Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 24, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Tax Dispute Resolution: Utilize Statutory Remedies Before Knocking Judicial Doors.
Case-Laws - HC : The HC dismissed the petition on the ground that efficacious alternative statutory remedies of appeal were available to the petitioner. Freezing of the petitioner's bank account did not violate principles of natural justice as it would not affect the petitioner's ability to institute an appeal by making the pre-deposit. The HC relied on precedents like Oberoi Constructions Ltd and Greatship (India) Limited, which emphasized exhaustion of statutory appellate remedies before entertaining writ petitions, especially in cases involving factual inquiries or classification disputes. The HC noted the tendency to bypass statutory remedies and held that general averments cannot justify bypassing such remedies. The petition was dismissed, and the petitioner was relegated to the alternative remedy of appeal before the Appellate Authority.
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Impugned order for IGST on SEZ to DTA supply quashed; import by DTA unit liable for IGST/duties.
Case-Laws - HC : The HC quashed the order raising demand for IGST on goods cleared from SEZ to DTA. The petitioner was not required to pay IGST on such supply as it is treated as import for DTA unit which is liable to pay IGST and duties. The respondent failed to consider provisions of Section 74 requiring adjudication of show cause notice by considering reply and provisions of the Act. The attempt to justify the order based on Sections 37 and 39 was unacceptable. The impugned order lacked reasoning and was quashed.
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Tax refund due for zero-rated exports to be recalculated as per CBIC circular, hearing opportunity given.
Case-Laws - HC : Petition remanded to respondent-Authorities to recalculate and process petitioner's refund application for IGST on zero-rated supply as per CBIC Circular No. 197/09/2023-GST, providing opportunity of hearing to petitioner within 12 weeks from HC order receipt. Petition disposed.
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Taxable reimbursable expenses included in service valuation only from 14.05.2015.
Case-Laws - HC : The SC upheld the Delhi HC decision in Intercontinental Consultants & Technocrats Pvt. Ltd. vs. UOI, holding that reimbursable expenses incurred by the petitioner for providing taxable services under the Finance Act would form part of the valuation of taxable services for charging service tax only from 14.05.2015 by virtue of Section 67. Prior to this, such expenses could not be included. Consequently, the demand confirmed in the impugned order for the period before 14.05.2015 was quashed. The petition was allowed.
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Court rejects plea for refund; statutory appeal route available despite Tribunal vacancy.
Case-Laws - HC : Petitioner challenged appellate orders rejecting refund applications. HC held there are no grounds to invoke extraordinary jurisdiction under Article 226 as statutory appeal lies before Tribunal. Though Tribunal is not constituted, Central Government permitted filing appeal after its constitution. Since impugned orders relate to refund with no demand, pre-deposit of 20% tax demand is not required. Petition closed.
Income Tax
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Exempting income tax deduction on payments to Credit Guarantee Fund Trust for MSEs.
Notifications : No deduction of income-tax shall be made under Chapter XVII of the Income-tax Act, 1961 on any payment received by the Credit Guarantee Fund Trust for Micro and Small Enterprises as referred to in clause (46B) of section 10 of the said Act. This notification by the Central Government exercising powers u/s 197A(1F) shall come into force on its publication date in the Official Gazette.
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Local Committee's report not binding, no right to personal hearing before it; assessments subject to review by appellate authorities.
Case-Laws - HC : The HC held that the Local Committee constituted to identify high-pitched assessments is an administrative mechanism to advise the Principal Commissioner to prevent coercive recovery. It is not a quasi-judicial or statutory authority bound to provide an opportunity of personal hearing. The Committee's report is not binding on appellate/revisional authorities. The assessee's rights before appellate authorities remain unaffected, notwithstanding the Committee's decision. The HC concurred with judgments holding that no hearing is required to be granted by the Local Committee as per the Standard Operating Procedure. The assessment order itself envisages an opportunity of hearing by the Assessing Authority. Consequently, the HC found no merit in the petitioner's contentions.
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Designated Authority can't reopen tax settlement after issuing Form 5 certificate under DTVSV Act.
Case-Laws - HC : The HC held that once a certificate (Form No. 5) is issued u/s 5 of the DTVSV Act and the declarant deposits the determined amount, the Designated Authority cannot initiate any proceedings regarding the 'tax arrear' as the dispute stands settled. Issuance of a fresh Form No. 3 modifying the earlier one to reopen a concluded settlement is without authority of law. The impugned certificate dated 29.01.2021 was set aside.
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Export income deduction: Foreign exchange loss excluded; telecom expenses disallowed.
Case-Laws - HC : Deduction u/s 10A - loss on account of foreign exchange fluctuation while computing deductions: CIT(A) order against assessee attained finality as assessee did not challenge it. IT department's ground misconceived as it did not arise from ITAT order. Telecommunication expenditure excluded from export and total turnover for computing deduction u/s 10A as per SC judgment in CIT vs HCL Technologies Ltd, allowing exclusion of foreign exchange expenses for providing technical services outside India.
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Notice to reopen tax assessment quashed; no fresh material, merely a change of opinion.
Case-Laws - HC : The HC quashed the notice issued u/s 147 for reopening of assessment. There was no tangible material to form a belief of income escaping assessment. The reasons recorded merely reflected a change of opinion which is impermissible. All material facts were duly disclosed by the petitioner during the original assessment proceedings. The reopening notice was thus held to be invalid and set aside.
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Cash sales bills raised on different occasions can't be aggregated to allege Rs. 2 lakh cash receipt violation.
Case-Laws - AT : The ITAT upheld the CIT(A)'s order deleting the penalty levied by the AO u/s 271DA for alleged violation of Section 269ST. The ITAT observed that the AO had aggregated different cash sales bills raised at different times by different sales executives, without establishing that the bills were raised for sales to a single person exceeding Rs. 2 lakhs in a day. The ITAT held that Section 269ST prohibits receiving cash of Rs. 2 lakhs or more from a single person in a single day, and the violation is connected with the payer's identity, which the AO failed to conclusively prove. The mere presumption of aggregate cash sales exceeding Rs. 2 lakhs was insufficient to establish a violation.
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Startup's DCF method upheld for share valuation, AO's rejection overruled, premium over face value not taxable under Sec 68.
Case-Laws - AT : The ITAT held that the assessee, a start-up company with no past financials, had correctly adopted the Discounted Cash Flow (DCF) method for valuation of unquoted shares u/r 11UA. The rejection of the DCF method by the AO based on disclaimers by the valuer and comparison with actual performance was improper. The ITAT directed the AO to accept the valuation provided by the assessee and delete the additions proposed u/s 56(2)(viib). Additionally, the ITAT held that since the shares were issued to existing shareholders at a premium, the AO cannot invoke Section 68 for the share issue at Rs. 1. Consequently, the grounds raised by the assessee were allowed.
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Taxpayer wins exemption u/s 10(34A) & concessional LTCG tax rate; Revenue appeal dismissed.
Case-Laws - AT : The ITAT upheld the CIT(A)'s order allowing the assessee's claim for exemption u/s 10(34A) and taxation of Long Term Capital Gains (LTCG) at the special rate u/s 112. The ITAT rejected the AO's disallowance of exemption claimed u/s 10(34A) and treatment of LTCG as income from other sources, denying the benefit of Section 112. The ITAT found no infirmity in the CIT(A)'s well-reasoned order based on facts and law, concluding that the assessee met the conditions for Section 10(34A) exemption and was entitled to the concessional tax rate on LTCG u/s 112. The Revenue's appeal was dismissed on both counts.
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Taxpayer gets tax relief for building house, buying farm & loan from brother accepted.
Case-Laws - AT : Assessee was granted deduction u/s 54F as evidence of construction of residential house worth Rs. 1.25 crore on ancestral land using funds from sale of agricultural land was accepted by ITAT. Benefit u/s 54B for purchase of agricultural land worth Rs. 3.08 crore was also allowed as sale deeds were furnished. Addition of Rs. 40 lakh as unexplained cash credit on account of loan from brother was deleted as affidavit, cash flow statement and sale agreement substantiated the transaction.
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Crypto gains taxed as long-term capital gains, 54F deduction allowed if held >36 months.
Case-Laws - AT : Gain on sale of crypto currency (bitcoin) prior to AY 2022-23 is chargeable to tax as capital gain. Deduction u/s 54F is allowed since assessee held crypto currency for more than 36 months. ITAT allowed the assessee's grounds - income on sale of crypto currency is taxable as long-term capital gain and deduction u/s 54F of the IT Act is applicable.
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Manufacturers' association granted tax exemption for promoting trade interests.
Case-Laws - AT : ITAT allowed the appeal and directed to grant registration u/s 12AB. It held that the assessee association's objects of organizing and uniting manufacturers of steel re-rollers and dealing with matters of common trade interest would be treated as charitable purpose u/s 2(15), as the benefit is being given to a section of people. The ITAT relied on the Supreme Court's decision in Bar Council of Maharashtra case to hold that trading bodies promoting and protecting industry are eligible for exemption.
Customs
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Customs Eases Storage Insurance & Bonding Requirements for Authorized Logistics Operators.
Circulars : The Public Notice clarifies the following regarding Customs Cargo Service Providers (CCSPs) and Authorized Economic Operators - Logistics Operators (AEO-LOs): Regulation 5(1)(iii) of Handling of Cargo in Customs Areas Regulations (HCCAR), 2009 has been amended. CCSPs now need to provide insurance equal to the average value of goods likely stored for 5 days, as specified by the Commissioner based on goods already insured by importers/exporters. Regulation 5(3) has been amended to reduce the custodian bond value furnished by CCSPs for imported/exported goods to cover 5 days of storage instead of 10 days. Regulation 10 has been amended making the approval for AEO-LO CCSPs as custodians valid till their AEO authorization remains valid and not suspended/revoked under Regulation 12. The custodian bond executed by AEO-LO CCSPs will have the same validity as their Regulation 10 approval.
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Digitization of Customs Bonded Warehouse Procedures via ICEGATE.
Circulars : The CBIC introduced a Warehouse Module on ICEGATE to digitize customs bonded warehouse procedures. It enables online filing for obtaining warehouse licenses, submitting requests for transfer of warehoused goods, and uploading monthly returns. The applicant can submit the license application online which will be processed by the proper customs officer. Requests for transfer of warehoused goods between persons/warehouses can also be filed and processed online. Monthly returns in Forms A and B can be uploaded as scanned PDFs, with web-form filing to be enabled later. The module aims to facilitate ease of doing business for customs bonded warehouses.
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Duty exemption for unmarked pallets from UAE upheld despite misdeclaration.
Case-Laws - AT : CESTAT upheld the Commissioner's order exempting 19 pallets from anti-dumping duty as their Chinese/Taiwanese origin was not proved. While misdeclaration was established for enhancing value and imposing penalty, the burden to prove Taiwanese origin for remaining pallets could not be shifted to the importer solely based on allegations in the show cause notice. As the consignment emanated from a third country, UAE, the 19 unmarked pallets could not be presumed as of Taiwanese origin without evidence. The consequences of misdeclaration cannot extend to reversing statutory rules of evidence beyond valuation and limitation period.
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Customs appeal: Gold jewelry confiscation set aside, redemption allowed on fine payment.
Case-Laws - AT : The CESTAT held that it had jurisdiction to hear the appeal concerning confiscation of gold jewelry, despite arguments of maintainability. While confiscation u/ss 77, 111(l) and 111(m) of the Customs Act for non-declaration was valid, absolute confiscation was set aside. The appellant was allowed to redeem the gold jewelry on payment of Rs. 50,000 as fine, and the penalty was reduced to Rs. 50,000. The CESTAT found no justification for absolute confiscation, as the government does not survive on confiscatory proceeds, and wrongful import could be addressed by monetary measures. The appeal was disposed of accordingly.
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Imported goods valuation: Freight/insurance costs not addable, MRP inapplicable for bulk liquid imports.
Case-Laws - AT : Appellant provided documentary evidence that freight and insurance was borne by foreign exporter, establishing goods were exported on CIF basis. CESTAT held enhancement of assessable value by adding freight and insurance by revenue is legally unsustainable. Goods meant for bulk supply to Jharkhand government hospitals, not for retail sale. Notification invoked by revenue for MRP-based assessment not applicable as goods imported in liquid form, not bars/cakes/moulded shapes. MRP-based valuation u/s 4A of Central Excise Act cannot be used to calculate CVD. Revenue failed to bring new evidence of suppression/misstatement to evade duty, hence extended period of limitation unsustainable. Appeal allowed on merits and limitation.
DGFT
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Govt. delays enhanced eCoO 2.0 system launch for Preferential Certificates, mandatory e-filing of Non-Preferential CoO from Jan 2025. .0.
Circulars : DGFT rescheduled launch of enhanced Preferential eCoO 2.0 system to 17th January 2025, postponed from earlier announced 21st December 2024 date. Mandatory electronic filing of Non-Preferential CoO on eCoO 2.0 Platform from 1st January 2025 per earlier Trade Notice No. 36/2023-2024.
FEMA
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BCCI not a 'State', no writ for FEMA penalty indemnity. Petition dismissed with Rs.1 lakh costs for Tata Memorial Hospital.
Case-Laws - HC : Petition dismissed. HC held BCCI is not a 'State' under Article 12 of Constitution. No writ can be issued against BCCI to indemnify petitioner for Rs.10.65 crore penalty imposed by ED under FEMA. Petition frivolous, dismissed with Rs.1 lakh costs payable to Tata Memorial Hospital.
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Export proceeds repatriation default: Penalty upheld for non-compliance with RBI write-off conditions.
Case-Laws - HC : The HC dismissed the appeals challenging the penalty imposed for failure to take reasonable steps for repatriation of export proceeds of US$ 5,36,759.50 for goods exported in 1997-98. The ground of limitation was rejected as the show cause notice was issued within the prescribed period and the appellants had submitted a reply. On merits, the Reserve Bank of India's write-off was subject to return of export incentives availed, which the appellants failed to comply with, thereby contravening Sections 18(2) and 18(3) of the Act. The Appellate Tribunal had reasonably reduced the penalty to 1/3rd after due consideration of the appellants' contentions. The HC found no merit to interfere with the reasoned orders.
Corporate Law
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Flyway Toll Fee Controversy: Commuter Rights Upheld Against Unilateral Concession.
Case-Laws - SC : The SC held that Respondent No. 1, a society registered to promote welfare of NOIDA residents, had locus standi to file the writ petition challenging imposition of toll/user fees by NTBCL on DND Flyway. The delay was condoned as commuters trusted NOIDA to protect their interests initially. Judicial intervention was justified given the public interest involved. Selection of NTBCL without bidding violated Article 14. NOIDA lacked real choice in extending the concession period due to unreasonably escalated project cost calculated to make repayment impossible. NTBCL recovered project cost and profits through illegal toll/fees. No opinion on outdoor advertisement dues as it was outside the scope of appeal. The HC judgment restraining toll/fees was upheld.
IBC
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Appellants classified as financial creditors can claim despite moratorium; prohibited actions under IBC invalid.
Case-Laws - SC : DoH to continue as valid but prohibited actions u/s 14 cannot be done. Appellants classified as financial creditors u/s 5(7) of IBC entitled to claim despite moratorium. Cause of action irrelevant for claim definition. CoC approval of resolution plan subject to pending applications. NCLAT order set aside, NCLT order upholding appellants' claims restored.
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After resolution plan approval, no new claims allowed; binding on all stakeholders. Adjudicating Authority can't modify unilaterally.
Case-Laws - AT : The NCLAT held that after approval of a resolution plan by the Adjudicating Authority, it becomes binding on the corporate debtor, employees, creditors, guarantors and stakeholders. The plan cannot be modified by introducing new claims, as it would prejudice the successful resolution applicant (SRA) and create uncertainty. The Adjudicating Authority lacks power to modify an approved plan unilaterally and can only suggest modifications to the Committee of Creditors (CoC). As the respondent did not challenge the plan within the prescribed time, it attained finality. The SRA made payments per the approved plan, and no non-compliance was attributed to it. Thus, the Adjudicating Authority exceeded jurisdiction by reviving and directing payment of the respondent's gratuity claims, and the NCLAT set aside those orders.
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Insolvency law: Withdrawal of CIRP by non-applicants not allowed; inherent powers for malicious cases.
Case-Laws - AT : The NCLAT upheld the Adjudicating Authority's rejection of the appellant's prayer to recall the admission order. Regarding withdrawal of CIRP u/s 12A of the IBC, the NCLAT held that since the Section 7 application was filed by respondents 6-9, and not by the applicants who initiated it, compliance with Section 12A read with Regulation 30A cannot be made, and withdrawal u/s 12A is not permissible. However, the NCLAT observed that if the Adjudicating Authority concludes that the ingredients of Section 65 are attracted (application filed with fraudulent/malicious intent), it can exercise its inherent jurisdiction to close the CIRP proceedings. Relying on the Supreme Court's judgment in SBI vs. Consortium of Murari Lal Jalan & Florian Fritsch, the NCLAT held that the Adjudicating Authority can exercise inherent powers in appropriate cases. Consequently, the appeal was disposed of.
Indian Laws
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Confession of co-accused alone insufficient to frame charges: SC.
Case-Laws - SC : The SC allowed the appeal and set aside the dismissal of the application for discharge u/s 227 CrPC. The sole material against the appellant was the confession statement of a co-accused, which cannot be treated as admissible evidence against him at the trial stage. When there is no material that could translate into evidence, making the person stand trial would be a miscarriage of justice. The alleged offence was consumption of narcotics under the NDPS Act, but no medical examination was conducted on the appellant, and the complaint witness merely smelt the accused. In the absence of any other incriminating material, the confession of a co-accused alone cannot justify framing charges against the appellant.
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Oral gift of immovable property valid despite donor's demise shortly after.
Case-Laws - SC : The SC held that the oral gift executed in 1953 was valid. The gift was for past services rendered and did not impose any future obligation on the donees. All conditions for a valid gift under the Transfer of Property Act, 1882 (TPA) were met - the subject matter was immovable property, there was no consideration, and the gift was accepted by the donees upon taking possession. Section 127 of TPA permitting onerous gifts was not applicable. The donor's demise shortly after the gift precluded any further services by the donees. The plaintiffs failed to substantiate their claim of denial of services. Consequently, the SC dismissed the appeal against the impugned judgment upholding the validity of the gift.
PMLA
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Money laundering case: Property attachment during trial is criminal in nature.
Case-Laws - HC : The HC held that since proceedings for attachment and adjudication by the Adjudicating Authority are in aid of trial of money laundering offence under PMLA, an appeal against an order passed by the Authority before the Appellate Tribunal is liable to be entertained on the criminal side. The ultimate test is whether attachment of property was on account of registration of PMLA offence, and what is to be done with the property upon culmination of trial. Since the result of attachment depends on the result of trial of offence involving criminal element, the appeal lies on criminal side.
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Property attachment upheld despite Covid delays; joint ownership claim rejected due to lack of evidence.
Case-Laws - AT : The AT dismissed the appeal challenging the provisional attachment order under the Prevention of Money Laundering Act, 2002. It held that the confirmation of the order beyond 180 days did not result in its lapse, considering the Covid-19 period and the Supreme Court's extension. The AT also rejected the ground that the attached property being joint property without notice to the joint holder invalidated the order, as there was no material to show it was joint property, and the appeal was not preferred by any joint holder. Thus, no interference was warranted in the impugned order.
SEBI
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Listed cos' key compliance rules consolidated - SEBI Master Circular on LODR Regulations.
Circulars : SEBI issued a Master Circular consolidating all relevant circulars issued till September 30, 2024 on compliance with SEBI (LODR) Regulations, 2015 by listed entities. It supersedes the previous Master Circular dated July 11, 2023. The circular provides a framework for compliance with various LODR obligations. Certain previous circulars were rescinded, with provisions for continuity. Stock exchanges, depositories and listed entities are required to comply with the circular.
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AMCs need to upload draft SIDs for only 8 days for public comments before launching new MF schemes.
Circulars : SEBI has modified the requirement for AMCs to upload draft Scheme Information Documents (SIDs) on SEBI's website. Previously, draft SIDs had to be uploaded for 21 working days to receive public comments. Now, SIDs on which SEBI has issued observations must be uploaded for at least 8 working days for public comments. After this, AMCs can launch the scheme and file final offer documents as per existing regulations. The relevant clauses in SEBI's Master Circular on Mutual Funds have been amended accordingly. This change streamlines the process for launching new mutual fund schemes.
VAT
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Sale of railway sleepers by manufacturer deemed regular trade, not a works contract.
Case-Laws - HC : Petitioner regularly manufactures PSC sleepers supplied to Indian Railways and other dealers. Though made to Railways' specifications, a significant factor, HC held supply not a works contract but sale, being non-exclusive and part of regular manufacturing. Allowed writ petition, set aside assessment order dated 28.05.2009.
Service Tax
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HC strikes down Service Tax adjudication notice, cites unreasonable 9-year delay & time bar u/s 73(4B).
Case-Laws - HC : The HC quashed the impugned hearing notice dated 18.09.2024 issued by respondent no. 5. Reinitiation of adjudication proceedings after a gap of nine years is time-barred u/s 73(4B) of the Finance Act. The delay in not concluding the hearing qua the impugned show cause notice dated 21.04.2015 within the stipulated time period is unreasonable. The pendency of an appeal in another case on an identical issue before the CESTAT cannot justify keeping the present proceedings in abeyance. The HC held that Section 73(4B) requires proceedings to be concluded within six months/one year, and extending the same to nine years in the given facts is unreasonable. The petition is disposed of.
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Mining firm's service agreement taxed as "Mining Service" under tax laws, not "Business Support.
Case-Laws - AT : The CESTAT held that the agreement between the appellant and M/s GG was a service agreement and not a partnership agreement. The nature of service provided by the appellant to M/s GG was rightly classified as 'Mining Service' u/s 65(105)(zzzh) of the Finance Act, 1994, and not as 'Business Support Service'. The invocation of the extended period of limitation was justified as the appellant did not disclose all relevant facts to the department. Consequently, the appellant was liable to pay Service Tax on the 'Mining Services' provided to M/s GG. The appeal was dismissed.
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Trade body's seminars/workshops exempted from service tax under mutuality principle before July 2012.
Case-Laws - AT : The appellant, an industry-specific body registered under the Trade Union Act, 1926, conducted seminars and workshops for its members. The CESTAT held that the appellant was engaged in Club or Association services, exempt from service tax under the principle of mutuality. Relying on Supreme Court decisions, the CESTAT ruled that the appellant, being constituted under law, was not included in the service tax net for Club or Association services prior to July 1, 2012. Consequently, the delegation fees charged by the appellant for seminars/workshops did not attract service tax under Convention Services. The demand for service tax was set aside, and the appeal was allowed.
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Activity of processing raw materials into new products deemed manufacturing, not job work service.
Case-Laws - AT : The CESTAT held that the appellants' activity of processing raw materials/forged blastings received from M/s. Varroc Engineering Pvt. Ltd. into 'Gear 4th Platina' amounted to manufacture u/s 2(f) of the Central Excise Act. The processes undertaken imparted a lasting change, resulting in a new product with a distinct identity. Consequently, the demand of service tax alleging the job work to be Business Auxiliary Service was set aside. The CESTAT further held that there was no suppression of facts or intention to evade tax payment by the appellants, as their activity did not attract service tax liability. Thus, invoking the extended period of limitation was incorrect. The appeal was allowed, and the impugned order was set aside.
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Outbound tours exempt from tax, domestic tours taxable - CESTAT ruling on tour operator's service tax liability.
Case-Laws - AT : Appellant not liable to pay tax on outbound tours irrespective of service recipient's location as per Rule 3(2) of Export of Service Rules, 2005 and Notification No. 09/2005. Liable to pay service tax on domestic outbound tours as per Section 67 of Finance Act. Not liable for service tax on web design charges as domain name not a trademark u/s 65(55a) of Finance Act, 1994. CESTAT partly allowed appeal - set aside demand on outbound tours and web charges, upheld demand on domestic tours and renting of immovable property.
Articles
News
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2024 (12) TMI 1185
Maintainability of petition - availability of efficacious alternative remedy - Freezing of petitioner's bank account - violation of principles of natural justice - HELD THAT:- The arguments about the orders suffering from vice of want of jurisdiction or the orders being contrary to the decisions in MDS Switchgear Ltd [ 2008 (8) TMI 37 - SUPREME COURT] and Nestle India Ltd. [ 2004 (5) TMI 65 - SUPREME COURT] can always be raised in an appeal. Based on such general and vague averments, the remedies provided under the statute cannot be so lightly bypassed. In the case of Oberoi Constructions Ltd Vs. The Union of India [ 2024 (11) TMI 588 - BOMBAY HIGH COURT] this Court has considered several precedents about the exhaustion of alternate remedies. This Court has also taken note of the increased tendency to bypass the statutory remedies and insist upon instituting Petition under Articles 226 and 227 of the Constitution of India. Paragraph 65 quoted above does not even indicate any financial difficulties for payment of the pre-deposit amount - Therefore, freezing this bank account will not affect the Petitioner s ability to institute an appeal by making a pre-deposit. By adopting the reasoning in the said decision, no case is made to interfere with the impugned order. Upon an exhaustive analysis of precedents on the subject, including the precedent in Greatship (India) Limited [ 2022 (9) TMI 896 - SUPREME COURT] and others, the coordinate Bench declined to entertain the Writ Petition inter alia on the ground that statutory appellate remedies were available and factual inquiry was necessary to determine whether the jurisdictional facts were established, or not. The coordinate Bench noted that even the Supreme Court had disapproved the High Court s entertaining Writ Petitions involving classification disputes or even the applicability of exemption notification when parties had statutory alternate remedies. This Petition cannot be entertained, even though some artificial urgency sought to be created, and relegate the Petitioner to the alternate remedy of appeal, should the Petitioner choose to institute such appeal before the Appellate Authority - petition dismissed.
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2024 (12) TMI 1184
Legality and validity of the order dated passed by the respondent No. 2 in DRC-01 raising demand - HELD THAT:- From the averments made by the GST and Network, it is apparent that the petitioner was not required to pay the IGST on the goods cleared from (Domestic and Tariff Area). Supply from SEZ Unit to DTA is treated as import for DTA Unit and therefore the DTA unit is required to pay IGST and other applicable duties on filing of the Bill on Entry. The petitioner was not required to pay to IGST on the goods supplied from SEZ unit to DTA. The petitioner has not claimed any refund for such IGST paid, which otherwise was payable by DTA Unit. Therefore, there is no liability of the petitioner to pay the IGST under the provisions of the Integrated Goods and Service Tax Act, 2017 read with GST Act. The respondent No. 2 has failed to consider the same and passed the impugned order merely on account of the difference between in form GSTR-1 and GSTR-3B ignoring the provisions of Section 74 which provides the mechanism of adjudication of show cause notice by taking into consideration the reply filed by the petitioner as well as the provisions of the Act. On perusal of the affidavit-in-reply filed on behalf of the respondent No. 2, an attempt is made to justify the impugned order which lacks any reasoning. The deponent of the affidavit filed on behalf of the respondent No. 2, has tried to improve upon the impugned order by referring to Section 37 of the GST Act to contend that as per Section 37 of the GST Act furnishing the details of the output supply is required to be declared in GSTR-1 and as per Section 39 of the GST Act, the payment of tax declared in GSTR-1 is to be same as to be paid in Form GSTR-3B return and therefore if there is any difference, the same would amount to non payment of tax resulting into demand, interest and payment. The impugned order dated 05.02.2022 passed by the respondent No. 2 is hereby quashed and set aside - Petition allowed.
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2024 (12) TMI 1183
Refund the IGST on account of the zero-rated supply made by the petitioner - it is submitted that the matter may be remanded back to the respondent-Authorities to recalculate the refund and process the refund application as claimed by the petitioner as per the Clarification made by the CBIC in Circular No. 197/09/2023-GST dated 17th July, 2023. HELD THAT:- The matter is remanded back to the respondent-Authorities to reconsider the refund application made by the petitioner so as to grant the refund by applying the Circular No.197/09/2023-GST dated 17th July, 2023. Such exercise shall be completed within a period of twelve weeks from the date of receipt of the copy of this order after providing an opportunity of hearing to the petitioner. Petition disposed off by way of remand.
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2024 (12) TMI 1182
Inclusion of reimbursable expenses incurred by the petitioner by providing taxable services under the provisions of the Finance Act, 1994 - HELD THAT:- The Hon'ble Supreme Court while upholding the decisions of the Delhi High Court in Intercontinental Consultants Technocrats Pvt. Ltd. Vs. Union of India [ 2012 (12) TMI 150 - DELHI HIGH COURT] has ultimately held that ' only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. Though, it was not argued by the learned counsel for the Department that Section 67 is a declaratory provision, nor could it be argued so, as we find that this is a substantive change brought about with the amendment to Section 67 and, therefore, has to be prospective in nature.' Both the learned counsel for the petitioner and the learned counsel for the respondent confirms that there are no other disputes in the impugned order. Since, the issue is now covered in favour of the petitioner for the period prior to 14.05.2015, the demand confirmed vide impugned order to that extent is liable to be quashed and is accordingly quashed. Petition allowed.
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2024 (12) TMI 1181
Challenge to appellate orders passed against the rejection of refund applications filed by the petitioner - petitioner submits that the original order has been passed without considering the specific allegation in the show-cause notice - violation of principles of natural justice - HELD THAT:- There are no reason to invoke the extraordinary jurisdiction under Article 226 of the Constitution of India to deal with the matter in which there is a statutory appeal provided to the Tribunal. Admittedly, a Tribunal has not been constituted till date and a notification has also been issued by the Central Government permitting the filing of the appeal after the Tribunal is constituted. Since, the impugned orders are with respect to refund, there is no demand and hence there is no requirement to pay 20% of the tax demand as has been found in SAJ Food Products Pvt. Ltd. vs. The State of Bihar Others [ 2023 (3) TMI 1390 - PATNA HIGH COURT] . The petition is closed.
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Income Tax
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2024 (12) TMI 1180
Prosecution Proceedings initiated u/s 276C - Bogus LTCG - guilty mind i.e., mens rea - willful evasion of tax on claims made under the head LTCG/Short Term Capital Loss - allegation of crime invoking Section 200 of the CrPC for offence punishable under Section 276C - As decided in [ 2024 (1) TMI 1007 - KARNATAKA HIGH COURT] mens rea is an element that is to be present in a proceeding u/s 271. The mere fact of not accurate tax, not exact tax or erroneous tax would not lead to the proceedings u/s 276 of the Act. Court taking Cognisance ought to have referred to and recorded the reasons why the said Court believes that an offence is made out so as to take Cognisance more so on account of the fact that it is on taking Cognisance that the criminal law is set in motion insofar as accused is concerned and there may be several cases and instances where if the Court taking Cognisance were to apply its mind, the Complaint may not even be considered by the said Court taking Cognisance let alone taking Cognisance and issuance of Summons. Thus the order taking Cognisance is not in compliance with applicable law and therefore is set aside. Proceedings pending before the Special Court (Economic Offences) Bengaluru in these cases stand quashed. HELD THAT:- After hearing learned Additional Solicitor General, we are not satisfied that any case for interference is made out under Article 136 of the Constitution of India. Special Leave Petitions are, accordingly, dismissed, leaving the question of law to be decided, if necessary in some other appropriate case.
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2024 (12) TMI 1179
Validity of orders passed by the Local committee on High Pitched Scrutiny Assessment - violation of principles of natural justice as an opportunity of personal hearing was not granted by the said Committee - HELD THAT:- Local Committee can administratively advice the Principal Commissioner of the Income Tax concerned to prevent any cohersive recovery in cases where it had identified such assessments to be high pitched. There has been a depature in placing the said Report before the Appellate Authority under the old instructions, where such Reports were to be placed before the Appellate Authority to curb the litigations. The same has been left out under the amended instructions. The amended instructions stops with sharing the Report with the Appellate Authority namely the National Faceless Assessment Center. It should be noted that both the instructions in clear terms envisaged that the Local Committees should not be treated as alternative forum of disputes resolution/ appeallate proceedings. A reading of the said instructions would clearly indicate that the constitution of Local Committees was to curb unnecessary assessment orders which are made high Pitched by the Assessing Officer/ Assessing Units. Report of the Local Committee shall not be binding on the Appellate Authorities/ Revisional Authorities. It is also to be noted that it is on the discretion of the Principal Chief Commissioner of Income Tax to take any departmental action based on that Report. There is no instructions for giving an opportunity of hearing by the Local Committee. The Local Committee being neither a quasi judicial authority or a statutory authority is not bound to give an opportunity of hearing to the grieving tax payer. It is primarily an internal mechanism only to curb the high Pitched assessment without any reasons or in violation of law or principles of natural justice. A learned Single Judge of this Court in [ 2019 (9) TMI 614 - MADRAS HIGH COURT] had categorically held that the mechanism provided in constitution of the Local Committee is not in lieu of appellate remedy and that the contentions and the rights of the assessees before the Appellate Authorities can very well be decided by the Appellate Authority not withstanding the fact that the Local Committee had decided otherwise. The learned Judge had also held that the rejection of the petitioner's complaint before the Local Committee will not prejudice the right of the assessee to persue his appellate remedy by raising all grounds available to him. A Division Bench of the Punjab and Haryana High Court in the case of Liberty Shows Ltd., vs. Ld., Chairman Central Board of Direct Taxes [ 2024 (10) TMI 778 - PUNJAB AND HARYANA HIGH COURT] had held that there is no necessity for granting an opportunity of hearing to an assessee by the Local Committee as there is no provisions laid down in the SOP. The Act itself envisages that an opportunity of hearing ought to have been given by the Assessing Authority before passing orders of assessment. Similarly, the judgment made in [ 2024 (9) TMI 1672 - MADRAS HIGH COURT] it could be seen that the learned Single Judge had not dealt with the submissions made by the petitioner as in that case, the petitioner himself had submitted that it could be suffice to issue necessary directions to the Appellate Authority to consider the petitioners appeal within a time bound manner. Law envisaged by the learned Single Judge of this Court and the Division Bench of the Punjab and Haryana High Court, no merits in the contentions raised by the petitioner.
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2024 (12) TMI 1178
Reopening of assessment - reasons to believe - proceedings initiated against the company purchasing the shares which is the subsidiary of the petitioner - HELD THAT:- A reading of the reasons communicated u/s 143(2) makes it clear that there were sufficient reasons for reopening of the assessment under Section 148 read with Section 147 of the Income Tax Act, 1961 as it stood on 01.04.2021. That apart, the petitioner has suffered Speaking Order. Therefore, there is no justification in challenging the Impugned Notice issued under Section 148 of the Income Tax Act, 1961 and the Impugned Communication/Impugned Scrutiny Notice giving reasons for reopening the assessment and the Impugned Show Cause Notice dated 10.01.2022. Also petitioner has not cooperated with the respondents Department by furnishing the required informations. Therefore, on this count also there is no basis on which, the Impugned Notices/Communications can be quashed. Department are empowered to pass the Assessment Orders based on best judgment method under Section 144 of the Income Tax Act, 1961 in absence of proper informations by the petitioner to the above communications calling upon the petitioner to furnish the required informations/documents. Under these circumstances, these Writ Petitions are liable to be dismissed and are accordingly dismissed. The respondents are directed to complete the assessment preferably, within a period of 3 months from the date of receipt of a copy of this order or such other extended period that may be required subject to the petitioner filing its reply objections, if any, to the Show Cause Notice.
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2024 (12) TMI 1177
Qualification as an appellant u/s 2(1)(a) of the DTVSV Act - validity of a certificate issued under the Direct Tax Vivad Se Vishwas Act, 2020 - HELD THAT:- Rule 7 of the DTVSV Rules expressly provides that the order of the designated authority under sub-Section (2) of Section 5 with respect to the payment of amount made by the declarant as per the certificate granted under sub-section (1) of section 5, shall be in Form No. 5. In terms of Section 5 of the DTVSV Act, the Designated Authority (respondent no. 1) issued a certificate in Form No. 3 dated 16.10.2020 determining the balance amount payable as Rs. 69,56,571/-. Thereafter, the Designated Authority issued a certificate in Form No. 5, in terms of Rule 7 of the Direct Tax Vivad Se Viswas Rules, 2020 (hereafter DTVSV Rules), under Section 5 (2) read with Section 6 of the DTVSV Act. The said certificate clearly recorded that a sum had been paid by the declarant towards full and final settlement of the tax arrear . Once a declarant is issued a certificate (Form No. 5) in terms of Section 5 of the DTVSV Act, and the declarant deposits the determined amount, the Designated Authority is proscribed from initiating any action or proceedings in respect of tax arrear . The dispute stands settled. In view of the above, all disputes regarding the tax arrear stood settled with the issuance of a certificate as contemplated under Section 5 of the DTVSV Act. The petitioner is aggrieved by the issuance of the fresh Form No. 3 dated 29.01.2021, which is a modified version of the earlier Form No. 3 dated 16.10.2020. Thus, effectively the Designated Authority seeks to reopen a concluded settlement. On a pointed query from this court as to under which provisions the said action has been taken, Mr. Rai fairly states that there is no provision under the DTVSV Act that empowers a Designated Authority to reopen a concluded settlement. As noted above, a plain reading of the provisions of the DTVSV Act indicates that once a final certificate is issued under Section 5 (1) of the Act, all disputes with regard to the tax arrear stand concluded. It is apparent that the issuance of the impugned certificate is without authority of law. The impugned certificate dated 29.01.2021 is set aside.
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2024 (12) TMI 1176
Deduction u/s 10A - loss on account of foreign exchange fluctuation while computing deductions - HELD THAT:- We find that the same has been decided against the assessee by order of the CIT (Appeals). That order has attained finality since the assessee, who is aggrieved, has not chosen to challenge the same. Strangely, the Income-Tax Department has raised a ground in this regard, despite the issue having been decided adverse to the assessee by the first appellate authority.Tribunal has affirmed the conclusions of the Commissioner of Income-Tax (Appeals) on a mistaken premise that the appeal has been filed by the assessee. Substantial question of law no.1 is misconceived as that issue does not arise from the order of the Income Tax Appellate Tribunal, and is hence returned unanswered. Telecommunication expenditure should be excluded both from the export turnover and the total turnover for the purpose of computing deduction u/s 10A - HELD THAT:- Issue arising in substantial question no.2 is covered by a judgment of the Supreme Court in the case of Commissioner of Income-Tax, Central III v HCL Technologies Ltd [ 2018 (5) TMI 357 - SUPREME COURT] wherein held that expenses incurred in foreign exchange for providing the technical services outside shall be allowed to exclude from the total turnover.
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2024 (12) TMI 1175
Reopening of assessment u/s 147 - Reasons to believe - tangible material - HELD THAT:- On perusal of the reasons recorded, it is apparent that there is no failure on part of the petitioner to disclose fully and truly all the material facts for the assessment. Considering the show-cause notice issued during the regular assessment and the replies filed by the petitioner as well as the details provided, it is apparent that the issues which are raised in the reasons recorded for re-opening of the assessment are duly covered in the details provided by the petitioner along with the Significant Accounting Policies referred to in the Audited Accounts. Undisputed facts of all the details being provided during the course of the regular assessment and on perusal of the reasons recorded, we are of the opinion that the impugned notice was issued only on mere change of opinion which is not permissible as per the settled legal position as held in case of Kelvinator of India Limited [ 2010 (1) TMI 11 - SUPREME COURT] held after 1st April, 1989, AO has power to re-open, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words reason to believe but also inserted the word opinion in Section 147. However, on receipt of representations from the Companies against omission of the words reason to believe , Parliament re-introduced the said expression and deleted the word opinion on the ground that it would vest arbitrary powers in the AO. In view of the above conspectus of law, the impugned notice dated 31st March, 2021 is hereby quashed and set aside and accordingly, the petition succeeds. The impugned notice is hereby quashed and set aside and accordingly, the petition succeeds.
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2024 (12) TMI 1174
Penalty u/s 271DA - violation of provisions of section 269ST - CIT (A) deleting the penalty levied by AO on the invoice value - HELD THAT:- As noticed from the data submitted before the AO that the date wise bills aggregated by the AO were raised at different point of time. It is further noticed that different sales bills were executed by different sales executives. AO has not stated as to how the bills were in respect of sales to one person only and also that it was against the provisions of section 269ST of the Act. Apparently, the standalone amount of these bills is less than Rs. 2 lacs. It is also noticed that AO has not brought on record any name/identity of the persons whom he is alleging to be accommodated by the appellant by raising split bills. Accordingly, it was not justified on his part to presume that there was splitting of cash bills against the appellant with respect to cash sales mentioned. We agree with the contention of the appellant that it is regular phenomena for a brand like appellant company to have such small value cash sales during any particular day. The provision of section 269ST nowhere permits to aggregate/club different cash sales Invoices in a day and treat the same as violation of the provisions of the Act if the aggregate is Rs. 2 lakhs or more. The violation of the section 269ST by receiving cash from a person of Rs. 2 lakhs or more in a day with respect of single or multiple transactions is essentially connected with the payer, it has to be conclusively proved that the amount is received from a single person in a single day. In the present case, it is mere the presumption of the AO that the aggregate amount of cash sales in a day might have been received from one person. There is no basis or supporting evidence to justify the presumption. We do not see any reason to disturb the findings of CIT(A) and accordingly, the order of the CIT (A) is upheld and the ground raised by the Revenue is dismissed.
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2024 (12) TMI 1173
Bogus long term capital gains - Application of the wrong section for the addition under the Income Tax Act - addition u/s 68 of the Act invoking the principle of human probabilities and suspicious surrounding only - AO has made the addition u/s 68 in the Assessment Order, whereas in the remand proceedings, he specifically asked CIT(A) to consider the additions u/s 69A. HELD THAT:- We are of the considered view that there is no ambiguity which established the non-application of mind by the lower authorities and vitiates the additions made. Mentioning a wrong section by the AO is not fatal. In a case where income is chargeable under the deeming income provisions the transactions can be overlapping. There is no doubt that for alleged bogus LTCG, additions can be made u/s 68 of the Act, and for that reasons the order of CIT(A) requires no interference. Allegation of the assessee that the A.O has relied upon certain statements and documents while making the impugned additions in the assessment but they were not provided to the Assessee neither an opportunity of cross examination was afforded to the Assessee - It is a matter of record that the A.O. accepted that the relevant material was not provided to the Assessee during the Assessment and then the A.O. in his remand report has mentioned that he sent all the statement by post to the Assessee on the Address mentioned in the ITR for AY 2018-19. In this regard, it is submitted by the ld. AR that the address of the Assessee was changed and the same was updated in PAN records. Same is certainly established by copy of return available on Page 60-61 of the Paperbook and the said documents should have been sent on the address as per PAN records with NSDL. Then we find that AO forwarded these documents to CIT(A) along with Remand Report with the observations that these documents relied by AO could not be provided to the assessee yet CIT (A) failed to share these documents with the Assessee during appellate proccedings. Thus no doubt certain principle of natural law are violated but we have to examine the issue on merits and then consider that how far absence of this opportunity cross examination of witness or non provision of documents was prejudicial to the assessee. Bogus LTCG claims - AO has discredited the explanation of the assessee being general in nature. However, the findings and reasoning of the AO are patently very general. No doubt, the test of preponderance of probability would be applicable, but, that would be on the basis of some evidence indicating that some colorable device was used for introduction of unaccounted money through the LTCG Claim. The financials of the two scrips or the movement in the prices are indeed relevant, but, cannot alone be relied for considering the investment to be motivated for preparing false LTCG claim. When an assessee deposes on oath giving explanation of the reasons and circumstances for investment, the same cannot be brushed aside on the basis of general principles of the modus operandi of bogus LTCG claims. We are inclined to accept the grounds of appeal of the assessee holding that ld. tax authorities below have fallen in error in considering the LTCG claim of the assessee from the two disputed scrips as bogus claim. The appeal of the assessee is allowed with consequences to follow.
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2024 (12) TMI 1172
Reopening of assessment u/s 147 - final Assessment order u/s 147 r/w section 144 in pursuance to the direction of DRP u/s 144C(5) for the Assessment Year 2013-14 - HELD THAT:- As per notice dated 25.06.2021 u/s 148 of the Act, assessee sold two properties for sale. Assessee in reply dated 31.10.2021 claimed that assessee had 1/6th share in the property. Copies of sale deeds clearly mentioned assessee s shares as 1/6th i.e. 16.69%. T AO in compliance of judgment of Hon ble Supreme Court of Union of India vs. Ashish Aggarwal [ 2022 (5) TMI 240 - SUPREME COURT] and CBDT Instruction No.1 dated 11.05.2022 converted notice under section 148 into a deemed show-cause notice under Clause (B) of Section 148A of the Act and issued fresh notice dated 01.06.2022. Notice dated 28.07.2022 u/s 148 of the Act for reopening of A.Y. 2013-14 based on income below Rs. 50,00,000/- is contrary to law. Therefore, the directions of DRP dated 26.02.2024 and assessment order dated 22.03.2024 are illegal and are set aside. Appeal filed by the assessee is allowed.
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2024 (12) TMI 1171
Reopening of assessment u/s 147 - reasons to believe - HELD THAT:- The jurisdiction assumed u/s 147 of the Act is in controversy. As pointed out on behalf of the assessee, the reasons to believe contemplated u/s 147 has been held with reference to FY 2013-14 relevant to AY 2014- 15 whereas the AY in consideration is AY 2012-13. Thus the entire foundation of holding the reason to believe has crumbled at the threshold. Besides, it is also noticed that the AO has made reference to certain information received from Investigation Wing based on search and seizure action carried out in ASL Group. However, the reference made to such information is non-descript and cryptic. Approval for issuing notice was granted by the Addl. Commissioner/Pr. Commissioner of Income Tax - Reasons recorded are shorn of any particulars of information whatsoever. The vague reasons cannot be the basis for assumption of jurisdiction u/s 147 of the Act as held in long line of precedents. The approval granted based on such reasons is devoid of any objectivity and formation of reasons to believe by AO is in relation to a different AY. CIT has granted approval under 151 of the Act based on such reasons apparently without application of mind. The approval under s. 151 so granted thus cannot be countenanced in law. The notice issued under s. 148 of the Act based on reasons and approval suffering from the vice of substantive defect is clearly nonest. Thus, the jurisdiction assumed is without meeting the pre-requisites stipulated u/s 147 of the Act. Hence the re-assessment order thus is bad in law. Re-assessment order in question is quashed. Appeal of the assessee is allowed.
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2024 (12) TMI 1170
Issuance of shares at a value higher than the fair market value - Addition u/s 56(2)(viib) - Rejection of the DCF Method for Valuation of Shares in terms of rule 11UA - fair market value of unquoted shares may be determined either as per Net Assessed Value (NAV) or DCF method as determined by a merchant banker or an accountant - HELD THAT:- Assessee is a start-up company, has no past financials and we also observe that the assessee has adopted one of the approved method under Rule 11UA. It is also relevant to note that as per Rule 11UA, option is given to the assessee to adopt one of the approved method for the purpose of valuation of unquoted shares either under Net Assets value or DCF method. As per the above choice of option, assessee has adopted one of the approved method for valuing its shares. Hon ble High Court of Delhi held exact similar view in the case of Pr. CIT vs. Cinestaan Entertainment (P) Ltd. [ 2021 (3) TMI 239 - DELHI HIGH COURT] AO also proceeded to review the various disclaimers made by the Valuer to reject the method. It is normal that the valuer give various disclaimer such as the values are provided by the management and they have not carried out any verification. This cannot be the basis to reject the method adopted by the assessee. Coming to the issue of review of the actual performance with the projection it is settled law that the AO cannot review the projected figures adopted by the assessee at the time of projections. Therefore, this method of evaluating actual performance with projected figure after 4 or 5 years is not proper. Assessee has adopted one of the approved method of valuation under rule 11UA. Therefore, the rejection of such method is not proper and unjustified. Accordingly, we direct the AO to accept the valuation provided by the assessee and delete the additions proposed by him. In the result, ground nos. 3 4 are allowed. Addition u/s 68 - issue of shares at Rs. 1 is the same share which are issued by the assessee with share premium - Valuations of shares are proper based on the DCF method. Further, we observe that the shares were issued to the existing shareholders, therefore, the AO cannot invoke the provisions of section 68. In the result, ground no. 5 raised by the assessee is allowed.
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2024 (12) TMI 1169
Disallowance of exemption claimed u/s 10(34A) - AO while computing the assessed income also treated Long Term Capital Gain ( LTCG ) as income from other sources and thus denied benefit of special rate of tax available to LTCG u/s 112 - CIT(A) found merit in the plea of the assessee for wrongful denial of special rate of tax available u/s 112 of the Act towards LTCG arising to the assessee - HELD THAT:- CIT(A) has examined the issue threadbare and concluded in favour of the assessee after due consideration of facts and law. In order to avail benefit u/s 10(34A) the conditions therein need to be satisfied which was found to have been met. Thus, based on alleged manipulations on issue price in some earlier concluded years, the benefit of exemption u/s 10(34A) of the Act on transaction recorded in the books and subjected to assessment process in the past, could not be denied by any stretch of imagination. We find no infirmity in the order of the CIT(A) in this regard. Hence, we decline to interfere. Taxation offered by the assessee as LTCG - CIT(A) found the reasoning of the AO that some unaccounted money was converted into legitimate the money as baseless and unfounded. The assessee has not claimed any benefit of exemption u/s 10(38) of the Act on such LTCG and has merely applied special rate of tax @ 20% as prescribed u/s 112 at LTCG. The purchase transactions carried out in the earlier years could not be disturbed in a subsequent year to deny the concessional rate of tax claimed by the assessee as available under the provisions of the Act. The findings of the Ld.CIT(A) in our view, is based on sound footing and thus, does not call for any interference. The appeal of the Revenue is thus, liable to be struck down on both counts.
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2024 (12) TMI 1168
Penalty u/s 271(1)(c) - addition being difference in stock - HELD THAT:- Notice u/s 274 r.w.s. 271(1)(c) has not expressed under which limb the penalty is initiated under Section 271(1)(c) of the Act. The decision in the case of Manjunatha Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] is applicable in the present case. Besides this, the assessee has rightly submitted the closing stock details as well as the stock difference was also reflected in the audited accounts and there was no case built up by the Revenue that the assessee has filed inaccurate particulars of income or concealment of income. Thus, AO as well as the CIT(A) was not right in imposing the penalty. Appeal of the assessee is allowed.
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2024 (12) TMI 1167
Validity of Reopening of assessment - no approval u/s 151 from the competent authority - HELD THAT:- AO at the time of recording reasons in March 2018 was not in possession of any information which could have led him to form a belief that income of the assessee had escaped assessment warranting reopening. We find that in the case of PCIT Vs. NC Cables Ltd. [ 2017 (1) TMI 1036 - DELHI HIGH COURT ] had also held the same, wherein, the approving authority had merely stated approved in the proforma while granting approval in terms of section 151 of the Act. This approval was held to be a mechanical approval. Thus, we hold that the reopening has been made in the instant case by not taking approval under section 151 of the Act from the competent authority in the manner known to law. Appeal of assessee allowed.
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2024 (12) TMI 1166
Deduction u/s. 10AA on account of voluntary adjustment made to arm s length price (ALP) of international transaction pursuant to the Advance Pricing Agreement (APA) - HELD THAT:- We find that for AY 2014-15, identical issue arose in assessee s own case which was decided by the coordinate Bench [ 2020 (9) TMI 68 - ITAT BANGALORE] and hold that the ALP adjustment made pursuant to APA by the assessee in respect of Gurgaon SEZ unit results in increase in profits of the business of the undertaking/unit, the increased profits of the assessee being eligible for deduction under section 10AA of the Act given the wide nature of the expression used in section 10AA i.e. 'Profits of the business of the undertaking/unit' and that the proviso to section 92C(4) is not a bar to allowing such a claim. Thus, appellate order passed by the ld. CIT (A) is following the decision of coordinate bench in assessee s own case where in the decision of honorable Karnataka high court [ 2014 (6) TMI 1007 - KARNATAKA HIGH COURT] is followed. Accordingly, this ground of appeal raised by the ld. AO is dismissed and the order of the ld. CIT(A) is upheld.
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2024 (12) TMI 1165
Disallowance u/s. 14A - Addition being 1% of the average of the investment - HELD THAT:- Since the disallowance made by the AO of Rs. 1,56,10,238/- is right as per the provisions of Rule 8D(2) related to disallowance u/s. 14A of the Act, we decline to interfere with the order of the CIT(A) on this issue. In the result, the appeal of assessee on this ground is dismissed. Disallowance u/s. 36(1)(va) - Delayed employees' contributions to provident funds - HELD THAT:- This issue has been settled by the order of the Hon ble Apex Court in the case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] observed that there is a marked distinction between the nature and character of the two amounts viz., the employers' contribution and employees' contribution required to be deposited by the employer. The first one is the employer's liability is to be paid out of its income whereas the second is deemed an income, by definition, since it is the deduction from employees' income and held in trust by the employer. As the issue of payment of employees contribution towards the PF has been settled by the judgment of Hon'ble Supreme Court, the appeal of the assessee on this ground is liable to be dismissed. Disallowance u/s. 40(a)(i) - TDS u/s 195 - commission paid to non-resident agents as no TDS was effected on the commission payment - HELD THAT:- The amounts have been paid to non-resident agents who are not tax payable entities in India for the services rendered abroad. The commission agents who have been paid commission do not have any permanent establishment in India. Hence, no disallowance u/s. 40(a)(i) of the Act, is attracted as the entities were not situated in India. Decided in favour of assessee. Disallowance u/s. 36(1)(iii) on account of Capital Work In Progress (CWIP) - as submitted the assessee has sufficient own funds which can be utilized as capital work in progress and for capital advances - HELD THAT:- From the detailed examination of the borrowings of the assessee and payment of interest since no loan amount has been raised and utilized for the purpose of Capital Work in Progress (CWIP), since the assessee s own funds far exceed the value of the CWIP by 14 times, no addition is called for in this account. The notional interest calculated by the Assessing Officer on the closing balance of CWIP cannot stand test of legal scrutiny.
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2024 (12) TMI 1164
Addition u/s 69B - undisclosed stock - HELD THAT:- Closing stock worked out by the CIT(A) was Rs 10,20,91,121/- and the correct closing stock ought to have been worked out by the search party as per Table A supra was Rs 10,12,53,736/-. Hence, there is no deficit in stock at all. Accordingly, there is no case for making any addition on the ground of excess closing stock by the CIT(A). Hence we have no hesitation in deleting the addition made on account of closing stock by holding that there is no excess stock at all even as per the workings of CIT(A) and by adopting the correct closing stock as on the date of search after eliminating the profit element on finished goods. Accordingly, the Ground Nos. 1 to 3 raised by the assessee are allowed. Disallowance of car running and maintenance expenditure and car depreciation thereon - HELD THAT:- The book results declared cannot be disturbed unless certain deficiencies are found thereon and there is no need to make any ad hoc disallowance thereon. The partners have their own personal vehicles for their personal usage, which fact was brought to the knowledge of Learned CIT(A) and the same had not been disputed by the revenue. Hence the action of the Learned CIT(A) in restricting the disallowance on account of car maintenance expenses to Rs 2 lakhs on an ad hoc basis is devoid of merit and deserves to be deleted at once. Car depreciation - CIT(A) had rightly held that it is an allowance statutorily provided to the assessee in the Act and the same cannot be disturbed by alleging that there is personal usage of the vehicle. The element of personal usage of the vehicle had already been answered to be non-existent in the previous paragraph. Hence, we hold that the CIT(A) had rightly granted relief to the assessee by allowing the depreciation on car, on which we do not find any infirmity. Accordingly, the Ground Nos. 1 and 2 raised by the revenue are dismissed and Ground No. 4 raised by the assessee is allowed. Addition made u/s 69A - HELD THAT:- When there are unaccounted sales mentioned in the seized document, there should be obviously unaccounted purchases, as without purchases there cannot be any sales. Hence, only the profit element needs to be brought to tax. In the instant case, the Learned CIT(A) had estimated the gross profit at the rate of 28.10% by taking cognizance of the fact that the same rate has been offered by the assessee during the year under consideration. It is also pertinent to note that assessee has accepted to the CIT(A) order by not preferring any further appeal. Hence, there is no other better gross profit rate that could be applied in the facts of the case. Hence we hold that the adoption of gross profit rate of 28.10% on the unaccounted sales is in order. The Learned CIT(A) had rightly applied the same, on which we do not find any infirmity.
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2024 (12) TMI 1163
Deduction u/s 54F - no evidence for construction was filed, no evidence of ownership of land on which construction was claimed to be made was filed - Assessee initially submitted that house was constructed in the name of his son but subsequently it was contended that it was constructed in his name - HELD THAT:-Valuation of the house property constructed by assessee which shows that construction was done between the period of Jan, 2013 to July, 2015 with value of Rs. 1,25,20,000/-. Aksh, Sizra and Jamabandi of the ancestral land showing the ownership of assessee. Copy of Certificate issued by Councillor, Gurgaon, Copy of cash flow statement of assessee and reply filed by the assessee mentions the residential house on ancestral land for a sum of Rs. 1,25,20,000/- was constructed in 3 years. The house situated in Lal Dora of the village Mohammedpur, Jharsa, Gurgaon. Nothing was brought on record by AO to disregard the above evidence produced by assessee. It is a material fact that assessee had sold agricultural land and received Rs. 4,31,25,000/- by selling agricultural land and sufficient fund. Assessee deserves benefit of section 54F of the Act, therefore, the findings of learned CIT(A) deserves to be set aside. Disallowance of exemption u/s 54B - Details of purchase of land by assessee for Rs. 3,08,33,650/- is at page 24 of the paper book. Sale deed agreements executed by assessee for purchase of agricultural land. The assessee claims to be illiterate and was not aware of the income tax laws and was suffering from serious diseases since 2012. Before learned AO assessee submitted that land was purchased in the name of wife to save stamp duty. In view of the above material facts and well settled principle of law, the assessee having purchased agricultural land was eligible for deduction under section 54B of the Act. Therefore, the findings of learned CIT(A) denying benefit of deduction under section 54F of the Act, is set aside. Unexplained cash credit on account of unsecured loan received by assessee from his brother Shri Brahm Singh, assessee filed copy of affidavit of Brahm Singh and cash flow statement - Agreement of sale dated 26.12.2012. In view of the above, said affidavit, cash flow statement and agreement to sale, it is evident that Shri Brahm Singh had paid Rs. 40,00,000/- on behalf of assessee for purchase of land as same was outstanding as on 31.03.2023. Assessee had made payment on behalf of Shri Brahm Singh for purchase of another land and thus squared off the transaction. In light of above facts, the addition consider as unexplained cash credit on account of unsecured land deserves to be deleted.
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2024 (12) TMI 1162
Validity of Assessment u/s 153A - based on incriminating material or no incriminating material in the case of an unabated assessment - primary contention is that incriminating material is necessary for framing such an assessment - HELD THAT:- Admitted facts are that the nature of additions made by the Assessing Officer (i) unsecured loans, unsecured cash credits, expenditure noted in the profit and loss account, and advances from customers, i.e, suspense account, which is part of account of the assessee, are disclosed in the financials of the assessee. It means that the addition is based on the accounts of the assessee filed in the financial statements along with return of income originally. It means that there is no incriminating material or seized material pertaining to these four assessment years, and the addition is based on the financials filed by the assessee along with the original return. An assessment u/s 153A of the Act is linked with the search and requisition made u/s 132 and 132A of the Act, and the objects of Section 153A is to bring under tax the undisclosed income, which is found during the course of search or pursuant to search or requisition. Hon ble Supreme Court in Abhisar Buildwell [ 2023 (4) TMI 1056 - SUPREME COURT] held that only in a case where the undisclosed income was found on the basis of incriminating material, the AO would frame the jurisdiction to assess or reassess the total income for the entire six block assessment year period in the case of unabated assessment. As there is no incriminating materials in these four appeals, we quash the assessment framed u/s 153A of the Act for all these four years and also set aside the orders of CIT(A). Hence, these four appeals of the assessee are allowed for this jurisdictional issue.
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2024 (12) TMI 1161
Crypto currency - income earned on account of sale of Bitcoin - whether taxable as capital asset u/s 2(14) of the IT Act, 1961 in as much as the same is defined by FA, 2022 w.e.f 01.04.2022 u/s 2(47A)? - AO proposing to tax the net gains on sale of Bitcoins as Income from other sources and accordingly his claim for exemption u/s 54F of the Act was not considered as allowable. HELD THAT:- Since crypto currency is specifically incorporated in the statute as an asset, it means that even before 01.04.2022 it was an asset and therefore gain on sale of crypto currency has to be taxed under the head capital gain and not under the head income from other sources before the law maker made the specific provision in the Act. Even otherwise, looking to the profile of the assessee we note that the only source of income of assessee is from salary and he has invested his savings in shares / crypto currency. He is not regularly dealing in purchase/ sale of shares/ crypto currency. His intention is to hold for long term capital gain which is more evident from the fact that he made investment in crypto currency during FY 2015-16 which was sold in FY 2020-21 and the gain on sale of crypto currency is invested for purchase of house. This proves that intention of the assessee in making investment in crypto currency is to hold it and to earn long term capital gain. Gain on sale of crypto currency (bitcoin) prior to AY 2022-23 is chargeable to tax as capital gain. Ground no. 1 raised by the assessee is allowed. Deduction u/s 54F - As we have in ground no. 1 held that the income on sale of crypto currency is chargeable to tax under the head long term capital gain since assessee has hold crypto currency for more than 36 months, therefore, AO is directed to allow claim of deduction u/s 54F of the Act to the assessee. Based on this observation ground no. 2 raised by the assessee is allowed.
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2024 (12) TMI 1160
Deduction u/s 80P - return filed by the assessee was treated by the CIT(A) as belated return - HELD THAT:- The present case before us pertains to assessment year 2019-20 (previous year 2018-19). It can be readily inferred, therefore, that an assessee will not be hit by provisions of Section 80AC of the Act, having regard to the assessee claim for deductions under Chapter VIA of I. T. Act, while processing the return and making adjustments u/s 143(1) of the Act. It follows accordingly that in the present case before us, the assessee s claim for deduction u/s 80P of the Act (which falls under Chapter VI-A of the Act) is not hit by Section 80AC of the Act while processing the return and making adjustments under section 143(1) of the Act. We direct the AO to allow the assessee s claim under section 80P of the Act. Appeal of the assessee is allowed.
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2024 (12) TMI 1159
Rejection of grant of registration u/s 12AB - charitable activity u/s 2(15) - HELD THAT:- While making the reference of the aforesaid objects of the assessee association, we find that the association is established for the purpose to organize and unite the manufactures of steel Re-Rollers and people of similar business and certain other connected / incidental / ancillary objects referred. In view of such objects, it can be safely gathered that the association is set up for safeguard of the interest of its members and to deal with matters having common interest of the trade. Whether such objects shall be treated as trade, commerce and business and not the activities in the nature of charity? - We find force in the contentions raised by the Ld. AR that there was no benefit derived by specified individual. As per law, the benefit is being given to a section of people. We may herein refer to the order of Bar Council of Maharashtra [ 1981 (4) TMI 8 - SUPREME COURT] wherein it was held that trading bodies have been held to be constituted with a view to advance an object of general public utility because their primary or predominant purpose was to promote and protect industry, trade and commerce and are eligible for exemption u/s 11. Thus, we find that the assessee association fulfils the conditions requisite to fall within the charitable purpose as defined in section 2(15) of the Act, dehors any other infirmity in the eligibility qualifications of the assessee, which would have alleged by the Ld. CIT(E), we therefore, are of the considered view that the order of Ld. CIT(E) cannot be sustained, we, therefore, reverse the same and direct to grant the registration u/s 12AB. Assessee appeal allowed.
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Customs
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2024 (12) TMI 1158
Application seeking condonation for the delay in filing an Appeal under Section 28KA of the Customs Act, 1962 - HELD THAT:- Relying on the Delhi High Court's decision in Commissioner of Customs (Import) AIR Cargo Complex, New Delhi vs Amazon Seller Services Pvt Ltd [ 2022 (1) TMI 1332 - DELHI HIGH COURT] , this Court, in Commissioner of Customs JNCH vs Bag Industries [ 2024 (12) TMI 102 - BOMBAY HIGH COURT] , has held that delay beyond the maximum condonable period referred to in the proviso to Section 28KA of the Customs Act, 1962, cannot be condoned. Since the delay in this case is beyond the maximum condonable period prescribed in the proviso to Section 28KA, it cannot be condoned. This Interim Application is dismissed.
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2024 (12) TMI 1157
Levy of anti-dumping duty on 46.646 MT bearing Made in Japan marking - exemption under N/N. 14/2010-Cus dated 20.02.2010 - Department is aggrieved by that portion of the order whereby 19 pallets out of 25 which were having no country of origin mentioned on them and which were imported from Dubai were not subjected to the Anti Dumping duty which was mainly meant for Cold Stainless-Steel Sheet if they originated from China and Taiwan. HELD THAT:- Ihe instant case Commissioner while writing order has duly considered that there was a mis-declaration involved and enhance the value and subjected the party to the penalty for importation of mis-declared goods, including the duty and penalty thereon. Department is of the view that once misdeclaration is found then it was for the party to prove that 19 pallets were not of Chinese/Taiwanese origin even when the goods have been imported from UAE. Department has also proposed that once something is alleged in show cause notice it is for the party to prove otherwise. In relation, however, to 19 pallets which were having no marking of country of origin, the department is of the view that they are of Non Taiwanese origin needed to be proved by the party rather than they being asked to prove that such pallets were of Taiwanese origin. The assertion that once department has alleged something in show cause notice then it is for party to prove otherwise is erroneous as a general rule. In the instant case, there are 3 pallets each of Japanese origin (i.e. non ADD country) and 3 pallets of Chinese /Taiwanese origin (subjected to ADD country), therefore, without bringing in presumption, the remaining 19 cannot be treated as of Taiwanese origin. This is more so, as the consignment has emanated from Dubai which is a 3rd party country. Again department cannot extend the consequences of initial misdeclaration for all purposes including to the Rules of evidence, even when the statute does not provide for it. The scrutiny of the statute does not afford any such scope in favour of the department beyond the listed consequences of extended period of limitation and re-looking at the valuation. The departmental appeal is therefore devoid of merits and order of the Commissioner in the instant case deserves to be upheld. Departmental appeal is rejected.
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2024 (12) TMI 1156
Jurisdiction and maintainability of the appeal - Absolute confiscation of prohibited goods - Gold Jewelery - denial of redemption. Jurisdiction and maintainability of appeal - HELD THAT:- The assessment is the primary determinant for clearance of goods under customs law and, consequently, inalienable from the appellate jurisdiction of the Tribunal. Even the excluded jurisdiction, under proviso to section 129A of Customs Act, 1962, other than shortlanding , operates only to the extent of not being a consequence of assessment or re-assessment, where payment of drawback is concerned, under section 17 or section 18 of Customs Act, 1962 and, even if assessment is concerned, as in baggage , only to the extent that the original authority has ordered by recourse to empowerment in Rules framed under the aegis of section 81 of Customs Act, 1962. Any other interpretation of the amendment effected to Customs Act, 1962 in 1984 for restoration of revision jurisdiction would be contrary to Article 323B of the Constitution besides being arbitrary denial of right to appeal before the highest court of the land. Reflief of redemption of goods - HELD THAT:- There are no doubt that the appellant was ineligible to import gold jewelry as baggage of person arriving in India from abroad. The appellant had not denied his intent to evade duty that was leviable from the lack of eligibility. The confiscation of goods for non-declaration under section 77 of Customs Act, 1962, implicit in passage through green channel and, thereby, empowered by section 111(l) and section 111(m) of Customs Act, 1962, is not to be faulted. There is nothing on record, other than an original finding at the first appellate stage, to suggest that a passenger may not carry gold jewelry in excess of entitlement of duty free import as long as duty liability is borne - That finding in the impugned order is without reference to any notice issued to the appellant herein; the substance of the finding, too, does not carry the authority of careful consideration of the nature and contents of the stipulation of the Reserve Bank of India (RBI). The tariff does not determine licencing restrictions but deployment of the same code system enables easy cross referencing; here, if the goods, indeed, are semi-manufactured , the goods may be restricted for import. There is, however, no evidence to suggest that this suspicion was, at any time, subjected to scrutiny by expert ascertainment; indeed, no effort was on display to establish conformity of goods with the description corresponding to tariff item 7108 1300 of First Schedule to Customs Tariff Act, 1975. The proposition for confiscation on the ground of being prohibited does not sustain. As a State, the exchequer does not survive on confiscatory proceeds. Gold and articles made of gold are goods and not vested in the government. Illicit import of articles of gold must be deterred but not by alienation of possession from its owner. The cause for restricting import of semi wrought gold is monetarily measurable and that would have sufficed as consequence of wrongful import. There was, thus, no justification for absolute confiscation of the impugned goods either from being restricted or despite being restricted. It is found appropriate to set aside the absolute confiscation to permit the gold jewelry to be redeemed on payment of fine of ₹ 50,000 and for penalty to be reduced to ₹ 50,000 - Appeal is, accordingly, disposed off.
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2024 (12) TMI 1155
Exemption under N/N. 43/2002-Cus dated 19.04.2002 on import of duty free raw materials such as HDPE, LDPE granules, Master Batch and High Speed Diesel (HSD) etc. - Department is of the view that since the additional duty of Customs at the rate of Rs. 1 per liter was imposed by the Finance Act, the appellant is not entitled to the benefit of N/N. 43/2002-Cus dated 19.04.2002 - HELD THAT:- The matter is no longer res-integra as this Tribunal has already decided the issue in case of Atlantic Shipping Pvt. Limited vs. Commissioner of Customs, Jamnagar (Prev.) [ 2018 (9) TMI 458 - CESTAT AHMEDABAD] where it was held that ' the benefit of exemption from additional duty of Customs levied under sub-section (1) of Section 116 of Finance Act, 1999 has to be extended to the goods which are entitled to exemption under Notification No. 94/96-Cus.' The matter has already been decided in favour of the appellant and therefore, the impugned order-in-appeal is without any merit - Appeal allowed.
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2024 (12) TMI 1154
Inclusion of Freight and Insurance costs in the Assessable Value - price charged by the overseas exporter is on CIF basis or on FOB basis - applicability of MRP / RSP provisions - Extended period of limitation. Whether the Freight and Insurance costs are to be added or not to arrive at the Assessable Value? - HELD THAT:- The appellant has provided proper documentary evidence to the effect that the freight and insurance has been borne by the foreign party. There is nothing to indicate in these documents that the appellant is required to pay these amounts. Therefore, it gets established that the overseas exporter has exported the goods on CIF basis to the appellant. Accordingly, we hold that the enhancement of Assessable Value by adding the freight and insurance by the Revenue, is legally not sustainable. Whether the MRP / RSP provisions would apply, thereby calling for higher CVD payment as has been held by the Adjudicating authority? - HELD THAT:- The goods are meant for supply to Govt of Jharkand. The label also clearly states that the goods are not meant for retail sale to any individual but are meant for bulk sale to Govt. of Jharkand Hospitals only. On going through the Sl. No.40 of Notification No.14/2008-CE (NT) dated 01.03.2008 issued under Section 4A of the Central Excise Act, 1944 on which Department has placed reliance to hold that the goods are liable for MRP based assessment, we find that Sl. No.40 covers goods of Heading 34.02, which are in the form of bars, cakes, moulding pieces or shapes - In the present case, the appellants have imported the goods under CTH 3402 90 99 and are in liquid form and not in the form of bars, cakes, moulding pieces or shapes. Hence, the view of the Revenue that the goods are required to be assessed in terms of Section 4A of the Central Excise Act, 1944, for arriving at the CVD to be paid cannot be subscribed. Thus, the MRP based Section 4A value cannot be used for calculating the CVD. The Revenue is in error in applying the Section 4A valuation method to arrive at the CVD on the imported goods. Therefore, holding that the enhancement of Duty on this count is legally not sustainable, the impugned order to this extent set aside. Extended period of limitation - HELD THAT:- In the present proceedings, the Revenue has not brought in any evidence to the effect that they have stumbled upon any new evidence to the effect that the freight and insurance paid by the exporter has been reimbursed to them by the appellant. Nor has the Department brought in any evidence to the effect that the goods in question were not sold in bulk to the Govt of Jharkhand hospitals, but were diverted and sold in retail. All the documents relied upon by the Department are the ones, which were already made available to them by the appellant at the time of imports. Thus, the Department has failed to bring in any evidence to fasten the allegation of suppression / misstatement with an intent to evade the Customs Duty. Therefore, there are no hesitation to hold that the confirmed demand is legally not sustainable even on account of time bar. Appeal allowed on account of merits as well as on account of limitation.
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Corporate Laws
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2024 (12) TMI 1153
Legality of Articles 13 and 14 of the Concession Agreement - direction to NTBCL to cease the imposition of user fees or toll upon commuters using the DND Flyway - maintainability of Writ Petition purportedly filed in public interest, before the High court - non-floating of tenders - power to levy fees could be delegated to the Appellant or not - excessive delegation - Article 14 of the Concession Agreement, opposed to public policy or not - recovery of Total Project Cost and Returns - recovery of dues from the Appellant, in regards to the display of outdoor advertisements. Maintainability of the Writ Petition before the High Court - Locus standi of Respondent No. 1 - HELD THAT:- In the instant case, Respondent No. 1 is a Society duly registered under the Societies Registration Act, 1860, with the primary objective of promoting the welfare of NOIDA residents. The society acts as a bridge between the residents and public authorities, catering to the former s needs for essential civic amenities. Given this object, it is clear that Respondent No. 1 approached the High Court in good faith, with a view to safeguard the interests of NOIDA residents, who had been subjected to the levy of toll at the DND Flyway under the guise of user fees by NTBCL. Consequently, there are no merit in NTBCL s contention that Respondent No. 1 lacked locus standi in approaching the High Court - As regard to NTBCL s contentions pertaining to the alleged collusion between Respondent No. 1 and NOIDA, there is not an iota of material on record to substantiate these sweeping insinuations. Delay and laches - HELD THAT:- The High Court rightly observed that the plea of delay lacks substance, as the commuters, including Respondent No. 1, were justified in trusting that NOIDA would protect their interests. However, in 2012, after learning that they were being misled and subjected to an illegal toll based on an audit report from NTBCL s Auditor and Chartered Accountant indicating that as of 31.05.2012, Rupees 2340 crores were still to be recovered from the public, and the recovery period had extended from 30 years to 100 years they were prompted to immediately approach the High Court - the challenge laid by Respondent No. 1 before the High Court, regarding the levying of toll or user fees, being rooted in public interest and involving en masse potential violations of Fundamental Rights of citizenry, warrants thorough examination. Scope of judicial intervention - HELD THAT:- The High Court was justified in entertaining the petition filed by Respondent No. 1 in public interest. The continued levy of toll and the Concession Agreement were directly impacting the rights and interests of commuters. NTBCL s attempts to classify the Concession Agreement as a purely private contractual matter, sequestered from such scrutiny, thus holds no ground. The Project, having been developed for public benefit, cannot escape judicial oversight, particularly when the allegations pertain to the public s rights and interests, which are being infringed upon by the levying of user fees. The contention of NTBCL seeking dismissal of Respondent No. 1 s petition at the threshold was thus rightly rejected by the High Court. The contention that there were no suitable companies capable of undertaking such infrastructural development during that period lacks any substantiation or material on record to support such sweeping claims - The selection of NTBCL without following proper procedure and without giving any opportunity to bid, to other competitors, was nothing but an opaque device resorted to, in contravention of Article 14 of the Constitution of India. Delegation of power to levy fees and its validity - HELD THAT:- NTBCL cannot assert that NOIDA has a genuine 'choice' or the ability to 'withhold consent' from extending the Concession Agreement. NOIDA effectively has no choice and is perversely being browbeaten to continue enforcing the Concession Agreement. Despite the supposed 'choice,' it is burdened with the obligation to repay an exorbitant sum, which we have already established is unreasonably calculated. This consensual extension is solely a show of smoke and mirrors and has been cunningly engineered by NTBCL and IL FS. They successfully ensured that: first, the formula was designed in such a way that the Total Project Cost and returns would escalate each year; second, inflated and unnecessary expenses could be included in the Total Project Cost, making repayment impossible; third, the Concession Agreement would only terminate upon full repayment of the Total Project Cost and returns, knowing as early as 2007 that 30 years would not suffice for recovery; and finally, NOIDA was left with no real choice but to extend the concession period due to the ultimatum presented in Article 18, masked as consent. An exhaustive reading of the CAG Report highlights the extent to which the public has been defrauded. The general public has been forced to part with hundreds of crores by IL FS and NTBCL, under the guise of providing necessary public infrastructure. This could not have been done but for the collusion of the then officers of the two State Governments and of NOIDA, who closed their eyes while the contractual obligations were incurred. Had Respondent No. 1 not been vigilant of their rights, the public funds would have continued to be misappropriated for private profiteering. Furthermore, the role played by IL FS in this entire scheme is highly questionable. Since NTBCL has recovered the costs of the project and substantial profits thereon by virtue of imposition of user fees/tolls and given the existing position of law, there are no error in the High Court s judgment and its directions in restraining the imposition and collection of user fees/tolls. Recovery of dues arising out of display of outdoor advertisements - HELD THAT:- The question pertaining to outdoor advertisements does not constitute the subject matter of the present appeal, where the matter assailed by the Respondent Welfare Association before the High Court was restricted to the imposition and levy of user fees or toll by NTBCL and concomitantly, the validity of certain provisions of the Concession Agreement. Regardless, Respondent No. 2, NOIDA, has alleged that NTBCL owes substantial dues to them, accrued through outdoor advertising, for which the license had been granted by NOIDA - NOIDA shall be at liberty to initiate recovery proceedings as per the dispute resolution mechanism outlined in the Delhi Land Lease and NOIDA Land Lease Agreements. Such a process shall be subject to the defence and objections that may be available to NTBCL before the appropriate forum. Consequently, this issue does not fall within the scope of the instant appeal and therefore we have not expressed any opinion on its merits. Application disposed off.
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Insolvency & Bankruptcy
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2024 (12) TMI 1152
Classification of appellant - Financial Creditors within the meaning of sub-section (7) of Section 5 of the Insolvency and Bankruptcy Code, 2016 or not - whether the appellants can be classified as Secured Creditors and paid commensurate to their security interest? - HELD THAT:- Section 14(1) imposes an embargo or prohibition on certain acts. However, it does extinguish the claim. If the argument that the claims of all the creditors of the Corporate Debtor are extinguished once the moratorium comes into force is accepted, no creditor would be able to file a claim. For example, if money advanced is secured by a promissory note or a negotiable instrument, a suit for recovery based on the said documents will not lie once a moratorium comes into force. But, the liability under the documents will continue to exist. In fact, after moratorium, no creditor can recover any dues from the Corporate Debtor. But still, there is a provision for making a claim. Hence, the argument based on moratorium deserves to be rejected. The DoH will continue to be valid. However, on the basis of the DoH, something which is prohibited by Section 14, cannot be done. Therefore, Section 14 will be of no assistance to the 1st respondent-Doha Bank. 64. When we are on the interpretation of DoH, we must refer to sub-clause (vi) of clause 16 of the DoH, which provides that every provision contained in the deed shall be severable and distinct from every other such provision. If the right to payment exists or if a breach of contract gives rise to a right to payment, the definition of claim is attracted. Even if that right cannot be enforced by reason of the applicability of the moratorium, the claim will still exist. Therefore, whether the cause of action for invoking the guarantee has arisen or not is not relevant for considering the definition of claim . Much capital was made of the fact that the CoC, including the appellants as well as the third-party lenders, have voted for the Resolution Plan. At this stage, it is noted that the NCLAT has not held against the appellants on the ground that if the case of the appellants is accepted, it will amount to modification of the Resolution Plan - The NCLAT observed that the Resolution Plan was rightly approved, subject to the disposal of the pending application. In fact, in paragraph 7, the NCLAT observed that depending upon the outcome of the applications, if the Resolution Plan requires to be reconsidered, the adjudicating authority will do so after hearing the parties. This order has become final. The sum and substance of the above discussion is that the impugned judgment and order dated 9th September 2022 passed by the NCLAT cannot be sustained, and the order dated 2nd March 2021 of the NCLT deserves to be upheld. Accordingly, the impugned order of the NCLAT is quashed and set aside, and the order dated 2nd March 2021 passed by the NCLT, Mumbai Bench (adjudicating authority) is restored. The appeals are, accordingly, allowed.
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2024 (12) TMI 1151
Extinguishment of claim - non-implementation of resolution plan - whether the Adjudicating Authority, on the grounds of non-implementation of the plan, could have revived the gratuity dues claims of the Respondent and given directions to pay gratuity dues to the Respondent without consideration by the CoC? - HELD THAT:- After the Corporate Debtor is admitted into CIRP, RP invites claims and after collating and updating the same in the Information Memorandum thereafter invites potential resolution applicants to submit their respective resolution plans before the CoC. The plans are deliberated and the best plan approved by the CoC in exercise of their commercial wisdom is placed before the Adjudicating Authority which then arrives at a subjective satisfaction that the plan conforms to the requirements as provided under Section 30(2) of IBC and thereafter grants its approval to the Resolution Plan. The Adjudicating Authority while approving the Resolution Plan has to see that the plan does not contravene any requirements set out under Section 30(2) of the IBC and also that the Resolution Plan can be carried out efficiently and satisfactorily as per Section 31(1) of the IBC. Approval of a resolution plan by the Adjudicating Authority is statutorily recognized as a closure to all claims that creditors or other relevant entities may have against a Corporate Debtor unless it is challenged within the statutorily prescribed time-limit. It is significant to note that once the Adjudicating Authority approves the Resolution Plan, the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution Plan. Facts on record show that this aspect of the plan was never challenged by the Respondent. Thus, the plan had undisputably attained finality. Further the SRA has already made payments to the stakeholders as per the approved plan. The Appellant have placed reliance on the legal precept laid down by the Hon ble Supreme Court in Ghanshyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited and Ors. [ 2021 (4) TMI 613 - SUPREME COURT ] to contend that belated claims cannot be taken up for inclusion in the Resolution Plan and after placing reliance thereon asserted that the SRA cannot be saddled with the liability of claims which were not part of the plan. The Hon ble Supreme Court has time and again held that it an imperative need to impart finality to the resolution process by protecting an SRA from undecided claims. In the present case, the plan having been approved by the Adjudicating Authority on 16.04.2019, the stage to challenge the plan approval came to an end long time back. Therefore, the Resolution Plan as approved by the Adjudicating Authority has become binding on the Corporate Debtor, creditors, guarantors and other stakeholders involved in the Resolution Plan. Having noticed the contours of IBC and settled jurisprudence, the derivative is crystal clear that no surprise claims should be flung on the SRA in a belated manner. In the present case, there has been a lapse of more than 5 years since approval of the resolution plan. After the Adjudicating Authority had approved the resolution plan, the same was not challenged and had therefore acquired finality thereby vesting a right in favour of the SRA to acquire the Corporate Debtor in terms of the resolution plan. The same vested right therefore cannot be taken away except in accordance with law. Allowing any interference with the plan at this stage by introducing new claims would prejudice the SRA and put the Corporate Debtor into the throes of grave and unpredictable uncertainty at a time when the resolution plan has been implemented and the CoC not in existence anymore. Considering the overall architecture of the IBC and the Court evolved jurisprudence, it is clear that the Adjudicating Authority is not empowered to modify the resolution plan approved by the Committee of Creditors. In the eventuality of the Adjudicating Authority finding that the approved resolution plan requires certain modifications, it can only make suggestions regarding the modification of plan to the CoC but cannot unilaterally modify the plan - There is no material on record to demonstrate any such non-compliance or default or failure or breach attributable on the part of the SRA in the plan implementation for the Corporate Debtor to warrant interference by the Adjudicating Authority. The Adjudicating Authority has clearly exceeded its jurisdiction - Both the impugned orders are set aside. The Appeals are allowed.
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2024 (12) TMI 1150
Rejection of recall of the admission order - withdrawal of CIRP u/s 12A of the Insolvency and Bankruptcy Code (IBC) - exercise of inherent jurisdiction permitting withdrawal of CIRP proceedings against the CD. Rejection of recall of the admission order - HELD THAT:- The Adjudicating Authority did not commit any error in rejecting the prayer of the Appellant in IA No.2241 of 2024 for recall of the order dated 08.10.2021. The Adjudicating Authority has also in paragraph 26 has noted the order passed by this Appellate Tribunal and has rightly observed that no case has been made out for recall of the admission order dated 08.10.2021. There are no error in the order of the Adjudicating Authority rejecting the prayer of the Appellant to recall order dated 08.10.2021. The order of Adjudicating Authority to that extent is not interfered with. Withdrawal of CIRP u/s 12A of the Insolvency and Bankruptcy Code (IBC) - exercise of inherent jurisdiction permitting withdrawal of CIRP proceedings against the CD - HELD THAT:- With regard to withdrawal under Section 12A of the IBC, the law has been settled by Hon ble Supreme Court in Glass Trust Company LLC v. BYJU Raveendran [ 2024 (10) TMI 1185 - SUPREME COURT (LB) ]. The Hon ble Supreme Court in the said judgment has noticed the procedure for withdrawal of the CIRP as provided in Section 12A and Regulation 30A of the CIRP Regulations - In the present case, Section 7 Application has been filed by Respondent Nos.6 to 9 and unless an Application is filed by the Applicant, who has initiated Section 7 Application, compliance of Section 12A read with Section 30A, cannot be made. The present is not a case where CIRP can be withdrawn under Section 12A read with Regulation 30A. There can be no quarrel to the proposition that in a case where Adjudicating Authority comes to the conclusion that ingredients of Section 65 are attracted, i.e. Application has been filed with fraudulent or/ with malicious intent for the purpose other than the resolution of the Corporate Debtor, the Adjudicating Authority may impose on such person penalty. In a case where finding is returned within the meaning of Section 65, the Adjudicating Authority can very well exercise its inherent jurisdiction to close such CIRP proceedings. While considering the exercise of inherent power by the Adjudicating Authority, it is already noticed the judgment of the Hon ble Supreme Court in SBI vs. Consortium of Murari Lal Jalan Florian Fritsch [ 2024 (1) TMI 1021 - SUPREME COURT ], wherein the Hon ble Supreme Court laid down that in an appropriate case, the Adjudicating Authority very well can exercise its inherent power. The order passed by Adjudicating Authority rejecting the prayer of the Appellant to recall order of admission is upheld - appeal disposed off.
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FEMA
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2024 (12) TMI 1149
Penalty imposed under FEMA - petitioner was appointed as Vice President of the Board of Control for Cricket in India ( BCCI ), and claims to have been appointed Chairman of the IPL governing body, a subcommittee of the BCCI - relief in this case is firstly against the BCCI on the ground that by-laws require the BCCI to indemnify the petitioner. HELD THAT:- In Zee Telefilms Ltd. Anr. Vs. Union of India Ors.[ 2005 (2) TMI 773 - SUPREME COURT] as held that the BCCI does not answer the definition of State within the meaning assigned to this term under Article 12 of the Constitution of India. Therefore, this petition and the reliefs sought for it are not maintainable. Though the above decision was delivered in 2005, this petition was instituted in 2018, pleading that the Hon ble Supreme Court and this Court have consistently held that the BCCI is amenable to writ jurisdiction under Article 226 of the Constitution of India. In matters of alleged indemnification of the petitioner in the context of penalties imposed upon the petitioner by the ED, there is no question of discharge of any public function, and therefore, for this purpose, no writ could be issued to the BCCI. In any event, the reliefs are wholly misconceived. The adjudication authority under the FEMA has imposed a penalty of Rs. 10,65,00,000/- upon the petitioner. The petitioner now seeks a writ of mandamus on the BCCI to pay this amount to the Enforcement Directorate (ED). No such mandamus can be issued. This petition is frivolous, and accordingly, we dismiss this petition with costs of Rs. 1,00,000/- payable to Tata Memorial Hospital.
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2024 (12) TMI 1148
Penalty imposed - failure take reasonable steps for repatriation of export proceeds of US$ 5,36,759.50 for the goods exported in the year 1997-98 - Ground of limitation - It would clearly reflect that respondent No. 2 had in fact issued the first show cause notice to the appellants on 23.01.2001 and the said date is well within the sunset period of two years prescribed u/s 49 (3) of the Act of 1999. The appellants have also submitted reply to the said notice on 01.12.2001, which again is within the sunset period itself, as in terms of Section 49 (3) of the Act of 1999 the proceedings could had been initiated up to 31.05.2002 which in the instant case was initiated on 23.01.2001 to which the appellant has also given his reply on 01.12.2001. Hence, keeping in view the judgments of Mohd. Mustafa Ahmed Alvi and Others vs. Union of India and Others [ 2005 (11) TMI 257 - HIGH COURT OF ANDHRA PRADESH] and Binod Agarwal [ 2006 (12) TMI 587 - DELHI HIGH COURT] and M/s. Kitti Steels Limited and Others [ 2023 (6) TMI 1458 - TELANGANA HIGH COURT] the ground of proceedings being vitiated on the ground of limitation is not available in the instant case. Merits of the case RBI s write off was subject to the condition that the appellants would return the export incentive already availed by them. This in other words means that unless the return of the export incentive was testified by the appellants, the RBI s write off will not come into play. The entire correspondence of RBI while granting write off has to be read in consonance and in altogether and therefore the claim of the waiver of contravention of Section 18 (2) of the Act of 1973 cannot be accepted on the submissions made by the learned counsel for the appellants on its face value. What is also reflected is that the Appellate Tribunal has already duly considered the contentions put forth by the appellants as also the Special Director of Enforcement Directorate and have held that since the Special Director of Enforcement Directorate did not point out the actual amount of export incentive availed by the appellants, they are also to some extent reasonable for non-compliance of the order of the RBI so far as the write off is concerned. Appellate Tribunal had substantially reduced the burden of penalty imposed in the Order in original to 1/3rd of what was imposed. This in the opinion of this Bench also is a sufficient indication of proper consideration of the contentions put forth by the appellants before the Appellate Tribunal. A plain reading of the order of the Appellate Tribunal would also show that the Appellate Tribunal had passed a reasoned and a speaking order dealing with all the aspects raised before it by the appellants. Since there was a non-compliance on the part of the appellants so far as the condition imposed while granting write off, the appellants undoubtedly have contravened the provisions of Section 18 (2) and (3) of the Act of 1973. We do not find any substantial merits made out by the appellants calling for an interference to the impugned orders. The three appeals therefore being devoid of merits, deserve to be and are accordingly dismissed.
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PMLA
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2024 (12) TMI 1147
Money Laundering - organized crime - proclaimed offender - whether the captioned Appeals challenging the impugned order should be entertained on the civil side or the criminal side? - HELD THAT:- The power of attachment of the property is therefore, conferred upon the Adjudicating Authority against whose order an Appeal is maintainable before the Appellate Tribunal, but this is a provision which is supplementary to the offence of money laundering created under the statute and with a specific provision prescribing that the confiscation or release of the property upon conclusion of trial, will depend upon whether the offence of money laundering has been made out or not. Upon a finding to that effect being finally rendered in a trial of an offence under PMLA, on conclusion of the trial, it can be rightly assumed that the power to attach the property and its adjudication is in the aid of the Special Court, who shall ultimately pronounce upon the aspect of commission of offence of money laundering. Since the proceedings for attachment and its adjudication by the Adjudicating Authority, are in aid of the trial of the offence, an Appeal being preferred against an order passed by the Authority before the Appellate Tribunal, is definitely liable to be entertained on the criminal side. By reading Section 9 of the Act, it was inferred that the proceedings taken therein, following the procedure of Code of Civil Procedure, results either in confirmation of ad-interim order of attachment passed by the Government or varying the same, and sale of property, leading to equitable distribution among depositors of money realised out of such sale, and it was concluded that it would be in form of Civil Appeal. Reliance placed upon the decision of the Delhi High Court in case of Deputy Director, Directorate of Enforcement, Vs. Axis Bank and Ors. [ 2019 (4) TMI 250 - DELHI HIGH COURT ] where the learned Judge has summarized the conclusion to the effect that the process of attachment (leading to confiscation) of proceeds of crime under PMLA is in the nature of civil sanction which runs parallel to investigation and criminal action vis- -vis the offence of money laundering, do not determine the issue as to whether the Appeal should be entertained on criminal side or civil side. There can be no difference of opinion that while the proceedings of attachment are conducted by the Adjudicating Authority, in adjudicating the rights of the contesting parties, the Adjudicating Authority shall have the powers vested in a civil court under Code of Civil Procedure and the proceedings shall be deemed to be civil proceedings. The ultimate test to be applied is, whether the attachment of property was on account of the registration of offence under PMLA, and what has to be done with the property on culmination of the trial, and in this case, since the result of attachment would depend upon the result of the trial of an offence. Necessarily, the proceedings having criminal element involved, would lie on the criminal side of the High Court - the Appeal is directed to be listed after Christmas Vacation.
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2024 (12) TMI 1146
Money Laundering - challenge to provisional attachment order on the ground of time limitation - challenge to the order has been made mainly in reference to section 5 (3) of the Act of 2002 on the ground that the order of confirmation of provisional attachment order is subsequent to the period of 180 days, thus it should lapse - criminal conspiracy - forging of licenses - attachment of joint property. Whether the confirmation of the provisional attachment order beyond 180 days should result in its lapse under Section 5(3) of the Prevention of Money Laundering Act, 2002? - HELD THAT:- The impugned orders were passed during the period of Covid-19. Both the orders were passed in the year 2021 which was the period of Covid-19. The Supreme Court extended the period for termination of proceeding under any statute. Whether the attached property being a joint property without notice to the joint holder invalidates the attachment order? - HELD THAT:- There are no material on record to show that the property attached to be a joint property and in any case, if it is assumed for the sake of argument that the property attached is a joint property, the challenge to the order should have been made by the party holding the property with joint share. The appeal is not preferred by anyone else than the appellant - this ground cannot be accepted as well. Thus, there are no case to cause interference in the impugned order - appeal dismissed.
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Service Tax
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2024 (12) TMI 1145
Reinitiation of adjudication proceedings after a gap of nine years is time-barred u/s 73 (4B) of the Finance Act or not - jurisdiction to issue SCN - issuance of the impugned hearing notice by an officer under the CGST Act is valid or not - HELD THAT:- There is a merit in the contention of the learned counsel for the petitioner that the Revenue / respondents were in knowledge about the proceedings being dropped against the petitioner in respect of the earlier two show cause notices, and also the fact that the appeal of the Revenue had already been dismissed by the learned CESTAT vide judgment dated 15.09.2022 [ 2022 (9) TMI 853 - CESTAT NEW DELHI] , i.e. about two years prior to issuance of impugned hearing notice dated 18.09.2024. This Court is of the view that Section 73 (4B) was framed and introduced in the Finance Act to ensure effective administration of taxation. While there cannot be denying that the taxation forms the backbone of a nation's economy, any inordinate delay by the Revenue itself in prosecuting its own cases cannot be construed in their favour by stretching the period of limitation to nine years especially when the provision requires the proceedings to be concluded within six months / one year - De hors the aforesaid findings, even if one accepts that the time period of six months/one year as mentioned in Section 73 (4B) of the Finance Act is only suggestive, it would be unreasonable to hold that the same can be extended till a period of nine years in the given facts and circumstances of the case. The Revenue s contention that it was justified in keeping the proceedings in this case, in abeyance because an appeal pertaining to similar issue was pending before the learned CESTAT, is unmerited. The filing of an appeal in another case qua the petitioner, though on identical issue, and its pendency before the learned CESTAT cannot be held as a valid reason for not conducting the proceedings in the present case, after a show cause notice has already been issued, within the time frame as laid down in Section 73 (4B) of the Finance Act. Even if the said appeal was pending, the proceedings in this case could have continued and order(s) could have been passed, and if aggrieved, the Revenue could have again approached the learned CESTAT by way of an appeal. There are no reason for the delay caused in the present case in not concluding the hearing qua the impugned show cause notice dated 21.04.2015 within the stipulated time period, and for issuing the impugned hearing notice dated 18.09.2024 after a period of nine years - it is apposite to quash and set aside the impugned hearing notice dated 18.09.2024 issued by respondent no. 5. Petition disposed off.
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2024 (12) TMI 1144
Recovery of service tax - Interpretation of Sabka Vishwas Scheme under Article 226 of the Constitution of India - amount already deposited by the petitioner during investigation - HELD THAT:- It is not in dispute that the petitioner had deposited the amount of Rs. 30,36,101/- pending investigation which is also adjusted in the order-in-original passed by the respondent authority after the scheme was over while determining the tax liability under the provisions of the GST Act. Therefore, the amount of Rs. 30,36,101/- ought to have been considered as the amount paid towards the outstanding liability instead of amount of pre-deposit made by the petitioner of Rs. 4,86,851/- for preferring the appeal before the Commissioner (Appeals). There is a glaring mistake committed by the Designated Committee while computing the amount payable under SVLDRS. The petitioner was always ready and willing to deposit the amount of Rs. 30,82,811/- after considering the amount of Rs. 30,36,101/- deposited by the petitioner. Therefore, by permitting the petitioner to deposit the amount of Rs. 30,82,811/- with interest, it cannot be said that the time period for deposit under SVLDRS would be extended as the Designated Committee has committed an error in computation of the amount payable under the provisions of the SVLDRS without taking into consideration the amount already deposited during the investigation by the petitioner. The petitioner is directed to deposit amount of Rs. 30,82,811/- within a period of four weeks from today along with interest at the rate of 9% p.a. from 06.03.2020 till the date of payment - Petition allowed.
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2024 (12) TMI 1143
Classification of services provided by the appellants as Works Contract Service - taxability prior to 01.06.2007 - Issuance of two consecutive SCN - Extended period of limitation. Classification of services provided by the appellants as Works Contract Service - taxability prior to 01.06.2007 - HELD THAT:- The works undertaken by the appellants are Works Contract as defined under Heading 65(105)(zzzza) and are taxable only w.e.f. 01.06.2007. This being the position, argument of the Department that the projects were not of commercial nature would not be of any help. Hon ble Courts and the Tribunals have been continuously holding that such contracts involving service and material components are taxable only from 01.06.2007. Issuance of two consecutive SCN - Extended period of limitation - HELD THAT:- The first Show Cause Notice covered the period of 10.09.2004 to 31.03.2010 and the second Show Cause Notice covered the period 2007-08 to 2011-12. Revenue has erred not only in issuing two consecutive Show Cause Notices invoking the extended period but also covered a period which was common to both the Show Cause Notices. No particular suppression of facts etc. with intent to evade payment of duty has been evidenced against the appellants - Extended period cannot be invoked. Appeal allowed.
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2024 (12) TMI 1142
Exclusions made by the Department for the purpose of arriving at the export turnover on the services in terms of N/N. 05/2006-CE(NT) dt.14.03.2006, as amended by N/N. 27/2012-CE(NT) dt.18.06.2012 - whether certain exclusions made by the original sanctioning authority for calculating export turnover of services are correct or otherwise? - HELD THAT:- These services are intermediary services, viz., outbound call centre services and reimbursement in the nature of foreign exchange received towards services provided to foreign personnel who visit India. It is also noted that against the said exclusion of services for computing the export turnover, the appellant had come before this Bench in appeal and this Bench [ 2024 (1) TMI 887 - CESTAT HYDERABAD ] has already decided the issue and held that ' it is clearly established that there is connection between the visits of the foreign customers and the backoffice support services provided by the appellant, in terms of the subcontracting arrangement, these expenses should qualify as export turnover and be allowed the benefit of export without payment of taxes since the same would be covered in terms of Rule 3 of the POPS, which says that the place of provision of service, would be the location of the recipient, in this case, HGRL, UK.' The matter can be remanded back to the Original Sanctioning Authority - all these appeals are disposed of by way of remand.
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2024 (12) TMI 1141
Agreement of partnership or otherwise - Joint Venture (JV) - agreement along with the codicil - nature of service being provided by the appellant to M/s GG was classifiable under Business Support Service or is rightly classified as Mining Service under Section 65(105)(zzzh) of the Finance Act, 1994 w.e.f. 01.07.2007 - Invocation of exetnded period of limitation. Whether the agreement dt.17.10.2001 along with the codicil can be considered as agreement of partnership or otherwise? - HELD THAT:- There are much force in the contention of the department that this is an agreement between service provider and service recipient and not a partnership agreement, if all the clauses are evaluated holistically. A codicil to the agreement made at a later date, that too unregistered, terming the whole agreement as an agreement of partnership will not be tenable in the light of the fact that the terms and conditions of the agreement dt.17.10.2001 were not changed, except for Income Tax related provisions, since on holistic evaluation of all terms and conditions, it is apparent that it is not an agreement of partnership and thus, there cannot be a service to sell, which appellants are canvassing. Therefore, the agreement dt.17.10.2001 is in the nature of service agreement between M/s GG and the appellant and not a partnership agreement, therefore, there would be liability to discharge Service Tax on the services provided by the appellant to M/s GG. Whether the nature of service being provided by the appellant to M/s GG was classifiable under Business Support Service or is rightly classified as Mining Service under Section 65(105)(zzzh) of the Finance Act, 1994 w.e.f. 01.07.2007? - HELD THAT:- In the facts of the case, it is absolutely clear that the scope of the work is quarrying and the fact that M/s GG holds a prospecting license for black granite granted by the Director of Mines and Geology, the entire activity is mining activity only and not Business Support Service as contended by the appellant. The appellant tried to highlight some of the clauses in their agreement in support that the activities would more appropriately fall within the category of Business Support Service rather than under Mining service as alleged by the Department. Admittedly, they are also raising invoices, jointly fixing sale price, furnishing periodical statements and returns and constructing rest shed, sanitary conveniences, blaster sheds, etc. However, these activities themselves cannot convert the entire quarrying and mining activities into Business Support services. These services are incidental to their mining services and are intrinsically required to be performed in connection with their mining activities in terms and conditions for providing that mining service to M/s GG - thus, the activities would be more aptly covered within the category of Mining service and not under Business Support service in the given factual matrix. Whether, in the facts of the case, the provisions for invoking extended period if justified or otherwise? - HELD THAT:- While the appellants and M/s GG have entered into an elaborate agreement clearly marking the nature of services to be performed, they have not taken enough care to find out the exact nature of services or taxability and merely because they have furnished certain information or copy of agreement to the department, it would not absolve them from the invocation of extended period in the given facts of the case. The fact that they never disclosed codicil to Department or claimed their services as Business Support services and not Mining service also supports the view that appellants have not come out with clean hands before the Department. Therefore, there are no reason to interfere with the findings of the Commissioner relating to limitation. Thus, in the present case, the agreement is not that of partnership and is in the nature of service agreement, where the appellants are service provider and are therefore, liable to pay Service Tax - they are providing Mining Services and not Business Support Services - there is sufficient ground for invoking the extended period for raising the demand - there are no infirmity in the impugned order and therefore any reason to interfere with the Order of the Original Authority. Appeal dismissed.
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2024 (12) TMI 1140
Classification of services - service of conduction seminars and charging delegate fees - Convention Services or Club or Association Services? - Applicability of the principle of mutuality to the services provided by the appellant - HELD THAT:- The appellant is registered under Club or Association service which specifically excludes any person or body of persons engaged in the activities of Trade Unions. In the instant case, it is seen that the seminars and workshops being held by the appellant is for the benefit of their members only, as is obvious from the nature of these seminars. It is also noted that the appellant is an association of its members, and therefore no service tax can be charged on service to one self, as per the principle of mutuality. Reliance pplaced in the decision of the Hon ble Supreme Court in the case of STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT] wherein it was held that the definition of club or association contained in Section 65(25a) makes it plain that any person or body of persons providing services for a subscription or any other amount to its members would be within the tax net. However, what is of importance is that anybody established or constituted by or under any law for the time being in force, is not included. Consequently, the Hon ble Supreme Court concluded that companies and cooperative societies and like which are registered under the respective Acts, can certainly be said to be constituted under those Acts, and therefore incorporated clubs or associations constituted prior to 1st July, 2012 are not included in the service tax net. In the instant case, the appellant was an industry specific body of persons registered under the Trade Union Act, 1926. The main objectives, inter alia, to regulate the relationship between workmen and employers; to promote and regulate and consider all questions affecting them, make representations to local/State/Central government authorities on any matter connected them etc., falling within the parameters defined by the Hon ble Supreme Court. Consequently, the holding of seminars/workshops by the appellant does not fall within the ambit of Convention Services on the basis of the principle of mutuality. Consequently, the charging of Delegation Fee is not leviable to service tax. Thus, the demand of service tax on Convention service is liable to be set aside. Once the principle of mutuality is accepted, then all other activities carried out by the appellant on which demand has been confirmed is also set-aside - the impugned order is set aside - appeal allowed.
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2024 (12) TMI 1139
Activity amounting to manufacture or Business Auxiliary services - appellants are engaged in processing of goods of M/s. Varroc Engineering Pvt. Ltd. on job work basis and the said conversion charges are used for doing the said activity - Extended period of limitation. Activity amounting to manufacture or Business Auxiliary services - HELD THAT:- The department has produced a detailed literature about the processes undertaken by them on the raw material received from the principal manufacturer to explain that the Forged Blastings received from the principal manufacturer are being converted into Gear 4th Platina . The photographs of Forged Blasting and the Gear 4th Blatina are also placed on record. In fact, both the physical goods were also produced before the bench as sample - Though the product of the appellant is not the final product of M/s. Varroc Engineerig Pvt. Ltd. but the product sent back to the principal manufacture was no more a raw Forging Blast supplied by the principal manufacturer. Forged Blasting has converted into Gears/shafts except an outer gear cutting to be done at the end of M/s. Varroc Engineering Pvt. Ltd. in order to make them complete Gears and Shafts . But the fact remains is that after the job work done by the appellant, the Forge Blasting as no more the same. It has converted into Gear 4th Platina a distinct product known to said trade distinctly. No evidence produced by the department to falsify the same. The burden of proving the allegation was on the department itself. Thus, the processes of cutting, deburring and broaching on the raw material/Forged Blastings have laid into existence of a new product having gear teeth on its internal ring and the cutting in the centre of the product which can now readily be identified and called as Gear . Hence it is held that since any process incidental or ancillary to the completion of manufactured product also falls in the definition of manufacture (Section 2(f) of Central Excise Act, already quoted) and that the processes undertaken by the appellant have imparted change of lasting character to the raw material to the extent that a new product had come into existence with a distinguishable identity, the activity done by the appellant is such which amounts to manufacture - the order confirming the demand of service tax alleging the job work done by appellant to be Business Auxiliary Service by provided to M/s. Varroc Engineering Pvt. Ltd. is liable to be set aside. Extended period of limitation - HELD THAT:- The appellant is alleged to have suppressed the value of taxable services. The entire above discussion has already held that appellant was not providing any taxable services. The question of suppression of such activity becomes absolutely redundant. Since the activity of appellant is held to be an activity amounting to manufacture, question of appellant to seek service tax registration vis- -vis rendering such activity does not arises. The allegations that ST-3 returns were not filed also becomes redundant. Thus, it has wrongly been held that non-filing of returns amounts to an act of suppression on part of the appellants. Since appellant was not liable to pay any service tax question of having intention to evade the tax payment is also not applicable - irrespective the appellant was processing the raw material as job worker but as already held above, a distinct product with distinct use and character had emerged, the job work was amounting to manufacture. Accordingly it is held that there is no act of alleged suppression on part of the appellant. The show cause notice has wrongly invoked the extended period. The order under challenge is hereby set aside - Appeal allowed.
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2024 (12) TMI 1138
Application for refund against export of output services namely Information Technology from September 2008 to March 2009 rejected - non-registration of premises - HELD THAT:- After the decision of SPAN INFOTECH (INDIA) PVT LTD P LTD [ 2018 (2) TMI 946 - CESTAT BANGALORE] , statute has been necessarily amended to incorporate provision to the effect that computation of limitation period to grant refund would start from the date of receipt of foreign exchange by the exporter, apart from the fact that section 35A(4) of the Central Excise Act 1944 which is equally applicable to Service Tax matters in view of operation of section 73(5) of the Finance Act 1994, the Commissioner (Appeals) is required to pass his/her order disposing of the appeal in writing by stating the points for determination, the decision thereon and the reasons for such decision, which is admittedly not done in respect of all issues raised before him while disposing of the appeal . The matter requires a de novo hearing by the Commissioner (Appeals) for which this appeal is required to be remanded back to him for de novo hearing and for giving his finding in accordance with section 35A (4) of the Excise Act, equally applicable to Service Tax matters, while disposing of the appeal - the appeal is allowed by way of remand.
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2024 (12) TMI 1137
Liability of appellant to pay tax on outbound tours and for in bound tours being provided to foreign travelers - liability of appellant to pay service tax on domestic outbound tours - liability to pay service tax on the amount received as web design charges. Whether appellant is liable to pay tax on outbound tours and for in bound tours being provided to foreign travelers? - HELD THAT:- Since, arrangement of tours outside the territory of India i.e the destination being outside India for outbound tours irrespective the service recipient is located in India or is a foreign traveller, the outbound tour is not liable to service tax. There is no tax activity on outbound tours in terms of Rule 3(2) of Export of Service Rules, 2005 according to which the taxable service which is partly performed in India has also to be considered as the activity performed outside India. Notification No. 09/2005 dated 03.01.2005 also extends exemption from service to outboud tours - reliance can be placed in M/S COX KINGS LIMITED (FORMERLY KNOWN AS COX AND KINGS (INDIA) LIMITED) VERSUS COMMISSIONER (TAR) -MUMBAI [ 2023 (10) TMI 1388 - CESTAT MUMBAI - LB] - Issue stands decided in favour of appellant. Whether the appellant is entitled to pay service tax on domestic outbound tours? - HELD THAT:- The insertion of clause (q) in Section 67 of Finance Act provides that the value of tour operator service will not only include the gross amount charged for the tour but also the charges for accommodation, food or any other facility provided in relation to such tour, we hold that the amount charged by the appellant for arranging domestic tour is liable to be taxed. In terms of TRU clarification No. 43/10/1997 dated 22.08.1997 the service tax on the services rendered by tour operators is only on tour services rendered in India in respect of tour with in Indian Territory (inbound tours). The services rendered by tour operators in respect of outbound tourism i.e. tours abroad do not attract to service tax. In case of composite tour which combined tour with in India and also outside India, the service tax will be leviable only on services rendered for tours within India. Separate billing has to be done by the tour operators for services provided in respect of tours within India. The order under challenge confirming the demand on inbound tours, is therefore, upheld. Whether the service tax is to be paid by the appellant on the amount received as web design charges? - HELD THAT:- It is observed that the intellectual property right service has been defined under Section 65 (55a) of Finance Act 1994 to mean any right to intangible property, namely, trademarks, design, patent or any other intangible property under any law for the time being in forced. The term trademark is defined under clause 2(b) of Section 2 of Trade Marks Act, 1990 to mean a mark capable to being represented graphically and which is capable of distinguished goods or services of one person from those of others and may include shape of goods, the packing and combination of colours. The definition makes it clear that the trademark indicates relationship between goods or services and proprietor of such trademark. The domain name is not a trade mark as neither user thereof nor the provider of the services is the proprietor of the domain name. Hence, any amount paid for using the domain name cannot be called as an amount paid for receiving the taxable service of intellectual property right. This observation are sufficient to hold that the demand on Issue No. 3 is not sustainable. The demand with respect to outbound tours and the demand with respect to web domain charges is hereby ordered to be set-aside, however, the demand with respect to domestic tours provided to Indian travellers and the demand on renting of immovable property is hereby confirmed. The order under challenge is partly set-aside and partly sustained. Consequently, the appeal also stands partly allowed.
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2024 (12) TMI 1136
Liability to pay service tax on erection, commissioning, and installation charges included in the sale of Draw Texturising Machines - HELD THAT:- Similar matter has already been decided by this tribunal in case of C.C.E S.T. -SILVASA VERSUS AALIDHRA TEXTOOL ENGINEERS PVT LTD [ 2022 (12) TMI 11 - CESTAT AHMEDABAD] and therefore the matter is no longer res-integra - it was held by CESTAT that ' where an activity so Integrarely related and connected with the manufacturing activity and the purchase orders are for the complete plant ind machineries, duty commissioned, without showing any segregated amount recovered for erection and commissioning and where the entire contract value is taken as an assessable value for the purpose of payment of excise duty, no service tax is liable to be paid by the assessee.' Appeals of Revenue dismissed.
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Central Excise
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2024 (12) TMI 1135
Whether the job worker is liable to pay central excise duty when the job worker has received raw material against challans under Rule 57 F (2) of the Central Excise Rules, 1944? - HELD THAT:- The identical issue was taken up by the Supreme Court after the High Court passed an order in favour of the revenue in Kartar Rolling Mills v. Commissioner of Central Excise, New Delhi [ 2006 (3) TMI 63 - SUPREME COURT] , and the Supreme Court held that ' Since the notification came into effect from 11-4-1994, the benefit of the notification cannot be extended to the appellants retrospectively w.e.f. 1-3-1994.' The demand for central excise duty ss affirmed by the Commissioner (Appeals) in the impugned order and subsequently upheld by the Tribunal, with a reduction in the penalties imposed upon the assessee - The reference is accordingly answered in favour of the revenue.
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2024 (12) TMI 1134
Liability of appellant to pay interest u/s 11AA of the Central Excise Act, 1994 when neither the show cause notice nor the adjudication order therein propose levy of interest - principles of natural justice - HELD THAT:- When, admittedly, the said provision was not there in the statute at the time of issuance of show cause notice nor specified in the Order-in-Original therein. Admittedly the said provision were inserted w.e.f. 26.5.1995 vide Section 73 of the Finance Act, 1995 which provides that Where a person chargeable with duty determined under sub-section (2) of Section 11A, fails to pay such duty within three months from the date of such determination, he shall pay in addition to the duty, interest at the rate not below 18% and not exceeding 36% per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, on such duty from the date immediately after the expiry of the said period of three months till date of payment of such duty. On identical issue, a co-ordinate Bench of the Tribunal in the matter of Excel Tyre Rubber Products vs. CCE, Mangalore [ 2016 (8) TMI 1070 - CESTAT BANGALORE ] after going through various decisions cited by the revenue in support of their submission for charging interest, including the decision of Prabhat Zarda Factory Ltd. [ 2002 (2) TMI 228 - CEGAT, NEW DELHI ], has held that interest cannot be demanded from the appellant therein which was never resorted to either in the show cause notice or in the Order-in- Original - the views taken therein agreed upon. The department cannot deduct and adjust or charge any interest which was neither proposed in the show cause notice nor imposed in the Order-in-Original by the Adjudicating Authority - the impugned order is set aside - Appeal allowed.
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2024 (12) TMI 1133
Availment of MODVAT/CENVAT Credit - Suppression of manufacturing details - separate financial records were not maintained in respect of exempted products and dutiable products - violation of various provisions contained in Rule, 57 of the then Central Excise Rules, 1944 read with Rule, 12 of the CENVAT Credit Rules, 2001 and proviso of Section 11A of the Central Excise Act - HELD THAT:- Modified Value Added Tax (MODVAT) was introduced in 1986 in India that has taxed the value addition to a product and not to the product itself. A manufacturer pays duties on the inputs procured by it and capital goods purchased by it for the purpose of manufacturing final product(s) on which he pays the duty and the duty paid by him on its inputs and capital goods are credited to its account so as to enable him to adjust the said amount at the time of payment of duty on the final product, so that the ultimate consumer will not suffer the burden of duty liability again again on the product purchased by him/her and also on all its components, those were used to manufacture the final product. Appellant had already paid more than ₹11 lakhs for the relevant period in addition to what was taken in total towards accumulated CENVAT Credit, which of course is not due to it legally, as per provision of law but judicial decision is consistent on this issue starting from what is being relied on by this Tribunal in its final order dated 21.11.2005 namely the case of Narayan Polyplast (Respondent) [ 2004 (11) TMI 112 - SUPREME COURT] , Punjab Tractors Ltd. [ 2005 (2) TMI 141 - SUPREME COURT] and Narmada Chematur Pharmaceuticals Ltd. [ 2004 (12) TMI 93 - SUPREME COURT] and the one passed in CENVAT regime namely Commissioner of Central Excise Vs. Ajinkya Enterprises [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] , as relied upon by learned Counsel for the Appellant, wherein it had been consistently held that once duty on final product has been accepted by the Department, CENVAT Credit availed need not be reversed even if the activity does not amount to manufacture. In the order passed by Hon'ble Bombay High Court reservation was expressed on the ground that Revenue neutral situation were discussed in Narmada Chematur Pharmaceuticals Ltd. case but this judgment is cryptic in which discussion on the same was missing. Concurring with the findings of the Commissioner that not a single final product was dutiable, invocation of extended period would result in the same situation as that of a duty assessment for normal period but having regard to the fact that there is a clear observation of Hon'ble Bombay High Court that specific finding concerning allegation of suppression of material fact was available in the order passed by the Commissioner, that has not been dealt with properly by the Tribunal, it is considered worthwhile to reiterate that at no point of time for the entire extended period covering calendar month from March 1997 to August 2001, final products manufactured by Appellant were dutiable and after analysing with reference to judicial precedent on the legality of availment of inadmissible credit that was adjusted against payment of tax on non dutiable products, nothing survived to confirm any liability of dues of any kind on the Appellant, who though had not mentioned while registering under Excise Act about its plan to manufacture vegetable edible oil that was subjected to nil rate of duty had filed periodical intimation under Rule, 173B of the Central Excise Rules, 1944 since 24.11.1997 after started manufacturing after March 1997, in which event for irregularity in applying for registration Appellant could have been prosecuted but that would never justify invocation of extended period. The order passed by the Commissioner of Central Excise, Pune-III is hereby set aside - Appeal allowed.
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2024 (12) TMI 1132
Rejection of appeal on the ground of time limitation - appeal appears to be filed after 3 years from the date of the order - HELD THAT:- As per the fact, the order was first sent by registered AD post which was returned as the factory was closed, thereafter the order was affixed on the notice board of the Assistant Commissioner following the clause (c) of Section 37C. By plain reading of Section 37C (1) sequentially from clause the (a) to (c), first the department is supposed to send the order by registered post and if it is not possible to be delivered thereafter the order should be affixed to some conspicuous part of the factory, warehouse or other place of business or usual place of residence of the person for whom such decision, order is intended and in case the order cannot be served in the manner prescribed under 37C(1) (a) and (b) then only the order should be affixed on the notice board of the office of the department. Therefore, it is found that instead of affixing a copy on the notice board, and since the order was returned which was sent by post, the department was supposed to affix copy of the order at the factory, which was not complied by the department. Therefore, the affixing tge order copy on the notice board is not the proper service of the order. In this fact only when the appellant have received the order copy on 27.03.2015 it is that which is correct date of communication of the order to the appellant, and if this be so, the appeal was filed well within the stipulated time period of two months. Hence, there is no delay. However, since the commissioner (Appeals) has decided the appeal only on the time bar, the matter needs to be reconsidered by Commissioner (Appeals) on merit. The impugned order is set aside - Appeal is allowed by way of remand to the Commissioner ( Appeals ), for deciding a fresh, only on merit without visiting again on the issue of time bar.
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2024 (12) TMI 1131
Liability to pay excise duty on tools and fixtures manufactured and used captively for the manufacture of parts of motor vehicles - Applicability of exemption Notification No. 67/95-CE on tools and fixtures - Demand of excise duty on tools and fixtures cleared to the appellant's own unit at PuneRevenue neutrality - extended period of limitation. Liability to pay excise duty on tools and fixtures manufactured and used captively for the manufacture of parts of motor vehicles - Applicability of exemption Notification No. 67/95-CE on tools and fixtures - HELD THAT:- The contention of the revenue is that since for these tools and fixtures sale invoices were raised by the appellant they are liable to pay excise duty. This contention of the revenue cannot be agreed upon for the reason that firstly the excise duty is payable only at the time of clearance of the goods secondly in the present case the tools and fixtures manufactured by the appellant is used within the factory as captive consumption for manufacture of other excisable goods that is parts of motor vehicle which are cleared on payment of duty to M/s. General Motors India Pvt Ltd. The said captive consumption is clearly covered by exemption Notification No. 67/95-CE dated 16.03.1995 therefore no excise duty is payable on tools and fixtures manufactured and captively used even though the sale invoice in favour of M/s. General Motors India Pvt Ltd were issued. Demand of excise duty on tools and fixtures cleared to the appellant's own unit at Pune - HELD THAT:- As regard the demand of duty on tools and fixtures cleared by the appellant to their Pune unit, it is found that the Pune unit is also engaged in manufacture of parts of vehicle for General Motor India Pvt Ltd and the same is cleared on payment of duty, therefore they are eligible for Cenvat Credit of duty, if any payable by the appellant. Revenue neutrality - extended period of limitation - HELD THAT:- Since the entire exercise of duty if any payable by the appellant which is available as Cenvat Credit to their Pune unit this amount to revenue neutrality accordingly, as per the settled law in case of the revenue neutrality malafide intention cannot be attributed to the appellant, consequently extended period is not invokable. Therefore, in the facts and circumstances in the present case and as per the settled legal position, the duty payable on the clearance of the tools and fixtures to the Pune unit is hit by limitation for the reason that the demand was raised after the normal period. The impugned order is set aside - The appeal is allowed.
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CST, VAT & Sales Tax
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2024 (12) TMI 1130
Taxability - supply of PSC sleepers would amount to execution of a works contract or not - HELD THAT:- In K. Raheja Development Corporation vs. State of Karnataka [ 2005 (5) TMI 7 - SUPREME COURT] , the Hon ble Supreme Court was considering the taxability of a development agreement between land owners who had offered the land for construction of a multi-storied apartments and Commercial Complexes and the developer who took up construction, under this agreement. The Hon ble Supreme Court after considering the definition of works contract , contained in the Karnataka Sales Tax Act, which is in pari materia with the definition contained in APGST Act, had held that an agreement for construction of apartments, for a valuable consideration or in installments would amount to a works contract. In the present case, the petitioner is in regular manufacture of these sleepers which are supplied not only to Indian Railways but also to other dealers. Though the fact that the PSC Sleepers are made according to the specifications of Indian Railways, may be a significant factor which has to be taken into account, the fact remains that these sleepers are manufactured in the regular course of manufacture by the petitioner. In such circumstances, it may not be appropriate to conclude that the contract in question was a works contract and not a contract of sale. In view of the non-exclusive nature of supply and in view of the facts mentioned above, this Writ Petition is allowed setting aside the Assessment Order dated 28.05.2009, passed by the Assessing Authority.
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Indian Laws
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2024 (12) TMI 1129
Dismissal of the application for discharge u/s 227 of the Cr.P.C. - commission of offences like supply of narcotics - whether the dismissal of the application for discharge filed by the appellant calls for interference in view of the nature of the charge framed against him and the materials on record to support the same? - HELD THAT:- The alleged offence is consumption of narcotic drug or psychotropic substance other than those specified in or under clause (a) of Section 27, NDPS Act, and therefore, the question is whether any material is available to charge the appellant thereunder. The contention of the appellant is that he has been arraigned as accused No.13 based on the confession statement of co-accused viz., accused No.1. Certainly, in the absence of any other material on record to connect the appellant with the crime, the confession statement of the co-accused by itself cannot be the reason for his implication in the crime. This view has been fortified by the law laid down in Suresh Budharmal Kalani v. State of Maharashtra [ 1998 (9) TMI 656 - SUPREME COURT ], wherein it was stated that a co-accused s confession containing incriminating matter against a person would not by itself suffice to frame charge against him. The materials on record would reveal that the investigating agency had not subjected him to medical examination and instead, going by complaint Witness No.23, he smelt the accused. The sole material available against the appellant is the confession statement of the co-accused viz., accused No.1, which undoubtedly cannot translate into admissible evidence at the stage of trial and against the appellant. When that be the position, how can it be said that a prima facie case is made out to make the appellant to stand the trial. There can be no doubt with respect to the position that standing the trial is an ordeal and, therefore, in a case where there is no material at all which could be translated into evidence at the trial stage it would be a miscarriage of justice to make the person concerned to stand the trial. In view of the settled position of law stated and reiterated by this Court, the impugned judgment is liable to be interfered with and the appeal is liable to be allowed - Appeal allowed.
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2024 (12) TMI 1128
Validity and conditions of the oral gift executed in 1953 - gift for past services - onerous gifts - Applicability of the Transfer of Property Act, 1882, to the case - delay in filing suit - HELD THAT:- As far back as 1870, the Privy Council in Forbes v. Meer Mahomed Tuquee, had an occasion to consider broadly a similar case, where the appellant/plaintiff sought resumption of land granted to the defendants. The land was originally granted on the condition of rendering services, which were to keep off the incursion of wild elephants and attend to the safety of tenants in nearby areas. It was the appellants case that since the services are not required any more as the incursion of elephants has itself ceased, the land should revert to him as part of their zamindari. Lower Court decreed the suit in favour of the plaintiff on the grounds, inter alia, that since the defendants therein have ceased to render the services, the land must revert to the plaintiff therein. This decree of the lower court was reversed by the High Court and the matter finally reached the Privy Council where defendants/grantees argued that they had rendered the services till they were required to do so and since the elephant incursion has stopped on its own, they are no longer bound by the condition. Similarly in the present case, the gift was for past services but even if it is assumed that it was for some past and some future services, there was no occasion for the defendants to render the services as the appellants had left the village and now, when defendants have been enjoying peaceful possession of land for long, resumption of land in favour of appellants will not be justified. The defendants had produced their witness DW-1 before the Court who gave the evidence that the plaintiffs had left the village long ago, immediately after the death of the Donor, which would be only a few years after the gift deed was executed in 1953 and therefore, there was no question of rendering any further service. On a perusal of the material on record, both the plaint and PW-1 s deposition are conspicuously silent regarding any specific instances where services were denied by the defendants or their predecessors-in-interest. There was only a vague and conclusory allegation that services have been refused, without any evidence in support of the same. Now all conditions for a valid gift deed were in existence when it was made on 13.12.1953. The subject matter of transfer was an immovable property (land), and it was without any consideration. There was also an acceptance of this gift deed by the donees, when the donor was alive, as possession of this land was given the very same day to the donees and this undisputed fact is on record - Under TPA a valid gift can be made without giving immediate possession to the donee as has been held by this Court in Renikuntla Rajamma v. K. Sarwanamma [ 2014 (7) TMI 1284 - SUPREME COURT ] where it was held that section 123 of TPA supersedes Hindu Law and delivery of possession is not an essential requirement for the gift to be valid under provisions of TPA. Section 127 of TPA, which permits onerous gifts, was not in force in present day Haryana which was earlier part of Punjab, as TPA was not applicable there. Nor can we say that such a condition being based on equity, justice good conscience can be read into the gift deed as a valid condition - The stipulated condition of services and the continuation of the rendering of such services has to be read in the context when the deed was executed. Thus, services shall be understood only as past services rendered, or at most, the services which had to be rendered by the original donees to the original donor during his lifetime. There are no doubt that the plaintiffs had absolutely no case. Hence, the impugned judgment calls for no interference - appeal dismissed.
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2024 (12) TMI 1127
Civil dispute or criminal offence? - petitioner expresses a grievance that in the absence of any order of stay passed by the High Court, the proceedings against the petitioner which continued have reached the stage of charges being framed, thereby effectively rendering the petition before the High Court infructuous - HELD THAT:- The exact reason is not known as to why the learned Judge of the High Court, despite lapse of 14 (fourteen) months since judgment was reserved, could not deliver the judgment and dispose of the petition one way or the other. Be that as it may, without expressing any further comment on the matter of keeping a reserved judgment pending for 14 (fourteen) months and then not delivering the same, we request the roster bench of the High Court to dispose of the petition in accordance with law as early as possible, preferably within three months from date upon hearing all the parties. Should there be any lack of cooperation from any party, the High Court may proceed according to law. Till such time, the matter is considered next by the High Court, there shall be stay of proceedings before the trial court, i.e., the court of the Additional Chief Judicial Magistrate-IV, Varanasi, in Case No. 330 of 2019 - appeal disposed off.
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