TMI Tax Updates - e-Newsletter
December 26, 2024

Case Laws in this Newsletter:

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

TMI Short Notes

1. Pre-deposit: Upholding Principles of Natural Justice in CGST Appeals

  GST:

2. Dismissal of GST Appeal on Procedural Grounds Quashed: Where the appeal was not signed by the Authorized Person

  GST:

3. Quashing Show-Cause Notice Due to Unexplained Delay: Upholding Fair Adjudication

  Service Tax:

Articles

1. Re-imaging the role of Public International Law’s in Arbitration

   By: Shirsha Jana

2. UNATTENDING DAMAGED VEHICLE – FATAL TO THE INSURANCE CLAIMS?

   By: DR.MARIAPPAN GOVINDARAJAN

3. Notification extending time limit not applicable for passing of order under Section 73 for FY 2017-18

   By: Bimal jain

4. GST Returns Due Date: What Happens If You Miss It?

   By: Ishita Ramani

News

1. Advisory for Entry of Receipt Numbers Pertaining to Leased Wagons in the E-Way Bill System

2. Annual Survey of Unincorporated Sector Enterprises (ASUSE)Results for 2023-24 (Reference & Survey period: October 2023 to September 2024)

3. Inauguration of Advance Calibration Laboratory and 500 kWp Solar Rooftop at National Council for Cement and Building Materials, Ballabgarh

4. Auction for Sale (issue/re-issue) of (i) ‘New GS 2031’, (ii) ‘6.92% GS 2039’ and (iii) ‘7.09% GS 2054’

5. Government of India and Asian Development Bank sign $500 million loan to support sustainable infrastructure projects aligned with the India’s climate commitments

Notifications

DGFT

1. 43/2024-25 - dated 24-12-2024 - FTP

Extension in Import Period for Yellow Peas under ITC(HS) Code 07131010 of Chapter 07 of ITC (HS) 2022, Schedule -I (Import Policy)

GST - States

2. FIN/REV-3/GST/1/08(Pt-1)(Vol. II)/303 - dated 9-10-2024 - Nagaland SGST

Amendment in Notification No. FIN/REV-3/GST/1/08(Pt-1)/352 dated the 22nd June, 2017

3. FIN/REV-3/GST/1/08(Pt-1)(Vol. II)/302 - dated 8-10-2024 - Nagaland SGST

Amendment in Notification No. FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/253 dated 19th October, 2023

Circulars / Instructions / Orders

Customs

1. 27/2024 - dated 23-12-2024

Enabling Voluntary Payment electronically on ICEGATE e-Payment Platform

Highlights / Catch Notes

GST

• High Court quashes late fee order on delayed GST returns before 01.04.2023, extends amnesty benefit for filings till 30.06.2023.

  Case-Laws - HC : HC set aside order imposing late fee on petitioner for delayed GSTR-9/9C filing before 01.04.2023, holding petitioner entitled to benefit of amnesty notification N/N. 07/2023 dated 31.03.2023 exempting late fee for filings between 01.04.2023-30.06.2023. HC ruled differential treatment violative of Article 14, directed withdrawal of impugned order/show cause notice, remanded for fresh order extending amnesty benefit to petitioner.
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• Stock transfer hiccup: Goods hauled despite e-way bill discrepancy, HC vindicates owner's rights.

  Case-Laws - HC : Petitioner is owner of goods being transported as stock transfer from Orissa branch to Kanpur. HC held that when goods were intercepted, requisite documents under GST Act were accompanied and no discrepancy found regarding quantity, except in e-way bill transferee place was mentioned as Ghaziabad while in tax invoice it was Kanpur. As petitioner is consignor and consignee, being stock transfer, petitioner ought to have been treated as owner. Following SC judgment in Arviva Industries case and HC's own judgment in Riya Traders case, authorities were not justified in not recognizing petitioner as owner evident from record. Impugned orders quashed, petition allowed.
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• Interim bail in GST evasion case due to lack of tax liability determination & cooperation.

  Case-Laws - HC : Petitioner granted interim bail in GST evasion case. HC held arrest u/s 69 of CGST Act requires determination of tax liability by authorities, which was lacking. Despite power to arrest, continued detention at investigation stage not warranted as petitioner cooperated. Interim bail granted on personal bond of Rs. 1 lakh and bail bond with sureties, subject to conditions by CJM.
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• High Court upholds show cause notice against firms involved in generating fake input tax credit through circular trading (2017-2022).

  Case-Laws - HC : The HC dismissed the writ petition challenging the validity of the show cause notice (SCN) issued u/ss 74 and 122 of the CGST Act, 2017. The SCN was issued for generating fake input tax credit (ITC) through circular trading by multiple firms from 2017 to 2022. The HC held that joint assessment proceedings u/s 74 against all involved firms were justified, and the petitioner could not be singled out. The SCN was validly issued within the limitation period specified in Sections 74(2) and 74(10) of the CGST Act.
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• Validity of GST Act section 174(2) on hold pending Supreme Court decision in X v. Y case.

  Case-Laws - HC : The HC held that the challenge to section 174(2) of the GST Act, 2017 would be subject to the final outcome in the case of X v. Y [2024 (5) TMI 1498 - SC ORDER]. Till disposal of the SLP in X by the SC, interim orders passed by the HC in all respective cases shall continue to operate, subject to the final SC decision in X. The petition was disposed of.
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• Appellate authority must examine appeal merits even if documents not provided.

  Case-Laws - HC : The HC allowed the petition challenging the order of the appellate authority dismissing the appeal. Despite being granted an opportunity to produce documents, the appellant did not do so. However, the HC held that under the Bihar Goods and Services Tax Act, particularly Section 107(8)-(12), the appellate authority has a duty to examine the merits and grounds raised in the appeal memorandum. Even in ex parte proceedings, the authority must decide on merits, failing which it would abdicate its statutory powers to conduct further enquiry necessary to decide the appeal on the points raised.
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• Goods Transfer in FTWZ to DTA Classified as "Supply" Under CGST Act; IGST Applicable, No Input Tax Credit Reversal Needed.

  Case-Laws - AAAR : Transfer of title of goods stored in Free Trade Warehousing Zone (FTWZ) by the appellant to customers in Domestic Tariff Area (DTA) or multiple transfers within FTWZ is covered under paragraph 8(a) of Schedule III of CGST Act, 2017 as "Supply of warehoused goods to any person before clearance for home consumption". It does not fall under paragraph 8(b) regarding endorsement of documents of title to goods. IGST is applicable on such supplies from FTWZ to DTA customers. No reversal of input tax credit is required under amended Section 17(3) of CGST Act for these supplies, except for supplies from duty-free shops at international airports.
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Income Tax

• Interest Income from Pre-Operational Deposits Tied to Capital Costs, Not Taxable as Other Income, Court Decides.

  Case-Laws - HC : The HC held that interest income earned on funds temporarily deposited in bank during pre-commencement of business for acquisition of capital asset like coal mine is inextricably linked to the cost of acquisition and cannot be charged to tax under 'income from other sources'. Such interest income is to be credited to capital work-in-progress (CWIP) and treated as part of capital cost. However, this accounting treatment applies only for assets requiring considerable time for construction or putting to use, not for off-the-shelf products. The Assessee, incorporated to acquire and operate coal mine overseas, had borrowed funds for this purpose which were temporarily kept in interest-bearing deposits pending acquisition. Since the attempt was aborted, the borrowed funds were repaid. The interest earned on such funds was rightly treated as part of capital cost creditable to CWIP. Decided in favour of the Assessee.
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• Reopening tax assessment quashed for lack of fresh evidence, AO merely changed opinion on existing material.

  Case-Laws - HC : The HC held that the AO lacked jurisdiction to reopen the assessment beyond four years u/s 147. The reasons did not establish the assessee's failure to fully disclose material facts. The AO merely changed its opinion on the same material, which is impermissible. Reopening was based on existing material without any fresh tangible evidence, violating the first proviso to Section 147. The HC entertained the writ petition and quashed the reopening notice for lack of jurisdictional compliance.
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• Landmark firm's plea for compounding tax offences rejected, HC allows fresh consideration.

  Case-Laws - HC : Respondent no. 5 - M/s Adel Landmark Limited's application for compounding offences u/s 276B and 278B was rejected as the competent authority [Chief CIT(TDS)] deemed petitioner's standalone application non-considerable. HC set aside the order, remanding to the competent authority to decide afresh per current guidelines, allowing co-accused to apply separately for compounding offences. Petition disposed accordingly.
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• Excess & short stock during survey: 50% benefit on excess stock; 12.72% GP rate on short stock.

  Case-Laws - AT : CIT(A) determined excess stock and short stock during survey. ITAT partly allowed assessee's appeal. For excess stock, benefit of doubt given to assessee for 50% of value. For short stock, ITAT directed AO to adopt 12.72% gross profit rate instead of 25% adopted by CIT(A). Appeal partly allowed.
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• Huge share trade profits alone don't make scrips penny stocks; Revenue failed to prove dubious transactions.

  Case-Laws - AT : The ITAT held that merely huge profits from share transactions do not make the scrips penny stocks. Despite the financials being incommensurate with purchase/sale prices and characteristics of penny stocks existing, the Revenue failed to link the assessee to dubious transactions, price rigging or establish involvement as entry/exit provider. Absent any material against the assessee's role beyond being an investor for quick profits, the ITAT decided in the assessee's favor, overturning the AO's addition treating share gains as bogus u/s 68, which was based on presumptions and human probabilities without substantiation.
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• Tax deduction disallowance u/s 14A accepted by AO; revisionary authority can't substitute satisfaction without inquiry.

  Case-Laws - AT : The ITAT held that the AO, after examining the assessee's explanation, was prima facie satisfied with the correctness of the suo motu disallowance made by the assessee u/s 14A read with Rule 8D. The revisionary authority cannot substitute the AO's satisfaction with its own without making an inquiry. The assessee consistently followed a particular methodology for suo motu disallowance u/s 14A, which was accepted in past assessment years. If the AO, being satisfied with the assessee's explanation, accepted the suo motu disallowance consistent with the past methodology, the assessment order cannot be considered erroneous. Thus, the assumption of jurisdiction u/s 263 was invalid. The decision was in favor of the assessee.
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• Interest expense on unsecured loans allowed; nexus proven between borrowings & interest income.

  Case-Laws - AT : The ITAT held: Interest expenditure on unsecured loans is allowable deduction u/s 57(iii) as borrowed funds were utilized for advancing loans earning interest income, establishing one-to-one nexus. Addition of Rs 20 lakh unsecured loan from Mr Piyush Kumar deleted as fresh loan of Rs 5 lakh from same party accepted as genuine. Addition u/s 69A on unsecured loans incorrect as AO failed to record satisfaction that assessee owned unexplained money/assets; AO examined loans from angle of s.68 requiring assessee to prove sources instead of invoking s.69A shifting onus on AO. Decided in assessee's favour.
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Customs

• Single window for voluntary self-payments replaces manual challans for customs duties & taxes.

  Circulars : The CBIC circular enabled electronic voluntary self-initiated payments on ICEGATE e-Payment platform to replace manual TR-6 challan payments. Users registered on ICEGATE can generate challans for specified purposes listed in Annexure-A and make payments through authorized banks/modes. Field officers are instructed not to accept manual TR-6 challans after 31.12.2024 unless specifically approved by jurisdictional Pr. Commissioner/Commissioner citing reasons. Payment verification facility provided on ICEGATE.
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• Customs notice quashed due to 8-year delay in adjudication despite importer's reply.

  Case-Laws - HC : The HC quashed the show cause notice (SCN) issued u/s 28(9) of the Customs Act, 1962 due to an inordinate delay of almost eight years in adjudication. Despite the petitioner's reply to the SCN dated 17.04.2015, no adjudication was conducted. The HC held that there was no justifiable reason for the non-adjudication, and the facts did not reveal any impossibility for the Customs Department to deal with the SCN. Consequently, the impugned SCN deserved to be quashed, and the petition was allowed.
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• Imported metal items classified as ingots/flats, not scrap - higher duty upheld despite appeal.

  Case-Laws - AT : The CESTAT dismissed the appeal against the order of the Commissioner (Appeals) confirming the classification of the imported goods as ingots and flats instead of heavy melting scrap, thereby rejecting the appellant's claim for concessional rate of duty. The Tribunal upheld the Additional Commissioner's authority to determine the accurate classification after 100% physical examination and examiner's reports, refuting the appellant's contention that the reclassification was improper.
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• Customs Tribunal Classifies Digging Spades Correctly, Overturning Previous Ruling on Exporter Liability and FOB Value.

  Case-Laws - AT : The appellants challenged the classification of goods described as "Hand Tools Digging Spade With Handle" under CTH 82011000 or as "Pick Mattock" under CTH 82013000 for DEPB Scheme. CESTAT held the goods are spades used for digging based on Chartered Engineers' opinions, falling under Sr. No. 196 of DEPB schedule. Regarding mismatch in declared and actual quantity, CESTAT ruled the exporter cannot be blamed due to loose packing. On valuation, CESTAT held no evidence of market price for identical goods, and FOB value can be higher than market value. The impugned order was set aside and appeal allowed.
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Corporate Law

• Judges Protection Act upheld; non-payment is default for insolvency; no forum shopping; cost imposed on petitioner.

  Case-Laws - HC : Section 3 of Judges (Protection) Act, 1985 held constitutional. Non-payment of debt, even partially, amounts to default by Corporate Debtor u/s 7 IBC. Order of NCLT-1 Mumbai admitting insolvency application not perverse or illegal. Petition alleging forum shopping, suppression, multiplicity of proceedings dismissed. Cost of Rs. 2.5 lakh imposed on Petitioner.
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• Land dispute lost for defunct firm: Court bars claim, upholds trespassers' possession. Costs imposed on struck-off company's rep.

  Case-Laws - HC : Suit dismissed. Plaintiff company's suit seeking possession and permanent injunction rejected. HC granted permanent injunction against plaintiff barring reliance on sale deeds and interference with defendants' possession. Suit filed after final judgment is abuse of process. Plaintiff struck off under Companies Act, unable to maintain suit. Actual costs awarded against plaintiff's representative personally due to struck-off status.
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State GST

• GST rates revised for snacks, AC units, & vehicle seats. Snacks 12%, Rail AC 28%, Two-wheeler seats 28%, Four-wheeler seats 28% from Oct 2024.

  Circulars : The CBIC clarified: Extruded/expanded savoury snacks under HS 1905 90 30 attract 12% GST prospectively from 10.10.2024, earlier 18% payable. Roof Mounted Package Unit Air Conditioners for Railways classified under HS 8415 attract 28% GST. Two-wheeler seats under HS 8714 attract 28% GST. Four-wheeler seats classified under HS 9401 attract 28% GST prospectively from 10.10.2024, earlier 18% payable.
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• University Affiliation Services Taxable at 18% GST; Flying Courses Exempt; Helicopter Transport Taxed at 5% or 18% Based on Service.

  Circulars : The SC clarified that affiliation services provided by universities to colleges are taxable at 18% GST rate. Affiliation services by educational boards/councils to schools, except government schools, are taxable; GST liability is regularized from 1.7.2017 to 17.6.2021. DGCA-approved flying training courses by approved FTOs are exempt under education services. Transport of passengers by helicopter on seat share basis attracts 5% GST; GST liability regularized from 1.7.2017 to 9.10.2024, while charter operations attract 18% GST. Ancillary services by GTAs are part of composite transport supply. Import of services by foreign airlines from related parties without consideration is exempt; GST liability regularized from 1.7.2017 to 9.10.2024. Preferential location charges are part of construction services supply. Certain support services by electricity utilities are exempt; GST liability regularized from 1.7.2017 to 9.10.2024. GST liability on film distribution rights regularized from 1.7.2017 to 30.9.2021.
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IBC

• Insolvency Professional suspended for related party dealings & unauthorized valuation report submission.

  Case-Laws - HC : Petitioner's registration as an Insolvency Professional suspended for one year by DC. Engaged brother's firm without proper CoC disclosure - related party transaction violation of Section 28(1)(f), IBC Code. Submitted valuation report without CoC approval/ratification - violation of Regulation 34, CIRP Regulations. Appropriate action taken against non-payment of water charges. Suspension upheld on two valid grounds despite one ground lacking. HC disposes application.
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• Appellate authority dismisses appeal for 156-day refiling delay, citing insufficient justification and IBC's strict timelines.

  Case-Laws - AT : The NCLAT dismissed the appeal, declining to condone the delay of 156 days in re-filing. The appellant's explanation was found insufficient to condone such a prolonged delay. The NCLAT emphasized adherence to procedural timelines under the IBC, referring to Supreme Court judgments which disallowed extending timelines beyond statutory limits except in limited circumstances not attributable to the litigants. As the appellant failed to provide adequate justification for the inordinate delay of 156 days in re-filing, which appeared aimed at hindering the resolution process, the NCLAT dismissed the appeal.
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• Unsuccessful bidder's challenge to approved resolution plan dismissed due to lack of locus standi.

  Case-Laws - AT : The NCLAT rejected the intervention application filed by the Appellant for approval of the Resolution Plan u/s 30 of the I&B Code. The Appellant was an unsuccessful Resolution Applicant and lacked locus standi to become a party to the proceedings. The NCLAT held that the Adjudicating Authority has the prerogative to determine whether the approved Resolution Plan by the COC falls within the parameters prescribed in Section 30(2), and the Appellant has no right to ensure its compliance. The NCLAT allowed the impleadment of M/s Lulu International Shopping Malls Private Limited, whose Resolution Plan was approved. Since the Appellant's Intervention Application was rejected and its Resolution Plan was rejected without challenge, the NCLAT dismissed the appeal, holding that the Appellant has no locus standi to intervene or challenge the approval of the Resolution Plan granted to M/s Lulu International Shopping Malls Private Limited.
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Indian Laws

• Apex court reverses High Court's premature discharge; says charge framing needs only prima facie case, not clinching evidence.

  Case-Laws - SC : The SC held that the HC erred in setting aside the charge framed against the respondent while exercising revisional power. At the charge framing stage, the court is only required to consider if a prima facie case exists, not whether there is clinching evidence. The HC's meticulous consideration of evidence to find absence of clinching material was beyond its scope under S.239 CrPC. The SC set aside the HC's judgment quashing the charge and discharging the respondent.
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Service Tax

• Service tax demands for site formation and mining services ruled unsustainable; interest and penalties set aside.

  Case-Laws - AT : The CESTAT held: The demand of service tax under 'site formation service' for June 2005 to May 2007 by culling out site formation charges from a composite mining contract is unsustainable. The alleged site formation activity was only incidental to the mining service, and demanding tax on a service not agreed upon lacks merit. The demand for short payment of service tax under mining service for June 2007 to September 2008 is unsustainable. The appellant had already paid service tax on the gross income by end of 2008-09. The demand for service tax under mining service for June 2007 to September 2008 on account of undervaluation is unsustainable. Enhancement of value based on cost of provision u/r 3(b) is inapplicable as there was no realization of consideration in kind. All three demands of service tax confirmed in the impugned order, along with interest and penalty, are set aside. The appeal is allowed.
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• Services to Overseas Universities Classified as 'Export,' Not 'Intermediary'; No Service Tax Liability, Appeal Allowed.

  Case-Laws - AT : The CESTAT held that the services rendered by the appellant to overseas universities/colleges amounted to 'Export of Service' and not 'intermediary service'. It observed that the appellant was not an agent of the foreign universities as per the agreements. All conditions u/r 6A of Service Tax Rules, 1994 were satisfied. The amount was received from foreign universities in convertible foreign exchange, not from Indian students. Indian students were not the service recipients. The place of provision was wrongly held to be in the taxable territory (India). The services fell u/r 3 of Place of Provision Rules, 2012, with the service recipient (foreign universities) located outside the taxable territory. Invoking Rule 9 of Place of Provision Rules was incorrect. The appellant was not liable to pay service tax on foreign consultancy fees. The show cause notice was barred by limitation as there was no evasion of tax. The order was set aside, and the appeal allowed.
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Central Excise

• Excise Duty Overpayments and Short Payments Resolved: No Fraud, Leniency on Limitation Period.

  Case-Laws - AT : The CESTAT allowed the appeal. The appellant had been adjusting duty payments considering sale price at factory gate and ex-C&F depot price, resulting in excess and short payments. The appellant informed the department about the price details since 2009. The CESTAT held that invoking extended period of limitation u/s 11A(4) of the Central Excise Act, 1944 was wrong as there was no fraud, wilful mis-statement or suppression of facts with intent to evade duty by the appellant. The impugned order confirming the show cause notice demanding short payment of duty was set aside as legally unsustainable on the point of time limitation.
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Case Laws:

• GST

• 2024 (12) TMI 1228
  Constitutional Validity of N/N. 07/2023, dated 31.03.2023, which is in violation of the Article 14 of the Indian Constitution and Principle of parity - different treatment to the assessee/dealers who had filed their GSTR-9/9C with delay before 01.04.2023 - direction to respondents, its servants, subordinates, agents and successors in office to forthwith withdraw and/or cancel the impugned order dated 30.11.2023 passed by the respondent No. 3 and the show cause notice dated 22.08.2023 issued under Section 74 of the Act imposing late fee. HELD THAT:- It is evident that the intention of the Government is not to harass the assessee, who come forward to file their return for the assessment years mentioned in the notification within the stipulated period. Thus, it would imply that the benefit would extend to the petitioner as well, who filed the return although belatedly on 13.03.2023, which is before the cut off date mentioned in the above notification - It would be unjust to deny the benefit to the petitioner merely because the petitioner filed the return prior to the issuance of the amnesty notification dated 31.03.2023, confined to amnesty only to those who filed the return between 01.04.2023 and 30.06.2023. The intention of the government in issuing the aforesaid notification was to encourage filing of returns. Therefore, this Court is of the view that the petitioner is entitled to the benefit of notification dated 31.03.2023. The impugned order dated 30.11.2023 passed by respondent No. 3 and the show cause notice dated 22.08.2023 issued under Section 74 of the Act are set aside and the case is remanded back to the third respondent with a direction to pass fresh order on merit by extending the benefit of notification dated 31.03.2023 in accordance with law as expeditiously as possible preferably within three months from the receipt of the copy of this order - Petition allowed by way of remand.

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• 2024 (12) TMI 1227
  Contempt of Court - interference with the administration of justice by arresting the petitioner - HELD THAT:- From the Arrest Memo dated 20 December 2024, it is apparent that this Arrest Memo is signed again by the Assistant Commissioner of State Tax. The Arrest Memo shows that the authorisation for this arrest was obtained on 20 December 2024 i.e. today itself and the Petitioner was arrested at 7.55 am today itself - Prima facie this amounts to interference with the administration of justice and consequently, might amount to a Contempt of Court. The petition is posted on 06 January 2025. Before that date, the Commissioner should consider and dispose of the Petitioner s objections/representation dated 11 December 2024 made in Form GST DRC-22A under Rule 159(5) of the MGST Rules. For this, the Commissioner, must give a hearing to the Petitioner and pass a speaking order. In this case, we direct Respondent No. 2 to decide these objections/representation. List this matter on 06 January 2025.

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• 2024 (12) TMI 1226
  Challenge to order passed under Section 129(3) of the Act - Petitioner is owner of goods or not - HELD THAT:- Admittedly, the goods were being transported as stock transfer from Orissa branch to Kanpur, Uttar Pradesh. When the goods were intercepted, the requisite documents required under the GST Act, were found to be accompanied therewith. Further, on physical verification, no discrepancy whatsoever was found with regard to quantity of goods in transit, rather mere a discrepancy was found that in the e-way bill, place of transferee was mentioned as Ghaziabad whereas in tax invoice, it was mentioned as Kanpur. In the case in hand, petitioner is both i.e. the consignor and consignee as the goods in question is a stock transfer from State of Orrisa to Kanpur, Uttar Pradesh and, therefore, the petitioner ought to have been treated as the owner of the goods. The Hon ble Apex Court in the case of Arviva Industries (I) Ltd. [ 2007 (1) TMI 6 - SUPREME COURT ] has specifically held that the circulars are binding upon the authorities, it is not a case of the respondents that the Circular dated 31.12.2018 has been rescinded or superseded. In view of the judgment of this Court passed in the case of M/s Riya Traders [ 2023 (1) TMI 1238 - ALLAHABAD HIGH COURT ] wherein it has specifically been held that once the consignor and consignee of the goods comes forward, then the proceedings should have been initiated against the owner of the goods in accordance with the law. Therefore, the authorities were not justified not recognizing the petitioner as the owner of the goods, which is evident from the material available on record. The impugned orders cannot sustain in the eyes of law and the same are hereby quashed - Petition allowed.

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• 2024 (12) TMI 1225
  Legality of the arrest and detention of petitioner - evasion of GST by falsely claiming ITC - power of the detention under Section 69 of the GST Act - reasons to believe - HELD THAT:- Section 69 of the CGST Act, 2017 confers the power to arrest, where the Commissioner has reasons to believe that the persons had committed any offence specified in Clause (A) or Clause (B) or Clause (C) or Clause (D) of Sub-section 1 of Section 132 which is punishable under Clause (I) (II) of Sub-section (1) for (2) of the said Section, he, the Commissioner may by order authorize any officer of central excise to arrest such a person. Having notice to the provisions of Section 69 of the Central GST Act, a reference to Section 132 which provides for punishments for certain offences is also necessary for the purposes of this proceedings. Only the relevant portion of this section is referred to. Under Section 132 (1) (c) whoever commits or causes to commit and retain the benefits arising out of input tax credit using invoice and bill referred to in Clause (B) or fraudulently avails input tax credit without any invoice or bill shall be punishable - in cases where the amount of tax evaded or the input tax credit wrongly availed or used the amount of refund wrongly taken exceeds Rs. 500 Lakhs, with imprisonment for a term which may extend to 5 years and with fine. The records produced before this Court by the learned Standing Counsel of the respondent reveals that pursuant to the summons issued the petitioner had appeared before the investigating authority and his statements have also been recorded. The records also reveal that the authorization as required under provisions of Section 69 has been issued by the Commissioner and the petitioner also does not deny that the grounds of arrest have been supplied to them within the prescribed period under the statute. The investigation still underway and therefore, the respondents have have sought for extension of the remand before the competent court of criminal jurisdiction. The power of writ court to issue direction to release from custody has been discussed in several judgments of the Apex Court as well as the High Courts of this country. The power although available is to be used sparingly where the facts demand. In THE STATE OF GUJARAT ETC. VERSUS CHOODAMANI PARMESHWARAN IYER ANR. ETC. [ 2023 (7) TMI 1008 - SUPREME COURT] while dealing with the proceeding where pursuant to summons issued by the Goods and Services Authority, the assessee, apprehending arrest had approached the Gujarat High Court praying for grant of Pre-arrest bail. The Gujarat High court disposed of the writ petition directing the petitioner to appear before the authority and if any apprehension is necessary, the authority will give further opportunity of two weeks. Perusal of the records reveals that the authorization required under the statue has been given by the Commissioner on the ground that he has reasons to believe on the materials placed before the authority. However, what is not seen from the materials placed before the court at this stage is the determination of the liability as is required for recovery of taxes from any assessee. No material has been shown that such determination of the liability had been arrived at by the respondent authorities on whom the Commissioner had concluded that he had reasons to believe that the person has committed any offence specified under the various Clauses under Section 132. While there is no quarrel with the proposition that Section 69 does confer power on the Commissioner to order arrest in case any of the specified offences under Section 132 of the CGST Act, the question remains is whether arrest or detention is called for merely because is power is available on the authority to do so. In ARNAB MANORANJAN GOSWAMI VERSUS THE STATE OF MAHARASHTRA AND ORS. [ 2020 (11) TMI 965 - SUPREME COURT] it was held that the principles have involved over a period of time and had emanated from the series of decisions and such principles are equally applicable while exercising jurisdiction under 226 of the Constitution of India when the court is call upon to secure the liberty of the accuse/petitioner. Coming to the present proceedings as discussed from the records produced it is seen that the petitioner has cooperated with the investigating authority and his statement has been recorded there is no material to suggest that he will abscond or not respond to summons issued. There is also no material which prima facie suggests that the determination of the liability has been arrived that by the Commissioner or the investigating officer. Under such circumstances this court of the view that continued detention of the petitioner at the stage of investigation is not required. This therefore court considers that the petitioner can be released on interim bail until further orders. The petitioner is directed to be released on interim bail subject to furnishing personal bond of Rs. 1 Lakh as well as execute a bail bond of Rs. 1 Lakh with two local sureties of the like amount to the satisfaction of the learned Chief Judicial Magistrate, Kamrup (M) and the subject to fulfilment of conditions imposed - bail application allowed.

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• 2024 (12) TMI 1224
  Validity of SCN issued u/s 74 and 122 of Central Goods and Services Tax Act, 2017 - notice u/s 74(1) of CGST Act, 2017 issued beyond the period of limitation specified in Section 74(2) and 74(10) of the CGST Act, 2017 - generation of fake ITC - HELD THAT:- The search was conducted initially in the premises of M/s Panjon Limited and the material collected from the premises revealed that as many as 5 firms are involved in circular trading with a common object to inflate their turnover, increase of valuation of the company in order to take benefit of higher loans from the bank or financial corporation and to avail fake input tax credit. The total period during which these fake ITCs were generated is from 2017 to 2022, therefore, a joint assessment is liable to be conducted of six companies / noticee in the aforesaid period. In such type of circular trading matters, the assessment can be done by calling all the firm / companies involved in trading in the relevant years by the proper office. This matter cannot be proceeded individually in a given facts and circumstances under Section 74 of CGST Act, 2017. Except petitioner, remaining 4 companies have not approached this Court challenging the show-cause notice. In order to prove the circular trading as explained by way of diagram in the page 20 of the common show-cause notice, said notice has rightly been issued and the joint assessment proceedings are liable to be undertaken u/s 74 of the CGST Act, 2017 by the proper officer. Hence, the petitioners cannot be singled out from this assessment proceedings by entertaining this writ petition. This Writ Petition being devoid of merit and substance stands dismissed.

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• 2024 (12) TMI 1223
  Challenge to section 174 (2) of the GST Act, 2017 - HELD THAT:- The challenge to section 174 (2) of the GST Act, 2017 would be subject to the final outcome of the decision in the case of T.S. BELARAMAN VERSUS THE COMMERCIAL TAX OFFICER ORS. [ 2024 (5) TMI 1498 - SC ORDER] . Till the disposal of the SLP in T.S. Belaraman by the Supreme Court, interim orders passed by this Court in all the respective cases shall continue to operate, which shall be subject to the final decision to be rendered by the Supreme Court in T.S. Belaraman. Petition disposed off.

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• 2024 (12) TMI 1222
  Cancellation of GST registration of petitioner - devoid of reasons - violation of the principles of natural justice - retrospective cancellaton of registration of petitioner - HELD THAT:- The authority has passed an order dated 31.01.2024 retrospectively cancelling the registration of the appellants. It is found from the impugned order dated 01.02.2024 that it is in statutory format being Form GST REG-19. However, the statutory format does not give any reasons as to why the appellants registration has to be cancelled that too with retrospective effect from 18.12.2021 - the assessee would state that they have not received any enclosures along with Form GST REG- 19. As the assessee has submitted a reply to the show cause notice, it is for the authority to consider the reply and to record reasons in writing either accepting the reply or rejecting the contentions of the reply to the show cause notice. In other words, the order should be a speaking order - this appeal is disposed off by setting aside the order dated 01.02.2024 in Form GST REG-19 and remanding the matter back to the Original Authority who is directed to afford an opportunity of personal hearing to the appellants assessee, peruse the document produced and take a fresh decision on merits and in accordance with law. Petition disposed off by way of remand.

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• 2024 (12) TMI 1221
  Challenge to order of the appellate authority - dismissal of appeal - appeal was filed in time but the appellate authority despite opportunity being granted to the appellant to produce the documents in support of his case, he did not produce the same - HELD THAT:- A Division Bench has already held in PURUSHOTTAM STORES VERSUS STATE OF BIHAR AND OTHERS [ 2023 (8) TMI 1356 - PATNA HIGH COURT] looking at the provisions of the Bihar Goods and Services Tax Act especially sub-sections (8), (9), (10), (11) and (12) of Section 107 of the Act, that the Appellate Authority has a duty and an obligation under the statute to look into the merits of the matter and also examine the grounds raised by the appellant and decide the issue on merits. The Appellate Authority even while considering the appeal ex parte will have to consider the grounds raised in the memorandum of appeal, deciding the appeal on merits, failing which it would be abdicating its powers especially looking at the provisions where the Appellate Authority has been empowered to conduct such further enquiry as found necessary to decide the appeal, which decision also shall be on the points raised. Petition allowed.

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• 2024 (12) TMI 1220
  Classification of supply - transfer of title of goods stored in FTWZ by the appellant to its customers in DTA or multiple transfers within the FTWZ - to be covered under paragraph 8 (a) or under paragraph 8 (b) of Schedule III of the CGST Act, 2017? - scope of warehoused goods used in paragraph 8 (a) of Schedule III of the CGST Act, 2017 - Applicability of IGST on goods stored in FTWZ and supplied to DTA customers - reversal of input tax credit (ITC) under amended Section 17(3) of the CGST Act for supplies from FTWZ to DTA customers. Classification of supply - transfer of title of goods stored in FTWZ by the appellant to its customers in DTA or multiple transfers within the FTWZ - to be covered under paragraph 8 (a) or under paragraph 8 (b) of Schedule III of the CGST Act, 2017? - HELD THAT:- The transfer of title of goods lying in FTWZ takes place admittedly as per the Statement of facts of the case furnished by the appellant, whereas the provisions of 8 (b) of Schedule III of the CGST. Act, 2017 talks about Supply of goods. by the consignee to, any other person, by endorsement of documents of title to the goods . It is to be noted here that the above phrase specifically refers to the term by endorsement of documents in absolute terms, and not just transfer of title to the goods in general. It is opined that the term by endorsement assumes significance in the context of the instant case. On a conjoint reading of the phrases, along with its properties and specifications, i.e., by endorsement and documents of title to the goods , it becomes clear that the activity relating to Supply of goods, by endorsement of documents of title to the goods as enumerated under para 8 (b) of Schedule III of the CGST Act, 2017 refers to the mode of transaction for a specific activity, as against the practice adopted for normal sale transactions - paragraph 8 (b) of Schedule III is conceptually linked to High Sea Sale . The appellant raises invoices to transfer the title of the goods to the customer while the goods are lying within the FTWZ unit in the instant case, and that they are not into endorsement of any document of title to goods in the nature of a bill of lading, dock-warrant, warehouse keeper s certificate, multimodal transport document etc. - The document in the instant case being a commercial invoice, the same is to be treated as a proper document for sale, and it cannot be treated as a case of Supply of goods, by endorsement of documents of title to the goods , by any means whatsoever. Accordingly, it becomes clear that the transaction involved in the instant case is to be considered as a mere transfer of title , and thereby it does not get covered under paragraph 8 (b) of Schedule III of the CGST Act, 2017, as it is meant to cover a specific situation/activity. Once the application of paragraph 8 (b) of Schedule III of the CGST Act, 2017 to the instant case is effectively ruled out, it becomes imperative to examine as to whether the provisions of paragraph 8 (a) of Schedule III of the CGST Act, 2017, viz., Supply of warehoused goods to any person before clearance for home consumption , applies to the instant case or not. A Free Trade Warehousing Zone , as the name suggests, is a bonded premises providing warehousing facility, much in parity with the bonded warehouse under the Customs Act. Further, when the goods are imported and brought into a FTWZ unit, they are basically warehoused first and then traded or subjected to other authorized operations as the case may be - the provisions of 8 (a) of Schedule III of the CGST Act, 2017, viz., Supply of warehoused goods to any person before clearance for home consumption applies to the instant case, and there are no reason to modify the ruling pronounced by the AAR. Applicability of IGST on goods stored in FTWZ and supplied to DTA customers - HELD THAT:- This query is not answerable, since the first query is answered in the affirmative., and therefore the ruling does not require any modification. Whether any reversal of ITC is warranted in the instant case in view of the recent amendment to Section 17 (3) of the CGST Act, 2017? - HELD THAT:- The reversal of proportionate input tax credit of common inputs/input services/Capital goods is not warranted at the hands of the Appellant in terms of the amended Section 17 (3) of the CGST Act, 2017 read with Explanation 3 of Rule 43 of the CGST Rules, 2017, even when the activity/transaction in question is covered under paragraph 8 (a) of Schedule III of the CGST Act, as long as it does not relate to supplies from Duty Free Shops at arrival terminal in international airports to the incoming passengers.

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• Income Tax

• 2024 (12) TMI 1219
  Offence punishable u/s 276CC - mens rea of the petitioner - rebuttal of presumption u/s 278E - non filing of the income tax return for the assessment year 2012-2013 - Appellant submitted that the revised income tax return was filed belatedly as the concerned records were seized in pursuance to the seizure - respondent submitted that in view of the non-compliance of the mandate in not filing the revised income tax return within time, the criminal proceedings have been initiated against the appellant. HELD THAT:- We are of the view that continuing the criminal proceedings would be unnecessary. We are dealing with a case where the appellant did in fact file the revised income tax return, and penalty proceedings which were initiated against the appellant itself have been dropped. As a consequence, refund was also ordered. We are further supported by the reasoning given in the decision of this Court in Guru Nanak Enterprises and Ors Vs. ITO [ 2004 (11) TMI 15 - SUPREME COURT ] Thus, considering the facts of the case in its totality, we are inclined to set aside the impugned order. The impugned order stands set aside. Consequently, the criminal proceedings initiated under Section 276CC against the appellant stands quashed.

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• 2024 (12) TMI 1218
  Addition u/s 56 - interest income earned on surplus fund deposited in the bank during pre-commencement of the business - It is the Assessee s case that income by way of interest is not chargeable to tax under the head income from other sources as it was inextricably linked to acquisition of coal mine a capital asset. The Assessee claims that the amount of interest payable on the funds borrowed for acquiring such asset is required to be added to the total cost of the asset HELD THAT:- Plainly, if the interest is earned on the amounts which were temporarily kept in fixed deposits in the course of acquisition of the coal mine to set up its business, the interest earned would require to be accounted for as the part of the capital value of the business/asset. We may, however, add a caveat that this accounting treatment is or will be applicable only if the nature of the asset is such that requires time for construction or for putting it in use. Illustratively, the same would be applicable where the asset is to be constructed, developed or is of a nature that requires considerable time to bring it to use. Illustratively, in case where a plant is being set up in a factory and the requisite funds for setting up the same are deployed for a period of time, the interest paid on the amount borrowed for the said purpose and interest earned on temporary deposits during the course of deployment are required to be accounted for as a part of the capital costs. This is not true for an off the shelf product. Illustratively, if a motor vehicle is purchased from borrowed capital, neither the interest paid nor the interest earned on the funds borrowed for payment of consideration of the same can be accounted for as a part of the cost of the said asset. In the present case, there is no dispute that the Assessee was set up to acquire resources to ensure supply of coal. At the material time it was in the process of negotiation for acquiring a coal mine, to set up its business, and thus called for capital from its shareholders for the purpose of payment of the acquisition costs. It is the part of the said funds that were kept in the short-term fixed deposit in the bank for pending payment of the construction. The attempt to acquire the coal mine was aborted and thus the amounts borrowed were repaid to RINL. It is not disputed that the funds in question were not surplus funds of the Assessee, the same were called for and were earmarked for acquisition of a coal mine overseas. The said coal mine was to be the Assessee s undertaking as the Assessee was formed for the purpose of acquiring and operating a coal mine overseas. We find merit in the Assessee s contention that the interest received on borrowed funds, which were temporarily held in interest bearing deposit, is a part of the capital cost and is required to be credited to CWIP. The question of law as framed refers to the funds deposited in interest bearing account as surplus funds . However, as noted above, the funds in question were not surplus funds but funds that were called for and earmarked for a specific purpose of acquiring a coal mine. To that extent the use of the term surplus in respect of the funds, in the question of law as framed, is not apposite and ought to be deleted. Decided in favour of the Assessee.

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• 2024 (12) TMI 1217
  Reopening of assessment u/s 147 - reasons to believe - Notice issued beyond period of four years - HELD THAT:- AO in issuing the impugned notice u/s 148 has clearly acted without jurisdiction. AO was reopening an assessment beyond the period of four years and in such context the first proviso to Section 147 was strictly applicable inter alia to the effect that when the petitioner/assessee had not defaulted in fully and truly disclosing all material facts necessary for his assessment for the assessment year in question, AO would not have jurisdiction to reopen the concluded assessment. Reasons as furnished to the petitioner, in no manner whatsoever make out a case on the failure on the part of the petitioner to fully and truly disclose all the materials. Reasons demonstrate that the entire basis for such reopening is on the materials which was already available with the AO in finalizing the petitioner s assessment u/s 143 (3). If this be so, the AO was acting on a complete change of opinion on the same material and / or intending to have a review of the assessment order passed by him. This was certainly not permissible applying the settled principles of law as discussed by us hereinabove. It was, hence, clearly not permissible for the AO to reopen the assessment on the very material on which the assessment order was passed. The law does not permit such course of action and if permitted, it would not only fall foul of the mandate of the first proviso below Section 147 but also it would amount to manifest arbitrariness and illegality resulting in drastic and unwarranted consequences being brought about to unsettle settled/concluded assessments, which the law would certainly not recognize. This is certainly not a case where on the materials which are already produced before the AO, AO has gathered or discovered further material evidence so as to construe that there was failure on the part of the assessee to make a disclosure of such materials. Moreover, there is no further tangible material which has been gathered on due diligence from the existing material and hence it is quite futile for the respondents to take recourse to this provision. When the impugned reopening itself lacks compliance of the jurisdictional requirements, as ordained by the provisions of Section 147 considering the settled principles of law, such Writ Petition under Article 226 of the Constitution certainly needs to be entertained and adjudicated. Courts have exercised its power of judicial review, to interfere in the cases of reopening of assessment. We accordingly reject such contention as urged on behalf of the revenue.

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• 2024 (12) TMI 1216
  Rejecting the petitioner s application for compounding of the offences u/s 276B and 278B - main accused (respondent no. 5 M/s Adel Landmark Limited) had not filed any application for the compounding of the offences before the competent authority [Chief CIT(TDS)] as the said authority was of the view that the petitioner s application for compounding could not be considered on a stand alone basis. HELD THAT:- Co-accused are now entitled to apply separately for compounding of the offences. Revenue states on instructions that the impugned order may be set aside and the parties be remanded to the competent authority to consider it afresh in the light of the guidelines dated 17.10.2024. The said course commends to us. We accordingly set aside the impugned order and remand the matter to the competent authority to decide afresh in the light of the current guidelines. Petition is disposed of in the aforesaid terms.

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• 2024 (12) TMI 1215
  Revision u/s 263 - AO having allowed claim of employers contribution to staff provident fund in excess of 27% of the salary, which was contrary to Rule 87 of the Income Tax Rules, 1962 - HELD THAT:- We find that the assessee had explained no excess claim to have been made and had pointed out the demonstration of this fact to the AO with details during assessment proceedings. He had also explained how the excess had been erroneously calculated by the Ld. PCIT by considering contribution to funds which were not covered u/R87 of the Rules. PCIT however we find completely ignores these submissions and goes on to record a contrary finding, of the assessee having contributed to PF in excess of the limits specified under Rule 87 of the Rules. There is nothing in his order mentioning why and how he contradicts this factual contention of the assessee. Depreciation on addition of new plant and machineries while the same ought to have been limited to the amortized value of the assets - PCIT notes in his order that the assessee had contended that this depreciation had been claimed on new assets created by it and the circular no. CBDT Circular No. 9 of 2014 dated 23-01-20214 did not apply. Without dealing with the contentions of the assessee, the ld. PCIT holds the assessment order erroneous on this count simply by noting the impugned assets ought to have amortized and depreciation ought not to have been allowed to the assessee. Thus, the impugned order passed by the ld. PCIT is in gross violation of the principles of natural justice, passed without considering the contentions of the assessee before him and a completely non-speaking order. Assessee appeal allowed.

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• 2024 (12) TMI 1214
  Valuation of Excess Stock found during Survey - addition u/s 69 - Assessee is in appeal objected to the excess quantity determined by the CIT(A) with the plea that the assessee was holding at the time of survey 213 gms. Of 22 K jewellery kept for repair work which was also included in the above said excess stock. He prayed that above said amount must be removed from the excess stock HELD THAT:- CIT(A) has considered the difference in physical stock. After considering both the parties it is also a fact on record and the nature of business of the assessee that there are certain jewellery which may be kept for the purpose for repair purpose. In our view assessee should have brought to the notice of the officers at the time of survey itself. Since the nature of business demands that certain jewellery may be kept for repair purpose which could not be denied. For the sake of substantial justice, in our considered view, the difference claimed by the assessee is only Rs. 6,54,853/-, we are inclined to give the benefit of doubt to the assessee to the extent of 50% of the above value. Therefore, we direct the AO to reduce the same from the amount sustained by the CIT(A) i.e. Rs. 36,82,978/-. Short quantity found during the survey - CIT(A) has adopted gross profit at 25%, which, in our considered view, is excessive. We may have to determine the gross profit relevant to the assessee for the year under consideration. On careful consideration we observe from the Balance-Sheet submitted by the assessee wherein assessee has achieved Rs. 2,34,96,286/- over the sales of Rs. 18,46,56,857/- gross profit @ 12.72%. Since the AO has accepted the result furnished by the assessee and we are aware that the gross profit may differ from item to item, however, it is difficult to determine at this stage. Therefore, we are inclined to direct the AO to adopt the gross profit rate at 12.72% of the value of short stock determined by the CIT(A) i.e. at Rs. 9,19,350/-. With the above observation we are inclined to partly allow the grounds raised by the assessee. Appeal filed by the assessee is partly allowed.

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• 2024 (12) TMI 1213
  Addition u/s 68 treating gains from shares as bogus - AO observed that assessee had made huge profit out of this investment because of this, it makes the script as suspicious and penny stock - HELD THAT:- We cannot agree to the AO observation, merely because of huge profit, it does not make the script a penny stock. The financials of the company are not commensurate with the purchase and sale price in the market. Assessee has purchased the shares directly from the company and through share transfer from other party, subsequently, sold the same in the stock exchange. There is no discrepancies in the documents filed by the assessee claiming the deductions u/s 10(38). Even though all the characteristics of the penny stock exists in the present case, still the revenue has not brought on record any materials linking the assessee in any of the dubious transactions relating to entry, price rigging or exit providers. Even in the SEBI report, there is no mention or reference to the involvement of the assessee. We can only presume that the assessee is one of the beneficiaries in these transactions merely as an investor who has entered in investment fray to make quick profit. Even the AO has applied the presumptions and concept of human probabilities to make the additions without their being any material against the assessee. AO and CIT(A) has applied the concept of Human probabilities and held the above said scrips to be a penny stock without bring on record how the assessee is involved in any of the scrupulous activities or directly linked to one of the person who has involved in manipulation/rigging of share prices, entry operator or exit provider as observed in the case of Ziauddin A Siddique [ 2022 (3) TMI 1437 - BOMBAY HIGH COURT ] Therefore, there is no material with the tax authorities to substantiate their findings that the impugned transaction is non-genuine. Decided in favour of assessee.

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• 2024 (12) TMI 1212
  Revision u/s 263 - disallowance u/s 14A read with Rule 8D - Effect of suo motu disallowance made by the assessee - HELD THAT:- We are of the view that after examining the explanation of the assessee, the AO prima facie was satisfied with the correctness of the suo motu disallowance made by the assessee, having regard to its accounts. Hence, he did not discuss the issue in the body of the assessment order itself. By merely stating that the A.O. has not properly recorded his satisfaction, the revisionary authority cannot substitute the satisfaction of the A.O. with his own, that too, without making any enquiry himself. Coming to the enquiry part, ld. PCIT himself admits that assessee s case does not fall under no enquiry. According to ld. PCIT, the A.O. has made partial enquiry and has not carried the enquiry to its logical end. It is evident from the past history relating to the issue in dispute, the assessee has been consistently following a particular method for making suo motu disallowance u/s. 14A. Assessee s contention that in the past assessment years, the methodology adopted has been accepted, either at the stage of assessment or in appellate proceeding, remains uncontroverted. Therefore, if the A.O., having been satisfied with the explanation of the assessee, has accepted the suo motu disallowance, which is otherwise consistent with the methodology adopted by the assessee in past assessment years, in our view, the assessment order cannot be considered to be erroneous. Thus, assumption of jurisdiction u/s. 263 of the Act, is invalid. Decided in favour of assessee.

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• 2024 (12) TMI 1211
  Addition u/s 68 - unsecured loans from paper companies - HELD THAT:- As decided in Ojas Tarmake (P.) Ltd. [ 2023 (9) TMI 845 - GUJARAT HIGH COURT ] AO made addition on ground that assessee failed to discharge onus of liability as laid down under section 68, since amount of loan received by assessee was returned to loan party during year itself and all transactions were carried out through banking channels, impugned addition was to be deleted. Also in Ganesh Plantation Ltd. [ 2021 (12) TMI 206 - GUAJRAT HIGH COURT ] since no live link/proximate nexus of alleged dubious transactions between searched person and assessee had been brought on record, said addition was to be deleted. Decided against revenue.

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• 2024 (12) TMI 1210
  Disallowance of interest expenditure - interest income from advances made to group concerns, claimed deduction for interest expenditure - HELD THAT:- Borrowed funds have been utilized by the assessee for advancing loans to certain parties from whom interest income has been indeed earned by the assessee. Hence, one-to-one nexus has been proved beyond doubt. Accordingly, the interest expenditure paid by the assessee on the unsecured loans becomes an allowable expenditure for the purpose of earning interest income in terms of section 57(iii). Accordingly, we direct the AO to grant deduction on account of interest paid and ground no. 1 raised by the assessee is hereby allowed. Addition of unsecured loans received - Loan received from Mr Piyush Kumar, was repaid and thereafter fresh loan was received from the said party. AO in the assessment had added both old as well as the fresh loans. Once the second loan of Rs 5 lakhs is accepted as genuine and found to be satisfactory, there is no case for treating the earlier loan of Rs 20 lakhs from the same party to be non-genuine. Hence we direct the learned AO to delete the addition of Rs 20 lakhs received from Mr Piyush Kumar. Addition on account of unsecured loans was made by the learned AO u/s 69A - Mentioning of wrong section - onus to prove - For section 69A the basic pre-condition is that assessee should be found to be the owner of any money, bullion, jewellery, etc. for which assessee was not able to explain the source thereon or the explanation found given by him was not found to be satisfactory in the opinion of the AO. In the instant case, no such satisfaction per se has been recorded by the learned AO or by the learned CITA that assessee was found to be the owner of any money, bullion, jewellery, etc. On the contrary, assessee has merely received loans from certain parties - CIT-A sought to examine the veracity of the loans from the angle of section 68 of the Act by asking the assessee to prove the three ingredients of section 68. Though mentioning of wrong section may not be fatal to the addition that is being made, the burden of proof clearly shifts from assessee to the department when provisions of section 69A are being invoked. There is a huge difference between burden and onus of proof in terms of section 68 and 69A of the Act. This being not satisfactorily explained by the revenue in the instant case, we hold that no addition could be made in the hands of the assessee for the loans received from certain parties u/s 69A of the Act. Decided in favour of assessee.

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• Customs

• 2024 (12) TMI 1209
  Imposition of ADD - grievance raised by appellant is that despite a recommendation having being made by the designated authority in the final findings notified on 16.02.2022 for imposition of anti-dumping duty under section 9A of the Customs Tariff Act 1975, the Central Government did not issue the notification for imposition of anti-dumping duty - violation of principles of natural justice - it is held by CESTAT that The office memorandum dated 26.05.2022 is set aside and the matter is remitted to the Central Government to reconsider the recommendation made by the designated authority in the final findings . HELD THAT:- It is pointed out by the learned counsel for the petitioner that the domestic industries have given up their right in terms of the recommendation made by the Directorate General of Trade Remedies, Department of Commerce, Ministry of Commerce and Industry, Government of India, in the Notification (Final Findings) F.No. 6/46/2020-DGTR dated 23.09.2021 for imposition of anti-dumping duty under Section 9A of the Customs Tariff Act, 1975 made by the designated authority, as well as, their claims on the basis of the order passed by the Customs, Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi. In view of the statement made, the special leave petition is dismissed as infructuous.

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• 2024 (12) TMI 1208
  Validity of SCN issued u/s 28(9) of the Customs Act, 1962 - Delay of almost eight years in adjudication of the SCN - HELD THAT:- Coming to the facts of this case, the Show Cause Notice dates back to 17th April, 2015. The counter affidavit claims that there was certain re-organisation within the Customs Department and on 12th January, 2016, a Common Adjudication Authority was appointed. Even if the date is reckoned from 12th January, 2016 when the adjudication authority was appointed, the Mangli Impex decision came only on 3rd May, 2016 and the matter has been placed in the callbook on 21st July, 2016. A few months later, it was retrieved on 2nd February, 2017 but again from 2017 till 2023, there can be no reason for not adjudicating the show-cause notice. Four hearing notices have been given during this period. Despite the reply having been filed to the show-cause notice, there has been no adjudication. In the opinion of this Court, there existed no reason for the non-adjudication of the show-cause notice and therefore this Court is of the opinion that the facts do not reveal any glaring impossibility for the Customs Department to deal with the show-cause notice. The impugned show-cause notice dated 17th April, 2015 deserves to be quashed and is set aside - petition allowed.

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• 2024 (12) TMI 1207
  Eligibility of Concessional rate of duty applicable to melting scrap - rejection of certificate dated 15.06.2004 produced by the appellant - mis-declaration of ingots and flats of alloy steel as heavy metal scrap - Confiscation of imported goods - Department believed that the imported goods were not eligible for concessional rate of duty applicable to melting scrap and, therefore, 100% physical examination of the goods was conducted in the presence of two independent witnesses. HELD THAT:- One of the grounds taken in the appeal is that the Additional Commissioner had no authority in law to change the classification of the imported goods from heavy melting scrap to ingots and flats. It is not possible to accept this submission. Apart from the fact that the appellant failed to substantiate this ground, the Additional Commissioner does have the power to determine the classification of the imported goods. In the present case, 100% physical examination of the goods was conducted and thereafter reports were also called from the examiner. This finding of the Additional Commissioner has been confirmed by the Commissioner (Appeals). Apart from making a bald statement that the Commissioner (Appeals) failed to appreciate the contention raised by the appellant, this finding has not been seriously disputed by the appellant. There is, therefore, no infirmity in the order passed by the Commissioner (Appeals) - The appeal is, accordingly, dismissed.

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• 2024 (12) TMI 1206
  Classification of goods under DEPB Scheme - Hand Tools Digging Spade With Handle to be classified under CTH No. 82011000 or as Pick Mattock falling under CTH No. 82013000? - mismatch between the quantity declared and the quantity good - Valuation of goods. Classification of goods under DEPB Scheme - Hand Tools Digging Spade With Handle to be classified under CTH No. 82011000 or as Pick Mattock falling under CTH No. 82013000? - HELD THAT:- The goods are described as consisting of two parts, one metal part and one wooden handle. The appellants have submitted a certificate of Chartered Engineer Shri O.S.Nagar describing it as digging spade. The notice alleges that as per examination report the goods are found to be Pick Mattock. The notice does not define what a Pick Mattock is and how the revenue comes to a conclusion that it is a Pick Mattock - it is seen that both the Chartered Engineers have opined that the tool is used for digging. CRCL Kandla, in its opinion has not given any name to product. The word Pick Mattock has not been defined anywhere in the proceedings. Shri Nagar, Chartered Engineer in reply to questionnaire had described that the words Digging Spade and Pick Mattock are used interchangeably - The Google defines a spade as a tool that you use for digging . Since, both the Chartered Engineers have stated that the item is used for digging it can be called a Spade . There are no evidence is produced by revenue to establish that the goods are not Spade falling under Sr. No. 196 of DEPB schedule. Mismatch between the quantity declared and the quantity good - HELD THAT:- The declaration made in the documents was based on the order placed by the exporter. Physical counting of 21000 pieces would require opening of all packages. Moreover, it is stated that there was a delay in carting of second truck in the part by two days which necessitated the carting of cargo from the warehouse to open. The pictures of the cargo available in the file show that the goods were loosely packed in bags. In these circumstances the exporter cannot be blamed for some mismatch in quantity. As it is the benefit depends on value of foreign currency earned and not on the number of places exported. Valuation of goods - HELD THAT:- There is no evidence that the market price indicated by dealers is of identical goods as nothing except approximate weight of metal part is mentioned. There is no reference to the composition. Moreover, it is not necessary to export the goods has to be done at the domestic market price. The exporter can get a better price due to his marketing skills as well - It is apparent that the only administrative restriction is that the DEPB claimed should not exceed 50% of the market value. Thus, the CBEC also recognizes that FOB value can be much higher than market value. In these circumstances we do not find any merit in this objection as well. The Impugned ordered is set aside - the appeal is allowed.

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• Corporate Laws

• 2024 (12) TMI 1205
  Constitutionality of Section 3 of the Judges (Protection) Act, 1985 - failure to pay debt - default on the part of a Corporate Debtor - forum shopping - suppression - multipicity of cases - wastage of time of the court - making unfair statements - prayer to restrain and prohibit the two learned members of the NCLT-1, Mumbai from functioning and exercising jurisdiction. HELD THAT:- The view taken by the Hon ble Supreme Court in Swiss Ribbons Pvt. Ltd. and Anr. V/s. Union of India and Ors. [ 2019 (1) TMI 1508 - SUPREME COURT ] is now crystallized that even the non-payment of a part of the debt, when it becomes due and payable, will amount to default on the part of a Corporate Debtor. In such a case, an order of admission under Section 7 of the IBC must follow. If the NCLT notices that there is a debt, but it has not become due and payable, the application under Section 7 can be rejected. When there is a non-payment of debt under Section 3 (12) of the Code, when whole or any part or installment of the amount of debt has become due and payable and is not paid by the debtor or the Corporate Debtor, as the case may be, it would amount to default and the proceeding under Section 7 of the IBC must follow. In view of the above, there are no illegality or error in the order dated 29th October, 2024. Forum shopping - suppression - multipicity of cases - wastage of time of the court - HELD THAT:- The impugned order dated 29th October, 2024, can neither be termed as perverse or illegal. Merely because a different view could be possible, would not call upon this Court to quash and set aside the impugned order, in view of the law laid down in Syed Yakoob V/s. K.S. Radhakrishnan, [ 1963 (10) TMI 26 - SUPREME COURT ] and Surya Dev Rai V/s. Ram Chander Rai [ 2003 (8) TMI 527 - SUPREME COURT ], this Petition to the extent of the challenge to this order, stands dismissed. Taking into account all the prayers put forth by the Petitioner, except the challenge to the impugned order dated 29 th October, 2024 and main Prayer Clause, all other prayers being practically copied and pasted , this Petition deserves to be dismissed. Petition dismissed - cost of Rs. 2.5 Lakhs imposed.

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• 2024 (12) TMI 1204
  Maintainability of suit - Seeking a decree of possession and permanent injunction mesne profit in its favour and against the Defendants - consequence of the Plaintiff Company s struck-off status on its capacity to initiate legal proceedings - HELD THAT:- The present suit has been filed for seeking recovery of possession of the suit property from the Defendants on basis of the sale deed dated 30.10.1987 and sale deed dated 25.08.2011. However, the District Court on 15.09.2022 has granted a permanent injunction against the Plaintiff Company from relying upon the said documents and from interfering in the peaceful possession of the Defendants. In view of this permanent injunction, the present suit for recovery of possession is barred in law. The disputes between the parties arose in the year 2011 as acknowledged in the plaint at paragraphs 29 and 30. The Defendant Nos. 1 and 2, who were in possession and were threatened by the Plaintiff immediately to recourse to due legal process and filed the Civil Suit in year 2012, which culminated in the final judgment and order dated 15.09.2022 in favour of Defendant Nos. 1 and 2 as well as against the Plaintiff Company. The present suit filed after the passing of the final judgment and order dated 15.09.2022 is a gross abuse of process and is intended to nullify the binding effect of the said Judgment. A corporate entity is liable under the Companies Act, 2013 to make annual compliances with respect to its affairs by filing statutory returns. The Plaintiff Company would have been obliged between the year 2018 to 2024 to make several filings and would have immediately learnt that it is unable to do so since the company has been struck-off. This Court, therefore, finds no substance in the explanation offered by the Plaintiff Company - this Court is of the considered opinion that the captioned suit is liable to be rejected under Order VII Rule 11 (a) and (d) of the Code of Civil Procedure, 1908. The present suit is dismissed with actual costs awarded in favour of Defendant Nos. 1 and 2. Since, Plaintiff Company has been struck-off, Mr. Ram Dilawri will be personally liable for the costs awarded. List before the Taxing Officer/concerned Joint Registrar on 14.01.2025 - List before the Taxing Officer/concerned Joint Registrar on 14.01.2025.

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• Insolvency & Bankruptcy

• 2024 (12) TMI 1203
  Admission of application u/s 7 of the Insolvency and Bankruptcy Code, 2016 - withdrawal u/s 12A of the IB Code - HELD THAT:- In view of Section 12A of the IB Code, obviously on the basis of the statement of the first respondent, interference cannot be made with the impugned order - the view taken by the NCLAT is agreed upon. There is no error therein. Accordingly, the appeal is dismissed.

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• 2024 (12) TMI 1202
  Suspension of Petitioner s registration as an Insolvency Professional for a period of one year by Disciplinary Committee - Petitioner s engagement of M/s Ibay Capital, a firm owned by his brother, without proper disclosure of appointment to the Committee of Creditors - submission of a valuation report prepared by M/s iVAS Partners, whose appointment and fee had not been approved or ratified by the CoC - purported failure to take timely and appropriate action against Gravity Facility Management Solutions Pvt. Ltd. for non-payment of water charges. Non-disclosure of Related Party Transaction pertaining to M/s Ibay Capital - Petitioner s engagement of M/s Ibay Capital, a firm owned by his brother, without proper disclosure of appointment to the Committee of Creditors - HELD THAT:- While Section 28 (1) (f) of the IBC Code, relied upon by the Petitioner, permits the Resolution Professional to undertake Related Party Transaction, the same must be done with the prior approval of the CoC. In the present case, while the CoC approved the appointment of M/s Ibay Capital in its 13th Meeting, the CoC was not made aware of the fact that M/s Ibay Capital was a related party of the Petitioner. Thus, prior approval required under Section 28 (1) (f) of the IBC Code has not been complied with. As regards, compliance with para 3 of the Circular dated 16th January, 2018, the Court has perused the nature of services for which M/s Ibay Capital was hired, as detailed in minutes of the 13th CoC meeting. These services fall within the definition of professional rather than mere clerical or logistical support. The Petitioner s interpretation that no disclosure was necessary is thus off the mark. Thus, in the opinion of the Court, the Petitioner has violated clauses 1,2,5,9,12,13, 14 and 23B of the Code of Conduct, Section 28 (1) (f) of the IBC Code and Circular dated 16th January, 2018. While the Petitioner has relied on the case of Mr. Anil Goel to claim parity it must be noted each case has to be decided on its own merit. Wile the Court acknowledges that the Impugned order does not indicate any concrete financial irregularity on the Petitioner s part, it nonetheless remains evident that the Petitioner failed to fully adhere to the requirements of disclosure provided under IBC, 2016 and the regulations framed thereunder. Considering the Petitioner s role as an Insolvency Professional, entrusted with fiduciary duties and the responsibility to act in the best interests of the stakeholders, strict compliance with these provisions is non-negotiable. Therefore, Petitioner s oversights in candidly informing the CoC of a related-party engagement justify regulatory intervention. The valuation report was submitted by M/s iVAS Partners whose appointment or fee was not approved/ ratified by the CoC - HELD THAT:- On perusal of the minutes of 13th CoC meeting, it is clear that CBRE South Asia Pvt. Limited was appointed to determine the cost of completion of the projects. Further, in the minutes of 17th CoC meeting, it was recorded that the cost of completion report and final valuation report of iRing commercial complex were submitted by CBRE. However, there is no mention of any discussion with the CoC regarding the engagement of M/s iVAS Partners, nor was any fee related to them approved by the CoC. Even if the valuation of the iRing Complex was delegated to M/s iVAS, by CBRE, the Petitioner has not placed anything on record to show that the fee paid to M/s iVAS was approved by the CoC. Based on the available documents, it can be concluded that neither the appointment of M/s iVAS Partners nor the fees paid to them were approved by the CoC - RP is mandated to take approval of the CoC for the expenditure incurred to run the Corporate Debtor as a going concern. Therefore, the contention of the Petitioner that he, as an RP, is not required to take approval of the CoC for going concern expenses cannot sustain. Hence, the Court finds that the Petitioner violated Regulation 34 of the CIRP Regulations. The Petitioner failed to take appropriate action against the Gravity Facility Management Solutions Pvt. Ltd for non-payment of water charges - HELD THAT:- The documents placed on record discloses that the Petitioner had infact initiated necessary action against Gravity Facility Management Solutions Pvt. Ltd. A civil suit for recovery of Rs. 64,20,813/- had been intiated by the Petitioner before the Civil Commercial Court, Guatam Budh Nagar, Uttar Pradesh. The Impugned order fails to take note of the same. In light of the aforenoted, it cannot be said that the Petitioner failed to take appropriate action against the Gravity Facility Management Solutions Pvt. Ltd. Accordingly, the contravention, arising from alleged inaction on the part of the Petitioner, is not made out. Conclusion - The one-year suspension, therefore, stands supported by at least two valid grounds, while the third ground is found lacking. Accordingly, the Petitioner s plea to set aside the suspension order, in its entirety, cannot be granted - application disposed off.

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• 2024 (12) TMI 1201
  Condonation of delay of 156 days in re-filing the appeal - sufficient cause for not filing the Appeal presented or not - HELD THAT:- From the series of events as enumerated, it is noted the Appellant has not been vigilant enough in prosecuting the Appeal which was initially e-filed on 01.06.2023 and finally refiled on 22.11.2023 after a huge delay of 156 days. The explanation given by the Appellant is found to be not sufficient to condone the delay. The Respondent has also relied upon various judgments of Hon ble Apex Court. The adherence to procedural timelines has been emphasised again and again by Hon ble Apex Court and also this Appellate Tribunal in various judgments - Reliance placed in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT ] where it was held that on the facts of a given case, if it can be shown to the Adjudicating Authority and/or Appellate Tribunal under the Code that only a short period is left for completion of the insolvency resolution process beyond 330 days, and that it would be in the interest of all stakeholders that the corporate debtor be put back on its feet instead of being sent into liquidation and that the time taken in legal proceedings is largely due to factors owing to which the fault cannot be ascribed to the litigants before the Adjudicating Authority and/or Appellate Tribunal, the delay or a large part thereof being attributable to the tardy process of the Adjudicating Authority and/or the Appellate Tribunal itself, it may be open in such cases for the Adjudicating Authority and/or Appellate Tribunal to extend time beyond 330 days. The issue of timelines has been further elaborated by 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 ] where it was held that Any judicial creation of a procedural or substantive remedy that is not envisaged by the statute would not only violate the principle of separation of powers, but also run the risk of altering the delicate coordination that is designed by IBC framework and have grave implications on the outcome of the CIRP, the economy of the country and the lives of the workers and other allied parties who are statutorily bound by the impact of a resolution or liquidation of a corporate debtor. All above judicial pronouncements don t support the case of the Appellant. IBC proceedings are time bound. No indulgence can be given for condoning such long delays which do not have sufficient casue. It appears that the Appellants attempts are to hinder and restrict the resolution process from attaining finality. Under these circumstances of 156 days of delay in refiling and also supported by judicial precedents and provisions of the Code, re-filing delay cannot be condoned. Appeal dismissed.

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• 2024 (12) TMI 1200
  Rejection of intervention application filed for the purposes of approval of the Resolution Plan under Section 30 of I B Code - Applicant/Appellant herein had participated and has been determined as to be an unsuccessful Resolution Applicant - locus standi to become a party to the proceedings - Impleadment of M/s Lulu International Shopping Malls Private Limited. Rejection of Intervention Application - HELD THAT:- The Applicant himself was admittedly determined as be an unsuccessful Resolution Applicant. The rejection of the of the intervention Application was rightly made because the Appellant was not even required to be heard even at the consideration of approval of the stage when the Resolution Plan is placed before the Ld. Adjudicating Authority for its approval. Rejection of application filed for the purposes of approval of the Resolution Plan under Section 30 of I B Code - HELD THAT:- As far as, the aspect pertaining to Section 30 (2) of I B Code, it would be absolutely falling within the domain of the learned Adjudicating Authority to determine as to whether the approved Resolution Plan by the COC falls to be within the parameters prescribed therein, as that contained in clause A B of Section 30(2). Ensuring the satisfaction of those conditions is a prerogative of the tribunal and not a right of the Appellant to ensure its compliance, particularly when the plan of the has Appellant already been rejected as their rights are not at all to be affected at the stage when the mechanism prescribed under section 53 of I B Code, was to be resorted to. Hence the appeal lacks merit and the same would stand dismissed. Impleadment of M/s Lulu International Shopping Malls Private Limited - HELD THAT:- Having considered the fact that the plan already stands approved and if any orders are likely to be passed in the instant appeal their rights are likely to be affected, the IA No. 1195/2024, would stand allowed, the applicant intervener M/s Lulu International shopping malls Private Limited, is being permitted to intervene in the appeal. The Appellant herein, who is also the appellant of the appeal already decided by the aforesaid part of today s judgment who has put a challenge to the order passed on IA No. 1229/2024, as rendered in CP(IB)No. 296/7/HDB/2022. The factual part as far as the instant appeal is concerned, the same will remain similar up to the stage of filing of the application IA No.1229/2024, preferred by the appellant who has already been dealt with the above, and has been determined as to be an unsuccessful Resolution Applicant and whose Intervention Application has been rejected. Owing to the fact that the Appellant s Intervention Application has been rejected and its rejection has been affirmed by the Judgment rendered in Company Appeal AT CH (Ins) No. 342/2024 as decided today the limited question which would be required to be venture is as to whether, at all the Company Appeal AT CH (Ins) No. 343/2024, preferred by the Appellant whose intervention has been rejected as against the decision rendered on IA No. 1229/2024, could at all put a challenge to the process of approval of the Resolution Plan, is to the effect that since the appellant has got no locus standi and their Intervention Application has already been rejected. As such the relief sought for in IA No. 1229/2024, as against the approval of the Resolution Plan, it as stood submitted by the newly impleaded Respondent M/s Lulu International shopping malls Private Limited, the same cannot be questioned by the present appellant hence the appeal at their behest as against the process of the approval of the Resolution Plan would not be tenable the same would too stand dismissed. The revised plan submitted by the Appellant has been rejected and the rejection of the plan has not been challenged has attained finality, has no locus to agitate a cause by intervention or by challenging approval of Resolution Plan - Since the Resolution Plan of the Appellant has been rejected, he has no locus standi to either intervene or to put a challenge to the process of the approval of the Resolution Plan granted in favour of M/s Lulu International shopping malls Private Limited. Appeal dismissed.

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• 2024 (12) TMI 1199
  Dismissal of petition for being barred by limitation as having been preferred beyond the prescribed period contemplated under law for initiation of the CIRP proceedings - HELD THAT:- In the instant Appeal, actual balance period of limitation remaining with effect from 01.03.2022 is the period from 01.03.2022 to 06.09.2022, that is, 190 days. Since this is greater than 90 days, the end date of limitation period will continue to be 06.09.2022 and not 22.08.2024 as contended by the Appellant. The determination of period of limitation as it has been sought to be impressed upon by the Counsel for Appellant, in which he is attempting to compute the end date of the limitation period by adding 905 days from 01.03.2022 on the premises that 905 days is the actual balance period of limitation remaining is absolutely a misconceived notion because the actual balance period of limitation has to be calculated from 01.03.2022 - as the Company Petition was filed only on 17.04.2023, it is clear that it has been filed much beyond 06.09.2022, the end date of limitation period and accordingly, the rejection of the Company Petition on the ground that has been observed by the Learned adjudicating authority does not suffer from any error. The dismissal of the Company Appeal is also desirable for the reason being that, the proceedings which are held under the I B Code,2016, are to be strictly construed in a straight jacketed formula, so far it relates to the aspect and computation of limitation, because period of limitation invariably in all the proceedings under the I B Code, 2016 has an objective to be attained and it cannot be stretched according to the expectation of the appellant to defeat the very objective of the Act, which itself contemplates that, the proceedings of CIRP has had to be concluded in the specified time frame. Appeal dismissed.

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• PMLA

• 2024 (12) TMI 1198
  Money Laundering - Jurisdiction of the E.D. to attach the properties of the Corporate Debtor, which was undergoing Corporate Insolvency Resolution Process, particularly in the light of Section 32A of the Insolvency and Bankruptcy Code, 2016 - provisional attachment of the properties - proceeds of crime as defined u/s 2 (1) (u) of the PMLA - HELD THAT:- In view of the submissions made by the learned counsel for the E.D. and the learned counsel for the CoC and for the successful Resolution Applicant JSW, following order is passed without expressing any opinion on the merits of the Appeals and without prejudice to the rights and contentions of the respective parties in the connected Appeals and other proceedings, including the right of the E.D. to investigate into the cases registered against the accused-Promoters of the Corporate Debtor, under the PMLA. The Appellant-E.D. is directed to handover and the Respondent successful Resolution Applicant JSW is directed to take over the control of the properties of Corporate Debtor-Bhushan Power and Steel Ltd., provisionally attached vide the order dated 10.10.2019 passed by the E.D., immediately in view of Section 8 (8) of the PMLA read with Rule 3A of the said Rules. Appeal disposed off.

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• Service Tax

• 2024 (12) TMI 1197
  Condonation of delay in filing appeal - no sufficient reasons for the delay - Non-payment of service tax - Cleaning Services - Manpower Recruitment or Supply Agency Services - Services provided by the respondent to the Government Hospitals, Medical Colleges, Primary Health Centres, Community Health centres, Arogya Parivar Kendra, Block health Centres, Panchayat Health Centres, Municipal Corporation, District Ayurved Office Bhavnagar etc. - exemption from payment of Service tax under Sr. No. 25(a) of the Notification No. 25/2012-ST dated 20.06.2012 - the exemptions were allowed by CESTAT. HELD THAT:- There is a gross delay of 155 days in filing these appeals and 47 days in refiling which has not been satisfactorily explained by the appellant. There are no reason to interfere with the impugned order dated 23-02-2024 passed by the Custom Excise Service Tax Appellate Tribunal, West Zonal Bench at Ahmedabad. The Civil Appeals are, accordingly, dismissed on the ground of delay as well as merits.

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• 2024 (12) TMI 1196
  Levy of service tax - Site Formation service for the period from June 2005 to May 2007 - demand of service tax by culling out the site formation charges from a composite mining contract - short payment of service tax under Mining service for the period June 2007 to September 2008 - demand of service tax under Mining Service for period June 2007 to Sept 2008 on account of charge of under valuation. Whether demand of service tax made under Site Formation service for the period from June 2005 to May 2007 by culling out the site formation charges from a composite mining contract is sustainable? - HELD THAT:- From the documents available on record and the agreements between the parties which is the cause for any action between the parties, it is definitely not the intention of either of the signing parties to undertake SFS and hence, at the most, it could be incidental to the mining service. This is in fact of the spirit of the TRU Letter dated 28.02.2007 wherein the Board has considered the incidental activities insofar as the Mining Service is concerned. Hence, the Circular F.No. B1/6/2005 TRU dated 27.07.2005 would apply only when the scope of work is SFS per se. The scope of work would naturally flow from the intention between the parties, as reduced into writing, which alone is instrumental in working out the tax liability. Hence, demanding tax on a service that was not agreed upon, for which no separate consideration is payable or paid, is clearly unsustainable - the Order-in-Original passed by the Ld. Commissioner is clearly on surmises and wrong interpretation of the understanding between the parties, and thus the impugned order lacks any credit and cannot be supported. The contract entered into in 2002 by the appellant with the mine owners for raising of ore is a composite mining contract and the alleged activity of site formation is only incidental to the of mining service and hence, the scope of mining contract cannot be vivisected to demand service tax on the incidental activity of site formation. Therefore, the demand confirmed under site formation service for the period from June 2005 to May 2007 is not sustainable and is ordered set aside. Whether the demand of service tax made under Mining service on account of short payment for the period June 2007 to September 2008 is sustainable? - HELD THAT:- Rule 6 was amended in the year 2011 to levy service tax from receipt basis to accrual/billing basis. However, in terms of proviso to Rule 9 of P.T.R., 2011, the point of taxation for the services provided/invoice raised before 30.06.2011 would continue to be the date on which payment is received. As per the certified worksheet, the appellant had an opening balance of unrealised income of Rs.17,04,66,648/-as on 01.04.2011 and during the said year 2011-2012 they had billed income of Rs.40,25,39,421/-. However, it is seen from the said worksheet itself and the ST3 returns, that the appellant had discharged service tax on the opening balance of unrealised income as well as the billing income during the year 2011-2012 consequent to the above amendment, irrespective of realisation and despite the above proviso to Rule 9 of P.T.R., 2011, except for a short fall of Rs.4,03,673/-. The demand of service tax on account of short payment of service tax on mining service for the year 2007-2008 2008-2009 (Upto September 2008) is not at all sustainable as the appellant had already paid the service tax in full on the gross income reported in their balance sheet by the end of year 2008-2009 itself. Accordingly, the demand of service tax confirmed in the impugned order in this regard cannot be sustained and is required to be set aside. Whether the demand of service tax made under Mining Service for the very same period June 2007 to Sept 2008 on account of charge of under valuation is sustainable? - HELD THAT:- Section 67(1)(ii) provides that in a case where the provision of service is for a consideration not wholly or partly consisting of money be such amount in money with the addition of service tax charged, is equivalent to the consideration. In the instant case, however, there is no allegation that the appellant had realised any part of the consideration in kind other than money. Rule 3 of the above rules provides that the value of taxable service, where the consideration received is not wholly or partly consisting of money, shall be determined in the manner prescribed under clause (a) or (b) below in the said Rule. Since the demand of service tax in respect of billed amount itself is not sustainable if the payment is not received, even presuming without admitting that the redetermination of value as proposed in terms of Rule 3(b) is sustainable for a moment, the question of realising such notionally enhanced value based on cost of provision from the mine owners is not possible at all and as such, in the absence of any realisation of such enhanced value, the demand of tax lacks any merit and is an impossibility - the demand of service tax is not legally sustainable for the reason that enhancement of value based on cost of provision in terms of Rule 3(b) is not applicable as there is no realisation of consideration in kind in this case, in the absence of any realisation of the enhanced value. Accordingly, the enhancement of value as well as the demand of service tax in this regard lacks any merit and hence, the same is set aside. The three demands proposed and confirmed in the impugned order is not sustainable and the same is set aside - the demand of interest confirmed and the penalty imposed in the impugned order are also not sustainable - appeal allowed.

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• 2024 (12) TMI 1195
  Classification of services - Cargo Handling Service or not? - activity of loading of Lime Stone into tippers, dumpers at mines and from railway plots into railway wagons using front end loaders - Cum-tax benefits in terms of provisions of section 67 (2) of Finance Act, 1994 - Extended period of limitation - penalty. Classification of services - HELD THAT:- The issue about movement of lime stone/coal and rejects in the mining area is no more res-integra to the effect that the activity does not involve Cargo Handling Service as it was held by this Tribunal, Kolkata Bench in the case of SAINIK MINING ALLIED SERVICES LTD. VERSUS COMMR. OF C. EX., CUS. ST [ 2007 (11) TMI 90 - CESTAT, KOLKATA] . Hon ble Apex Court also in the case titled as CHOWGULE CO. PVT. LTD. VERSUS UNION OF INDIA [ 1980 (11) TMI 61 - SUPREME COURT] has held that process of extraction of ores from mines washing, screening, crushing in the crushing plant and stacking at the mining site all are covered under the Mines Act, 1952, hence, cannot be called as Cargo Handling Service . The CBEC Circular No.232/2/2006 dated 12.11.2007 clarified that the services which are liable to tax under this category ( Cargo Handling Service ) are the services provided by cargo handling agencies who undertake the activity of packing, unpacking, loading and unloading of goods meant to be transported by any means of transportation namely truck, rail, ship or aircraft. Well known examples of cargo handling service are services provided in relation to cargo handling by the Container Corporation of India, Airport Authority of India, Inland Container Depot, Container Freight Stations. This is only an illustrative list. There are several other firms that are engaged in the business of cargo handling services. Thus, the activity rendered by the appellant to M/s.RSMML cannot be called as Cargo Handling Service . Otherwise also the Cargo Handling Services were made taxable w.e.f. 01.06.2007. The period in dispute/ period of demand is the period prior the said date (27.05.2005 to 12.04.2006). Hence, the demand has wrongly been confirmed by the Department. Extended period of limitation - Penalty - HELD THAT:- It has been brought to the notice that there were several circulars got issued by CBEC with respect to explaining scope of Cargo Handling Services . One has been already discussed above and the another was of the year 2002. The series of the Circulars created doubts and confusions. It has been settled by this Tribunal in the case of VISHAL TRADERS VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I [ 2009 (11) TMI 137 - CESTAT, NEW DELHI] that when the question of interpretation caused confusion, the intention to evade tax cannot be alleged.Penalty is also not impossible in such circumstances. Keeping in view the same and the fact that there is no specific allegation nor any proof about any positive act of the appellant which may amount to suppression /willful mis-statement that too, with an intent to evade payment of service tax, we hold that the department was not entitled to invoke the extended period of limitation. The entire period of impugned demand is beyond the normal period, seen from the date of impugned Show Cause Notice. Hence, the Show Cause Notice is held barred by time. Cum-tax benefits in terms of provisions of section 67 (2) of Finance Act, 1994 - HELD THAT:- The services provided in relation to security by the appellant are not taxable in terms of the definition as it stood prior to 18.04.2006. Due acknowledgement has been given to the fact that Service Tax on transportation activity has been paid by M/s.RSMML. Appellant is also held eligible for cum-tax benefits in terms of provisions of section 67 (2) of Finance Act, 1994. The demand has been confirmed only by holding that the complete and proper details about the services and the taxable value were suppressed by the appellants. The order under challenge is set aside - appeal allowed.

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• 2024 (12) TMI 1194
  Classification of services - Whether the services rendered by the appellant to overseas universities/colleges amounts to Export of Service as contended by appellants or it is intermediary service as alleged by the department? - Invocation of Rule 9 of Export of Service Rules - Extended period of limitation. Classification of services - Whether the services rendered by the appellant to overseas universities/colleges amounts to Export of Service as contended by appellants or it is intermediary service as alleged by the department? - HELD THAT:- It is observed that in all contracts with the foreign universities, it is explicitly written that NNCCPL is not an agent of such universities. There is a clear denial of agent-principal relationship in the Agreement itself. All the conditional as laid down in Rule 6A of Service Tax Rules, 1994 are held satisfied in the present case. Though department s stand is that place of provision of service is taxable territory as the services are provided to Indian students. But the services as mentioned above have been rendered by the appellants for promotion and publicity of foreign universities among Indian students. The agreement for the same is between appellant and foreign universities. There is no agreement of appellant with Indian students. The amount in question is received from foreign universities in convertible foreign exchange and not from Indian students. The students are paying fees in case of getting admission, to the foreign university only. These observations are sufficient for us to hold that Indian students are not the service recipients of the impugned services rendered by the appellants. The place of provision is wrongly held to be in taxable territory (India). Hence foreign consultancy services provided by an assessee amounts to Export of services and they are outside the ambit of service tax and they are wrongly alleged as being rendered by intermediary. The fundamental principle enunciated by the Apex Court in ALL INDIA FEDERATION OF TAX PRACTITIONERS ORS VERSUS UNION OF INDIA ORS [ 2007 (8) TMI 1 - SUPREME COURT] is that service tax is a destination based consumption tax, leviable only on services provided within the country. The provision of Section 66B of the Act, explicitly provides that for service tax to be levied in terms of Chapter V of the Act, the service had to be provided within the taxable territory. But in case where services are provided outside the taxable territory , where the service provider is in India and the recipient of service is located outside India, in normal parlance it would be export of service. Invocation of Rule 9 of Export of Service Rules - HELD THAT:- The services of M/s NNCCPL falls within the ambit of Rule 3 of Place of Provision Rules, 2012, according to which location of service recipient is relevant. Foreign universities the service recipient, are located outside the taxable territory. Therefore place of provision of impugned Foreign Consultancy Service is outside the taxable territory. Accordingly, the show cause notice has wrongly invoked Rule 9 of Place of Provision Rules. Demand confirmed invoking said rule is therefore, liable to be set aside. The issue is otherwise no more res integra as being already dealt with by this Tribunal Principal bench in the case of M/S CHF INDUSTRIES INDIA (P) LTD. VERSUS COMMISSIONER, CENTRAL GOODS AND SERVICE TAX, NOIDA [ 2021 (10) TMI 641 - CESTAT ALLAHABAD] , MACQUARIE GLOBAL SERVICES PVT LTD VERSUS COMMISSIONER OF CE ST, GURGAON-I [ 2021 (12) TMI 481 - CESTAT CHANDIGARH] and M/S. R.S. GRANITE MACHINE TOOLS PVT. LTD. VERSUS THE COMMISSIONER OF GST CE (CHENNAI-NORTH) [ 2019 (1) TMI 1179 - CESTAT CHENNAI] . Extended period of limitation - HELD THAT:- In present case, NNCCPL has been registered with the Service Tax department and has been filing its service tax returns regularly. Payment of Service Tax as applicable on them has clearly been discharged by them vis- -vis domestic consultancy Income and Coaching Services. The appellant is held not liable to pay service tax with reference to foreign Consultancy Income i.e. the income received from foreign universities for promoting and publicizing their business in India. There is no evasion of tax, question of having any intent to evade is redundant when the tax is already paid. Thus the show cause notice is barred by time. The appellants are wrongly held as intermedia in terms of Rule 2(f) of Place of Provision Rules, 2012. The services rendered amounts to Export of Service in terms of Rule 6A of Service Tax Rules. Hence Rule 9 of Place of Provision Rules has wrongly been invoked. Appellant is, therefore, not liable to pay service tax on foreign Consultancy fee. The show cause notice is otherwise held to be barred by time - the order under challenge is set aside and the appeal is hereby allowed.

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• 2024 (12) TMI 1193
  Liability of Service tax on the entire amount without deducting TDS - Department has entertained a view that the appellant should have discharged their service tax liability on the entire amount which was decided to be paid to the appellant that is the appellant should not have deducted the amount of TDS while discharging their service tax liability - HELD THAT:- It can be seen from the order of the learned Commissioner (Appeals) that the short payment of the service tax has been demanded on TDS amount. It is an established legal proposition that the amount of the TDS has to be deducted from the taxable value for charging service tax as per the provisions of Section 67 Finance Act, 1994 read with relevant service tax rules. While holding the above view reliance placed on this Tribunal decision in case of M/S. MAGARPATTA TOWNSHIP DEVELOPMENT AND CONSTRUCTION CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-III [ 2016 (3) TMI 811 - CESTAT MUMBAI] where it was held that There is nothing on record that indicates that the appellant had recovered that amount of Income Tax paid by them on such amount paid to the service provider from the outside India and any other material to hold that this amount is paid is consideration for services received from service provider. The service tax cannot be demanded on the TDS amount which have been deducted from the taxable value - the impugned order-in-appeal is without any merit and is set aside - appeal allowed.

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• Central Excise

• 2024 (12) TMI 1192
  Valuation of Excise duty - two firms are related to one another as per Schedule 1A to the Clause (c) of Section 6 of the Companies Act, 1956 and as provided under Section 4(3)(b) of the Act or not - requirement to value in terms of Section 4(1)3(b)(ii) of Central Excise Act, 1944 read with Rule 9 of Central Excise Valuation Rules or not - HELD THAT:- The same issue has come for consideration before this Bench in the appellant s own case for the demand raised for the period 2003- 04 and 2005-06. The Bench in HINDUSTAN PUMPS ELECTRICAL ENGINEERING PVT. LTD., MALKOH MARKETING PVT. LTD. VERSUS C.C.E. S.T. - PANCHKULA, C.C.E. DELHI-III [ 2018 (10) TMI 532 - CESTAT CHANDIGARH] held that the appellant are not related persons in terms of section 4(3)(b)(ii) of Central Excise Act, 1944 and provisions of Rule 9 of the Central Excise Valuation Rules, 2000, are not applicable to the facts of this case, therefore, the impugned orders are not sustainable in the eyes of law. The issue is squarely covered in favour of the appellants and the impugned orders cannot be sustained - Appeal allowed.

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• 2024 (12) TMI 1191
  Levy of penalties u/r 26 of Central Excise Rules, 2002 - non-payment of duty by the manufacturer of goods on job work basis by M/s Paras Trading Company - HELD THAT:- As per the facts of the case, it is found that M/s Paras Trading Company was involved in direct sale on principal to principal basis as well as on job work on behalf of the Rcuhi Soya Industries as well as Cargill India Pvt Ltd. The appellant was under bona fide belief that the direct sale is covered under SSI exemption for the reason that as per their bonafide belief job work goods being not dutiable in their hands is not includible in the aggregate value of the overall clearances of the goods. For this reason M/s Paras Trading Company has not discharged the duty. It is also found that the issue of excise duty liability on the job work was under serious dispute as there were conflicting judgments and subsequently this CESTAT s Larger Bench in the case of THERMAX BABCOCK AND WILCOX LTD., THERMAX LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2017 (12) TMI 266 - CESTAT MUMBAI] settled the issue holding that job worker is liable to pay duty even the goods is manufactured on job work basis. The larger bench judgment was delivered subsequent to the passing of the impugned order in the present case. It is also observed that M/s Paras Trading Company has made legitimate transaction by issuing of invoices and all the transactions and payment particulars are recorded in their books of accounts. This is not case of clandestine removal such as removal of goods without issuing any documents. Therefore, there is no doubt that the appellant has rightly entertained the bona fide belief even though they were liable to pay the excise duty. When the goods were received by the principal manufacturers under proper documents, if any lapse on the part of the job workers the same cannot be attributed to the principal manufacturer or even to their employees. Therefore, irrespective of any offence whether or not committed by the M/s Paras Trading Company these two appellants cannot be penalized under Rule 26 - the appellants are not liable for penalty under Rule 26 of Central Excise Rules, 2002. The penalties on all the present appellants are set aside - Appeals are allowed.

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• 2024 (12) TMI 1190
  Determination of assessable value of Lubricating Oils and other products - requirement to adopt value as provided under Rules 7 of Central Excise Valuation Rules, 2000 read with section 4 of the Central Excise Act, 1944 - extended period of limitation. Vlauation of goods - HELD THAT:- It is a matter of record that they have adjusted the duty payments considering sale price on which Central Excise duty have been discharged at the factory gate and the sale price on which the goods have actually been cleared ex-C F depot. There have been differences both on positive and negative sides, the appellant have paid excess Central Excise Duty on certain goods that is where the price at factory gate has been taken at higher side than the prices on which the goods ex-C F depot have been cleared and that amount has been adjusted by them towards the short payment of duty taking ex-C depot price. The appellant vide their letter dated 18.11.2009, 04.04.2010, 12.08.2011, 05.09.2011, 23.12.2011 and 20.01.2012 have submitted all the relevant information of the prices on which goods were cleared at the factory gate as well as the ex- C F depot price. The show cause notice dated 16.04.2013 has been issued demanding short payment of Central Excise Duty for Financial year 2008-09 to December 2012. Extended period of limitation - HELD THAT:- For invoking extended time proviso under section 11A(4), the elements of fraud, collusion, willfull mis-statement, suppression of facts or contravention of any provisions of this act or rules with an intention to evade payment of Central Excise Duty need to be presented. The facts of the matter clearly speak that the appellant on their own informed the department since 18.11.2009 giving all the details of ex-factory prices as well as ex-C F depot prices. In such circumstances it is wrong on the part of the department to invoke the extended time proviso under section 11A(4) of the Central Excise Act, 1944 - the impugned show cause notice and the orders issued confirming the show cause notices are legally not sustainable on the point of time limitation. The impugned order-in-appeal is not sustainable and therefore set aside - appeal allowed.

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• 2024 (12) TMI 1189
  Classification of product called Zymegold Plus Granules - classifiable under Central Excise Tariff item 3101.0099 as fertilizer or as plant growth regulator under Central Excise Tariff item 3808.9340? - HELD THAT:- The matter stands covered by the coordinate bench decision in relation to the same product in the matter of M/S. GODREJ AGROVET LTD. VERSUS COMMISSIONER OF CGST, KOLHAPUR [ 2023 (5) TMI 299 - CESTAT MUMBAI ] wherein the same product i.e. Zymegold Plus was involved and it was held that The impugned order is liable to be set aside as the products in issue are fertilizers and therefore the appellants have rightly classified their products. Thus, the product is classifiable as claimed by the party under the Central Excise Tariff Item 31010099 and the same is to be treated as a fertilizer has claimed by them - appeal allowed.

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• CST, VAT & Sales Tax

• 2024 (12) TMI 1188
  Challenge to attachment of bank and Demat accounts and the demand notice for recovery under the Maharashtra Land Revenue Code (MLRC) - opportunity of hearing was not provided - violation of principles of natural justice - HELD THAT:- It does appear that the impugned attachment orders and notices have been issued without disposal of the show-cause notices. The attachment orders do not refer to any final adjudication orders. These notices threaten the petitioners with serious civil consequences. Therefore, before taking such drastic action, the principles of natural justice and fair play had to be complied with. The impugned attachment notices and other notices warrant interference on this short ground. In these cases, the respondents had themselves given the show cause notices to the petitioners. Accordingly, it was incumbent upon the respondents to dispose of the show cause notices in accordance with law before the impugned notices could have been taken. Petition allowed.

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• 2024 (12) TMI 1187
  Rate of tax - inter-state sales of safety equipment without the C form - requirement to pay tax at the rate of 4% as per the entry 34 schedule (4) - HELD THAT:- On perusal of the record, it shows that the petitioner had paid tax in accordance with the schedule of the Act from the beginning and has never claimed any exemption through C forms. Therefore, the question of submitting the C forms for the goods in dispute does not arise. The authorities below and also the Appellate Tribunal, did not consider the petitioner s case in its the proper prospective. On perusal of the orders passed by the authorities and as well as the Tribunal, it is succinctly clear that without going into the aspect of rate of tax as against the goods dealt by the assessee of the authorities including the Tribunal must directed with the issue on hand and passed orders under challenge mulcting the assessee to pay tax at the rate of 14.5%, since he did not produce the C forms. The furnishing of C forms would arise only when the assessee is claiming exemption - But in the instant case he has paid tax as per the schedule appended to the Act for the goods viz., hand gloves. In that view of the matter, the orders of the Tribunal and also the order of the Appellate Deputy Commissioner and Assessing Authority are set aside, and the matter is remanded to the Assessing Authority to take-up the assessment afresh and pass appropriate orders, after giving opportunity of being heard to the petitioner and the same has to be completed within a period of four weeks from the receipt of copy of this order - the Tax Revision is allowed.

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• Indian Laws

• 2024 (12) TMI 1186
  Whether the High Court is legally correct in interfering with and setting aside the same and discharging the respondent - Prevention of Corruption - Disproportionate income - Submission of copy of ITR and other information before the High Court without disclosing the same before the trial court - framing of charge u/s 109 of the Indian Penal Code, 1860 read with Section 13(1)(e) punishable under Section 13(2) of the Prevention of Corruption Act, 1988 - HELD THAT:- Taking note of the fact that in the case on hand, the High Court set aside the charge framed against the respondent while exercising the revisional power, it is relevant to refer to the decision in MINAKSHI BALA VERSUS SUDHIR KUMAR AND ORS. [ 1994 (5) TMI 287 - SUPREME COURT] . This Court on the question of quashing of charge by the High Court held that once charges are framed under Section 240 CrPC the High Court in its revisional jurisdiction would not be justified in relying upon documents other than those referred to in Sections 239 and 240 CrPC; nor would it be justified in invoking its inherent jurisdiction under Section 482 CrPC to quash the same except in those rare cases where forensic exigencies and formidable compulsions justify such a course. A perusal of the impugned judgment would reveal the nature of the exercise undertaken for passing the impugned judgment. In fact, the aforesaid observation was made after going through the documents filed by the respondent before the High Court. In this context, it is also to be noted that the High Court has also referred to the contentions of the respondent, including the one that for purchasing land at Bhubaneswar, she had borrowed an amount of Rs.2.5 lakhs from her father. After such exercise, it was held by the High Court that there is no clinching material showing that the appellant abetted her husband or made any conspiracy or instigated him in the alleged acquisition of disproportionate assets. This observation itself would go against the very scope of Section 239, Cr. P.C. as at the stage of consideration of a petition for discharge what is to be considered whether there is a prima facie case and certainly, the endeavour cannot be to find whether clinching materials are there or not. In the common parlance the word clinch means point or circumstance that settles the issue. There are no hesitation to hold that such meticulous consideration for presence or absence of clinching material is beyond the scope of power of the Court while considering the question of discharge under Section 239, Cr. P.C. as also while considering the question of quashing of charge framed by the Trial Court, while exercising the revisional jurisdiction. The judgment under challenge in the case on hand cannot stand the scrutiny. The High Court has clearly erred in its approach and exercise of revisional jurisdiction in quashing the charge framed by the Trial Court upon finding a prima facie case, and also in discharging the respondent Smt. Pratima Behera. The impugned judgment dated 31.01.2017 in Criminal Revision No.381 of 2016 is set aside - appeal allowed.

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