Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 4, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Articles
News
Notifications
Highlights / Catch Notes
GST
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Violation of principles of natural justice - non speaking SCN - If petitioner is of the view that certain additional document/material is required for filing an effective reply to the same, then petitioner could have very well demanded the same from the Proper Officer by disclosing the relevancy of such evidence/material to the issue involved - no such representation was made by the petitioner - writ petition dismissed - HC
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Demand of interest payable u/s 50 (1) of the CGST/SGST Act, 2017 - GST returns could not be filed due to cancellation of GSTIN of the petitioner - petitioner can not be said to have made any default in not remitting the tax inasmuch as he could not have remitted the tax without there being a valid GSTIN - it is highly inequitable to impose interest - HC
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Blocking of ITC - contravention to Rule 86A - If the letter dated 02.12.2022 is neither an order under Section 86A, nor an order under Section 74 of the Act, in these factual circumstances, it is difficult to sustain the said letter dated 02.12.2022. If at all the same is the notice or the order of blocking the ITC account of the petitioner, the same is clearly in contravention to the statutory provisions governing the field of blocking of availment of ITC. - HC
Income Tax
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Addition u/s 68 - unexplained credits - The burden to prove otherwise rested squarely on the revenue authorities. Unless the initial onus had been discharged by leading some evidence that may have led itself to the conclusion that the investment was never made, the burden that was cast on the revenue remained undischarged. - HC
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Non deposit of TDS by employer - credit of TDS denied - recovery from employee for default in TDS deposits - The petitioner having accepted the salary after deduction of income tax at source had no further control over it in the sense that thereafter it was the duty of his employer acting as tax collecting agent of the revenue - No recovery to be made from employee - HC
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Offence punishable u/s 276CC - non filing of income tax return - on receipt of notice u/s 276CC petitioner filed his income of return, accordingly, the petitioner had paid Advance Tax, TDS, TCS, Self Assessment Tax - the proviso (ii) b of Section 276CC comes for rescue of the petitioner from the rigor of the prosecution under Section 276CC of the Income Tax Act. - HC
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Validity of reopening of assessment u/s 147 - Reasons to believe - The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission. - AT
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Black money - levy of penalty - undisclosed investment in foreign entity - No doubt the Schedule “FA” and BMI Act, have been introduced and enacted for checking the economic offenders, tax evaders and for analyses of information qua foreign investment/income by using artificial intelligence and Schedule “FA” applicable specifically to the Assessee(s) whose accounts are not required to be audited or if audited but books of account not filed along with the return of income. However, in each and every case, the penalty as prescribed in section 43 of the Act, cannot be imposed. - AT
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Capital gain computation - deduction of expenses for removal of encumbrances and indexation thereon - The legal remedy for removal of the encroachments, at times, is quite slow and it takes many years through such course. The land owners are thus compelled to pay compensation by force of circumstances to obtain clean possession for sale/use. One cannot put blinkers on such unstated but prevalent eco-system. - Claim of the assessee allowed - AT
Customs
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Compounding of offences u/s 137(3) of Customs Act - Rate for fixing the compounding - Once when there is an upper cap limit of 5%, there was no power conferred with the authorities concerned with which the said amount could have been raised. - HC
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Valuation of imported goods - enhancement of value - Data taken from the Zuaba Portal and authenticity of the same is not known - Since the data of Zuaba is not authentic, there is no any other evidence to doubt the value declared by the appellant. The department has not discharged the burden in rejecting the declared value. - AT
Service Tax
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CENVAT Credit - ownership of inputs / goods - Since, there is no restriction or embargo created in the statute, for establishment of ownership of the goods, which are used for the provision of the output service, the impugned orders passed by the learned adjudicating authority cannot be sustained on such grounds. - AT
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Extended period of limitation - Demand based on Form 26AS (TDS Statement) - The Notice in this case was issued on 08.09.2021, demanding service tax for the period 2016-17. The Department has not adduced any positive evidence to show malafide intention or mens rea for evasion of Service Tax on the part of the Appellant. Thus, the extended period cannot be invoked in this case to demand service tax on the Appellant. - AT
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Scope of remand order - Refund of service tax - It is clear that the Assistant Commissioner travelled beyond the remand order as he proceeded to examine whether the appellant is entitled to refund or not on merits when this issue had been settled by the Commissioner (Appeals) in the order dated 22.11.2016 and this was not a matter which was remanded to the Assistant Commissioner. - Refund allowed - AT
Central Excise
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Refund - amount paid by the appellant under protest - the principal unjust enrichment does not apply to cases where duty has been paid to protest - unjust enrichment does not apply to the refund claim in the impugned appeal. - AT
Case Laws:
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GST
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2023 (12) TMI 73
Violation of principles of natural justice - non speaking SCN - insufficient for the petitioner/assessee to prepare an effective reply and defend himself - HELD THAT:- It is obvious that the impugned show-cause notice contains enough material to enable petitioner/assessee to submit an effective reply so as to prevent the said show-cause notice from being sacrificed at the alter of principles of natural justice. The details in the show-cause notice satisfy the per-requisites prescribed in Form GST DRC -01 which is statutory in nature. Thus, the contents of the show-cause notice cannot be termed as deficient or inadequate preventing the petitioner/assessee to prepare and file an effective reply and defend himself before the Proper Officer. If petitioner is of the view that certain additional document/material is required for filing an effective reply to the same, then petitioner could have very well demanded the same from the Proper Officer by disclosing the relevancy of such evidence/material to the issue involved - However, what is noticeable in this case is that no such representation was made by the petitioner pursuant to the show-cause notice and, therefore, it is presumed that petitioner has no grievance against the show-cause notice. This Court sees no reason to interfere in this matter especially in view of the non-availed statutory remedy of appeal u/S 107 of the M.P. GST Act, 2017 - petition dismissed.
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2023 (12) TMI 72
Maintainability of petition - availability of alternative remedy - waiver of demand alongwith interest and penalty u/s 74 of the CGST Act, 2017 - penalty u/s 122(1)(vii) of the CGST Act, 2017 confirmed - HELD THAT:- Learned counsel for the parties are ad-idem that a statutory remedy of an appeal is available to the petitioner to assail the aforesaid order passed by the adjudicating officer, as provided under Section 107 of the CGST Act - petitioner would submit that the effect of the order-in-original is that the amounts would be now required to be refunded to the petitioner being the amount of input tax credit paid by the petitioner - Respondent would not dispute such consequences which would fall from the order passed by the adjudicating officer. It is stated by the petitioner that they intend to challenge the penalty of Rs. 20,63,46,994/- imposed by the said order passed by the adjudicating officer. Considering the subsequent developments, further adjudication of the present proceedings is not called for. The petition can be disposed of by permitting the petitioner to avail the alternate remedy of an appeal to assail the order-in-original dated 17 November, 2023.
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2023 (12) TMI 71
Violation of principles of natural justice - no hearing granted to the petitioner - bad and illegal impugned order - demand of tax alongwith interest and penalty - HELD THAT:- Firstly, it is seen that the petitioner had sufficiently indicated that the petitioner intended that a personal hearing be granted to the petitioner. If that be so, merely because the petitioner did not appear on 7 July, 2023, in the absence of a valid reason, it should not have been presumed by the State Tax Officer that the petitioner is not interested for hearing - it is also found that no written notice in that regard was issued adjourning the proceedings - also the impugned order does not consider the case of the petitioner even in the reply to the show cause notice as submitted. The interest of justice would require that the petitioner be granted an opportunity of being heard after which an appropriate order be passed by the State Tax Officer in accordance with law - proceedings are remanded to the State Tax Officer to be decided in accordance with law after granting an opportunity of a personal hearing to the petitioner - petition allowed by way of remand.
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2023 (12) TMI 70
Validity of SCN - SCN seeks to fasten a liability for the period when the petitioner was not active - HELD THAT:- In view of the statement made by Mr. Singla (on instruction of Mr. Neeraj Aggarwal, SIO, DGGI, DZU, who is present in Court) that multiple notices have been issued and the highest demand is covered under notice issued to Belz Tech Private Limited, which is registered in Thane, paragraph 7.1 of the Circular dated 09.02.2018 amended by the Circular dated 12.03.2022, as set out above, would clearly be applicable. The petitioner s contention that the Additional / Joint Commissioner of Central Tax, Thane would have no jurisdiction to adjudicate the impugned SCN is, thus, unmerited. Insofar as other contentions are concerned, it is not considered apposite to examine the same in this petition since the matter is at the show cause notice stage, and the petitioner is not precluded from raising such contentions in response to the impugned SCN. Petition disposed off.
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2023 (12) TMI 69
Demand of interest payable under Section 50 (1) of the CGST/SGST Act, 2017 - GST returns could not be filied due to cancellation of GSTIN of the petitioner - HELD THAT:- The petitioner cannot be held responsible for cancellation of the GSTIN on 24.08.2017. The petitioner immediately approached to the GST authorities on 24.08.2017 itself by way of an e-mail bringing into the notice of the authorities about the cancellation of the GSTIN and on such request no action was taken till the petitioner filed petition before this Court, and only in pursuance of the interim order passed by this Court on 21.12.2017 the GSTIN of the petitioner got restored. The petitioner had thereafter, filed return for the months of July, 2017 to December, 2017 and paid tax. Thus, the demand for interest for delay in filing the returns and payment of tax due for the period from July, 2017 to December, 2017, this Court is of the view that the it is highly inequitable to impose interest under Section 50 of the Income Tax Act, 2017 on the petitioner, and petitioner can not be said to have made any default in not remitting the tax inasmuch as he could not have remitted the tax without there being a valid GSTIN. However, if the petitioner had failed to remit the tax after 26.12.2017, within twenty days thereafter, the petitioner would be liable to pay the interest under Section 50 of the CGST/SGST Act, 2017. The impugned order is set aside and the authorities are given liberty to impose fine for delayed payment of GST after 20th day from 26.12.2017 for the period up to December, 2017. for subsequent months, if there is any delay, the petitioner is liable to pay the interest - Petition disposed off.
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2023 (12) TMI 68
Refund of unutilised Input Tax Credit (ITC) - Petitioner s application for refund was allowed in part - rejection of refund on the ground that the services rendered by the petitioner was as an intermediary and did not qualify for export of services - Initiation of contempt proceedings for wilful disobedience - HELD THAT:- The petitioner was constrained to file a writ petition - The respondents again raised an issue in relation to furnishing of FIRCs. It was further stated that the decision of the Appellate Authority is erroneous and the Revenue proposes to file an appeal against the said decision. The said petition was allowed by an order of this Court dated 08.05.2023 and this Court directed the respondent to forthwith disburse the petitioner s claim for refund along with interest, in accordance with law. This Court also held that the deficiency memos issued shall be treated as non est and the Revenue cannot ignore the orders passed by the Appellate Authority on the ground that it proposes to file an appeal. To enable the respondent to give effect to the said order, the petitioner once again filed an application for refund. It appears that the Adjudicating Authority once again commenced the exercise for adjudicating the petitioner s claim and has partly rejected the same. The concerned Adjudicating Authority (Deputy Commissioner, CGST, Uttam Nagar Division) has wilfully failed to implement the order dated 08.05.2023 passed by this Court, which in unambiguous terms directed the concerned authority to disburse the petitioner s claim along with interest, as applicable - Issue notice to show cause as to why contempt proceedings not be initiated against the respondent for wilful disobedience of the order [dated 08.05.2023 in W.P.(C) No. 5722/2023] passed by this Court. List on 18.12.2023.
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2023 (12) TMI 67
Maintainability of appeal - time limitation - appeal dismissed on the ground of delay. The maintainability of the appeal is regulated by paragraph no. 3 of N/N. 53 of 2023- Central Tax, dated 02.11.2023 (S.O. 4767(E)) which require that the admitted tax, interest, fine, fee and penalty arising from the impugned order is paid up along with a sum equal to 12.5% of the remaining amount of tax in dispute arising from the said order subject to a maximum of twenty-five crore rupees; out of which 12.5%, 20% should have been paid by debiting from the Electronic Cash Ledger. HELD THAT:- In the present case, the appeal was filed and was dismissed by the first Appellate Authority. In such circumstances, it is only proper that the appeal be restored to the files of the Authority subject to the condition as per paragraph no. 3 of the Notification being satisfied. The impugned order set aside - assessee is directed to satisfy the aforesaid conditions before the time stipulated in Notification; i.e. 31.01.2024, in which event, the appeal would be taken up and considered on merits - petition allowed.
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2023 (12) TMI 66
Blocking of ITC - non-compliance with the statutory requirements under the CGST Act, 2017 and rules framed therein so far as steps necessary to be initiated prior to blocking of electronic credit ledger under the Rules - contravention to Rule 86A of CGST Rules, 2017 - non-speaking order - violation of principles of natural justice - HELD THAT:- A plain reading of the said notice dated 02.12.2022 would clearly reveal that, the said notice being a notice so far as blocking of the electronic credit ledger of the petitioner under Section 86A of the CGST Act. There was also no mention of the same being an intimation in respect of proceedings drawn under Section 74 of the Telangana State (TS) GST Act, 2017. From plain reading of the contents of letter dated 04.11.2023, it would make it evident that the notice dated 04.11.2023 or for that matter 02.12.2022 are not under Section 74 of the Act. The fact that the impugned notice (Annexure P2) called upon the petitioner to submit his explanation as would be evident from Annexure P2 would also goes to establish that it was not an order of attachment of ITC account of the petitioner. If the letter dated 02.12.2022 is neither an order under Section 86A, nor an order under Section 74 of the Act, in these factual circumstances, it is difficult to sustain the said letter dated 02.12.2022. If at all the same is the notice or the order of blocking the ITC account of the petitioner, the same is clearly in contravention to the statutory provisions governing the field of blocking of availment of ITC. The impugned notice dated 02.12.2022 therefore being in contravention to the provisions of CGST and TSGST Acts are concerned, the same deserves to be and are accordingly set aside - petition allowed.
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Income Tax
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2023 (12) TMI 65
Addition u/s 68 - unexplained credits in the hands of assessee company - reliance on chain of transactions and probative value of the statements and other incriminating facts - HELD THAT:- CIT (Appeals) has reasoned, the doubts and suspicions howsoever strong may never lead to adverse findings against the assessee. He has categorised the findings recorded by the assessing authority as conjectural being not based on any cogent material or evidence on record. It is the above findings recorded by the CIT (A) that have been sustained by the learned Tribunal. On specific query made, learned counsel for the revenue could not point to any evidence existing on record as may have led to the conclusion that any part of the investment made in the assessee company by the three investing entities was false or bogus. Prima facie , in face of investment made through banking channel which according to revenue was duly disclosed in the regular returns of the investing entities, there does not exist any presumption or room to disbelieve the investment made in the assessee company. The burden to prove otherwise rested squarely on the revenue authorities. Unless the initial onus had been discharged by leading some evidence that may have led itself to the conclusion that the investment was never made, the burden that was cast on the revenue remained undischarged. Accordingly, the findings of fact recorded by the learned Tribunal, confirming the order of the CIT (Appeals) is seen to be in accordance with law and based on material consideration.
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2023 (12) TMI 64
Non deposit of TDS by employer - Kingfisher Airlines Limited - employer had not deposited the tax deducted at source, so the outstanding dues be recovered by the respondents from his employer - recovery from employee for default in TDS deposits - credit of TDS deduction denied - as per revenue no credit for tax can be given to the petitioner, since in view of the provisions under Section 199 of the Income Tax Act the credit can be given only when the tax which was deducted at source is paid to the Central Government and in the present case, admittedly the tax deducted from salary of the petitioner has not been deposited by his employer. Whether any recovery towards the said outstanding tax demand can be effected against the petitioner in view of the admitted position that the tax payable on salary of the petitioner was being regularly deducted at source by his employer namely Kingfisher Airlines Ltd. who did not deposit the deducted tax with the revenue? - HELD THAT:- In the case of BDR Finvest Pvt. Ltd. vs DCIT, [ 2023 (11) TMI 808 - DELHI HIGH COURT] it was clarified that payment of the tax deducted at source to the Central Government has to be understood as the payment in accordance with law. The petitioner having accepted the salary after deduction of income tax at source had no further control over it in the sense that thereafter it was the duty of his employer acting as tax collecting agent of the revenue under Chapter XVII of the Act to pay the deducted tax amount to the Central Government in accordance with law. The employer of the petitioner having failed to perform his duty to deposit the deducted tax with the revenue, petitioner cannot be penalized. It would always be open for revenue to proceed against employer of the petitioner for recovery of the deducted tax. Same view has been taken by this court in the case of PCIT vs Jasjit Singh [ 2023 (12) TMI 34 - DELHI HIGH COURT] Section 199 of the Act, in our view cannot operate as impediment to grant relief to the petitioner. The petition is allowed, thereby setting aside the intimations/communications issued by respondent no. 3 u/s 143 of the Act raising a demand of tax to the tune and consequently, also restraining the respondents from carrying out any recovery proceedings pertaining to the said intimations/ communications. However, it is clarified that in case the petitioner is able to obtain any amount of money towards tax deducted from his income at source for the Assessment Year 2012-13 from his employer, the same shall be deposited by him with the revenue forthwith.
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2023 (12) TMI 63
Non deposit of TDS by employer - Kingfisher Airlines Limited - employer had not deposited the tax deducted at source, so the outstanding dues be recovered by the respondents from his employer - recovery from employee for default in TDS deposits - credit of TDS deduction denied - as per revenue no credit for tax can be given to the petitioner, since in view of the provisions u/s 199 of the Income Tax Act the credit can be given only when the tax which was deducted at source is paid to the Central Government and in the present case, admittedly the tax deducted from salary of the petitioner has not been deposited by his employer. Whether any recovery towards the said outstanding tax demand can be effected against the petitioner in view of the admitted position that the tax payable on salary of the petitioner was being regularly deducted at source by his employer namely Kingfisher Airlines Ltd. who did not deposit the deducted tax with the revenue? - HELD THAT:- In the case of BDR Finvest Pvt. Ltd. vs DCIT, [ 2023 (11) TMI 808 - DELHI HIGH COURT ] it was clarified that payment of the tax deducted at source to the Central Government has to be understood as the payment in accordance with law. The petitioner having accepted the salary after deduction of income tax at source had no further control over it in the sense that thereafter it was the duty of his employer acting as tax collecting agent of the revenue under Chapter XVII of the Act to pay the deducted tax amount to the Central Government in accordance with law. The employer of the petitioner having failed to perform his duty to deposit the deducted tax with the revenue, petitioner cannot be penalized. It would always be open for revenue to proceed against employer of the petitioner for recovery of the deducted tax. Same view has been taken by this court in the case of PCIT vs Jasjit Singh [ 2023 (12) TMI 34 - DELHI HIGH COURT ] Section 199 of the Act, in our view cannot operate as impediment to grant relief to the petitioner. The petition is allowed, thereby setting aside the intimations/communications issued by respondent no. 3 u/s 143 of the Act raising a demand of tax to the tune and consequently, also restraining the respondents from carrying out any recovery proceedings pertaining to the said intimations/ communications. However, it is clarified that in case the petitioner is able to obtain any amount of money towards tax deducted from his income at source for the Assessment Year 2012-13 from his employer, the same shall be deposited by him with the revenue forthwith.
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2023 (12) TMI 62
Offence punishable u/s 276CC - non filing of income tax return - on receipt of notice u/s 276CC petitioner filed his income of return, accordingly, the petitioner had paid Advance Tax, TDS, TCS, Self Assessment Tax - HELD THAT:- Proviso to Section 276CC gives some relief to genuine assessees. The proviso in clause (ii) of b to Section 276CC provides that if the tax payable determined by regular assessment has reduced by advance tax paid and tax deducted at source does not exceed Rs. 3,000/-, such an assessee shall not be prosecuted for not furnishing the return u/s 139(1) of the Income Tax Act. Therefore, this proviso takes care of genuine assessees who either file the returns belatedly but within the end of the assessment year or those who have paid substantial amounts of their tax dues by prepaid taxes from the rigor of the prosecution u/s 276CC of the Income Tax Act. Admittedly, the petitioner had paid taxes under the Heads of Advance Tax, TDS, TCS, Self Assessment Tax to the tune of Rs. 23,75,066/-. According to his returns, the total tax and interest payable by him is Rs. 23,74,610/-. Therefore, he claimed refund of Rs. 460/- and the proviso (ii) b of Section 276CC comes for rescue of the petitioner from the rigor of the prosecution under Section 276CC of the Income Tax Act. Therefore, the initiation of prosecution for the offence punishable u/s 276CC of the Income Tax Act cannot be sustained as against the petitioner and it is liable to be quashed. Decided in favour of assessee.
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2023 (12) TMI 61
Deduction u/s 80P(2)(a)(i) - interest earned on deposits pertaining to reserve fund with DCC Bank which is a cooperative bank and other nationalised banks - contention of the AO is that interest accrued on Reserve Fund Deposits is not eligible for deduction u/s 80P - HELD THAT:- The coordinate bench of the Tribunal, on similar set of facts dismissed the appeal of the revenue in the case of Kakateeya Mutually Aided Thrift and Credit Co-op Society Ltd. [ 2023 (9) TMI 211 - ITAT VISAKHAPATNAM] and the same ratio was followed by the coordinate bench of the Tribunal in the case of Rangaraya Large Sized Cooperative Society [ 2023 (11) TMI 1207 - ITAT VISAKHAPATNAM] as held assessee has invested surplus funds out of the activities carried out as per the provisions of section 80P(2)(a) of the Act. We therefore held that interest income should be allowed as deduction U/s. 80P(2)(a)(i) of the Act and thereby the Ld. CIT(A) - NFAC has rightly held by deleting the addition made by the Ld. AO - Decided in favour of assessee.
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2023 (12) TMI 60
Validity of reopening of assessment u/s 147 - Reasons to believe - notice beyond period of four years - Exemption u/s 10B to be denied as assessee has not carried out any manufacturing activity - HELD THAT:- It is very clear that there is absolutely no whisper about the failure on the part of the assessee to make full and true disclosure of all material facts relevant for the purpose of assessment in the original assessment proceedings before the ld. AO. Admittedly, the notice u/s 148 of the Act was issued to the assessee on 03.03.2015 which is beyond the period of 4 years from the end of the relevant assessment year. Hence, the proviso to section 147 of the Act would come into operation. As per the said proviso, the ld AO is bound to duly mention the failure on the part of the assessee to make full and true disclosure of all material facts relevant for the purpose of assessment. We find that this issue is no longer res integra in view of the decision of Hindustan Lever Ltd Vs. R. B. Wadkar 2004 (2) TMI 41 - BOMBAY HIGH COURT] Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission. Thus the reopening deserves to be quashed and is hereby quashed. Decided in favour of assessee.
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2023 (12) TMI 59
Exemption u/s 11 - as per CIT(E) absence of registration of assessee under the Rajasthan Public Trust Act, 1959 the assessee is not eligible for registration u/s. 12AB - application u/s. 12A(1)(ac)(iii) in Form No. 10AB was not filed in time - HELD THAT:- CIT(E), being a limitation matter case, decided the case of the applicant on the basis of material placed on record and thus rejected the application of the applicant in Form 10AB for registration u/s 12A of the Act. The Bench does not want to go into merit of the case but it is imperative that the applicant samiti must be provided adequate opportunity of being heard by the ld. CIT(E). In this view of the matter, the Bench feels that the applicant samiti should be given one more chance to contest the case before the ld. CIT(E) and the applicant samiti is directed to produce all the relevant papers concerning application so filed before the ld. CIT(E) to settle the dispute raised hereinabove. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(E) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. CIT(E) independently in accordance with law.
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2023 (12) TMI 58
Addition u/s. 14A r.w.r. 8D(ii) - As per AO assessee not followed the methodology as contemplated under Rule 8D(2) of the Rules, made disallowance at 1% on whole investment under Rule 8D(2)(iii) - HELD THAT:- We note that the assessee calculated average investment at Rs. 1,07,12,445/- which have yielded the dividend income of Rs. 74,52,725/-, but however, the AO did not satisfy with the said submissions as made by the assessee to consider those investments which yielded exempt income for the purpose of computing disallowance of expenditure. The assessee reiterated the same submissions before the CIT(A), but however, CIT(A) confirmed the order of AO. Before us, the ld. AR drew our attention to the order of Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] requested to remand the issue to the file of AO for its fresh consideration with a direction to take into account those investments which were yielded exempt income for the purpose of disallowance of expenditure. It is settled principle that those investments which yielded income shall be considered for the purpose of computing expenditure in relation to exempt income. DR did not dispute the finding of Special Bench of Delhi Tribunal, we deem it proper to remand the issue to the file of AO to make disallowance considering those investments which yielded exempt income for its fresh consideration. The assessee is liberty to file evidences, if any, in support of its claim. Thus, the grounds raised by the assessee are allowed for statistical purpose.
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2023 (12) TMI 57
Ex-parte appellate order passed by National Faceless Assessment Centre - assessee argued that he did not receive any notice issued by the First Appellate Authority, thus violation of principle of natural justice - HELD THAT:- Upon perusal of the entire set of documents, we find that the impugned order is ultimately an ex-parte one. The documents furnished before First Appellate Authority physically on 15/5/2018 were also not taken into consideration by the ld.CIT(A), Faceless as impugned before us. This is clearly a violation of the principle of natural justice. The deliberation on this documents should have been made by the authorities below while dealing with the issue involved in the appeal preferred before the First Appellate Authority and in the absence of the same, the entire proceedings initiated by the ld.CI(TA) is found to be bad in law and requires re-adjudication of the same. We, therefore, find it fit and proper to direct the ld.AO to consider the issue afresh upon consideration of the relevant evidences already been placed by the assessee or any other evidences appellant chooses to file at the time of hearing of the matter. Deduction u/s 40(a)(ia) - interest paid by a cooperative society to its members in terms of the provision of sec. 194A(3)(v) - We find that so far as the amendment made by the Finance Act 2015 is concerned, the Chennai Bench in [ 2022 (7) TMI 1048 - ITAT CHENNAI] has been pleased to observe that the amendment is prospective in nature and applicable only from 01/06/2015. We find substance in the submission made by assessee that though amendment has been made by the Finance Act 2015, the same is not applicable to the instant case, particularly taking into consideration the observation made by the Mumbai Benches. We also find that the assessee has been able to make out a substantial case against addition made by the authorities below on the issue itself and thus, respectfully relying upon the order passed by the Co-ordinate Bench Asst. Year 2013-14 [ 2017 (9) TMI 2016 - ITAT BANGALORE] particularly in assessee s own case on the identical issue as already discussed above, we remit the issue to the file of the ld.AO for fresh adjudication of the same on merit upon giving an opportunity of being heard to the assessee and to consider the evidence in support of the case made out by the assessee. Appeal of the assessee is allowed for statistical purposes.
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2023 (12) TMI 56
Addition of employees contribution to PF / ESI - assessee argued disallowance ought to have been made considering the month during which the salaries were actually disbursed (and not the month to which the salaries relate) - HELD THAT:- We find that the ld. AR before us placed a chart separately for PF and ESI stating that the addition to be made would be only Rs 3,33,937/- as against Rs 53,89,319/-, if the month in which salary was actually disbursed is taken into account by the ld. AO. We find that this aspect of the issue was not decided in the decision of CHECKMATE SERVICES P. LTD. VERSUS COMMISSIONER OF INCOME TAX-1 [ 2022 (10) TMI 617 - SUPREME COURT] - AR placed reliance on the decision of Calcutta Tribunal in the case of Kanoi Paper Industries Ltd vs ACIT 2001 (5) TMI 139 - ITAT CALCUTTA-E] where this aspect of the issue was considered. The ld. DR vehemently relied on the orders of the lower authorities and argued that the issue of employees contribution to PF/ ESI had already been decided in favour of the revenue by the recent decision of Hon ble Supreme Court referred supra. Considering the tabulation submitted by the assessee for each of the month in which salary was actually disbursed, we deem it fit and appropriate to restore this issue to the file of ld. AO for verification of those figures. On verification, if it is found that the employees contribution to PF / ESI had been remitted within the due date from the end of the month in which salary was disbursed, then assessee would be entitled for relief and no addition could be made thereon. The ld. AO is also directed to examine the applicability of KANOI PAPER INDUSTRIES LTD. case while deciding the issue. Accordingly, the Additional Ground B is allowed for statistical purposes. Adjustment on a/c of variance based upon a statement made by the Tax Auditor in Tax Audit Report (without mentioning that the reported amount is to be disallowed) - As claim of deduction towards employee s contribution to PF ESI made by the assessee becomes an incorrect claim warranting primafacie adjustment u/s. 143(1) of the Act. Hence, the decision relied by the ld. AR would not advance the case of the assessee. Accordingly, Additional Ground A raised by the assessee is dismissed.
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2023 (12) TMI 55
Revision u/s 263 - as per CIT there is Default computing deduction u/s 40(b)(v) towards partners remuneration - Interest income be excluded from book profit while computing permissible remuneration u/s 40(b)(v) - CIT setaside the assessment for misplacing explanation 3 in arriving eligible amount of book profit for the purpose of clause (v) of sub-section (b) of 40 - HELD THAT:- Section 40(b)(v) restricts a partnership firm from claiming deduction towards remuneration paid to its working partner exceeding certain limits of book profit . The explanation 3 defines the term book profit, means the net profit, as shown in the profit and loss account for the relevant previous year, computed in the manner laid down in Chapter IV-D as increased by the aggregate amount of the remuneration paid or payable to all the partners of the firm if such amount has been deducted while computing the net profit. The present issue is squarely covered by the judgement of CIT Vs J J Industries [ 2013 (7) TMI 577 - GUJARAT HIGH COURT] and Md. Serajuddin Bros. [ 2012 (8) TMI 104 - CALCUTTA HIGH COURT] any interest earned from the funds deployed which arose out business activity by no stretch of imagination can it be categorized under the head income from other sources. Further in similar facts and circumstance in Lok Holdings [ 2008 (1) TMI 365 - BOMBAY HIGH COURT] has categorically held that interest earned from deposit of funds linked to any business activity is income from business profession and thus, cannot be categorized as income arising from other sources. It is a settled principle of law now that, income for the purpose of ascertaining ceiling on the basis of book profit, the profit shall be as appearing in the profit and loss account. The interest income, thus, cannot notionally be excluded while determining allowable of deduction of remuneration to partners u/s 40(b)(v) of the Act. In the extent case, the interest income shall form part of business income for the purpose of computing admissible deduction u/s 40(b)(v) of the Act. CBDT vide para (iv) of Circular No. 12/2019 dt. 19/06/2019 instruction to exclude all incomes such as capital gain, interest, rental income, income from other sources etc. which do not fall under the head 'profit or gain of business or profession', from the figure of book profit for the purpose of section 40(b)(v) shall failed make its application in the present case for two reasons that; (1) Firstly, circular although binding but in no case shall override aforestated judicial precedents (2) Secondly, assessment as well impugned revisionary order were framed anterior to circular coming into effect. Decided in favour of assessee.
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2023 (12) TMI 54
Levy of Penalty under Black Money Act - undisclosed investment in foreign entity - Assessee had investment in foreign entities but has not reflected said investment in Schedule of Foreign Assets in its return of income filed - HELD THAT:- It is not in controversy that the Assessee has not disclosed the information qua investment in foreign entity in Schedule FA of the Income Tax return but disclosed the same in its balance-sheet and Schedule part-A-BS under Non Current Investments attached with the return of income filed for the AY under consideration. In the instant case, the Assessee admittedly duly recorded and disclosed the investment in foreign entity in its audited balance-sheet and also furnished such information under Non Current Investments in Schedule para-A-BS in its return of income, hence we are in concurrence with the claim of the Assessee that the Assessee has directly or indirectly complied with the statutory provisions and therefore, the case of the Assessee does not fall under the rigorous provisions of section 43 of the B.M. Act. No doubt the Schedule FA and BMI Act, have been introduced and enacted for checking the economic offenders, tax evaders and for analyses of information qua foreign investment/income by using artificial intelligence and Schedule FA applicable specifically to the Assessee(s) whose accounts are not required to be audited or if audited but books of account not filed along with the return of income. However, in each and every case, the penalty as prescribed in section 43 of the Act, cannot be imposed. With regard to the contention raised by Ld. DR to the effect that the Assessee is a habitual defaulter. In our view as the Black Money Act was introduced and enacted in 2015 and therefore, that could be a reason for technical / venial breach starting from AY 2016-17 onwards which is under consideration before us, however, in the instant case, it is not the case of total defiance or malafide or dishonest breach/non disclosure of information of foreign investment in schedule FA, therefore, on the aforesaid analyzations and considerations, in our view the penalty is not warranted, hence, the same is deleted. Consequently, the appeal filed by the Assessee is allowed.
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2023 (12) TMI 53
Undisclosed income - undisclosed cash deposits - information regarding cash deposited by the assessee in his bank account - onus to prove - assessee submitted to have received gift from his grand-mother and from his father who had sold some land during the year - HELD THAT:- In the case under consideration, the facts are identical to the case of Parimisetti Seetharamamma vs Commissioner Of Income- Tax [ 1965 (4) TMI 21 - SUPREME COURT] - in the case under consideration, assessee claimed that he had received gift from grand-mother and filed affidavit of grand-mother, therefore, the onus shifted on the department. The department has not brought on record any evidence to establish that facts mentioned in the affidavits were not true and hence, the income was taxable therefore, in these facts and circumstances of the case, we are of the opinion that assessee had explained source of cash deposits made in the assessment order. Ground of the assessee is allowed.
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2023 (12) TMI 52
Capital gain computation - Denial of expenses incurred towards removal of encumbrances and indexation thereon for the purposes of determination of tax liability towards capital gain - HELD THAT:- Revenue Authorities have questioned the bona fides of the cost of removal of encumbrances in the absence of any direct evidence except for Rs. 15 lakh paid to one Shri Rajender Kumar. On perusal of bank statement, it is noticed that between the period October 2010 to March 2011 certain withdrawals have been identified in the name of several parties. Other similar entries in the name of other occupants are also discernible. We take note of the plea on behalf of the assessee that an amount of Rs. 15 lakh paid to Shri Rajender Kumar has been accepted by the CIT(A) to have been incurred cost of removal of encumbrances. Thus, the cost of removal of encumbrances per se is not in doubt and rather has been accepted on first principles. The quantum of payment to various parties is put under cloud by the Revenue on account of lack of corroboration. Appraisal of bank statement gives an unflinching impression that several parties as named on behalf of the assessee have been paid costs against their respective names. The payments have been made on various dates close to each other to several parties. Thus, the facts when read in conjunction, there appears to be ring of truth in the version of the assessee towards incurring of cost of encumbrances. While holding so, one needs to bear in mind the ground realities prevalent in the indian-socio-ecostructure. One cannot deny that a large population of India stays unauthorizely in the land parcel belonging to others and move out of such land parcels only on payment of some sort of compensation. The legal remedy for removal of the encroachments, at times, is quite slow and it takes many years through such course. The land owners are thus compelled to pay compensation by force of circumstances to obtain clean possession for sale/use. One cannot put blinkers on such unstated but prevalent eco-system. Thus, where at least one party has accepted the factum of receipt of compensation and payments to other parties are also reflected in the bank statement of the assessee company to be the beneficiary of payments, the plea of the assessee requires a benign consideration. Coupled with this, we note that the payments have been made and accounted for in the Financial Year preceding to the Financial Year 2011-12 in question. Thus, the costs incurred and accounted for in an earlier year cannot be ordinarily visited for a review. We are inclined to accept the plea of the assessee for deduction of cost of encumbrances as claimed. Hence, we set aside the order of the CIT(A) and reverse the disallowance carried out by the Assessing Officer on this score. Assessee appeal allowed.
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Customs
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2023 (12) TMI 51
Compounding of offences under Section 137(3) of Customs Act - Rate for fixing the compounding - re-working of amount of compounding on reduced value as allowed by the tribunal - smuggling of 247 boxes of prescription drugs which could not be exported without due clearance and completion of statutory formalities - compliance with Circular No.27 of 2015 - HELD THAT:- Since it is mandatory for the Department to have adhered to the guidelines laid down in the said Circular No.27 of 2015 and which stood modified and clarified on various occasions from time to time, it was not justifiable for the authorities concerned to have ignored the said guidelines and imposed unreasonable penalty as has been done in the instant case. Once when there is an upper cap limit of 5%, there was no power conferred with the authorities concerned with which the said amount could have been raised. The rate at which the compounding amount has been finalized by the authorities concerned does not seem to be proper, legal and justified and the compounding amount so finalized under the order of compounding dated 12.09.2023 is liable to be limited to 5% in terms of the Circular No.27 of 2015. To that extent the compounding amount deserves to be and accordingly stands modified.
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2023 (12) TMI 42
Valuation of imported goods - enhancement of value - rejection of declared value - basis of enhancement of the value exists or not - presence of contemporaneous goods or not. Petitioner submits that the entire enhancement of the value is based on the data taken from the Zuaba Portal and authenticity of the same is not known, there is no evidence of the genuineness of the data in Zuaba. HELD THAT:- It is found that the appellant has imported stock lot of Jute Bags, which was declared in the bill of entry. The department has enhanced the value on the basis of data gathered from the website of Zuaba. It is undisputed fact that the authenticity of the platform of Zuaba has not been established or department has not made any effort to verify the authenticity of the same. It was also a submission of the appellant that it is not approved by any government agency and the same is a private platform. Therefore, the sole reliance made on the data appearing on Zuaba platform, in our view is not correct and legal. Since the data of Zuaba is not authentic, there is no any other evidence to doubt the value declared by the appellant. The department has not discharged the burden in rejecting the declared value. Even from the data of Zuaba which was relied upon by the department that the goods appearing on that data are not similar or identical to the one imported by the appellant. A perusal of the description of the said goods mention in the said table. Such as New Binola Jute Bags , Vegetable Oil Treated New Jute Bags etc. are not identical to the goods under import - The stock lot, if not of the same quality of which the new goods are, and thus, the stock lot is available at a lesser price in the market. Therefore,there are no basis for rejecting the declared value by the appellant. The impugned order set aside - appeal allowed.
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Insolvency & Bankruptcy
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2023 (12) TMI 50
Sanction of scheme of compromise of the Corporate Debtor under Section 230 of the Companies Act, 2013 read with Regulation 2B of IBBI (Liquidation Process) Regulations, 2016 - HELD THAT:- It is submitted that the proposed scheme of the appellant may be put to the SCC on 01.12.2023 which shall be considered by the SCC on that day and take the decision accordingly. Counsel for the Appellant has not shown any averseness to this proposal made by the Counsel for the Respondent. As a result, thereof, while disposing of this appeal, it is directed as per the agreement between the parties, that the scheme propounded by the appellant, in terms of the Section 230 of the act, shall be presented before the SCC on 01.12.2023. the meeting shall be convened by the liquidator on 01.12.2023 by giving time, date and place to the parties concerned and in that meeting the scheme shall be considered by the SCC a decision shall be taken in accordance with law. The present appeal is hereby disposed of.
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PMLA
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2023 (12) TMI 49
Money Launderng - scheduled offence or not - criminal conspiracy - proceeds of crime - facilitating the accused no.1 to use her bank accounts to siphon the university funds - attachment of first and second property - HELD THAT:- The offence under Section 120B of IPC included in Part A of the Schedule will become a scheduled offence only if the criminal conspiracy is to commit any offence already included in Parts A, B or C of the Schedule. In other words, an offence punishable under Section 120B of IPC will become a scheduled offence only if the conspiracy alleged is of committing an offence which is otherwise a scheduled offence. Coming back to the facts of the case, in the chargesheets filed in the alleged scheduled offences, there is no allegation of the commission of criminal conspiracy to commit any of the offences included in the Schedule - except for Section 120B of the IPC, no other offence in the schedule has been applied. Therefore, in this case, the scheduled offence does not exist at all. Hence, the appellant cannot be prosecuted for the offences punishable under Section 3 of the PMLA. It is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged, must have been shown as the accused in the scheduled offence - Even if an accused shown in the complaint under the PMLA is not an accused in the scheduled offence, he will benefit from the acquittal of all the accused in the scheduled offence or discharge of all the accused in the scheduled offence. Similarly, he will get the benefit of the order of quashing the proceedings of the scheduled offence - The first property cannot be said to have any connection with the proceeds of the crime as the acts constituting scheduled offence were committed after the property was acquired. The offence punishable under Section 120B of the IPC will become a scheduled offence only if the conspiracy alleged is of committing an offence which is specifically included in the Schedule. The impugned order dated 27th September 2022 is, hereby, quashed and set aside, and the complaint pending before the Special Court for PMLA cases, Bengaluru is, hereby, quashed only insofar as the present appellant is concerned - appeal allowed.
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Service Tax
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2023 (12) TMI 48
Classification of service - business auxiliary service or Telecommunication services? - providing international roaming facilities to the subscribers of the appellant travelling to foreign countries - HELD THAT:- The payment of roaming charges was made by the Appellant to FTOs for providing connectivity services to their subscribers when they are abroad. We find that the services are appropriately classifiable as Telecommunication Service . During the relevant period, only telecommunication services provided by a 'Telegraph Authority' to a person was taxable. In the instant case, FTOs located abroad providing the connectivity services would not fall within the ambit of 'Telegraphy Authority' as defined under Section 65(111) of the Finance Act, 1994 read with Section 3(6) of the India Telegraph Act, 1885. Accordingly, it is observed that the charges paid for the services rendered by the FTOs cannot be taxed under head Business Auxiliary Service on the Appellant. The issue is no longer res-integra as the issue has been settled by the decision of the CESTAT, New Delhi in case of one of the Appellant's group Companies, viz. VODAFONE ESSAR MOBILE VERSUS C.S.T., DELHI [ 2017 (9) TMI 359 - CESTAT NEW DELHI] . The Tribunal in the aforesaid ruling was considering whether roaming services provided by foreign telecom company can be taxable under the head business auxiliary service wherein the Tribunal has observed There is no dispute that the services provided by the foreign telecom Company is squarely covered by the tax entry telecommunication service . The facts and circumstances of the case cited above are similar to the case on hand and the ratio is applicable for the present case on appeal. In light of the aforesaid decisions, we hold that the demand confirmed in the impugned order under the category of Business Auxiliary Service on the Appellant is not sustainable. Since the demand is not sustainable consequently, demand of interest and penalty is also not sustainable. The impugned order set aside - appeal allowed.
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2023 (12) TMI 47
CENVAT Credit - inputs or not - manufactured LED lights, fixtures and control panels etc. The department objected to the fact of availment of cenvat benefit on the ground that the appellant cannot avail of such credit of duty paid on their own finished goods, as the same cannot be treated as raw material/inputs for provision of taxable output services. HELD THAT:- On perusal of the definition of input is contained in Rule 2(k) of the CENVAT Credit Rules, 2004, it would reveal that all goods used by any service provider, for providing any output service, should be eligible for consideration as input . In this case, the disputed goods namely LED lightings, fixtures and control panels were used by the appellants for provision of the taxable services to the service recipient i.e., the Municipality/Municipal Corporation. Since, those disputed goods in the form of inputs were used and utilized for provision of the output service and service tax liability on provision of such services were duly discharged by the appellants, it cannot be said that the disputed goods shall not be considered as inputs for the provision of the output services. Further, consideration of the ownership is not a criteria for determining whether the disputed goods should be eligible for the cenvat benefit or otherwise. Since, there is no restriction or embargo created in the statute, for establishment of ownership of the goods, which are used for the provision of the output service, the impugned orders passed by the learned adjudicating authority cannot be sustained on such grounds. In other words, usage of inputs is only confined to the factory in case of a manufacturer and premises in case of service provider. There are no merits in the impugned order, insofar as the adjudged demands were confirmed on the appellants, holding that the disputed goods shall not be considered as inputs for the purpose of the provision of the taxable output service - appeal allowed.
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2023 (12) TMI 46
Extended period of limitation - Demand based on Form 26AS (TDS Statement) - entire proceedings has been carried out on the basis of information available in Form 26AS of Income Tax department - suppression of fact sor not - HELD THAT:- It is observed that the Service Tax Department has demanded service tax solely on the basis of the data provided by the Income Tax Department, which is the gross value as received by the Appellant. The department has not conducted any verification to ascertain whether the amount mentioned in the Form 26AS was received on account of providing any taxable service by the Appellant.It is observed that the demand of Service Tax cannot be made solely on the basis of difference between Income tax return and 26AS Statement, as held by the Tribunal in the case of M/S KUSH CONSTRUCTIONS VERSUS CGST NACIN, ZTI, KANPUR [ 2019 (5) TMI 1248 - CESTAT ALLAHABAD] . The same view has been taken by the Tribunal, Kolkata, in the case of M/S LUIT DEVELOPERS PRIVATE LIMITED VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, DIBRUGARH [ 2022 (3) TMI 50 - CESTAT KOLKATA] wherein it has been held that the figures reflected in Form 26AS cannot be used to determine Service Tax liability unless there is evidence shown that it was due to a taxable service. The Notice in this case was issued on 08.09.2021, demanding service tax for the period 2016-17. The Department has not adduced any positive evidence to show malafide intention or mens rea for evasion of Service Tax on the part of the Appellant. Thus, the extended period cannot be invoked in this case to demand service tax on the Appellant. On perusal of the documents, it is found that the entire demand has been raised beyond the normal period of limitation. In view of the discussions above, the demand of service tax by invoking extended period is not sustainable in this case. Accordingly, it is held that the demand is liable to be set aside on the ground of limitation. The impugned order set aside - appeal allowed.
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2023 (12) TMI 45
Rejection of appeal on the ground of limitation - non-service of SCN - Violation of principles of natural justice - Appellant prayed for accepting the Affidavit and treat 17.01.2023 as the date of receipt of the OIO and remand the matter to the Commissioner (Appeals) to decide the issue on merits - HELD THAT:- On going through the Affidavit signed by the Appellant before the Notary Public. Considering the chronological events happened in this case and the Affidavit filed by the Appellant before the Notary Public, the Affidavit is accepted and 17.01.23 is treated as the date of receipt of OIO. Since, the Appellant has filed the appeal within the time limit prescribed from 17.01 2023, it is held that the Appellant has filed the appeal within the time limit prescribed under Section 37C and direct the Commissioner (Appeals) to decide the issue on merits. For that purpose, the impugned order is set aside and matter remanded to the Commissioner (Appeals), to hear the Appellant and decide the issue on merits. Appeal allowed by way of remand.
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2023 (12) TMI 44
Scope of remand order - Refund of service tax paid under goods and transport agency service [GTA] on a reverse charge basis - time limitation - whether the Assistant Commissioner and the Commissioner (Appeals) in their orders dated 30.01.2018 and 23.04.2018 travelled beyond the remand order? - HELD THAT:- The Commissioner (Appeals) in the order dated 22.11.2016 held that the appellant would be entitled to refund but the matter was remanded to the Assistant Commissioner only for the limited purpose of verification of the documents. This is clear from paragraph 10 of the remand order. The Assistant Commissioner, pursuant to the remand order, did record a categorical finding that the bar of unjust enrichment would not be attracted since the amount was paid under reverse charge basis. After having held so, the Assistant Commissioner should have granted refund but what transpires from the order dated 30.1.2018 passed by the Assistant Commissioner is that he further proceeded to examine whether the appellant would be entitled to refund and for this purpose, in view of the decision of the Supreme Court in Singh Transporters, concluded that the transportation of coal within the mining area would appropriately be classifiable under GTA service. It is clear that the Assistant Commissioner travelled beyond the remand order as he proceeded to examine whether the appellant is entitled to refund or not on merits when this issue had been settled by the Commissioner (Appeals) in the order dated 22.11.2016 and this was not a matter which was remanded to the Assistant Commissioner. The order dated 23.04.2018 passed by the Commissioner (Appeals) cannot be sustained and is set aside in as much a categorical finding has been recorded by the Assistant Commissioner in order dated 30.1.2018 that the bar of unjust enrichment would not be attracted since the amount was paid under reverse charge basis, which finding has been recorded after examination of the documents as directed by the Commissioner (Appeals) in the order dated 22.11.2016. - refund allowed Appeal allowed.
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Central Excise
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2023 (12) TMI 43
Wrongful availment of MODVAT/CENVAT Credit on the capital goods - case of the appellant/Revenue is that on the basis of report from the intelligence, on scrutiny of the premises of the assessee, irregularity in availing the MODVAT credit on capital goods was detected - HELD THAT:- Given the fact that the appeal of the appellant/Revenue was primarily touching upon the applicability of the Notification No.214 of 1986 and also use of the term capital goods as such mentioned in Rule 57AB of the Central Excise Rules, 1944, it is opined that the judicial precedents referred to in the preceding paragraphs dealing with if not identical in almost similar circumstances lays to rest the question of law being agitated by the Revenue in this case. There are no substantial merits in the grounds raised by the Revenue in this case and the appeal thus fails and stands decided affirming the order passed by the Tribunal and the same stands decided in favour of the respondent/assessee - questions of law on which the appeal was admitted, stands answered against the appellant/Revenue and in favour of the respondent/assessee. Appeal dismissed.
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2023 (12) TMI 41
Recovery of CENVAT Credit availed wrongly - Credit for exempted / non-dutiable products - Refund of duty paid under protest - - refund order challenged on the ground that adjudicating authority had not verified whether the refund was clear from principle of unjust enrichment - HELD THAT:- The Tribunal had remanded the matter for the limited purpose of satisfying the Deputy Commissioner on the requirements of Rule 10(3) and as also to quantify the demand after considering the appellant s payment of an amount @ 6% of the price of PMB. In this context, it is noted that the adjudicating authority has not given the benefit of the duty paid at the time of removal of PMB amounting to Rs.60,89,453/-. There is no dispute that the appellant had paid the duty of Rs.60,89,453/- which has not been objected to by the Department during the relevant time. Therefore, the appellant cannot be denied the adjustment of this duty paid against the amount liable to be reversed - the Commissioner had erred in denying the adjustment of ₹60,89,453/- against the demand for the period September 2012 to November 2012. - After adjusting the amount already reversed, balance of the demand confirmed. Penalty on appellant - HELD THAT:- The appellant were regularly availing credit and paying duty on the final product, even after it was held that the said process did not amount to manufacture. The department did not raise any dispute or the fact that the appellant was choosing to pay the duty on a product, not exigible to excise duty. In such a scenario, it is not established that there was any intention of the appellant to evade duty or avail inadmissible credit. Therefore, no case has been made out by the adjudicating authority for levying penalty on the appellant, the same is set aside. Unjust enrichment - HELD THAT:- The appellant vide their letter dated 31.07.2013 had clearly indicated that the said amount had been paid after utilising CENVAT credit under protest. It is also brought to our notice that the amount so deposited is recorded under the head other current asset in Schedule 14 of the Balance Sheet. This substantiates the contention of the appellant that they had not recovered this amount from the buyer of the product or any other person. It is found that in several decisions, it has been held that the principal unjust enrichment does not apply to cases where duty has been paid to protest - unjust enrichment does not apply to the refund claim in the impugned appeal. On this basis alone the impugned order is set aside. - Refund allowed. Appeal allowed in part.
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2023 (12) TMI 40
Reduction in demand - receipt of defective goods from their suppliers and non-issuance of invoices at the time of sending the goods for replacement - HELD THAT:- The Commissioner (appeals) has already considered all the disparities pointed out by the Appellant and reduced the demand from Rs. 2,39,986/- to Rs.108,182. The valuation aspect raised by the Appellant has been dealt with by the Commissioner (Appeals) and the Appellant submits that there is no dispute of valuation now. Thus, it is observed that the Ld. Commissioner (Appeals) has already dealt with all the issues in the impugned order and there is no infirmity in the impugned order for interference. Accordingly, the demand of duty confirmed in the impugned order is upheld. Penalty - HELD THAT:- The Appellant is entitled for the reduced penalty of 25% of the duty confirmed. Accordingly, if the Appellant pays the demand of duty confirmed in the impugned order along with interest on or before 31.12.2023, they are entitled for the reduced penalty of 25% of the demand confirmed. If they do not comply with the payment, the penalty of Rs.1,08,182/- will stand. Appeal disposed off.
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2023 (12) TMI 39
Reversal of proportionate CENVAT Credit - manufacture of both dutiable goodsas well as exempted goods - non-maintenance of separate records of inputs - HELD THAT:- It is not relevant as to how the separate records are maintained rather it is important that the records are maintained in such a way that no credit on constituent inputs is taken which is used in manufacture of exempted goods either by sole use are by common use. There is no such allegation in the show cause notice against the respondent for taking credit on any input which is solely used in exempted goods or used as common input. The notice alleged that though the party maintains separate records but not as required under Rule 6 (2) of the CCR, 2004. This view is not supported by any evidence and there is no prescribed manner in Rule 6 (2) for maintaining separate records.It is also found that the only requirement is that the credit should not be taken on inputs used in exempted goods. If the inventory of exempted goods are separately maintained and no credit is availed on the inputs used therein, this will serve the purpose. The demand of 10% amount under sub-rule 3 of Rule 6 of the CCR, 2004 on the export clearances as detailed in Annexure-A to the notice is contrary to the provisions of sub-rule 6 of Rule 6 of the Cenvat Credit Rules, 2004 as the export clearances are one of the clearances among others to which the provisions under sub- rules (1), (2), (3) (4) of Rule 6 shall not be applicable. The demand of an amount on export clearances is not sustainable in the light of the provisions of sub rule 6 of Rule 6 of the CCR 2004 - There are no infirmity in the impugned order and accordingly, the same is sustained - appeal dismissed.
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