Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 26, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Articles
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Denial of refund of unutilised input tax credit (ITC) - period of limitation - There is no dispute that the petitioner had attempted to file an application for refund on the GST portal twice but its application could not be uploaded on account of technical glitches. It is not disputed that the petitioner had also made a complaint and a ticket for the same was also raised. - refund cannot be rejected on the ground of delay - HC
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Refund - The solvent security is that of a person who is entitled to/recipient of the amount. Whereas, the ‘bank guarantee’ is a guarantee given by the bank on behalf of the applicant to cover the payment obligation to a third party. As such, it cannot be said that the demand of bank guarantee by respondent No. 1 could be equated with providing solvent security in terms of the order passed under Section 54 (11) of the Act, 2017. - HC
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Cancellation of petitioner’s GST registration - it is noticed that the impugned SCN was issued solely on the basis of a letter received from another authority. The said letter is neither attached to the impugned SCN nor does the impugned SCN refers to the contents thereon The impugned order, does not indicate that the Proper Officer was satisfied as to any of the conditions as set out in Section 29(1) or 29(2) of the CGST Act - order of canellation set aside - HC
Income Tax
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Validity of assessment order - the petitioner has been deprived away of their rights to appear in person to put forth their contention as the petitioner was heard only through video conferencing, which lasted only for five to six minutes and thereafter, the Portal was closed and within a short span of time, no assessee can be expected to put forth their contention in an effective manner. Therefore, this Court holds that the impugned order is in gross violation of principles of natural justice and liable to be aside. - HC
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Refund claim with Interest u/s 244A - Withholding of refund without recording an opinion on whether grant of refund would likely affect the revenue adversely u/s 241A - There are overwhelming circumstances as established by the undisputed facts. In the light of the above, the petition must be allowed directing the respondents to refund a sum along with interest as is permissible in law within a timeframe without prejudice to recover demand on the conclusion of the pending proceedings. - HC
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Deduction u/s. 80G - CSR - No specific tax exemptions have been extended to CSR expenditure. The Finance Act, 2014 also clarifies that expenditure on CSR does not form part of business expenditure. - Thus we hold that no deduction u/s. 80G is allowable on the amount incurred for the purpose of Corporate Social Responsibility. - AT
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Deduction u/s. 80IB - compensation received by the assessee from the insurance company - some of the assessee’s stocks were destroyed and the assessee was compensated by Oriental Insurance Company - compensation for lost goods - both the above sums are profits derived from industrial undertaking business eligible for deduction. - AT
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Treating intimation u/s “143(1) as "non-est" - The onus is on the Revenue to show that the claim of TDS is fraudulent. A perusal of the computation sheet shows that inadvertently the assessee has mentioned the tax payable at normal rates at Sl. No. 3 instead of tax payable of deemed total income u/s 115JB of the Act. - This by any stretch of imagination, cannot be considered as fraudulent activity of the assessee to deny the benefit of the decision of the Hon'ble Jurisdictional High Court of Delhi - AT
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Penalty u/s 271(1)(c) levied - In the assessee’s case, the AO has not given any finding in assessment order that the assessee had concealed any income or furnished inaccurate particulars of such income. He had simply accepted the returned income u/s 148 - penalty u/s 271(1)(c) will not be imposable. - AT
Customs
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Classification of goods - Bulk Reishi Gano Powder 100% Ganoderma - There are thus no hesitation in concluding the issue of classification of the products in question under CTH 21069099 as food preparation - the issue of classification on merits stands affirmed in favour of the revenue and against the appellant. - AT
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Classification of the imported goods - parts of frequency converter - As per Note 2(a), parts which are included in any of the Headings of Chapter 84 or 85 or in all cases are to be classified in their respective headings. Since, frequency converter is already classified under Chapter 8504, based on Section 2(a) of Section XVI the goods are rightly classifiable under Chapter Heading 8536 69 10/90. - AT
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Confiscation of imported goods - import of aircrafts/helicopters - whether non-scheduled (passenger) services permit - it cannot be urged by the department that Condition No. 104 of the notification had been violated merely because one particular flight was undertaken without any remuneration - AT
Indian Laws
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Dishonour of Cheque - compounding of offence - Requirement of consent of non-applicant - CIRP proceedings have been initiated against the Accused company and its directors - The non-applicant no.2, thus, appears to have raised his claim for recovery of the amount on 03.01.2018 before the IRP. Admissible recovery, whether of Rs.3 crores or otherwise, will be considered before the IRP and in terms of the provisions of the IBC Code, 2016. In the circumstances, to not offer consent on the ground that the applicants owe dues to the non-applicant no.2 to the tune of Rs. 3 crores is, in my considered opinion, an abuse of process of law - HC
IBC
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Initiation of CIRP - Since Adjudicating Authority has not relied upon the “confirmation and undertaking” and has come to a conclusion that there is a debt and default and demand notice, which is not disputed and accordingly concluded that sufficient reasons exists for CIRP proceedings under Section 7 of IBC, 2016 - non-stamping of document does not render the corporate insolvency resolution process (CIRP) application filed to be non-maintainable when there exists other material on record to prove existence of default in the payment of debt. - AT
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Validity of approved Resolution Plan - Order of liquidation issued - the contention of the Learned Counsel for the Appellant that if the Appellant is allowed to manage the Corporate Debtor Company, the Appellant shall repay the money to the Bank in a ‘short period’, is untenable, specifically having regard to the fact that the Plan was approved way back in 2019, IBC is a time-bound process, and several opportunities were given for implementation of the original Plan as well as the modified Plan. - AT
Service Tax
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Recovery of short paid service tax - post GST era - The demand cum show cause notice for recovery of short deposit of service tax for the financial years 2014-2015, 2015-2016 and 2017-2018 shall be deemed to have been instituted and continued under the repealed law and cannot be pre-empted with reference to the time frame under section 74 (10) of the Act of 2017. Hence, the impugned show cause notice cannot be said to be ex facie without jurisdiction or time barred. - HC
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Refund of service tax - Principles of unjust enrichment - The Commissioner’s reasoning in the impugned order is based on the presumption as to how the appellant would have decided to bid an amount and we find no room in law to speculate as to how the bids would have been made by the appellant. It is their business decision and there is no presumption in law that whenever bids are made, elements X, Y or Z have been reckoned. - AT
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GTA - transportation services rendered by other transporters as sub-contractors - Consignment note' for the transportation service, it is held that the Appellant is not liable to pay service tax as recipient of GTA Service. As the Appellant has raised the invoice on the full value and the recipient has paid service tax under GTA on the full value, demanding Service Tax again from the sub-contractor for the transportation service would amount to 'double-taxation' - AT
Case Laws:
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GST
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2023 (12) TMI 1102
Denial of refund of unutilised input tax credit (ITC) accumulated in respect of the Goods and Services Tax paid on inputs - zero-rated supplies - period from July 2017 to March 2018 - petitioner s application for refund rejected on the ground that it was filed beyond the period of two years as specified under Section 54(1) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- A plain reading of Sub-section (1) of Section 54 of the CGST Act indicates that any person who is claiming a refund of tax or interest, if any, paid on the amount is entitled to make an application before the expiry of two years from the relevant date and in such form and manner as may be prescribed. The term relevant date has been defined in Explanation (2) to Section 54 of the CGST Act - There is no cavil that the petitioner was required to make an application for refund under Sub-section (1) of Section 54 of the CGST Act within two years of the goods leaving India or crossing its territorial frontiers. The controversy essentially revolves around whether the petitioner did make an application within the period and/or was prevented from doing so. It is not disputed that at the material time, there was confusion regarding the implementation of the Goods and Services Tax regime which had been rolled out - In the present case, there is no dispute that the petitioner had attempted to upload its application for refund but could not do so on account of technical glitches - it is difficult to accept that the petitioner s legitimate right to seek refund could be foreclosed on account of such technical glitches. There is no dispute that the petitioner had attempted to file an application for refund on the GST portal twice but its application could not be uploaded on account of technical glitches. It is not disputed that the petitioner had also made a complaint and a ticket for the same was also raised. It cannot be accepted that the petitioner s claim for refund is required to be denied on the ground of delay - the proper officer is directed to examine the petitioner s claim for refund and process the same, if it is found that the petitioner is entitled to the same. Petition allowed.
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2023 (12) TMI 1101
Seeking refund claim - petitioner submitted the requisite for complying with the directions of furnishing the solvent security and requested the respondent No. 1 to refund the amount with up-to-date interest - HELD THAT:- The order passed by the appellate authority while rejecting the prayer of the respondent on an application filed under Section 54 (11) of the Act, 2017 was very clear and specifically required the proper officer to process the application of refund as per the provisions of Act/Rules provided the petitioner furnishes the solvent security as per his satisfaction. It appears that the respondent No. 1, who had passed the original order, which came to be set aside by the appellate authority and ordered for refund so made, has been trying to somehow block the refund to be made to the petitioner. Initially, he moved an application under Section 54 (11) of the Act, 2017 which came to be rejected by the authority and direction was given to the petitioner to provide solvent security. Once solvent security was produced by the petitioner, the respondent No. 1 again, apparently not willing to refund the amount, has demanded bank guarantee from the petitioner. The solvent security is that of a person who is entitled to/recipient of the amount. Whereas, the bank guarantee is a guarantee given by the bank on behalf of the applicant to cover the payment obligation to a third party. As such, it cannot be said that the demand of bank guarantee by respondent No. 1 could be equated with providing solvent security in terms of the order passed under Section 54 (11) of the Act, 2017. The action of respondent No. 1 in seeking bank guarantee from the petitioner is ex facie contrary to the directions of respondent no. 2 and, therefore, the same cannot be sustained - Petition allowed.
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2023 (12) TMI 1100
Grant of Conditional bail - Direction to surrender passport before the Trial Court and direction to not to leave India, without prior permission of this Court - HELD THAT:- In this case, Nitesh Wadhwani is also one of the accused persons, who has been granted bail by this Court with the same condition and against which, he approached the Apex Court in NITESH WADHWANI VERSUS UNION OF INDIA [ 2023 (4) TMI 1275 - SC ORDER] , the Apex Court has permitted him to leave the country, without requirement of reporting to the Court - Against Nitesh Wadhwani also Adjudication Proceedings are initiated. He is also facing ECIR along with this applicant. Condition No.11 (v) imposed on the applicant by this Court vide order dated 13.08.2020 (Annexure A/1) passed in Miscellaneous Criminal Case No.26653 of 2020 is hereby relaxed - Application disposed off.
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2023 (12) TMI 1099
Payment of amount to the supplier through banking channel - HELD THAT:- As the respondents are represented through their counsel, notice need not to be issued - Let this petition be listed on 07th February, 2024.
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2023 (12) TMI 1098
Cancellation of GST registration of petitioner - SCN did not specify the reasons for proposing to cancel the petitioner s GST registration - whether the petitioner was carrying on its business from the declared principal place of business? There is a controversy whether the petitioner had informed the visiting team as to his then current address. Whereas, the petitioner claims that he has informed the visiting team regarding his new address, the same is disputed by the respondents as there is nothing on record to substantiate the same. HELD THAT:- It is apparent that no physical verification had been carried of the petitioner s earlier premises during the period 14.10.2022 to 31.05.2023. Any such verification was required to be carried in accordance with the Rules, which also mandates the petitioner to be issued a notice for the same. It cannot be accepted that the Appellate Authority could have taken a definite view of the petitioner being non- functional from its declared place of business prior to 31.05.2023. It is also apparent that there is no contest that the petitioner had furnished evidence of his leasing another premises with effect from 31.05.2023. Undisputedly, the petitioner has not been unable to upload his application for change of its earlier place of business as the petitioner s GST registration stood suspended with effect from 25.01.2023. The concerned official of the respondents shall visit the petitioner s current premises (336/26, Onkar Nagar-B, Tri Nagar, Delhi-110035), within a period of one week from date, to verify whether the petitioner is occupying the same - In the event the petitioner is found occupying and operating from the aforesaid premises, the petitioner s GST registration shall be restored immediately thereafter - The petitioner shall file the requisite application regarding shifting to his new place of business. The concerned official shall verify whether the petitioner has filed the requisite returns as well as application for updating its current place of business on the record. Petition disposed off.
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2023 (12) TMI 1097
Principles of natural justice - valid SCN or not - non-application of mind - availment of irregular input tax credit - HELD THAT:- At the first blush, on perusal of the show cause dated 16th August, 2023, it appears that the submissions made by the appellants in their reply to the pre-show cause notice appears to have been considered. However, on a closer scrutiny of the show cause notice dated 16th August, 2023, it is seen that except extracting the reply given by the appellants, the authority has not dealt with the contentions, which were placed by the appellants in the reply to the pre-show cause notice. Thus, this would be sufficient to hold that the show cause notice dated 16th August, 2023 has been issued without due application of mind. Be that as it may, this Court is satisfied that since the show cause notice dated 16th August, 2023 has been issued without due application of mind, without considering the reply to the pre-show cause notice and without conducting any inquiry or investigation at the supplier s end, the show cause notice would call for interference. Thus, the Court is satisfied that the case on hand falls within one of the exceptional circumstances, where the Court will exercise its jurisdiction to interdict a show cause notice. The appeal is allowed and consequently, the writ petition is allowed and the show cause notice dated 16th August, 2023 is set aside and the matter is remanded back to the adjudicating authority to the stage of pre-show cause notice dated 31st March, 2023 - appeal allowed by way of remand.
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2023 (12) TMI 1095
Cancellation of petitioner s GST registration - conditions as set out in Section 29(1) or 29(2) of the CGST Act satisfied or not - vague SCN - Principles of natural justice - HELD THAT:- Section 29 of the Central Goods and Services Tax Act, 2017 ( CGST Act ) enables a Proper Officer to cancel a dealer s GST registration in certain circumstances. Sub-section (1) of Section 29 of the CGST Act set out the circumstances in which a taxpayer s GST registration can be cancelled. Sub-section (2) of Section 29 of the CGST Act specify the circumstances in which the registration can be cancelled from such date, including with retrospective effect, as the proper officer considers fit. In the present case, it is noticed that the impugned SCN was issued solely on the basis of a letter received from another authority. The said letter is neither attached to the impugned SCN nor does the impugned SCN refers to the contents thereon The impugned order, does not indicate that the Proper Officer was satisfied as to any of the conditions as set out in Section 29(1) or 29(2) of the CGST Act - The impugned order does not indicate that the Proper Officer was satisfied as to any of the conditions as set out in Section 29(1) or 29(2) of the CGST Act. The impugned order, cancelling the petitioner s GST registration, is set aside and the respondents are directed to forthwith restore the same - petition allowed.
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Income Tax
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2023 (12) TMI 1094
Application for condonation of delay u/s 119(2)(b) - mismatch between the PAN number reflected in the income-tax return and the name of the company - primary grounds raised was Petitioner s application came to be rejected without even giving a personal hearing - name of Petitioner had been changed with the approval and sanction of the Ministry of Corporate Affairs - HELD THAT:- As the notices issued u/s 139(9) of the Act were sent on Mr. Prasad Sathe s official ID, none of the other members of the company had any access to the same. Admittedly, no physical copy of notice was sent to company s registered address. All this came to light when the new team including one Mr. Kapil Bhakre (Director) and Mr. Dinesh Pande (Director-Finance), found out the error during the finalization of accounts for AY 2018-2019 and immediately took remedial action by submitting an application dated 5th November 2019 to the office of the DCIT, Circle-3, Pune. Petitioner immediately provided details about the invalid return and requested him to activate the action on the Income Tax Portal so as to enable Petitioner to rectify the return of income for AY 2017-2018. We are satisfied that the delay in not responding to the notice is received under Section 139(9) of the Act, was neither deliberate nor on account of culpable negligence or any mala-fides. The issue is only of correcting the name of Petitioner in the returns so that there is no mismatch between the PAN number and name of the company. We, therefore, direct Respondents to permit Petitioner to correct its name in the returns for AY 2017-2018 from Optra Technologies Private Limited to Optra Health Private Limited . Therefore, we hereby quash and set aside the impugned order dated 23rd December 2022. Within two weeks of this order being uploaded, the required portal will be opened for Petitioner to do the needful, under advice to Petitioner. We hasten to add that we have not examined the contents of the returns filed by Petitioner or claims which have been made in the returns. That will be subject of appropriate assessments/proceedings under the Act.
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2023 (12) TMI 1093
Validity of assessment order passed w/o affording fair opportunities to the petitioner to put forth their contentions - denial of principles of natural justice - main grievance expressed by the petitioner is that no fair opportunity of hearing was granted to the petitioner before passing the impugned order and the opportunity that was granted to the petitioner cannot be deemed to be fair opportunity, since within a short span of time - HELD THAT:- As respondent-Department has concluded the assessment proceedings hurriedly inasmuch as, the show cause notice itself was issued only on 27.03.2022 and within two days the petitioner was called upon to file their reply on 29.03.2022 and immediately on the very next day, i.e. on 30.03.2022 at 3.30. p.m the petitioner was asked to appear for hearing through video conference within one hour, i.e. at 4.30 p.m. and on the very same day,, the impugned assessment order has been passed. Therefore, impugned order suffers from violation of principles of natural justice. As decided in M/s. Gemini Film Circuit Vs. Additional/Joint/Deputy/Assistant Commissioner of Income Tax.[ 2023 (10) TMI 1040 - MADRAS HIGH COURT] provision of fair opportunity of hearing, held that minimum of 21 days has to be granted to an assessee to enable him to file reply in an effective manner, and the opportunity granted to the assessee should be nominal in nature and should not be an empty formality. This Court is inclined to set aside the impugned order passed by the respondent, since, in the present case, opportunity that was granted to the petitioner was not realistic in nature rather appears to be a nominal one and further, the petitioner has been deprived away of their rights to appear in person to put forth their contention as the petitioner was heard only through video conferencing, which lasted only for five to six minutes and thereafter, the Portal was closed and within a short span of time, no assessee can be expected to put forth their contention in an effective manner. Therefore, this Court holds that the impugned order is in gross violation of principles of natural justice and liable to be aside. Writ Petition is allowed, the impugned order is set aside and the matter is remanded back to the first respondent for re-consideration, in which case, the respondent is directed to provide an opportunity of personal hearing to the petitioner, which can be fixed by the respondent at any date granting 15 days' time after the receipt of a copy of this order
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2023 (12) TMI 1092
Refund claim with Interest u/s 244A - Withholding of refund without recording an opinion on whether grant of refund would likely affect the revenue adversely u/s 241A - HELD THAT:- As consideration falls short of the requirements under the provisions of Section 241A of the IT Act, which stipulate that the Assessing Officer, having regard to the fact that notice has been issued under sub-section (2) of Section 143, must record in writing an opinion with reasons on how the revenue s interest would be adversely affected if refund is allowed. The withholding of the refund in the manner as now considered by the Assistant Commissioner of Income Tax, ReAC (AU)-1(2)(1), Surat cannot be accepted, and there must be interference by this Court. This Court must record that it is undisputed that the petitioner has claimed refund for the Assessment Years prior to the Assessment Year 2021-22. The Principal Commissioner of Income-tax (AU)-1 has granted approval recording the details of the carry forward losses for the corresponding years, and consequentially, the petitioner is admitted to refund for the Assessment Years 2018-19, 2019-20 and 2000-21 respectively. The petitioner has reported a carry forward loss to the tune of Rs. 3,325.85/- Crores for the present Assessment year. The Revenue as against the principal sum of Rs. 29,35,11,360/- will have to pay interest in excess of Rs. 2,00,00,000/-, imposing a burden on the exchequer, if there is a delay. Further, if indeed a reference to the transfer pricing officer is under investigation, it would suffice for this Court to observe that if the adjudication, after due process, results in a demand, the petitioner will have to answer the demand, but in anticipation of a conclusion for a demand without even recording the reasons, the petitioner cannot be denied the refund. There are overwhelming circumstances as established by the undisputed facts. In the light of the above, the petition must be allowed directing the respondents to refund a sum along with interest as is permissible in law within a timeframe without prejudice to recover demand on the conclusion of the pending proceedings. The petition is allowed. The first and the fifth respondents [National Faceless Assessment Centre through the Commissioner of Income Tax-1 and Central Processing Cell through the Commissioner of Income Tax], are directed to take appropriate action for refund of a sum of Rs. 29,30,46,736/- along with permissible interest under Section 244A.
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2023 (12) TMI 1091
Addition u/s 56(2)(viib) read with Rule 11UA - assessee issued shares at the face value of Rs. 10 with the premium at 990.00 per share - FMV determination - CIT(A) deleted the above additions - HELD THAT:- As per section 56(2) (viib) of the Act, the amount exceeding the Fair Market Value of shares has to be treated as income. As per the Explanation, the Fair Market Value shall be as per the value determined in accordance with the method prescribed or as substantiated by the company based on the value of the shares, goodwill etc. whichever is higher. The working provided as per Rule 110A(2) has 2 limbs either FMV of unquoted equity share as per formula (A-L)* (PV) / (PE) or as p the FMV worked out for the unquoted shares determined by merchant banker as per discount free cash flow method. It is at the option assessee to choose between two. In the present case, the assessee opted for the second option for working out the fair market value shares duty supported by report of a Chartered Accountant. As also observed by the CIT(A) that AO has not provided any sound reasoning or not brought on record any material to counter the argument or to negate the submissions of the appellant. He has only taken the book value for the fair market value, though it is at the option of the appellant. Since appellant has adopted the higher value, therefore, it cannot be denied the working without any reasoning. Considering the factual position in this case and valuation report etc. It has been rightly held by the Ld. CIT(A) that that there is no case by the AO to take the FMV @ Rs. 25/- per share, on the basis of book value, disregarding the projected value, especially when it is provided in the Act that fair market value can be taken by the assessee to its option and at a higher amount. CIT(A) committed no error in deleting the addition. Accordingly, the Ground No.1 of the Revenue is dismissed. Addition u/s 68 after making addition u/s 56(2) - CIT(A) deleted addition - HELD THAT:- AO conducted the probe regarding share application money and the assessee provided due confirmation from each of the parties along with ITR which has been neither doubted nor proved as bogus. The assessee also provided the share application Form and its allotment with ROC. As found by the Ld. CIT(A) that the out of total share application money received by the assessee during the year under consideration, the AO made addition u/s 56 (2)(viib) for a sizable portion and for the balance amount the provisions of Section 68 has been invoked. When the AO considers the very same applicants u/s 56(2)(viib), then the AO cannot question their identity, creditworthiness and the genuineness of the transaction, that too when the assessee has satisfied the initial burden cast upon him u/s 68 of the Act. In our considered opinion, CIT(A) has rightly deleted the addition made by the AO u/s 68 of the Act with requires no interference at the hands of the Tribunal. Accordingly, ground No.2 of the Revenue is dismissed.
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2023 (12) TMI 1090
Deduction u/s. 80G - amount incurred for the purpose of Corporate Social Responsibility - DRP held that, as per section 80G(2) a deduction is admissible in respect of any sums, which is paid by the assessee in the previous year as donations to various bodies/institutions indicated in that section - HELD THAT:- As per the Companies Act 2013, it is mandatory for certain specified companies to spend 2 percent of their average profits to CSR. CSR expenses incurred by companies are now specifically treated as for non business purposes and hence are disallowed for Income tax purposes. Finance Act 2014 mandated that CSR Expenditure shall not be allowed as Business Expenditure u/s 37 of Income Tax Act 1961. The Memorandum of Finance Bill 2014 had also clarified that this initiative is primarily to ensure that companies share the burden of providing social services and granting deduction for CSR expenditure would amount to the Government effectively bearing one third of that expenditure. This same Memorandum also added that if CSR expenditure is of the nature which is covered by specific deductions contained in Sections 30 to 36, the expenditure by virtue of being governed by a specific provision (of Income tax) shall be granted a deduction if the conditions prescribed are satisfied. No specific tax exemptions have been extended to CSR expenditure. The Finance Act, 2014 also clarifies that expenditure on CSR does not form part of business expenditure. Thus we hold that no deduction u/s. 80G is allowable on the amount incurred for the purpose of Corporate Social Responsibility.
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2023 (12) TMI 1089
Rectification of mistake - Benefit of brought forward loss - CIT(A) directed the AO to recompute the income of appellant for A.Y. 2009-10 after taking into consideration the brought forward loss for A.Y. 2008-09 as determined by AO by replacing the disallowance of loss - HELD THAT:- It can be appreciated that consequent to the order of the Tribunal however, for A.Y. 2008-09 the effect giving order was passed by Ld. AO on 12.12.2018 by which the total loss for A.Y. 2008-09 was recomputed at Rs. 4,92,05,810/- . That thus made available loss for set off or carry forward in the subsequent years. Same has been taken into consideration by Ld. CIT(A) while passing the direction in the impugned order. The appeal has no merit. Same is dismissed.
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2023 (12) TMI 1088
Deduction u/s. 80IB - compensation received by the assessee from the insurance company - CIT(A) upheld the addition made by the ld. A.O. on the ground that the insurance/compensation claimed cannot be considered for computing the eligible profit and gains derived from the industrial undertaking of the assessee - HELD THAT:- The assessee in the present case has received compensation for destroyed and lost goods from the insurance company and from the franchisees which the Revenue claims to be not from the industrial undertaking and shall not be the profits and gains of the business of the assessee. The Hon ble Gujarat High Court in SHREE RAMA MULTI TECH LTD. [ 2013 (10) TMI 306 - GUJARAT HIGH COURT] after duly considering the decision of Sportking India Ltd. [ 2009 (8) TMI 29 - DELHI HIGH COURT] has held that such compensation received from insurance company for the damage incurred by the assessee would be the profit/loss from such industrial undertaking, for the reason that if not for such loss, the assessee would have earned income which is otherwise eligible for deduction u/. 80IB, It is evident that on identical facts, the Hon'ble High Court has held that the assessee is eligible for deduction u/s. 80IA/80IB of the Act on compensation received due to destruction of goods before sale had taken place. We find that on destruction of raw materials, the assessee was paid insurance claim, the cost of raw material is already considered as cost while working out the profit of eligible undertaking and the claim tantamount to sale of raw materials. As regards to loss of goods at franchisee and the amount paid by such franchisee would also be sale of goods. Thus, both the above sums are profits derived from industrial undertaking business eligible for deduction. Hence, we direct the ld. A.O. to allow deduction u/s. 80IB on both the amounts. We, therefore, allow the appeal filed by the assessee.
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2023 (12) TMI 1087
Addition u/s 68 - undisclosed cash credit found in the books of the assessee - unexplained share application money in the form of share capital - HELD THAT:- We find that the assessee which is regularly carrying on business activity of manufacturing sponge iron, registered under the Excise Act, holds fixed assets, having considerable amount of stock in hand and has successfully discharged the burden of proof primarily casted upon it to explain the identity and creditworthiness of investor company i.e., Bhillai Holdings Pvt. Ltd., which is group concern having common directors and shares issued at face value and no share premium has been charged. Genuineness of the share transactions and correctness of such details has not been disputed by the Revenue Authorities except making general observations. Therefore, considering the evidences placed by Ld. A/R to explain the nature and source of the alleged share application money, we find no reason to interfere with the findings of the ld. CIT(A) deleting the addition made u/s 68 of the Act. Appeal of the revenue is dismissed.
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2023 (12) TMI 1086
Treating intimation u/s 143(1) as non-est - intimation u/s 143(1) of the Act was never communicated - whether CIT (A) exceeded his jurisdiction in entertaining appeal against intimation where no adjustment of income was carried out resulting in demand? - demand raised on the basis of book profit u/s 115JB as disclosed in the schedule 7 of return of the return of income for A.Y. 2008-09 - HELD THAT:- The entire quarrel revolves around the following findings of the Hon'ble High Court of Delhi Court on its Own Motion [ 2012 (9) TMI 163 - DELHI HIGH COURT] as held onus to show that the order was communicated and was served on the assessee is on the Revenue and not upon the assessee. We may note in case an order under Section 143(1) is not communicated or served on the assessee, the return as declared/filed is treated as deemed intimation and an order under Section 143(1). Therefore, if an assessee does not receive or is not communicated an order under Section 143(1), he will never know that some adjustments on account of rejection of TDS or tax paid has been made. While deciding applications under Section 154, or passing an order under Section 245, the Assessing Officers are required to know and follow the said principle. Thus the onus is on the Revenue to show that the TDS or tax credit had been fraudulently claimed by the assessee. Facts on record show that the Revenue has grossly failed in showing that the intimation u/s 143(1) of the Act ever served upon the assessee as the Revenue failed to give any proof of service of such intimation to the assessee. Therefore, intimation u/s 143(1) of the Act has to be treated as non-est or invalid. Coming to the observations of the Hon'ble High Court, again the onus is on the Revenue to show that the claim of TDS is fraudulent. A perusal of the computation sheet shows that inadvertently the assessee has mentioned the tax payable at normal rates at Sl. No. 3 instead of tax payable of deemed total income u/s 115JB of the Act. This by any stretch of imagination, cannot be considered as fraudulent activity of the assessee to deny the benefit of the decision of the Hon'ble Jurisdictional High Court of Delhi [supra]. Decided against revenue.
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2023 (12) TMI 1085
Penalty u/s 271(1)(c) levied - AO held that assessee had concealed his income by not filing the return of income and not showing his income and paying due taxes thereon - concealment has come to notice as a result of scrutiny assessment proceedings only as had the case not been re-opened u/s 147/148 assessee would have succeeded in tax evasion - HELD THAT:- We note that assessee did not conceal the income and was in the bona fide believe that the said income, which was taxed u/s 147 of the Act, was not assessable under the Act. We note that there is no finding of the AO in the assessment order that assessee has concealed his income; rather Assessing Officer has accepted the returned income filed by assessee, as it is, (in response to notice u/s 147 of the Act). We note that in the case of CIT v. K.R. Chinni Krishna Chetty [ 1998 (6) TMI 5 - MADRAS HIGH COURT ] has held that u/s 271(1)(c) of the Act the authority is given the discretion to levy a penalty if there is concealment of particulars of income and even as regards the quantum of the penalty there is a discretion. Of greater importance is the necessity for a definite finding that there is concealment, as without such a finding of concealment, there can be no question of imposing any penalty. In the assessee s case, the AO has not given any finding in assessment order that the assessee had concealed any income or furnished inaccurate particulars of such income. He had simply accepted the returned income u/s 148 - penalty u/s 271(1)(c) will not be imposable. Decided in favour of assessee.
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2023 (12) TMI 1084
Estimation of income - bogus purchases - CIT(A) noted that in absence of visibility on correctness of the amount paid/ payable to creditors, the possibility of purchasing the goods from grey market at lower rates and recording the same at inflated price in books of accounts cannot be ruled out. However, if the entire purchases are disallowed, the corresponding sales also need to be ignored but the assessing officer has not done so - HELD THAT:- As observed by ld CIT(A) that the assessee's business is recently started and it is into second year of its operations. During the year under consideration the gross profit earned by assessee is 13.05%. Therefore, ld CIT(A) restricted the addition to Rs. 9,80,121/- (Rs.75,10,503/- X 13.05%). We have gone through the above findings of CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
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Customs
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2023 (12) TMI 1083
Detention of goods - consignment of apples - prohibited goods or not - hit by the N/N. 5/2023 - HELD THAT:- In the present case, the Bill of Entry seeks to clear the imports of apples which are imported by the petitioner at a price which is at Rs. 50/- per kg. Thus clearly the price per kilogram being Rs. 50/- per kg. which is not below the price fixed by Notification No. 5 of 2023, it would be correct for the petitioner to contend that the respondents cannot detained the petitioner s consignment on the basis of the minimum price as fixed by the said notification. It is opined that there is no reason as to why the petitioner ought not to be permitted to clear the goods - it is directed that the imports of the petitioner be not detained on the ground that this goods are prohibited goods under NN. 5/2023 and on such count be released on the petitioner furnishing a bond - An appropriate assessment of the bill of entry be accordingly undertaken in accordance with law within a period of 3 days from today - Petition disposed off.
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2023 (12) TMI 1082
Seeking provisional release of the consignment of apples imported by the petitioner - Detention on the ground that N/N. 5/2023 has been issued, which caps the minimum price of apples for import at Rs.50/- per kg - HELD THAT:- It is seen from the documents as annexed in the petition, which are Bill of Entry and Invoices, that the price at which the petitioner has imported the apples in question is at Rs. 50/- and the embargo to any clearance of such import under Notification No. 5/2023, which would operate if the value is below Rs. 50/- per kg. Thus, it would not be correct on the part of the revenue only on the ground of the notification in regard to fixing of the import price, the present consignment of the apples, as imported by the petitioner should be labelled as prohibited goods. It is also observed that not only this Court in the case of M/S. INDUSINA EXIM L.L.P. VERSUS THE COMMISSIONER OF CUSTOMS (IMPORT) ORS. [ 2023 (12) TMI 918 - BOMBAY HIGH COURT] but also the Kerala High Court as well as the Madras High Court have taken a consistent view in regard to permitting clearance of the apples on the ground that Notification No. 5/2023 has been stayed - there are no contrary judgment which takes a contrary view in regard to the notification in question. It is directed that the imports of the petitioner subject matter of Bill of Entry No. 8854586 dated 20 November, 2023, be released on the petitioner furnishing a bond - An appropriate assessment of the bill of entry be accordingly undertaken in accordance with law within a period of three days from today - petition disposed off.
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2023 (12) TMI 1081
Seeking permission to complete the obligation of manufacturing and exporting copper wire by purchasing additional copper of the same grade from the open market and also seeking advance authorization license - HELD THAT:- The request of the Petitioner is to fill up the shortage of raw material by purchasing the same from the domestic market, the same has been rejected by the Department placing reliance on Para 4.03 of the Foreign Trade Policy 2015-20. Since the Foreign Trade Policy specifically insists that in case advance authorization is issued to allow duty free import which is physically incorporated in the export product, the request to allow the Petitioner to purchase the raw material from open market for these exports could not be permitted. The Court while adjudicating administrative orders exercising its jurisdiction under Article 226 of the Constitution of India only looks into the decision making process and also the fact that whether the order is violative of any law. The reasons given in the order passed by the Respondent does not require any interference under Article 226 of the Constitution of India. A perusal of the Order challenged in the present Writ Petition indicates that the DGFT has given a proper opportunity of hearing to the other sides and, therefore, this Court is of the opinion that the decision-making process is fair. Further, even on merits, the learned Counsel for the Petitioner has not been able to establish as to why the Order is contrary to the law or that any provisions of the Foreign Trade Policy or the handbook of procedures has been violated. Resultantly, this Court finds no reason to interfere with the present Writ Petition. The writ petition is rejected.
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2023 (12) TMI 1080
Classification of goods - Bulk Reishi Gano Powder 100% Ganoderma - Bulk Ganocelium Powder 100% Gano Mycelium - whether the products are classifiable as Ayurvedic medicaments under chapter 3003.9011 of the First Schedule to the Central Excise Tariff Act, 1985 (CETA) as contended by the appellant or as food supplements under CTH 2106999 of CETA? - Invocation of the extended period of limitation under section 28(4) of the Act - Confiscation of goods under section 111 (m) and (o). Classification - HELD THAT:- The said issue is no longer rest-integra and has been decided by the Chennai Bench in DXN Manufacturing India Private Ltd. vs. Commissioner of Central Excise and Service Tax, Pondicherry [ 2017 (11) TMI 608 - CESTAT CHENNAI ], where the Tribunal reconsidered the matter at length on being remanded by the Supreme Court [ 2015 (8) TMI 1418 - SUPREME COURT ] and concluded that both the impugned goods fail both the twin test for being considered as Ayurvedic medicament and therefore the products in question are nothing but food supplements promoted mainly for general health or well-being and therefore merit classification under 2108 of the CETA and more specifically under 2108.99, as it stood at the relevant time and assessed accordingly under section 4A of the Act for discharge of duty liability. The issue of classification was thus decided in favour of the revenue and against the assessee. There are thus no hesitation in concluding the issue of classification of the products in question under CTH 21069099 as food preparation - the issue of classification on merits stands affirmed in favour of the revenue and against the appellant. Invocation of the extended period of limitation under section 28(4) of the Act - HELD THAT:- In view of the proceedings which was pending since 2012 and the department itself had preferred an appeal, it cannot be said that the department was not aware of the classification of the products as declared in the instant bills of entry by the appellant and therefore no fault can be found on the part of the appellant as 9 out of the 10 bills of entries were filed before the final order was passed by the Tribunal on 10.01.2018 and the Order-in-Appeal by the Commissioner (Appeals) was holding the field. The law on invocation of extended period of limitation is well settled. Mere omission or merely classifying the goods/services under incorrect head does not amount to fraud or collusion or wilful statement or suppression of facts and therefore the extended period of limitation is not invocable. The Supreme Court in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] has categorically laid down that where facts are known to both the parties, the omission by one to do what he might have done, and not that he must have done, does not render it suppression. Thus when all the facts are before the department as in the present case then there would be no wilful mis-declaration or wilful suppression of facts with a view to evade payment of duty - the revenue cannot invoke the extended period of limitation under section 28(4) of the Act, hence the show cause notice dated 2.07.2018 is barred by limitation for the period beyond the normal period. Imposing penalty under section 114A of the Customs Act - HELD THAT:- As it is held that it is not a case of willful suppression, mis-statement or misdeclaration by the appellant, the ingredients required for invoking the penalty being the same, the penal action under the provisions of section 114A as imposed by the impugned order is not justifiable and is hereby set aside - the appellant cannot be held liable for penalty under section 114 AA of the Customs Act and the reasoning given by the Principal Commissioner that at the time of presenting the bill of entry, the importer made and subscribed to false declaration against the contents of bills of entry, in contravention to section 46(4) of the Act is unsustainable Confiscation of goods under section 111 (m) and (o) - HELD THAT:- The findings in the impugned order that section 111(m) can be invoked for misdeclaration of any material particular, in respect of the goods and not necessarily only the value of the goods stands quashed and the issue stands decided in favour of the appellant that there cannot be any confiscation of goods under section 111(m) in the case of wrong classification - it is a simple case of mis-classification/incorrect classification and not mis-declaration of goods on the part of the appellant, the logical inference would be that the appellant has not wrongly claimed the exemption benefit and therefore there can be no confiscation under Section 111(o) of the Act. The appeal is remanded to the Adjudicating Authority for the limited purpose of computing the differential duty to be demanded in respect of normal period only - the appeal is partly allowed by way of remand.
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2023 (12) TMI 1079
Levy of Anti-Dumping Duty - clearance of tyre making machines (old and used) including used Chinese origin tyre curing presses under EPCG scheme - applicability of N/N. 01/2010 dated 08.01.2010 - HELD THAT:- At the outset it has to be stated that the respondent-company has gone into liquidation as per the order of the NCLT, Bangalore Bench dated 30.12.2019. Further, in the present case, the goods imported are used and second-hand machines . The Chartered Engineer has reported that the goods are used and second-hand. There is no dispute on the fact that the goods are used and second-hand machines. The Tribunal in the case of Trinity Exporters [ 2019 (2) TMI 1370 - CESTAT CHENNAI] had an occasion to analyse the issue as to whether ADD is leviable on import of used and second-hand machines. The issue was answered in favour of the importer and against the Department. Taking note of the fact that the respondent-company has gone into liquidation and also following the decision in the case of Trinity Exporters, there are no merit in the appeal filed by the Department - the appeal filed by the Department is dismissed.
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2023 (12) TMI 1078
Classification of the imported goods - Frequency Converter (variable speed drive) and its parts - to be classified under Chapter Heading 9032 89 90 or under Chapter Heading 8504 4010? - HELD THAT:- The classification of the said goods has already been decided by this Tribunal s order in M/S. ABB LIMITED VERSUS THE COMMISSIONER OF CUSTOMS (APPEALS) , BANGALORE [ 2023 (11) TMI 20 - CESTAT BANGALORE] which has fairly been admitted by both sides. Accordingly, following the above decision for the earlier appeals, it is held that the goods are rightly classifiable under Chapter Heading 8504 as against the classification under Chapter Heading 9032 claimed by the appellant. The Authorized Representative on behalf of the Revenue referring to the impugned order submits that the goods are presented in the form of plugs and sockets which are rightly classifiable under 8536 in terms of Note 2(a) of Section XVI of the Customs Tariff Act, 1985. As seen above at para 4, this Tribunal has classified the frequency converter under Chapter Heading 8504 as against 9032 as claimed by the appellant. Therefore, the question of classifying the plugs and sockets as parts of frequency converter under chapter heading 9032 does not arise. Since the fact that plugs and sockets are general in nature and having cleared them for retail sale and having not being produced any evidence to prove that these items can only be used in frequency converter, the classification by the Commissioner (Appeals) under Chapter Heading 8536 69 10/90 is to be upheld. Moreover, Chapter 8536 includes lamp holders, plugs and sockets and therefore, as per the Interpretative Rules when there is a specific description, the item has to be classified accordingly. The only contention of the appellant is that the item to be classified under Chapter Heading 9032 as parts of frequency converter, since 9032 is ruled-out, the classification under 8536 as per Rule 3(a) of the General Interpretative Rules is upheld. As per Note 2(a), parts which are included in any of the Headings of Chapter 84 or 85 or in all cases are to be classified in their respective headings. Since, frequency converter is already classified under Chapter 8504, based on Section 2(a) of Section XVI the goods are rightly classifiable under Chapter Heading 8536 69 10/90. Appeal dismissed.
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2023 (12) TMI 1077
Confiscation of imported goods - import of aircrafts/helicopters - whether non-scheduled (passenger) services permit would qualify as non charter services permit also? - whether the appellant would qualify for providing charter service? - HELD THAT:- These issues were decided by the Larger Bench of the Tribunal in M/S VRL LOGISTICS LTD VERSUS COMMISSIONER OF CUSTOMS, AHMEDABAD [ 2022 (8) TMI 720 - CESTAT AHMEDABAD (LB)] where it was held that It is, therefore, clear that an operator providing non-scheduled (passenger) services can always provide such services either on individual seat basis or by chartering the entire aircraft and such a restriction is not contained either in Condition No. 104 or Aircraft Rules or the Civil Aviation Requirements - The Larger Bench also held that remunerative flights qualify as a air transport services and would be covered under the exemption. Whether the appellant had violated Condition No. 104 of the notification merely because on one occasion one aircraft had been used without remuneration? - HELD THAT:- In reply to the show cause notice the appellant had pointed out that in regard to the aircraft VT-RAN which was imported on 13.11.2007, the first flight was undertaken on 25.01.2008 and the second flight was undertaken on 27.01.2008. The second flight was for crew familiarization and it had two pilots and Mr. Sunil Godhwani and Mrs. Dhillon, who as prospective users were travelling on the flight only for experiencing the aircraft. The flight was also from Delhi-Raipur-Bagdogra-Delhi with no stoppage time at the airports. Thus, it cannot be urged by the department that Condition No. 104 of the notification had been violated merely because one particular flight was undertaken without any remuneration - the order dated 30.09.2010 passed by the Commissioner confiscating the imported aircrafts/helicopters with an option to the appellant to redeem the same after payment of redemption fine and also confirming the demand of customs duty with interest and penalty cannot be sustained. The appellant would, therefore, be entitled to refund of the redemption fine paid by the appellant in terms of the order passed by the Commissioner. Whether the appellant would be entitled to interest on the redemption fine amount deposited by the appellant, which is now liable to be refunded? - HELD THAT:- The issue, therefore, stands settled against the appellant in the aforesaid decision of the Larger Bench of Tribunal in Advance Mechanical Works [ 2004 (12) TMI 107 - CESTAT, MUMBAI] . The Larger Bench of the Tribunal had placed reliance upon the decision of the Supreme Court in Union of India vs. Orient Enterprises [ 1998 (3) TMI 137 - SUPREME COURT] to hold that no interest would be payable on redemption fine, while refunding the same in pursuance of an order of a higher judicial forum - The appellant would, therefore, not be entitled to any interest on the refund of the redemption fine. The bank guarantees, however, furnished by the appellant are liable to be discharged as the order passed by the Commissioner has to be set aside. The order dated 30.09.2010 passed by the Commissioner is set aside with a direction to the department to refund the redemption fine deposited by the appellant within a period of two months from the date of service of a copy of this order - Appeal allowed.
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Insolvency & Bankruptcy
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2023 (12) TMI 1076
Maintainability of section 7 application - initiation of CIRP - inter corporate deposit of Rs.7 Crores is captured in an unstamped document with the title of confirmation and undertaking @ interest of 1% per month - Financial Creditor/R2 had made an investment of a sum of rupees seven crores in the project developed by the CD/ R1 or it is a loan? Reliance upon unstamped document in deciding CIRP - HELD THAT:- Adjudicating Authority has come to a conclusion that there is a financial debt, there is a default basis other documents and no reliance whatsoever nature has been placed on the confirmation and undertaking dated 29.09.2015. Since Adjudicating Authority has not relied upon that and have come to a conclusion that there is a debt and default and demand notice which is not disputed and accordingly concluded that sufficient reasons exists for Section 7 CIRP proceedings. The plea of the Appellant, to claim that the unstamped agreement/instrument in question cannot be admitted into evidence under the provisions of the Maharashtra Stamp Act, as a defense, cannot render the corporate insolvency resolution process ( CIRP ) non-maintainable, when there exists other material on record to prove existence of default in payment of debt - there are no fault in the orders of the Adjudicating Authority. Financial Creditor made an investment or gave a loan - HELD THAT:- There is a contradiction to the nature of amount payable to the Financial Creditor which is admitted in the audited financial statements placed by the Corporate Debtor, being shown as unsecured loan, and which has also been noted by the Adjudicating Authority. Furthermore, R1 himself has admitted that it has serviced the interest in accordance with the terms of the confirmation and undertaking till June 2017. National E Governance Services Limited (NeSL) Report dated 24.06.2020, also reflects this as a loan wherein the Date of Default is reflected as 23.12.2015 and the total outstanding is of Rs.4,80,80,000/- - Adjudicating authority has rightly come to the conclusion that it is a loan and allowed Section 7 proceedings under IBC. Adjudicating Authority has come to a conclusion that there is a financial debt and there is a default on the basis of other documents, and no reliance whatsoever nature has been placed on the confirmation and undertaking dated 29.09.2015. Since Adjudicating Authority has not relied upon the confirmation and undertaking and has come to a conclusion that there is a debt and default and demand notice, which is not disputed and accordingly concluded that sufficient reasons exists for CIRP proceedings under Section 7 of IBC, 2016 - non-stamping of document does not render the corporate insolvency resolution process (CIRP) application filed to be non-maintainable when there exists other material on record to prove existence of default in the payment of debt. There are no error in the order of the Adjudicating Authority admitting Section 7 proceedings of the IBC against the CD/ M/s Shankheshwar Properties Pvt. Ltd. (R-1) - there is no merit in this appeal - appeal dismissed.
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2023 (12) TMI 1075
Approval of Resolution Plan - HELD THAT:- Adjudicating Authority has directed that the proceeds from sale of the aircraft will be deposited in an escrow account and be utilized to discharge the payments to various stakeholders in accordance with the Resolution Plan. Aircraft is a depreciating asset and huge costs are being incurred for preservation and parking of the same. Appellant was trying to recover its dues de horse the Resolution Plan. Erstwhile Resolution Professional has complied with the NCLAT order and communicated the computation of dues of the workmen and employees to the Successful Resolution Applicant. The impugned order fully protects the interests of the Appellant since it has directed the amount proceeds from the sale to be kept in escrow account. Approval of the Resolution Plan - HELD THAT:- The Adjudicating Authority in the impugned order while considering the rival submission of the parties has come to the conclusion that the sale process with regard to which LoI was issued on 19.10.2022 had concluded in view of the performance on the part of the Ace Aviation. Submission of the Successful Resolution Applicant for re-bidding insofar as three aircrafts was concerned was not accepted. With regard to other two aircrafts whose process was halted on 11.11.2022, direction was issued to reinitiate the process and conclude the sale of aircrafts after considering the Ace Aviation as one of the eligible bidders. The Adjudicating Authority did not commit any error in directing to conclude the sale agreement of three aircrafts for which LoI was already issued - there are no good ground to interfere with the order passed by the Adjudicating Authority in IA No.3747 of 2022. The interests of the Successful Resolution Applicant are also protected since the Adjudicating Authority had directed that the proceeds of the sale of aircrafts is to be deposited in the escrow account and dealt with in accordance with the approved Resolution Plan - The order disposing is not an order which has any consequence on the manner of distribution of the sale of the aircrafts as observed by the Adjudicating Authority sale proceeds has to be distributed as per the Resolution Plan. Rights and contentions of the Successful Resolution Applicant are left open to be raised at the relevant time with regard to distribution of sale proceeds as and when occasion arises. Recovery of the PF and gratuity dues of the workmen and employees of the Corporate Debtor - HELD THAT:- The sale proceeds having been directed to be deposited in escrow account which has to be distributed in accordance with the approved Resolution Plan, the Appellants are fully protected the orders passed by the Adjudicating Authority in no manner affects the entitlement of the Appellant- All India Jet Airways Officers and Staff Association to receive their dues under the Resolution Plan as per order of this Appellate Tribunal dated 21.10.2022. The Adjudicating Authority has not committed any error in partly allowing IA No.883 of 2023 - there are no error in the order passed by the Adjudicating Authority in IA No.883 of 2023. There are no grounds to interfere with the orders of the Adjudicating Authority - Appeal dismissed.
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2023 (12) TMI 1074
Maintainability of appeal on the ground of time limitation - HELD THAT:- The present appeal is directed against the order dated 06.12.2022 and filed on 04.02.2023. The period of 30 days, as prescribed under Section 61(2) of the Code, counted from 06.12.2022 expired on 05.01.2023 and further period of 15 days expired on 20.01.2023 whereas the appeal has been filed on 04.02.2023. It is pertinent to mention that the impugned order was not passed dismissing the application for non-prosecution rather the impugned order was passed dismissing the application having been rendered infructuous, therefore, the period of limitation would start from the date of order 06.12.2022 in view of the decision of the Hon ble Supreme Court in the case of V. Nagrajan Vs. SKS Ispat and Power Ltd. Ors. [ 2021 (10) TMI 941 - SUPREME COURT ]. The appeal having been filed even after the expiry of further 15 days prescribed under Section 61(2) proviso, is not maintainable in view of a decision of the Hon ble Supreme Court rendered in the case of National Spot Exchange Limited Vs. Anil Kohli [ 2021 (9) TMI 1156 - SUPREME COURT ]. This appeal has been filed beyond the period of limitation and not maintainable, the Corporate Debtor has already been sold as going concern subsequent to the order dated 19.01.2023 passed in 1018 of 2022 and thereafter the change in the management has taken effect and the sale proceeds received from such sale have also been distributed to the stakeholders. There is hardly any merit in the present appeal which is otherwise barred by limitation and hence, the same is hereby dismissed.
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2023 (12) TMI 1073
Seeking Condonation of Delay of 15 days in filing the Appeal - sufficient cause for delay present or not - Appellant had waited for the outcome of the Liquidation Application before filing the instant Appeal - HELD THAT:- The discretion lies with the Courts to distinguish between an explanation and an excuse and only then to exercise discretion to condone the delay. In the instant case, it is crystal clear that the Appellant was aware of the Impugned order on 10.08.2023 itself and the justification given that the Appellant had requested the Third Respondent/The erstwhile RP to apply for a certified copy of the Impugned Order since it was not a party to the proceedings is rejected as Rule 50 read with Clause 31 of the Schedule of Fees of the NCLAT Rules, 2016 provides for the Registry to send a certified copy of the final Order to the parties concerned free of cost and the certified copies may be made available with costs as per schedule of fees, in all cases. Hence, it is clear that the Appellant itself could have applied for a certified copy by making an Application with the requisite fee, therefore, the contention of the Appellant that it was a Third party to the proceedings, is of no relevance. The Hon ble Supreme Court in the case of V NAGARAJAN VERSUS SKS ISPAT AND POWER LTD. ORS. [ 2021 (10) TMI 941 - SUPREME COURT] addressed the issue of the commencement date of the period of limitation for filing an Appeal under Section 61 of the Code. In this aforenoted Judgment, the Hon ble Supreme Court answered the question as to when the clock for calculating the limitation period would begin to run for Appeals filed under the Code and recorded the same in Paras 33 through 35, after taking into due consideration the provisions of Rule 22(2) of the NCLAT Rules, 2016, Section 12 of the Limitation Act, and Section 421 of the Companies Act holding that While it is true that the tribunals, and even this Court, may choose to exempt parties from compliance with this procedural requirement in the interest of substantial justice, as re-iterated in Rule 14 of the NCLAT Rules, the discretionary waiver does not act as an automatic exception where litigants make no efforts to pursue a timely resolution of their grievance. The appellant having failed to apply for a certified copy, rendered the appeal filed before the NCLAT as clearly barred by limitation. Neither the provisions of the NCLAT Rules, 2016 nor the Code bars the Appellant from filing an Appeal within the statutory limitation period provided for under Section 61(3) of the Code and requesting the erstwhile RP to seek a certified copy and awaiting the outcome of the Liquidation Application, further renders the argument of the Learned Counsel for the Appellant, that the delay may be condoned for the foregoing reasons, unsustainable - there are force in the contention of the Learned Senior Counsel for the First Respondent that the Appellant, having 85% of the voting share in the CoC of the Corporate Debtor, ought to have taken effective steps within the limitation period, which they have failed to do so. The reasons given by the Applicant/Appellant do not constitute sufficient cause for the Appellant to have filed the Appeal on the 45th day - Appeal dismissed.
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2023 (12) TMI 1072
Validity of approved Resolution Plan - Appellant submitted that the Adjudicating Authority has erroneously allowed the Application seeking Liquidation on the ground that the Appellant had not adhered to the terms of the Resolution Plan - HELD THAT:- Admittedly there were several rounds of discussions held and the Appellant sent a letter dated 12.08.2021 where it sought for modification for the repayment Plan promising to deposit Rs.25 Crores in a no-lien account and a balance 15 Crores within three weeks from the date of approval - there are force in the contention of the Learned Counsel for the First Respondent that though the other CoC members, SBI and IDBI, did not accept the modified payment terms, the First Respondent being the majority voting shareholder of the CoC accepted the modified payment terms way back on 29.09.2021, but the Appellant did not comply with the terms and hence, no further opportunities are required to be given. It is evident from the record that though almost two and half years has lapsed from the date of approval of the Plan and several opportunities were given to the Appellant and the modified payment terms were also accepted by the First Respondent, even then the Appellant did not pay the required amount of Rs. 83.07Cr by November 2021. Therefore, the contention of the Learned Counsel for the Appellant that if the Appellant is allowed to manage the Corporate Debtor Company, the Appellant shall repay the money to the Bank in a short period , is untenable, specifically having regard to the fact that the Plan was approved way back in 2019, IBC is a time-bound process, and several opportunities were given for implementation of the original Plan as well as the modified Plan. Keeping in view the law laid down by the Hon ble Apex Court in EBIX SINGAPORE PRIVATE LIMITED VERSUS COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED ANR., KUNDAN CARE PRODUCTS LIMITED VERSUS MR AMIT GUPTA AND ORS. AND SEROCO LIGHTING INDUSTRIES PRIVATE LIMITED VERSUS RAVI KAPOOR RP FOR ARYA FILAMENTS PRIVATE LIMTIED ORS. [ 2021 (9) TMI 672 - SUPREME COURT] , wherein the Hon ble Apex Court has clearly emphasised the importance of adhering to strict timelines, keeping in view the scope and objective of the Code - In the instant case as the Appellant / SRA could not implement the Resolution Plan within the specified time, the Adjudicating Authority has rightly, as provided for under Section 33 of the Code, allowed application filed by the Monitoring Committee of Scott Garments and Canara Bank respectively, seeking Liquidation. Appeal dismissed.
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Service Tax
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2023 (12) TMI 1096
Recovery of short paid service tax - post GST era - Refusal to entertain a challenge to the show cause notice issued by the 1st respondent - direction to respondent authorities to issue a fresh notice for personal hearing to the appellant/assessee in response to the impugned show cause-cum-demand notice - time limitation - HELD THAT:- The averments in the notice give a different picture. Being alerted by the TDS deposited with the income-tax department, authority concerned initiated an independent investigation into the matter. In the course of the investigation it examined the records and documents of the firm including its audited balance-sheet etc. On the basis of these materials the authorities concerned was of the view that there was a short deposit of service tax for the financial years to the tune of 7,43,625/- for the financial years 2014-15, 2016-17 and 2017-18. Time Limitation - HELD THAT:- There are substance in the submission of the learned counsel for the respondent authorities that the proceedings for recovery of service tax under the prior legislation (since repealed) is saved by operation by section 174 sub-clause (2) of the Act of 2017. Sub-section 2 of section 174 of the Act of 2017, inter alia, provides that the promulgation of the Act of 2017 shall not affect any right, privilege, obligation, liability accrued under the repealed law and/or any investigation, enquiry adjudication or recovery proceedings of duty, tax, penalty, interest under the repealed law may be instituted or continued as if the earlier law had not been repealed. The demand cum show cause notice for recovery of short deposit of service tax for the financial years 2014-2015, 2015-2016 and 2017-2018 shall be deemed to have been instituted and continued under the repealed law and cannot be pre-empted with reference to the time frame under section 74 (10) of the Act of 2017. Hence, the impugned show cause notice cannot be said to be ex facie without jurisdiction or time barred. Thus, no case of patent lack of jurisdiction or legal bar to the issuance of show cause notice cum demand notice has been made out. However the appellant/assessee is entitled to a personal hearing in the matter - appeal disposed off.
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2023 (12) TMI 1071
Sabka Viswas Scheme (SVLDRS) - petitioner not able to pay the demanded amount in time - HELD THAT:- In W.P.No.24366 of 2021 [ 2023 (11) TMI 899 - MADRAS HIGH COURT] , a similar set of facts was already considered and a detailed order was also passed by this Court where it was held that this Court is of the view that the application, filed on 13.02.2023 consequent to the payment made by the petitioner, has to be accepted under the SVLDRS scheme by the respondent and in such view of the matter, this Court has no hesitation to direct the respondent to issue Form SVLDRS-4 to discharge the tax liabilities within a period of 30 days from the date of receipt of copy of this order. The impugned order dated 24.08.2021 is set aside. Further, the 2nd respondent is directed to accept the payment made by the petitioner in terms of Form SVLDRS 3 and issue a Certificate of Settlement in Form SVLDRS 4 within a period of four weeks from the date of receipt of copy of this order - the writ petition is allowed.
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2023 (12) TMI 1070
Refund of service tax - Principles of unjust enrichment - incidence of duty - it is alleged that appellant had not passed on the burden of service tax to its client departments. According to the Revenue, unjust enrichment would apply to this case because the contracts were for an all inclusive price (including duties and taxes) and therefore, the appellant must have had reckoned the service tax into the total cost while bidding and at the time of bidding, there was no exemption from service tax and therefore, the appellant must have included in its invoice price, the service tax element. HELD THAT:- This finding because section 102 provides for refunds only if the contracts were signed prior to 1 March 2015. During that period, no service tax was payable because of exemption notification no. 25/2012-ST. cannot be agreed - it is found inconceivable that the appellant would have anticipated that the exemption from service tax would be withdrawn even before submitting its bids and would have included the service tax element in the bills. It is found impermissible to hold that the appellant had indirectly passed on the burden of the service tax to its client government departments. Once this anomalous and baseless presumption that the service tax would have been indirectly passed on by the appellant to its client government departments is removed, no basis remains for rejecting the refund claim or crediting it to the Consumer Welfare Fund. What distinguishes the present case from UNION OF INDIA VERSUS SOLAR PESTICIDE PVT. LTD. [ 2000 (2) TMI 237 - SUPREME COURT] is the fact that no service tax was paid when the appellant submitted its bids to the clients. Therefore, there is no scope for passing on the burden of any service tax at that stage. After the service was rendered, it was only entitled to the amounts which it bid and which were accepted in the contract and not to any additional amount as service tax. The contracts specifically exclude any additional payments towards service tax - The Commissioner s reasoning in the impugned order is based on the presumption as to how the appellant would have decided to bid an amount and we find no room in law to speculate as to how the bids would have been made by the appellant. It is their business decision and there is no presumption in law that whenever bids are made, elements X, Y or Z have been reckoned. Based on this presumption as to how the appellant would have made its bids and further, based on the factually incorrect assumption that at the time of making the bids, service tax was not exempted and hence would have been reckoned by the appellant while preparing its bids, the Commissioner held that unjust enrichment would apply. The impugned order deserves to be set aside and is set aside - Appeal allowed.
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2023 (12) TMI 1069
Recovery of service tax alongwith interest and penalty - Business auxiliary services - spares and parts - incentive received from the Atlantic Lubricants and Specialities Pvt. Ltd. for buying minimum quantity of goods - amount received on account of colour difference charges of vehicles - rent received for providing table space to banking and financial institutions - HELD THAT:- It is found that neither in the show cause notices, nor in the impugned order, the Ld. Commissioner has mentioned any specific clause of Section 65 (19) of Business Auxiliary Service (BAS) under which service tax demand is sought to be made - it is also found that the Tribunal has consistently taken the view that specific clause of Business Auxiliary Service is required to be mentioned and if not mentioned, the entire demand is liable to be set-aside. Reference made to the decision of the Tribunal in the case of SYNIVERSE MOBILE SOLUTIONS PVT LTD., (EARLIER TRANSCIBERNET INDIA PVT LTD.) VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD IV [ 2023 (6) TMI 463 - CESTAT HYDERABAD] where it was held that On this issue it is seen that Tribunals have been consistently holding that it is essential for the Show Cause Notice issuing authority to clearly indicate the sub-clause under which the service tax in question would fall. Demand of Service Tax on spares and parts - HELD THAT:- It is found from the documents placed on record at Page No. 116 to 124 of the Appeal Paper book that services and spares are charged separately from the manufacturer for the warranty period and service tax was paid on the value of services and on the value of spare parts, VAT/Sale Tax was paid as the sale of spare parts is considered to be sale of goods and liable to VAT. Therefore, the service tax is not leviable on the sale of spare parts - reference made to Department Circular No. 699/15/2003-CX dated 05.03.2003 which specifically clarifies that the sale of parts, accessories and consumables are not includible in the value of taxable services provided the value of such consumables are shown separately and in the present case, we find that the assessee has shown the value of service and value of spare parts separately. Service tax on amount of incentive received from the Atlantic Lubricants and Specialities Pvt. Ltd. for buying minimum quantity of goods - HELD THAT:- It is found that such receipt of incentives/trade discount is not towards provision of any service which fact is clear from the perusal of the agreement dated 01.10.2009 entered into between the parties which is placed at Page No. 195 to 200 of the Appeal Paper Book - it has been held in many case by the Tribunal has held that the demand of service tax is not sustainable on incentives and trade discounts received on the buying minimum quantity of goods. Demand of service tax under Business Auxiliary Service on the amount received on account of colour difference charges of vehicles - HELD THAT:- Such charges are in relation to sale of car and is related to the value of car sold and not a consideration for any service, let along BAS. To this effect, the appellant has produced the certificate of the Chartered Accountant alongwith ledger which is on record of the appeal paper book - in the appellant s own case, for the previous period, the Ld. Commissioner (Appeals), Chandigarh set-aside the demand on this issue on the ground that there is no provisions of service involved in this case. Demand of service tax on rent received for providing table space to banking and financial institutions - HELD THAT:- It is found that the amount received by the appellant is for providing space and not for promoting the business of banks/financial institutions. The provisions of space cannot be considered as promotion of business of the person to whom the space has been provided as held in various decisions. The impugned order confirming the demand amounting to Rs. 18,11,691/- under Section 73 of the Finance Act, 1994 is not sustainable in law, and therefore, the same is set aside - once the demand is set aside, the question of interest and penalty does not arise - appeal of assessee allowed.
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2023 (12) TMI 1068
Non-payment of Service Tax - Cargo Handling Services - evacuation of Ash and Nuisance Free Disposal at the abandoned mines of CCL/BBCL - Mining Services - transportation of Coal - Supply of Tangible Goods Service - GTA Service - services availed for hire of trucks from various persons for transportation of coal - Violation of CCR '04 by not paying 6% on the value of exempted services. Demand of Service Tax under Cargo Handling Service - HELD THAT:- It is observed that the Appellant has rendered the service to Tenughat Vidyut Nigham Limited, Damodar valley Corporation and Mejia Thermal Power Corporation, for evacuation of ash from different Ash Ponds located at the power stations. The ash was transported to the abandoned mines of CCL, ECL, BCCL for the disposal of ash - the ash was transported in automatic dippers/dumpers/trucks and unloaded the same into the abandoned mines, by automatically sliding down the ash in the core of such mines - A perusal of the work order reveal that the primary service in this case is transportation and the loading and unloading work is ancillary to the transportation service - the Appellant has rendered transportation service. In terms of Rule 2(1)(d)(v) of the Service Tax Rules, 1994, the recipients are liable to pay service tax for the GTA services received by them - the demand of service tax from the Appellant under the category of 'Cargo Handling Service' is not sustainable. Demand of Service Tax under the category of 'Mining Services' - HELD THAT:- The services rendered by the Appellant was transportation of coal. They have not received any contract for actual mining of coal - A perusal of the work order received by them would reveal that it is a composite contract involving transportation as the primary service. All other services are incidental or ancillary to transportation service - the adjudicating authority has not brought in any evidence to substantiate the allegation that the appellant has rendered 'Mining Service' - the service rendered by the Appellant is transportation service. As the receiver has already paid service tax in terms of Rule 2(1)(d)(v) of the Service Tax Rules, 1994, the demand confirmed in the impugned order under 'Mining Service' against the Appellant is not sustainable. Demand of Service Tax on the transportation services rendered by other transporters as sub-contractors - HELD THAT:- The transporters have not issued any 'Consignment Notes'. In respect of this transportation service, the Appellant has raised invoice for the full value to their clients CCL/BCCL and the receiver has paid service tax on the full value of the contract. As the sub-contractors who provided the transportation service has not issued any 'consignment note', it is observed that the Appellant are not liable to pay service tax under the category of GTA service on reverse charge - Since the sub-contractor who rendered the transportation service to the Appellant has not issued any 'consignment note' for the transportation service, it is held that the Appellant is not liable to pay service tax as recipient of GTA Service. As the Appellant has raised the invoice on the full value and the recipient has paid service tax under GTA on the full value, demanding Service Tax again from the sub-contractor for the transportation service would amount to 'double-taxation' - the demand of service tax from the Appellant on reverse charge basis under GTA service is not sustainable. Extended period of limitation - penalty - HELD THAT:- It is observed that the issue involved in the Work Orders covered by earlier Notices were also related to the issue whether Evacuation of Ash from the ponds and transporting it out side ti fill the abandoned mines. Earlier Notice demanded service tax under the category of ,Cleaning Service, for the same work. Thus, it is evident that even though the Work Orders are different, the issue involved is the same - the department has not brought in any evidence to substantiate the allegation of suppression in this case, to invoke extended period - the adjudicating authority has rightly dropped the demands on the ground of limitation and not imposed penaltied under Section 78 of the Finance Act, 1994 and Rule 15 of the CCR 04 - the department s appeal is not sustainable and it is liable for rejection. The impugned order set aside - appeal allowed.
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2023 (12) TMI 1067
Levy of service tax - Business Auxiliary service or not - Appellant only receives distributor s profit margin - BSNL pays service tax on the wholesale price including the distributor s profit margin, thus appellant were not paying service tax on this income received - exemption under Sl. No.29(f) of the mega Exemption Notification No. 25/2012 ST dated 20-06-2012 - dispute in the instant case relates to the period 2015-16 whereas the Show Cause Notice was issued on 30-12-2020 - invocation of extended period of limitation - HELD THAT:- The Appellant submits that they are distributors of BSNL Prepaid/Post-paid SIM, Vouchers and are engaged for sale and distribution of BSNL products. The relation between them and BSNL is that of buyer and seller. There is no service provider/service receiver relationship. The Appellant does not provide any service and does not receive any service charges from BSNL. They only receive distributor s profit margin. BSNL supplies these cards etc. with fixed Maximum Retail Price (MRP) to them which is inclusive of Service Tax reduced by distributor s profit margin which is sold by them to end users at MRP. The difference is the distributor profit margin. BSNL pays service tax on the wholesale price including the distributor's profit margin. The issue is no longer res integra as the Tribunal Kolkata has decided the issue in Appellant's own case M/S KEDIA COMPUTER SERVICES VERSUS CCEX., CUS. S. TAX, BHUBANESWAR [ 2020 (7) TMI 183 - CESTAT KOLKATA] for the period July 2003 to November 2004 and December 2004 to July 2005 while dealing with identical facts has held that there is no agency service or sales promotion service provided in such transactions, but it is a case of sale/purchase of item from BSNL on principle to principle basis which is pure trading activity and on the cellular products, the BSNL has already discharged Service Tax, hence, demanding service tax again from the trader would amount to double taxation. Thus, the demand confirmed in the impugned order is not sustainable on merits. Since the demand itself is not sustainable the question of demanding interest or imposing penalty does not arise. Extended period of limitation - HELD THAT:- The dispute in the instant case relates to the period from 2015-16 whereas the Show Cause Notice was issued on 30-12-2020 i.e. beyond the normal period of limitation under Section 73(1) of the Act. The normal period of limitation under Section 73(1) is 30 month from the relevant date while the Show Cause Notice is issued after lapse of 4 year 9 months. Accordingly, the demand is liable to be set aside on the ground of limitation also. The impugned order set aside - appeal allowed.
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2023 (12) TMI 1066
Non-payment of service tax - Business Auxiliary Service - providing services of 'Sizing of coal' to their customers - Appellant while invoicing the sale of coal has included all the components of its sale price of coal which includes the sizing charges and paid applicable VAT on such assessable value as per the State Laws - HELD THAT:- The issue is no longer res integra, as the Tribunal Kolkata Bench has decided the issue in favour of the Appellant in the case of M/s Integrated Coal Mining Ltd. Vs Commissioner of Central Excise and Service Tax, Bolpur [ 2021 (1) TMI 179 - CESTAT KOLKATA] where it was held that Sizing of coal is an incidental and ancillary process to make coal marketable and thus complete manufacture of coal and to make it into excisable goods as per Section 2(d) of the Central Excise Act. The process of sizing of coal is also therefore outside Section 65(19) of the Act since it is a process in the manufacture of the final product, sized coal. The demands confirmed in the impugned order is not liable to service tax under the category of 'Business Auxiliary Service' - the demands of service tax, interest and penalty confirmed in the impugned order set aside - appeal allowed.
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2023 (12) TMI 1065
Penalty u/s 78 of the Finance Act, 1994 - Service Tax along with the interest is paid by the assessee on commission income before issuance of SCN - Classification of services - income booked as godown rent - Renting of Immovable Property Service (RIPS) or not. Whether penalty is imposable under Section 78 of the Finance Act, 1994 when service tax along with interest thereon has been paid before issue of the SCN and whether further penalty of Rs.5,000/- imposable under Section 77 of the Finance Act, 1994? - HELD THAT:- The Appellant has deposited the Service Tax of Rs.4,05,205/- along with interest of Rs.1,30,876/- on 25.02.2009 without raising any dispute. In terms of Section 73(3) of the Finance Act, 1994, where the Service Tax along with the interest is paid by the assessee on the basis of tax ascertained by the Central Excise Officer, no SCN is required to be served - this view has been held by this Tribunal in the case of M/S. NATIONAL POWER ENGINEERING COMPANY VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, SILIGURI COMMISSIONERATE [ 2023 (7) TMI 361 - CESTAT KOLKATA] - imposition of penalty under Section 78 of the Finance Act, 1994 is not warranted in this case - the penalty imposed under Section 78 is set aside. Whether Service Tax of Rs.34,865/- is payable under the category of Renting Immovable Property Services (RIPS) during the period 2007-08 2008-09 for the amount shown as 'godown rent' in the balance sheet? - HELD THAT:- From the rate payable by ICICI bank as per the agreement mentioned above, it is evident that the land has been used for parking of the vehicles by ICICI bank. Accordingly, the Appellant are entitled for the exemption provided under Clause (c) of Explanation 1 to Section 65(105) (zzzz) of the Finance Act, which specifically excludes the land used for parking purposes from levy of service tax under the category of RIPS. Accordingly, the demand of Rs.34,865/- confirmed along with interest and penalty in the impugned order is not sustainable and the same is set aside. Penalty imposed under section 77 of the Finance Act - HELD THAT:- It is observed that the penalty was imposed for non registration and not filing the returns and non-payment of the tax in time - the Appellant has been filing returns regularly. The demand confirmed in the impugned order has been held as not sustainable. In view of the above, the penalty under Section 77 is not imposable and accordingly the same is set aside. The impugned order set aside - appeal allowed.
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Central Excise
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2023 (12) TMI 1064
Denial of benefit under N/N. 29/2004-CE and N/N. 30/2004-CE both dated 09.07.2004 - Denial on the ground of availment of CENVAT Credit - whether the appellants can avail both the notifications and as to whether CENVAT credit is available under such circumstances? - HELD THAT:- The very same issues have been deliberated by the Tribunal in number of cases - it is found that this Bench in the case of SHRIJEE LIFESTYLE PVT. LTD. VERSUS COMMISSIONER OF C. EX., THANE [ 2013 (9) TMI 998 - CESTAT MUMBAI] has held it is not a situation where the duty credit on inputs were availed in respect of exempted goods and dutiable goods simultaneously. Hence the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004 is not applicable in the facts of the case. The Tribunal in the case of Winsome Yarns Ltd. [ 2015 (9) TMI 459 - CESTAT NEW DELHI ] has held When an assessee does not avail of input duty credit, he has option to pay 4% duty under Notification No. 29/2004-C.E. and also the option to clear his goods at nil rate of duty under Notification No. 30/2004-C.E. and when two exemption Notifications are available to an assessee, he can always opt for the Notification which is most beneficial for him and in this regard the Department cannot force the assessee to avail a particular exemption Notification. Looked at from this point of view, the Department s stand is incorrect. There are no infirmity in the simultaneous availment of benefit under both the Notifications No. 29/2004 and 30/2004 and the credit on capital goods by the appellants - appeal allowed.
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2023 (12) TMI 1063
Disallowance of CENVAT Credit alongwith interest and penalties - denial of credit on the sole ground that no service has been rendered by the contractors to the Appellant and the amount paid by the Appellant is in the nature of reimbursement of capital investment and not towards the provision of any service - extended period of limitation - HELD THAT:- The ground under which the Cenvat credit availed by the Appellant was denied, cannot be agreed upon - It is a settled proposition of law that Cenvat credit cannot be denied to service recipient when payment of service tax is not disputed by the department at the service provider s end. In the case of M/S. HINDALCO INDUSTRIES LIMITED VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, ROURKELA [ 2023 (12) TMI 117 - CESTAT KOLKATA] , this Tribunal has held that Without challenging the assessment, the department cannot question the Cenvat credit passed on by ABMCPL to the Appellant - By relying on the decision, it is held that the denial of Cenvat credit amounting to Rs. 183,36,81,368/-in this case vide the impugned order is not sustainable. Since the demand of recovery of Cenvat credit is not sustainable, the question of demanding interest and imposing penalty does not arise. Extended period of Limitation - HELD THAT:- The impugned order has confirmed the demand without any conclusive evidence towards any suppression, misstatement, fraud, collusion, etc. with the intent to evade payment of service tax on part of the Appellant. Further, the Appellant being a PSU, there exists a presumption of bona fide and no allegation of suppression of facts with intent to evade payment of tax can be levelled against them without any concrete evidence - It is also observed that the factum of availment of CENVAT credit was duly reflected in the periodical returns filed by the Appellant. Therefore, the demand confirmed vide the impugned O-I-O by invoking the extended period of limitation cannot be sustained - the demands confirmed in the impugned order are liable to be set aside on the ground of limitation also. The impugned order is set aside on merit as well as on limitation - the appeal filed by the Appellant is allowed.
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2023 (12) TMI 1062
CENVAT Credit - eligibility to avail credit on input services relating to captive mines, which is distributed to the Appellant vide ISD invoices - HELD THAT:- It is found that both the mines as well as the manufacturing unit belongs to one legal entity i.e. SAIL, which is engaged in manufacture of Steel. The subject mines are set up primarily to serve as captive mines to manufacturing units of SAIL and thus bears an integral link to steel plants - it is observed that the input services like security service, mining service, transportation etc used by the captive mines bears a direct nexus with Appellant s units manufacturing final products i.e. Steel. Hence, such services are very well covered within the scope of the definition of input services . Rule 3 of CCR does not mandate that for the purpose of availment of credit on input services, such services should be received within the premises where manufacture of final product takes places but only provides that services should be used in or in relation to the manufacture of final products. Thus, the Appellant is entitled to avail credit of service tax paid on input services received at the mines, which serves as an intermediate product for manufacture of final product i.e. steel items. Thus, the Appellant is eligible to avail CENVAT Credit of input services relating to captive mines, which is distributed to the Appellant vide ISD invoices - the demand of reversal of Cenvat credit along with interest and penalty confirmed vide the impugned order dated 30.09.2019, is not sustainable - appeal allowed.
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2023 (12) TMI 1061
Reversal of CENVAT Credit - Appellants have availed Cenvat Credit both for dutiable and exempted goods - separate Cenvat Credit records and status were not maintained - with effect from 01/03/2011, the supplies to Railways brought under the concessional rate of 1%/2% Excise Duty subject to the condition that no Cenvat Credit is availed - Extended period of Limitation - HELD THAT:- The Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT ] has held that if the Cenvat Credit taken is reversed, the same would amount to non-availment of Cenvat Credit. As per the factual details available and seen from the records, it is found that the Department itself does not dispute after proper verification by the Superintendent that the Appellant has maintained separate accounts and has not availed the Cenvat Credit to the extent of Rs. 2,69,26,825/- and they have availed Cenvat of Rs. 54,46,566/- only in respect of three or four common inputs - there are no justification for confirmed demand of Rs. 35,39,80,370/- for the period 2009-10 to 28/02/2011. For the same reason, the confirmed demand of Rs. 49,43,41,259/- for the period 01/03/2011 to May 2013 is not legally sustainable. However, verification is required to be done about the Cenvat Credit taken for the common inputs to the extent of Rs. 54,46,566/-, a figure which is being agreed to by the both sides - it is directed that the Adjudicating Authority to apply the procedure prescribed under Rule 6 of CCR, 2004, for proportionate reversal of Cenvat Credit. For arriving at this figure, Gross Total Credit available, total credit taken, credit taken for common inputs, total turnover, exempted turnover etc. are required to be considered as per the CCR Rules, 2004. Extended period of limitation - Appellant submits that there is total absence of suppression on their part and prays that the confirmed demand towards the extended period is required to be set aside - HELD THAT:- There are considerable force in this argument since the Appellants have been filing the Returns regularly and non-availment of Cenvat of over Rs. 2.69 Crores as claimed was found to be correct by the Superintendent on 18.06.2018, after the Show Cause Notice was issued. Therefore, it is held that the any confirmed demand for the extended period is not sustainable and such demand on account of time bar is set aside. Matter remanded to the Adjudicating Authority for the limited purpose of quantifying the Cenvat Credit to be reversed on account of common inputs for the normal period only after excluding the demand for the extended period - appeal allowed by way of remand.
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2023 (12) TMI 1060
Irregular availment of CENVAT Credit - imported goods - cleared as such as the said tools neither inputs nor capital goods used in or in relation to the manufacture of their final products - process not amounting to manufacture - HELD THAT:- In the present case, the appellants are engaged in the manufacture of various high precision tools, and also import certain parts used as inputs. The tools were customised and sold by the appellant on payment of appropriate duty of excise on its transaction value, which was more than the credit availed on the inputs. The Revenue disputed the processes undertaken on the imported items alleging the same do not result into manufacture of a new item different from the inputs; hence the activity undertaken by the appellant is purely in the nature of trading; therefore, cenvat credit availed on the inputs cannot be admissible. This issue is no more res integra as it has already been settled by various decisions as cited by the learned counsel for the appellant. In THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] , the Bombay High Court taking note of the arguments of the Revenue, more or less in the same line observed once the duty on final products has been accepted by the department, CENVAT credit availed need not be reversed even if the activity docs not amount to manufacture. There are no merit in the impugned order. Consequently, the impugned order is set aside - appeal allowed.
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2023 (12) TMI 1059
Valuation - addition of scrap value to the assessable value, at which Appellant job worker had cleared the intermediate product to the input supplier cum Principal manufacturer - demand alongwith interest and penalty - HELD THAT:- Order already passed in the Appellant s own case for its earlier period VISHNU KUMAR RATANLALJI OZA VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR AND M/S. VINAR ISPAT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2023 (2) TMI 1232 - CESTAT MUMBAI] holding that money value of the scrap retained by the Appellant does not represent additional consideration for the Appellant and it is not liable to be included in the assessable value of the job worked goods, being cleared on payment of duty to the manufacturer. There is no substantial change of law in the meantime except inclusion of Rule 10(A) which CBEC have clarified vide its Circular dated 31.03.2010 that once goods manufactured by job workers are not sold by the Principal Manufacturer but are consumed by the Principal manufacturer, Provision of Rule 8 of Valuation Rules, 2000 that provides for determination of value on the basis of 110% of the cost of production is required to be adopted, besides the facts that ever since the judgment of P.R. Rolling Mills passed way back in 2010 [ 2009 (3) TMI 444 - CESTAT, BANGALORE ], it has been consistently held by the Judicial Authorities that additional scrap value would not determine the final assessable value. The order passed by the Commissioner (Appeals) is set aside - appeal allowed.
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2023 (12) TMI 1058
Levy of Central Excise Duty - resin powder reflected in the monthly returns of Allied Resins - resin powder clandestinely cleared - under valuation of stock transferred goods - penalty under Section 11AC of the Central Excise Act, 1944 - penalty under rule 26 Of Central Excise Rules, 2002 read with Section 9(1) of the Central Excise Act, 1944. Confirmation of duty demand of Rs.61,24,002/- including Education Cess and SHE Cess, relating to unaccounted manufacture and clearance of U F Resin Powder, to Rampur Unit of Allied Resins - HELD THAT:- There is no evidence to substantiate the allegation of clandestine clearance and there is no question of the Appellant being required to pay any duty in respect of the said quantity. Thus, we hold that the demand of duty from the Appellant on the said quantity again is not sustainable. Accordingly, the demand confirmed in the impugned order on this count is liable to be set aside. Confirmation of duty demand of Rs.22,99,672/- including Education Cess and SHE Cess, relating to clandestinely cleared goods not accounted for in physical stock verification - HELD THAT:- On going through the reconciliation statement submitted by the Appellant, the net shortage of 36.13 MT arrived at by the Appellant is satisfied. Accordingly, the Appellant is liable to pay duty of Rs. 3,02,176/- along with interest on the shortage of 36.13 MT, as worked out by them. Confirmation of duty demand of Rs. 1,50,540/- relating to under valuation of stock transferred goods - HELD THAT:- The Appellant has not disputed this liability. Accordingly, the confirmation of this demand is upheld. Levy of penalty of Rs.85,74,214/- on the Appellant under Section 11AC, of the Central Excise Act, 1944 - HELD THAT:- The duty of Rs. 3,02,176/- along with interest has been confirmed on the shortage of 36.13 MT, which the Appellant agrees to pay. It is observed that this shortage has been arrived at by taking the yield of UF Resin Powder produced as 55% of the weight of liquid resin consumed. As there is no evidence available on record to establish clandestine clearance of this quantity of U F Resin Powder, penalty under Section 11AC not imposable on this demand. Also, the demand of duty Rs. 1,50,540/- is related to under valuation of stock transferred goods. The Appellant has not disputed this liability. However, the issue being technical in nature, the intention to evade payment of duty cannot be attributed to this demand. Accordingly, no penalty imposable on this demand. Levy of penalty of Rs.1,00,000/- on Shri. R K Vijay, CEO under rule 26 Of Central Excise Rules, 2002 read with Section 9(1) of the Central Excise Act, 1944 - HELD THAT:- The allegation of suppression with intent to evade payment of duty has not been substantiated in this case. Also, the department has not brought in any evidence to highlight the role of Appellant No.2 in the commission of the alleged offence. Accordingly, the penalty imposed on him under rule 26 read with section 9(1) of the Central excise act, is not sustainable. Appeal disposed off.
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2023 (12) TMI 1057
Clandestine removal - demand of differential duty based on difference in the quantity mentioned on the railway receipts and central excise invoices prepared by the Respondent - HELD THAT;- It is observed that there is no evidence brought on record by the department to allege that there has been excess production. There is no evidence available on record regarding excess receipt of corresponding raw materials or there has been excess electricity consumption or other similar variations to establish clandestine manufacture and removal of goods. Thus, it is observed that the demand raised by the department is based merely on assumptions only. It is observed that the department has not brought in any evidence on record to substantiate the allegation of clandestine clearance. Accordingly, the demand of duty calculated by the department only on the basis of the excess quantity mentioned in the railway receipts, is not sustainable. Thus, there are no infirmity in the OIO passed by the Ld. Commissioner. Accordingly the OIO dated 28.03.2013 passed by the Ld. Commissioner is upheld. The impugned order passed by the adjudicating authority upheld - appeal of Revenue dismissed.
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Indian Laws
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2023 (12) TMI 1056
Dishonour of Cheque - punishment to accused with jail sentence which may be extended to two years or with fine which may extend to twice the amount of the cheque or with both - HELD THAT:- It appears that under section 138 of Negotiable Instruments Act, there is a specific provision that court has empowered to punish the accused with jail sentence which may be extended to two years or with fine which may extend to twice the amount of the cheque or with both. In view of the law laid down by the Hon'ble Apex court in Surinder Singh Deswal [ 2019 (5) TMI 1626 - SUPREME COURT] , the first appellate court is conferred with the power to direct the applicant to deposit such amount pending appeal which shall be minimum 20% of fine or compensation awarded by the trial court. The impugned order dated 19.1.2023 passed by the first appellate court appears to be just and proper which does not suffer from any illegality or irregularity - this criminal revision petition is accordingly dismissed by affirming the order passed by the first appellate court. The applicant is directed to deposit the said amount before the trial court within a period of one month from the date of receipt of certified copy of this order.
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2023 (12) TMI 1055
Dishonour of Cheque - compounding of offence - CIRP proceedings have been initiated against the Accused company and its directors - whether the present case is an appropriate case where the consent of non-applicant no.2 for compounding the offence, could be ignored? - HELD THAT:- In the present case, the complaint has been filed on 29.03.2018, the summons is said to have been issued in April, 2018. Advocates appeared through counsel. On 11.12.2018 the applicants have filed an application seeking compounding of offence. Demand draft of the entire amount of cheque was also annexed. Strictly speaking, the applicants have not filed the application on 1st or 2nd hearing of the case but have filed the same on third hearing of the case which can be said to be an initial stage. This application has been filed in response to the summons issued by the Court making it clear that if the applicants would make an application for compounding of offence at the first or second hearing of the case, the compounding may be allowed. The non-applicant no.2, thus, appears to have raised his claim for recovery of the amount on 03.01.2018 before the IRP. Admissible recovery, whether of Rs.3 crores or otherwise, will be considered before the IRP and in terms of the provisions of the IBC Code, 2016. In the circumstances, to not offer consent on the ground that the applicants owe dues to the non-applicant no.2 to the tune of Rs. 3 crores is, in my considered opinion, an abuse of process of law and, therefore, by invoking the jurisdiction u/s 482 of the Code, this attempt will have to be and stands nipped down. Whether it will be permissible for six accused (the present applicants) out of twelve, to seek compounding of offence? - HELD THAT:- The applicants have referred to the judgment of the Allahabad High Court, in the case of GAGAN PAL SINGH AHUJA AND ORS VERSUS STATE OF U.P. AND ORS. [ 2023 (5) TMI 1280 - ALLAHABAD HIGH COURT] , which was required to consider whether piecemeal compromise and compounding thereof is permissible and it was held that the scope and ambit of Section 482 Cr.P.C. is in much wider than that of Section 320 of Cr.P.C. The non-applicant is getting adequate compensation. In the circumstances, having given my thoughtful consideration to the attending circumstances, the request to compound the offence will have to be allowed. The present case appears to be a fit case where powers under Section 482 of the Code must be exercised, considering the peculiar facts and circumstances of the case - criminal application allowed.
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