report does not inspire any confidence as regards the valuation is concerned and hence the reliance placed on the same is not the correct position. Hence, the lower authority has clearly erred in solely relying on the said inspection report, which is of no evidentiary value. - AT
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• Customs Duty Certificate of Origin Rejection Dispute Remanded for Further Review.

  Case-Laws - AT : Concessional rate of Customs Duty to goods of Indonesian origin - certificate of origin rejected by the original adjudicating authority The said order of Commissioner (Appeal) is not a speaking order. He has not examined the reasons given by the Appellant in its appeal before Commissioner (Appeal). - Matter restored back - AT
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Indian Laws

• Cheque Issuance Triggers Presumption Under Negotiable Instruments Act; Debt Non-Discharge Leads to Legal Consequences.

  Case-Laws - HC : Dishonour of Cheque - insufficient funds - When once issuance of cheque is proved, the presumption under Section 138 of N.I.Act would arise with regard to consideration. But the accused has not discharged the debt in question. Whether the accused has issued cheque for repayment of loan or as security or it was discharged prior to the current transaction, makes no difference under Section 138 of the N.I.Act. The legal consequence reamaining same without any distinction. - HC
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IBC

• Corporate debtor must settle debts despite insurance payout; Section 9 application remains valid and maintainable.

  Case-Laws - AT : Initiation of CIRP - Insurance Company has made payment to the Operational Creditor of its claim - third party liability - Liability of Corporate debtor to discharge its debt - Section 9 Application is fully maintainable and the fact that Insurance Company has made payment to the Operational Creditor of its claim, cannot be a ground to reject Section 9 Application. The Corporate Debtor is still liable to discharge its liability of debt. - AT
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PMLA

• Bail Denied for Ex-Chief Minister's Office Official in Money Laundering Case; Court Finds No Innocence Evidence.

  Case-Laws - SC : Rejection of Bail application - Money Laundering - utilisation of proceeds of crime - There is sufficient evidence collected by the respondent Enforcement Directorate to prima facie come to the conclusion that the appellant who was Deputy Secretary and OSD in the Office of the Chief Minister, was actively involved in the offence of Money Laundering as defined in Section 3 of the PMLA. As against that there is nothing on record to satisfy the conscience of the Court that the appellant is not guilty of the said offence and the special benefit as contemplated in the proviso to Section 45 should be granted to the appellant who is a lady. - Appeal dismissed - SC
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Service Tax

• Reimbursements for expenses like hotels and food during service provision are not taxable; tax demand on these set aside.

  Case-Laws - AT : Valuation - inclusion of reimbursement of expenses - The amount collected as imprest from the customers is towards various expenditure incurred during the provision of services such as hotel, food and telephone bills. This expenditure or costs incurred by the service provider in the course of providing the taxable service cannot be considered as the gross amount charged by the service provider "for such service" provided by him, and accordingly not taxable u/s 67 - Demand set aside - AT
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• CENVAT Credit Eligibility: Chartered Accountant's Certificate Insufficient for Legal Interpretation of FOR Contract Terms.

  Case-Laws - AT : CENVAT Credit - input service - GTA service, for delivery on FOR basis - Reliance on CA Certificate - These issues, inter-alia, involve interpretation of law on the terms of contract. Without Chartered Accountant pronouncing on record his legal expertise such certificate lacks credence, as it is not based on accounts alone. Same is therefore, not acceptable. - AT
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Central Excise

• Refund of Deposit and Penalty Contested; Unjust Enrichment Argument Rejected, Refund with Interest Approved.

  Case-Laws - AT : Refund of deposit made during investigation and penalty paid in compliance to Order-in-Original - Straight away arriving at a conclusion that because of the amount fact that the amount is shown in the Balance Sheet as Excise Duty paid, incidence of duty was transferred and thereby Appellant would be unjustly enriched if amount is refunded to him/it is not sustainable in law and facts. - Refund with interest allowed - AT
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VAT

• Court Upholds Tax Liability for 'Dealers,' Rejects Constitutional Challenge Over Lack of Value Addition.

  Case-Laws - HC : Scope of the term 'Dealer' - Constitutional validity of the definition of the term ‘dealer’ - The contention that the petitioner is not liable to pay any tax on sale of goods on the ground that there is no value addition, is insubstantial. The petitioner’s challenge to the constitutional validity of the definition of the ‘dealer’ is founded on ex facie erroneous premise. The same is, accordingly, rejected. - HC
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Case Laws:

• GST

• 2023 (12) TMI 739
  Denial of Input Tax Credit (ITC) - requirements of Section 16(2) of GST / WBGST Act fulfilled or not - Failure of the supplier to pay GST to the government - High Court while allowing the petition of the assessee, directed the GST authorities to first proceed against the fourth respondent (supplier) and only under exceptional circumstance as clarified in the press release issued by the Central Board of Indirect Taxes and Customs (CBIC), then and then only proceedings can be initiated against the appellant. [ 2023 (8) TMI 174 - CALCUTTA HIGH COURT ] Held that:- Having regard to the facts and circumstances of this case(s) and the extent of demand being on the lower side, we are not inclined to interfere in these matters in exercise of our powers under Article 136 of the Constitution of India. SLP of the revenue dismissed.

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• 2023 (12) TMI 738
  Refund of the amount that was made through its cash ledger - amount was coercively recovered by from the Petitioner alongwith interest - conduct of search and seizure operation - HELD THAT:- It is an admitted case that while the payment was made by the petitioner, it had not admitted the liability to pay the amount. It is also not in dispute that there is no adjudication of the liability and the Show Cause Notice demanding the recovery of GST and the appropriation of the amount of Rs.2,30,00,000/- deposited by the petitioner was issued on 23.06.2022, that is, much after the said deposit. The amount was deposited during the course of investigation. The learned counsel appearing for the respondents does not deny that an assessee cannot be forced to pay any amount during the course of investigation. If any amount is collected without any authority of law, the same amounts to depriving the person of its property and infringes its rights under Article 300A of the Constitution of India. In the facts of the present case, it is accepted that the deposit was made by the petitioner under duress and compelling circumstances. The search operations started at around 3:45 p.m. on 20.10.2021 and went way beyond the normal business hours, that is, up to 00:30 a.m. on 21.10.2021. It is not in doubt that a tax payer can voluntarily pay tax prior to issuance of the Show Cause Notice in terms of Section 73(5) of the Act. In terms of Section 73(6) of the Act, in case a person chargeable with tax before service of notice under Section 73(1) or before giving any statement under Section 73(3) of the Act, makes a voluntary payment of tax with interest, the proper Officer is not to serve any notice in respect of tax so paid or any penalty payable under the provisions of the Act or the CGST Rules made thereunder. The provision is clearly for the benefit of the tax payer who voluntarily pays tax prior to issuance of any Show Cause Notice and, thus, absolves himself of any liability to pay the penalty. These provisions do not empower the Department to compel the tax payer to pay any tax. It is also important to note that the requisite procedure under Rule 142 of the CGST Rules, has also been complied with in the present case. It is not disputed that any voluntary deposit in Form GST DRC-03 is to be followed by an acknowledgement accepting the payment as being voluntarily made by issuance in Form GST DRC- 04. The respondents, admittedly, have not issued Form GST DRC-04 as required under the CGST Rules. This Court also relied upon the judgment passed by the Gujarat High Court in M/s Bhumi Associate v. Union of India [ 2021 (2) TMI 701 - GUJARAT HIGH COURT] and held that the directions issued by the Gujarat High Court had not been followed. The Central Board of Indirect Taxes and Customs ( CBIC ), has also issued directions emphasizing that tax must be collected only after following the due process of law. The petitioner s claim for refund is allowed and the respondents are directed to forthwith process the same - petition allowed.

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• 2023 (12) TMI 737
  Seeking grant of Regular Bail - tax evasion - supply of goods without issuing invoices - Power to arrest - HELD THAT:- The transaction by the petitioner was with an intention to suppress his actual outward taxable supplies and thus was involved in large-scale tax evasion. Permission for the search was sought under Section 67(2) of the Act at the principal place of business and the additional place granted by the Joint Commissioner on 20.10.2023. In the search that followed, business transaction books of 480 pages from the business places of Lakshmi Mobile Accessories at Kottayam were seized. On verification, it was found that the petitioner had suppressed a total turnover of Rs.34,15,42,040/- for the years 2021-2022, 2022-2023 and 2023-2024 and has evaded tax approximately to the tune of Rs.6,14,77,567/- being 18% of the taxable turnover. It was also found that the petitioner was doing business even from the VAT regime, and therefore, the suppression for the years 2017-2018, 2018-2019, 2019-2020 and 2020-2021 had to be verified. Based on the above accusations, the petitioner had committed cognizable and non-bailable offences under Section 132(5) of the GST Act, 2017. Power to arrest - HELD THAT:- The power to arrest is one, and the exercise of the same is another. In the instant case, it has to be seen that for a proper investigation of the offence and to prevent the petitioner from causing the evidence of the offence to disappear or to tamper with the same, continued custody of the petitioner is warranted. The power to arrest under Section 69 can be invoked if the Commissioner has a reason to believe that the person has committed offences that are prescribed and which are punishable under Section 132 of the CGST Act, 2017. Thus, the reference to Section 132 in Section 69 is only to indicate the nature of the offences based on which reasonable belief is found and recorded by the Commissioner to pass an order for arrest - in cases of alleged violation of a technical nature, like where a demand of tax is based on a difference of opinion regarding the interpretation of law or such analogous grounds, the power to arrest must be very carefully exercised, having regard to the provisions of S.41 Cr.P.C. that stipulated the situations requiring an arrest. It is also relevant to note that the expression any person in Section 69 includes any person suspected or believed to be concerned with tax evasion for availing legal input tax credit. It has to be seen that there is an evasion of more than Rs.6.5 crores alleged against the petitioner. A serious allegation is made, which warrants a thorough investigation. Under such circumstances, when the investigation is going on, bail cannot be granted to the petitioner at this stage - bail application dismissed.

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• 2023 (12) TMI 736
  Invocation of extended period of limitation - procedural irregularity inasmuch as the pre-show-cause notice was not issued as per the relevant circular issued by the Board - HELD THAT:- In the instant case, on going through the show-cause notice dated 11th November, 2019 as well as the order in original dated 31st March, 2023. Prima facie, while issuing the show-cause notice dated 11th November, 2019, the adjudicating authority in paragraph 9 has set out certain reasons as to why the extended period of limitation is invokable against the appellants. The appellants have contested the show-cause notice by submitting the reply and the adjudicating authority has sustained the allegations in the show-cause notice and justified invocation of the extended period of limitation. Thus, the case on hand appears to be not a simple case of going through the show-cause notice and examining as to whether there is any factual finding with regard to wilful misstatement or suppression or fraud but to consider the said aspect, facts have to be gone into, much of which has been seriously disputed by the appellants in their reply to the show-cause notice. In the instant case, the issue as to whether extended period of limitation could be invoked is not purely a question of law but a mixed question of fact and law and necessarily, disputed questions of fact have to be gone, which cannot be adjudicated in a writ petition. The appellants should not be permitted to bypass the appellate remedy available under the Act and for such reason, the appellants have to necessarily file an appeal before the learned Tribunal challenging the order in original dated 31st March, 2023 - Appeal dismissed.

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• 2023 (12) TMI 735
  Search and seizure carried out on the premises of the assessee - mandatory provision with regard to Section 67 (1) of the Uttar Pradesh Goods and Services Tax Act, 2017 has not been complied with by the Joint Commissioner while granting the authorization for search and seizure - HELD THAT:- Upon a perusal of the documents, it is found that the authorization for search under the Form GST INS -01 was issued on 31.08.2022. However, the reasons for carrying out the search was provided to the Joint Commissioner subsequently which he has signed on September 1, 2022. This is a clear case of putting the cart before the horse wherein the officer concerned has authorized the search and seizure without even looking into the reasons for the authorization of the same. Upon a careful perusal of the Section 67, it is clear that it is only after reasons are provided to the Joint Commissioner that he can authorize in writing any search and seizure to be carried out - In the present case, the said procedure had not been followed, and accordingly, the entire authorization is vitiated and liable to be quashed. Under such circumstances, the entire search and seizure that has been carried out is based on an illegal authorization and is accordingly quashed and set aside. The Authorities are directed to release all goods and documents that they may have detained or confiscated within a period of 15 days from date - petition allowed.

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• 2023 (12) TMI 734
  Validity of notice initiated under Rule 129 of the Central Goods and Services Tax Rules, 2017 - seeking for stay of all the further proceedings pursuant to the summons issued on 22.11.2019 - HELD THAT:- What is apparent is that the notice and the summons were issued calling upon the petitioner to enter appearance and to produce cogent, relevant documents as has been sought by the authorities concerned. Thus, no strong case has been made out by the petitioner calling for interdiction of the notice and summons under challenge. The petitioner is at liberty to enter appearance before the authorities concerned by submitting their detailed reply in addition to any reply if they have already made in the past. The authorities concerned thereafter in turn is expected to proceed further in accordance with law after due consideration of the contents of the reply and documents which the petitioner shall be furnishing by way of their response. It is directed that considering the fact when the entire country is going into the digital world and the Competition Commission of India also having its sitting only at New Delhi, it cannot be expected that every person can afford attending the hearing at New Delhi on all the dates of hearing. Petition disposed off.

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• 2023 (12) TMI 733
  Cancellation of petitioner s GST registration - impugned order does not record any reason for cancelling the petitioner s GST registration but it refers to the Show Cause Notice dated 26.09.2019 - principles of natural justice - HELD THAT:- Section 29(2) of the Central Goods and Services Tax Act, 2017 empowers the proper officer to cancel the registration from any date including with retrospective effect if the authority deems it fit. However, the discretion to cancel the registration with retrospective effect cannot be exercised arbitrarily. In the present case, the only reason for proposing to cancel the petitioner s GST registration was that the petitioner had not filed the returns for a continuous period of six months. However, the registration has also been cancelled for a period during which the petitioner had filed the GST returns. As noted above, the impugned order provides no reason whatsoever for cancelling the petitioner s GST registration much less the reason for doing so with retrospective effect. The petitioner s GST registration are directed to be cancelled from September, 2018. However, it is clarified that this would not preclude the respondents from initiating any proceedings in case the petitioner has violated any statutory provisions - petition allowed.

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• 2023 (12) TMI 732
  Maintainability of petition - non-constitution of Tribunal - availability of alternative remedy - HELD THAT:- Paragraph 4.3 of Circular dated 26th May 2020 records that when the assessee intends to take recourse to an alternate remedy of an appeal, after the Tribunal is constituted, the prescribed time limit to make an application to the Appellate Tribunal would be counted from the date on which President or the State President enters office - Further paragraph 5 of the said circular provides that a declaration is required to be made by such party and submitted to the jurisdictional Tax Officer, stating that an appeal is proposed to be filed under Section 112 of the CGST Act within a period of 15 days from the communication of the said order. This petition is disposed off by permitting the petitioner to take recourse to an alternate remedy of an appeal as provided in the Circular dated 26th May 2020, and more particularly in terms of paragraph 4.3 read with paragraph 5, thereof, subject to the declaration to be made by the petitioner to the jurisdictional Tax Officer, in terms of Annexure-I to the said Circular, which be submitted within a period of 15 days from today.

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• 2023 (12) TMI 731
  Cancellation of petitioner s GST registration - impugned order does not indicate any reason for cancelling the petitioner s GST registration except mentioning that no reply has been received to the SCN - principles of natural justice - HELD THAT:- In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant. In the present case, the petitioner had indicated that she closed her business in January, 2020. Thus, not filing returns, thereafter, cannot be a ground to cancel her registration in respect of the period while she was carrying on the business in compliance with the provisions of the law - the SCN proposing to cancel the petitioner s GST registration is flawed. Although, it directed the petitioner to appear for a personal hearing on the appointed date and time but it failed to specify the said date, time, or venue. The impugned order cancelling the petitioner s GST registration is also liable to be set aside as it is bereft of any reason. It neither specifies the reason for cancelling the GST registration nor gives any clue as to why it was cancelled with retrospective effect. It is considered apposite to allow the present petition and direct that the cancellation of the petitioner s GST registration shall take effect from 17.01.2020, being the date of the application filed by the petitioner seeking cancellation of her GST registration. Petition allowed.

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• 2023 (12) TMI 730
  Exemption under Notification No. 12 of 2017 dated 28 June, 2013 - Sr. No. 54(e) of N/N. 12 of 2017 dated 28 June, 2013 pertaining to loading, unloading, packing, storage or warehousing of agricultural produce namely tea - whether the petitioner would be entitled to exemption in supply of warehouse services as let out to Unilever for packing and storage of tea under the Item Sr. No. 54(3) of the 2017 Notification ? HELD THAT:- On a plain reading of the definition of the agricultural produce and as applicable in the present context, it can be certainly inferred that the tea is produced from the cultivation of plants (tea gardens). It is an edible produce meant for human consumption. It can also be said that tea without processing, which can be done either by the cultivator / producer, or otherwise cannot be consumed. Further such processes do not alter its essential characteristic of tea ceasing to be an agricultural produce. Also such processing is necessary for making tea marketable for primary market. Merely by blending i.e. mixing or combining different teas and/or packing, such processes would not change the basic character of tea as an agricultural produce . Again by undertaking packing, it cannot be countenanced that the essential characteristic of tea to be an agricultural produce would undergo any change. It is ill-conceivable that the packs of tea cannot be sold in marketable lots, acceptable packages for its marketing. The law laid down by the Supreme Court in COMMISSIONER OF SALES TAX, LUCKNOW VERSUS DS. BIST AND OTHERS [ 1979 (9) TMI 168 - SUPREME COURT] is clearly applicable in the facts of the present case, which ought to have persuaded the AAR to hold that the tea belonging to Unilever as stored in the petitioner s godown, did not change its essential characteristics merely because certain processes were undertaken, so as to reach to a conclusion that tea was an agricultural produce. In reaching the above conclusion as to what was understood by the term agricultural produce in some enactments and how they were considered by the Court can be discussed. Now coming to the contention as urged on behalf of the respondents that in respect of the notification in question, a clarification has been issued by a CBIC Circular dated 15 November 2017 and therefore, the authorities below were correct in their approach in interpreting Tea as stored in the petitioner s warehouse, is not an agricultural produce. This is not agreed - Such contention as urged on behalf of the respondent is in teeth of the settled principles of law that a circular cannot whittle down or nullified the Exemption Notification - the clarification as contained in the Circular cannot amend the statutory notification. Under the guise of clarification, the notification No. 12 of 2017 cannot be taken to be amended so as to delete tea as an agricultural produce from the ambit of exemption. On a perusal of the orders passed by the AAR the emphasis appears to be more on the issue that the process by which the tea leaves are dried which results in emergence of a manufactured product, and therefore, tea ceases to be an agricultural produce - The only question in the present proceedings was in regard to the levy of service tax and whether the petitioner would be entitled to exemption when the petitioner had provided services of warehousing of agricultural produce. It was only in such context both the authorities below were required to consider the legal position and apply the same and any other extraneous consideration could not have been relevant. It is settled principle of law that a writ of certiorari can be issued only when there is a failure of justice and that it cannot be issued merely because it may be legally permissible to do so. There must be an error apparent on the face of the record as the High Court acts merely in a supervisory capacity. An error apparent on the face of the record means an error which strikes one on mere looking and does not mean long drawn out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to show its incorrectness - While issuing a writ of certiorari, the order under challenge should not undergo scrutiny of an appellate court. It is obligatory on the part of the petitioner to show that a jurisdictional error has been committed by the statutory authorities. This Hon ble Court be pleased to issue a Writ of Certiorari or any other appropriate writ, order or directions under Article 226 of the Constitution of India calling for the records of the Petitioners case and after examining the legality and validity thereof quash and set aside the impugned order dated 10.12.2018 passed by Respondent No. 6 under Section 101 of the CGST Act and the MGST Act - Hon ble Court be pleased to declare that the Petitioner is entitled to exemption from payment of GST in terms of SI. No. 54(e) of the Notification 12/2017-Central Tax (Rate) dated 28.06.2017 and the corresponding notification issued under the MGST Act - Petition allowed.

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• 2023 (12) TMI 729
  Seeking approval to modify / amend FORM GSTR-1 for financial year 2021-2022 dated 11 September 2023 - Validity of communication dated 27 September 2023 issued by the respondent-Deputy Commissioner, State Tax. Petitioner has been informed that such a request for amendment of Form GSTR-1 cannot be approved considering that the matter is time barred and accordingly, the petitioner s application would stand rejected. HELD THAT:- Having considered the statutory ambit of Section 37, 38 and 39, it is opined that the provisions of sub-section (3) of Section 37 read with Section 38 and sub-sections (9) and (10) of Section 39 need to be purposively interpreted - the sub-section (3) of Section 37 cannot be read to mean that the assessee would be prevented from placing the correct position and having accurate particulars in regard to all the details in the GST returns being filed by the assessee and that there would not be any scope for any bonafide, and inadvertent rectification / correction. This would presupposes that any inadvertent error which had occurred in filing of the returns, once is permitted to be rectified, any technicality not making a window for such rectification, ought not to defeat the provisions of sub-section (3) of Section 37 read with the provisions of sub-section (9) of Section 39 read de hors the provisos. The proviso ought not to defeat the intention of the legislature as borne out on a bare reading of subsection (3) of Section 37 and sub-section (9) of Section 39 in the category of cases when there is a bonafide and inadvertent error in furnishing any particulars in filing of returns, accompanied with the fact that there is no loss of revenue whatsoever in permitting the correction of such mistake. Any contrary interpretation of sub- section (3) of Section 37 read with sub-sections (9) and (10) of Section 39 would lead to absurdity and / or bring a regime that GST returns being maintained by the department having incorrect particulars become sacrosanct, which is not what is acceptable to the GST regime, wherein every aspect of the returns has a cascading effect. This is necessarily required to be borne in mind when considering the cases of inadvertent human errors creeping into the filing of GST returns. The State Tax officer ought to have granted the petitioner s request to rectify / amend the Form GSTR 1 for the period July 2021, November 2021 and January 2022, either through Online or manual means. The law would be required to be interpreted and applied by the Department. This necessarily would mean, that a bonafide, inadvertent error in furnishing details in a GST return needs to be recognized, and permitted to be corrected by the department, when in such cases the department is aware that there is no loss of revenue to the Government. Such freeplay in the joint requires an eminent recognition. The department needs to avoid unwarranted litigation on such issues, and make the system more assessee friendly. Such approach would also foster the interest of revenue in the collection of taxes. The respondents are directed to permit the petitioner to amend / rectify the Form GSTR-1 for the period July 2021, November 2021 and January 2022, either through Online or manual means within a period of four weeks from today - Petition allowed.

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• 2023 (12) TMI 727
  Levy and collection of cess by the respondent authorities under the provisions of the Assam Agricultural Produce Market Act, 1972 post the GST regime - refund of cess amount which have been wrongfully and illegally collected from the petitioners - whether post the 101st amendment of the Constitution and the enactment of the Central Goods and Service Tax Act, 2017, the Integrated Goods and Service Tax Act, 2017 and the Assam Goods and Service Tax, Act 2017 whether the respondent Board or the Market Committees established under Section 7 of the Act of 1972 would have the power to levy cess? HELD THAT:- The law if applied to the facts of the present cases would make the exemption so granted by the notification No.12/2017-Central Government (Rate) dated 28.06.2017 issued by the Government of India, Ministry of Finance, Department of Revenue at Sl. No.54 and the notification No.FTX.56/2017/25 dated 29.06.2017 issued by the Finance (Taxation) Department of the Government of Assam at Sl. No.54 in respect to service by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale and purchase of agricultural produce pre-supposes that the cess which was collected by virtue of the Act of 1972 had been subsumed by the CGST Act,2017 as well as AGST Act, 2017. Under such circumstances, the levy of cess by the Respondent Board or the Market Committee after the said notifications had come into effect was unconstitutional as well as ultra vires to the provisions of CGST Act, 2017 and the AGST Act, 2017. In the instant case, the Respondent Board and the Market Committee after having lost their powers to levy cess, the financial position of the Respondent Board is in a penurious state. It is surviving as could be seen from the additional affidavit filed on 28.09.2023 on the basis of grant-in-aid received from the State Government. Under such circumstances, it is the opinion of this Court that directing the State to recover the said amount from the Respondent Board would not be in the interest of justice, equity, good conscience as well as also it would seriously hamper the functioning of the Respondent Board in terms with the provisions of the Act of 1972. This Court is not inclined to pass any direction(s) for restitution by the respondent Board of the cess so collected during the period from 01.07.2017 to 12.06.2020. Petition disposed off.

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• 2023 (12) TMI 726
  Revocation of tagging/naming the petitioner as risky exporter - requirement of verification in terms of Circular No. 131/01/2020-GST - HELD THAT:- In light of the admitted fact that process of verification is not completed, the authorities to strictly adhere to the time frame stipulated in the Circular at Annexure-A. On the lapse of three weeks from today in the event, verification is not completed in terms of procedure at Annexure-A, alert and E.O. remark classifying exporter as risky for grant of refund would stand stayed, which would not come in the way of verification as per law which must be completed within a period of one month thereafter. The petition is disposed off.

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• 2023 (12) TMI 725
  Local Authority or not - GST on procurement of security services received from any person other than body corporate under reverse charge mechanism - exemption granted in sl. no. 3 of Notification No. 12/2017 Central Tax (Rate) or sl. no. 3 of Notification No. 09/2017 IGST (Rate) - levy of GST on advertisement services or the service recipient of AJL is required pay GST under reverse charge mechanism considering Notification no. 13/2017-Central tax (Rate) dated 28-06-2017 - requirement to be registered as a deductor under GST as per the provision of Section 24 of the CGST Act. Whether the appellant is a local authority as claimed by the appellant? - HELD THAT:- The appellant is a legal person, formed as a Special Purpose Vehicle and incorporated under the Companies Act. The averment that since they are funded by the Central funds, which is routed through AMC, they are in control/management of the municipal or local fund, is a proposition difficult to agree with. The appellant is neither a Municipal Committee, nor a Zilla Parishad nor a District Board. Now, as far as other authority which is legally entitled to/entrusted by the Central/State Government with the control/management of a municipal or local fund is concerned, though they are granted Central funds as loan by AMC the appellant is not in control/management of a municipal/local fund - the appellant is not a local authority . Ongoing through sections 25 to 29A, 342, 355 and 357, ibid, it is found that AMTS is a statutory authority discharging municipal functions as stipulated under the GPMC Act. It is on this ground that GAAR held AMTS to be a local authority. While relying on the advance ruling in the case of AMTS, the appellant failed to point out as to under which section of the GPMC Act the Ahmedabad Janmarg Limited was incorporated as a Public Limited Company and was entrusted with the Municipal functions of providing transportation facilities. Thus there is clear cut distinction as far as AMTS is concerned which is a statutory authority in terms of the GPMC Act, which incidentally is not the case with the appellant as far as the present dispute is concerned. The appellant is neither a department nor establishment of the Central/State Government, nor a local authority as we have already held above nor persons or category of persons notified under notification No. 50/2018-CT - the appellant cannot deduct tax hence is not required to be registered as deductor under GST. As far as Governmental agencies are concerned, it is found that this has been dealt with in para 21.2 of the impugned order in detail. The Appellant has not produced anything to interfere with the findings of the GAAR. Appeal rejected.

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• 2023 (12) TMI 724
  Classification of goods - frozen chicken - Poultry Meat Not Cut in pieces - to be classified under HSN Code 02071200 or not - Poultry Meat Cuts and Offal - to be classified under HSN Code 02071400 or not? - N/N. 2/2017-CT (Rate) dated 28.06.2017 - HELD THAT:- If the packaged commodities viz. the impugned products containing quantity of more than 25 kg are meant for institutional consumers, then the same would be exempted under SI.No. 9 of Notification No. 2/2017-CT (Rate) dated 28.06.2017 as amended - From the plain reading of the definition of institutional consumers , it means that the packaged commodities, firstly, should bear a declaration not for retail sale , secondly, it is meant exclusively for use by that institution; and thirdly, it is not for commercial or trade purposes. It is found that a declaration that packed exclusively for institutional sale, not for retail sale will be affixed on the bag. Hence the first condition is met. It is also found that the proposed sale is being made by the wholesale dealer/trader, in this case, the Applicant. Coming to the last condition, it is found that such sale proposed to be made by the Applicant, should also establish that it is not for commercial or trade purposes even though it is meant for use by that institution. As per the facts submitted by the Applicant, they intend to supply to institutional consumers such as The Indian Army, Ministry of Defence, The Park Hotel, Chennai etc. - for supplies to be made to institutional consumers, it is found that the exemption from GST as claimed by the Applicant would be available if and only if it fulfills all the conditions envisaged under Rule 2(bc) of the Packaged Commodities Rules 2011 for Institutional Consumer . As regards the supply of the impugned products to a distributor who would further supply to institutional consumers, Rule 3(c) of the Chapter II of the Packaged Commodities Rules, states that packaged commodities meant for industrial consumers or institutional consumers . Thus the condition given in the said rule is that the end user should be industrial consumers or institutional consumers. The Applicant has stated that the impugned frozen chicken is pre-packaged and labelled. Accordingly, adhering to other provisions of Legal Metrological Act, 2009, the rate of duty for the impugned frozen chicken is of 2.5% -CGST, 2.5% - SGST, in ease of intra-state supply, and 5% IGST in case of supply to inter-state, is payable.

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• 2023 (12) TMI 723
  Supply or not - recovery of subsidised value from employees for providing canteen facility - Canteen operated by the Applicant within the factory premises - Canteen run by Applicant s subsidiary company operating within common premises for which the subsidiary company recovers charges from the Applicant. HELD THAT:- Applicant provides canteen facility either by himself or through a third party and is providing meals/food at concessional rates, i.e., no meal is extended free and specified amount in respect of the food consumed by the employee are collected by the Applicant against such consumption of food. Further, as seen from the documents furnished i.e. appointment order, availing the canteen facility made available by the Applicant in their premises is not mandatory. Whether recovery of subsidised value from employees for providing canteen facility would amount to supply ? - HELD THAT:- The Act mandates establishing a canteen when more than two hundred and fifty workers are ordinarily employed in a factory and as per sub-clause (2)(dd) above, certain expenditure are to be borne by the employer. Abiding by the above provisions, since the number of workers and contract labourers, ordinarily employed exceeds 250 in number, the Applicant has established a canteen - In the case at hand establishing a canteen facility in the unit is an activity incident to the running of their business. Factory Act, above mandates establishing canteen, bearing certain mandatory costs in running of the canteen by the employer in as much as the number of workers ordinarily employed (workers contract labourers) are above 250 per unit, which is the case in hand as per their submissions. Accordingly, the applicant has established the canteen in their premises and bears certain running cost while collecting the nominal rate as fixed by the Managing Committee, which is an activity in furtherance of their business. In the case at hand, the Applicant supplies food to their employees at a nominal cost, and the same is the consideration for such supply made by the Applicant on which GST is liable to be paid - The supply of the food/beverages, although at subsidized rates, by the Applicant to their employees is certainly an activity amounting to supply of service and attracts levy of GST on that part of the consideration being charged for such supply. The supply of food by the employer, i.e, the applicant to their employees is composite supply of food held as Supply of service as per Schedule-II of the GST Act and the amount collected by the Applicant is a Consideration on which GST is liable to be paid. Subsidized food is a perquisite to employees forming a part of the wage agreement and HR policy of the Applicant or not - HELD THAT:- A combined reading of the Circular no. 172/04/2022-GST dated 06.07.2022 of CBIC and the term perquisite , it is found that the intention of the Circular is to clarify that tax is not applicable on perquisite which is part of the employee agreement and which may be free of cost for the employees. Accordingly, in case where a recovery is made against a supply, even if it is subsidised, the same will be subjected to tax - it is found that the benefit of the non-levy of GST could be extended only to the extent of the consideration being borne by the Applicant out of the total cost for supply of the food/beverages, but not to the extent of the consideration being collected at the subsidized rates, by the Applicant from their employees. Thus, GST is to be levied on the amount recovered by the Applicant from the employees towards canteen provision. Canteen facility is provided through a third party i.e. SACL - pure agent services or not - HELD THAT:- It was the contention of the Applicant that in respect of Model II, where canteen facility is provided through a third party i.e. SACL, the Applicant s role is limited to collecting the amount from the workers for onward payment to SACL and thereby they act as a pure agent. We find that this contention of the Applicant is not acceptable as the third party i.e. SACL is providing the canteen service to the Applicant and not to the employees. The Applicant in turn is providing the canteen facility to the employees. This fact is stated by the Applicant themselves in their application. Moreover, the first condition to act as a pure agent is that the service recipient should enter into a contractual agreement to authorize a person to act a pure agent for them. Whereas, in the present case, the employees have not authorised the Applicant to act as their agent. Hence this contention of the Applicant is totally not tenable. The recovery of subsidised value from employees for providing canteen facility will amount to supply under the CGST Act and GST is to be levied on the amount recovered by the Applicant from the employees towards provision of canteen facility.

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• 2023 (12) TMI 722
  Input tax credit on Basic Customs Duty (BCD), Countervailing Duty (CVD) and Special Additional Duty (SAD) - non-fulfillment of EPCG obligation can be taken as Input tax credit under GST or not - HELD THAT:- Rule 3 of CENVAT Credit Rules allows credit of additional duties of CVD and SAD paid under Section 3 of the Customs Tariff Act, 1975. However, upon the introduction of Goods and Service Tax Laws w.e.f. 01.07.2017, the levy of CVD and SAD of Customs were subsumed into GST. In the present case the imports relate to a period prior 01.07.2017 and duties as applicable on the date of import was paid by the Applicant. However, in the GST regime, with respect to imported goods, the definition of Input tax and input tax credit as per Section 2 of the GST Act, 2017, (reproduced at para 6.2), includes only IGST charged on imports of goods. There is no provision under the GST Law for availing credit of CVD and SAD. In case of the Applicant, Basic Customs Duty (BCD), Countervailing Duty (CVD), Special Additional Duty (SAD) along with interest has been paid towards non-fulfilment of prescribed export obligation on import of capital goods under EPCG scheme, which commenced before the implementation of GST and concluded post the implementation of GST. Payment of Basic Customs Duty (BCD), Countervailing Duty (CVD), Special Additional Duty (SAD) made on non-fulfillment of export obligation under EPCG scheme, cannot be claimed as Input Tax Credit under GST Act, 2017.

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• Income Tax

• 2023 (12) TMI 721
  TP Adjustment - whether the reimbursement of advertising, marketing and promotion expenses (AMP), incurred by assessee on behalf of its AE was at arm s length - whether any upward adjustment was required to be carried out in the amount received by assessee from its AE? - Whether TPO ought to have used the bright line test (BLT) in computing the arm s length price (ALP) concerning AMP activities carried out by the respondent/assessee? - whether the respondent/assessee was adequately compensated for expenses incurred for AMP activities carried out in India? - HELD THAT:- As in the period in issue, the respondent/assessee was only in the business of import and distribution of Sony products. The amount spent on AMP activities by the respondent/assessee in the relevant FY was Rs. 119,54,43,600/-.The compensation for this expense was, according to the Tribunal, received by the respondent/assessee in terms of higher profitability for the product sold. Even according to the TPO, the AMP expenditure incurred by the respondent/assessee resulted in increased sales in India for products, albeit developed by the AE but sold by the respondent/assessee. The fact that the comparables chosen by the TPO had a net margin lower than that registered by the respondent/assessee would persuade us to hold that no upward adjustment concerning AMP expenses ought to have been made. Lastly, the application of the BLT tool, by the TPO, in determining ALP, injected the order issued by him, which was incidentally approved by the DRP, with a legal error. [See Sony Ericsson Mobile Communications India case [ 2015 (3) TMI 580 - DELHI HIGH COURT] ]. We are not inclined to interfere with the impugned order passed by the Tribunal, as no substantial question of law arises for our consideration. Thus, for the foregoing reasons, we are not inclined to interfere with the impugned order passed by the Tribunal, as no substantial question of law arises for our consideration.

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• 2023 (12) TMI 720
  Disallowance of contributions to temple/panchayat - ITAT deleted the addition - whether the CIT (A) erred by admitting the additional evidence in violation to Rule 46A(3) of the Income Tax Rules, 1962? - HELD THAT:- We find that no additional evidence was allowed to be produced. AO had made the addition based upon the evaluation of the material before the AO. Commissioner (Appeals) on evaluating the very same material disagreed with the AO. The ITAT agreed with the Commissioner of Appeals. Therefore, this is not a case of any violation of Rule 46A(3), and the first question of law now sought to be raised does not arise in this appeal. Respondent pointed out that the addition was based upon misconstruing the Assessee s case. He pointed out that merely because some contributions had been made to temples, etc., the Assessee had not claimed any exemption under Section 80-G of the Income Tax Act. He pointed out that these were routine revenue expenditures incurred by the Assessee after explaining the factual background in which such contributions were made. This explanation was accepted by the Commissioner (Appeals), and the ITAT upheld the Commissioner s view. Accordingly, the first question, as proposed, does not arise in this appeal. Addition u/sec. 28(iv) - benefits in some form other than money or cash - ITAT deleted the addition - whether CIT (A) erred in admitting the additional evidence in violation of Rule 46A(3) of Income Tax Rules, 1962? - HELD THAT:- We are not too sure whether this was a case of admission of any additional evidence. However, even assuming that this was so, the Tribunal has decided the matter based upon the decision of this Court in Mahindra And Mahindra Ltd [ 2018 (5) TMI 358 - SUPREME COURT ] wherein held that the benefit as contemplated by Section 28(iv) of the Income Tax Act has to be some benefit other than a benefit in the shape of money or cash. In the present case, there is no dispute that there was no benefit other than in the form of money alleged to be received by the Assessee. Even the case of the Revenue was that the Assessee had accepted certain advances for which no proper explanation was furnished. Therefore, the issue of admission or non-admission of additional evidence is quite irrelevant since Section 28(iv) contemplates benefits in some form other than money or cash. Therefore, even if the additional evidence or the new documents allegedly admitted at the appellate stage were to be completely excluded from consideration, there would be no difference, and the Assessee s case would have to be accepted based upon the interpretation of Section 28(iv) in Mahindra and Mahindra (Supra). No substantial question of law arises.

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• 2023 (12) TMI 719
  Application for settlement filed by the petitioner rejected - application came to be rejected by the first respondent/Interim Board for Settlement II for the reason that the petitioner had filed the application without payment of tax and interest on the income disclosed as mandated under the provisions of section 245 C (1) - petitioner submitted that the entire tax liability along with interest has been discharged and no further amount is liable to be paid by the petitioner towards tax as well as interest - HELD THAT:- A mere perusal of the order impugned herein as well as the application made by the petitioner for third occasion, dated 10.3.2021, it is seen that the petitioner has clearly furnished the details with regard to the discharge of entire tax liability along with interest, however, the application came to be rejected, without stating as to why, the application is rejected and further, in the impugned order, there is not even a reference made with regard to the payment details made by the petitioner towards tax and interest and mechanically, the first respondent rejected the application for settlement filed by the petitioner. Hence, this Court is inclined to direct the 1st respondent to take up the application of the petitioner on record and dispose of the same on merits and in accordance with law within a specified time. Writ Petition is disposed of by directing the 1st respondent to take the application of the petitioner on record and dispose of the same on merits and in accordance with law on or before 31.12.2023.

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• 2023 (12) TMI 718
  Income accrued in India - Royalty receipts - income received by the appellant as a consideration for providing domain name registration services - Appellant/assessee is a US-based company and is an accredited registrar for the Internet Corporation for Assigned Names and Numbers (ICANN) - HELD THAT:- What is agreed between the appellant/assessee and its customers is that mere registration of a domain name does not create any proprietorship rights in the name used as the domain name or in the domain name registration either in the appellant/assessee or the customers or even any other third party. Therefore, the submission advanced on behalf of the appellant/assessee, i.e., that since it is not the domain name s owner, it cannot confer the right to use or transfer the right to use the domain name to another person/entity, deserves acceptance. We are also of the view that passing off and injunction actions are entertained by the courts where domain name registrations are brought about in bad faith or to perpetuate fraud. The courts tend to grant injunctive relief where the defendant, in such actions, is seen to be feeding off the plaintiff s goodwill and causing confusion amongst its customers regarding the origin of the subject goods and services. Such reliefs are granted on the basis that the definition of the expression mark includes a name , and in turn, the expression trademark so defined to include a mark, distinguishes the goods and services of one person from those of others. Therefore it is possible in a given situation that a domain name may have the attributes of a trademark. [See Section 2m read with Section 2zb of Trademarks Act, 1999 ]. The Supreme Court, in Satyam Infoway [ 2004 (5) TMI 529 - SUPREME COURT] held that it is the registrant (and not the Registrar) who owns the domain name, and can protect its goodwill by initiating passing off action against a subsequent registrant of the same domain name/a deceptively similar domain name. SC was concerned only with the rights of the domain name owner and not the Registrar, while determining whether passing off action can be initiated in relation to domain names. Given this position, the Tribunal s reliance on this judgment is misconceived. In this case, however, we need not travel down this path, as the appellant/assessee is only acting as a Registrar and thus offering its services to its customers for having their domain names registered.The aforementioned principle may have been attracted if the appellant/assessee had granted rights in or transferred the right to use its domain name, i.e., Godaddy.com, to a third person. Therefore, the fee received by the appellant/assessee for registration of domain names of third parties, i.e., its customers, cannot be treated as royalty. We are of the view that the question of law has to be answered in favour of the appellant/assessee and against the respondent/revenue.

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• 2023 (12) TMI 717
  Income taxable in India - revenue earned from distribution rights transferred by assessee in favour of BBC Worldwide (India) Pvt. Ltd. [ BWIPL ] concerning the distribution of the subject channel to cable operators, DTH operators, hotels, etc - HELD THAT:- Tribunal has concluded that the distribution fee could not be construed as royalty and hence was not taxable. Received of distribution fee - whether in the period in issue i.e., AY 2008-09, it had received any distribution fee? - A finding of fact has been returned, which is that in the period in issue i.e., AY 2008-09, the assessee did not receive any distribution fee and therefore, no profit could be attributed to it. In our view, if one were to take into account the finding of fact returned qua the second issue, clearly, no case for interference with the impugned order is made out by the appellant/revenue. No substantial question of law arises for our consideration.

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• 2023 (12) TMI 716
  Revision u/s 263 - course of survey proceedings at the assessee s business premises, certain discrepancy were observed and confronted to the assessee and in response, the assessee offered a sum towards unexplained misc. advances - CIT stated that the assessee in his return of income has disclosed the surrendered income in the profit/loss account and paid taxes at the rates applicable to normal business income which need to be taxed u/s 115BBE making assessment erroneous so far as prejudicial to the interest of the Revenue - HELD THAT:- Assessee has been asked specific questions not just regarding the discrepancy found during the course of survey but the nature and source thereof during the course of survey and it is clearly emerging that nature of such advances is unaccounted business advances and the source of such income so surrendered is assessee s share of diagnostic lab fees received from Shri Sandeep Singh who was running the diagnostic lab from business premises of the assessee and sharing 70% of lab fees with the assessee which remain unaccounted and undisclosed at the time of survey. No doubt, these transactions were not recorded at the time of survey thus qualify as unrecorded transactions satisfying one of the essential conditions, at the same time, the assessee has provided the necessary explanation about the nature and source of such unrecorded transactions and the necessary nexus with assessee s business has been established, thus, it cannot be said that these are unexplained transactions thus, doesn t satisfy the second condition for invoking the deeming provisions of section 69-69B - AO has duly taken cognizance of the findings of the survey team, the documents found during the course of survey, the statement of the Shri Sandeep Singh, the surrender letter and the return of income and after examination thereof and due application of mind, the income has been rightly assessed under the head business income. We are of the considered view that the order so passed by the AO cannot be held as erroneous due to lack of inquiry or for that matter requisite inquiry on the part of the AO. As we have held above, there is no findings recorded by the Ld. Pr. CIT as to how the deeming provisions are applicable in the instant case and the order so passed by the AO is erroneous. We therefore find that merely stating that there was survey operation at the business premises of the assessee and provisions of Section 115BBE of the Act are attracted, the same can be a basis for exercise of jurisdiction u/s 263 of the Act. In view of the same, order so passed by the Ld. Pr. CIT under section 263 is set aside and that of the AO is restored. Appeal of assessee allowed.

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• 2023 (12) TMI 715
  Nature of receipt - capital receipt or income from other sources - Investment made in fixed deposits, out of the funds received for setting up a power transmission system in the state of Himachal Pradesh - whether the interest earned on the fixed deposit is dependent on whether the invested funds were inextricably linked with setting up of the power transmission system? - AO concluded interest earned on funds invested in the fixed deposit was taxable under the head income from other sources - HELD THAT:- Sub-clause (ii) of Clause 15.2 indicates that the title documents and other documentary evidence establishing ownership of the permitted investments made using the sub-accounts regulated by the TRA were to be held in custody for the benefit of the borrower/lender. Similarly, sub-clause (iii) of Clause 15.2 broadly casts an obligation that the maturity value of the permitted investments is related to the payment or transfer obligations under the TRA. In this regard, what is underscored in the said sub-clause is that the permitted investments had to be readily marketable. Clause 15.3 obliges the respondent/assessee to ensure that the money which was realized through investments shall be immediately credited to the relevant account by the account bank or invested in another permitted investment, in accordance with the lender/borrower s instruction. It is in the same vein that Clause 15.6 of the TRA provided that any interest or other income paid qua permitted investments would have to be paid to the relevant account as determined by the facility agent, which broadly meant that it would enure to the benefit of the borrowers/lenders. A holistic reading of the aforementioned Clauses would show that there was indeed an inextricable link between the investment of the surplus funds and the setting up of the power transmission system. Therefore, clearly, the interest earned thereon could only be categorized as capital receipt.

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• 2023 (12) TMI 714
  Penalty u/s 271(1)(c) - defective notice - non specification of clear charge - Tribunal, had set aside the findings of CIT (Appeals) and directed the AO to delete the penalty as AO, while initiating penalty proceedings under Section 271(1)(c) of the Act, should have alluded to the limb under which penalty is proposed to be levied - HELD THAT:- AO should have stipulated as to whether the penalty was proposed to be imposed on the respondent/assessee for concealment of particulars of its income, or furnishing inaccurate particulars. Tribunal notes that a lack of clarity was apparent upon perusal of paragraph four (4) of the penalty order. According to us the view taken by the Tribunal is correct. The respondent/assessee was entitled to know, clearly, the charge levelled against it. As adverted to in the Unitech Reliable Projects Pvt. Ltd. [ 2023 (6) TMI 1219 - DELHI HIGH COURT] case, the imposition of a penalty entails several consequences. The AO is required to apply his mind to the material and indicate, clearly, to the assessee what is being put against him. In other words, which limb of Section 271(1)(c) of the Act is attracted in the given facts and circumstances of the case. It is our view, that this clarity would be necessary as the pecuniary burden that the assessee may be mulct with could vary, depending on the infraction committed by him. Thus, in the given case, where concealment has taken place, a heavier burden may be imposed, as compared to the situation where the assessee furnishes inaccurate particulars. We may also make it clear that there may be circumstances where both limbs are attracted. If that is the situation, the notice should allude to this aspect.No substantial question of law arises for our consideration.

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• 2023 (12) TMI 713
  Disallowance u/s 14A r.w.r. 8D - expenditure incurred on earning exempt income - mandation of recording satisfaction by AO - ITAT deleted addition on the basis that relevant investments are out of assessee s old and own interest free funds, which exceeded tax free investments - HELD THAT:- The language of Section 14A of the Act is plain and clear. Before invoking Rule 8D, the Assessing Officer is obliged to indicate that having regard to the accounts of the assessee, he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to the income which does not form part of the total income under the Act. To put it in other words, the condition precedent of recording the requisite satisfaction which is a safeguard provided in Section 14A should not be overlooked before going to Rule 8. In such circumstances we are not impressed by the submission canvassed on behalf of the Revenue that once there are mixed funds, Rule 8 would be attracted automatically. We are of the view that the ITAT rightly relied on the decision of the Bombay High Court in the case of CIT Vs. Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] Whether Tribunal is justified in upholding that the disallowance made under section 14A read with Rule 8D cannot exceed the exempt income, in the absence of any such restriction being there in the relevant section or rule? - The aforesaid second question is squarely covered by the decision of this Court in the case of Correctch Energy Pvt. Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] In our opinion, no error not to speak of any error of law could be said to have been committed by the ITAT in this regard MAT adjustment on account of disallowance u/s.14A - HEDL THAT:- We hold that no addition in the book profit would be made on the basis of calculations worked out under section 14A of the Act. We allow this ground of appeal in both the years and delete the additions Deduction u/s.80IA(4) - GEB supplied power to its consumers - Tribunal was of the opinion that the market value of the electricity supplied by the CPP Unit to the general unit would be the same being charged by GEB from the consumers - HELD THAT:- Under sub-Section(8) of Section 80IA of the Act, if it is found that where any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessee or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the eligible business and in either case the consideration for such transfer does not correspond to the market value of such goods as on the date of the transfer, then for the purposes of deduction under Section 80IA in case of the eligible business as if the transfer had been made at the market value of such goods or services. It is in this context that the question of substituting the actual consideration by the market value comes into picture. Characterization of income - income from realization of carbon credits - revenue or capital in nature - realization from carbon credits has been treated by the assessee itself as revenue income and offered to tax and in fact in actualities they are revenue receipt - HELD THAT:- This issue is squarely covered by decision M/s. Alembic Ltd. [ 2017 (9) TMI 189 - GUJARAT HIGH COURT] held as decided in Subhash Kabini Power Corporation Ltd. [ 2016 (5) TMI 793 - KARNATAKA HIGH COURT] and My Home Power Limited [ 2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] that receipts of carbon credit are in nature of revenue receipts. Following the decision of said two High Courts, this question is also not considered. Having considered the question of law and in light of the decision of the coordinate bench of this court which has been relied upon by the tribunal in the order under challenge, no substantial question of law arises for the consideration of this court - Revenue appeal dismissed.

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• 2023 (12) TMI 712
  Estimation of net profit - assessee is a civil contractor has declared the net profit @5.79% - AO had made additions under various heads but the ld. CIT(A) has observed that the books of accounts of the assessee deserves to be rejected and profits to be estimated @8% - HELD THAT:- We also notice that this Tribunal in the assessee s own case for Assessment Year 2011-12 2014-15 has decided the similar issue and sustained the addition @6.75%. Since the net profit @6.75% has been estimated by the Tribunal in the assessee s own case, we, therefore, respectfully following the same, uphold the finding of the ld. CIT(A) of rejecting the books results and estimate the net profit rate @ 6.75% for the year under appeal on the gross turnover and the addition is sustained only to the extent of the difference between the net profit rate of 6.75% estimated by us as against the net profit declared by the assessee in its income tax return. Accordingly, the assessee s appeal is partly allowed and the that of the revenue is dismissed for Assessment Year 2013-14. As far as Assessment Year 2015-16 is concerned, only the assessee is in appeal and the issue remains the same regarding the estimation of net profit where the assessee has challenged that the ld. CIT(A) has erred in estimating the net profit @8%. We considering our decision for Assessment Year 2013-14 as well as the decision of this Tribunal in the assessee s own case for Assessment Year 2011-12 and 2014-15, estimate the net profit for Assessment Year 2015-16 @6.75% and partly allow the appeal of the assessee.

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• 2023 (12) TMI 711
  Exemption u/s 11 - Claim denied on non-filing of Form 10B prior to furnishing return of income - assessee could not attend the communication due to IT-website technical glitches - HELD THAT:- Hon`ble Gujarat High Court in the case of Gujarat Oil Allied Industries,[ 1992 (9) TMI 67 - GUJARAT HIGH COURT] held that where an assessee could not file audit report along with return of income but filed it later before completion of assessment before the Assessing Officer, the assessee was entitled to claim deduction. We note that the law in this regard is settled that benefit of exemption under section 11 and 12 should not be denied merely on account of delay in furnishing the audit report, and it would be sufficient compliance, if the audit report is furnished at a later stage either before the assessing officer during the assessment proceedings or before the ld.CIT(A) in the appellate proceedings. Therefore, we state that assessee has filed Form No. 10B on 04.08.2022 (after filing return of income) but before the assessment/ intimation u/s 143(1) was made by the Department. The intimation/assessment order was framed under section 143(1) of the Act, on 23.08.2022, hence Form No. 10B was available before the AO/CPC, at the time making the assessment/processing the return of income of the assessee. The assessee could not attend the communication due to IT-website technical glitches, however has eventually filed the audit report in Form No 10B on 04.08.2022 and complied with the condition laid in section 12A(1)(b) so as to entitle for a claim of exemption envisaged under sections 11 and 12 of the Act, hence we delete the disallowances made by the AO and allow the appeal of the assessee.

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• 2023 (12) TMI 710
  Assessment of trust - Rejecting the claim of the appellant society u/s 11 and 12 as claimed in the return of income - Rectification of income tax return rejected - AR was candid enough to accept that mistake did occur in the ITR filed by the assessee in as much as the entire gross receipt was shown under the head income from business or profession but it was an inadvertent mistake committed by the ex-CA of the assessee -None-the-less it is also a fact which cannot be denied by the Revenue that it was shown in the return that the said gross receipt was also the aggregate of income referred to in section 11 and 12 and that the entire said amount was applied to charitable purposes in India during the previous year. HELD THAT:- Intimation under section 143(1) clearly reveals that the CPC ignored all other relevant information and proceeded to process the case by adopting the entire gross receipt as income of the assessee. We are of the view that even assuming that the case of the assessee falls u/s 143(1)(a)(ii) which is the view of the Ld. CIT(A), the provision of the First proviso to section 143(1)(a) has altogether been ignored by the CPC/AO/CIT(A) which provides that no such adjustment shall be made unless an intimation is given to the assessee of such adjustment either in writing or in electronic mode. It is not a matter of dispute that the assessee which is registered u/s 12AA of the Act has been enjoying the benefit of section 11 of the Act in preceding AYs 2011-12, 2012-13 and 2014-15 as also in succeeding AYs 2016-17, 2017-18 and 2018-19 which is obvious from the chart giving the status of scrutiny assessment under section 143(3) of the Act appearing at page 52 of the Paper Book. There is thus material on record indicative of the fact that the assessee is eligible for exemption of its income in the AY 2015-16 as well but its claim of exemption for the AY 2015-16 presently under consideration has not been examined by the Ld. AO/CIT(A). On the facts and in the circumstances of the assessee s case both the Ld. AR and the Ld. CIT-DR conceded that the matter be sent to the Ld. AO to verify the assessee s claim of exemption under section 11 and 12 based on its past history and the material on records and to decide the matter afresh. We, therefore, restore the matter back to the file of the Ld. AO for verification of the assessee s claim of exemption under section 11 and disposal afresh in accordance with law after allowing reasonable opportunity to the assessee to explain its case. Appeal of the assessee is treated as allowed for statistical purposes.

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• 2023 (12) TMI 709
  Order u/s 154 whereby interest granted u/s 244A reduced - reasons attributable to the assessee or not? - HELD THAT:- It is not in dispute that originally the return was processed by CPC and refund of Rs. 6,01,280/- including interest of Rs. 1,00,195/- was generated. The rectification order has been passed u/s 154 of the Act by the AO/CPC by reducing the interest amount to Rs. 47,595/-. It is the case of the Revenue that the delay of issuing of refund is due to the reason attributable to the deductor of the assessee, therefore, as per section 244A(2) assessee is not entitled for such period of 19 months. The amendment to the provisions of section 244A(2) of the Act has been carried out by inserting the word or the deductor, as the case may be on 01/04/2017 vide Finance Act, 2017, therefore, the said provisions of section 244A(2) of the Act is not applicable in the present case being A.Y 2013-14 and the ld. CIT(A) committed an error in observing that the Section 244A(2) of the Act is applicable to the case of the assessee. We deem it fit to restore the issue to the file of the AO to re-compute and grant interest in accordance with law by keeping in the mind that the amendment to the Section 244A (2) of the Act is not applicable for the year under consideration. Appeal filed by the assessee is partly allowed for statistical purposes.

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• 2023 (12) TMI 708
  LTCG - Exemption u/s 54 and 54EC - determination of holding period in the hands of the appellant - asset sold by the appellant can be treated as short-term or long-term capital asset - assessee has stated that the property as acquired through gift deed was inherited property and she has received from his father in law - claim denied as property in question is not a long term capital asset within the meaning of IT Act, 1961 and was not covered under the provision of clause (b) of Explanation 1 to section 2(42A) r.w.s. 49(1) - CIT(A) allowed exemption - HELD THAT:- Appellant acquired the property by way of gift. A gift is defined under the Transfer of Property Act, 1882 as the transfer of certain existing moveable or immovable property, made voluntary and without consideration, by one person, called the donor, to another, called the donee and accepted by or on behalf of the done. By implication, it follows that a gift deed is a document that evidences such a transfer and takes effect during the lifetime of the donor. The conclusion arrived at by the A.O that the gift was given by Sh. Kultar Singh without any consideration through his attorney i.e. Sh. Kawaljit Singh, is not inconsonance with facts of the case and is erroneous. Invocation of explanation (e) to Section 56(2)(vii) to the facts of case is also not the correct interpretation of law and has no bearing on the facts of the case. AO has not brought on record any document or evidence that would suggest that the General Power of Attorney was void or voidable. The legal validity of the said document, which was duly registered has remained outside the pale of doubt. Thus, by virtue of the GPA, absolute power of ownership has been vested in the donor. The power to gift is a consequential outcome of the said power. Gift deed was duly executed following legal procedures, including payment of applicable stamp duties. The said document remains a valid legal instrument, in the context of lack of any adverse inference brought on record by the Assessing Officer. Thus from the available documents, it is also, without any doubt that the donor and done are related, the appellant being the daughter-in-law of the donor. Therefore, in the absence of such adverse findings as enumerated in (a) to (c) of para 5.5 of will not be just and proper to arrive at conclusions, as has been done by the Assessing Officer. Assessing Officer s reference to explanation (e) to section 56(2)(vii) also appears to be based on erroneous reading of the provision. Extrapolating principles applicable under a particular head (Income from Other Sources) to another head (Capital Gains) does not have legal legs to stand on. Therefore, it can be concluded that the property was received by the appellant as a gift . The provision of subsection (1) of Section 49 of the Act is squarely applicable. Consequentially, the period of holding of the previous owner, as specified in clause (42A) of Section (2) of the Act will also apply. Accordingly, the exemption u/s 54 and 54EC of the Act cannot be denied to the appellant. We find that the Ld. CIT(A) has elaborately considered the legal position as well as factual aspects. DR also could not point out any infirmity in the same. Decided against revenue.

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• 2023 (12) TMI 707
  Rectification proceedings u/s 154 - Nature of land sold - capital gain arising from the sale of agricultural land - entitlement to exemption u/s 54B - apparent mistakes noticed by AO was that the assessee had claimed exemption u/s 54 of the Act but this Section relates to profit on sale of property used for residence and cannot apply on the case of the assessee where agricultural land has been sold -AO also observed that even Section 54F cannot be applied because the same pertains to capital gain on transfer of certain capital assets not to be charged in case of investment in residential house - HELD THAT:- So far as the finding of the lower authorities that the assessee did not provide this fact during the course of assessment proceedings, we note that during the course of rectification proceedings, though the same were initiated by the Assessing Officer but once certain facts were placed before the Assessing Officer during the course of such rectification proceedings, then he ought to have taken note of the same and should have dealt with the said contentions. It has been consistently held by the Hon ble Courts that no tax can be levied or collected except by the authority of law and that if the assessee by mistake or inadvertence or on account of ignorance included in his income any amount which is non-taxable or is not income within the contemplation of law, the assessee may bring the same to the notice of the Assessing Officer to which if the Assessing Officer is satisfied, he may grant the assessee necessary relief and refund the tax paid in excess. When the assessee had given sufficient documentary evidence during the course of the rectification proceedings that the agricultural land sold during the year do not fall under the category of capital asset u/s 2(14) of the Act and inadvertently the assessee has shown it as a capital asset in the Income tax return, therefore, the assessee deserves to succeed and we accordingly hold that the capital gain arising from the sale of agricultural land in question is exempt from tax. Since we have allowed this claim of the assessee that the agricultural land sold during the year is not a capital asset and gain arising from there is exempt from tax, the remaining grounds raised by the assessee becomes merely academic in nature, still we would like to take note of the fact that the assessee also deserves to succeed on the alternative ground that even if the agricultural land is considered as capital asset, even then the assessee who has sold agricultural land and has purchased the agricultural land within a period of two years, after the date of sale for a total purchase consideration of Rs. 97,55,000/-, the assessee is entitled for exemption u/s 54B of the Act for the total sum of Rs. 97,55,000/- or the long term capita gain arising from sale of agricultural land whichever is lower. Thus, the grounds raised by the assessee are allowed.

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• 2023 (12) TMI 706
  Non quoting of DIN on internal communications between the AO and Addl. Commissioner seeking approval u/s 153D - HELD THAT:- The CBDT Circular no. 19/2019 casts obligations that every income tax authority shall allot a new computer generated Document Identification Number (DIN)in respect of every communication by way of notice, order, letter or any correspondence issued by him to any other income tax authority or assessee or any other person and such number should be quoted thereon. The issue thus raised in the additional ground is thus no longer res integra . The Hon ble Delhi High Court in the case of CIT vs. Brandix Mauritius Holdings Ltd. [ 2023 (4) TMI 579 - DELHI HIGH COURT] clearly underscored the binding nature of CBDT Circular No.19/2019 dated 14.08.2019 and stated in unequivocal terms that the assessment order passed without DIN is unsustainable in law owning to failure of the Department to allocate DIN and such failure cannot be regarded as an error which can be corrected by taking recourse of section 292B of the Act. The Hon ble Delhi High Court explained the binding effect of CBDT Circular and held that in the light of CBDT Circular, any communication issued by any Income-tax Authority relating to assessment, appeals, orders, statutory or otherwise, explanations, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person on or after the first day of October, 2019 shall have no standing in law unless a computer generated Document Identification Number (DIN) has been allotted and is duly reflected in the body of such communication subject to exceptional circumstances referred to in para 3 of CBDT Circular. It is an admitted position that the approval granted u/s 153D by the Addl. CIT to the draft assessment order is without issuance of DIN. The approval under section 153D which is the fulcrum for passing final assessment order dated 19.02.2021 in question is thus apparently non-est in law in the absence of DIN allocated to such communication at all. The final assessment order so passed under s. 153A in question on the basis of such invalid and non-est approval under section 153D is thus without sanction of law. The assessment order dated 19.02.2021 passed u/s 153A is thus liable to be quashed at threshold. Similarly, notice of demand u/s 156 without DIN and on the basis of non-est assessment order is also to be reckoned as a nullity. Having held the assessment order passed is vitiated owning to non conformity with the CBDT Circular No.19 of 2019, we do not consider it necessary to go into other aspect of objections raised on behalf of the assessee in its main grounds of appeal and additional grounds. Assessee appeal allowed.

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• 2023 (12) TMI 705
  Addition u/s 56 - taxing the Interest amount granted by the Land Acquisition Officer u/s 28 of the Land Acquisition Act as Income from other sources - case was selected for scrutiny for the reason that gross receipt shown in schedule 0S of ITR is less than the receipts reported in 26AS u/s 193 and large agricultural income - HELD THAT:- In the present case, the applicability of the Hon ble Apex Court in case of Ghanshyam HUF [ 2009 (7) TMI 12 - SUPREME COURT] will not be applicable as the interest u/s . 28 is not on delayed payment but was enhanced compensation. But in present assessee s case, the interest has been granted by the Hon ble Principal Senior Civil Judge while awarding additional compensation to the assessee. Therefore, the decision of Hon ble Apex Court which is a three judge bench decision in case of Bikram Singh [ 1996 (9) TMI 6 - SUPREME COURT] will be applicable wherein it is clearly held that the interest was not intended to exclude the revenue receipt on interest on delayed payment of compensation from taxability. Hence, the appeal of the assessee is dismissed.

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• 2023 (12) TMI 704
  Computation of capital gains - FMV determination - resorting to section 50C - AO considering the valuation of the DVO as the fair market value of the property instead of the value shown by the assessee which is also the circle rate - difference of Fair Market Value of the property estimated by the Valuation Officer and the actual sale consideration and circle rate shown by the appellant - HELD THAT:- As in the case of PCIT Vs. Shanubhai M Patel [ 2016 (4) TMI 480 - GUJARAT HIGH COURT] held that where the assessee sold plot of land since the value declared by the assessee exceeded value adopted by the Stamp Valuation Officer there was no question of referring valuation of plot to Valuation Officer by the AO by way of a reference u/s 50C of the Act. In the case on hand the valuation as per Stamp Value Authorities is same or equal to the sale consideration received by the assessee. Provision of Sec. 50C sub-section (1) says if the sale consideration is less than the value adopted by the Stamp Valuation Authorities the value so adopted by the Stamp Valuation Authorities shall be deemed to be the full value consideration. Here in the case on hand the assessee has reported the sale consideration which is equal to the stamp valuation adopted by the Stamp Valuation Authorities in other words the circle rate. The sale consideration reported by the assessee is equal to the circle rate and not less than the circle rate. Therefore, following the decision of the Hon ble Gujarat High Court, we hold that when the sale consideration is more than or equal to the circle rate the reference made to Valuation Officer to find out fair market value of the property is not justified. Thus, we hold that the reference to Valuation Officer in the case of the assessee is bad in law. Since reference made to Valuation Officer was held to be bad in law the addition made to long term capital gains will not survive. Accordingly, the same is directed to be deleted. Appeal of the assessee is allowed.

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• 2023 (12) TMI 703
  Validity of TP order beyond period of limitation - HELD THAT:- TPO can pass an order u/s 92CA of the Act at any time before 60 days prior to the date on which period of limitation reformed to u/s 153 expires. Thus 60 days have to be counted prior to the date of last limitation u/s 153 Period of limitation for passing the assessment order as per Section 143(3) was 31/12/2019 and however, the extension of period of limitation u/s.92CA(3A) to pass the order by the ld. TPO expired on 31/10/2019 i.e. 60 days one day before 31/12/2019.We hold that transfer pricing order itself is barred by limitation. Once the ld. TPO s order is held to be nullity on the ground that it is barred by limitation, then draft assessment order could not have been passed in the case of the assessee because assessee would no longer treated as eligible assessee. Accordingly, we quash the final assessment order being barred by limitation and once the assessment is quashed then none of the additions are sustained. Accordingly, the appeal of the assessee is allowed.

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• 2023 (12) TMI 702
  Addition under the Head Income from Other Sources u/s 56(2)(viib) - excess amount per share paid as premium - DCF v/s NAV method for valuing shares - Justification in rejecting the declared value of the shares - Whether CIT (A) eared in holding that there is no case of application of Section 56(2)(viib) to the facts of appellant s case where pre-existing unsecured loans of partners/ shareholders were converted into equity shares at premium and the facts of the assessment order do not indicate any case of tax abuse involved in such share conversion? HELD THAT:- The forecasted results usually change because of some events and circumstances that do not occur as expected or are not anticipated; market conditions are changing rapidly due to fast changing technology and also due to changing Government policies. Actual results will, therefore, always differ from the forecast and sometimes the difference may be material. To put it differently, considering that the DCE Method is essentially based on projections (estimations), the projections cannot be compared with the actuals so as to expect the same figures as were projected. Accordingly, the projections under DCF method have to be scrutinised with the facts and data available on the date of valuation and not by comparison with the actuals. In that view of the matter, variation between the projections and the actual results achieved cannot be the basis for disregarding/rejecting the valuation as per DCF method. It is apparent that there is no case of application of Section 56(2)(viib) to the facts of appellant s case where pre-existing unsecured loans of partners/shareholders were converted into equity shares at premium and the facts of assessment order do not indicate any case of tax abuse involved in such share conversion. Even the AO s decision to substitute DCF method of share valuation by NAV method is not in accordance with the Rule 11UA of IT. Rules. Accordingly, addition u/s. 56(2)(viib) of the Act is hereby deleted. PCIT has observed that the Assessee had stated in its Reply that the valuation report had already been supplied to the A.O. and the fair market value of each share was arrived at Rs. 1,087/- as per the Valuation Report of the valuer; that this stand of the Assessee was not acceptable; that the fair market value of the shares, as per rules 11U and 11UA of the Rules, had been computed at Rs. 450/- per share; and that the share premium received by the Assessee in excess of the rate of Rs. 450/- per share had remained from being assessed at the hands of the Assessing Officer. The Id. PCIT, however, did not venture to elaborate as to how the determination of the fair market value of the shares, as arrived at Rs. 1.087/- per share by the Assessee, on the basis of the DCF Method and certified by the Assessee s Chartered Accountants, was not acceptable, remaining oblivious to the statutory mandatory option made available to the Assessee by the provisions of rule 11UA(2) of the Rules, laying down that the fair market value of unquoted shares shall be, as provided in the said rule, the value as determined either under clause (a), or clause (b) of the rule, that is, by invoking the Book Value (NAV) Method, or the Discounted Free Cash Flow (or DCF) Method, at the option of the Assessee. For the proposition that the FMV of a share determined as per the DCF method and duly supported by the Valuation Report of the ld. CIT(A) cannot be rejected merely on the ground that the valuation of the equity shares was based on projection of revenue which did not match with the actual reviews of subsequent years. Assessee followed the DCF Method for valuing the shares, whereas the Id. PCIT utilised the NAV Method to do so. This action of the Id. PCIT is in direct contravention of the provisions of Explanation (a) (i) to section 56(2)(vii) of the I.T. Act read with rule 11UA(2) (b) of the I.T. Rules. AO could not have changed the method of valuation opted by the Assessee, in view of the statutory mandate of rule 11UA(2) of the Rules. To similar effect, under mutatis-mutandis, similar is our order passed in the case of Apna Punjab Resorts Limited[ 2023 (3) TMI 553 - ITAT CHANDIGARH] . Accordingly, the grievance sought to be raised by the Department by way of its ground of appeal is found to be shorn of merit and it is rejected as such.

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• 2023 (12) TMI 701
  Validity of Intimation passed u/s 143(1) - as argued assessee was not given any statutory notice required as per proviso appended to section 143(1)(a) - assessee s claim of refund was reduced by making addition in the total income - HELD THAT:- We notice from the intimation order in Table-B that there is a mismatch of Rs. 2 only in the TDS claimed by the assessee with that of the 26AS report. Thus it appears that the assessee was not put to notice the disallowances proposed by CPC before initiating u/s. 143(1) proceedings. As per first proviso to section 143(1)(a), the total income or loss shall be computed after making following adjustments namely (i) arithmetical error in the return, (ii) incorrect claim which is apparent from any information in the return, then CPC is entitled to make adjustments as per 1st proviso of Section 143(1)(a) by giving an intimation to the assessee either in writing or in electronic mode before making such adjustments. In response to first proviso, when the assessee replies the same shall be considered before making any adjustments u/s. 143(1)(a) and in case, the assessee fails to response within 30 days of issue of such intimation, the CPC is empowered to make such adjustments. Here, in this case, the assessee was not given any intimation as per 1st proviso to section 143(1)(a) of the Act and CPC straight away made adjustments in 143(1) proceedings and communicated to the assessee by reducing the refund claimed by the assessee. Intimation passed u/s. 143(1) dated 15-07-2021 is violation of 1st proviso to section 143(1)(a) of the Act by not offering hearing to the assessee. Therefore the entire proceedings u/s. 143(1) is vitiated and invalid in law. Appeal filed by the Assessee is allowed.

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• 2023 (12) TMI 700
  Reopening of assessment u/s 147 against legal heirs of late assessee - whether the legal heirs also received any benefit or not as late Smt. Sita Badoliya[assessee] has not received any benefit from the transaction done by Shri Jethmal Binawara? - HELD THAT:- Since the issue of notice u/s 148 of the Act is already decided by the ld. CIT(A) by holding that the AO failed to bring on record any evidence whatsoever, which could even remotely suggest that late Smt. Sita has some benefit on account of transaction entered by late Shri Jethmal Binawara. This is as per the court order that the late Smt. Sita and her sister Smt. Sanjana only received Rs. 21,355/ which was equally divided between both of them. Nothing substantial has been received by the late Smt. Sita from the property of Shri Jethmal Binawara. No proper enquire was done at the assessment stage and the assessment has been made in a very causal manner without establishing that the assessee (Late Smt. Sita) was only beneficiary and as per provision of law AO cannot taxed the notional income in the hands of the assessee. The similar finding is confirmed by the ITAT, where in the Coordinate Bench in favour of the assessee (Late Smt. Sita) holding that the notice u/s 148 of the Act has not been served to the legal heirs of the deceased and the said defect is not curable. Therefore, even after taking on record the legal heirs of assessee (Late Smt. Sita) the moot question will remain same. Nothing to deviate from the finding of the coordinate bench already recorded and the revenue here also in a very causal approach not assisted to the bench and therefore, at this stage we record the legal heirs of late Smt. Sita and confirm the earlier order. Thus, the decision of the Bench taken vide order dated 19.03.2018 will not require any reconsideration. Even though after taking on record the legal heirs presently, as per direction of the Hon ble High Court. We do not see any scope of making any error in that finding on the judgment of the Coordinate Bench and in the light of fact as per direction of the Hon ble jurisdictional High Court the legal heirs are placed on record and the Bench do not want to go into reconsideration about the issue of notice u/s 148 of the Act.

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• 2023 (12) TMI 699
  Rectification of mistake u/s 154 - claim of exemption u/s 54F - Power to review own order - HELD THAT:- The claim is duly reflected in the return of income filed by the assessee. In the original assessment proceedings, the issue related to the claim made u/s 54F was raised vide order sheet entry dated 16.11.2015 a reply to this order sheet entry filed on 24.11.2015. Considering all these evidences placed on record, we are of the view that the claim of the assessee was very well considered in the proceedings u/s 143(3) completed on 15.01.2016. Thereafter invoking the provisions of section 154 of the Act to reconsider the claim of section 54F of the Act vide order passed u/s 154 of the Act dated 13.06.2018 is bad in law Thus, based on these conspectus of the case we are of the considered view that the action of the Assessing Officer passing an order u/s 154 of the Act is incorrect and bad in law. Thus we are of the view that under the law no one is permitted to review own order, the provision of section 154 of the Act does not permit to revisit the claim that has already been allowed. The Bench also noted that in this case the assessee was already confronted on the claim u/s 54F of the act and the same has been examined on its merit under the guise of section 154 of the Act the claim which has already been considered at length cannot be revised u/s 154 of the Act considering the arguments recorded hereinabove and discussion considering the various decision cited we quash the order passed u/s. 154 of the Act. Based on these observation ground No. 1 raised by the assessee is allowed.

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• 2023 (12) TMI 698
  Revision u/s 263 - unexplained cash deposit - original assessment order passed u/s. 144 challenged - HELD THAT:- A perusal of the order of the ld. Pr.CIT shows that the ld. Pr.CIT in his order has categorically mentioned that he has restored the matter to the AO to have a second look at the issue and draw appropriate conclusions. The requirement under the provisions of Section 263 of the Act is prejudicial and erroneous order . The ld. Pr.CIT has not shown how the original assessment order passed u/s. 144 of the Act was erroneous or prejudicial to the interest of revenue for the purpose of relooking at the issue. Therefore, the provisions of Section 263 of the Act cannot be invoked. Consequently, the order u/s. 263 of the Act passed by the ld. Pr.CIT stands quashed. Appeal of the assessee is allowed.

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• Customs

• 2023 (12) TMI 697
  Finalization of provisional assessment - release of Bank Guarantee which had been furnished by the petitioner awaiting finalization of the provisional assessment proceedings - HELD THAT:- The claim for interest as raised by the petitioner clearly merits acceptance. As it is found, the DRI had duly completed the COO Certificates verification exercise and had also shared the requisite results thereof with the respondents. Despite the above, the respondents failed to conclude the provisional assessment proceedings. The information in respect of the COO Certificate verification had been shared with the field authorities way back in 2016. There was thus no justification for the respondents having failed to render a closure to the proceedings at that stage itself. We were also not apprised of any other legal impediment that may have operated and restrained the respondents from finalizing the provisional assessment. It also becomes pertinent to note that the provisional assessment itself was initiated not on an allegation of any undervaluation or wrongful declaration of the value of goods, the same was founded solely on the opinion formed by the respondents that the COO Certificates merited verification. In view of the above, it is opined that the indolence exhibited by the respondents is rendered wholly arbitrary. The respondents are directed to release the BG and any other monies retained forthwith subject to whatever final orders that they may choose to pass while finalizing the provisional assessment proceedings - petition allowed.

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• 2023 (12) TMI 696
  100% EOU - Fixation of wastage norms for the downstream products of the Petitioners - seeking waiver of requirement of data certified by Excise or, in the alternative; direct the Ministry of Commerce to collect data afresh after affording reasonable time to the Petitioners to restart the process of production of downstream products - influence on the process of fixation of wastage norms - seeking to keep the Petitioners Settlement Application in abeyance till the fixation of wastage norms by the Respondent No. 2. HELD THAT:- The importance of fixation of the Wastage Norms has been highlighted by the respondents themselves when they state that the nature of the EOU Scheme necessitates the Government to closely monitor the consumption of input and the production process in the EOU Unit, and with this intent, the detailed guideline for determining the ratio of input to its output has been provided - Para 9.30(b) of the Handbook of Procedure also mandates that the Wastage Norms in respect of the items not covered by the Appendix 41 are to be fixed by the BOA. Para 6.8(e) of the Chapter 6 of the FTP 2004-2009 also states that with respect to the items not covered by the norms notified by the Duty Exemption Scheme, Development Commissioner may fix ad-hoc norms, which would be valid for a period of six months, and within this period, final norms shall be fixed by the BOA. It is apparent that the function and the duty of the BOA is to fix the Wastage Norms. The BOA cannot refuse to exercise this jurisdiction and this power merely because it is of the opinion that the product for which such norms are requested to be determined, would not be commercially viable, or due to the high quantity of wastage, such products should not be allowed in the EOU. The power vested in the BOA is coupled with a duty inasmuch as it is required for giving full effect of EOU Scheme, and without such norms, the Scheme itself would be difficult to implement. It is, therefore, mandatory for the BOA to fix the Wastage Norms, when requested or applied for - In the present case, the Norms Committee refused to determine the Wastage Norms on the ground that the products sought to be manufactured by the petitioner would result in high quantity of wastage of raw materials. The Norms Committee further opined that such activities would not be commercially viable and, in any case, should not be allowed in the EOU. Commercial viability - HELD THAT:- It is for the petitioner to decide whether the production of the products in question is commercially viable to it or not. The commercial viability of the products cannot be a ground for the BOA to refuse to exercise the jurisdiction and duty vested in it - Similarly, whether such products can be and should be allowed under EOU Scheme, is a matter of policy, which is to be determined by the concerned Ministry. The Impugned Report of the Norms Committee dated 08.05.2015 is set aside - the Committee shall re-consider and fix the Wastage Norms for the products applied for by the petitioner, in accordance with the law - petition disposed off.

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• 2023 (12) TMI 695
  Jurisdiction of tribunal to entertain appeal related to duty drawback - Validity of Notice U/S 128A(3) of the Customs Act, 1962 - recovery of Duty Drawback erroneously sanctioned and paid to the Firm alongwith interest - HELD THAT:- Chapter X of the Customs Act not only deals with the eligibility as to Drawback but also contains the provision for its recovery in case the Drawback has been paid erroneously. In our view, even though proviso (c) of Section 129A(1) of the Customs Act mentions the word payment , the same would also include the recovery of the Drawback. This is because whether it is the claim for payment or the claim of the Revenue for recovery, both would include an adjudication on merits, that is, the eligibility and entitlement of the assessee for the Duty Drawback on the exports made by it. It would be erroneous to accept that the entitlement of the Firm claiming payment of Drawback cannot be considered by the learned CESTAT, but the Revenue s demand for recovery of the erroneously paid Duty Drawback, can be considered by learned CESTAT. This would lead to a situation where if the Drawback is not fully sanctioned by the Revenue, and the Revenue later claims the refund of the partly paid Drawback, the assessee resisting the Revenue s claim for recovery of the part Drawback would have to appeal before the learned CESTAT, but claim payment of the remaining part of the Drawback before another authority. There is merit in the contention that the Revenue s appeal is grossly delayed. However, the principal controversy sought to be raised is regarding the jurisdiction of the learned CESTAT to entertain the Firm s appeal. Although, Revenue had not filed an appeal against the order dated 02.11.2018 within the stipulated time, the concerned authority has taken the steps for reviewing the consequential steps taken pursuant to the said order which is impugned in the said appeal. The issue whether the said order is valid is also sought to be raised in defence to the relief sought by the Firm in the present writ petition. In view of above, this Court considers it apposite to condone the delay in filing the appeal. In the peculiar facts of this case where the Revenue originally had not taken any objection on the appeal being heard by the learned CESTAT, and had also, following the order of the learned CESTAT, sanctioned refund of the Drawback, the Firm should not be left remediless - opportunity granted to the Firm to prefer a revision, under Section 129DD of the Customs Act, against the order dated 14.05.2018 passed by the Commissioner (Appeals). Petition disposed off.

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• 2023 (12) TMI 694
  Refund claim for differential CVD - Period of limitation - re-assessment/modification of Bills of Entry - refund can be claimed by the respondent on Bills of Entry amended under Section 149 of the Customs Act, 1962 or not - HELD THAT:- The issue is no longer res integra. The Principal Bench of this Tribunal in the respondent importer s own case PRINCIPAL COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS M/S LAVA INTERNATIONAL LIMITED [ 2023 (3) TMI 25 - CESTAT NEW DELHI] had considered these two issues in detail and held that It would be seen that the Bombay High Court held that the question of refund would arise only when the assessment order is rectified - the Commissioner (Appeals), therefore, committed no illegality in holding that the refund claims were not barred by time. It has also been brought to notice that the aforesaid order of the Tribunal has attained finality, as no appeal has been filed. Appeal dismissed.

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• 2023 (12) TMI 693
  Valuation - addition of royalty to value of the imported goods - Rule 10(1)(C) OF Customs Valuation Rules - Power of the Commissioner (Appeals) - HELD THAT:- The learned Commissioner (Appeals) vide the impugned order has concluded that going by the agreements, the payment of royalty can be certainly said to be not related to imports. Having come to such a conclusion, it is found that he has erred by still remanding the matter to the lower authority for a decision afresh instead of rejecting the departments appeal. He compounded his error by going on to mention that the scrutiny of cost structure of all the facilities from where the goods were imported was necessary to be done by the lower authority while allowing the appeal of the department. The Commissioner (Appeals) cannot examine and pronounce upon any issue beyond the factum of the appeal. It is imperative that all actions of public functionaries be guided by reason and not by whim or caprice - it is found that the directions given in the impugned order is improper and travels beyond the appeal. The issue of royalty not being related to the impugned goods during the said period has become final as no cross objections have been filed on the issue by Revenue. The portion of the impugned order giving directions to the original authority while remanding the matter is set aside - Appeal allowed.

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• 2023 (12) TMI 692
  Classification of imported goods - Kerosene - to be classified under CTH 2710 1990 of the Customs Tariff Act, 1975 or not - Power of commissioner (appeals) to remand back the case - HELD THAT:- Having disputed the classification, the Revenue approached an expert and obtained the expert s opinion, whereas the appellant, having filed its Bills-of-Entry, did not lead any evidence, but kept on raising objections after objections in the approach of the Department as well as the expert opinions. No affidavit is filed, nor did it file any iota of evidence in its support. Hence, going by the dictum of the Hon ble Apex Court in HINDUSTAN FERODO LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [ 1996 (12) TMI 49 - SUPREME COURT] , it is required to go by the only evidence available, that is, expert opinion of CRCL, New Delhi since, admittedly, the appellant did not lead any evidence. Classification, as it is understood, cannot be determined based only on arguments since arguments, howsoever forceful, cannot take the place of proof or substitute evidence. The Revenue in order to reach the conclusion as to the classification of the impugned goods, has placed reliance on the expert opinion and the same is not based on assumptions and presumptions and nor is it the personal view of the adjudicating authority. There are no piece of evidence to take a contrary view to the finding of the first appellate authority as to the classification of the imported goods as Superior Kerosene Oil by rejecting the uncorroborated classification as LAWS by the appellant - the Commissioner (Appeals) should have closed the case instead of remanding the matter back to the file of the original authority, which is against the amended provisions of Section 128A of the Customs Act, 1962, which has withdrawn the power of the Commissioner (Appeals) to remand the case for fresh adjudication except for those issues mentioned at Section 128A(3)(b), which does not cover the impugned issue. The order of the original authority is restored - Appeal dismissed.

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• 2023 (12) TMI 691
  Valuation of imported goods - used office furniture - rejection of declared value - enhancement of value - dispute is based on the Inspection Report of the Charted Engineer - HELD THAT:- The Inspection Report filed by the Chartered Engineer which is placed on record is perused. They said Chartered Engineer has not disputed that the goods in question were in fact used goods. At paragraph 2.6 of his report, the said engineer is giving an estimated new equipment value at the YOM; other than this, the said engineer has not considered any other similar goods which were imported at about the same time/date. Admittedly, the imported goods were used goods/equipment and not new equipment, as observed in the Inspection Report. Hence, the Inspection Report does not inspire any confidence as regards the valuation is concerned and hence the reliance placed on the same is not the correct position. Hence, the lower authority has clearly erred in solely relying on the said inspection report, which is of no evidentiary value. The said report is ignored, and consequently, the re-valuation as well, which is solely based on the said report - impugned order set aside - appeal allowed.

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• 2023 (12) TMI 690
  Concessional rate of Customs Duty to goods of Indonesian origin - benefit of notification and no. 46/2011 dated 01.06.2011 - certificate of origin rejected by the original adjudicating authority on the grounds that the said certificate of origin did not mention the details of the impugned imports - HELD THAT:- Notification No. 46/2011 grants special concession rate of custom duty to the goods originating from specified countries listed in appendix II of the said notification. The Appellant claimed to have imported 50,000/- MTs. of Indonesian origin coal by vessel MV. Jindal Varad to India. The bill of entry, the commercial invoice, the bill of lading and the certificate of origin all mentioned the name of vessel MV. Jindal Varad. It is noticed that the original adjudicating authority has pointed out that the invoice no. and date mentioned in the country of origin certificate does not match with the invoice number and date of the invoice presented by the importer. The certificate covers a quantity of 70,000 MTs. of steam coal of Indonesian origin consigned for from PT Yastra Energy Indonesia to Farlin Energy Commodities Dubai UAE. The number and date of invoice on the certificate produced by the Appellant as shown as (1) 0002455/BJM/2013 dt. 22.07.2013 whereas, the imports are covered under invoice no. FECFCUST/13-1029 dt. 11.08.2013. The said order of Commissioner (Appeal) is not a speaking order. He has not examined the reasons given by the Appellant in its appeal before Commissioner (Appeal). The impugned order is therefore set aside and the matter remanded to the Commissioner (Appeal) to gives specific findings on all the points raised by the Appellant before the Commissioner (Appeal) - Appeal allowed by way of remand.

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• 2023 (12) TMI 689
  Classification of imported goods - classifiable as part of vehicles or otherwise or not - HELD THAT:- In the case of SUZUKI MOTOR GUJARAT PVT LTD VERSUS C.C. -AHMEDABAD [ 2023 (5) TMI 618 - CESTAT AHMEDABAD] the Tribunal has observed The test of predominant use is incorporated in the set of test to be exercise before classification. In view of above, there are no conflict in the decision of Hon ble Apex Court cited by the Learned AR and the decision of the Tribunal in the appellant s own case. It is found that the test of predominant use is incorporated in the set of test to be exercise before classification. In view of above, follow the decision of Tribunal in the case of Suzuki Motor Gujarat Pvt. Ltd remand the matter to the Commissioner (Appeals) to decide in identical manner as the earlier remand order. Appeal allowed by way of remand.

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• Insolvency & Bankruptcy

• 2023 (12) TMI 688
  Rejection of Section 9 application - rejection on the ground of pre-existing dispute - Appellant challenging the order contended that the debt was acknowledged by the Corporate Debtor even after Demand Notice - HELD THAT:- From the materials which are brought on the record, the Adjudicating Authority has referred to letter dated 04.02.2021 issued on behalf of the Corporate Debtor to the Operational Creditor, where replying to the email dated 30.01.2021 from the Operational Creditor it was stated that there is no liability to pay. It was stated in the letter that no charge is payable by the Company on the bill which was raised by the Operational Creditor. The letter dated 04.02.2021 is at page 243 of the paper book. The Demand Notice was issued by the Operational Creditor on 08.02.2022 which Demand Notice was also replied on 18.02.2022 by the Corporate Debtor refuting the claim and the said notice dated 08.02.2022. The reply to notice dated 18.02.2022 is at page 249, where the Corporate Debtor has categorically stated that no amount is due. The letter dated 18.02.2022 is nothing but notice of dispute issued by the Corporate Debtor. The Adjudicating Authority has rejected the application on the ground of pre-existing dispute - thus, no error has been committed by the Adjudicating Authority. Coming to the submission of learned counsel for the Appellant that there are certain acknowledgements contained in interrogatory issued in a civil proceeding, when there is clear statement in letter dated 04.02.2021 and reply to Demand Notice dated 18.02.2022 denying the payment of dues raised by the Operational Creditor, there are no reason to accept the submission that debt was acknowledged. No error has been committed by the Adjudicating Authority by rejecting Section 9 application. There is no merit in the Appeal - Appeal is dismissed.

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• 2023 (12) TMI 687
  Admission of section 9 application - Insurance Company has made payment to the Operational Creditor of its claim - third party liability - Liability of Corporate debtor to discharge its debt - preexisting dispute between the parties - HELD THAT:- All relevant documents pertaining to debt and default committed by the Corporate Debtor has been mentioned. The contract between the Operational Creditor and the Insurer was third party contract with which Corporate Debtor was not concerned. The emails were already sent by the Operational Creditor informing the Corporate Debtor that if payments were not made, claim shall be lodged before the Insurer. Thus, the Agreement with the Insurer by the Operational Creditor was communicated to the Corporate Debtor and it cannot be accepted that contract of the Insurer was concealed by the Operational Creditor. The Hon ble Supreme Court in in Economic Transport Organisation v. Oriental Insurance Company Limited [ 2010 (2) TMI 1264 - SUPREME COURT] even held that in case a subrogation, rights of the assured was not put to an end and assured can sue the wrongdoer and recover the damages for the loss. The Hon ble Bombay High Court in Rojee-tasha Stampings Pvt. Ltd. v. POSCO-India Pune Processing Centre Pvt. Ltd. and Anr. [ 2018 (4) TMI 164 - BOMBAY HIGH COURT] after hearing the parties held that third party cannot take shelter and disown its liability of a debt payable to the Company on the basis that insurance transaction has taken place between Respondent and its Insurer. The Corporate Debtor cannot take benefit of the fact that Insurer had paid the claim to the Insured. By payment of the Insurance Company to the Operational Creditor of its claim, the Corporate Debtor cannot be absolved from its liability to discharge its operational debt - it is further noticed that Operational Creditor is under obligation to take proceeding to recover its dues and handover the amount to the Insurance Company and when Operational Creditor has filed Section 9 Application, it is not open for the Corporate Debtor to submit that Application deserves to be rejected, since the amount has been received by the Operational Creditor from the Insurance Company. Section 9 Application is fully maintainable and the fact that Insurance Company has made payment to the Operational Creditor of its claim, cannot be a ground to reject Section 9 Application. The Corporate Debtor is still liable to discharge its liability of debt. Preexisting dispute between the parties - HELD THAT:- When the Demand Notice was issued on 03.04.2019 by the Operational Creditor, it was thereafter on 06.04.2019 a reply email was sent by the Corporate Debtor raising all types of frivolous and moonshine defenses. In the reply, which was submitted by the Corporate Debtor, there is no mention of any correspondence between the parties prior to receipt of the Demand Notice. The facts as noted above, indicate that the dues were clearly acknowledged by the Corporate Debtor and several assurances were given for payment of 100% debt. For two years, assurances were given by the Corporate Debtor for clearing the entire outstanding, but only part payment was made on 01.08.2018 by the Corporate Debtor. Thus, the plea taken by the Corporate Debtor in its reply that there is pre-existing dispute is dishonest and moonshine plea. The goods having been received and amounts acknowledged, after two years, the Corporate Debtor cannot be allowed to say that there is pre-existing dispute for which there was no communication, although there were correspondence exchanged for long two years between the parties - Adjudicating Authority has rightly rejected the plea of pre-existing dispute raised on behalf of the Corporate Debtor. The appeal is dismissed.

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• 2023 (12) TMI 686
  Condonation of delay of 15 days in filing of the appeal - It is alleged that the impugned order was passed on 29.03.2023 and the appeal was filed on 11.05.2023 i.e. on the 45th day counted from the date when the order was passed - HELD THAT:- If the appeal is filed on 46th day then the application cannot be entertained by the Tribunal as it has been held that such delay cannot be condoned by resorting even to Article 142 of the Constitution of India. In such a scenario, when the timeline is so strict, it is always incumbent upon the person who wanted to challenge the order of the Adjudicating Authority before the Appellate Authority to remain vigilant regarding his rights to file the appeal. The legislature has provided only 30 days for this purpose and then granted 15 days window to file the appeal but by assigning a sufficient cause that too to the satisfaction of the Appellate Tribunal. In the present case, however, the sufficient cause is conspicuous by its absence as it would not be a sufficient cause to hold that the Appellant is a resident of Kerala and the appeal had to be filed at Chennai and the Advocate took time in drafting the appeal etc. There is no merit in the present application and the same is hereby dismissed.

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• PMLA

• 2023 (12) TMI 685
  Rejection of Bail application - Money Laundering - utilisation of proceeds of crime - scheduled offence or not - extortion racket - applicability of Section 45 of PMLA, being a lady - HELD THAT:- The object of the PMLA hardly needs to be delineated. The said Act has been enacted to prevent money laundering and to provide for confiscation of property derived from, or involved in, money laundering and for the matters connected therewith and incidental thereto. As per Section 2(1)(p), Money Laundering has the meaning assigned to it in Section 3. The offence of Money Laundering has been defined in Section 3, which is punishable under Section 4 of the said Act. Section 45 makes the offences under the PMLA to be cognizable and non bailable. As regards the twin conditions for the grant of bail contained in Section 45(1), it has been held by the Three-Judge Bench in VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. [ 2022 (7) TMI 1316 - SUPREME COURT] that the underlying principles and rigours of Section 45 of the Act must come into play and without exception ought to be reckoned to uphold the objectives of the Act, which is a special legislation providing for stringent regulatory measures for combating the menace of money laundering. Though the findings recorded by the Court while granting or refusing to grant bail would be tentative in nature, nonetheless the Court is expected to express prima facie opinion while granting or refusing to grant bail which would demonstrate an application of mind, particularly dealing with the serious economic offences. The evidence relating to strong relations between the Appellant and Mr. Suryakant Tiwari, between the Appellant and Mr. Manish Upadhyay, and between the Appellant and Mr. Anurag Chaurasia; the evidences of movement of funds acquired out of extortion syndicate run by Mr. Suryakant Tiwari to Manish Upadhyay, proxy of the appellant; the utilization of proceeds of crime and acquisition of properties by the appellant in the name of her mother Shanti Devi and cousin Mr. Anurag Chaurasia along with the details of the said properties etc. have been detailed in the said prosecution complaint, which leave no doubt in the mind of the Court that prima facie the appellant has been found involved in the commission of the offence of money laundering as defined in Section 3 of the said Act. Whether the appellant being a woman should be granted the benefit of the first proviso to Section 45 of the PMLA? - HELD THAT:- The use of the expression may be in the first proviso to Section 45 clearly indicates that the benefit of the said proviso to the category of persons mentioned therein may be extended at the discretion of the Court considering the facts and circumstances of each case, and could not be construed as a mandatory or obligatory on the part of the Court to release them. Similar benevolent provision for granting bail to the category of persons below the age of sixteen years, women, sick or infirm has been made in Section 437 Cr.P.C. and many other special enactments also, however by no stretch of imagination could such provision be construed as obligatory or mandatory in nature, otherwise all serious offences under such special Acts would be committed involving women and persons of tender age below 16 years. There is sufficient evidence collected by the respondent Enforcement Directorate to prima facie come to the conclusion that the appellant who was Deputy Secretary and OSD in the Office of the Chief Minister, was actively involved in the offence of Money Laundering as defined in Section 3 of the PMLA. As against that there is nothing on record to satisfy the conscience of the Court that the appellant is not guilty of the said offence and the special benefit as contemplated in the proviso to Section 45 should be granted to the appellant who is a lady. In the instant case, there is neither discharge nor acquittal nor quashing of the criminal case by the court of competent jurisdiction against Suryakant Tiwari in the predicate/ scheduled offence. In that view of the matter the Court does not find any merit in the instant appeal - Appeal dismissed.

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• Service Tax

• 2023 (12) TMI 684
  Valuation - inclusion of reimbursement of expenses - Demand of service tax by invoking the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act with interest under section 75 of the Finance Act and penalties under sections 77(1) and 78 of the Finance Act. Whether the Commissioner committed an error in confirming the demand of service tax when, according to the appellant, service tax had been paid on all the collections received during the relevant period? - HELD THAT:- The Commissioner failed to properly appreciate the nature of the refundable security deposits. The appellant was required to provide infrastructure to the customers, for which the appellant had taken premises on lease from third party suppliers. These suppliers had taken refundable security deposits from the appellant and the appellant recouped the refundable security deposits from the customers. This was a back to back arrangement. Under section 67(1) of the Finance Act the gross amount charged is for service provided or to be provided. The returnable security deposits are collected for business reasons by the service providers during the subsistence of the contract and they are refunded to the recipient when the contract is completed/terminated. This amount, therefore, cannot be for services and service tax would not be leviable - The submission advanced by the learned counsel for the appellant also deserves to be accepted. The amount collected as imprest from the customers is towards various expenditure incurred during the provision of services such as hotel, food and telephone bills. This expenditure or costs incurred by the service provider in the course of providing the taxable service cannot be considered as the gross amount charged by the service provider for such service provided by him, and accordingly not taxable under section 67 - it is not possible to sustain the demand confirmed by the Commissioner. The penalty and interest, therefore, cannot also be sustained. It would, therefore, not be necessary to examine the contention raised by the learned counsel for the appellant that the extended period of limitation could not have been invoked in the facts and circumstances of the case. The order dated 03.10.2022 passed by the Commissioner, therefore, cannot be sustained and is set aside - Appeal allowed.

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• 2023 (12) TMI 683
  CENVAT Credit - input service - GTA service, for delivery on FOR basis - Reliance on CA Certificate - Board Circular No. 97/8/2007 dated 23.08.2007 - HELD THAT:- In the instant case, in principle this Court agrees that credit is admissible if terms are FOR basis and goods are delivered to the buyer at the place of buyer rather than place of manufacture relying on the following the case of M/S SANGHI INDUSTRIES LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1488 - CESTAT AHMEDABAD] and M/S ULTRATECH CEMENT LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1487 - CESTAT AHMEDABAD] . This court finds that reliance on the Chartered Accountant certificate by the appellant which, inter-alia, gives opinion on legal issues like property getting appropriated/transferred, risk and loss in terms of insurance policy or that freight charges were not integral part of the goods are not the matters on which Chartered Accountant has expertise to pronounce. These issues, inter-alia, involve interpretation of law on the terms of contract. Without Chartered Accountant pronouncing on record his legal expertise such certificate lacks credence, as it is not based on accounts alone. Same is therefore, not acceptable. This court remands matter back to Commissioner (Appeals) with pronouncement that in case of FOR basis freight on road and till the time ownership and title gets passed to buyer, in principle is admissible - Appeal allowed by way of remand.

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• 2023 (12) TMI 682
  Recovery of CENVAT Credit alongwith interest and penalty - recovery sought on the ground of its erroneous availment - non-compliance of sub-Rule 3 of Rule 10 of CCR. Contention of the Department was that sub-Rule, 3 was not followed which permits transfer of CENVAT Credit only after verification of stock of inputs or capital goods which was to be transferred. HELD THAT:- From the discussion made by the Adjudicating Authority who gave account of each credit taken on input services in a table annexed to 11.3, it is very much clear that only on the credits accumulated from input services, transfer was effected and Rule 10(3) has not dealt with such a situation, since it deals with stock of inputs or the capital goods. However, going by sub-Rule-2 it is manifestly clear that entire CENVAT Credit lying unutilised in the account of the business unit is to be transferred to the new business unit and the same is fortified by the fact that sub-Rule-3 had not restricted availment of credits on input services which were only available with the transferor business unit - there are no irregularity in the order passed by the Adjudicating Authority and, therefore, the observation made by the Commissioner (Appeals) in para 15 of the order that Rule, 10(3) of the CENVAT Credit Rules, 2004 permits CENVAT Credit of inputs or capital goods alone to be transferred is not inconformity to the law. Judicial decision on this issue is consistent from CESTAT up to the level of Hon ble Apex Court that Rule, 10 does not require that Assessee can transfer the credit corresponding only to the quantum of inputs transferred to the new factory since it permits the Assessee to transfer the entire available credits alongwith inputs and capital goods in stock at the factory to the new location - reliance placed in COMMISSIONER VERSUS CESTAT [ 2009 (2) TMI 824 - SC ORDER] . In view of the consistent decisions of this Tribunal that has been affirmed by the Hon ble Supreme Court and in carrying forward the judicial precedent set on the issue and having regard to the fact that no stipulation is available under Rule, 10 for transfer of credit accumulated from input services. The order passed by the Commissioner of Customs, Central Excise GST (Appeals), Nagpur is hereby set aside - Appeal allowed.

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• 2023 (12) TMI 681
  Extended period of limitation - Levy of service tax - brokerage in connection with service of steam agent service - period April 2012 March 2013 - HELD THAT:- The demand is sustainable on merit. However, this tribunal while considering the overall issue and facts of the case for the earlier period set aside the demand for the extended period in the appellant s own case in INTERMARK SHIPPING AGENCIES PVT LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT [ 2023 (8) TMI 123 - CESTAT AHMEDABAD ]. From the above decision it can be seen that the tribunal is of the view that extended period cannot be invoked. The present case is on much better footing for the reason that the show cause notice dated 08.10.2013 was issued subsequent to the earlier show cause notice, therefore, not only on the fact but also on the principle laid down by the Hon ble Supreme Court in the case of Nizam Sugar [ 2006 (4) TMI 127 - SUPREME COURT] that suppression of fact cannot be invoked in respect of the subsequent show cause notice when on the same issue earlier show cause notice was issued. The demand for the extended period in the present appeal is not sustainable. However, demand for the normal period is sustainable - the impugned order is modified to the above extent - Appeal allowed in part.

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• 2023 (12) TMI 680
  Levy of service tax - activity of construction of Mechanised fertiliser handling and bagging facility on the land leased out - invocation of extended period of limitation - HELD THAT:- Admittedly, the Mechanized fertilizer handling and bagging facility have been constructed at berth No. 6 and its backup area of the Kakinada Deepwater Port. Admittedly, the construction of the said baggage handling facility have enhanced the capacity of the port, which shall further enhance the revenue from the operations in the port - it is further found that the agreement between KSPL and SCCPL provides to establish fertilizer and FRM handling system for unloading, bagging and rail/Road dispatch in the said port, for enhancing the port capacity with respect to fertilizer cargo. Further, both KSPL and SCCPL are obligated to market the said facility for attracting fertilizer cargo and also to jointly coordinate on matters pertaining to railway movement and allotment of the railway rakes in co-ordination with the Indian Railways - the revenue generated from the facility so created is also shareable by the port authority of the State government under the concessionaire agreement. Admittedly, the Appellants were awarded work by SCCPL for civil work concerning Mechanized fertilizer handling bagging facility. Extended period of Limitation - HELD THAT:- The extended period of limitation is not invokable by the Revenue as no sufficient evidence and grounds have been brought on record for invoking extended period. Admittedly, SCN dated 25.08.2018 has been issued after the end of 40 months, as calculated from April 2015. The normal limitation during the period was 30 months, as substituted for 18 months vide Finance Act, 2016. Accordingly, SCN is hit by limitation, as extended period is not available to the Revenue in the admitted facts and circumstances. Since, on the grounds of limitation itself, the SCN is not sustainable, the case on merit as to whether or not the Appellants were eligible for the benefit of Notification No.25/2012-ST, is not examined in the facts of the case. The impugned order set aside - appeal allowed.

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• 2023 (12) TMI 679
  Non-payment of service tax - reverse charge mechanism - While quantifying the demand, the abatement available has not been considered - revenue neutrality - HELD THAT:- The Tribunal in the case of ARANI AGRO OIL INDUSTRIES LTD. VERSUS COMMR. OF C. EX., VISAKHAPATNAM [ 2011 (1) TMI 715 - CESTAT, BANGALORE] has gone into this issue and has held the benefit is denied for the reason that declaration of GTA as regards not availing the Cenvat credit was not available on each consignment note. We find that there is no such condition in the notification. Notification benefit should be allowed also for the period after issue of Circular based on the consolidated declaration obtained from GTA. The Circular of CBEC cannot prescribe a condition not present in the Notification. In the circumstances, we find that the impugned order is not in accordance with law. Therefore, as per the ratio of this case law, the Appellant would be eligible for abatement of 75% of the total freight value. Accordingly, as contended by the Appellant, the total Service Tax payable would amount to Rs. 26,43,025/- after considering this abatement. There is no dispute that the Appellant has paid Rs. 20,39,182/- along with interest of Rs. 15,79,196/-. When the issue is that of Revenue neutrality, in such cases, the question of suppression does not arise and it is held that on this count the balance demand amount of Rs. 6,03,843/- is liable to be set aside. The appellant is eligible for 75% abatement while the demand is quantified - Service Tax of Rs. 20,26,194/- along with interest of Rs. 15,29,196/- is not being disputed by the appellant and hence the same is being taken as their part discharge of the net Service Tax liability of Rs. 26,43,025 - For the balance amount of Rs. 6,03,843/- we allow the Appeal in view of the Revenue Neutrality - interest and penalty confirmed in the OIO are set aside. Appeal disposed off.

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• 2023 (12) TMI 678
  Classification of service - renting of immovable property service or construction service? - sub-leasing the industrial lands allotted by Maharashtra Industrial Development Corporation (MIDC) to various customers - HELD THAT:- Under the provisions of Section 66E ibid, the service under the category of renting of immovable property has been considered as a declared service. Thus, any amount received towards rent for letting out the property will only be liable for payment of service tax and not otherwise. As per the contractual norms, the rent amount has been fixed, which the appellant is entitled to receive from the lessee for letting out the property, which had not been disputed by the department in the present case. One time premium received by the appellant cannot be equated with rent inasmuch as the said amount is payable by the lessee for obtaining lease of the immovable property and for various infrastructural facilities provided in that property. In other words, since such premium amount is not in the context with the occupation of the immovable property leased, the same shall not be treated as a consideration , for letting out the property. The issue arising out of the present dispute is no more res integra, in view of the order passed by this Tribunal, in the case of M/S. GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY VERSUS CCE ST, NOIDA [ 2014 (9) TMI 306 - CESTAT NEW DELHI] where it was held that Service Tax under Section 65(105)(zzzz) read with Section 65(90a) cannot be charged on the premium or salami paid by the lessee to the lessor for transfer of interest in the property from the lessor to the lessee as this amount is not for continued enjoyment of the property leased. There are no merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellant. Therefore, by setting aside the impugned order, the appeal is allowed in favour of the appellant.

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• 2023 (12) TMI 677
  Scope of SCN - dealing with an issue not raised in SCN - Non-payment of service tax - maintenance and repair services - manpower recruitment agency services - period pre and post to 01.06.2007 - invocation of extended period of limitation - HELD THAT:- A show cause notice is the foundation of any demand but the Commissioner (Appeals) proceeded to comment upon the order passed by the Joint Commissioner observing that the Joint Commissioner just took recourse to the show cause notice. The Commissioner (Appeals) could not have dealt with an issue not raised in the show cause notice. Period prior to 01.06.2007 - HELD THAT:- Once it was found as the fact that the nature of services provided by the appellant were works contract service and this service had not been carved out of the earlier entries relating to maintenance and repair services and manpower recruitment agency services, it has to be held that no service tax could have been demanded. In any case, the appellant had not rendered manpower recruitment services and, therefore, even otherwise, the demand could not have been confirmed under a different category. In fact, no reasons have been given by the Commissioner (Appeals) to confirm the demand, except stating that the show cause notice can be ignored. Period post 01.06.2007 - HELD THAT:- It is not in dispute that the appellant had rendered works contract and had also paid service tax. Without giving any reasons as to why service tax demanded under maintenance and repair services and manpower recruitment agency services was required to be confirmed, the Commissioner (Appeals) simply confirmed the demand holding that since the appellant had applied for registration, the demand against service tax was required to be confirmed. In any view of the matter, once the service tax is proposed under a particular category it cannot be confirmed under a different category. The order dated 24.10.2013 passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside - Appeal allowed.

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• 2023 (12) TMI 676
  Evasion of payment of service tax on 80% of the contract value considering the same as supply of material - period from 01.04.2012 to 30.06.2012 and from 01.07.2012 to 30.01.2014 - demand under works contract service. Period from 01.04.2012 to 30.06.2012 and from 01.07.2012 to 30.01.2014 - HELD THAT:- It is not in dispute that the service tax has been demanded on amount of Rs. 6,80,248/- which was received by the appellant on trading of goods. No service tax could have been levied. It also needs to be noted that the appellant discharged VAT liability on the aforesaid amount. Demand raised under works contract service - HELD THAT:- The works contract awarded to the appellant clearly mentions the value of material as 80% of the contract value and service portion as 20% of the contract value. The contracts awarded to the appellant are composite in nature as they involve transfer of material as well as rendering of service. Learned consultant for the appellant has placed reliance upon the decision of the Tribunal in the matter of the appellant in M/S. UNITED ELECTRICALS AND MECHANICAL WORKS VERSUS CST, DELHI [ 2017 (4) TMI 1133 - CESTAT NEW DELHI] . The Commissioner (Appeals) has distinguished this decision for the reason that the bifurcation of 80% and 20% was artificially created - it was held in the said case that We have perused a few work orders, which clearly stipulated that 80% of the value shown to have suffered VAT with reference to supply of materials. Considering the ratio followed in the decided cases cited above, in identical set of facts, we find that the impugned order is not sustainable. Accordingly, the same is set aside - The Commissioner (Appeals) was not justified in distinguishing the aforesaid decision of the Tribunal rendered in the case of the appellant. The order dated 06.06.2018 passed by the Commissioner (Appeals) is set aside except to the extent it has confirmed the demand of service tax on trade discount - Appeal allowed.

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• Central Excise

• 2023 (12) TMI 675
  Area based exemption - relevant date for commencement of commercial production to avail the benefit of notification - N/N. 50/2003-CE dated 10th June - it was held by Tribunal that The appellant has started commencement of the production before 31.10.2010 and therefore, eligible for area based exemption. HELD THAT:- There are no reason to interfere in the matter - appeal dismissed.

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• 2023 (12) TMI 674
  Refund of deposit made during investigation and penalty paid in compliance to Order-in-Original - refund was allowed but amount was not paid to the Appellant as being directed to be paid to the Consumer Welfare Funds - rejection of refund on the ground of unjust enrichment - HELD THAT:- This Provision has not stated anywhere that any document is required to be produced before the Assistant Commissioner or Deputy Commissioner of the Central Excise to pass the burden of unjust enrichment but to his satisfaction he call for and examine documents to arrive at a finding that such incident of duty was not passed on to any other person. Therefore, the general perception that burden of proof is on the assesse to establish that incidence of duty was not passed on to any other person is true to the extent that and in the case where allegation is made concerning passing of such duty incidence to any other persons, then only he would be in a position to falsify the same through related documents. For example, when a person is accused of committing murder of another person Named B then at least B should have been dead so as to allege A of culpable homicide. Therefore, the finding of the Refund Sanctioning Authority at para 21 of the Order-in- Original that Appellant failed to produced documentary proof for not having passed on the incidence of duty of Excise to any other person, is ill founded till there is an allegation based on record that duty has/might have passed to another person or any other person. It would also be erroneous on the part of Commissioner (Appeals) to refer to Para 17 of the Judgment of Hon ble Supreme Court passed in the case of UNION OF INDIA VERSUS SOLAR PESTICIDE PVT. LTD. [ 2000 (2) TMI 237 - SUPREME COURT ] where there is only reference of indirect passing of duty incidence and not burden of proof. Further straight away arriving at a conclusion that because of the amount fact that the amount is shown in the Balance Sheet as Excise Duty paid, incidence of duty was transferred and thereby Appellant would be unjustly enriched if amount is refunded to him/it is not sustainable in law and facts. Appellant is entitled to get refund of Rs.22,78,119/-, with applicable interest as per Section 11B of the Central Excise Act, 1994 and the Respondent-Department is directed to pay the same within three months of receipt of this order - Appeal allowed.

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• 2023 (12) TMI 673
  CENVAT credit - input service - clearing services - consultant engineering services - courier service - premium paid on insurance of bus / van / two wheelers - motor vehicle services rendered for servicing van - advertising services taken for purchase of land - business Auxiliary services - denial on the ground that this services are not in relation to manufacturing of goods - HELD THAT:- It is found that even though the activity related to business activity is removed appellant being a manufacturer all the activities right from procurement of the raw material, manufacture of goods and sale of the goods is used directly or indirectly, in or in relation to the over all manufacturing activity. Therefore, even though the specific entry that is activity related to business has been removed the services, which are otherwise required for the overall business activity of the manufacture of goods are admissible input service. In many judgments as cited by the learned Counsel even post 01.04.2011, the services have been held as admissible input services and credit has been allowed - reliance can be placed in RMZ INFOTECH PVT. LTD. VERSUS COMMR. OF CENTRAL TAX, BENGALURU EAST [ 2021 (11) TMI 1108 - CESTAT BANGALORE ], M/S. OLAM INFORMATION SERVICES PRIVATE LIMITED VERSUS COMMISSIONER OF G.S.T. AND CENTRAL EXCISE, CHENNAI [ 2022 (9) TMI 1156 - CESTAT CHENNAI ] and M/S. DEEPAK FERTILIZERS AND PETROCHEMICALS CORPORATION LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE [ 2013 (4) TMI 44 - BOMBAY HIGH COURT ]. Thus, all the services involved in the present appeal of the assessee have been held in one or more judgments as admissible input service and credit was allowed. Hence, the credit claimed by the assessee in their appeal is admissible, accordingly demand on those services is set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (12) TMI 728
  Time limit for finalising of redoing the assessment - issuance of notice after 12 years from the date of the order - compliance with the time prescribed under Section 17D of KGST Act - HELD THAT:- The limitation prescribed for passing the assessment/revised assessment would not be applicable to the facts of the present case inasmuch as the high Court had set aside the original assessment and remanded the matter back to assessing authority to redo the assessment. Therefore, the proposed assessment is neither the original assessment nor the revised assessment and the limitation prescribed for assessment and revised assessment would not be applicable to the facts of the case. The question whether on remand also the limitation period prescribed for revised assessment would be applicable does not call for consideration in the facts of the present case inasmuch as it is not known that when the petitioner had supplied the copy of the judgment passed by the high Court before the assessing authority. The final order yet to be passed in pursuance to the proposed assessment in Ext. P8. This Court had directed the petitioner to file reply to Ext. P8 proposed assessment order and the petitioner has not filed the reply. There are no substance to interfere in this writ petition at this stage - petition dismissed.

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• 2023 (12) TMI 672
  Constitutional validity of the definition of the term dealer as defined under Clause (j) of Sub-section (1) of Section 2 of the Delhi Value Added Tax Act, 2004 - Explanation to Sub-clause (vii) of Clause of Section 2(j) of the DVAT Act, inasmuch as it also includes any corporation or company engaged in commercial banking - HELD THAT:- In terms of Sub-section (2) of Section 3, VAT is payable at the rates as specified under Section 4 of the DVAT Act. Section 5 of the DVAT Act, explains the term taxable turnover as the turnover during the tax period subject to adjustments. Sections 6 and 7 of the DVAT Act contains provisions regarding sales that are exempted from tax and certain sales that are not liable to tax. Section 9 of the DVAT Act contains provisions regarding the tax credit. The adjustments of tax credit in essence encapsulates the VAT regime. The machinery provisions, subject to other provisions, restrict the aggregate VAT to the tax at the last point of taxation. Thus, the petitioner s contention that the Scheme of the Act does not entail a charge on sale of goods, is erroneous. The DVAT Act expressly provides for charge of tax on sale of goods subject to certain exemptions and adjustments provided for under the DVAT Act. The scheme of DVAT Act does provide for credit for the taxes already borne to avoid the cascading effect of tax on sale of goods. However, it would be erroneous to assume that charge of tax in not on the sale of goods. The contention that the petitioner is not liable to pay any tax on sale of goods on the ground that there is no value addition, is insubstantial. The petitioner s challenge to the constitutional validity of the definition of the dealer is founded on ex facie erroneous premise. The same is, accordingly, rejected. In HDFC Bank v. Commissioner of Value Added Tax, Delhi [ 2016 (10) TMI 1345 - DELHI HIGH COURT] , another Coordinate Bench of this Court had, following the decision of M/s Citi Bank v. Commissioner of Sales Tax M/s Citi Bank v. Commissioner of Sales Tax [ 2015 (12) TMI 1040 - DELHI HIGH COURT] , rejected an appeal against the decision of the VAT Tribunal holding that sale of such re-possessed vehicles was subject to the charge of VAT. The said two decisions cover the petitioner s challenge to the impugned notices demanding VAT, interest, and penalty under the DVAT Act. Petition dismissed.

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• 2023 (12) TMI 671
  Penalty order u/s 67(1) of the Kerala Value Added Tax Act, 2003 - turn over suppression - tax evasion - this Court in exercise of the power of judicial review under Article 226 of the Constitution of India can interfere order of penalty or not - HELD THAT:- It is well settled that the High Court, in exercise of power of judicial review, under Article 226 of the Constitution of India, would interfere with an order or the proceedings under a statute against which the statutory remedy of appeal etc. is provided only when the proceedings taken under provisions are ultravires, in violation of principles of natural justice, assumption of jurisdiction which is not otherwise vested in the authority or where there is infringement of fundamental rights or in clear evidence of abuse of process of law. It is also well settled that even when grounds on which the jurisdiction can be invoked by the High Court are present, it should be invoked sparingly and only when there is something which goes to the route of the matter and it would be injustice to the petitioner to relegate to alternate forum. From the facts, as narrated in the show cause notice and the order impugned, it is evident that the petitioner/assessee has not made true and correct disclosure, and there has been a pattern of untrue and incorrect returns for all the quarters for the year 2013-14 suppressing substantial volume of taxable contract receipts evading the tax. Therefore, there is little substance in the submission of the learned counsel for the petitioner that there was no deliberate suppression of the contract receipts as recorded in the impugned order - The assessment proceedings have also been completed under Section 25 of the Act for the year 2013- 2014 and a demand of Rs. 5,53,85,288/- has been issued against the petitioner. The petitioner has filed an appeal against the said order before the first appellate authority and paid 20% of the tax amount. The impugned order passed by respondent No. 1 is neither without jurisdiction nor in violation of the principles of natural justice as alleged and therefore, this Court would not like to exercise its jurisdiction under Article 226 of the Constitution of India. The petitioner s appeal against the assessment order is already pending and therefore, if the petitioner files appeal within a period of 15 days against the impugned penalty order Ext. P12 dated 30.11.2014, the appellate authority should consider the appeal on merits, without going into the question of limitation in accordance with law. Petition disposed off.

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• Indian Laws

• 2023 (12) TMI 670
  Dishonour of Cheque - validity of judgement of acquittal - examination of evidence of DW1 and DW2 which is in the form of affidavit - application filed under Section 391 of Cr.P.C - HELD THAT:- The appellate Court has accepted the defence set up by the accused and acquitted the accused. The evidence of DW1 and DW2 which is in the form of affidavit instead of examination-in-chief is not permissible under law, the same cannot be looked into. However, the appellate Court has not observed the same and passed the impugned judgment of acquittal which is not sustainable under law. On these grounds, it is just and proper to remand the case to the trial Court with a direction to provide an opportunity to the accused to adduce his evidence in accordance with law. Application filed under Section 391 of Cr.P.C - HELD THAT:- In the affidavit of the complainant he has stated that the appellate Court has allowed the appeal filed by the respondent solely on the ground that the report of the handwriting expert is not proved in accordance with law. In order to prove that particular handwriting expert report, the complainant has not examined the handwriting expert. As a matter of abundant caution, without prejudice to the appeal filed by the appellant before this Court for the purpose of proving the report of handwriting expert, the complainant had filed this present application - The respondent has not filed any objection to this application. Considering the facts and circumstances of the case since, this Court has opined that the trial Court has committed an error in receiving the defence evidence by way of affidavit, it is just and proper to provide an opportunity to the complainant to examine the handwriting expert as sought for in this application. Appeal allowed.

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• 2023 (12) TMI 669
  Dishonour of Cheque - insufficient funds - discharge of debt or not - apparent error or not, on the face of the record in the judgment of the Trial Court as well as the First Appellate Court in convicting the accused for the offence punishable under Section 138 of the Negotiable Instruments Act - HELD THAT:- In the instant case, the complainant has produced the cheque in question and it is marked as Ex.P1. The signature of the accused is also marked as Ex.P1(a). The bank endorsements are also marked as Exs.P2 and P3. On perusal of all these documents, it clearly establishes that the accused has not disputed the issuance of cheque and service of legal notice on him. As per the presumption available under the NI Act, the complainant has complied the legal requirements under Section 138 of the Act. Now, the burden shifts on the accused to disprove the case of the complainant. On perusal of the evidence on record, the accused has taken up the contention that the cheque was issued to one Rajesh Bhat for different transaction and for security of the said transaction, he had issued the cheque, but the complainant by misusing the same, presented the said cheque for encashment in the year 2010 by filling the contents of Ex.P1-cheque and thereby he misused the cheque and therefore, the accused has taken such contention - In the instant case, the complainant has proved that on the relevant date, he lent loan to the accused and in consideration thereof, the accused issued cheque Ex.P1 in favour of the complainant. Further the accused has not placed any material before the Court to prove under what circumstances he issued cheque in favour of the complainant. Further, the accused has taken up a contention that he discharged the loan of one Rajesh Bhat and he never called upon the said Rajesh Bhat to return the cheque in question, if he has discharged the loan in complete, further he also failed to call upon the complainant to return the cheque in question, as it was not issued to him. The burden lies on the accused to prove non- existence of consideration which would lead to the Court to disbelieve the non-existence of consideration either by direct evidence or by probable defence to show that the existence of consideration was improbable, doubtful or illegal, but the accused has not produced any kind of evidence to show that existence of consideration was improbable, doubtful or illegal. Therefore, Ex.P1-cheque was issued towards legally enforceable debt - When once issuance of cheque is proved, the presumption under Section 138 of N.I.Act would arise with regard to consideration. But the accused has not discharged the debt in question. Whether the accused has issued cheque for repayment of loan or as security or it was discharged prior to the current transaction, makes no difference under Section 138 of the N.I.Act. The legal consequence reamaining same without any distinction. The judgment of the Trial Court as well as the First Appellate Court is in accordance with law. The Trial Court as well as the First Appellate Court have passed well reasoned orders. Hence no interference is called for and there is no error on the face of the record - Revision petition dismissed.

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• 2023 (12) TMI 668
  Dishonour of Cheque - technically defective legal demand notice - no cause of action arises against the drawers of cheques - sufficient opportunity to a person who issues the cheque - HELD THAT:- Once a cheque is issued by a person, it must be honoured and if it is not honoured, the person is given an opportunity to pay the cheque amount by issuance of a notice and if he still does not pay, he is bound to face the criminal trial and consequences. It is seen in many cases that the petitioners with malafide intention and to prolong the litigation raise false and frivolous pleas and in some cases, the petitioners do have genuine defence, but instead of following due procedure of law, as provided under the NI Act and the Cr.PC, and further, by misreading of the provisions, such parties consider that the only option available to them is to approach the High Court and on this, the High Court is made to step into the shoes of the Metropolitan Magistrate and examine their defence first and exonerate them. The High Court cannot usurp the powers of the Metropolitan Magistrate and entertain a plea of accused, as to why he should not be tried under Section 138 of the NI Act. Sections 143 and 145 of the NI Act were enacted by the Parliament with the aim of expediting trial in such cases. The provisions of summary trial enable the respondent to lead defence evidence by way of affidavits and documents. Thus, an accused who considers that he has a tenable defence and the case against him was not maintainable, he can enter his plea on the very first day of his appearance and file an affidavit in his defence evidence and if he is so advised, he can also file an application for recalling any of the witnesses for cross-examination on the defence taken by him. In view of the procedure prescribed under the Cr.PC, if the accused appears after service of summons, the learned Metropolitan Magistrate shall ask him to furnish bail bond to ensure his appearance during trial and ask him to take notice under Section 251 Cr.PC and enter his plea of defence and fix the case for defence evidence, unless an application is made by an accused under Section 145(2) of NI Act for recalling a witness for cross-examination on plea of defence. If there is an application u/s 145(2) of N.I. Act for recalling a witness of complainant, the court shall decide the same, otherwise, it shall proceed to take defence evidence on record and allow cross examination of defence witnesses by complainant - Upon analyzing the provisions of the NI Act, it is clear that Section 138 of the Act spells out the ingredients of the offence as well as the conditions required to be fulfilled before initiating the prosecution. The parameters of the jurisdiction of the High Court, in exercising jurisdiction under Section 482 Cr.PC, are now almost well-settled. Although it has wide amplitude, but a great deal of caution is also required in its exercise. The requirement is, the application of well known legal principles involved in each and every matter. Adverting back to the facts of the present case, this Court does not find any material on record which can be stated to be of sterling and impeccable quality warranting invocation of the jurisdiction of this Court under Section 482 Cr.PC at this stage. Thus, no ground for quashing of the proceedings/complaint/order of cognizance/order of summoning dated 16.03.2023 against the petitioners from the Complaint Case No. C.C. N1 ACT 6887/2022 is made out - petition dismissed.

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