Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 27, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Writ Petition Dismissed: Factual Issues Require Statutory Remedies.
Case-Laws - HC : The HC found that the writ petition was not maintainable as the issues raised pertained to complex questions of fact and law squarely within the jurisdiction of the adjudicating authority under the CGST Act, 2017. The petitioner's grievances related to invocation of extended period of limitation, allegations of misclassification of goods, and denial of Input Tax Credit, necessitating detailed factual inquiry outside the HC's writ jurisdiction. The HC held that writ courts do not interfere where statutory remedies are available unless there is a clear violation of fundamental rights, lack of jurisdiction, or procedural perversity leading to manifest injustice, which were not demonstrated. The petitioner was advised to exhaust statutory remedies, including responding to the show cause notice and availing appellate remedies if dissatisfied. The petition was dismissed.
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Dismissal of appeal overruled due to procedural lapses and arbitrary actions.
Case-Laws - HC : The HC allowed the writ petition challenging the dismissal of an appeal under Article 226 of the Constitution as time-barred. It held that statutory limitation provisions should be interpreted liberally where genuine hardships are demonstrated, particularly considering judicial precedents favoring such relief. Despite the appeal being filed beyond the prescribed 30 days from the communication of the adjudication order, extendable by another 30 days at the Appellate Authority's discretion, the HC found the petitioner's case meritorious due to procedural irregularities and arbitrary actions. Consequently, it quashed the appellate order dated 30.08.2024.
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Intelligence Dept needn't disclose sensitive info for raids; justified to protect third-party rights & market stability.
Case-Laws - HC : Sensitive information gathered by Intelligence Department forming basis of search operation need not be disclosed to petitioners. Withholding such information does not violate principles of natural justice. Source of information collected by Intelligence Department crucial for maintaining confidentiality and integrity of investigative processes. SC in T. TAKANO case emphasized safeguarding sensitive information obtained during investigations to protect third-party rights, market stability and investor interests. Principles of natural justice do not entail right to indiscriminate disclosures where sensitive third-party interests involved. Investigative authority to balance noticee's right to disclosure with imperative to protect third-party rights and market stability. HC concludes withholding of sensitive information justified, does not breach natural justice as relied upon documents provided to petitioner. Petition disposed of.
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Flawed tax liability order revoked; remanded for fresh review considering reply & reasoning.
Case-Laws - HC : Impugned order quashed and matter remanded for fresh consideration. HC found non-application of mind, non-consideration of Petitioner's reply to show cause notice, and lack of reasoning in passing order u/s 168-A of CGST Act read with DGST Act for failure to declare correct tax liability in GSTR-09. Relying on coordinate bench judgments in Indian Highways and Chetak Logistic, HC held impugned order untenable for being passed in cavalier manner without deciding on merits, thereby violating principles of natural justice.
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GST Appeal Revived: Procedural Lapses, Natural Justice Impaired.
Case-Laws - HC : The HC set aside the impugned order rejecting the petitioners' appeal due to an alleged shortfall in pre-deposit u/s 107(6) of the CGST Act. Despite the availability of an alternative remedy, the HC entertained the petition citing failure of natural justice and non-functionality of the GST Tribunal. Following precedent, the matter was remanded to the Commissioner (Appeals) for de novo consideration. The petitioners were granted time to remedy any deficiencies in pre-deposit, with the respondents directed to inform them of persisting deficiencies for further rectification.
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Lack of reasoning & non-application of mind by tax officer leads to quashing of order under GST Act.
Case-Laws - HC : The HC quashed the order passed u/s 73 of the CGST Act by the Assistant Commissioner due to lack of reasoning, non-application of mind, and violation of principles of natural justice. The Assistant Commissioner adopted an identical template, merely stating that the reply filed was "not comprehensible, conceivable, not perspicuous and is ambiguous" without any substantive reasoning, despite previous cautions against using such a template. The HC held that this exhibited an abject non-application of mind and failure to make amends despite earlier directions.
Income Tax
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Silk Board Gets 5-Year Tax Break on Grants, Fees, Interest & Other Specified Incomes.
Notifications : Central Silk Board, Bengaluru (PAN: AAALC0093M) is exempted from income tax u/s 10(46) of the IT Act, 1961 on specified incomes like grants, compensation from property sale, royalties, penalties, fees for services, and interest income. The exemption is subject to non-commercial activities, unchanged nature of specified income, and filing returns. It is applicable for AYs 2024-25 to 2028-29.
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Exempt long-term capital gains taxable for MAT but not regular income if not in book profits.
Case-Laws - HC : The HC upheld that LTCG exempt u/s 10(38) should be included in book profits for MAT computation u/s 115JB. However, proviso to s.10(38) cannot be read to include exempt LTCG in normal income if not included in book profits. The CIT(A) and ITAT rightly rejected Revenue's contention.
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Income Tax: AO failed to reopen assessment within 6-year limit, no escaped income reference.
Case-Laws - HC : A notice for reopening assessment for AY 2014-15 could not be issued beyond the period of six years. Uploading of information by the investigation wing would not substitute recording satisfaction note by AO and handing over material for initiation of proceedings u/s 153C. No reference of asset representing escaped income, hence reopening for ten years u/s 153A not applicable. Notice issued beyond six years from end of AY 2014-15, beyond limitation period. HC allowed petition, set aside impugned notices u/s 148A(b) and 148, decided in favour of assessee.
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Construction society's unexplained cash receipts taxed as income from undisclosed sources.
Case-Laws - AT : CIT(A) lacked power to change provision under which addition was made in assessment order. Addition was made u/s 69A for cash receipts from society members. ITAT set aside CIT(A)'s treatment of addition u/s 69A, holding CIT(A) could only confirm, reduce, enhance or annul assessment u/s 251(1)(a), but not change provision for item assessed.
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Assessee liable to pay interest beyond 4 years from assessment date; late payment despite demand notice.
Case-Laws - HC : HC dismissed the appeal. The assessee is liable to pay interest u/s 220(2) beyond the four-year period from the assessment date as per Section 154. The HC held that despite the demand notice u/s 154, the assessee failed to pay the amount due within 30 days. There is no specific time limit for charging interest, and the power was exercised within a reasonable time. The substantial question of law was answered in favor of the revenue.
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High Court orders tax system change for 2024-25 to allow rebate claim.
Case-Laws - HC : The HC directed the respondents to modify the tax filing system for AY 2024-25 to allow assessees to claim the rebate u/s 87A of the Income Tax Act, 1961. The statutory right to claim rebate cannot be overridden by procedural changes like software utility. The rebate is linked to total income and tax liability, with the onus on tax authorities to ensure proper implementation if statutory criteria are met. Procedural impediments depriving statutory benefits warrant judicial intervention. As interim relief, the CBDT was directed to extend the due date for e-filing returns till 15.01.2025 for assessees required to file by 31.12.2024, ensuring opportunity to exercise statutory rights.
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Religious charity's anonymous hundi donations rightly excluded; reopening for reapplying law impermissibly rejected.
Case-Laws - HC : The HC quashed the reopening of assessment u/s 148, holding that the reasons furnished did not disclose any fresh tangible material. The AO had sought to reapply the law differently on facts already within his knowledge during the original assessment, which is impermissible. As the assessee was a religious charitable trust, anonymous donations received in hundi were rightly claimed as non-taxable u/s 115BBC(2)(b). The ground regarding non-investment of donations in prescribed modes u/s 11(5) was inconsequential due to a prior HC order staying conversion of precious items/metals. Since no fresh material emerged after the original assessment, reopening lacked jurisdiction and was set aside in favor of the assessee.
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Tax filing delay excused due to sufficient justification.
Case-Laws - HC : The HC condoned the delay of 799 days by the petitioner in filing Form 9A u/s 119(2)(b) of the Income Tax Act. Despite the delay being bona fide, the Assessing Officer rejected the belated filing on hyper-technical grounds without considering the petitioner's justification letters. The HC held that dissuading belated filing can be counterproductive and where sufficient cause for delay is explained, it ought to be condoned to uphold the object and purpose of tax laws. Consequently, the petitioner's delay supported by sufficient cause was condoned.
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Assessing officer's order beyond limitation period invalid; HC directs adherence to statutory timelines.
Case-Laws - HC : The HC held that the assessment order passed by the Assessing Officer after expiry of limitation period prescribed u/s 153 was invalid. Applying the principles laid down in Income Tax Officer vs. Murlidhar Bhagwan Das, Rajinder Nath vs. Commissioner of Income Tax, and Tally India Pvt. Ltd., the HC order did not contain findings necessary for disposal of issues to be decided by the Assessing Officer. The words "in consequence of or to give effect to" cannot enlarge scope of findings/directions. As per Section 153(6)(ii) read with Explanation 1, limitation for passing assessment order expired 60 days after HC order, whereas impugned order was passed 10 months later. The writ petition was allowed.
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JAO Vs FAO: Lack of jurisdiction invalidates tax scrutiny notice, High Court rules.
Case-Laws - HC : The HC quashed the notice issued u/s 143(2) by the JAO for AY 2023-24, holding that the JAO lacked jurisdiction. As per section 144B(1)(iii), for scrutiny assessment under the Faceless Assessment Scheme, the notice u/s 143(2) is to be issued by the NFAC, not the JAO. The JAO can issue such notice only where notice u/s 148 has already been issued for that AY, which was not the case here. Mere approval from the Pr. CIT cannot confer jurisdiction on the JAO to issue the impugned notice.
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Taxpayer's relief: HC allows raising illegality of reassessment notice before appellate authorities.
Case-Laws - HC : The HC held that once the petitioner has availed an alternate remedy of filing a substantive appeal, if the assessment order and notices u/ss 148A and 148 are contrary to Sections 151A and 151 as interpreted in Hexaware, the Appellate and Revisionary Authorities, being bound by the jurisdictional HC's decisions, must consider such legal position. The petitioner can raise contentions regarding the illegality of the Section 148 notice before these authorities in light of the Hexaware case. The impugned assessment order shall remain stayed till the Appellate or Revisionary Authority decides the proceedings. The petitioner shall pursue proceedings before CIT(A) against the assessment order and Revisionary Authority, raising contentions on the illegality of the Section 148 notice based on the HC's Hexaware decision.
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Revision authority must consider error made by assessee, not reject application outright.
Case-Laws - HC : The HC held that even if an assessee commits an error, it can be examined u/s 264 of the Act, which has a wide scope. The revision authority cannot decline consideration merely because the assessee made a mistake. The HC found the reasons given for not entertaining the application u/s 264 unjustifiable. It held that the revision authority erred in rejecting the application without considering the applicable SRO values on the dates of agreement and registration, as claimed by the assessee. The HC allowed the writ petition, setting aside the impugned order and remanding the matter to the revision authority for fresh consideration in accordance with the law.
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Software exporter eligible for tax deduction despite delayed forex realization with RBI approval.
Case-Laws - HC : The assessee was entitled to deduction u/s 10A despite receiving foreign exchange beyond six months from the end of the previous year, as the Reserve Bank of India, being the competent authority under the Foreign Exchange Management Act, 1999, had granted approval for realization of export proceeds by the assessee. The HC held that such approval met the requirement of Section 10A(3), entitling the assessee to exemption u/s 10A. The decision was rendered in favor of the assessee, in line with the Bombay HC judgment in Morgan Stanley Advantage Services P. Ltd.
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Immunity from prosecution revoked for incomplete disclosure of undisclosed income before Settlement Commission.
Case-Laws - HC : HC set aside orders granting immunity from prosecution and penalty to Respondents u/s 245H(1) of IT Act. Assessee failed to make full and true disclosure of undisclosed income initially before Settlement Commission. Disclosure in instalments not permissible. Matter remanded to reconsider granting immunity. Review petition dismissed as no error apparent on record.
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Cash payments for supplies wrongly treated as unexplained cash credits, notice quashed.
Case-Laws - HC : The HC set aside the order passed u/s 148A(d) and notice issued u/s 148, and remanded the matter to the AO to consider afresh. It held that the revenue's contention that the petitioner had received cash was erroneous. The ledger account reflected that the petitioner had paid cash consideration for supplies. The AO had not made any specific allegation that the petitioner had paid money through banking channel and received back cash against those payments. The HC directed the AO to consider the petitioner's averments and replies furnished.
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TP adjustment upheld; tax treaty benefit denied; mirror ALP rejected; receipts taxable on receipt basis; software, services income non-taxable.
Case-Laws - AT : TP adjustment upheld as per Special Bench ruling in Instrumentarium rejecting base erosion argument. Benefit of tax treaty against TP provisions rejected following earlier ITAT order. Mirror ALP principle rejected relying on Filtrex Technologies. Receipts taxable only on receipt basis per Ampacet Cyprus to be re-adjudicated. Software income treated as non-royalty and Global P&T services, HLPL receipts, L&T services income held as non-fees for technical services deleting respective additions following earlier ITAT orders.
Customs
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Wireless Device Import Relaxation: Self-Declare Equipment Type Approval via SARAL Portal.
Circulars : The CBIC issued instructions allowing Equipment Type Approval (ETA) for license-exempt wireless equipment devices on a self-declaration basis through the SARAL Sanchar portal. ETA holders must obtain necessary clearances from DGFT before importing the equipment and ensure compliance with import regulations. The Public Notice modifies earlier instructions and serves as a Standing Order for Chennai-IV (Export) Commissionerate officers.
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New Indian Customs Rules for Cargo Tracking Aim to Boost Security, Efficiency & Transparency at Tuticorin Port.
Circulars : The Public Notice announces the implementation of the Sea Cargo Manifest and Transshipment Regulations (SCMTR) for Tuticorin Customs (INTUT1 & INTUT6) w.e.f. 15.11.2024. SCMTR seeks transparency, predictability of movement, and advance information collection for expeditious risk-based Customs clearance, stipulating obligations, roles, and responsibilities for stakeholders involved in imported/exported goods movement. Filing in new formats as per SCMTR becomes mandatory, and stakeholders are advised to start filing immediately on a parallel basis. Allocated ASC/ASA/Transhippers must acquaint themselves with common errors, intimate concerned officers about success/failure, and approach officers for system-related errors. Officers shall ensure allocated entities file e-manifests and escalate unresolved system errors. Any difficulty to be brought to notice.
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Duty-free imports of yellow peas extended until February 2025, giving relief to food industry.
Notifications : Notification No. 49/2024-Customs amends Notification No. 64/2023-Customs to extend the exemption for imports of Yellow Peas [HS 0713 10 10] from applicable BCD and AIDC until 28th February 2025, superseding the previous end date of 31st December 2024. The amendment comes into force from 27th December 2024.
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Too Many Tax Notices for Heavy Equipment Importer? Common Authority Appointed to Streamline Cases.
Notifications : The Central Board of Indirect Taxes and Customs appointed the Dy/Assistant Commissioner of Customs, Gr.V, NS-V, JNCH, Nhava Sheva as the common adjudicating authority for finalization of provisional assessments against M/s HD Hyundai Construction Equipment India Pvt. Ltd. relating to three show cause notices issued by different jurisdictional authorities.
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Imported natural Rutile/Leucoxene Sand reclassified as concentrates, not ores - ineligible for ore exemptions. Tribunal remanded for fresh consideration.
Case-Laws - SC : The SC held that the imported goods, natural Rutile Ore/Leucoxene Sand of different grades, are concentrates and not ores, relying on its decision in M/s. Star Industries case. Thus, they are ineligible for exemption under the relevant notifications meant for ores. The Tribunal failed to consider the binding precedent and its findings on delay were flawed. The matter was remanded to the Tribunal for fresh consideration after properly considering the submissions and factual aspects.
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Duty Evasion Case: Court Allows New Evidence Despite Delay, Imposes Cost on Agency for Lapses.
Case-Laws - DSC : The DSC allowed DRI's application u/s 311 CrPC to bring additional evidence, subject to payment of Rs. 50,000 cost to DLSA. The court opined that despite inordinate delay by DRI in filing the case for alleged duty evasion, there is no limitation for taking cognizance of economic offences. The cost was imposed on DRI for the lapse of not submitting the evidence earlier, to be deducted from the responsible officer's salary and not burdening the exchequer. The additional evidence pertaining to import duty evasion, specifically the thickness of the imported item (0.6 mm), was deemed relevant for adjudication.
DGFT
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Govt. Greenlights Menthol Imports, Reviving Duty-Free Schemes Amid Industry Needs.
Circulars : The DGFT reinstated SION/Adhoc norms for import of Menthol under ITC(HS) codes 2906 11 10 and 2906 11 90, allowing RAs and NCs to consider cases for issuance and fixation of Advance Authorisation/DFIA and Adhoc norms as per policy and procedure. This supersedes the earlier suspension vide Public Notice No. 48/2023.
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Title (77 characters): Temporary Import Curbs on Low Ash Metallurgical Coke to Safeguard Domestic Industry.
Notifications : DGFT imposed quantitative restrictions on import of low ash metallurgical coke having ash content below 18% under HS codes 27040020, 27040030, 27040040, 27040090 for 6 months from 01.01.2025 to 30.06.2025, based on DGTR's final findings vide Notification No. 22/4/2023-DGTR. The country-wise quantitative restrictions were specified, with imports permitted only against DGFT's import authorization through EDI ports. Unutilized quota for Q1 would be added to Q2. Residual quantity could be utilized by countries exhausting their allocated quota. Metallurgical coke with high ash content above 18% was excluded from restrictions.
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Import Policy for Yellow Peas Extended: Free Entry Until Late Feb 2025 with Monitoring System Registration.
Notifications : DGFT extended import policy conditions for yellow peas under ITC(HS) Code 07131010 from 31st December 2024 to 28th February 2025. Import of yellow peas is "Free" without minimum import price condition and port restriction, subject to registration under online Import Monitoring System for all import consignments where Bill of Lading is issued on or before 28th February 2025. Other terms and conditions remain unchanged.
FEMA
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Enforcement action quashed due to delay, remanded for fresh hearing within 3 months.
Case-Laws - HC : The HC set aside the impugned order dated 9 March 2009 passed by the Special Director (Enforcement) due to inordinate and unexplained delay between the conclusion of arguments and pronouncement of the order. The matter was remanded to the Special Director (Enforcement) to dispose of the show cause notices issued against the appellants expeditiously after providing them a hearing and passing reasoned orders within a reasonable period, preferably within three months from the conclusion of the hearing as per the guidelines laid down in Ramdular Singh vs. State of UP. The appellants were directed to appear before the Special Director on 2 January 2025 to set a schedule for the hearing.
Corporate Law
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Membership dispute: Company ousts member in 2012, fails to challenge decision until 2023.
Case-Laws - AT : The NCLAT dismissed the company petition filed by the appellant on grounds of lack of maintainability and delay. It held that the appellant failed to establish his membership in the respondent company between 2012-2013 till the filing of the petition in 2023. The appellant was removed as a member in the EOGM dated 01.02.2012, which was published in the newspaper, and he did not challenge this decision. With 97 members on the date of filing, the appellant did not meet the statutory threshold for filing the petition u/s 244(b) of the Companies Act, 2013. The NCLAT rejected the appellant's argument of believing he was still a member during these years, finding no infirmity in the impugned order. Consequently, the appeal was dismissed as devoid of merit.
IBC
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Ex-management's pre-insolvency offenses pardoned post resolution plan approval under IBC Section 32A.
Case-Laws - HC : HC quashed FIR against corporate debtor (CD) in view of Section 32A of IBC granting immunity from prosecution after approval of resolution plan. HC held once resolution plan is approved transferring control to new management unrelated to past offences, CD cannot be prosecuted for pre-CIRP offences. As FIR pertained to 2008-2017 period before CIRP commencement in 2019 and new management took over post-approval in 2023, CD is immune from prosecution u/s 32A. Petition allowed quashing FIR against CD.
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Resolution Professional's Power to Withdraw CIRP Upheld by NCLAT.
Case-Laws - AT : The NCLAT dismissed the appeal, holding that the Resolution Professional had jurisdiction to file an application for withdrawal of CIRP u/s 12A of the IBC. The NCLAT relied on the Supreme Court's judgment in GLAS Trust Company LLC, which held that after admission of CIRP, the proceedings become in rem, and the Resolution Professional must conduct them. The NCLAT found no error in the Adjudicating Authority's order permitting withdrawal of the Section 12A application after the claim of a creditor was admitted, necessitating reconstitution of the CoC. The appeal against the earlier order became infructuous due to the subsequent order.
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Limitation period starts from issuing SARFAESI notice, not OTS decree - NCLAT on IBC case.
Case-Laws - AT : The NCLAT held that the date of default for invoking proceedings u/s 7 of the Insolvency and Bankruptcy Code (I&B Code) should be reckoned from 01.10.2012, when notices u/s 13(2) of SARFAESI Act were issued to the Corporate Debtor. The One-Time Settlement (OTS)/Compromise decree of 03.01.2020 cannot be considered the date of default, as default occurred when notices were issued and accepted by the Corporate Debtor in 2012. Since the application u/s 7 was filed on 19.07.2020, after the limitation period from the date of default in 2012, the NCLAT dismissed the appeal, holding the proceedings barred by limitation.
Indian Laws
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Non-compliance with early disposal of seized contraband can't lead to bail/acquittal if seizure lawful. Presumption applies until rebutted.
Case-Laws - SC : SC held that non-compliance with Sec 52A of Narcotic Drugs and Psychotropic Substances Act for early disposal of seized contraband cannot entitle accused to bail or acquittal if sufficient material establishes lawful search and seizure. Statutory presumption under Sec 54 applies unless rebutted. Illegality in investigation doesn't render evidence inadmissible. Manner of discovery immaterial if factum proved. SC set aside HC order granting bail solely for delayed Sec 52A compliance, remanded matter for fresh consideration on merits.
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Signatory not Drawer for Company's Cheque Bounce Case under NI Act.
Case-Laws - SC : The SC held that an authorized signatory of a company does not fall within the ambit of the expression "drawer" u/s 138 of the Negotiable Instruments Act, 1881 (NI Act). The expression "on an account maintained by him" in Section 138 refers to the account maintained by the drawer and not by an authorized signatory acting on behalf of the company. The scope of "any debt or other liability" in Section 138 is wide enough to cover any legally enforceable debt or liability, not necessarily between the drawer and payee. u/s 141, the company as the principal offender must be first held liable before extending vicarious liability to directors or persons in-charge. Since the accused was prosecuted in individual capacity and not as director, and the cheque was drawn on the company's account, the requirements of Section 138 were not met. The appeal was dismissed.
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Summoning order quashed, IRP in control post CIRP; Cheques dishonoured during moratorium, no vicarious liability for petitioners under NI Act.
Case-Laws - HC : The HC quashed the summoning order and allowed the petition. It held that after the commencement of CIRP proceedings against the accused company and appointment of IRP under IBC, the control and management vested with IRP. The dishonoured cheques were post moratorium, and the petitioners cannot be held vicariously liable u/s 138 of NI Act. Proceedings u/s 138 cannot continue against the corporate debtor once moratorium u/s 14 of IBC is in effect.
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Police failed to inform grounds of arrest in writing, court orders release despite merits of case.
Case-Laws - HC : The HC held that the grounds for the petitioner's arrest were not duly communicated forthwith as mandated by Section 50 of Cr.P.C. and the SC's judgment in Pravir Purkayastha. It reiterated the settled position that any arrested person has a fundamental and statutory right to be informed about the grounds of arrest in writing at the earliest to enable consulting a lawyer, opposing remand, and seeking bail. Providing grounds of arrest is of utmost sanctity and significance. The HC ordered the petitioner's release on this technical non-compliance, without examining the merits, allowing the prosecution to proceed with investigation as per law.
VAT
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Helicopter leasing not 'deemed sale' under CST Act, rules HC on effective control test.
Case-Laws - HC : The HC held that the transfer of right to use helicopters by hiring them out did not constitute a 'deemed sale' u/s 2(g)(iv) of the CST Act. There was no transfer of dominion or effective control over the helicopters to the customer (A&N Administration). The appellant retained the right to operate and maintain the helicopters, provide pilots and crew, and held necessary permits and insurance. The relationship was akin to providing an exclusive transportation service rather than transfer of possession and effective control required for a 'deemed sale' under Article 366(29A)(d) as explained in Adani Gas Ltd. case. It was distinguished from Aggarwal Bros. case where there was complete transfer of shuttering goods. The Tribunal's conclusions were unsustainable, and the appeal was allowed.
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Liquor transfers to depots in Bihar & Jharkhand are inter-state stock transfers, not supply - No CST payable.
Case-Laws - AT : The CESTAT held that the movement of goods from the appellant's manufacturing unit in Rajasthan to its depots in Bihar and Jharkhand constituted inter-state stock transfers, not inter-state supply of goods. Consequently, no central sales tax was leviable. The demand was set aside and the appeal was allowed, considering the Liquor Sourcing Policy of Bihar, Liquor Policy of Jharkhand, and identical Master Agreements between the appellant and Corporations in those states.
Service Tax
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No illegal collection of service tax from sub-agents; shared tax burden on commission.
Case-Laws - AT : The CESTAT held that the appellant did not collect any amount representing service tax from sub-agents/customers. The amount recovered was the service tax already paid by the appellant on the commission retained by the sub-agents. No service tax was actually collected payable u/s 73A(2). The revenue wrongly alleged illegal collection of service tax from sub-agents, ignoring that commission was shared with sub-agents, and the tax burden was accordingly shared. Demanding service tax again on the sub-agents' commission portion would amount to double taxation. The CESTAT set aside the impugned order and allowed the appeal.
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Contractor's sub-contracted works not exempt from service tax under dam construction notification.
Case-Laws - AT : The appellant sub-contractor was not eligible for exemption under S.No.12(d) of Notification 25/2012 for services provided to the principal contractor engaged in dam construction by the Government. Their activities of site formation, excavation, etc. did not strictly fall within "by way of construction" of dam under strict interpretation. Even if provided indirectly through the contractor, their services were not covered by the exemption notification. Their activities could not be considered works contract service eligible for exemption under S.No.29(h) due to lack of transfer of property. The extended period of limitation was rightly invoked as the appellant did not have a bona fide belief of non-taxability. The appeal against confirmed service tax demand was dismissed by CESTAT.
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Service tax demand remanded for fresh adjudication on new grounds raised by assessee after part-payment.
Case-Laws - AT : The CESTAT allowed the appeal by way of remand to the Adjudicating Authority. The appellant raised new grounds in the miscellaneous application which were not considered by the authorities below. To uphold principles of natural justice, the matter was remanded to the Adjudicating Authority to consider the additional grounds raised by the appellant afresh on merits. The appellant had previously accepted the service tax liability by depositing the confirmed demand amount based on a Delhi High Court judgment. However, the CESTAT opined that the department should have an opportunity to contest the new grounds raised by the appellant which are purely legal issues.
Articles
News
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2024 (12) TMI 1290
Violation of principles of natural justice - Jurisdiction to issue SCN - wrongfully availing the benefit of an exemption on the supply of Kulcha by misclassifying it as bread under S. No. 97 of N/N. 02/2017-Central Tax (Rate) dated June 28, 2017 - denial of reduction of the Petitioner s outward tax liability based on credit notes issued for deficient services and destroyed goods - suppression of facts or not - violation of principles of natural justice. HELD THAT:- Upon a thorough examination of the documents presented to the Court and taking into account the arguments put forth by the parties, this Court finds that the writ petition is not maintainable. This Court shall refrain from adjudicating or delving into the merits of the case as the issues raised in the present writ petition pertain to complex questions of fact and law that are squarely within the jurisdiction of the adjudicating authority under the Central Goods and Services Tax (CGST) Act, 2017. The petitioner s grievances primarily relate to the invocation of the extended period of limitation, allegations of misclassification of goods and denial of Input Tax Credit (ITC). Each of these issues necessitates a detailed factual inquiry, which is outside the purview of this Court in its writ jurisdiction. In Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and others [ 1998 (10) TMI 510 - SUPREME COURT] , the Hon ble Supreme Court explained that writ petitions may be entertained against show cause notices where the petitioners seek enforcement of any fundamental rights, where there is a violation of principles of natural justice or where the order or proceedings are wholly without jurisdiction or where the vires of the Act is itself challenged. None of these circumstances are made out in the present petition. Simply alleging that the impugned SNC are without jurisdiction because, according to the petitioners perception, the exemption covers them, or the nil tax rate notification is insufficient. The usual adjudicatory process, where such a matter can be effectively adjudicated upon, cannot be scuttled by rushing to the writ court and securing stays on the adjudicatory process. It is well-settled that writ courts do not interfere in cases where statutory remedies are available unless there is a clear violation of fundamental rights, lack of jurisdiction, or procedural perversity leading to manifest injustice. The petitioner has not demonstrated any such exceptional circumstances warranting this Court's intervention. Instead, the statutory framework under the CGST Act provides adequate mechanisms for addressing the petitioner s concerns, including responding to the SCN, participating in adjudication proceedings and availing appellate remedies if dissatisfied with the outcome. The petitioner is advised to exhaust the statutory remedies provided under the CGST Act, 2017 including submitting a detailed response to the SCN. This Court reiterates that it shall not interfere in matters requiring fact-finding and adjudication, which fall squarely within the statutory domain. Petition dismissed.
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2024 (12) TMI 1289
Challenge to dismissal of appeal under Article 226 of the Constitution of India - time-barred appeal - HELD THAT:- Upon a thorough examination of the documents presented to the Court and taking into account the arguments put forth by the parties, this Court allows the writ petition as statutory provisions on limitation should be interpreted liberally in cases where genuine hardships are demonstrated, particularly in light of judicial precedents supporting such relief. In S.K. CHAKRABORTY SONS VERSUS UNION OF INDIA ORS. [ 2023 (12) TMI 290 - CALCUTTA HIGH COURT] the Hon ble Division Bench held that ' since provisions of Section 5 of the Act of 1963 have not been expressly or impliedly excluded by Section 107 of the Act of 2017 by virtue of Section 29(2) of the Act of 1963, Section 5 of the Act of 1963 stands attracted. The prescribed period of 30 days from the date of communication of the adjudication order and the discretionary period of 30 days thereafter, aggregating to 60 days is not final and that, in given facts and circumstances of a case, the period for filling the appeal can be extended by the Appellate Authority.' In light of the procedural irregularities and the arbitrary nature of the actions, this court finds the petitioner s case to be meritorious. Accordingly, the writ petition is allowed, and the appellate order dated 30.08.2024 is quashed.
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2024 (12) TMI 1288
Non-disclosure of relied upon documents to the petitioner by the respondent authorities - representation dated 15th February, 2024 has not been acted upon by the respondent authorities till date - withholding sensitive information in the interest of national security and third-party commercial interests - HELD THAT:- Perused the writ petition as well as the judgment of the Bombay High Court. This Court holds that sensitive information gathered by the Intelligence Department, forming the basis of a search operation, should not be disclosed to the petitioners. It is determined that withholding such sensitive information does not violate the principles of natural justice. The source of information collected by the Intelligence Department of Revenue is crucial for maintaining confidentiality and the integrity of investigative processes. In T. TAKANO VERSUS SECURITIES AND EXCHANGE BOARD OF INDIA ANR. [ 2022 (2) TMI 907 - SUPREME COURT ] the Hon'ble Supreme Court emphasized the importance of safeguarding sensitive information obtained during investigations. The Court recognized that such reports may encompass a wide range of market-sensitive information, including details of financial transactions and interactions with other entities. Disclosure of such information could infringe upon third-party rights, destabilize the securities market, and affect investor interests. The Court, therefore, clarified that the principles of natural justice do not entail a right to indiscriminate or unrelated disclosures, particularly where sensitive third-party interests are involved. The investigative authority must balance the noticee's right to disclosure with the imperative to protect third-party rights and maintain market stability. Based on these precedents and considerations, this Court concludes that the withholding of sensitive information in the present case is justified and does not breach the principles of natural justice as all the relied upon documents have already been handed over to the petitioner by the respondent authorities. Petition disposed off.
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2024 (12) TMI 1287
Challenge to impugned order passed by Sales Tax Officer - seeking quashing of N/N. 56/2023-Central Tax dated 28th December, 2023 and N/N. 56/2023-State Tax dated 11th September, 2024 on the grounds of it being ultra vires of Section 168-A of the Central Goods and Services Tax Act, 2017 read with Delhi Goods Services Tax Act, 2017 - failure to declare correct tax liability in the annual returns of GSTR-09 - non-consideration of contentions raised by the Petitioner - non-application of mind - violation of principles of natural justice. HELD THAT:- It is seen that none of the contentions raised by the Petitioner in response to the Show Cause Notice have even been adverted to in the impugned order. The order is completely silent on the grounds and the reasons for which the reply of the Petitioner has not been considered or has been rejected. Recently, in the case of Indian Highways Management Company Limited v. Assistant Commissioner Delhi Department of Trade And Taxes And Anr., Order [ 2024 (12) TMI 131 - DELHI HIGH COURT] a Coordinate Bench of this Court has already taken note of similar orders and has set aside the same. This Court in Chetak Logistic Ltd. vs. Union of India Ors. [ 2024 (12) TMI 874 - DELHI HIGH COURT] had occasion to consider another previous order of the same officer, which had identical language and complete non-application of mind wherein this Court had observed ' These petitions were allowed by the coordinate Bench of this Court and a perusal of the said orders would show that the wording is almost identical. In fact, the impugned order lacks reasons and also lacks any application of mind to the reply given by the Petitioner. Show-cause notices which seek to impose further liabilities upon assesses, including, penalties etc,. have to be decided on merits and not in such a cavalier manner.' In view of the lack of reasoning, non-consideration of the reply and non-application of mind in passing the impugned order dated 31st August, 2024, it is held that the impugned order is not tenable and deserves to be set aside - matter is remanded for fresh consideration of the Show Cause notice and the replies given by the Petitioner. Petition disposed off by way of remand.
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2024 (12) TMI 1286
Maintainability of petition - availability of alternative remedy - Rejection of petitioners appeal on the ground of alleged shortfall of Rupees Two Lakhs in the pre-deposit required under Section 107 (6) of the Central Goods and Services Tax Act - HELD THAT:- Though the petitioner has an alternate remedy in this matter, it is proposed to entertain it because it is satisfied that this is a case of failure of natural justice. Besides, petitioner pointed out that the GST Tribunal is not functional, and therefore, the petitioner does not currently have an efficacious remedy. In somewhat similar circumstances, the impugned order is interfered with, which was the subject matter of challenge in Delphi World Money Ltd. Vs. The Union of India and ors [ 2024 (11) TMI 781 - BOMBAY HIGH COURT] where the matter was remanded to Respondent No. 2 for de novo consideration. The impugned order in appeal dated 31 July 2024 set aside and the petitioners appeal restored before the Commissioner (Appeals). If the pre-deposit has any deficiencies, the petitioner is granted two weeks to remedy them. If, according to the Respondents, the deficiencies still persist, the respondents must inform the petitioner within two weeks, and the petitioner must remedy them within two weeks of being so informed.
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2024 (12) TMI 1285
Cancellation of GST registration - appellant is ready and willing to pay the tax, interest, late fee, penalty and any other sum required to be paid for the return form of his client to be accepted by the department - HELD THAT:- Reliance placed in M/s. Mohanty Enterprises [ 2022 (11) TMI 1521 - ORISSA HIGH COURT] where it was held that ' In that view of the matter, the delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc., due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law.' The writ petition is disposed of.
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2024 (12) TMI 1284
Challenge to impugned adjudication order - adjudication order and SCN barred by time limitation or not - seeking declaration that N/N. 9/2023-Central Tax dated 31.3.2023 as well as N/N. 56/2023-Central Tax dated 28.12.2023 through which the time period has been extended up till 30.8.2024 for the purpose of sec 73(10) for the year 2019-20 not only rub against sec 168A of the CGST Act but are also contrary and in conflict with the mandate of sec 168A of the CGST Act - HELD THAT:- The proceedings under Section 73 have come to be finalized with the response of the writ petitioner being perfunctorily rejected by merely observing that it has not been found to be satisfactory. Since the final order as framed fails to engage with the reply which was submitted by the writ petitioner or disclose any reasons in support of the ultimate conclusions which have come to be rendered, the same cannot be sustained. The impugned order dated 28 August 2024 is hereby quashed - petition allowed.
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2024 (12) TMI 1283
Challenge to order passed u/s 73 of the Central Goods and Services Tax Act, 2017 Act - lack of reasoning and non-application of mind by the Assistant Commissioner - violation of principles of natural justice - HELD THAT:- It is constrained to observe that the order as passed follows lines identical to those which have come here and have fallen for notice on earlier occasions. The Assistant Commissioner has clearly adopted a template where the only reason assigned is that the reply filed was not comprehensible, conceivable, not perspicuous and is ambiguous . This clearly exhibits an abject non-application of mind and the officer repeatedly employing identical phraseology to deal with such matters. Despite caution having been sounded, of the said language having attained the status of a template and the concerned officer having chosen to replicate an identical pattern while framing orders, in INDIAN HIGHWAYS MANAGEMENT COMPANY LIMITED VERSUS ASSISTANT COMMISSIONER DELHI DEPARTMENT OF TRADE AND TAXES AND ANR. [ 2024 (12) TMI 131 - DELHI HIGH COURT] , it is found that the officer has failed to make any amends. The impugned order of 16 August 2024 is quashed and set aside - Petition allowed.
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Income Tax
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2024 (12) TMI 1282
Penalty u/s 271(1)(c) - Concealment of income - validity of notice - HELD THAT:- Having regard to the peculiar facts of this case inasmuch as the High Court [ 2017 (10) TMI 1400 - KARNATAKA HIGH COURT] has followed CIT Vs. Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] we are not inclined to interfere in the matter. The reason being that the aforesaid judgment in Manjunatha Cotton and Ginning Factory case (supra) has been relied upon in M/s SSA s Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] and the said judgment has been sustained by this Court in SLP [ 2016 (8) TMI 1145 - SC ORDER] inasmuch as the said special leave petition was dismissed. Therefore, we are not inclined to go into the question of law, if any, as such raised in these Special Leave Petitions, the same is kept open.
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2024 (12) TMI 1281
Exemption of LTCG claimed u/s. 10 (38) - computation of book profits for the purpose of determination of MAT under Section 115JB - HELD THAT:- Section 10 (38) of the Act was added by virtue of the Finance Act, 2006 to abundantly clarify that the income from capital gains on certain assets, which are excluded from the income under Section 10 (38) of the Act, would nonetheless, be included in computing book profits for the purposes of Section 115JB of the Act. Proviso to Section 10 (38) of the Act cannot be read in the reverse to mean that if the gains are not included as book profits under Section 115JB of the Act, the same are liable to be included as income for the purposes of assessment to tax under the normal provisions, notwithstanding that the gains are required to be excluded from income chargeable to tax under Section 10 (38) of the Act. No fault with the decision of the CIT(A) as well as the ITAT in rejecting the Revenue s contention.
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2024 (12) TMI 1280
Addition u/s 69B - assessee had not discharged the burden of proof and rebutted the presumption available to the revenue u/s 132(4A) - ITAT held that the assessee was found to be the owner of the valuable article and the amount of investment on such valuable article shall be deemed to be the income of the assessee in the financial year in which such valuable article was found. HELD THAT:- Admittedly, the search operation took place on 21.01.2003 and the revenue authorities found the share certificates and the assessee was the owner of the valuable article i.e., share certificates. Record discloses that the assessee has not placed any iota of evidence to establish that the investment was made in the year 1994. It is trite law that the initial burden lies upon the assessee to prove the claim that the investment was made in the year 1994 and the same is not pertaining to the block period. The findings of fact recorded by the authorities under the Act are based on meticulous appreciation of evidence on record. Tribunal while dismissing the appeal, confirmed the order of the CIT (Appeals) as well as the order of the Assessment Officer, by giving cogent reasons taking into account of the provisions of the Act. This Court in an appeal u/s 260A of the Act cannot interfere with the findings of fact until and unless the same are shown to be perverse or based on no evidence. The findings of fact recorded by the authorities cannot be termed as perverse. Decided against assessee.
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2024 (12) TMI 1279
Interest u/s 220(2) after expiry of four years from the date of assessment and as per Section 154 - HELD THAT:- Contention of the appellant that the Tribunal as well as Commissioner without considering the grounds raised by the assessee in respect of charging of interest invoking the provisions of Section 220(2) of the Act beyond period of limitation of four years dismissed the appeal, is not tenable on the ground that the Tribunal as well as Commissioner after due verification of the records and also the provisions of the Act and law passed the order. The principles laid down in the above said judgment is squarely applicable to the facts and circumstances of the case on hand on the ground that the assessee in spite of the demand notice issued u/s 154 demanding an amount which is payable to the Department, has not paid the said amount within the stipulated time i.e., a period of 30 days. As per the provisions of Section 220(2) assessee is liable to pay interest, especially as there is no specific time for fixation of time limit for charging interest. The power to levy the interest, in the facts and circumstances of the case, has been exercised within a reasonable time. Substantial question of law is answered against the assessee and in favour of revenue.
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2024 (12) TMI 1278
Disallowance of the claim of interest converted to equity u/s 43B - conversion of outstanding interest liability into loan i.e., funding interest or into equity does - HELD THAT:- In M.M.Aqua Technologies Limited [ 2021 (8) TMI 520 - SUPREME COURT] and held that the liability of the assessee to pay interest had ceased on account of issue of equity shares. The assessee was held entitled to benefit of Section 43B of the Act. It is not the case of the Revenue that liability of the assessee to pay interest has not ceased to exist on issuance of equity shares. The claim of the assessee for deduction u/s 43B of the Act has been denied on the ground that the actual payment has not been made. In view of the interpretation put forth by the Supreme Court on Section 43B of the Act, as the liability of the assessee to pay interest ceased to exist on issue of shares in favour of APIDC, the same would tantamount to actual payment within the meaning of Section 43B of the Act. The assessee, therefore, is entitled to benefit of Section 43B of the Act. Substantial question of law is answered in favour of the assessee.
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2024 (12) TMI 1277
Statutory right to claim rebate - PIL petition - direction to the respondents to modify the system developed and put in place by the Tax Department for filing income-tax returns for AY 2024-2025 so as to allow the assessees at large to take complete benefit of the rebate available u/s 87A of the Income Tax Act, 1961 - whether the utility in the form of software can take away the statutory right to claim rebate as per the proviso to Section 87A and is it necessary for an assessee to make a claim for seeking rebate? HELD THAT:- The rebate u/s 87A is inherently linked to the total income and tax liability of the taxpayer. The responsibility lies with the tax authorities to ensure proper implementation of the rebate, as long as the taxpayer fulfills the statutory criteria. Procedural changes, such as those in utility software or instructions issued by the tax department, cannot override the substantive right to the rebate. Any action or inaction on part of the tax authorities that limits the ability of taxpayers to avail of this statutory benefit is arbitrary and violative of the rule of law. Taxpayers should not bear the consequences of administrative inefficiencies or unilateral executive actions that undermine the legislative intent behind Section 87A. It is well-settled that statutory benefits must be extended in a manner that aligns with the objectives of the legislature. In this regard, procedural changes that deprive taxpayers of such benefits warrant judicial intervention to rectify the anomaly and ensure justice. Tax authorities must act as facilitators to help taxpayers comply with the law rather than creating impediments through technical or procedural hurdles. Ensuring fairness, equity, and transparency in tax administration is crucial for upholding public confidence in the system. By way of interim relief, the respondent Central Board of Direct Taxes is hereby directed to forthwith issue requisite notification u/s 119 of the Act extending the due date for e-filing of the income-tax returns in relation to the assessees who are required to file a return of income by December 31, 2024, at least to January 15, 2025. This extension is to ensure that all taxpayers eligible for the rebate u/s 87A are afforded the opportunity to exercise their statutory rights without facing procedural impediments.
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2024 (12) TMI 1276
Reopening of assessment - validity of impugned notice u/s148 and to reject the objections as raised by the petitioner to the reasons for reopening of the assessment by the impugned order - anonymous donations received by the petitioner - HELD THAT:- Reading of the reasons for reopening that the same have been issued on the materials already available and on the record of the AO in the course of the assessment proceedings and to his knowledge. It was not a fresh discovery to the AO that the petitioner was receiving anonymous donations in a cash and in kind. He also could not have been oblivious to the provisions of Section 115BBC and Section 11 (5) or Section 13 of the IT Act, in finalizing the petitioner s assessment for the assessment year in question. On such backdrop, on a plain reading of the reasons for reopening as furnished to the petitioner, it is clear that the AO has sought to reopen the assessment on a change of opinion in the application of the provisions of the IT Act or on interpretation of law differently, on facts which were abundantly within his knowledge at the time of original assessment. This is certainly not permissible. Hence, such reopening of the assessment, being not on any fresh tangible material, the Assessing Officer would not have jurisdiction to proceed with the re-assessment, as this would be purely in the realm of a review and / or on a mere change of opinion. As decided in Shree Saibaba Sansthan Trust-Shirdi [ 2024 (10) TMI 546 - BOMBAY HIGH COURT ] held that the petitioner was a religious charitable trust and hence the assessee rightly and legitimately claimed an entitlement under sub-section 2 (b) of Section 115BBC of the Act that the anonymous donations as received in hundi are not liable to be taxed. Other ground to reopen the assessment by applying the provisions of Section 13 on the issue of accepting donations in the form of ornaments and not investing in the prescribed form as mandated by Section 11 (5) is of no consequence in view of the order passed in Rajendra Bhausaheb Gondkar Anr. [ 2012 (10) TMI 1280 - BOMBAY HIGH COURT ] wherein specifically directed that the auction in respect of such precious items / articles stands stayed and suspended forthwith. The Court also injuncted and restrained the petitioner from converting precious metals in any form or melt it in any form. If this be so, as to how the Assessing Officer can reopen the assessment on such ground cannot be understood. Thus once tangible material during the course of assessment proceedings was available with the AO and the same was considered in passing the assessment order u/s 143 (3) AO in the absence of any fresh material, could not have proceeded to reopen the petitioner s assessment on similar materials. Decided in favour of assessee.
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2024 (12) TMI 1275
Condonation of delay of 799 days filed by the petitioner in filing Form 9A - whether there is a power coupled with statutory discretion conferred upon the commissioners/competent authority under Section 119 (2) (b) authorizing them to admit belated filing of Form 9A? - petitioner uploaded a revised computation of income dated 09 November 2019 with a view to rectify certain computation mistakes HELD THAT:- There is undoubtedly a delay in filing Form 9A on part of the petitioner, however, as observed by us above, such delay appears to be completely bona fide. The principles which are paramount and jurisprudentially accepted in the case of Jyotsna Mehta [ 2024 (9) TMI 585 - BOMBAY HIGH COURT] in our opinion mandates their application in the present facts in condoning delay under the umbrella of section 119 (2) (b) of the IT Act. It is pertinent to reiterate that in a fact situation as the present, to dissuade an assessee to file return can be counter-productive to the very object and purpose, the tax laws intend to accomplish. In cases such as this, where the delay is sufficiently explained the same ought to be condoned. Pursuant to the filing of such Form 9A under Rule 17 (1), by the petitioners though belatedly, it had duly submitted two letters addressed to the respondent no. 1 justifying such delay. A perusal of the Impugned Order for the A.Y. 2017-2018 indicates that the jurisdictional assessing officer has totally lost sight of the first two letters of the petitioner. Though the Impugned Order refers to the letter of the petitioner dated 21 September 2023, there is no finding much less reasoning reflected in the order except to harp on the issue that the delay in filing Form 9A belatedly, was not a procedural lapse and thus, cannot be condoned. We do not find force in such hyper technical approach taken by the assessing officer in rejecting the belated filing of Form 9A by the petitioner, In the present case, the delay is of 799 days on the part of the petitioner in filing Form 9A supported by sufficient cause, deserves to be condoned.
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2024 (12) TMI 1274
Reopening of assessment u/s 147 beyond period of limitation - validity of order passed after the expiry of the period of limitation as prescribed u/s 153 - Time limit for completion of assessment, reassessment and recomputation - HELD THAT:- the expression direction and in consequence of or to give effect to are the key words which are common expressions used in the second proviso to Section 34 (3) of the IT Act, as it stood at the relevant time, and presently as falling under clause (i) of sub-section (6) of Section 153 of the IT Act. The Supreme Court in Murlidhar Bhagwan Das [ 1964 (1) TMI 5 - SUPREME COURT ] interpreting the said expressions held that the expression finding has not been defined in the IT At. Referring to Order XX Rule 5 of the Code of Civil Procedure, it was observed that a finding is, therefore, a decision on an issue framed in a suit and a finding shall be one which by its own force or in combination with findings on other issues should lead to the decision of the suit itself. It was observed that this was to say, the finding shall be one which is necessary for the disposal of the suit. It was held that a finding , therefore, can only be that which is necessary for the disposal of an appeal in respect of an assessment of a particular year as the Appellate Assistant Commissioner may hold in the facts, that the income shown by the assessee is not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. Thus, applying the principles of law as laid down in the decisions in Income Tax Officer vs. Murlidhar Bhagwan Das [ 1964 (1) TMI 5 - SUPREME COURT ], Rajinder Nath vs. Commissioner of Income Tax, Delhi [ 1979 (8) TMI 3 - SUPREME COURT ] and Tally India Pvt. Ltd. [ 2021 (4) TMI 547 - KARNATAKA HIGH COURT ] it is clear that the order dated 21 September 2021 passed by the Division Bench (supra) does not contain any findings necessary for disposal of the writ petition in a particular manner, so as to govern the issues which would be decided by the Assessing Officer. As observed that the words in consequence of or to give effect to do not create any difficulty, for they have to be collated with, and cannot enlarge, the scope of the finding or direction under the proviso. It was further observed that if the scope is limited in such event, the said words also must be related to the scope of the findings and directions. As as rightly contended on behalf of the petitioner, applying the provisions of clause (ii) below Explanation 1 read with the first proviso below Explanation 1, certainly the limitation for the Assessing Officer to pass the Assessment Order had come to an end on 20 November 2021 i.e. sixty days from 21 September 2021 (orders passed by the High Court) by applying the extended period as per the first proviso below Explanation 1, whereas the impugned assessment order has been passed almost ten months after the limitation expired. Thus, the case of the Revenue in regard to applicability of the extended period under sub-section (6) (i) of Section 153 cannot be accepted. WP allowed.
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2024 (12) TMI 1273
Jurisdiction of the AO u/s 143 (2) - JAO's assumption of jurisdiction - notice was issued to the petitioner u/s 143 (2) for the AY:2023-24 by the Jurisdictional Assessing Officer (JAO), ITO Ward Sunam, whereas the said notice was to be issued in terms of section 144B (1) (iii) of the Act by the NFAC - HELD THAT:- As notice under section 143 (2) for assessment u/s 144B would be issued through the NFAC, and the assessee would file a response to such notice within the date specified therein. After the Faceless Assessment Scheme was introduced by amendment in the Act through new regime, the jurisdiction has been ceased for the purpose of issue of notice under section 148, and it is only in special circumstances as provided u/s 144B(7) and (8) that the concerned Principal Commissioner of Income Tax may direct for issuance of notice. The circumstances as mentioned in section 144B (7) and (8) would only be where a notice u/s 148 has already been issued. CBDT Guidelines with respect to the power of issuance of notice by the JAO would arise only in terms thereto. On perusal of para 2 (4) (i) of the Circular dated 03.05.2024, it is apparent that the proceedings for scrutiny by the JAO can be picked up, and notice can be issued u/s 143 (2) only in cases where notice under section 148 has been issued for that particular assessment year. It is an admitted position from the reply filed by the respondent that notice under section 148 was issued for AYs: 2020-21, 2021-22 and 2022-23, and was not issued for the AY: 2023-24. In view thereto, the JAO would not have jurisdiction to issue notice under section 143 (2) of the Act, and it would be only the NFAC as per section 144B (1) (iii) to have jurisdiction to initiate proceedings under section 143 (2) of the Act. The notice issued under section 143 (2) of the Act is therefore found to be without jurisdiction. Merely taking approval from the concerned Principal Commissioner would not be sufficient to grant jurisdiction to the JAO.
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2024 (12) TMI 1272
Validity of Reassessment u/s 147 - applicability of Section 151 as the sanction has not been granted by the appropriate authority as specified - HELD THAT:- Once the petitioner has availed of an alternate remedy as provided under the Income Tax Act, namely of a substantive appeal being filed, and if the assessment order as also the notices issued to the petitioner prior thereto u/s 148A and u/s 148 are contrary to the substantive provisions of Section 151A and Section 151 of the Act, as interpreted by this Court in Hexaware [ 2024 (5) TMI 302 - BOMBAY HIGH COURT] the Appellate Authority as also the Revisionary Authority being bound by the said decisions of the jurisdictional High Court, need to consider such legal position. Thus, the petitioner is not precluded from raising all such contentions, as raised before us in the present proceedings, before the said authority. Accordingly, we are of the opinion that the proceedings which are pending before the CIT(A) as also the Revisionary proceedings, be decided considering the contentions of the petitioner namely as to whether the impugned assessment order as also the notice under Section 148 of the Act is illegal when tested on the law as declared by this Court in the aforesaid decisions. ORDER:- The petitioner shall pursue the proceedings before the CIT(A) against the impugned assessment order as also the proceedings before the Revisionary Authority. It is open to the petitioner to raise contentions in regard to the illegality of the notice issued to the petitioner under Section 148, in the light of the decisions of this Court in Hexaware case (supra). Till the proceeding before the Appellate Authority or Revisionary Authority are decided, the impugned assessment order shall remain stayed.
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2024 (12) TMI 1271
Revision u/s 264 - SRO values prevailing as on the date of agreement and the date of registration - HELD THAT:- Even if, an error is committed by an Assessee, it can be gone into in exercise of power conferred u/s 264 of the Act, which was held to be very wide . Considering the aforesaid, the first reason for not exercising power under Section 264 cannot sustain judicial scrutiny. Even if details about SRO value is not disclosed in the Return, revision u/s 264 of the Act is indeed maintainable. It is another aspect, where after considering the matter, the revision authority may take a different view on merits, but, it cannot decline consideration, when the Assessee commits a mistake/error. Secondly, as rightly highlighted by learned counsel for the petitioner, the application under Section 264 was rejected by stating that the application under Section 264 is filed, just to get advantage of reduction in SRO values. No iota of reason is mentioned in the impugned order as to why the Annexure-II showing SRO rates mentioned in para No.4 of the impugned order was not applicable or trustworthy. No other SRO value, which is held to be reduced one, is also mentioned. We are convinced that both the reasons for not entertaining the application u/s 264 of the Act are unjustifiable.
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2024 (12) TMI 1270
Deduction u/s 10A - assessee to receive the foreign exchange beyond a period of six months from the end of the previous year - HELD THAT:- Admittedly, the Reserve Bank of India is competent authority under Foreign Exchange Management Act, 1999, which regulates the payments and dealings in foreign exchange. Section 10A(3) of the Act provides that the benefits under Section 10A(1) of the Act is available to the assessee, if export proceeds are realized within the time prescribed by the competent authority under the Foreign Exchange Management Act, 1999. In the instant case, the competent authority under the Foreign Exchange Management Act, 1999, namely the Reserve Bank of India has granted approval in respect of export proceeds realized by the assessee. Therefore, the approval granted by the Reserve Bank of India meets the requirement of Section 10A(3). Income Tax Appellate Tribunal ought to have appreciated that the assessee had fulfilled the requirement contained in Section 10A(3) of the Act and therefore was entitled to exemption u/s 10A of the Act. We are in respectful agreement with the view taken in Morgan Stanley Advantage Services P. Ltd. [ 2011 (8) TMI 279 - BOMBAY HIGH COURT] - Decided against revenue.
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2024 (12) TMI 1269
Reopening of assessment u/s 147 - Legality of the order passed u/s 148A(d) and notice u/s 148 - Writ Court interference at the stage of notice u/s 148 when the assessment/reassessment is pending u/s 147 of the Act - scope of notices issued under Section 148 of the new regime between July and September 2022 - Application of TOLA to the Income Tax Act after 1 April 2021 -HELD THAT:- As decided in RAJEEV BANSAL [ 2024 (10) TMI 264 - SUPREME COURT (LB)] a notice could be issued under Section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses. In view of the above, the present petition is allowed. The impugned order under Section 148A (d) of the Act dated 23 July 2022 and consequential notice referable to Section 148 of even date are hereby quashed and set aside.
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2024 (12) TMI 1268
Validity of reopening of assessment - non addressing fresh objections raised by the Petitioner - HELD THAT:- Fresh objections as raised by the Petitioner have not been dealt / disposed of despite a specific order to that effect passed by this court, much less in the manner according to law. In fact the impugned order in our opinion shows gross non application of mind to the detailed case which was put up by the petitioner before the Assessing Officer. It was a legal obligation of the respondents to dispose of the objections, in accordance with law and more particularly when there was a mandate of the orders passed by this court which was staring at the respondents, namely, the order passed on the earlier writ petition filed by the petitioner. Without taking a serious view which this matter certainly deserved, we are of the opinion that the concerned officers would be better advised and a wiser sense prevails on these officers of the Assessment Unit so as to pass an appropriate order in accordance with law, by one more opportunity being granted to them.
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2024 (12) TMI 1267
Validity of orders passed by Settlement Commissioner to the extent that it has granted immunity from prosecution as well as the penalty to the Respondents - Maintainability of review petition - HELD THAT:- Mere recording of satisfaction, by itself, would not be sufficient to satisfy the conditions u/s 245H (1) of the IT Act Firstly, the Assessee has to be honest and fairly disclose all the facts at the outset itself. The Assessee cannot make disclosures in instalments in a settlement proceeding. For a disclosure to be considered full and true, the Assessee ought to have disclosed the complete undisclosed income in the first instance before the Settlement Commission. This Court had in its order observed that there is no foundation for the finding of the Settlement Commission that there was full and fair disclosure. Hence the matter was remanded for reconsideration as to whether immunity from penalty and prosecution ought to be granted or not. The Court is of the opinion that there is no error apparent on the face of the record or any other grounds that merit consideration for reviewing the order.
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2024 (12) TMI 1266
Validity of reopening of assessment - During the course of search, certain hard disk drives were seized and the statement of the managing director was recorded which indicated that there were certain transactions (including cash sales and purchases) - HELD THAT:- Petitioner had paid consideration for supplies in cash. The cash entries are thus reflected as credit entries and not debit entries. Revenue s contention that the ledger account that the petitioner had received cash is erroneous. The ledger account in question reflects that the petitioner had paid cash. It is the petitioner s case that the entries which are reflected as cash payments made by the petitioner are in fact the payments made through banking channel and have been incorrectly reflected as cash receipts in the books maintained of VKC Group. It does not appear that the AO had made any specific allegation that the petitioner had paid money through banking channel and received back the cash against those payments. We consider it apposite to set aside the impugned order dated 31.08.2024 passed u/s 148A (d) as well as the notice issued u/s 148 and remand the matter to the AO to consider afresh in light of the averments made in the present petition and the replies furnished by the petitioner on 14.08.2024 and 30.08.2024.
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2024 (12) TMI 1265
Reopening of assessment beyond period of limitation - notice beyond period of six years - HELD THAT:- A notice for reopening assessment for AY 2014-15 could not be issued beyond the period of six years from the said date. However, since the initiation of reassessment proceedings are premised on material containing information allegedly pertaining to the petitioner, the assessments/reassessment could be initiated u/s 153C of the Act Uploading of information by the investigation wing of the Income Tax department would not be a substitute for recording of a satisfaction note by the AO of a searched person and handing over the assets, books of accounts or other material to the AO of the person other than the searched person for the purpose of initiation of proceedings u/s 153C of the Act. There is no reference of an asset representing income escaping assessment. Thus, reopening the assessments for a period of ten years as contemplated u/s 153A of the ACT may not be applicable. In the present case, a notice has been issued beyond the period of six years from the end of the AY 2014-15 and therefore, the notice is clearly beyond the period of limitation. The petition is allowed and the impugned notices issued u/s 148A (b) and 148 of the Act, are set aside. Decided in favour of assessee.
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2024 (12) TMI 1264
Reopening of assessment - reason to believe - disallowance in accordance with Rule 8D r/w Section 14A as well as the depreciation claimed by the petitioner on various assets - HELD THAT:- AO has issued the notice for re-opening only on the basis of perusal of the assessment records for the year under consideration and in absence of any new tangible material available with him. It is therefore apparent that it is the case of mere change of opinion. AO during the regular course of assessment has called for the details of depreciation as well as the dis-allowance to be made u/s 14A - assessee has also dis-allowed the interest qua MSME in the return of income which is also stated in the objections raised by the petitioners. Therefore, AO had no jurisdiction to re-open the assessment on the basis of the above details which were already scrutinised during the course of the regular assessment. The impugned notice is issued beyond the period of four years for the Assessment Year under consideration and in absence of any allegation to the effect that the assessee has failed to disclose truly and fully all material facts relevant for the assessment, as per the provisio to Section 147 AO would not have jurisdiction to re-open the assessment. See M/S. Kelvinator of India Ltd [ 2010 (1) TMI 11 - SUPREME COURT] AO has no power to review; he has the power to re-assess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the AO. Hence, after 1st April, 1989, AO has power to re-open, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief.
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2024 (12) TMI 1263
Revision u/s 263 - assessee has not shown the cash deposit in the bank account of the assessee and in PPF account of his minor son - HELD THAT:- We are of the considered view that the assessing officer had made specific enquiries during the assessment proceedings to which specific reply was furnished by the assessee along with supporting documentary evidences and all such evidences were duly examine and considered by the assessing officer before completing the assessment proceedings u/s 143(3) of the Act. The power of revision can be exercised where no enquiry, as required under the law is done. Admittedly the AO asked the assessee to furnish the necessary details from time to time which were duly furnished by the assessee and after considering the same the assessing officer has completed the assessment. We find that in the case of CIT vs Sunbeam Auto [ 2009 (9) TMI 633 - DELHI HIGH COURT] has held that the AO in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Whether there was application of mind before allowing the expenditure in question has to be seen. If there was any inquiry, even inadequate, that would not by itself give occasion to the CIT to pass orders u/s 263 of the Act, merely because he has different opinion in the matter. Hon ble Delhi High Court in the case of Anil Kumar Sharma [ 2010 (2) TMI 75 - DELHI HIGH COURT] has held that there is a distinction between lack of enquiry and inadequate enquiry. If there was any enquiry, even inadequate, that would not by itself give occasion to the commissioner to pass orders u/s 263 of the Act. Considering the facts of the case in hand, in the light of the judicial decision discussed above, we set aside the assessment order of the PCIT and restore the assessment order of the assessing officer dated 21-12-2017 framed u/s 143(3) of the Act - Appeal of the assessee is allowed.
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2024 (12) TMI 1262
Denial of exemptions on transfer of leasehold rights in respect of land and building - based on the valuation undertaken by the DVO, the AO opined that the Assessee has undervalued the assets and made addition under the head of Business Income and held that the said transfer of the lease hold right was not exempt u/s 47(iv) on the ground that the Assessee has not been able to explain that the share holding pattern is not exactly same in the case of the subsidiary company. - AO has also invoked the provision of Section 56(2)(x) of the Act in the hands of the recipient HELD THAT:- As per Section 47(iv) of the Act if the transfer of a capital asset by a company made to its subsidiary company cannot be regarded as transfer and nothing contained on Section 45 of the Act shall apply if the parent company or its nominee holds entire share capital in the transferee subsidiary company; and the subsidiary company is an Indian Company. Considering the fact that InterGlobal Education Services Ltd. is a subsidiary of the Assessee and the Assessee including its nominees holds the entire share capital in InterGlobal Education Services Ltd. and the said InterGlobal Education Services Ltd. being an Indian Company meets all requirements of Section 47(iv) of the Act. Thus, the transfer of lease hold right in respect of the subject property for Assessment Year 2017-18 is not liable to tax. In the absence of any contrary material brought to our notice by the Department to dispute or disprove the factual aspects mentioned in the order of the Ld. CIT(A), we find no error or infirmity in the order of the Ld. CIT(A). Accordingly, we find no merit in the Grounds of Appeal of the Department of Revenue.
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2024 (12) TMI 1261
Power of CIT(A) to change the provision of law qua the item of which the assessment was made - Addition u/s 69A - cash received from the members of the society - HELD THAT:- As per section 251(1)(a) of the Act, in appeal against an order of assessment, the CIT(A) may confirm, reduce, enhance or annul the assessment, but there is no such power provided by the law that the Ld. CIT(A) could change the provision of law qua the item of which the assessment was made. Thus, in the absence of such power, Ld. CIT(A) could not have treated the addition made in the assessment order u/s 69A of the Act. Thus, confirmation by CIT(A) is set aside.
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2024 (12) TMI 1260
Denial of exemption u/s 11 - Assessee had not filed Form No. 10 and had not filed the income tax return within the due date prescribed u/s 139(1) - HELD THAT:- In the instant case, both the return of income as well as Form 10B audit report were filed together on 25-1-2019 which is well within the due date prescribed u/s139(4) of the Act. This is evident. Hence Assessee would be entitled for deduction u/s 11 of the Act. With regard to the grants received by the assessee, it is pertinent to note that those are specific grants received by the Assessee and cannot be used for any other purpose other than the purpose for which grant was given. The disbursement letters issued by the competent authorities proving the fact that the monies were paid only for specific purposes. In our considered opinion, they do not partake the character of income of the Assessee. We hold that the Assessee would be entitled for deduction u/s 11 - Decided in favour of assessee.
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2024 (12) TMI 1259
Penalty order u/s. 271(1)(c) - assessee had earned LTCG exempt u/s.10(38) - exempt LTCG shall be taken into account in computing the book profit u/s.115JB - HELD THAT:- Notice was for furnishing of inaccurate particulars of income as recorded by the AO in the assessment order. However, the penalty u/s. 271(1)(c) of the Act was imposed for concealment of income. The facts of the present case are, thus, found to be identical to the facts as discussed in the above referred decisions. We, therefore, hold that the order imposing penalty in this case for concealment of income when the penalty proceeding was initiated for furnishing of inaccurate particulars of income, was invalid. Therefore, the penalty imposed u/s. 271(1)(c) of the Act for concealment of income is cancelled. The legal ground taken by the assessee is allowed. On merit also, we do not find any reason to impose the penalty. The fact that the assessee had earned LTCG exempt u/s.10(38) of the Act, was duly disclosed in the return of income, in the tax audit report and also in the annual accounts. No penalty u/s. 271(1)(c) of the Act could have been imposed for concealment of income. The question of concealment would arise only if the relevant fact regarding earning of exempt LTCG was not disclosed by the assessee in the return of income. There could have been a case for furnishing of inaccurate particulars of income, for which the penalty proceeding was rightly initiated by the AO. However, considering the fact that there was amendment in this year in the provision of Section 10(38) of the Act, which stipulated that the exempt LTCG shall be taken into account in computing the book profit u/s.115JB of the Act, but there was no such corresponding amendment in Section 115JB of the Act; no motive can be imputed to the assessee. Explanation of the assessee that there was a bona-fide mistake on its part, is found acceptable. The technical glitch explained by the assessee in the first year of e-filing wherein the details relating to MAT was required to be auto filled and Form 29B could not be filled until there was liability under MAT, has not been controverted by the Revenue. Obviously these technical glitches had led to misreporting of the book profit under MAT. In the e-filing scheme of return filing, when the assessee has reported its exempt income u/s 10(38) of the Act, the book profit for MAT should have been automatically computed by the Systems by including this exempt income. The assessee alone can t be blamed for such misreporting which was also due to technical glitch in the system. Therefore, on merit also there was no case for imposition of penalty u/s. 271(1)(c). Penalty imposed u/s. 271(1)(c) of the Act in respect of concealment of book profit is cancelled and the ground as taken by the assessee is allowed. Appeal of the assessee is allowed.
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2024 (12) TMI 1258
TP adjustment - international transactions undertaken by the assessee with its Associate Enterprise (AE) - HELD THAT:- We hold that the Special Bench in the case of Instrumentarium [ 2018 (8) TMI 1192 - ITAT KOLKATA] has laid down principle of law to the effect that there is no base erosion by ALP adjustment in the income of the non-resident in respect of its transactions with the Indian AEs. In view of the above we reject this argument of assessee that the decision of the Special Bench in the case of Instrumentarium (supra) rejecting the base erosion argument of the assessee would not apply in the facts of the present case. Assessee, thereafter pointed out that in the preceding year, it had raised an argument, regarding Benefit of Treaty (DTAA) against applicability of TP provisions in reference to Article 9(1) of the India Netherlands Tax Treaty .Assessee fairly conceded that this argument of the assessee had been rejected by the ITAT in its order in the case of the assessee for Asst.Year 2007-08 to 2010-11.This argument of the assessee, therefore, is also dismissed. Principle of mirror ALP - argument of the assessee was that, if the ALP of a transaction with one of the AE s to an international transaction is determined, the same ALP is to be applied with respect to other AE also - HELD THAT:- No merit in the contentions of the ld.counsel that the ALP adjustment should be deleted by applying the principle of mirror ALP. We have gone through the order of the ITAT in the case of the assessee for Asst.Year 2011-12 to 13-14 and have noted that it had referred to the decision of Filtrex Technologies P.Ltd. [ 2018 (4) TMI 1957 - ITAT BANGALORE] has categorically held that in terms of provision of law relating to TP, there could not be any case of mirror ALP at all. Income received by the assessee on account of rendering of services was taxable in the source country only on receipt basis - We restore the issue back to the AO with the direction to apply the decision of the Special Bench in Ampacet Cyprus Ltd [ 2020 (9) TMI 25 - ITAT MUMBAI] on the issue of applicability of ALP adjustment to receipts which are otherwise not taxable in terms of provisions of DTAA as argued by the assessee before us. He shall consider the facts of the case and give due opportunity of hearing to the assessee while doing so. Income from software treated as royalty in nature - The above issue is covered in favour of the assessee by the decision of the ITAT on the identical issue for Asst.Year 2011-12 [ 2023 (10) TMI 771 - ITAT AHMEDABAD] the addition made to the income of the assessee by treating the receipts on account of supply of software licence, as royalty is deleted. Income from rendering Global P T Functional Services treated as fees for technical services - Since admittedly the above issue is covered in favour of the assessee by the decision of the ITAT on the issue for Asst.Year 2012-13, addition made to the income of the assessee by treating the receipts on account of service rendered by the assessee to its subsidiary SIMPL for providing Global P T Functional services as fee for technical services u/s 9(1)(vii) is deleted. Addition on account of receipt from HLPL as fees for technical services made to the income of the assessee is deleted. Addition made on account of income received from L T services , as fee for technical services under section 9(1)(vii) is deleted.
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2024 (12) TMI 1257
Validity of reopening of assessment - notice u/s. 143(2) was not issued on the return of income filed by the assessee in response to the notice u/s. 148 - HELD THAT:- Notices u/s. 143(2) was issued to the assessee, but is not based on examining the return of income filed by assessee that was picked up for scrutiny in the reassessment proceedings. Reassessment order can be passed without compliance with the mandatory requirement of a notice being issued by Ld.AO u/s. 143(2) of the act pursuant to filing of return of income, cannot be treated to be the correct procedure in the eyes of law as observed in case of Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] . Issuance of notice u/s. 143(2) of the act after filing of return of income cannot be said to be mere procedural irregularity and the same is not curable. The basic requirement under the act for issuance of notice u/s. 143(2) cannot be dispensed as held in Shree Jay Shivshakar Pvt. Ltd [ 2015 (10) TMI 1765 - DELHI HIGH COURT] Thus reassessment orders passed for the years under consideration deserves to be quashed as no notice u/s.143(2) was issued for both years under consideration to the assessee post response filed by the assessee to treat its original return in response to the notice u/s. 148 - Decided in favour of assesee.
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2024 (12) TMI 1256
Addition u/s 68 - unexplained bank deposits - AO has mentioned that the Circular Trading resorted relating to various sales bills which were issued and circulated amongst these fictitious concerns - CIT(A) deleted addition Partly (@0.30%) - HELD THAT:- The fact remains that these entities are paper concerns and engaged in providing accommodation to the various unrelated concerns. That was never disputed by the Revenue at any point of time, but in assessee s case, the Revenue s stand/contention that the expenses of circular purchases, being intermediately charges not for the purpose of business, appears to be not tenable as the assessee has clearly given the records showing as to how the Circular Trading has been conducted, and the CIT(A) has rightly made the observation that 0.30% of Circular Trading transactions have to be charged to inter-mediatory not for the purpose of business as mentioned in the case of M/s. Pradip Overseas Ltd and, therefore, deleted the remaining addition and sustained 0.30%. There is no need to interfere with the same. Besides, the Revenue s contention that the Settlement Commission Order is relied upon, but the fact remains that the ld. CIT(A) has given independent finding relating to the assessee s case and, therefore, there is no need to interfere with the findings of the ld. CIT(A). Appeal of the Revenue is dismissed.
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2024 (12) TMI 1255
Revision u/s 263 - approval proceeding granted by the ld Addl. CIT u/s 153D to be erroneous and prejudicial to the interest of the revenue - HELD THAT:- As relying on Devender Kumar Gupta [ 2024 (9) TMI 210 - ITAT DELHI ] wherein held PCIT has not taken account of the fact that the assessments were completed after prior approval of the competent authority. Thus, we are of the considered view that at the time of examining the issue as to if the assessment order is erroneous so far as prejudicial to the interest of the Revenue, the Id. revisional authority is not only supposed to see the assessment record of AO, but also the record of the approval which as far as the revisional authority is concerned becomes record of the quasi judicial authority whose order is being examined by invoking the revisional jurisdiction. Therefore, without giving a finding that the prior approval u/s 153D was vitiated and was also erroneous so far as prejudicial to the interest of the Revenue, the assessment order independently cannot be held to be erroneous so far as prejudicial to the interest of the Revenue. Thus, we hold that the revision order passed u/s 263 of the Act by the ld PCIT deserves to be quashed and is hereby quashed. Accordingly, grounds raised by the assessee are allowed.
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Customs
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2024 (12) TMI 1254
Works contract service - transmission of electricity irrespective of classification - services rendered by the appellant for construction of various structures, superstructures etc. of hydro power projects for generation of electricity for TNEB - N/N. 11/2010-ST and 45/2010-ST - it was held by CESTAT that the demands no not sustain. HELD THAT:- There are no reason to interfere with the impugned order dated 26.04.2018 passed by The Customs, Excise Service Tax Appellate Tribunal, South Zonal Bench, Chennai - appeal dismissed.
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2024 (12) TMI 1253
Violation of principles of natural justice - non-consideration of submissions - Classification of imported goods - import of natural Rutile Ore/ Leucoxene Sand of different grades - whether the imported goods are ore or concentrate and whether eligible for availing exemption under N/N. 4/2006 CE dt. 01.03.2006 as superseded by N/N. 12/2012 CE dt. 17.03.2012 - time limitation. Classification of imported goods - import of natural Rutile Ore/ Leucoxene Sand of different grades - HELD THAT:- Reliance placed upon a decision of this Court in the case of M/S. STAR INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) , RAIGAD [ 2015 (10) TMI 1288 - SUPREME COURT] where it was held that ' once we arrive at the conclusion that process of roasting of Ore amounts to manufacture and it creates a different product known as concentrate, for the purpose of exemption notification, which exempts only 'ores' it is not possible to hold that concentrate will still be covered by the exemption notification. Therefore, harmonious construction of Note 2 and Note 4 would lead us to hold that in those cases when Note 4 applies and Ores becomes a different product, it ceases to be ores.' Non-consideration of submission - principles of natural justice - HELD THAT:- It is found from the judgment of the Tribunal that without even considering what is laid down in paragraphs 29 and 31 of STAR INDUSTRIES, the Tribunal has brushed aside the binding decision. Therefore, the case will require re-consideration at the hands of the Tribunal. Time Limitation - HELD THAT:- Even as regards the finding on limitation, the Tribunal has overlooked the fact that the show cause notice was based on IIT, Powai s test report dated 03rd May, 2013. The finding of fact of the Tribunal on delay is without considering the factual aspects on record. Conclusion - Due to failure to consider properly the submissions, the impugned judgment is set aside and appeal restored to the file of The Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai for fresh consideration. Appeal allowed in part by way of remand.
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2024 (12) TMI 1252
Condonation of a gross delay of 326, 326, 330, 330 and 333 days respectively in filing the Civil Appeals which has not been satisfactorily explained - Under-valuation of imported goods - Demand of differential customs duty - demand based on load port documents - it was held by CESTAT that 'the impugned order in so far as the same is concerned with imports through said 365 Bills of Entry in respect of enhancement of value, confirmation of differential Customs duty, order to pay interest, confiscation of said goods and penalties imposed including personal penalties is set aside.' HELD THAT:- There are no good reason to interfere with the impugned orders passed by the Customs, Excise and Service Tax Appellate Tribunal - Civil Appeals are, accordingly, dismissed on the ground of delay as well as on merits.
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2024 (12) TMI 1251
Violation of principles of natural justice - SCN not recived by the petitioner - Seeking quashing the impugned Order - in respect of certain exports the actual realization of the amount in foreign exchange was belated and duty drawbacks could not have been availed by the Petitioner - HELD THAT:- A perusal of Section 153 of the Customs Act would show that one of the modes for service under Section 153 (b) of The Customs Act is through registered post, speed post or courier, however, it can also be sent through email in terms of Section 153(c) of The Customs Act. In addition, from 2021 onwards, notices and hearing notices can also be made available on the common portal as well. In the present case, the notice appears to have been sent under Section 153 (b) of The Customs Act and on the display board of the Customs Department. Section 153 (b) only records notice by post or courier and not via email - In the opinion of this Court, the provision itself makes it clear that notices can be sent by email. Moreover, it is also unclear as to why all the notices which were sent have been returned as the Petitioner has categorically stated that there was no change of address. In the overall scheme of things and the facts which have emerged, this Court is of the opinion that owing to the fact that as per the Petitioner the entire amount of the shipping bills and foreign exchange have been realized, the Petitioner ought to be given an opportunity to reply to the Show Cause Notice and a hearing may be afforded to the Petitioner - The impugned order dated 10th November, 2022 is set aside. Let a fresh show cause notice be served upon the Petitioner on the email address. In addition the said show cause notice shall be served upon the ld. Counsel appearing for the Petitioner within one week. Petition disposed off.
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2024 (12) TMI 1250
Application under Section 311 of Code of Criminal Procedure - delay in prosecution and filing of the complaint - prosecuting agency DRI seeks to bring on record several bill of entries under the heading index - Import duty evasion - HELD THAT:- The Court takes into consideration that this is the second application under section 311 of Cr.P.C, however same is also being read with Section 244 of Cr.P.C. and while such occasion was not availed of earlier on behalf of the DRI is still speculative. The arguments of the Ld. Senior Counsel that the data uploaded over computer are confidential and cannot be procured or accessed without the permission of the Court does not seems to inspire confidence, as these are already seized by the DRI as per their own version. There is no reason why such opportunity was not grabbed at the very first instance when the complaint case was filed by DRI after 17 years of the alleged occurrence - the arguments of the Ld. Counsel for the accused that there is inordinate delay in filing the present case is not sustainable in view that there is no limitation qua taking cognizance qua economic offence. This Court is of the opinion that the application is allowed subject to the cost of Rs. 50,000/- to be paid in DLSA by the DRI. It is clarified herein, that the department has to deduct the amount from the responsible officer for such lapse as since the cost is being imposed upon the State/ Department of State, it cannot be the case that the same be burden upon Exchequer. It is also not appreciated that though Sr. Counsel had submitted that physical copies is already seized by the Department and department could not lay his hand over such documents, and therefore Computer Copies from the database is required. Application stands allowed as the document is relevant for the adjudication the case and in particular, regarding the input qua thickness of item (i.e. 0.6 mm), subject to payment of cost within one month.
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Corporate Laws
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2024 (12) TMI 1249
Dismissal of company petition filed by the appellant on grounds of maintainability and delay - maintainability of petition filed by the appellant as per Section 244(b) of the Companies Act, 2013 - HELD THAT:- The appellant has not filed any record of the company wherein he was shown to be a member of the Respondent No.1 between 2012-2013 till the date he had filed Company Petition in the year 2023. Rather if one peruses the additional affidavit filed by the Respondent herein before the Ld. NCLT one would find at the time of the filing of the Company Petition there were 97 members of the Company, the list of which stood uploaded on the website of the ROC and appears to be the correct list. Thus considering this number of members on the date of filing the petition, the Ld. NCLT held the appellant did not meet the threshold for filing the Company Petition. Considering the fact the appellant was removed in the year 2012 from the list of members in EOGM dated 01.02.2012; such removal having been published in the newspaper; the appellant never took steps to challenge the decision of the EOGM dated 1.2.2012; he never filed any record wherein he could show he was a live member after 2012-13 till 2023, there are no infirmity in the impugned order. There are no force in the arguments of the learned counsel for the appellant that during these years he always believed he was still a member of the Club. Such an argument cannot be believed by any stretch of imagination. The appeal is thus devoid of merit and is accordingly dismissed.
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Insolvency & Bankruptcy
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2024 (12) TMI 1248
Exercise of inherent powers of this Court under Section 482 of the CrPC (now Section 528 of the BNSS) - Immunity from prosecution under Section 32A of the Insolvency and Bankruptcy Code (IBC) - Lack of territorial jurisdiction - disclosure of offences in the FIR. Exercise of inherent powers of this Court under Section 482 of the CrPC (now Section 528 of the BNSS) - HELD THAT:- The Hon ble Supreme Court, in Neeharika Infrastructure [ 2021 (4) TMI 1244 - SUPREME COURT ] , reiterated the principles to be followed while quashing an FIR and held ' When a prayer for quashing the FIR is made by the alleged accused, the Court when it exercises the power under Section 482CrPC, only has to consider whether or not the allegations in the FIR disclose the commission of a cognizable offence and is not required to consider on merits whether the allegations make out a cognizable offence or not and the court has to permit the investigating agency/police to investigate the allegations in the FIR.' The Hon ble Supreme Court has time and again reiterated that the power of quashing should be exercised sparingly with circumspection, in the rarest of rare cases . Additionally, while examining an FIR/complaint, quashing of which is sought, the Court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint - Thus, ordinarily, the Courts are barred from usurping the jurisdiction of the police, since the two organs of the State operate in two specific spheres of activities, however, the inherent power of the Court is to secure the ends of justice or prevent the abuse of the process of law. As per the law, to invoke its inherent jurisdiction under Section 482 of the CrPC, the High Court has to be fully satisfied that the material produced by the accused is such that would lead to the conclusion that the defence is based on sound, reasonable and indubitable facts, and that the material so produced is such as would clearly defeat or negate the allegations contained in the FIR without conducting trial - Further, as per Rajiv Thapar v. Madan Lal Kapoor [ 2013 (1) TMI 932 - SUPREME COURT ], the material placed on record has to be of such impeccable quality that would persuade a reasonable person to dismiss and condemn the accusations as false. Therefore, in order to meet the ends of justice, the High Court may be persuaded by its judicial conscience to prevent the abuse of the process of law. Immunity from prosecution under Section 32A of the Insolvency and Bankruptcy Code (IBC) - It is the case of the petitioner that the impugned FIR is liable to be quashed on merits as the same cannot exist qua the petitioner in view of Section 32A of the IBC - HELD THAT:- In Ebix Singapore Pvt. Ltd. [ 2021 (9) TMI 672 - SUPREME COURT ] submitted a resolution plan for Educomp Solutions Ltd., a CD undergoing the CIRP under the IBC. While dealing with various legal issues, the Hon ble Supreme Court observed that Section 32A of the IBC was introduced to provide immunity to the CD and its assets from liabilities arising out of past offenses once the resolution plan is approved. It was also observed that the said provision ensures the clean slate principle, shielding the CD and its assets from past liabilities once a resolution plan is implemented. It was further clarified that this immunity is crucial for the successful implementation of resolution plans and encourages resolution applicants to participate in the CIRP. Further, in Ajay Kumar Radheyshyam Goenka [ 2023 (3) TMI 686 - SUPREME COURT ], the Hon ble Supreme Court while upholding the settled position of law observed that Section 32A of the IBC ensures that the corporate debtor is freed from the past liabilities under the approved resolution plan in the event the new control is with the person/management which is not related to the person/management related to the commission of such offence. However, while stating the effect of Section 32A of the IBC on the directors of the company, it was made clear by the Hon ble Court that the criminal liability of directors and officers of the concerned corporate debtor is not absolved and the IBC does not shield individuals from personal criminal liabilities under the Negotiable Instruments Act, 1881. Therefore, it is settled that once a company, against whom an FIR is registered, undergoes CIRP and a resolution plan gets duly approved by the NCLT, whereby, the control of the affairs of the concerned CD is taken over by a new management which is not related to the CD s erstwhile directors/promoters who are related to the allegations of commission of such offence, the said company s liability for an offence committed prior to the commencement of CIRP ceases and the concerned CD shall not be prosecuted for such an offence from the date the resolution plan has been approved - In the instant case, it is an admitted position of fact that the impugned FIR pertains to the allegations of commission of fraud and diversion of funds by the petitioner and its erstwhile directors/promoters during the period 2008 to 2017 which is apparent from the bare reading of the complaint and FIR. Keeping in mind the settled position of law, the admitted position of facts that the offences alleged in the complaint and the FIR pertain to the period 2008-2017, i.e., before the commencement of the CIRP; resolution plan has been approved by the learned NCLT and there has been no objection/appeal against the same; the respondent CBI has not objected or brought on record any contention to submit to the effect that the resolution applicant is related to the persons accused of commission of offences, this Court is of the view that there are cogent grounds to invoke Section 32A of the IBC - It has been ascertained that Section 32A of the IBC protects a CD and leads to extinguishment of any criminal liability of the CD if the control of the said CD goes in the hands of the new management which is different from the original/old management. This Court also deems it apposite to state that the present petition has been adjudicated only with respect to the contention of immunity from the prosecution of the CD/petitioner under Section 32A of the IBC and has neither dealt with the issues on merits of the allegations levelled in the impugned FIR nor with the issue of territorial jurisdiction. Conclusion - In view of the undisputed fact that the CIRP in regard to the petitioner company commenced on 10th October, 2019 whereas the FIR was registered on 7th February, 2023 in regard to the alleged offences committed between the year 2008 to 2017, and that the resolution plan of the CD has been approved on 17th February, 2023 by virtue of which a new management has taken over the control of the petitioner/CD; any liability for such offences shall cease against the petitioner/CD and the petitioner cannot be prosecuted for the said offences as the same were committed prior to the approval of the resolution plan. Therefore, the impugned FIR is liable to be quashed qua the petitioner. Petition allowed.
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2024 (12) TMI 1247
Seeking withdrawal of the Insolvency Petition u/s 12A of the IBC r/w Regulation 30A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - submission pressed by the Appellant is that the Resolution Professional has no jurisdiction to pray for withdrawal of the application. Whether the Resolution Professional had any jurisdiction or authority to file a purshish for withdrawal of the application? - HELD THAT:- It was the Resolution Professional who has filed the application seeking withdrawal of the CIRP. The Hon ble Supreme Court had occasion to consider the entire statutory scheme for withdrawal of CIRP in recent judgment of GLAS Trust Company LLC [ 2024 (10) TMI 1185 - SUPREME COURT (LB) ]. The Hon ble Supreme Court has laid down that after admission of CIRP, the CIRP process becomes in rem proceeding and it is the Resolution Professional who has to thereafter conduct the proceeding and after proceedings having become in rem, they are no longer the preserve of only the applicant creditor and the corporate debtor and even creditors who were not the original applicants, become necessary stakeholders - The Hon ble Supreme Court after noticing the entire statutory scheme in the IBC for withdrawal of the application held that the application for withdrawal has to be filed through the Resolution Professional. Thus, it is the IRP/RP who is the person in control of the insolvency proceedings including the proceedings initiated by Resolution Professional for withdrawal under Section 12A - there are no lack of jurisdiction in the Resolution Professional filing purshish for withdrawal of Section 12A application. In the present case, the MHIL has filed its claim in Form C on 11.06.2024, as submitted by Counsel appearing for MHIL which claim was kept on verification by the Resolution Professional for long period and could be admitted only on 16.09.2024 and prior to that date, MHIL has to file an application seeking intervention as well as seeking a direction to accept the claim of MHIL - The withdrawal of the application under Section 12A is on account of subsequent event which has taken after 16.08.2024 i.e. admission of the claim of MHIL on 16.09.2024 i.e. much before the application filed under Section 12A could be heard or allowed. The Resolution Professional has rightly brought into the notice of the Adjudicating Authority on 17.09.2024 when application came for hearing that claim has been admitted and CoC has to be re- constituted. It is thus satisfied that the Resolution Professional had every jurisdiction to file purshish to withdraw of the application. In the facts of the present case, Adjudicating Authority has permitted withdrawal of Section 12A application in accordance with law by order dated 12.11.2024. There are no error in the order dated 12.11.2024 passed by the Adjudicating Authority. The Appeal filed against the earlier order dated 15.10.2024 has become infructuous in view of the subsequent order dated 12.11.2024 - appeal dismissed.
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2024 (12) TMI 1246
Determination of the date of default for the purpose of invocation of the proceeding under Section 7 of I B Code - Appellant had preferred Writ Petition before the High Court of Telangana and the same is still pending consideration - what would be the criteria to determine, as to what would be the date of default has to be, either 01.10.2012 or 03.01.2020, where the OTS/Compromise was in favour of the Financial Creditors was ultimately withdrawn in the meeting of the members of consortium on 04.02.2019? HELD THAT:- The Ld. Adjudicating Authority while scrutinizing the propriety of the judgment referred to, as rendered in the matters of Bijnor Urban Co-Operative Bank Limited Vs. Meenal Agarwal Others [ 2021 (12) TMI 669 - SUPREME COURT ], which was relied by the Appellant, has answered the same by observing thereof, that there cannot be any contrary view, with regards to the guidelines issued for the grant of benefit of the OTS scheme, which though cannot be claimed as a matter of right, because it is an arrangement, made under the guidelines issued by the Reserve Bank of India in order to carve out a middle, way for shortening the settlement of the dispute, but it is not as a matter of right. The Ld. Adjudicating Authority has observed that, the aforesaid authority in the matters of Bijnor Urban Co-Operative Bank Limited [ 2021 (12) TMI 669 - SUPREME COURT ], which deals with regards to the modalities to be adopted for sanctioning of the OTS, for settlement of a dispute is not an arrangement, which is available to a dishonest borrower. The defaulter, Corporate Debtor has not remitted the amount. It was contended that the date of declaration of the account has to be Non-Performing Asset (NPA) on 01.10.2012, would not be the actual date of determination of the limitation, because the same according to the Appellant was to be considered, from the date when the Corporate Debtor has acknowledged the dues - The Ld. Adjudicating Authority, observed that the application under Section 7 of the I B Code, has been filed on 19.07.2020, and that is being argued to be well within the limitation, determining the same to be with effect from the compromise decree of 03.01.2020. The Ld. Adjudicating Authority considered the aforesaid aspect and ultimately observed, that default in the case of the proceeding has to be reckoned from the date when the financial creditor had actually got the knowledge of the default having been committed, which in the instant case will be falling to be 01.10.2012 when the notices under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act was issued. Commission of a default consciously means, that it is an expression of default when it is realized and accepted by the Financial Creditor and accepted by the Corporate Debtor when the notices under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act was issued and accepted by the Corporate Debtor. The aspect of default as defined under Section 13 (2) of the SARFAESI Act was to be reckoned from the date notice is issued. It does not mean a debt when held or any part or instalment of the amount becomes due to be payable, but not paid. It would be actually be the default which has occurred when the notices were issued on 01.10.2012, for drawing the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, reckoning of the period of limitation prescribed under Article 137 the Limitation Act, since has been given a retrospective effect for the purposes of the proceeding under Section 7 or 9 of the I B Code. The drawing of the proceedings by issuing a notice or demand on 29.08.2018, after the reckoning of the default committed on 01.10.2012, the procedure under Section 7 rendered to be initiated and barred by limitation. As the entire proceeding under Section 7 of I B Code, was barred by limitation, the same does not hold merit and would accordingly stand dismissed .
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FEMA
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2024 (12) TMI 1245
Validity of delayed judgment and order made by the Special Director (Enforcement) - Inordinate and unexplained delay between the conclusion of the arguments and the pronouncement of the impugned order - HELD THAT:- As in the peculiar facts of the present case and upon considering the delay between the conclusion of arguments and pronouncement of impugned orders and further, also upon considering the explanation offered, we are satisfied that such an explanation hardly constitutes exceptional or extraordinary circumstances, and therefore that the impugned order dated 9 March 2009 warrants interference. We note that the appeal instituted by the South Indian Bank Limited against the same impugned order dated 9 March 2006 was allowed by the appellate tribunal on the grounds of delay between the conclusion of the hearing and pronouncement of the said judgment and order. Considering that the tribunal, on that occasion, spoke through its single member, was not quite relevant. It was not the case of the respondent that the single member, i.e. the Chairperson was not competent to dispose of the appeal. Nothing on record states that the respondents had challenged the tribunal order dated 25 January 2021 in the appeal instituted by South Indian Bank Limited, nor was the same brought to our notice. Therefore, the appellate tribunal was not justified in taking a different view on identical facts. Thus, we set aside the impugned order dated 9 March 2009 and remand the matter to the Special Director (Enforcement) or the Competent Authority by whatever name called to dispose of the show cause notices issued against the appellants herein as expeditiously as possible. Needless to add, the appellants must be given a hearing, and the competent authority must pass reasoned orders within a reasonable period from the conclusion of the hearing. In terms of Ramdular Singh vs. State of UP [ 2024 (12) TMI 1127 - SC ORDER ] matters must be disposed of within a maximum of three months from the date of all parties' hearings. Though these observations have been made in the context of Courts, there is no reason why a different timeline should apply to the facts and circumstances of the present case. In any event, this timeline could always be taken as a guideline for determining a reasonable period. These appeals are allowed in the above terms. The appellants or their duly authorized representatives must appear before the Special Director on 2 January 2025 at 11.00 am so that a schedule can be set out by the competent authority for hearing in the show cause notices.
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Service Tax
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2024 (12) TMI 1244
Legality of amount collected by the appellant from the sub-agents/customers, representing as Service Tax - liability to deposit it to the credit of the Central Government under the provisions of Section 73A(2) of the Finance Act 1994 - Procedural variations - Invocation of the provisions of Section 73A. Legality of mount collected by the appellant from the sub-agents/customers, representing as Service Tax - liability to deposit it to the credit of the Central Government under the provisions of Section 73A(2) of the Finance Act 1994 - HELD THAT:- It is found that in the entire transaction there is nothing to indicate that an amount representing as service tax that is collected and retained by the appellants. It is found that due to an understanding between the appellant and the sub-agent, the liability of the the subagentto pay this Service Tax to the exchequer, is shifted to the Appellant and an accounting entry is made as the liability stands discharged at the hands of the Appellant. Effectively, the service tax on the portion of the amount of commission paid to the sub-agent is discharged first by the appellant and thereafter recovered. His portion of the commission (net of service tax) is already withheld by the sub-agent. Therefore, it cannot be said that the appellants have recovered service Tax from their agents and have not paid it. The only plausible conclusion is that what was recovered was the service Tax already paid by the appellants on the commission actually retained by the sub-agent; no service tax is actually collected by the Appellant which is payable or recoverable under Section 73A. It is found that the SCN alleges that the appellants also illegally collected an amount as representing Service Tax from the sub-agents by wrongly impressing upon them that they (M/s TSIYPL) were providing services to the sub-agents and therefore, they (M/s TSIYPL) were entitled to collect Service Tax from them; M/s TSIYPL did not deposit the amount collected by them as representing Service Tax, with the Government exchequer. During investigations, M/s TSIYPL failed to provide any legal justifications/statutory authority under which Service Tax was collected by them from their sub-agents/customers of the airlines. There are no evidence in the Notice to allege that the appellants impressed upon their sub-agents that they were providing certain services and therefore, are eligible to collect some service tax from them. Procedural variations - HELD THAT:- It has to be construed that appellants and their subagents are rendering the ‗Air Travel Agent service. As a natural corollary, they share the commission and so, the tax burden. While alleging that the appellants have collected an amount representing service Tax form their sub-agents, Revenue has conveniently ignored the fact that the commission was also shared. It is not the case of the Revenue that tax burden cannot be shared more so, when remuneration is shared. There is no law forbidding such sharing of the tax burden when Revenue is shared - Revenue cannot enrich itself on the strength of procedural variations and accounting practices of the appellant. Invocation of the provisions of Section 73A - HELD THAT:- Revenue conveniently ignored the fact of sharing of remuneration, given by the Airlines, by the appellant and their sub-agents. Therefore, it was wrong to seek tax again on the sharing of Tax burden. Tax on the total remuneration was discharged. Demanding service tax again on the portion of sub-agent s commission would amount to double taxation - Revenue cannot enrich itself on the strength of procedural variations and accounting practices of the appellant. The amount shown as service tax in the invoice issued by the appellants is to account for the sub-agent s share of service tax. No case is made by revenue for invocation of the provisions of Section 73A. The impugned order is set aside - appeal allowed.
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2024 (12) TMI 1243
Eligibility for exemption under S.No.12(d) of Notification 25/2012 for services provided by the sub-contractor - Entitlement to exemption when services are not provided directly to the Government but through a contractor - contractor had been awarded the work of constructing part of dam from M/s Transstroy JSC EC UES JV (hereinafter referred to as the Principal Contractor), who, in turn, was awarded the work by the Government of Andhra Pradesh for construction of dam - Extended period of limitation. Whether in the facts of the case, the services provided by the sub- contractor are in the nature of services eligible for exemption under S.No.12(d) of Notification 25/2012? - HELD THAT:- When the expression used in the notification is by way of construction , whether it should mean actual construction of dam or it should mean any activity, howsoever remote it may be that ultimately lead into emergence of dam/ construction of dam. Another aspect, which is also crucial to understand is that similar activities of site formation, excavation, etc., were otherwise specifically covered under the specific classification of service prior to introduction of negative list based Service Tax in 2012. There was also an exemption available to such site formation services (vide Notification 17/2005-ST dt.07.06.2005) when provided in relation to, inter alia, construction of dam. However, after the introduction of Negative List, no such exemption is available for any site formation activities or services provided, which may be in relation to construction of dam. Therefore, going by the strict interpretation of notification, the activities of site formation, excavation, removal of soil boulders, etc., for dam spillway intake structure, etc., would not strictly be covered within the ambit of the expression by way of construction of dam. It is also a settled legal position in view of the judgment of Hon ble Supreme Court in the case of CC (Import), Mumbai Vs Dilip Kumar and Co Ors [ 2018 (7) TMI 1826 - SUPREME COURT] that an exemption notification claimed must be strictly interpreted by way of plain reading of the expression and only when there is any ambiguity or possibility of two different interpretations, the benefit should go to the Revenue. In this case, in view of the fact that the site formation services were separately classifiable service prior to 2012 and were also otherwise exempted in relation to dam, etc., but no such exemption, per se, is available post 2012 and therefore, even by the plain reading it would be obvious that it is the construction of dam, as such, which is exempted and the activity of site formation cannot be brought in within the expression to consider this for exemption under S.No.12(d) of Notification 25/2012. Thus, even if there is some ambiguity the benefit will go to Revenue. Their reliance on the case of Prasad Babu Kalyanam Vs CCT, Visakhapatnam-GST [ 2024 (2) TMI 1308 - CESTAT HYDERABAD] is also misplaced in the sense that there the issue of service was not involved. It was only relating to providing the service to the Government or Governmental Authority or otherwise when there was a sub- contractor and contractor relation and it was held that when the service is provided even indirectly, through the contractor, to the Governmental Authority, they will be eligible for exemption. Whereas, in the present case, when the activity itself is not covered within the ambit of the notification itself, they cannot, by virtue of their ultimate assertion that the Principal Contractor being eligible for exemption will also make them exempted, is not tenable. Therefore, on this count, the appellants are not eligible to claim exemption under S.No.12(d) of Notification 25/2012. If yes, then whether they are entitled for exemption under said notification when the same are not being provided to the Government directly but to the contractor, who, in turn, is providing the services to the principal contractor? - HELD THAT:-As the activities undertaken by the appellant are not covered within the expression in Notification 25/2012 then whether they have been provided directly or indirectly would not have any significance. Secondly, when the Government intended to provide exemption to site formation and clearance, excavation, earth moving and demolition, which exactly are the kind of activities assigned to the appellant, when provided to any person by any other person in the course of construction of roads, dams, etc., there was a specific exemption available for the activities. Therefore, in the absence of any specific exemption available for the activities being performed by the appellant in the post Negative List regime, their activities cannot be considered for coverage under S.No.12(d) of Exemption Notification 25/2012. As far as the issue of contractor and sub-contractor is concerned, this Bench, in the case of Akash Engineering Services Vs CCT, Visakhapatnam-I [ 2023 (12) TMI 1305 - CESTAT HYDERABAD] has dealt with the liability to pay Service Tax even when the main contractor has discharged the entire Service Tax on the project value and held, inter alia, that even sub-contractor is required to discharge the Service Tax irrespective of whether the main contractor has discharged the entire Service Tax or otherwise in respect of entire activities being provided by them and if the service provided by the sub-contractor otherwise amounts to provision of service. Whether the activities undertaken by the sub-contractor can be considered as works contract within the definition of WCS under Finance Act, 1994, in view of the factual matrix and material on record? - If the services are considered as WCS, then whether they will be entitled for exemption under S.No.29(h) of the said notification? - HELD THAT:- Holistically evaluating the terms and conditions and the scope of work awarded to the appellant by the Contractor, the same would not be covered within the expression by way of construction of dam in the given factual matrix. It is also obvious that despite pleading that they have discharged VAT there is no evidence on record to suggest except for certain deductions made by the Contractor from their bill on account of VAT, to prove that there was transfer of property while executing the site formation activities. Apparently, it appears that they were getting certain reimbursements on account of VAT paid on lubricants, spares, explosives, etc., from the Contractor. However, even if the appellants are claiming that VAT has been paid on lubricants, spares, etc., the definition of WCS would entail that they were otherwise required to transfer the property in goods to the Contractor or recipient for it to be covered within the definition of WCS. Under the VAT laws, when there is a deemed sale, the VAT is leviable unless otherwise exempted. In this case, there is no evidence adduced by the appellant that they had discharged any VAT on the services/activities performed by them to their Contractor or it was otherwise exempted - The activities are more in the nature of service of site formation, etc., as held by the department. Therefore, on this count also, they would not be eligible for exemption under S.No.29(h) of the Notification 25/2012. Extended period of limitation - HELD THAT:- In this case, there is no ground adduced by the Appellant that they had bonafide belief of their being not liable to Service Tax during the material time nor they have produced any evidence to suggest that they had sought any clarification from the department regarding leviability of Service Tax, etc., in respect of the activities being carried out by them. In fact, even at a subsequent stage, they have been taking multiple grounds to substantiate their claim that Service Tax is not leviable on these grounds. Therefore, the appellants were not sincere about finding out their tax liability and especially when they are engaged in work at such a large scale. Therefore, in the facts of the case, there are no reason to interfere with the observations of the Adjudicating Authority justifying the invocation of the extended period. There are no infirmity in the Order passed by the Adjudicating Authority and the same is sustained - appeal dismissed.
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2024 (12) TMI 1242
Violation of principles of natural justice - Submissions made in the miscellaneous application were not raised before the authorities below - requirement to consider the additional grounds raised now - Liability of corporate body to discharge the service tax liability on legal services availed by engaging advocates and paid legal fees for the period from 1.7.2012 - Reverse Charge Mechanism - Submissions made in the miscellaneous application were not raised before the authorities below. HELD THAT:- From the order of the Adjudicating Authority, it is found that the appellant was represented by Shri P. Kulasekaran, Ld. Advocate who attended the personal hearing on 13.01.2022 and he reiterated that the decision be taken based on the decision of the Delhi High Court judgement in the case of DELHI TAX BAR ASSOCIATION AND ANOTHER VERSUS UNION OF INDIA [ 2013 (4) TMI 77 - DELHI HIGH COURT] . No other submission was made by the Ld. Counsel for the appellant and accordingly, the order confirming the demand was passed. The appellant challenged the said order and filed the appeal on 01.4.2022, however, when the appeal was listed for hearing none appeared on behalf of the appellant instead a letter was submitted whereby they agreed to discharge the service tax liability and also deposited the aggregate amount towards the confirmed demand and penalties. In view of the stand taken by the appellant before the Adjudicating Authority as well as before the Commissioner (Appeals), it is evident that they had virtually accepted the service tax liability. All the referred submissions which are now being sought to be made in the miscellaneous application were not raised before the authorities below and hence there is no finding on them. The appellant accepts that they are certainly in the nature of new grounds, however since they are purely questions of law, there is no bar in considering the same. However, it is opined that though the issue now being raised are purely on legal grounds yet the department should get enough opportunity to place on record the submissions in support thereof and contest the same. As noticed earlier, the matter before the authorities below has proceeded at the behest of the appellant on the footing that the matter was covered by the decision of the Delhi High Court in DELHI TAX BAR ASSOCIATION AND ANOTHER VERSUS UNION OF INDIA [ 2013 (4) TMI 77 - DELHI HIGH COURT] and accordingly, the appellant has accepted its liability towards service tax in writing and thereafter discharged the said liability by depositing the amount towards the confirmed demand. Conclusion - Keeping in view the principles of natural justice which equally applies in favour of the department, in the interest of justice it would be fair to remand the matter to the Adjudicating Authority to consider the additional grounds which the appellant has raised now and record the findings thereof - the matter is remanded to the Adjudicating Authority to consider afresh on merits - appeal allowed by way of remand.
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2024 (12) TMI 1241
Non-payment of service tax - income from renting out immovable properties - whether the demand of service tax under the category of Renting of Immovable Property service on the appellant is sustainable or not? - HELD THAT:- It is found that in a similar case this Bench in the case of M/S. THE COMMISSIONER VERSUS COMMISSIONER OF GST AND CENTRAL EXCISE, CHENNAI III AND M/S. PALANI MUNICIPALITY VERSUS COMMISSIONER OF GST AND CENTRAL EXCISE, MADURAI [ 2024 (6) TMI 767 - CESTAT CHENNAI] has considered the decisions of jurisdictional High Court in the case of CUDDALORE MUNICIPALITY VERSUS THE JOINT COMMISSIONER OF GST CENTRAL EXCISE, THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE SERVICE TAX AND VIRUDHACHALAM MUNICIPALITY VERSUS THE ASSISTANT COMMISSIONER, OFFICE OF THE ASSISTANT COMMISSIONER OF GST AND CENTRAL EXCISE, CUDDALORE [ 2021 (4) TMI 500 - MADRAS HIGH COURT] , GV. MATHESWARAN VERSUS THE UNION OF INDIA AND OTHERS [ 2015 (3) TMI 391 - MADRAS HIGH COURT] and the subsequent decision in the case of ST. THOMAS MOUNT CUM PALLAVARAM CANTONMENT BOARD VERSUS ADDITIONAL COMMISSIONER, COMMISSIONER OF GST AND CENTRAL EXCISE, CHENNAI [ 2023 (4) TMI 1024 - MADRAS HIGH COURT] and the remanded the case to the file of AA. The Hon ble Court in the case of St. Thomas Mount Cum Pallavaram Cantonment Board after referring to the above conflicting decisions, held it proper to remand the matter back to the file of original authority. It is deemed proper to set aside the impugned order and remand the matter back to the file of original authority who shall adhere to the directions given by the Hon ble High Court in the case of St. Thomas Mount Cum Pallavaram Cantonment Board and then pass a de novo order in accordance with law. Appeal disposed off by way of remand.
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2024 (12) TMI 1240
Exemption from service tax on services provided by the appellant for government and its agencies as per N/N. 25/2012 dated 28.06.2012 - work of fixing and laying of the pipelines for water supply and drainage to Surat Municipal Corporation and Ors. HELD THAT:- From the facts of the matter, it can be seen that the appellant has been provided services of lying down the water supply pipelines and sewerage discharged pipeline etc. for Surat Municipal Corporation which is a statutory body and not a profit making organization, the services provided by SMC are of non commercial nature and the water pipeline which have been laid by the respondent assessee for the Surat Municipal Corporation are for non commercial purpose. The provisions of the N/N. 25/2012-ST dated 20.06.2012 under serial no. 12E and Serial No. 25A are fully applicable applicable towards activity undertaken by the respondent assessee and therefore fall under the category of the exempted services. In view of the above decision of the Gujarat High Court in BMS Projects Pvt Ltd vs Commissioner of Central Excise-Surat [ 2017 (9) TMI 1386 - GUJARAT HIGH COURT] and as well as by perusal of the mega N/N. 25/2012 dated 20.06.2012. There are no doubt that the activity undertaken by the respondent assessee falls under the category of exempted services. Since the facts in the present appeal are similar to the one which have been decided in the above cited decision of the Hon'ble Gujarat High Court. The appeal filed by the revenue does not have any merit, therefore the same is set aside. Appeal dismissed.
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Central Excise
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2024 (12) TMI 1239
Recovery of the excess availed credit along with interest and for imposing penalty - breach of Rules 4 and 9 of the Cenvat Credit Rules 2004 (CCR 2004) - suppression of facts or not - extended period of limitation - HELD THAT:- This is a case where the appellant had irregularly availed CENVAT credit by taking double credit on the same invoice and also by taking credit over and above what is specified in the invoice input. They had thus breached Rules 4 and 9 of the Cenvat Credit Rules 2004 (CCR 2004) and had committed a blame worthy act. The excess credit was recoverable under Rule 14 of CCR 2004. Interest and penalty - HELD THAT:- The appellant has reversed the credit even before issue of SCN and had sufficient credit balance and had not utilised such credit for payment of duty as verified and stated by the Ld. Adjudicating Authority in the OIO. In such circumstances no interest was payable by them as per the ratio of the Hon ble Karnataka High Court judgment in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] - Considering that the unit is a public sector unit and that the excess credit was not availed a lenient view is called for. In the facts and circumstances of the case, the interest demanded and the fine imposed is set aside. Extended period of limitation - HELD THAT:- It is settled law that to invoke willful suppression, fraud etc, there must be some positive act which betrays a negative intention of willful default from the side of the assessee to establish a charge of suppression, fraud etc. and not merely an error made. No such act has been shown in the impugned order. The impugned order is modified on the above terms and the interest and penalty set aside - Appeal allowed.
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2024 (12) TMI 1238
Denial of CENVAT Credit - duty paying documents - case of Revenue is that appellant has availed input service tax credit on the basis of invoices which are not the prescribed documents as per Rule 4(7) and Rule 9 of Cenvat Credit Rules, 2004 (CCR) as well as Rule 4(a) of Service Tax Rules, 1994 - denial of credit also on the ground that challans deposited against C AG report based whereupon the said Cenvat credit has been availed, are not the prescribed documents as per Rule 9(1)(bb) of CCR, 2004 - Extended period of limitation. The denial of Cenvat credit of Rs. 16,12,208/- on the ground that the invoices issued by the input service providers are not the valid documents - HELD THAT:- Cenvat credit cannot be denied merely on the ground that the documents does not contain all the particulars required to be contained in the invoice when there is no dispute regarding receipt of service - Reference made to decision in the case of Kemwell Biopharma Pvt. Ltd. Versus Commr. of C.Ex. ST, LTU, Bangalore [ 2016 (6) TMI 229 - CESTAT BANGALORE] . In this case, the Tribunal hold that mere non-mentioning of registration number of service provider on invoices is only a procedural lapse with regard to duty paying documents. In absence of any evidence of services not having been received or utilized, substantive benefit of credit, not deniable for such procedural lapse. In the present case also there is no dispute regarding receipt of input services as well as tax paid on such services. The only allegation is that the address is wrongly mentioned on the invoices. Admittedly, the appellant is Input Service Distributor. Resultantly, the substantive benefit of credit provided in Rule 3 of CCR cannot be denied by resorting to procedural requirements under Rule 4(7) and Rule 9(2) of CCR Rules. It is also an apparent fact on record that those suppliers had mentioned the incorrect address but once the said discrepancy was noticed the service providers rectified the mistake and issued the supplementary invoices by mentioning the correct address of the appellant. The supplementary invoices are also on record. It is held that Cenvat credit availed on such invoices has rightly been availed - the order directing reversal of Cenvat credit is therefore, held liable to be set aside. The denial of Cenvat credit of an amount of Rs. 32,95,447/- alleging that the challans deposited against C AG report based whereupon the said Cenvat credit has been availed, are not the prescribed documents as per Rule 9(1)(bb) of CCR, 2004 - HELD THAT:- Apparently the entire liability of service tax was paid by the appellant under Reverse Charge Mechanism vide the said challans pursuant to C AG audit report. The said challans evidencing the payment of service tax are enclosed on record. Once the payment of tax is made under RCM, it is Rule 9(1)(e) as shall be relevant. Rule 9(1)(bb) of CCR which provides that Cenvat shall be taken by manufacturer/service provider/input service distributor on the basis of supplementary invoices/bill or challan issued by the provider of output service, except where the additional amount of tax be recovered from the provider of service on account of non-levy or non-payment or short levy or short payment by reason or fraud or collusion or suppression of facts with intent to evade the payment of service tax. On the other hand, Rule 9(1) (e) CCR provides that Cenvat credit shall be taken by the manufacturer or the provider of output service or input service distributor, inter alia, on the basis of challan evidencing payment of service tax, by the service recipient as the person liable to pay service tax. Perusal of both these provisions when read in light of the fact that the impugned amount of service tax was paid by the appellant under Reverse Charge Mechanism it becomes clear that Rule 9(1)(bb) shall not be applicable - it is held that department has wrongly invoked Rule 9(1)(bb) while denying the Cenvat credit of Rs. 32,95,447/- confirmation of said demand is, therefore, liable to be set aside. Extended period of limitation - HELD THAT:- Admittedly the appellant has been regularly filing his returns mentioning the amount of Cenvat credit availed. There can be no possibility of any suppression as is alleged by the department. It is also an admitted fact that the service tax was duly been paid under forward or as well as under Reverse Charge Mechanism vis- -vis issue No. (1) and issue No. (2) respectively. The question of any evasion of tax is, therefore, absolutely redundant - no evidence is produced by the department for proving any positive act of the appellant which may amount to suppression - there was no occasion to invoke the extended period of limitation. The impugned order is hereby set aside. Consequent thereto, the appeal is hereby allowed.
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2024 (12) TMI 1237
Levy of penalty u/r 209A can be imposed on partnership firm - HELD THAT:- Reliance placed in the case of Commissioner v Woodmen Industries [ 2004 (7) TMI 637 - SC ORDER] where it was held that ' The Tribunal further relying on an earlier order in the case of Aditya Steel Industries [ 1996 (2) TMI 232 - CEGAT, MADRAS] held that penalty under Rule 26 of Central Excise Rules, 2002 was imposable only on a person and not on a firm.' Thus, penalty under 209A which is pari materia of Rule 26, penalty cannot be imposed on partnership firm. As regard the penalty on the partner, it is found that it is settled by the Hon ble Gujarat High Court in the case of Jay Prakash Motwani [ 2009 (1) TMI 501 - GUJARAT HIGH COURT] that in case of partnership firm penalty on the partner cannot be imposed. Accordingly, penalties on both the appellants are not sustainable only on the above finding. The penalties are set aside - appeal allowed.
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2024 (12) TMI 1236
Benefit of exemption from excise duty on RMC manufactured at site under Sr. No. 144 of Notification No. 12/2012-CE dated 17.03.2012, for the period prior to amendment dated 01.03.2016 - Invocation of extended period of limitation. Whether benefit of exemption from excise duty is available on RMC manufactured at site under Sr. No. 144 of N/N. 12/2012-CE dated 17.03.2012, for the period prior to amendment dated 01.03.2016. i.e. when the exemption was granted to Concrete Mix manufactured at the site of construction ? - HELD THAT:- This issue was carried in litigation in various judgments and there were conflicting issues on this issue. Later on the Hon ble Apex Court in the case of L T Limited [ 2015 (10) TMI 612 - SUPREME COURT ] finally decided the matter that the exemption is available to only ready mix concrete and not the concrete mix. It is also observed that subsequently the Government has brought the exemption also for concrete mix, vide Notification No. 12/2012-CE dated 17.03.2012 under Serial No. 144. This shows that there was an ambiguity about the exemption on concrete mix vis a vis ready mix concrete. Considering all these fact and applying the judgments, learned Commissioner (Appeals) has held the demand being time barred. Therefore, there are no infirmity in setting aside the demand on the ground of time bar by Commissioner (Appeals) in the impugned order. Extended period of limitation - HELD THAT:- On the identical issue Tribunal in the case of Reliance Industries Limited [ 2022 (3) TMI 400 - CESTAT AHMEDABAD ] also held the demand as time bar. Thus, the ratio of the above judgment is directly applicable on the issue of demand being time bar. Accordingly, the learned Commissioner (Appeals) has rightly set aside the demand of extended period. Accordingly the impugned order to the extent it set aside the demand for the extended period is upheld. Revenue s appeal is dismissed.
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2024 (12) TMI 1235
Reversal of CENVAT Credit - liability to pay an amount equal to 6% of the value of exempted goods (electricity) under Rule 6(3)(i) of the CENVAT Credit Rules, 2004 - common inputs used for generation of electricity and supply of the same to their sister concerns - electricity falls under the category of exempted goods or not - extended period of limitation. HELD THAT:- Hon ble Karnataka High Court in case of Commissioner Central Excise and Service Tax, Banglore Vs. Bill Force Pvt Ltd [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] has held that the once the CENVAT Credit has been reversed by the assesse, it amounts to not taking of the CENVAT Credit on inputs. The learned Adjudicating Authority has not quantified the amount of the duty which is to be recovered from the appellant and therefore, same is not sustainable on the merit The appellant was entitled for CENVAT Credit of common inputs used for generation of electricity and supply of the same to their sister concerns. The impugned Order-In-Original is not sustainable on the merits on this issue and therefore the same is set aside - appeal allowed.
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CST, VAT & Sales Tax
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2024 (12) TMI 1234
Sale u/s 2 (g) (iv) CST Act or not - transfer of right to use - hiring of helicopters - transfer of effective control and possession and right to use the helicopters to its customer - Deemed Sale or not - HELD THAT:- On a consideration of the contractual stipulations, it becomes apparent that while the appellant was obliged to place a helicopter or an equivalent model at the service of the A N Administration, the right to operate and maintain remained with the appellant. The helicopter was to be maintained, flown and operated by the appellant. The appellant was required to ensure that the requirements of the A N Administration were duly met. However, at no point of time was the helicopter placed in the hands of the latter to be operated as it thought fit. The pilot and crew who actually worked the helicopter were to be provided by the appellant. It becomes evident that there was no transfer of dominion or control of the helicopter to the A N Administration. This was essentially an agreement in terms of which the A N Administration acquired an exclusive medium of transportation as opposed to an absolute right over an aircraft, helicopter or means of conveyance which could be said to be under its dedicated and undivided control. There is an occasion to notice a decision of recent vintage rendered by the Supreme Court in Commissioner of Service Tax vs. Adani Gas Ltd. [ 2020 (8) TMI 789 - SUPREME COURT] . As the Supreme Court succinctly explained in Adani Gas, the key elements which are liable to be found to exist in order to qualify what is spoken of in Article 366 (29A) (d), are a transfer of a right of possession as well as effective control being conferred upon the transferee. It is these precepts on the basis of which the contractual stipulations may now be examined. There was no contractual relationship that existed between those operators and staff on the one hand and the A N Administration on the other. Additionally, the obligation to keep the equipment insured was also one which stood placed upon the appellant. There was also no transfer of permits and licenses which were necessarily required in order to undertake the operations contemplated under the agreement. Those permits and licenses undisputedly remained in the hands of the appellant. The Supreme Court in Aggarwal Bros. [ 1998 (9) TMI 532 - SUPREME COURT] had on facts found that there was a complete transfer of shuttering for consideration and the same being exclusively placed in the hands of the hirer to be used and utilized as it thought fit. Article 366 (29A) (d) is not concerned with delivery of goods for use but envisages the levy of a tax on the transfer of a right to use goods. It proceeded further to explain that clause (d) of Article 366(29A) cannot be placed in the same category as that of bailment where goods are left in the possession of the bailee solely for the purposes of use on a hire basis. The conclusions rendered by the Tribunal cannot be suatained - appeal allowed.
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2024 (12) TMI 1233
Levy of central sales tax on movement of goods from the manufacturing unit of the appellant situated in the State of Rajasthan to its depots in the State of Bihar and the State of Jharkhand - inter-state supply of goods or inter-state stock transfers? - HELD THAT:- A perusal of the facts of these four appeals and the facts of the fourteen appeals decided by the Tribunal on 21.10.2024 [ 2024 (10) TMI 1124 - CESTAT NEW DELHI] clearly show that they are similar. The Liquor Sourcing Policy framed by the State of Bihar and the Liquor Policy framed by the State of Jharkhand which came up for consideration in the decided appeals has also come up for consideration in these four appeals. The Master Agreement entered into between the appellant and the Corporation at Patna and the Master Agreement entered into between the appellant and the Corporation in Jharkhand are identical. Demand set aside - Appeal allowed.
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Indian Laws
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2024 (12) TMI 1232
Interpretation of Section 52A of the Narcotic Drugs and Psychotropic Substances Act, 1985 - mis-interpretation of the provision without recording the findings as mandated in Section 37 of the said Act - HELD THAT:- Section 52A was inserted only for the purpose of early disposal of the seized contraband drugs and substances, considering the hazardous nature, vulnerability to theft, constraint of proper storage space etc. There cannot be any two opinions on the issue about the early disposal of the contraband drugs and substances, more particularly when it was inserted to implement the provisions of International Convention on the Narcotics Drugs and Psychotropic Substances, however delayed compliance or non-compliance of the said provision by the concerned officer authorised to make application to the Magistrate could never be treated as an illegality which would entitle the accused to be released on bail or claim acquittal in the trial, when sufficient material is collected by the Investigating Officer to establish that the Search and Seizure of the contraband substance was made in due compliance of the mandatory provisions of the Act. It is significant to note that as per Section 54 of the said Act, the courts are entitled to presume, unless and until the contrary is proved that the accused had committed an offence under the Act in respect of any narcotic drug or psychotropic substance etc. for the possession of which he failed to account satisfactorily. Therefore, unless such statutory presumption is rebutted by the accused during the course of trial, there would be a prima facie presumption that the accused had committed the offence under the Act, if he is found to have possessed the contraband drug and substance, and if he fails to account satisfactorily, as contemplated in the said provision of Section 54. In case of State of H.P. vs. Pirthi Chand and Another [ 1995 (11) TMI 433 - SUPREME COURT] this Court following the observations made by the Constitution Bench in Pooran Mal case [ 1973 (12) TMI 2 - SUPREME COURT] held that ' It would be seen that the organised traffic in contraband generates deleterious effect on the national economy affecting the vitals of the economic life of the community. It is settled law that illegality committed in investigation does not render the evidence obtained during that investigation inadmissible. In spite of illegal search property seized, on the basis of said search, it still would form basis for further investigation and prosecution against the accused. The manner in which the contraband is discovered may affect the factum of discovery but if the factum of discovery is otherwise proved then the manner becomes immaterial.' In State of Punjab Vs. Makhan [ 2004 (2) TMI 663 - SUPREME COURT] , this Court upheld the conviction, where the contraband was recovered during a chance recovery, even though the procedure under Section 52A was not followed. From the above decisions, the position that emerges is that this Court in catena of decisions, has approved the procedure of spot searches and seizures in compliance with the Standing Orders and the Notifications issued by the NCB and the Central Government, and upheld the convictions on being satisfied about the search and seizure made by the officers as per the provisions of the Act and being satisfied about the scientific evidence of F.S.L. reports etc. - The evidence collected during the course of investigation in legal and proper manner and sought to be used in the course of trial with regard to the seized contraband substance could not be simply brushed aside, on the ground of procedural irregularity if any, committed by the concerned officer authorised in making application to the Magistrate as contemplated under Section 52A of the Act. The impugned order based on the inferences and surmises, in utter disregard of the statutory provision of the Act and in utter disregard of the mandate contained in Section 37 of the Act, and granting bail to the accused merely on the ground that the compliance of Section 52A was not done within reasonable time, is highly erroneous and deserves to be quashed and set aside. Since, the High Court has not considered the application of the respondent on merits and has also not considered the mandatory requirement under Section 37(1)(b) of the Act, it is deemed appropriate to remand the case to the High Court for deciding the bail application of the respondent afresh on merits and in accordance with law. The matter is remanded for fresh consideration on merits - appeal allowed by way of remand.
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2024 (12) TMI 1231
Dishonour of Cheque - challenge to order of conviction passed by the Trial Court and affirmed by the Sessions Court for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - authorized signatory of a company falls within the ambit of the expression drawer or not - Meaning of the expression on an account maintained by him used in Section 138 of the NI Act - Scope of the expression any debt or other liability appearing in Section 138 of the NI Act - vicarious liability for the offence said to have been committed by the company. Whether the accused could be said to be covered by the expression account maintained by him as it appears in Section 138 of the NI Act? - HELD THAT:- It is only the drawer of the cheque who can be held liable under Section 138. Section 141 is an exception to this scheme of the NI Act and provides for vicarious liability of persons other than the drawer of the cheque in cases where the drawer of the cheque under Section 138 is a corporate person. The question as to whether a person who was not the drawer of the cheque upon an account maintained by him could be held to be liable for an offence under Section 138 of the NI Act fell for the consideration of this Court in the case of P.J. Agro Tech Ltd. and Others v. Water Base Ltd. [ 2010 (7) TMI 280 - SUPREME COURT] . The Court construed the provision strictly and answered the question in the negative. As per the legislative scheme it is only the drawer of the cheque who is sought to be made liable for the offence punishable under Section 138 of the NI Act. Thus, the next question that requires consideration is whether a Director of a company, who is also the authorised signatory, to sign and issue cheques on its behalf could be said to be the drawer of a cheque drawn upon the bank account held in the name of the company. In other words, whether such an authorised signatory could be said to maintain the bank account upon which the dishonoured cheque has been drawn for the reason that such a person has the authority to enter into transactions using the bank account of the company and also look after the day-to-day functioning of the bank account of the company. Whether authorized signatory of a company falls within the ambit of the expression drawer ? - HELD THAT:- This Court in one of its recent decisions in the case of Shri Gurudatta Sugars Marketing (P) Ltd. v. Prithviraj Sayajirao Deshmukh and Others [ 2024 (7) TMI 1308 - SUPREME COURT] had the occasion to consider the issue of whether the authorised signatory of a company who had signed a cheque drawn on the bank account of the company and which got dishonoured subsequently could be held to be liable for the payment of interim compensation under Section 143A of the NI Act. This Court while answering the issue in the negative, applied the doctrine of separate corporate personality and held that it is only the drawer of the cheque who could be held to be liable for the payment of interim compensation under Section 143A of the NI Act and the authorised signatory of a company cannot be said to be the drawer of the cheque. Meaning of the expression on an account maintained by him used in Section 138 of the NI Act - HELD THAT:- Any delegation of authority to manage the account does not alter the intrinsic relationship existing between the account holder and the banker as envisaged under the NI Act. Corporate persons like companies, which are mere legal entities and have no soul, mind or limb to work physically, discharge their functions through some human agency recognised under the law to work. Therefore, if some function is discharged by such human agency for and on behalf of the company it would be an act of the company and not attributable to such human agent. One such instance of discharge of functions could be the authority to manage the bank accounts of the company, issue and sign cheques on its behalf, etc. which may be delegated to an authorised signatory. However, such authorisation would not render the authorised signatory as the maker of those cheques. It is the company alone which would continue to be the maker of these cheques, and thus also the drawer within the meaning of Section 7 of the NI Act. It is not the case of the complainant that the cheque in question was drawn by the accused on a bank account maintained by him, rather the case is that the cheque was issued in discharge of the personal liability of the accused towards the complainant, and hence there was no occasion for it to implead the company as an accused. Scope of the expression any debt or other liability appearing in Section 138 of the NI Act - HELD THAT:- Section 138 of the NI Act does not envisage that only those cases where a cheque issued towards the discharge of the personal liability of the drawer towards the payee gets dishonoured would come within the ambit of the provision. The expression of any debt or other liability appearing in Section 138 when read with the Explanation to the provision is wide enough to bring any debt or liability which is legally enforceable within its fold. Thus, the requirement under the provision is that the debt or any other liability has to be legally enforceable and the emphasis is not on the existence of such debt or other liability between the drawer and the payee. A number of decisions of this Court have clarified that even those cases where a person assumes the responsibility of discharging the debt of some other person, and in furtherance thereof draws a cheque on an account maintained by him, which subsequently gets dishonoured upon being presented before the drawee, would be covered by Section 138 if the payee is able to establish that there was some sort of an arrangement by way of which the debt was assumed by the drawer. Section 141 of the NI Act - HELD THAT:- It is the drawer Company which must be first held to be the principal offender under Section 138 of the NI Act before culpability can be extended, through a deeming fiction, to the other Directors or persons in-charge of and responsible to the Company for the conduct of its business. In the absence of the liability of the drawer Company, there would naturally be no requirement to hold the other persons vicariously liable for the offence committed under Section 138 of the NI Act. The High Court while rejecting the contention of the petitioner therein, adverted to the object of Section 138 of the NI Act to hold that the authorized signatory could be said to be the drawer of the cheque as he was maintaining the account held in the name of the proprietorix concern and thus could be held liable under Section 138 of the NI Act. In the case on hand, the accused was prosecuted in his individual capacity and not in his capacity of being the Director of the Shilabati Hospital Pvt. Ltd. Although it is undisputed that the accused signed the cheque in question, yet as the cheque was drawn not on an account maintained by him with a Banker but was issued on an account maintained by the hospital, the requirement of Section 138 of the Act cannot be said to have been complied with - The High Court rightly held that in the absence of the principal offender having been arraigned as an accused, prosecution for the commission of an offence under Section 138 of the NI Act could not have proceeded against the accused. It is trite law that an act may constitute an offence under more than one statute. The encashment of the cheque for an amount of Rs 7,00,000/- issued by the complainant in favour of the accused stood proved during the course of the trial. Further, the conduct of the accused in not replying to the statutory notice of dishonour of cheque issued by the lawyer for the complainant and in not taking the plea of the cheque having been drawn on the account of the company in his capacity as a Director during the course of trial undoubtedly raises questions as regards his dishonest intention in not repaying the amount borrowed by him from the complainant. Appeal dismissed.
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2024 (12) TMI 1230
Dishonour of Cheque - Seeking quashing of the summoning order - challenge to proceedings under Section 138 of the NI Act - vicarious liability of petiitoner - whether proceedings under Section 138 of the NI Act can continue against individuals after the commencement of the CIRP proceedings against the accused company? HELD THAT:- It is evident that insolvency proceedings against the company were initiated under the provisions of the IBC, and an order under Section 14 of the IBC was issued on 31.10.2019. The IBC explicitly provides that when a corporate debtor is undergoing proceedings before the adjudicating authority (NCLT), the control and management of the corporate debtor are vested in the Interim Resolution Professional. It is undisputed that the cheques in question were dated 15.01.2020 and 15.03.2020, respectively. However, the IRP was appointed on 31.10.2019, prior to these dates. Consequently, the account was blocked due to the order issued by the NCLT, and this cannot be attributed to the account holder. As a result of the NCLT s order, the authority and control of the account holder over the account ceased to exist. A coordinate bench of this Court in Govind Prasad Todi Anr. V. Govt. of NCT of Delhi Anr. [ 2023 (6) TMI 534 - DELHI HIGH COURT ], quashed the summoning order in similar circumstances, observing that once a moratorium under Section 14 of the IBC is in effect, proceedings under Section 138 of the NI Act against the corporate debtor cannot continue. It is reiterated that the cheques in question were dishonoured for the reason Drawer Signature to operate account not received . In view of this Court, the ingredients for constituting the offence punishable under Section 138 of the NI Act occurred post imposition of moratorium. The petitioners herein therefore cannot be held vicariously responsible for dishonour of cheque. The impugned order along with any consequential proceedings arising therefrom, is quashed - Petition allowed.
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2024 (12) TMI 1229
Seeking declaration of the arrest of the petitioner as illegal, arbitrary and void - serious accusations of mental, physical, and sexual abuse against the petitioner and his parents, implicating them in acts of coercion and complicity - whether the grounds for the petitioner s arrest were duly communicated in compliance with Section 50 of the Cr.P.C. and the Supreme Court's judgment in Pravir Purkayastha [ 2024 (5) TMI 1104 - SUPREME COURT] ? HELD THAT:- The Courts have time and again deprecated the practice of filling up columns in proforma indicating the formal reasons for which the accused was being arrested. It is also pertinent to note that Section 50 Cr. P.C. uses the word forthwith. which implies that grounds for such arrest have to be communicated at the time of the arrest. This requirement is designed to ensure that the arrested individual is promptly made aware of the reasons for their detention, thereby safeguarding their legal rights. Bare perusal of the judgments of Joginder Kumar [ 1994 (4) TMI 385 - SUPREME COURT] and Siddharth [ 2021 (8) TMI 977 - SUPREME COURT] makes it clear that the Indian Supreme Court has always been very sensitive and conscious about the individual s rights. The jurisprudence which is being evolved is that the police may not arrest a person only because it s permissible, the arrest should be justified also and must have grounds of arrest communicated forthwith. It is a settled proposition that the absence of specific grounds of arrest violates statutory and constitutional rights under Section 50 of Cr.P.C. and Article 22(1) of the Constitution. Any person has a fundamental and a statutory right to be informed about the grounds of arrest in writing and a copy of such written grounds of arrest have to be furnished to the arrested person as a matter of course and without exception at the earliest. The purpose of informing to the arrested person the grounds of arrest is salutary and sacrosanct inasmuch as this information would be the only effective means for the arrested person to consult his advocate; oppose the police custody remand and to seek bail. It is no longer res integra that grounds of arrest must be communicated in writing to the arrested individual expeditiously. Providing the grounds of arrest to the person being arrested is of utmost sanctity and significance. This information serves as the fundamental basis for the arrested individual to seek legal advice, challenge the remand, and apply for bail - In the context of present case, it is pertinent to mention that Section 50 Cr. P.C. uses the word forthwith . The dictionary meaning of the word forthwith as defined in the Shorter Oxford English dictionary on historical principles, fifth edition, volume - 01 A-M is (1) Along with, at the same time; and (2) Immediately, at one, without delay. The court makes it clear that the present order been passed for release of the petitioner on the technical non-compliance of Section 50 Cr.P.C. This court has not gone into merits of the case. The prosecution/victim shall all the necessary liberties to proceed with the investigation and take all the steps for smooth investigation of the case in accordance with law. This court has examined facts of this case only in perspective of Section 50 Cr.P.C., which is akin to Section 47 of BNSS, 2024. The present petition along with pending applications stands disposed of.
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