Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 4, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
TMI Short Notes
Articles
News
Notifications
GST - States
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(14/2024) FD 07 CSL 2024 - dated
16-11-2024
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Karnataka SGST
Seeks to amend Notification No. 18/2018, FD 47 CSL 2017, dated 14th September, 2018
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(13/2024) FD 07 CSL 2024 - dated
16-11-2024
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Karnataka SGST
Seeks to amend Notification No. 05/2017, FD 47 CSL 2017, dated the 29th June, 2017
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1787–F.T. - dated
22-11-2024
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West Bengal SGST
Seeks to amend Notification No 1137- F.T. dated 28.06.2017.
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1786–F.T. - dated
22-11-2024
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West Bengal SGST
Seeks to amend Notification No. 1136-F.T. dated 28.06.2017.
Income Tax
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125/2024 - dated
2-12-2024
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IT
Central Government approves ‘International Institute of Information Technology, Hyderabad for ‘Scientific Research' under the category of ‘University, College or Other Institution’ for the purposes of clause (ii) of sub-section (1) of section 35
SEBI
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SEBI/LAD-NRO/GN/2024/213 - dated
28-11-2024
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SEBI
Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2024
SEZ
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S.O. 5184(E) - dated
29-11-2024
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SEZ
Central Government de-notifies an area of 1.4787 hectares, thereby making resultant area as 8.6979 hectares at Rajiv Gandhi Infotech Park, Phase-I, Hinjewadi Pune, in the State of Maharashtra
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S.O. 5182(E). - dated
29-11-2024
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SEZ
Central Government de-notifies an area of 22.9187 hectares, thereby making the resultant area as 91.8521 hectares at Village Matoda, Sari and Chachanvadi Vasna on National Highway-8-A, Taluk Sanand, District Ahmedabad in the State of Gujarat
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S.O. 5181(E) - dated
29-11-2024
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SEZ
Central Government rescinds the Notification Number S.O. 2583 (E) dated 09.10.2009
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S.O. 5180(E). - dated
29-11-2024
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SEZ
Central Government rescinds the Notification Number S.O. 503 (E) dated 28.02.2013
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S.O. 5179(E) - dated
29-11-2024
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SEZ
Central Government rescinds the Notification Numbers S.O. 2394 (E) dated 30.09.2010 and S.O. 260 (E) dated 10.02.2012
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Court upholds GST law, but allows challenge if petitioner's construction qualifies as 'plant'.
Case-Laws - HC : The High Court dismissed the writ petition challenging the constitutional validity of clauses (c) & (d) of Section 17(5) of the Central Goods and Services Tax Act, 2017. The Supreme Court had previously upheld the validity of these clauses in the case of M/s Safari Retreats Private Ltd. However, the High Court granted liberty to the petitioner to raise the issue of whether the construction of immovable property carried out by the petitioner amounts to a 'plant' within the meaning of Section 17(5)(d) of the Act, subject to adjudication based on the facts and the functionality test laid down by the Supreme Court.
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Jurisdiction for tax notice under GST law: Conflicting HC views lead to Larger Bench reference.
Case-Laws - HC : The High Court held that the petitioner failed to establish lack of jurisdiction for issuance of the show cause notice (SCN) by the State Tax Authority, despite the absence of a notification u/s 6(1) of the Central Goods and Services Tax Act, 2017. The Court opined that a notification is required only when restrictions or conditions are to be imposed on the exercise of power by officers appointed under the State Goods and Services Tax Act. However, considering the contrary view expressed by the Madras High Court in Tvl. Vardhan Infrastructure, the matter was referred to a Division Bench for an authoritative pronouncement.
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State blocked firm's tax credit worth Rs 13 crore citing fraud, court upheld authority's action.
Case-Laws - HC : The High Court dismissed the petition challenging the notice in Form ASMT-10 issued by the state authorities for blocking the electronic credit/cash ledger. The court held that the state authorities acted within their powers by blocking the input tax credit (ITC) u/r 86A of the GST Rules, 2017, as they had reasons to believe that the ITC of Rs. 13.10 crores was fraudulently availed. The court clarified that u/r 86A, the authorities can block the debit of an amount equivalent to the fraudulently availed ITC from the electronic credit ledger, irrespective of whether the ITC was available or already utilized. The issuance of Form DRC-01A by the central authorities for Rs. 71,798/- and remittance of the same did not determine the entire issue raised in Form ASMT-10 by the state authorities.
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Tax Credit Reversal Quashed: Court Orders ITC Restoration for Exporter.
Case-Laws - HC : The High Court allowed the petition in part and directed the respondents to restore the input tax credit (ITC) of Rs. 9,83,53,032/- in the petitioner's Electronic Credit Ledger within four weeks. The Court held that the reversal of ITC by the respondents during the summons proceedings without an adjudication process was a violation of Article 265 of the Constitution of India and contrary to the provisions of Sections 16, 41, and 73/74 of the CGST Act. The ITC was initially claimed by the petitioner for exports and was debited twice, once during the summons proceedings and again when filing the refund application, leading to the Court's directive to restore the ITC amount.
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Taxpayer's writ petition dismissed due to delay in filing appeal against GST orders.
Case-Laws - HC : The High Court dismissed the writ petition filed by the petitioner challenging the orders issued by the adjudicating authority u/s 62 of the CGST/SGST Acts. The Court held that the petitioner failed to file an appeal against the orders within the limitation period prescribed u/s 107 of the CGST/SGST Acts. Furthermore, the petitioner approached the High Court through a writ petition after an inordinate delay of four years from the date of issuance of the orders, which is another ground for dismissal. Consequently, the High Court declined to grant any relief to the petitioner under Article 226 of the Constitution of India.
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Tax appeal unfairly dismissed; Court reinstates right to appeal despite delay.
Case-Laws - HC : The High Court allowed the writ petition, quashing the impugned order dated February 27, 2024. The Court held that the delay in filing the appeal by the petitioner was due to circumstances beyond their control. The rigid approach adopted by the Appellate Authority in dismissing the appeal solely on timing considerations without considering the genuine extenuating circumstances was legally unsound and reflected a lack of judicial empathy. Moreover, the petitioner's statutory right to a higher appeal was obstructed due to the non-formation of the GST Appellate Tribunal. In light of the procedural irregularities, arbitrary actions, and misapplication of statutory provisions, the High Court found the petitioner's case meritorious and allowed the writ petition.
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Retrospective GST Registration Cancellation Quashed, Effective from Show Cause Notice Date.
Case-Laws - HC : The High Court quashed the order cancelling the petitioner's GST registration retrospectively from July 2, 2017. The cancellation was held to be effective from January 15, 2023, the date of issuance of the show cause notice. The court found that the absence of reasons in the show cause notice for retrospective cancellation rendered the impugned order unsustainable. The allegation of failure to furnish returns for a continuous period of six months u/s 39 of the GST Act formed the basis for the cancellation proceedings.
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Wrongly availed ITC reversed but still included in tax demand notice - Court sets aside erroneous demand.
Case-Laws - HC : The petitioner had wrongly availed Input Tax Credit (ITC) which was reversed in the GSTR-3B filed for February 2020. Despite admitting the reversal, the second respondent included the demand for the wrongly availed ITC in the DRC-07 notice. The High Court held that the reason provided by the second respondent for including the demand was unacceptable. The demand under item No.3 of the impugned DRC-07 notice was set aside as erroneous since the first respondent had already ordered the reversal to be treated as payment u/s 73 of the CGST Act, 2017. For other claims, the petitioner was granted liberty to approach the concerned Authority seeking amnesty.
Income Tax
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Govt approves IIIT Hyderabad for tax exemption on scientific research expenditure under Sec 35(1)(ii.
Notifications : The Central Government approved the International Institute of Information Technology, Hyderabad (PAN: AAAAI6797B) for 'Scientific Research' under the category of 'University, College or Other Institution' for the purposes of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 read with rules 5C and 5E of the Income-tax Rules, 1962. This notification is effective from the previous year 2024-25 and applicable for assessment years 2025-26 to 2029-30.
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Tax tribunal allows appeal against reopening; Assessing Officer's allegation of Rs. 1.33 cr undeclared gains incorrect.
Case-Laws - AT : The Income Tax Appellate Tribunal allowed the assessee's appeal against the reopening of assessment u/s 148A of the Income Tax Act. The Assessing Officer had alleged that the assessee had undeclared capital gains of more than Rs. 50 lakhs from the sale of immovable properties worth Rs. 1.33 crores. However, the Tribunal found that the assessee had merely sold an immovable property for Rs. 43 lakhs and invested the proceeds in purchasing another property worth Rs. 90 lakhs, resulting in an addition of only Rs. 47 lakhs. The Tribunal held that it was not a case of capital gains of Rs. 1.33 crores escaping assessment, as alleged by the Assessing Officer. The reopening was deemed mechanical and lacking merit, as the Assessing Officer failed to differentiate between the two separate information sources and cumulatively considered them as escaped capital gains exceeding Rs. 50 lakhs.
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Taxpayer wins set-off of losses and bad debt provision in merger case before Income Tax Appellate Tribunal.
Case-Laws - AT : The Income Tax Appellate Tribunal held that the assessee is eligible to claim set-off of accumulated loss and unabsorbed depreciation u/s 72AB of the Income Tax Act after fulfilling the prescribed conditions related to merger. The Assessing Officer erred in interpreting that the claim could be made only after completion of the mandatory period. The Tribunal directed to allow the claim in accordance with Section 72AB. Regarding disallowance u/s 36(1)(viia), the Tribunal relied on its earlier order and held that the assessee, being a cooperative bank, is entitled to deduction for provision for bad and doubtful debts irrespective of rural or non-rural advances, subject to the statutory limit. The Revenue's appeal was dismissed.
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Tribunal upholds 1% TDS on property purchase when PAN provided (later); vacates 201(1) demand.
Case-Laws - AT : The Income Tax Appellate Tribunal held that the assessee had complied with the provisions of Section 194IA by deducting and depositing the requisite TDS at 1% on the purchase of property, as the recipient (seller) had furnished their PAN before completion of the transaction. The Tribunal opined that the higher TDS rate of 20% u/s 206AA for non-availability or non-quoting of PAN was not applicable in this case, as the legislative intent behind such provisions was to overcome issues in processing returns and granting TDS credit, which were not obstructed here. Consequently, the demand raised u/s 201(1) was vacated, and the issue of interest u/s 201(1A) and fee u/s 234E was restored to the Assessing Officer for recomputation in light of the Tribunal's observations.
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Tax authorities appeal rejected for excessive delay; interest calculation on securities left unaddressed.
Case-Laws - SC : The Supreme Court dismissed the appeal filed by the Revenue seeking condonation of a 220-day delay in filing the special leave petition. The Court found the reasons assigned for the delay unsatisfactory and insufficient to be condoned. Consequently, the special leave petition was dismissed on the ground of delay. However, the Court left open the question of law regarding the accrual of interest on securities, whether computed on an accrual basis or on the due date as per the terms and conditions of the security, to be agitated in any other appropriate case.
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Tax consultant's acquittal - Lack of evidence to prove abetment in filing false returns by assessee.
Case-Laws - HC : The High Court acquitted the petitioner of the charge u/s 278 of the Income Tax Act for abetting the filing of false returns. The court held that the prosecution failed to prove the foundational facts of abetment by the petitioner of the assessee Munilal Devi. The non-examination of Munilal Devi as a witness was crucial, as her reply in the show cause notice blaming the petitioner could not be tested through cross-examination. The presumption of culpable mental state u/s 278E could not be invoked without proving the foundational facts beyond reasonable doubt. The conviction was set aside, and the petitioner was acquitted and discharged.
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Individual found guilty of furnishing false statement, courts uphold conviction under Income Tax Act.
Case-Laws - HC : The High Court dismissed the criminal revision petition filed by the petitioner against the conviction u/s 277 of the Income Tax Act, 1961. The court upheld the concurrent findings of the lower courts convicting the petitioner for furnishing a false statement knowingly or with reason to believe it to be false. The court held that the prosecution had proved the foundational facts, and the petitioner failed to dislodge the presumption of 'culpable mental state' u/s 278E beyond reasonable doubt. The court found no perversity or illegality in the impugned judgments of conviction and sentence, and the revision petition was dismissed.
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Income Tax dept entitled to scrutinize all transactions via AO's deeper probe into demat/bank accounts & Form 26AS.
Case-Laws - AT : The ITAT upheld the revision order u/s 263 The PCIT demonstrated that the Assessing Officer failed to examine/inquire/investigate transactions in the demat account, bank account, and receipts as per Form 26AS vis-`a-vis the Income Tax Return, despite being required to conduct adequate examinations/inquiries/investigations to arrive at a logical conclusion. The assessee did not rebut the PCIT's finding or provide evidence of the AO examining these issues. Consequently, the Tribunal ruled that the PCIT rightly exercised jurisdiction u/s 263, and the decision went against the assessee.
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Tribunal upholds assessee's appeal, actual rent received & TDS should prevail over agreed rent for tax purposes.
Case-Laws - AT : The Assessing Officer (AO) erred in considering the agreed rent as per the agreement instead of the actual rent received from M/s. Mobivil Technologies India Pvt. Ltd. of Rs. 3,74,879/- and TDS deducted thereon of Rs. 37,492/-. The addition made by the AO on the difference between the actual rent received and agreed rent was unjustified. The assessee raised bills under "office rent" and paid CGST & SGST on the monthly rent received. Therefore, the addition made by the AO and confirmed by the CIT(A) was deleted.
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Tribunal upholds FMV determination using Rule 11UA for unquoted shares issued to promoters at premium.
Case-Laws - AT : The Income Tax Appellate Tribunal upheld the Assessing Officer's invocation of Section 56(2)(viib) read with Rule 11UA for determining the fair market value of unquoted shares allotted to promoters/existing shareholders at a premium. The assessee failed to substantiate the Discounted Cash Flow (DCF) method adopted for valuation. The Tribunal concurred with the Assessing Officer's rejection of the DCF method and application of Rule 11UA(2) to determine the fair market value at Rs. 63.47 per share. The Tribunal rejected the assessee's reliance on recent amendments to Rule 11UA regarding the option to adopt the valuation date, as no valuation report existed at the time of share issuance. The Tribunal distinguished its decision from the case of Brio Bliss Life Science Pvt. Ltd., holding that the facts differed as a valuation report under the DCF method was already on record and rejected during assessment proceedings based on the Delhi High Court's decision.
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Tribunal upholds reopening assessment based on AIR cash deposits, partially allows unexplained money/investments.
Case-Laws - AT : The Appellate Tribunal upheld the validity of reopening assessment proceedings u/s 147 and issuing notice u/s 148 based on information from the Annual Information Return (AIR) about substantial cash deposits in the assessee's bank accounts. The Tribunal ruled that the Assessing Officer (AO) had sufficient tangible material to reopen the case and the assessee's contention regarding non-supply of AIR information details was rejected. Regarding the additions made u/ss 69A and 69 for unexplained money and investments, the Tribunal partially allowed the assessee's grounds. Considering the decision in CIT vs. Samir Synthetics Mill, the Tribunal estimated 10% of the cash credits of Rs. 43,99,215 and other credits of Rs. 1.70 lacs as the assessee's reasonable income to avoid revenue leakage, instead of treating the entire transactions as income.
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Penalty for inaccurate income details quashed due to lack of fresh show-cause notice.
Case-Laws - AT : The Income Tax Appellate Tribunal (ITAT) allowed the assessee's appeal and directed the penalty u/s 271(1)(c) of the Income Tax Act to be deleted. The Assessing Officer had initiated penalty proceedings for concealment of income, while the Commissioner of Income Tax (Appeals) [CIT(A)] passed the penalty order on the ground of furnishing inaccurate particulars of income without issuing a fresh show-cause notice. The ITAT held that since the penalty proceedings were initiated by the Assessing Officer on one ground (concealment) and the CIT(A) passed the order on another ground (inaccurate particulars) without commencing fresh proceedings, the penalty order was without jurisdiction and bad in law. The assessee's agreement to offer the income to buy peace and avoid litigation did not cure the jurisdictional defect in the penalty proceedings.
Customs
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Export facilitation: IGST refund on postal exports enabled. Provide IGST details with postal bill for verification & refund.
Circulars : The trade notice informs about an upcoming mechanism for refund of IGST on exports through post. Exporters will provide details for seeking IGST refund while filing postal bill of exports. These details will be pushed to ICES System after physical export for GST verification with GSTN and preparation of scrolls. IGST refunds would be processed similar to exports through courier/ECCS. Postal exporters must register their bank accounts on ICES/ICEGATE at the corresponding master site. Trade associations/members are requested to take note and publicize the contents.
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Simplified brand rate drawback claims filing for Bengaluru exporters.
Circulars : The public notice streamlines the procedure for processing brand rate drawback claims u/s 75 of the Customs Act, 1962 for Bengaluru City Customs. It outlines requirements for filing complete applications with necessary documents, timelines and procedures for seeking extensions, bond requirements for provisional drawback, scrutiny process with deficiency memos, acknowledgment of complete claims, and consequences for failure to respond to deficiencies. The notice aims to facilitate efficient processing of brand rate claims by providing clear instructions to exporters, customs brokers, and other stakeholders.
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Customs confiscation overruled: Upholding importer's rights in pipeline imports.
Case-Laws - HC : The High Court upheld the CESTAT's order setting aside the confiscation order and imposition of redemption fines under the Customs Act, 1962. The appeals did not involve substantial questions of law and were based on factual issues which the Tribunal had considered in detail. The factual aspects were similar to the Ganesh Benzoplast Limited case, where goods were imported through pipelines and stored in non-bonded tanks after obtaining permissions. The Tribunal rightly relied on the Bombay High Court's decision in Finesse Creation Inc. instead of judgments from other High Courts. The imposition of penalties u/s 117 of the Customs Act was disapproved, as held in Ganesh Benzoplast Limited. The Tribunal's factual findings and reasoning did not warrant interference in appeals involving no substantial questions of law.
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Prosecution's Flawed Case Leads to Acquittal in Gold Smuggling Matter Due to Procedural Lapses & Lack of Evidence.
Case-Laws - HC : The High Court quashed the conviction of the Applicant under the Customs Act and the Gold (Control) Act. The prosecution failed to follow the prescribed procedure u/s 102 of the Customs Act for search and seizure. The seized gold bars were not produced as evidence before the trial court, instead only the paper label was presented along with a different gold bar. The courts below erred in accepting the prosecution's case despite the lack of adherence to statutory procedures and inadequate evidence. The High Court held that the prosecution failed to prove its case beyond reasonable doubt, rendering the conviction unsustainable.
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Import duty case remanded for fresh adjudication due to violation of natural justice.
Case-Laws - AT : This case involves the issue related to undervaluation and misuse of Country of Origin certificates against Import of Goods. The Tribunal found that the adjudicating authority passed the orders in haste and in gross violation of principles of natural justice. The appellants were not supplied with requested documents, and their statements recorded u/s 108 were relied upon without following the mandatory examination, cross-examination, and re-examination process u/s 138B of the Customs Act, 1962. The Tribunal observed that the adjudicating authority failed to examine a vital aspect concerning the applicability of a minimum import price notification for imports by units in Special Economic Zones (SEZs). The matter was remanded for reconsideration, directing the adjudicating authority to supply all required documents to the appellants, provide them with sufficient opportunity for defense and personal hearing, and pass a reasoned de-novo order.
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Smugglers caught with gold in shoe, aided by accomplice - penalties reduced considering circumstances.
Case-Laws - AT : The appellants were found involved in smuggling one cut piece of foreign origin gold weighing 645.500 grams. A concealed the gold in his shoe to deliver it outside the airport premises, while B abetted the offense. Both were held liable for penalties u/ss 112(a) and 112(b) of the Customs Act, 1962. Considering their lack of prior antecedents and not being owners or beneficiaries, the Appellate Tribunal reduced the penalties imposed on them from Rs. 5,00,000/- each to Rs. 1,00,000/- each. The appeals were disposed of accordingly.
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Customs broker's license revocation overturned due to lack of natural justice.
Case-Laws - AT : The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal and set aside the order dated 08.11.2021 revoking the customs broker license of the appellant. The Tribunal held that the principles of natural justice were violated as the show cause notice issued to the appellant was vague, failing to differentiate between regulations 17(1) and 17(6) of the 2018 Regulations. The appellant was not provided with the necessary documents and statements to submit a proper response and cross-examine the persons whose statements were recorded, violating the principles of natural justice. The Tribunal refrained from examining the documents itself, as it was the duty of the Inquiry Officer or the Commissioner to undertake this exercise.
SEZ
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Tech park shrinks as land denotified for infrastructure.
Notifications : The Central Government de-notified an area of 1.4787 hectares from the Rajiv Gandhi Infotech Park, Phase-I, Hinjewadi Pune Special Economic Zone in Maharashtra, thereby reducing the total notified area to 8.6979 hectares. The de-notified land will be utilized for creating infrastructure to support the SEZ's objectives while conforming to the state government's land use guidelines and master plan. The Development Commissioner of SEEPZ SEZ had recommended the de-notification proposal, and the state government had approved it, fulfilling the legal requirements under the Special Economic Zones Act, 2005, and Rules.
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Pharma SEZ in Gujarat downsized, unused land repurposed for infrastructure support.
Notifications : The Central Government de-notified an area of 22.9187 hectares from the existing Special Economic Zone for Pharmaceuticals at Village Matoda, Sari and Chachanvadi Vasna on National Highway-8-A, Taluk Sanand, District Ahmedabad in the State of Gujarat, operated by M/s. Zydus Infrastructure Pvt. Ltd. Consequently, the resultant area of the Special Economic Zone stands reduced to 91.8521 hectares. The de-notified area will be utilized for infrastructure creation to support the Special Economic Zone's objectives, conforming to the State Government's Land Use Guidelines and master plans. The proposal was approved by the State Government of Gujarat and recommended by the Development Commissioner, Kandla Special Economic Zone, fulfilling the requirements under the Special Economic Zones Act, 2005 and Rules.
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Gov't revokes IT Special Economic Zone status in Kerala's Kannur district.
Notifications : The Central Government rescinded Notification Number S.O. 2583 (E) dated 09.10.2009, denotifying the entire area of 10.375 hectares of the Special Economic Zone for Information Technology and Information Technology Enabled Services at Eramam Village, Thaliparambu Taluk, Kannur District, Kerala. M/s. Kerala State Information Technology Infrastructure Limited proposed the denotification, which was recommended by the Development Commissioner of Cochin SEZ and approved by the State Government of Kerala. The denotification conforms to land use guidelines and the master plan of the State Government.
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Land parcel denotified for IT SEZ at Cheemeni Village, Kerala after company proposal.
Notifications : The Central Government rescinded the Notification Number S.O. 503(E) dated 28.02.2013 which had notified an area of 40.4711 hectares for setting up a Special Economic Zone for Information Technology and Information Technology Enabled Services at Cheemeni Village, Hosdurg Taluk, Kasaragod District in Kerala by M/s. Kerala State Information Technology Infrastructure Limited. The denotification was done on the proposal of the company and after obtaining No Objection Certificate from the State Government of Kerala. The Development Commissioner of Cochin SEZ had recommended the denotification proposal. After denotification, the land parcel will conform to the State Government's land use guidelines and master plan.
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Govt rescinds SEZ notification for 46.87 hectares in Bori village, following Arshiya Ltd's proposal & state NOC.
Notifications : The Central Government rescinded the Notification Numbers S.O. 2394 (E) dated 30.09.2010 and S.O. 260 (E) dated 10.02.2012, thereby de-notifying the entire area of 46.874 hectares previously notified as a Special Economic Zone for FTWZ at Village Bori, Taluka and District Nagpur, Maharashtra for M/s. Arshiya Limited. This action was taken after M/s. Arshiya Limited proposed de-notification, the State Government of Maharashtra issued a No Objection Certificate, and the Development Commissioner, SEEPZ-Special Economic Zone recommended the de-notification proposal. The de-notified area will now conform to the State Government's land use guidelines and master plans.
IBC
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Deadline Extended for Liquidators to File Forms Under IBC Until Dec 2024.
Circulars : The Insolvency and Bankruptcy Board of India (IBBI) has extended the deadline for liquidators to file forms related to liquidation and voluntary liquidation processes under the Insolvency and Bankruptcy Code, 2016, and its regulations until December 31, 2024. The previous deadlines of September 30, 2024, and November 30, 2024, were extended due to representations from liquidators and Insolvency Professional Agencies citing technical issues and difficulties in form submission. For ongoing cases, the responsibility for filing forms lies with the Insolvency Professionals currently handling the process. In cases where an application for closure or dissolution has been filed or an order has been passed, the Insolvency Professional under whose tenure the application was filed or the order was passed is responsible for filing all forms related to that case.
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Security deposit can't be adjusted against pre-CIRP dues during moratorium.
Case-Laws - AT : The NCLAT dismissed the appeal and upheld the NCLT order, ruling that u/s 14 of the IBC, 2016, a security deposit lying with a third party cannot be adjusted against pre-CIRP dues during the moratorium period. The IBC prohibits any action to recover or enforce security interests created by the corporate debtor before CIRP admission. The corporate debtor must continue as a going concern, with essential supplies permitted subject to payment of current dues arising during moratorium. Recovery of past dues is prohibited, and creditors must file claims following the specified procedure. Adjusting the security deposit against pre-CIRP dues would contravene the IBC's provisions and the Supreme Court's guidance in upholding the IBC's primacy.
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Outstanding debt admitted, pre-existing disputes unsubstantiated - CIRP initiated against corporate debtor.
Case-Laws - AT : The NCLAT dismissed the appeal and upheld the Adjudicating Authority's order admitting the Operational Creditor's application for initiating CIRP against the Corporate Debtor. The key findings were: The Corporate Debtor admitted the outstanding operational debt exceeding the threshold limit through letters and emails. The alleged pre-existing disputes raised by the Corporate Debtor lacked credible evidence and appeared to be a moonshine defense. The Corporate Debtor failed to substantiate the claim of misappropriation of goods by the Operational Creditor. All conditions for initiating CIRP u/s 9 were fulfilled, and the Adjudicating Authority rightly admitted the application.
SEBI
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New rules allow stock account holders to nominate beneficiaries for securities in case of death/incapacity.
Notifications : The Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 were amended to introduce a new regulation 60A mandating participants to provide options to beneficial owners for nomination of persons to whom securities shall vest upon death or incapacitation. For joint accounts, joint beneficial owners may nominate a person upon whom securities shall vest upon death of all joint holders. Depositories and participants are not liable for actions taken based on such nominations.
Service Tax
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Lottery tickets exempted from service tax, ruled as privilege not service: Refund allowed.
Case-Laws - HC : The High Court, following the Supreme Court's decision, held that lottery tickets are actionable claims and not goods, thus excluding them from the purview of service tax under Entry 97, List I of the Constitution of India. Consequently, the petitioner is entitled to a refund of the service tax amount already deposited on lottery ticket sales, as such transactions do not constitute rendering of services but are a privileged activity by the State. The High Court disposed of the petition in accordance with the Supreme Court's judgment.
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Business obtains tax refund after court overrules tribunal's dismissal of appeal.
Case-Laws - HC : The High Court condoned the 525-day delay in instituting the appeal. It held that the case involved a refund of tax wrongly paid, not a tax rebate as erroneously assumed. Consequently, the appellant's Service Tax Appeal before the tribunal was maintainable. The HC set aside the tribunal's orders, restoring the appellant's appeal to the tribunal's file. The appeal was allowed.
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Mining Royalties Taxed: Rehabilitation Fees For District & National Mineral Trusts Attract Service Tax.
Case-Laws - AT : The appellate tribunal dismissed the appeal and upheld the demand for service tax on amounts paid by the appellants to the District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET). It was held that royalty is the consideration paid for the service rendered by the government/mine owner to the mine lessee, on which service tax is payable under reverse charge mechanism. The amounts paid to DMF and NMET by the polluter/lessee are akin to royalty for the service of rehabilitating the mined area and surrounding regions as per the 'polluter pays' principle of environmental law. Since DMF and NMET are governmental authorities, the appellants are liable to pay service tax on such amounts under the reverse charge notification.
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Facilitating foreign university admissions through referrals deemed export of services, exempt from service tax.
Case-Laws - AT : The appellant provided referral services to foreign universities and received commission for the same. The Tribunal held that the services provided by the appellant fall under the category of export of services and therefore cannot be liable to service tax. The issue is settled as per the Tribunal's earlier decision in Medway Educational Consultant Pvt. Ltd., wherein it was held that the concept of "intermediary" under GST is similar to the service tax regime, and such services provided to educational institutes in respect of education are exempted from service tax. Consequently, the impugned order was set aside, and the appeal was allowed.
Central Excise
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Tribunal allows reversal of CENVAT credit; Section 11D not applicable for amounts reversed u/r 6(3) of CENVAT Credit Rules.
Case-Laws - AT : The appellant had reversed CENVAT credit on input services amounting to 10.3% in terms of Rule 6(3) of the CENVAT Credit Rules, 2004. The Tribunal held that Section 11D of the Central Excise Act, 1944, which deals with recovery of duty not paid, cannot be invoked in this case. Firstly, the amount reversed was not a duty of excise. Secondly, the appellant had already reversed the amount. The Tribunal relied on CBEC Circular No. 870/08/2008-CX, which clarified that Section 11D shall not apply to amounts reversed u/r 6(3) of the CENVAT Credit Rules, 2004, even if recovered from customers. Consequently, the demand u/s 11D was held unsustainable.
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Tribunal overrules excise evasion charges, allows input tax credit due to flawed verification.
Case-Laws - AT : The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal and set aside the impugned order. The key findings were: 1) The allegation of clandestine removal and evasion of Central Excise duty by diversion of duty-paid inputs was not sustainable. The shortage detected during the physical verification was not reliable as the finished goods available in various sections/sheds were not considered, and the CCTV footage provided by the appellant was disregarded without proper inquiry. 2) Denial of CENVAT credit was not justified. The appellant had established the receipt of inputs in their factory with documentary evidence. The statements relied upon by the Revenue were inadmissible as evidence since the request for cross-examination was rejected without valid grounds. As long as duty payment on outputs is accepted, the benefit of input credit cannot be denied when the appellant has satisfied the requirements.
Case Laws:
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GST
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2024 (12) TMI 143
Challenge to impugned notice in the Form ASMT-10 dated 26.09.2024 issued by the 1st respondent - unblocking of electronic credit ledger/electronic cash ledger - main grievance of the petitioners is that the petitioner's ECL has been blocked without the availability of any credit, which is totally contrary to the provisions of Rule 86A of GST Rules, 2017. Whether the State Authorities are empowered to issue Form GST ASMT-10 dated 26.09.2024, subsequent to the search conducted by the Central Authorities on 13.03.2024? - HELD THAT:- At the time of issuance of ASMT-10 by the State Authorities, i.e., 26.09.2024, only the search was conducted by the Central Authorities and no notice was issued by them with regard to the wrongful availment of a sum of Rs. 13.10 Crores. Therefore, under these circumstances, one cannot assume or presume that in the present case, the cross empowerment will come into picture against the State Authorities - the State Authorities cannot proceed based on the Form GST ASMT-10, however, in the absence of any further orders, subsequent to the issuance of ASMT-10 by the State Authorities, it is pre-mature to decide as to whether the State Authorities are barred by cross empowerment or not. Even if the State Authorities are barred by cross empowerment for initiation of proceedings against the petitioner, the blocking of ITC will always be the domain of State Authorities, which was also accepted by the Central Authorities, since the petitioners are registered person of the State Authorities - this Court is of the considered view that in this case, the State Authorities have acted well within their power/jurisdiction and it is pre-mature to come to the conclusion as to whether the cross empowerment will come into picture or not. Whether the blocking of ITC by virtue of the intimation dated 24.06.2024, 09.09.2024 and 10.09.2024 is in accordance with the provisions of Rule 86A of the GST Rules, 2017? - HELD THAT:- A reading of the Rule 86A would show that if the Commissioner or an Officer, not below the rank of Assistant Commissioner, having reason to believe that the credit of ITC available in ECL has been fraudulently availed or ineligible under the circumstances mentioned in Clauses (a) to (d) of Rule 86A(1) of GST Rules, for the reasons to be recorded in writing, not allow the debit of amount equivalent to such credit in ECL for discharge of any liability under Section 49 of the GST Act. A conjoint reading of 1st and 2nd parts of Rule 86A would clearly reveal that the word available in the ECL referred in 1st part would mean that the amount available after the fraudulent availment of credit at any point of time, whether it was available in the ECL or utilised at the time of passing the blocking orders. Hence, the 2nd part of Rule 86A empowers the Authorities not to allow the debit of amount equivalent to the fraudulently availed credit for discharge of liabilities under Section 49. If it was already utilised, the Officials are also empowered to pass blocking orders to the extent of amount equivalent to such credit, which was already utilised, along with the unutilised fraudulently availed ITC amount available in the ECL at the time of passing the blocking orders. This Court is of the considered view that the negative blocking is well within the scope of provisions of Rule 86A of GST Rules. The blocking of ITC can be made to the extent of wrongful availment of credit, for which Rule 86A empowers State Authority not to allow debit of the amount equivalent to such wrongful availment of credit to the extent of available ECL at any point of time. Therefore, at the time of blocking, the availability of ITC in the ECL is immaterial - the Authorities are empowered to pass the blocking orders, in the present case, up to the maximum extent of a sum of Rs. 13.10 Crores towards the wrongful availment of credit. Whether the issuance of Form GST DRC-01A pertaining to a sum of Rs. 71,798/- and remitting of the said amount by virtue of Form GST DRC03 and dropping of proceedings would amount to determination of the entire issue in Form GST ASMT-10? - HELD THAT:- It is for the State Authorities to decide as to whether all the issues pertaining to Form GST ASMT-10 issued by them are covered by Form GST DRC-01A issued by the Central Authorities, for which, the petitioner has to file their reply. Upon considering the said reply filed by the petitioner, the State Authorities has to consider the same and decide with regard to the continuation of proceedings initiated by them - this Court finds no force in the submissions made by the learned Senior counsel appearing for the petitioner on all the three issues and accordingly, the same is rejected. Therefore, this Court is of the considered view that this writ petition is liable to be dismissed. Petition dismissed.
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2024 (12) TMI 142
Challenge to impugned order - Excess Input Tax Credit (ITC) claimed on account of non-reconciliation of information - ITC claimed from cancelled dealers, return defaulters and tax non-payers - HELD THAT:- The petitioner is ready and willing to pay 10% of the disputed tax and that they may be granted one final opportunity before the adjudicating authority to put forth their objections to the proposal, to which the learned Additional Government Pleader appearing for the respondent does not have any serious objection. The impugned order dated 09.08.2024 is set aside and the petitioner shall deposit 10% of the disputed tax within a period of four weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four weeks from the date of receipt of a copy of this order along with supporting documents/material - Petition disposed off.
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2024 (12) TMI 141
Stay of further proceedings - failure to issue notice under Rule 99 in Form AMST-10 before issuing Show Cause Notice under Form DRC-01 - HELD THAT:- Section 65 of the Goods and Services Tax Act provides audit of the tax authority but for that, as provided under Section 65 (3), the registered person has to be informed by way of notice not less than 15 working days prior to conduct of audit in such manner as may be prescribed. Learned Additional Advocate General has failed to point out any notice issued under Section 65 (3) of the Act or any corresponding rule related thereto, therefore, at this stage, prima facie case is made out like the case in CWP No. 1793 of 2024. Therefore, there shall be stay of further proceedings in pursuance to (Annexure P-1) dated 24.5.2024 and impugned order dated 12.9.2024 (Annexure P-3) for the financial year 2019-20 issued under Section 74 of the Act.
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2024 (12) TMI 140
Challenge to order of assessment and the order of rectification passed by the respondent - vague SCN - calculation of period of limitation from the date when the original assessment order was passed - HELD THAT:- After assessment order has been made, Section 161 of the GST Act provides for an application to be made for rectification. Such rectification can be disposed either in favour of the assessee or against him. If any rectification is made as prayed for, the same would get merged into the original order. Just because the rectification application has been rejected, the period of limitation to challenge the original assessment order cannot be said to begin from the date on which the original order was passed, it would only count from the date on which the order of rectification has been passed. In the present case, the original order of assessment was made on 07.08.2024 and the order in rectification was made on 12.11.2024. Therefore, the period of limitation for challenging the order of assessment dated 07.08.2024 shall start ticking from the date of rejection of the rectification application i.e., from 12.11.2024. It is made clear that when the appeal is filed by the assessee as against the original order of assessment, the period of limitation shall be calculated from the date on which the rectification had been dismissed. Petition disposed off.
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2024 (12) TMI 139
Reversal of ITC - violation of Article 265 of the Constitution of India - contrary to the provisions of Section 16 read with Section 41 and Section 73/74 of the CGST Act - HELD THAT:- It appears that the petitioner claimed the ITC for the month of July, 2021 in the return filed in the Form GSTR-3B on the basis of the ITC reflected in Form GSTR-2A pertaining to the transfer of leasehold rights and accordingly, filed the refund claim on 03.01.2023 as the petitioner was engaged in the business of exports and petitioner was therefore entitled to the refund of the ITC available in the Electronic Credit Ledger as per the provisions of Section 54 (3) (b) of the CGST Act read with Section 16 (3) (a) of the IGST Act. It appears from the material on record as well as the pleadings of the petitioner that the petitioner was compelled to reverse the ITC by the respondent No. 4 during the course of the summons proceedings on 12.01.2023 and 13.01.2023 and accordingly, the petitioner reversed the ITC of Rs. 9,83,53,032/-. This Court is not going into the merits as to whether the petitioner is entitled to refund of the ITC under the provisions of the CGST and IGST Acts as the matter is sub-judice before the Appellate Authority. However, in the facts of the case, it is apparent that as per Rule 89 of the Rules when the petitioner filed the refund application, the Electronic Credit Ledger was again debited by the amount of the ITC which was claimed in the refund application. Thus, there are two debits in the Electronic Credit Ledger of the same amount once on 13.01.2023, when the petitioner was compelled to reverse the ITC during the summons proceedings by the respondent No. 4 and second time, by virtue of the operation of the provisions of the Rules at the time of filing of the refund application on 30th June, 2023. In the facts of the case, the ITC which was reversed by the petitioner on 13.01.2023 during the summons proceedings without there being any adjudication process, is required to be restored. The petition therefore succeeds to that extent only - the respondents are directed to restore the ITC of Rs. 9,83,53,032/- in the Electronic Credit Ledger of the petitioner within a period of four weeks from the date of receipt of copy of this order - petition allowed in part.
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2024 (12) TMI 138
Violation of principles of natural justice - unreasoned impugned order - Rejection of application for rectification of order - extension of limitation for concluding the adjudication of show cause notice issued under Section 73 of the CGST Act, 2017 - HELD THAT:- There has been an apparent and clear failure to assign any reasons or engage with the reply that had been filed. Since the impugned order is wholly unreasoned, it cannot be sustained. The impugned order dated 30 December 2023 is quashed - petition allowed.
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2024 (12) TMI 137
Applicability of Section 5 of the Limitation Act,1963 - failure to file returns under CGST/SGST Acts - issuance of series of orders under Section 62 of the CGST/SGST Act - HELD THAT:- The petitioner has not made out any case for the grant of any relief under Art. 226 of the Constitution of India. Admittedly, the petitioner attempted to file the appeal against Ext.P2 series of orders only in the month of December 2023 i.e., almost four years after the date on which the orders (against which the appeal was sought to be filed) had been issued. This Court cannot, normally in the exercise of jurisdiction under Art. 226 of the Constitution of India extend the time limit for filing an appeal under Section 107 of the CGST/SGST Acts. There is yet another aspect of the matter. Though Article 226 of the Constitution of India does not fix any period of limitation for the filing of a writ petition, it is settled law that a writ petition can be dismissed on the ground of inordinate delay in filing the writ petition. As already observed the orders issued by the adjudicating authority were issued in the month of February 2020. This Writ Petition has been filed only in the year 2024. That is another reason to decline relief. The petitioner has failed to approach this Court within a reasonable time. The writ petition fails, and it is accordingly dismissed.
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2024 (12) TMI 136
Challenge to impugned order - service of notices - impugned order is challenged on the premise that neither the show cause notices nor the impugned order of assessment has been served by tendering to the petitioner or by registered post, instead it was uploaded in the common portal under the head Additional Notices and Orders tab - violation of principles of natural justice - HELD THAT:- The petitioner is ready and willing to pay 10% of the disputed tax and that he may be granted one final opportunity before the adjudicating authority to put forth their objections to the proposal, to which the learned Additional Government Pleader appearing for the respondent does not have any serious objection. The impugned order dated 29.08.2024 is set aside and the petitioner shall deposit 10% of the disputed tax within a period of four weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four weeks from the date of receipt of a copy of this order along with supporting documents/material. The petition is disposed off.
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2024 (12) TMI 135
Input Tax Credit - Challenge to constitutional validity of clauses (c) (d) of Section 17 (5) of the Central Goods and Services Tax Act, 2017 - Construction of immovable property - To be treated as Plant or not - HELD THAT:- The Supreme Court in CHIEF COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX ORS. VERSUS M/S SAFARI RETREATS PRIVATE LTD. ORS. [ 2024 (10) TMI 286 - SUPREME COURT] has considered the issue and held clauses (c) (d) of Section 17 (5) of the CGST Act to be intra vires and not unconstitutional. However, their Lordships in M/s Safari Retreats Private Ltd. s case further held that the question whether the construction of immovable property carried out by the petitioners therein amounts to plant has to be decided on its merit by applying the functionality test in terms of the judgment passed in the aforesaid case. Their Lordships also held that the issue must be decided in appropriate proceedings in which adjudication can be made on facts and granted liberty to the petitioners therein to adopt appropriate proceedings or raise the issue in appropriate proceedings. While dismissing the present writ petition qua the constitutional validity of clauses (c) (d) of Section 17 (5) of the CGST Act, liberty is reserved in favour of the petitioner to raise the issue whether the construction of immovable property carried out by the petitioner amounts to plant within the meaning of Section 17 (5) (d) (plant) of Act of 2017 - Petition disposed off.
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2024 (12) TMI 134
Seeking grant of Regular bail - operating and managing fake firms - wrongful passing on of fake Input tax credit - HELD THAT:- Considering the facts and circumstances of the case, the nature of the allegation levelled against the applicant, the fact that on the basis of the complaint and the evidences procure in the matter of Ishan Gupta and no incriminating has been recovered at the instance of the present applicant and the applicant was not involved in any of the acts as alleged against him consciously or otherwise and the applicant is a transgender person, the applicant is languishing in jail since 06.08.2024 and the charge-sheet/complaint has been filed, the conclusion of the trial is likely to take some time, hence, without commenting anything on merits of the case, it is inclined to grant regular bail to the applicant. Accordingly, the bail application filed on behalf of Applicant - Badal Gour is allowed. If the applicant - Badal Gour furnishes a personal bond in the sum of Rs.1,00,000 with one solvent surety to the satisfaction of the concerned Court, he be released on bail involved in Crime No.45/FIC//GST/2024-25, registered at Police Station Central GST and Central Excise Raipur, District-Raipur, (CG) for the offence punishable under Sections 132 (1) (B) and 132 (1) (c) of the Central Goods and Services Tax Act, 2017. Bail application allowed.
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2024 (12) TMI 133
Challenge to impugned order on the premise that the same was made in violation of principles of natural justice - discrepancies between GSTR-3B and Form 26AS and between GSTR-3B and GSTR9/9C - HELD THAT:- The petitioner is ready and willing to pay 10% of the disputed tax and that they may be granted one final opportunity before the adjudicating authority to put forth their objections to the proposal, to which the learned Additional Government Pleader appearing for the respondent does not have any serious objection. The impugned order dated 05.07.2024 is set aside and the petitioner shall deposit 10% of the disputed tax within a period of four weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four weeks from the date of receipt of a copy of this order along with supporting documents/material - Petition disposed off.
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2024 (12) TMI 132
Maintainability of petition - availability of alternative statutory remedy - Challenge to impugned order for not condoning the delay for filing an appeal - HELD THAT:- Upon a thorough examination of the documents presented before the Court and taking into account the arguments put forth by the parties, this Court allows the writ petition on the grounds that the delay in filing the appeal by the petitioner was due to circumstances beyond the control of the petitioner. This rigid approach fails to account for genuine extenuating circumstances, reflecting a lack of judicial empathy and an unreasonable interpretation of statutory time limits. Given the petitioner's situation, this decision by the Appellate Authority to dismiss the appeal based solely on timing considerations was legally unsound. Moreover, the petitioner s right to further appeal has been obstructed by the non-formation of the GST Appellate Tribunal, effectively denying him a statutory right to a higher appeal. In light of the procedural irregularities, the arbitrary nature of the actions, and the statutory misapplication, this court finds the petitioner s case to be meritorious. Accordingly, the writ petition is allowed, and the impugned orders dated February 27, 2024 is quashed.
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2024 (12) TMI 131
Challenge to impugned order - no proper reasoning in the impugned order - HELD THAT:- As is manifest from the record, upon the issuance of the Show Cause Notice [SCN] dated 29 May 2024, the petitioner had filed a detailed reply on 29 June 2024. However, the same has come to be perfunctorily rejected in terms of the order impugned - Apart from the Assistant Commissioner having observed that the reply filed by the tax payer was not comprehensible, conceivable, not perspicuous and is ambiguous , no further reasons have been assigned. In fact, it is constrained to observe that the said language appears to have attained the status of a template and is being uniformly used while passing orders like the one which is impugned here. Since the impugned order is wholly unreasoned, the same cannot be sustained - petition allowed.
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2024 (12) TMI 130
Retrospective Cancellation of GST Registration - failure to file returns for a continuous period of six months - HELD THAT:- The allegation which formed the basis for that notice was a purported failure on the part of the petitioner to furnish returns as required under Section 39 of the Act. The respondents had alleged that the petitioner had failed to furnish returns for a continuous period of six months. In the present case, in the absence of any indication in the SCN of the reasons which weighed upon the respondents to cancel registration with retrospective effect, it is unable to sustain the impugned order. The impugned order dated 28 February 2023 to the extent that it purports to operate with effect from 02 July 2017 shall stand quashed. The cancellation shall consequently come into effect from the date of issuance of the SCN namely 15 January 2023 - petition allowed.
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2024 (12) TMI 129
Challenge to to the DRC-07 notice - reversal of wrongly availed ITC in the petitioner's GSTR-3B filed - HELD THAT:- The notice had been issued by the first respondent to the petitioner, which has also been duly responded. Pursuant to the personal hearing that had been granted to the petitioner, the first respondent had considered the case in detail and had passed orders on 17.10.2023. With respect to the third item in the demand notice, which arises out of wrong availing of ITC credit by the petitioner, the first respondent had recorded the factual finding that the petitioner had reversed the wrong claim even as early as on 28.02.2021 in their GSTR-3B for the month of February, 2020. In the counter affidavit, the second respondent had categorically admitted that the petitioner had reversed the said wrongly availed ITC, however had expressed his inability, as the portal would not permit such reversal. The said reason given by the second respondent is wholly unacceptable. He ought not to have included the said demand when the first respondent himself had ordered such reversal to be treated as a payment under Section 73 of the CGST Act, 2017. The demand in respect of the said account in item No.3 is wholly erroneous and therefore, it is inclined to set aside the said demand under item No.3 of the impugned DRC-07 notice. In respect of the other claims as submitted by the learned counsel for the petitioner, he is at liberty to approach the concerned Authority seeking amnesty. The Writ Petition is partly allowed setting aside the demand in respect of item No.3 of the impugned DRC-07 notice dated 15.05.2024 and in all other aspects, the petitioner is at liberty to workout his remedy as available in law.
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2024 (12) TMI 128
Challenge to SCN on the ground that the SCN has been issued by the State Tax Authority without jurisdiction and without there being any notification as contemplated by the provisions of Section 6 (1) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The petitioner has not made out any case for interference with Ext. P4 show cause notice on the ground that it is issued without jurisdiction on account of the fact that there is no notification issued under the provisions of Section 6 (1) of the CGST Act empowering the officers of the State Goods and Services Tax Act to issue such a show cause notice. A reading of Section 6 (1) of the CGST Act makes it clear that the officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to be proper officers for the purposes of the Act, subject to such conditions as the Government shall, on the recommendations of the Council, by notification, specify. Unaided by authority, a reading of the provision suggests to me that by virtue of the operation of the provision itself, the officers appointed under the State Goods and Services Tax Act are proper officers for the purposes of the Central Goods and Services Tax Act, and it is only when any restriction or condition has to be placed on the exercise of power by any officer appointed under the State Goods and Services Tax Act that a notification as contemplated by the provisions of Section 6 (1) of the CGST Act has to be issued. In the decision of Tvl. Vardhan Infrastructure [ 2024 (3) TMI 1216 - MADRAS HIGH COURT] it was ruled that, the proceedings initiated by the respondents so far against the respective petitioners by the Authorities other than the Authority to whom they have been assigned to are to be held as without jurisdiction. Therefore, the impugned proceedings warrants interference Since the issue raised in this writ petition will affect several proceedings, and taking note of the view expressed by the Madras High Court in Tvl. Vardhan Infrastructure [ 2024 (3) TMI 1216 - MADRAS HIGH COURT] , which is contrary to the prima facie view taken here, it is opined that this issue requires an authoritative pronouncement by a Division Bench of this Court. The writ petition is, therefore, adjourned to be heard by a Division Bench. The Registry shall place the matter before the Division Bench, if necessary, after obtaining orders of Hon ble the Chief Justice.
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Income Tax
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2024 (12) TMI 147
Revision u/s 263 - development fees from its students had been directly carried to the balance sheet under the nomenclature Development Fund instead of being routed through the income and expenditure account and this was then treated as part of the Revenue and therefore the taxable income u/s 11 (1) - delay in filling SLP - As decided in HC [ 2022 (3) TMI 1497 - ORISSA HIGH COURT] as noted by the ITAT, if only the CIT (E) had undertaken an inquiry, he would have come to the above conclusion and there would have been no need to act to the taxable income of the Assessee. The Court is satisfied that no error has been committed by the ITAT in concluding that the order of the CIT (E) is unsustainable in law. HELD THAT:- After having perused the application for condonation of delay, we find that there is absolutely no explanation for a long delay of 504 days in preferring the Special Leave Petition. Hence, the Application seeking condonation of delay in preferring the Special Leave Petition is rejected. Consequently, the Special Leave Petition stands dismissed on the ground of delay.
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2024 (12) TMI 146
Cash deposits u/s 69A - additions made during demonetization period - objection of the department that the account of the assessee was contrary to the Agreement wherein he was supposed to deposit the money in the account of the FRB instead he deposited the cash in his bank account and thereafter transferred the money to the account of FRB which brings the deposit within the mischief of Section 69A - HELD THAT:- CIT(A) and the Tribunal were justified in coming to the conclusion that only on account of purported infraction of the Agreement between the FRB and the assessee, without there being any dispute regarding the amount collected by the assessee which, in turn, has been deposited with the FRB, the deposits in the bank account of assessee cannot be termed as unexplained cash deposits by the assessee. Both the authorities have concurrently found that the amount indeed has been collected from the micro borrowers of the FRB and after deposit in the bank account has been transferred to the FRB. The said finding of fact recorded by the two authorities, cannot and does not give rise to any substantial question of law as projected. So far as the fact regarding the period of demonetisation is concerned, the CIT(A) only on assumption, that the deposit was in infraction of the Agreement that the appellant was not authorised to collect money in Specified Bank Notes, rejected the appeal, the Tribunal came to the conclusion that merely because certain cash deposits in the Specified Bank Notes by the assessee during the demonetization period, the same did not make the deposit as tainted when the very same transactions were being made by the assessee in the past and have been accepted by the CIT(A). Tribunal was also of the opinion that it was not the case of the revenue that assessee was not in receipt of Specified Bank Notes from the customers of the FRB during the period 09.11.2016 to 30.12.2016. The findings recorded by the Tribunal, are in consonance with the material available before it and by no stretch of imagination the deposits received by the respondent assessee from the micro borrowers of the FRB can be termed as unexplained cash deposits in his bank account. No substantial question of law.
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2024 (12) TMI 145
Addition u/s 69A - cash deposit in the bank accounts (both the above bank accounts) during the demonetization period - HELD THAT:- As incumbent upon the authorities below to have issued summons to Mr. Neeraj Kumar u/s. 131 or ought to have made enquiries u/s. 133(6) with said Neeraj Kumar, to unravel complete truth. It is true that the assessee did not participated in the assessment proceedings, but the assessee duly participated in appellate proceedings conducted by ld. CIT(A). The powers of CIT(Appeals) are co-terminus with the powers of the Assessing Officer including power of enhancement. It is also explained by the ld. Counsel for the assessee that no proceedings have been initiated u/s. 143(2) or 147 against said Neeraj Kumar and his return of income has been accepted by Revenue. In these circumstances, it is only in the case when said Mr. Neeraj Kumar disown the aforesaid transactions, the Revenue could have proceeded against the assessee. No merit in the addition being made in the hands of the assessee on account of cash deposited on 10.11.2016, 13.11.2016 and 29.11.2016 in the demonetization currency of Rs. 500/- and Rs. 1000/- in the bank account maintained with Union Bank of India, Railway Road, Kasganj, as the said bank account belongs to Mr. Neeraj Kumar, proprietor of Anurag Kumar Neeraj Kumar. The Revenue has also not filed any C.O. with ITAT, thus, the Revenue is not aggrieved with the appellate order passed by ld. CIT(A). This addition as was made by the AO and later sustained by ld. CIT(A) is not sustainable and directed to be deleted. Other deposits during the year, which in total are not exceeding Rs. 50,000/- . The assessee has owned up these cash deposits, and declaration has also been made in ITR filed with Revenue. The assessee has already declared income of Rs. 2,84,600/- in the return of income filed with the department. Under these facts and circumstances. There is no such adverse finding by the authorities below that the said cash deposits are not accounted for by the assessee. No merit in the addition being made in the hands of the assessee. Therefore, order deletion of the additions made by the AO as income in the hands of the assessee which was later sustained by ld. CIT(A). Addition in the hands of the assessee on account of presumptive scheme of taxation u/s 44AD , as the said deposits are also in the bank account of Neeraj Kumar namely Anurag Kumar Neeraj Kumar, and the said bank account is owned by Shri Neeraj Kumar - If the department wanted to proceed, It ought to have proceeded against Mr. Neeraj Kumar, wherein department could have invoked provisions of Section 143(2) and/or Section 148. The department also did not find it relevant to issue summons u/s 131 or make enquiry u/s 133(6) with said Mr. Neeraj Kumar. It is true that the assessee did not participated in the assessment proceedings, but the assessee duly participated in appellate proceedings conducted by ld. CIT(A). The power of ld. CIT(A) are co-terminus with the powers of the AO. It is not the case of the Revenue that the said Mr. Neeraj Kumar did not own the said deposits in the bank account. The Revenue has also not filed any C.O. with ITAT, thus, the Revenue is not aggrieved with the appellate order passed by ld. CIT(A). The Assessing Officer is directed to delete the additions in the hands of the assessee.
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2024 (12) TMI 144
Maintainability of appeal on low tax effect - addition made by the AO is less than the prescribed monetary limit, specified in the Circular No.3/2018 dated 11.07.2018 - Revenue pointed out that above modified Circular No.3/2018 dated 11.07.2018 stated that in certain circumstances, the matter should be heard on merit, even if addition made by the assessing officer, is less than the prescribed monetary limit, specified in the modified Circular - HELD THAT:- We do not agree with learned DR for the revenue, because, in the assessee s case under consideration, the addition was made by the assessing officer, based on the information received from the state police department and not on the basis of enforcement agencies such as CBI/ED/DRI/SFIO/Directorate General of GST Intelligences (DGGI), which is mentioned in the modified said Circular No. No.3/2018(supra). Hence, even modified Circular No. No.3/2018 (modified on 20.08.2018,) is not applicable, to the assessee s case under consideration. The various agencies defined in the circular, such as, CBI/ED/DRI/SFIO/Directorate General of GST Intelligences (DGGI), are exhaustive in nature. Exhaustive means comprehensive, thorough or tending to exhaust and no further word / Agency should be added. It is a settled position of law that an act done by the assessee, which is legal, when it was done, cannot be made illegal by enacting a new circular. Therefore we find that even in modified said Circular No. No.3/2018(supra), state police department, is not mentioned, by CBDT, therefore, the said modified circular does not apply to the assessee s case under consideration. The claim of the Revenve, to recall the order of the Tribunal, and to hear on merit, is misconceived. Hence, based on these facts and position in law, we note that miscellaneous application filed by the Revenue deserve to be dismissed. Accordingly, we dismiss the miscellaneous application filed by the Revenue.
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2024 (12) TMI 127
Validity of reopening of assessment - delay in issuance of notices - High Court [ 2023 (7) TMI 1504 - BOMBAY HIGH COURT] refused to entertain the writ petition filed by the appellant herein under Article 226 of the Constitution of India relegating the appellant to the alternative remedy under the provisions of the Income Tax Act, 1961 - HELD THAT:- As in Union of India Ors. Vs. Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB)] wherein a three Judge Bench of this Court headed by the then Hon ble the Chief Justice of India, relegated the matters to the Assessing Officer for the purpose of considering the question of delay in issuance of notices impugned in those cases u/s 148 and/or other provisions of the I.T. Act, 1961, which were deemed to have been issued under the amended Section 148-A(b) in terms of the order of this Court in the case of Union of India Vs. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] Thus while applying the dictum of this Court in the case of Rajeev Bansal, referred to above, we think it just and proper to quash the final Assessment Order dated 22.05.2023 only for the purpose of enabling the appellant herein to take up all objections and contentions vis-a-vis the impugned notices. It is needless to observe that the concerned AO shall consider the objections and contentions of the appellant herein vis-a-vis the impugned notices and pass a fresh order in accordance with law.
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2024 (12) TMI 126
Accrual of income - Income from interest on securities - Whether computed on accrual basis or on due basis? - delay filling SLP - application seeking condonation of delay of 220 days in filing the special leave petition - As decided by HC [ 2023 (1) TMI 725 - TELANGANA HIGH COURT] interest can be said to have accrued only on the date on which it was due as per the terms and conditions of the security. When an instrument or an agreement stipulates interest to be payable at specified date, interest does not accrue to the holder thereof on any date prior thereto. Interest would accrue or arise only on the date specified in the instrument HELD THAT:- As we find that the reasons assigned for seeking condonation of delay are neither satisfactory nor sufficient in law to be condoned. Hence, the application seeking condonation of delay is dismissed. Consequently, the special leave petition is dismissed on the ground of delay. However, the question of law, if any, which arises in this matter is left open to be agitated in any other appropriate case.
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2024 (12) TMI 125
Reopening of assessment - 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 - as decided by HC [ 2022 (6) TMI 1500 - PUNJAB AND HARYANA HIGH COURT] where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such a pre-mature stage - there is no reason to warrant interference by this Court in exercise of the jurisdiction under Article 226/227 of the Constitution of India at this intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority - HELD THAT:- The issue involved in this Special Leave Petition is squarely covered by the Judgment of this Court rendered in Union of India Ors. vs. Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB)] The petition filed by the assessee is disposed of. The assessee will be governed by reasons discussed in the said Judgment. AO will dispose of the objections in terms of the law laid down by this Court. Thereafter, the assessee who is aggrieved will be at liberty to pursue all the rights and remedies in accordance with law, save and except for the issues which have been concluded in the Judgment.
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2024 (12) TMI 124
Power to pass Refund order - As decided in [ 2022 (9) TMI 1642 - ORISSA HIGH COURT] AO has already passed an order. But he has observed that he has no power to order refund. As clarified that the refund will be made by the Central Board of Direct Taxes (CBDT) to the Petitioner within a period of two weeks from the date of receipt of this order. HELD THAT:- Revenue makes a statement that the directions issued by the High Court in the impugned order have been duly complied with. He informs that an amount of Rs.16,90,510/- has been refunded after adjusting the self-assessed liability of Rs.58,09,487/-. Nothing further is required to be adjudicated now. If the assessees have any grievance or any further difficulty, we leave it open for them to take appropriate recourse available to them in law. Special Leave Petition is, accordingly, disposed of
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2024 (12) TMI 123
Exemption u/s 80P(2)(d) - Availability of exemption u/s 80P(2)(d) in re-assessment proceedings - petitioner has neglected assessment in as much as neither filed his Returns nor participated in the proceedings after the notice was issued u/s 148 - HELD THAT:- Having considered the submissions made by the learned counsel for the petitioner and the learned Standing Counsel for the respondent, the Court is of the view that the final issue relating to the availability of exemption u/s 80P(2)(d) of the Act, cannot be decided under Article 226 of the Constitution of India. In this case, no doubt the petitioner has neglected. However, the petitioner does deserve one more opportunity to went out his grievances in the re-assessment proceedings. Therefore, the case is remitted back to the respondent to pass fresh orders on merits and in accordance with law from the stage of show cause notice after the issuance of Section 148 notices to the petitioner, since the petitioner has neglected by not filing of Return both at the stage of filing of regular Return under Section 139(4) of the Act and has not participated in the proceedings, despite the service of the show cause notice through post to the petitioner. Since the petitioner has neglected and did not comply with the requirements of the Act, under new regime, the petitioner is directed to pay a sum of Rs.20,000/- to the credit of Chief Justice Relief Fund, Madras High Court, Chennai, on or before 29.11.2024.
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2024 (12) TMI 122
Maintainability of writ petition filed against the assessment order and demand notice u/s 147 - petitioner having availed all the statutory remedy of preferring an appeal before the Statutory Authority, namely the Commissioner (Appeals) of the Department and the present appeal is still pending - petitioner is an indigenous person belonging to a declared Scheduled Tribe of the State of Nagaland - HELD THAT:- The petitioner having availed all the statutory remedy, this Court, without the said appeal being disposed of and more particularly when the said appeal was filed prior to filing of the present writ petition, this Court is disinclined to accept the contention of the writ petitioner. The petitioner has not raised this contention before the Court by referring to the relevant provisions and/or the orders passed by the departmental authorities that the appeal before the Appellate Authority is not efficacious and will not provide adequate relief as prayed for by that forum. It appears from the facts urged that the only reason for approaching this Court is to evade payment of the statutory deposit which is prescribed under the Act while preferring the appeal. Such attempt may be made by the petitioner cannot be permitted, more particularly in the manner sought to be done by taking recourse to filing a writ petition before this Court during the pendency of the statutory appeal already filed by the petitioner. Section 249 (4) prescribes that where an appeal is filed before the Appellate Authority it shall not be entertained unless the Assessee has paid the tax due on the income return by him wherein return is filed and where no returns are filed the Assessee shall pay an amount equal to the amount of tax payable by him. Any application that may be filed by the petitioner will necessarily be required to be considered appropriately in terms of the proviso to Section 249 (4) of the Income Tax Act and pass appropriate orders. The contentions raised by the writ petitioner before this Court can also be raised before the Appellate Authority which is presently in seisin of the matter. The petitioner is granted liberty to file necessary applications before the Commissioner, Income Tax Appeal, raising all grounds to assail the Assessment Order dated 31.03.2022 before the Commissioner (Appeals). The Commissioner (Appeals) in its turn will proceed to hear and dispose of the appeal filed by the petitioner and pending before the said authority as per the provision of law. The petitioner is permitted 2 (two) weeks time to file all necessary papers.
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2024 (12) TMI 121
LTCG - exemption u/s 54F denial as there was a brick-kiln existing on the new property and not a residential house - ITAT concluded that the Assessee s investment was not in a residential house - HELD THAT:- ITAT had concluded that the word makaan used in the registry was not in a reference to a residential house. This view is supported by the fact that a brick-kiln and sheds had been constructed on the land in question and the registered sale deed does not mention any other structure on the new property, other than a makaan . The contention that the brick-kiln and the built up share has fallen to the shares of other co-owners and, therefore, is not required to be considered, overlooks this point. The present case is centered on appreciation of evidence on record. It is admitted that the registered sale deed of the new property is not confined to the share of the Assessee but also to the other co-owners. It is also admitted that it does not mention any structure other than a makaan and brick kilns and sheds stand on the new property. The learned ITAT noticed that the sale deed of the new property did not refer to the structure as rihayasi makaan, which would be a literal translation of a residential house . Therefore, concluded that the reference to a makaan in the registered deed was not a residential house. ITAT also found that the new property was described in the revenue records as agricultural land and the registration fee was paid on the said basis. The question as to whether a residential house existed on the land in question, is a question of fact. Assessee seeks to assail the factual findings of the AO and of the learned ITAT, as perverse. No substantial question of law.
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2024 (12) TMI 120
Offence u/s 278 of Income Tax Act for abetting filing of false returns - Petitioner convicted as an abettor of the offence committed by Munilal Devi - presumption of culpable mental state - Munilal Devi had disclosed to the Income Tax Department in her show cause reply that it is the petitioner who had abetted her to file false return - Effect of non-examination of Munilal Devi as a witness. HELD THAT:- Non-examination of Munilal Devi has a serious bearing in the case. The argument of the opposite party, Income Tax Department, that Munilal Devi could not have been examined as she was a co-accused in connection with the same transaction is not acceptable as Munilal Devi was not to depose against herself, but was to depose in support of her stand taken in her show cause reply and she was not a co-accused in the same complaint case and was already convicted in a different complaint case in connection with the same refund. This Court is of the considered view that under the aforesaid circumstances, it cannot be said that the prosecution has proved the foundational facts of abetment of Munilal Devi by the petitioner. While dealing with the plea of non-examination of Munilal Devi, the learned trial court observed that so far as non-examination of assessee namely, Munilal Devi is concerned, it does not affect credibility of her reply as contained in Ext.6. This Court is of the considered view that such a finding is perverse in as much as the credibility of reply of Munilal Devi could be tested only upon her examination and cross-examination. The finding of the learned trial court that the petitioner ought to have taken steps for examination of Munilal Devi is also perverse as it was for the prosecution to establish the foundational facts on the basis of which the petitioner was to be prosecuted. This Court is of the considered view that the foundational fact to bring home the charge against the petitioner for abetting filing of false return by Munilal Devi was not proved by the prosecution. Accordingly, presumption in terms of Section 278E regarding presumption of mens rea does not come into play. The role of presumption of mens rea would come into play only if the foundational facts are proved by the prosecution beyond reasonable doubts. The foundational fact was proved only to the extent that the return filed by Munilal Devi were based on forged and fabricated documents and that Munilal Devi had taken stand in her show cause reply giving the entire blame on the petitioner. This Court is of the considered view that the aforesaid fact was not sufficient to bring home the charge of abetment against the petitioner and consequently the petitioner could not have been convicted on the basis of presumption of culpable mental state , that is presumption of mens rea by referring to Section 278E of Income Tax Act. The fact remains that the same show cause reply was found not acceptable while convicting Munilal Devi in another complaint case and in this case, the same reply has been accepted to convict the petitioner. Hon ble Supreme Court [ 2011 (5) TMI 156 - SUPREME COURT ] has clearly held that once a person put signature on the verification form, he cannot wriggle out from his responsibility and the provisions of Section 278E comes into play. Such evidence is strong evidence against the maker, but he is at liberty to prove that such admission was mistaken or untrue. This Court is of the view that the conviction of the petitioner cannot be sustained in the eyes of law and in order to secure the ends of justice, the impugned judgment of conviction and sentence of the petitioner under Section 278 of Income Tax Act is set aside.Consequently, the petitioner is acquitted and discharged from the liability of his bail bonds.
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2024 (12) TMI 119
Charge u/s 277 of the Income Tax Act - petitioner had consciously furnished wrong statement knowingly or at least having reason to believe it to be false and committed the offence under section 277 of Income Tax Act, 1961 - scope of mens rea i.e. culpable mental state - sanction for prosecution of the petitioner was obtained from the Commissioner of Income Tax, Dhanbad - petitioner had taken a specific stand that one Satyaban Roy also an employee of Mugma Open Cast Area who deals with affairs of accounts had taken his signatures and signatures of his wife on several income tax forms and also on blank papers and he claimed himself to be illiterate and uneducated. HELD THAT:- Section 278E of the Income Tax Act clearly provides that in any prosecution under the Income Tax Act, which requires a culpable mental state on the part of the accused, the court shall presume the existence of such culpable mental state , but it shall be a defence for the accused to prove the fact that the accused had no such culpable mental state with respect to the act charged as an offence in that prosecution - if the accused has to prove a fact to dislodge the presumption under Section 278E of the Income Tax Act, the accused has to prove the fact in such a manner that the court believes it to exist beyond reasonable doubt and such a presumption of culpable mental state cannot be dislodged by mere preponderance of probability . This Court finds that in the present case, the foundational facts to convict the petitioner have been duly proved by the prosecution. The learned courts have rightly relied upon the legal presumption of culpable mental state on the part of the petitioner in terms of Section 278E of the Income Tax Act. Nothing credible has been brought on record by the petitioner to dislodge the presumption of culpable mental state . The petitioner was required to prove his case beyond all reasonable doubts and not on the touchstone of preponderance of probabilities , which the petitioner has failed to do. This Court is of the considered view that both the learned courts have duly considered the materials and attending facts on record and also the provisions of law and have recorded concurrent findings while convicting the petitioner for the offence under Section 277 of the Income Tax Act, 1961. There is no perversity, illegality or material irregularity in the impugned judgments and therefore, there is no scope for reappreciation of materials and coming to a different finding under revisional jurisdiction. Accordingly, the impugned judgements of conviction and sentence do not call for any interference. Compoundable nature of the offence as raised under the grounds in the criminal revision petition is concerned, the learned counsel for the Income Tax Department has no instruction in the matter and the petitioner is also not present before this Court to pursue the matter. Considering the totality of the facts and circumstance of the case, this Court finds no merit in this criminal revision petition, which is hereby dismissed. Bail bond furnished by the petitioner is cancelled.
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2024 (12) TMI 118
Revision u/s 263 - as per CIT transactions in the demat account, transactions in the bank account and receipts as per 26AS vis- -vis receipts as per the ITR were not examined/enquired/investigated by the AO though he should have carried out adequate examinations /enquiries/ investigations to come to a logical conclusion HELD THAT:- The words used in provision to section 263 of the Act are if the order is passed with making inquiries or verification which should have been done . The expression which should have been done suggests an objective test to be applied so as to highlight necessity of making appropriate inquiry for assessing the correct income and absence of which may cause prejudice to the revenue. The impugned order passed by the Ld. PCIT demonstrates that he has examined the record and has found certain issues as detailed in the impugned order that the AO has not examined/enquired/investigated certain issues which should have been made. In the present case the PCIT has clearly mentioned that the 26AS of the appellant/assessee showed receipt of Rs. 5,71,044/- from National Aviation Company of India Ltd. and Air India Ltd. whereas the ITR showed Rs. 2,22,540/-. PCIT has also held that transactions of demat accounts and bank account were not examined/enquired/investigated and consequentially dealt in the assessment order. This finding of the Ld. PCIT has not been categorically rebutted by the appellant/assessee though the factum of inquiry is always verifiable with reference to record. PCIT has amply demonstrated in the impugned order that three issues; transactions in the demat account, transactions in the bank account and receipts as per 26AS vis- -vis receipts as per the ITR were not examined/enquired/investigated by the AO though he should have carried out adequate examinations /enquiries/ investigations to come to a logical conclusion. Further, neither any reply/document nor any notice under section 142(1) of the Act demonstrating the fact that these issues had been examined by the AO was brought on the record, which may substantiate the claim of the appellant/assessee that it is a case of change in opinion. In view of the facts in entirety and above discussions/observations, we are of the considered opinion that the Ld. PCIT has rightly exercised her jurisdiction under section 263 - Decided against assessee.
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2024 (12) TMI 117
Disallowance of bonus gratuity shown payable/paid in the Balance Sheet/Profit Loss Account - HELD THAT:- We are of the considered view that this issue needs to be decided a fresh in view of the decision of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] . We therefore, set aside this issue and remit the disallowance of Bonus gratuity of back to the file of the AO to be decided accordingly. Lesser receipts shown in the ITR vis- -vis the receipts as per the Form 26AS of the appellant/assessee - We find merit in the submission of the Ld. Sr. DR that this issue requires verification reconciliation of receipts as per 26AS vis- -vis receipts as per the books of account/Profit Loss Account of the appellant/assessee. We therefore, set aside this issue and remit the issue of addition back to the file of the AO to be decided afresh after proper reconciliation and verification. Appellant/assessee should ensure compliances during the set-aside proceeding before the AO.
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2024 (12) TMI 116
Quantum Addition and Penalty u/s 270A - difference between the actual rent received and agreed rent as per agreement - HELD THAT:- Assessee received rent from M/s. Mobivil Technologies India Pvt. Ltd. only to the extent of ₹. 3,74,879/- and also TDS deducted thereon of ₹. 37,492/-, which is not disputed by both the parties. But, we find that the AO fell in error in taking into consideration the agreed rent as per the agreement resulting the impugned addition. Rent bill issued by the assessee in favour of M/s. Mobivil Technologies India Pvt. Ltd. for the period from 01.04.2017 to 31.03.2018. In all the months, it is noted that the assessee raised bill under the head office rent and also raised tax invoice for the period from July, 2017 to March, 2018, clearly shows CGST SGST at 9% each was calculated and paid for the monthly rent received by the assessee. Therefore, we find force in the argument of the AR that the AO fell in error in ignoring the receipt of rent as reflected in Form 26AS and TDS deducted thereon. Therefore, in our opinion, the addition made by the AO and confirmed by the ld. CIT(A) is not justified. Thus, the addition made on the amount of difference between the actual rent received and agreed rent as per agreement in the case of M/s. Mobivil Technologies India Pvt. Ltd. is deleted. Appeals filed by the assessee are allowed.
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2024 (12) TMI 115
Addition u/s 56(2)(viib) - shares allotted by the assessee to promoters/existing share holders at a premium - difference between the value of the shares adopted by the assessee as against the fair market value as determined by the AO by following Rule 11UA of the IT Rules - HELD THAT:- As in the present case, AO considered the DCF method as furnished by the assessee and rejected the same as the assessee failed to produce supporting documents and it was prepared based on the discussion with the management of the company. Before us, no material filed supporting the DCF method, except annexure A B annexed to letter dated 18.03.2021. Therefore, we find the AO rightly adopted the method under Rule 11UA(2) of the IT Rules in determining the FMV of the unquoted shares at ₹. 63.47. Further, we note from the impugned order of the ld. CIT(A) observed that the assessee obtained valuation of shares by DCF method only during the course of assessment proceedings in 2021 and there was no basis for claim of premium of ₹. 140/- at the time of issuance of shares to its promoters/existing shareholders. Therefore, admittedly, there was no valuation by DCF method at the time of issuance of shares as rightly held by the ld. CIT(A) and we hold the same. AR placed on record Income Tax (Twenty First Amendment), Rules, 2023 in respect of Rule 11UA regarding option of assessee to adopt the date of valuation - On plain reading of the sub-rule (3) of Rule 11UA clearly explains the date of valuation report by merchant bankers for the purposes of sub-rule (2) is not more than 90 days prior to the date of issue of shares which are subject matter of valuation of such date may at the option of the assessee be deemed to be the valuation date. As discussed above, the ld. CIT(A) held that there was no valuation report by merchant banker at the time of issuance of shares, since we agreed with the findings of the ld. CIT(A), we reject the arguments of the ld. AR that it is option left to the assessee to adopt any date i.e., the date of valuation report by merchant bankers for the purpose of sub-rule (2) be deemed to be the valuation date. Valuation report by merchant banker under DCF method was already on record before the Assessing Officer during the course of assessment proceedings and held not acceptable in terms of the decision of the Hon ble High Court of Delhi [ 2024 (4) TMI 318 - DELHI HIGH COURT] . Therefore, the finding of the Tribunal in the case of Brio Bliss Life Science Pvt. Ltd. ( 2023 (2) TMI 966 - ITAT CHENNAI] is not applicable to the facts of the present case Assessing Officer is fully justified in invoking the provisions of section 56(2)(viib) r.w. Rule 11UA - Decided against assessee.
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2024 (12) TMI 114
Validity of Reopening of assessment u/s 147 - lack of approval from the competent authority u/s 151 - notice beyond expiry of the period of four years - HELD THAT:- In the instant case, provision of sub-section (1) of Section 151 are applicable as the notice has been issued on 30/03/2021 after the expiry of period of four years from end of the relevant assessment year 2015-16 which expires on 31/03/2020, therefore, in such a case, the competent authority to grant the sanction u/s 151 is PCCIT, CCIT, Pr.CIT or Commissioner. In the instant case, it is an admitted and undisputed fact that the AO has sought sanction for issue of notice from the JCIT vide proposal dt. 30/03/2021 enclosing copy of the reasons so recorded and the approval has been granted by the JCIT Range-1, Ludhiana stating that she was satisfied with the reasons recorded by the AO that it is a fit case for issuance of notice u/s 148 of the Act on the same date. We therefore find that the approval from the competent authority as so prescribed before the issue of notice u/s 148 has not been obtained in the instant case and therefore, the very initiation of proceeding under section 147 stands vitiated. See EAST INDIA HOTELS LIMITED [ 1992 (2) TMI 12 - CALCUTTA HIGH COURT] and M/S. AMBIKA IRON AND STEEL PVT. LTD.[ 2022 (1) TMI 1291 - ORISSA HIGH COURT] Thus, given that the notice under section 148 has been issued after expiry of four years from the end of the relevant assessment year, the very initiation of the proceeding stands vitiated for want of specific sanction from the competent authority as so required under sub section (1) of Section 151 of the Act. Decided in favour of assessee.
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2024 (12) TMI 113
Applicability of TDS @ 1% or 20% in terms of provisions of Section 194IA with a conjoint reading of Section 206AA - non-availability of PAN or non-quoting of PAN - Purchase of property exceeded the limit prescribed u/s 194IA of Rs. 50.00 lac - P ayment in the nature of loan was made through Avani Traders by the proprietorship concern of Mr. RA, who happen to be the husband of the assessee, and at that point of time, the Seller was not having any PAN Number HELD THAT:- Higher rate of TDS was introduced to strengthen the PAN mechanism, so that the persons who are in receipt of payments and are subject to deduction of tax at source shall mandatorily furnish their PAN Numbers to the deductor and if they failed to do so, the deductor shall be liable to deduct tax at higher rate of 20%. Such provisions were brought in the Act to overcome the excuse of the non-availability of PAN or non-quoting of PAN, creating problems in processing of returns of income and in granting credit for tax deducted at source, leading to delay in issue of refunds. Going through the facts of the present case, as the recipient (Seller) has furnished his PAN Number before completion of the transaction, thus, non-availability of PAN or non-quoting of PAN, which was the concern of legislator has been complied with, therefore, it is not the case wherein, the processing of returns or any other proceedings or action which the revenue intending to perform against the parties to the impugned transaction of sale / purchase of property are being obstructed. We, therefore, are of the opinion that the act of assessee cannot be treated in violation of the mandate of law. We find force of the contentions of the assessee that the requisite TDS u/s 194IA was duly deducted and deposited by the assessee as prescribed under the relevant provisions of the Act, therefore, the demand raised u/s 201(1) qua the payment made to the Seller are liable to be vacated. Interest for the period of default and the levy of fee u/s 234E of the Act are consequential in nature, therefore, we restore the issue to the file of Ld. AO with the directions to re-compute the amount of interest u/s 201(1A) and fee u/s 234E, in terms of our aforesaid observations. Appeal of the assessee is partly allowed, for statistical purposes.
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2024 (12) TMI 112
Maintainability of revenue appeal on low tax effect - Penalty u/s 271E as assessee had contravened the provision of section 269T by repaying of loan other than the account payee or demand draft - HELD THAT:- As monetary limit prescribed in the Circular No. 17/2019 (Rs.50,00,000/-) as well as Circular No. 9/2024 (Rs.60,00,000/-) for filing the appeals before the Tribunal by the Department. We have perused the decision of the Hon ble Rajasthan High Court [ 2024 (10) TMI 431 - RAJASTHAN HIGH COURT] wherein the appeals filed by the Revenue are dismissed as not maintainable in view of the Circular No. 9/2024 under the similar set of facts and are inclined to agree with the assessee s contention that due to low tax effect the appeals of the revenue are not maintainable and liable to be dismissed.
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2024 (12) TMI 111
Validity of reopening and issuing notice u/s 148 - reopening on the basis of AIR information about huge cash deposits in assessee s bank accounts - main contention of the assessee was that reasons recorded and details of the AIR information was not supplied - HELD THAT:- On plain reading of language of Section 147 and 148, the conditions that needs to be fulfilled before taking action under this Section are; the AO must have reason to believe that income has escaped assessment, such income has escaped assessment on account of failure on the part of assessee to disclose fully and truly, in case, reopening is within four years from assessment completed under Section 143(3) or 147. AO must comply the condition laid down in Section 148 to 153 which consists that he must record reasons for reopening, issue notice to assessee, calling him to file return of income. AO must adhere to time limit for notice under Section 149 and 150 and obtained prior sanction of his superior if required under Section 151 and complete the assessment within time limit prescribed in Section 153. All these conditions are not challenged by the assessee. Assessee made more emphasis that there should be live link or AO must investigate to bring the material on record that income of assessee has escaped assessment. Hon'ble Apex Court in Raymond Woolen Mills Ltd. [ 1997 (12) TMI 12 - SUPREME COURT] held that sufficiency or correctness of the material was not a thing to be considered at the stage of reopening. AO has sufficient tangible material in the form of information about cash credit in the bank account of assessee and that assessee has not filed return of income for relevant assessment year. Thus, at the time of reopening, prima facie, there was a sufficient tangible material for reopening of the case. Thus, I do not find any merit in the ground of appeal corresponding raised by assessee. Ground No.1 of assessee is dismissed. Addition on account of unexplained money u/s 69A and unexplained investment u/s 69 of the Act on account of bank accounts - It is settled position under law that entire transaction / credit entry in bank can never be the income of assessee particularly when the bank account demonstrate that amount deposited in the bank was immediately debited by way of clearance, only a reasonable estimation of income would be sufficient to avoid possibility of revenue leakage. We find that assessee has claimed that he is engaged in business of cheque discounting and such fact is not accepted by lower authorities. Considering the ratio of decision in case of CIT vs. Samir Synthetics Mill [ 2008 (1) TMI 591 - GUJARAT HIGH COURT] when assessee could not even reconcile production, sales and closing stock although specific opportunity was provided by AO addition was justified on account of suppression of sale consideration but only to the extent of profit. Thus, adopting the same principle, a reasonable percentage of income can be treated as income of the assessee and not all entire transactions. Thus, find that total transactions in assessee s bank accounts a reasonable estimation of 10% would be sufficient to avoid possibility of revenue leakage. We have estimated the income of assessee at 10% of cash credit of Rs. 43,99,215/- as well as of other credit of Rs. 1.70 lac which would be reasonable and sufficient. Hence, ground No. 2 and 3 raised by assessee is partly allowed.
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2024 (12) TMI 110
Taxability of income in India - subscription fees received by the appellant/assessee - receipts in absence of any PE in India - whether receipts fall in the purview of section 9(1)(vii) of the Act and also under the Article 13 of the India-UK DTAA? - HELD THAT:- We are of the considered view that this case is squarely covered by the decision of RELX INC. [ 2024 (3) TMI 105 - DELHI HIGH COURT ] thus hold that the subscription fees received by the appellant/assessee is in the nature of business profit/income, which cannot be charged to tax in India in absence of the PE. Accordingly, we delete the addition.
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2024 (12) TMI 109
Ad-hoc disallowance of payment has been made to related parties - Contention of appellant on the ground of parity of tax rate in the case of payees and appellant, there was no loss to the revenue - HELD THAT:- CIT(A) confirmed ad-hoc disallowance of sum paid to four individuals on the grounds that payment has been made to related parties ignoring the ground of parity of tax rate in the case of payee and appellant there was no loss of Revenue and on the ground that the supporting evidence of the ITR filed by payee were fresh evidence for which no application u/s 46A was made. Additional evidence i.e., ITR for the year 2018-19 showed that the tax rate by the employees in question is 30% which is not much lower than the tax rate paid by the company who is to separate the theory of no loss making payment to the concerned employee - As per ratio of judgment in Orange Associates Pvt. Ltd. [ 2021 (1) TMI 286 - ITAT DELHI] it is well settled law that the assessee company and its director were both in the same tax bracket, the highest and, therefore, there could be no question of any evasion of tax by paying remuneration to the directors relying on the above Circular. Non-deduction of ESI/EPF on salary of persons - This objection is without merit as the employees drawing higher salaries and exercised the option of non-deduction. Shri Jatin Goyal and Shri Akhil Goyal were not covered in the list of relatives under section 40A(2)(b) of the Act. Hon ble Delhi Court in CIT vs. DLF Hilton Hotels [ 2016 (5) TMI 492 - DELHI HIGH COURT] held that where the assessee had reasonably established that the expenses incurred by it were for running business and in the absence of any finding by the AO that the expenses were non-genuine and the fact that the books of accounts of the assessee had not been rejected, 50% of the expenses could not be disallowed on an arbitrary basis. Accordingly, ground No.1 to 3 are allowed. Disallowance u/s 36 (1)(iii) on proportionate basis - Hon'ble Apex Court in the case of CIT vs Reliance Industries Ltd [ 2019 (1) TMI 757 - SUPREME COURT] wherein it was held that if the interest free funds available to the assessee are sufficient to meet its investment, it could be presumed that the investments are made from the interest free funds available with the assessee and not from borrowed funds. Thus, ground is allowed.
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2024 (12) TMI 108
Disallowance u/s 14A r.w.r. 8D - Assessee had claimed dividend income as exempt u/s 10 of the Act and no suo moto disallowance was made by the Assessee against this exempt income - basis and foremost contention of Ld. AR is that as the Assessee had sufficient surplus funds available which is evident from the financial statements of the Assessee and the Assessee had not made any fresh investment, no disallowance can be made HELD THAT:- There are no long term borrowings and short term borrowings. Then there is no change in non-current and current Investments in the impugned AY. It is settled proposition of law that if own funds are sufficient to meet the amount of investment yielding the exempt income, then a presumption would arise that the investment was made out of the own funds available with the assessee. Reliance is rightly placed on decisions in South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT ], Godrej Boyce Manufacturing Company Ltd. [ 2017 (5) TMI 403 - SUPREME COURT ] and Sintex Industries Ltd. [ 2018 (3) TMI 1448 - SC ORDER ] Assessee appeal allowed.
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2024 (12) TMI 107
Bogus LTCG - Addition u/s 68 - denial of exemption u/s 10(38) - HELD THAT:- We reiterate that the Assessee by producing the relevant documents referred to above before the authorities below as well as before us has duly discharged the onus cast upon him u/s 68 of the Act and admittedly there is no adverse order/penalty order against the Assessee. Even otherwise, no role has been attributed and/or established qua rigging of the shares upon the Assessee. Hence, we are inclined to allow the claim of the Assessee u/s 10(38) of the Act, by deleting the additions under consideration. Hence, the additions under consideration are deleted. Appeals filed by the Assessee are allowed.
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2024 (12) TMI 106
Rectification U/s 154 revising therein Income from Salaries as per Revised Form 16 issued by KPMG - HELD THAT:- In our opinion this issue needs proper verification and reconciliation in regards to the salary received by the assessee from KPMG as well as TDS deducted. AO is directed to verify the details and consider the claim in accordance with law. We, therefore, remand this issue to the Ld.AO. Needless to say that proper opportunity of law must be granted to the assessee. Appeal filed by the assessee stands partly allowed for statistical purpose.
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2024 (12) TMI 105
Penalty proceeding u/s 271(1)(c) - unaccounted money addition as assessee company was beneficiary by way of taking accommodation entry through layering of funds through accounts of other companies during the financial year - concealment of income versus furnishing inaccurate particulars of income - HELD THAT:- In the present case while we go over the order of the Ld. AO it appears to us that penalty notice u/s 274 r.w.s. 271(1)(c) of the Act dated 31.12.2019 was issued for initiating the same for concealment of particulars of income though the penalty order u/s 271(1)(c) of the Act was passed on 15.09.2021. However, Ld. CIT(A) in appellate proceeding against the said penalty order passed his appellate order on 18.06.2024 for the reason furnishing inaccurate particulars of income. It is clear that Ld. CIT(A) did not commence fresh penalty notice under the limb of furnishing inaccurate particulars of income by issuing fresh show cause notice. We find that the assessee has clearly stated that the assessee agreed to offer the income only to buy peace and avoid protracted litigation. As we have already discussed in deciding the issue placed in the additional ground, we find that penalty order u/s 271(1)(c) of the Act having been initiated by the Ld. AO on one ground i.e. concealment. However, Ld. CIT(A) has initiated on the other ground i.e. inaccurate particulars of income that goes to prove that the penalty proceeding is without jurisdiction and bad in law. The penalty u/s 271(1)(c) of the Act is hereby directed to be deleted. Assessee appeal allowed.
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2024 (12) TMI 104
TDS u/s 195 - order u/s 201(1) / 201(1A) - assessee remitted an amount towards purchase of software to a US based company without deducting TDS - AO held the view that explanation-IV to section 9(1) (vi) of the IT act as amended by finance act 2012 postulates that amounts paid for right to use computer software would tantamount to income of the deductee within the meanings of that section and therefore TDS deduction u/s 40(a)(i) was required to be done HELD THAT:- We find sufficient force in the argument of the assessee that no blame can be placed upon the assessee as the impugned amendment is with retrospective effect and was not there on statute when deduction was to be made. We have also noted that in the case of AMEC foster wheeler India Pvt Ltd [ 2022 (8) TMI 1341 - ITAT CHENNAI] . We have also noted that Hon ble Madras High Court in the cases of Saipem India PVt Ltd, [ 2021 (12) TMI 1447 - MADRAS HIGH COURT] Dasault, [ 2021 (4) TMI 180 - MADRAS HIGH COURT] Financial software [ 2021 (11) TMI 587 - MADRAS HIGH COURT] have also held that in view of the apex court decision in the case of Engineering Analysis [ 2021 (3) TMI 138 - SUPREME COURT] no TDS deduction is required in cases having facts as that of present assessee. In respectful compliance to the impugned decisions the order of lower authorities set aside and the Ld. AO is directed to delete the impugned addition. Accordingly, all the grounds of appeal raised by the assessee are allowed.
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2024 (12) TMI 103
Revision u/s 263 - unexplained cash credit u/s 68 r.w.s. 115BBE - assessee had invested 328,29,84,000 equity shares of face value of Rs. 10 per share amounting to aggregate unquoted investments in its subsidiary company - HELD THAT:- We failed to understand from where the ld. PCIT picked the value of Rs. 10/-. Perusal of clause (b) of share transfer agreement would definitely show that the face value of the shares were Rs. 10/-. However, the assessee has not acquired these shares at Rs. 10/-, rather acquired these shares at Rs. 13.52, as certified by the auditors of the assessee company and as disclosed by the assessee in its return of income and further documents. It is the settled position of law that for invoking the provisions of section 263, there has to be some error in the order of the AO and the error should be of such nature that it would be prejudicial to the interest of revenue. Unless this twin condition is satisfied the provisions of section 263 cannot be invoked. In the case at hand we find from the records that the CIT has made certain factually incorrect observations while declaring the order of the AO as erroneous. However, the material on record would prove beyond doubt that the assessee has paid an amount of Rs 3282,98,42,109/- for acquiring total 252,41,61,440 shares. Therefore, we are of the considered view that there was no error on the part of AO while framing the assessment. Hence, we allow the appeal of the assessee.
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Customs
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2024 (12) TMI 102
Maintainability of appeal - appeal would lie under Section 130 of the Customs Act, 1962 or under Section 28KA of the Customs Act, 1962? - Application seeking condonation of a delay of 856 days - HELD THAT:- Section 28KA provides that any officer authorised by the board, by notification, or the applicant may file the appeal to the High Court against any ruling or order passed by the authority within 60 days from the date of communication of such ruling or order, in such form and manner as may be prescribed. The proviso to this Section, however, provides that where the High Court is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the period so specified, it may allow a further period of thirty days for filing such appeal. This provision suggests that the High Court cannot condone any delay beyond the 30-day period referred to in the proviso. In COMMISSIONER OF CUSTOMS (IMPORT) AIR CARGO COMPLEX NEW DELHI VERSUS AMAZON SELLER SERVICES PVT. LTD. [ 2022 (1) TMI 1332 - DELHI HIGH COURT] Delhi High Court has held that an appeal filed beyond 90 days from the date of communication of the Advance Ruling Authority s order cannot be entertained because the delay beyond 90 days cannot be condoned. In this case, the delay is 856 days. Therefore, given the provisions of Section 28KA of the Customs Act, it cannot be condoned - Even otherwise, the reasons given in the Interim Application do not spell out any sufficient cause. The only reasons given are the classification complexity, revenue implication and analysis of legal precedents in similar matters. There is a statement that this delay was due to unavoidable circumstances. Considering that this is a case of inordinate delay, there should have been a much better explanation to persuade us to condone the delay, assuming there are powers to condone the delay in an appeal filed beyond 90 days from the date of the communication. The interim application dismissed without any orders for costs.
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2024 (12) TMI 101
Correctness of CESTAT's order setting aside the order of confiscation and imposition of redemption fines under the Customs Act, 1962 - HELD THAT:-Under Section 130 of the Customs Act, 1962, appeals can be entertained only if they involve substantial questions of law. Mr Sharma's contentions are factual issues that the tribunal has considered in considerable detail. In particular, the discussion clarifies this position. Therefore, these appeals, which attack pure findings of fact, may not be required to be admitted. There are no significant differences in the factual aspects of the present appeals and the appeal in the case of Ganesh Benzoplast Limited [ 2024 (10) TMI 990 - BOMBAY HIGH COURT ] Even in these appeals, the respondents import goods discharged through high-pressure pipelines from the vessel directly into tanks in the gated complex in the port area. After obtaining the necessary permissions from the authorities, some of the material may have been stored in non-bonded tanks but within the same gated complex. This was done after obtaining permission. The appeals do not raise any substantial questions of law, including the ones proposed by Mr Sharma. Observations in BISCO Limited (supra) also deal with a similar situation, and Dr Kantawala is right to submit that the decisions in Ganesh Benzoplast Limited [ 2024 (10) TMI 990 - BOMBAY HIGH COURT ] and BISCO Limited [ 2024 (3) TMI 1001 - SUPREME COURT ] support the respondent s case. Tribunal was entirely justified in relying on Finesse Creation Inc. [ 2009 (8) TMI 115 - BOMBAY HIGH COURT ] which is the decision of the Division Bench of this Court, instead of relying on the decisions of the Gujarat and Madras High Court. In these matters, it was the Bombay High Court, which was the jurisdictional High Court, and therefore, there was no question of the Tribunal relying upon the judgments of the other High Courts, which Mr Sharma now seeks to rely upon. The Hon ble Supreme Court rejected the SLP against the Bombay decision. In any event, even these contentions are based upon the decisions of the Gujarat and Madras High Courts, were considered and rejected by us in the case of Ganesh Benzoplast Limited [ 2024 (10) TMI 990 - BOMBAY HIGH COURT ] Commissioner has imposed penalties by invoking the residual provision of Section 117 of the Customs Act, 1962. We disapproved such an approach in the case of Ganesh Benzoplast Limited [ 2024 (10) TMI 990 - BOMBAY HIGH COURT ] This Court held that the residual provision of Section 117 of the Customs Act cannot be invoked upon realising that no fines or penalties could be imposed u/s 111 and 112 of the Customs Act,1962. Tribunal also considers the argument about exceeding the value in some instances in detail. The factual finding and the reasoning suffer from no perversity to warrant interference in appeals that must be considered only if they involve substantial questions of law. Therefore, we are satisfied that none of the substantial questions of law as proposed by Mr Sharma or even otherwise arise in both these appeals.
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2024 (12) TMI 100
Jurisdiction - proper officer - SCN and Order-in-Original challenged on the ground that the Directorate of Revenue Intelligence (DRI) officers cannot be considered as proper officers for issuing the show cause notice - HELD THAT:- The Hon ble Supreme Court [ 2024 (11) TMI 391 - SUPREME COURT (LB)] , has disposed of the review petition by observing that the decision passed in the M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] did not consider the notification and provisions of law since the same was not brought to their notice. The Supreme Court, in the review petition, held that a DRI officer is a proper officer for issuing show cause notice. The Hon ble Supreme Court also upheld the Validation Act by which amendment, the DRI officers were empowered to issue show cause notice. Now that the review petition filed by the revenue has been allowed, the petition is taken up for disposal. The learned counsel for the Petitioner states that the Petitioner has already filed an appeal against the Order-in-Original dated 5 October 2017. Accordingly, the Appellate Authority, should proceed to decide this appeal following law. This Petition is disposed of.
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2024 (12) TMI 99
Challenge to procedure adopted by prosecution for search and seizure - Adequacy of evidence presented by the prosecution - Conviction of Applicant for offences committed under Section 135 (1) (b) read with Section 13 (1) (i) of the Customs Act, 1962 under Section 8 (1) read with Section 85 (1) (2) of the Gold (Control) Act, 1968 - HELD THAT:- At the outset, it is seen that it is admitted position that prescribed procedure under Section 102 of the Customs Act has not been adopted and followed by the prosecution. This is what is heavily argued by the Advocate for Applicant. In the present case, it is seen that after apprehending the Applicant, instead of producing the Applicant before the nearest available Gazetted Officer of Customs or Magistrate, rather the Applicant was taken from Grant Road to the Customs Office at Marine Lines, Mumbai where he was frisked and subjected to search in the Customs Office by the Customs Officers. Though panchanama was prepared and confessional statement of Applicant was recorded regarding seizure of four gold bars from him, the details given by him regarding the origin of the gold bars, and the person to whom the delivery was to be made was prominently recorded in the panchanama but, the prosecution in the course of five years of investigation before according the sanction did not take any steps to unearth and investigate the matter - Record in this case clearly shows that the seized gold bar which were confiscated and duly signed by the Customs Officer at the time of confiscation on 10.11.1989 was not produced in trial by PW-1 before the Trial Court, rather the paper label attached to the said gold bar was produced alongwith a different gold bar. The learned Trial Court has further held that the case of prosecution is corroborated by circumstances on record and that the available evidence of seizure is required to be accepted under Section 108 of the Customs Act - Learned Appellate Court while upholding the decision of the Trial Court has deliberately commented upon the material and evidence on record in paragraph No.4 while appreciating the evidence of PW-5. What is significant to be noted is the fact that both the Courts below has accepted the deposition of independent witnesses for seizure and confiscation of the gold bars without prosecution having followed the prescribed procedure under Section 102 of the Customs Act. Hence the judgement of the Trial Court and failure of the Appellate Court to consider this issue renders them unsustainable. The judgment of Trial Court dated 27.09.2001 also suffers from substantial legal defects as observed above for indictment, conviction and sentencing of the Applicant under the Customs Act read with the Gold (Control) Act, 1968. The prosecution having not proved its case beyond all reasonable doubts, both the twin judgments are unsustainable in law and are therefore quashed and set aside. The bail bond of Applicant stands cancelled - Criminal Revision Application stands allowed.
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2024 (12) TMI 98
Seeking release of confiscated goods - undervaluation of goods - misuse of Country of Origin certificates, declaring the subject to be of Afghanistan and USA Origin, wrongly claiming benefit under SAFTA - it is alleged that the consignments which actually arrived in India had sailed from Dubai and never from Afghanistan and that these certainly cannot be equated or identified with the consignments which might or might not have been checked by Nangarhar Chamber of Commerce in Afghanistan - failure to comply with mandate of Section 138 B of the Customs Act, 1962 - impugned orders have been passed in haste - violation of principles of natural justice - HELD THAT:- It is found that the way impugned orders have been passed in haste and in gross violation of principles of natural justice, it should have been avoided by the learned Adjudicating Authority being a quasi judicial authority as it amounts to generation of unnecessary repeated litigation which is prejudicial to both the parties. It is found that the appellants vehemently argued that there is a gross violation of principles of natural justice in passing of adjudication order with pre determined bias and prejudice against the appellants in as much as documents as requested for by the appellants were not supplied to them. As per the Notification No. 21/2015-20 New Delhi dated 25.07.2018 issued by Government of India Ministry of Commerce and Industry, Department of Commerce, Directorate General of Foreign Trade, it prima facie appears that condition of minimum import price will not be applicable for imports by Units in SEZ, therefore, this notification also prima facie supports the case of the appellants that since admittedly the goods were meant for appellants warehousing in SEZ, the condition of minimum import price will not be applicable. This vital aspect has not been examined by the adjudicating authority. It is also observed from the submission of the appellant that the statements recorded under Section 108 were straight away relied upon by the Adjudicating Authority without following the mandate of Section 138 B of the Customs Act, 1962. From Section 138B, it is mandatory that the requirement of examination in chief and thereafter cross- examination and re-examination of the witnesses is required to be conducted to make the statements as admissible evidence. However, the learned commissioner has not complied with the provision of Section 138B which makes the impugned order unsustainable. There is a serious lapse on the part of the adjudicating authority in non compliance of the principles of natural justice - the entire matter needs to be re-considered. Needless, to say that the appellant shall be supplied all the required documents and they shall be given sufficient opportunity of making their defence and appearance for the personal hearing and thereafter, the adjudicating authority shall pass the reasoned and speaking de- novo order. The impugned order is set aside - the appeals are allowed by way of remand to the adjudicating authority.
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2024 (12) TMI 97
Levy of penalty u/s 112(a) and 112(b) of the Customs Act, 1962 - smuggling of one cut piece gold bar of foreign origin weighing 645.500 grams - HELD THAT:- The appellants viz. Shri Ayan Das and Shri Syed Ghazanfar Raza Hussain were working as Sales Officer and Assistant Stores Manager respectively in a store called AVA (Merchandiser) located within the Airport premises. For going in and working in the store, both them of them were given an Entry Pass/Identity Card. The appellants misused the Identity Card/ Entry Pass given to them and helped the passenger in the smuggling activity. Both the appellants were intercepted by the officers of the Airport Intelligence Unit and the impugned gold was recovered from the possession of the Appellant Shri Ayan Das. It is also noticed that on receipt of the gold in the toilet of the International Arrival Immigration Area, Shri Ayan Das concealed the same in his shoe, with a view to bring it outside the airport and to deliver it to one Mohammad Arif. As he was not a passenger and he was not eligible to bring the gold into the country, his role in the smuggling activity is established beyond doubt. Syed Ghazanfar Raza Hussain, being his superior in the store, working as Assistant Stores Manager, instructed Shri Ayan Das to conceal the gold in his shoe and smuggle it outside the airport. Thus, it is observed that he played the role of an abettor in the alleged offence. Thus, both the appellants are involved in the smuggling of the gold and hence they are liable for penalty under Section 112(a) and Section 112(b) of the Customs Act, 1962. It is observed that both the appellants do not have any antecedents of smuggling activities in the past. It is also observed that they were neither the owners nor the beneficiaries of the impugned gold - it is further found that no investigation was carried out in this regard with Mohammad Arif, who is the actual beneficiary - the penalty imposed on the appellants is not commensurate with the role played by them. Accordingly, we observe that the penalty imposed on both of them can be reduced. The penalty imposed on both the appellants reduced from Rs. 5,00,000/- each to Rs. 1,00,000/- each, under Section 112(a) and Section 112(b) of the Customs Act, 1962 - The appeals filed by the appellants are disposed off.
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2024 (12) TMI 96
Rejection of the request for conversion of Shipping Bills under Advance Authorisation Scheme to Duty Draw Back Scheme - rejection on the ground that the request was not made within three months from the date of the Let Export Order (LEO) in terms of Para 3 of the Board s Circular No.36/2010 CUS dated 23.09.2010 - HELD THAT:- The issue in the present appeal is whether the request for conversion sought to be rejected under the circular no.36/2010 is sustainable is no longer res integra as referred to in the decision passed by the Gujarat High Court in MESSRS MAHALAXMI RUBTECH LTD. VERSUS UNION OF INDIA [ 2021 (3) TMI 240 - GUJARAT HIGH COURT] which stands affirmed by the Apex Court UNION OF INDIA ANR VERSUS M/S MAHALAXMI RUBTECH LTD ANR [ 2023 (4) TMI 1272 - SC ORDER] and followed by the Tribunal in the case of the appellant. Therefore, the order passed by the Commissioner in the present case on 19.12.2013 rejecting the conversion as the request was made beyond the period of three months relying on the provisions of the Circular needs to be set aside. The issue with regard to the 104 shipping bills needs to be reconsidered on merits irrespective of the provisions of the circular. In the circumstances, it would be proper to remand the matter back to the Original Authority to decide the same in accordance with law. The Impugned order, is held to be unsustainable and is hereby set aside - appeal is allowed by way of remand.
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2024 (12) TMI 95
Levy of penalty under Section 114 (i) of the Customs Act, 1962 - nexus of appellant with the exporter either in supplying the prohibited goods or he had abetted in the offence committed by the exporter - HELD THAT:- Considering the fact that the appeal is abated with regard to the proprietor Shri. Stephen Rosario of M/s. Zandra Trading Company and taking into consideration the fact that the goods were absolutely confiscated, the penalty against Shri Uttam Bohra stands reduced to Rs.1,00,000/- under Section 114(i) of the Customs Act, 1962. Appeal is disposed of.
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2024 (12) TMI 94
Revocation of customs broker license of the appellant - forfeiture of the whole amount of security deposit - levy of penalty - vague SCN - violation of principls of natural justice - HELD THAT:- There is substance in the submission advanced by the learned consultant appearing for the appellant that the principles of natural justice have been violated and, therefore, the order that has been impugned should be set aside only for this reason. The show cause notice is very vague. It mentions that the appellant has been found to have contravened the provisions of the 2018 Regulations for the reasons stated in the order passed by the Commissioner confirming the suspension order and thereafter without even stating as to what are the charges against the appellant in connection with the various contraventions of the 2018 Regulations, it calls upon the appellant to submit a reply as to why he should not be held responsible for contravention of regulations 10 (a), 10 (d), 10 (e) and 10 (n) of the 2018 Regulations. As noticed above, the show cause notice fails to differentiate between regulations 17 (1) and 17 (6) of the 2018 Regulations because it calls upon the appellant to submit a reply to the Inquiry Report which could have been submitted by the Inquiry Officer only after an inquiry was undertaken by him - What needs to be noted is that the Inquiry Officer directed the appellant to approach the Policy Section of the department to obtain those documents and the Policy Section of the department informed the appellant that the document that he was seeking have been referred in the show cause notice and the statements could be obtained by him from the Officers who recorded the statement. It is not possible to accept the contention advanced by the learned authorized representative appearing for the department that as all the documents have now been supplied to the learned consultant for the appellant, the Tribunal itself should examine these documents and pass an appropriate order. These documents and the statement were required to be supplied to the customs broker by the inquiry officer so as to enable him to submit a proper response to the show cause notice. This would also enable to the appellant to cross-examine the persons whose statements were recorded. In any view of the matter, it is not for the Tribunal to now carry out the exercise that was required to be undertaken by the Inquiry Officer or the Commissioner dealing with the matter. The impugned order dated 08.11.2021 revoking the customs broker license of the appellant deserves to be set aside and is set aside - Appeal allowed.
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Insolvency & Bankruptcy
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2024 (12) TMI 93
Condonation of 104 days delay in refiling of Company Appeal - sufficient reasons for delay or not - HELD THAT:- The impugned order dated 30.04.2024 passed by the Adjudicating Authority has been challenged vide the present Company Appeal No. 1901 of 2024 which was e-filed on 01.06.2024 with a delay of 2 days. Since, sufficient cause had been shown for condonation of delay of two days in filing the Appeal, the same was allowed by this Tribunal. The Registry after due scrutiny, intimated the defects to the Applicant on 14.06.2024 and allowed time to remove the defects in 7 days. The Applicant, however, refiled the Memo of Appeal on 03.10.2024 after a delay of 104 days. There are no doubts that delay in refiling can be condoned only when the Tribunal is satisfied that there are reasonable and cogent grounds for not refiling the appeal on time. While agreeing that an application for condonation of refiling delay is a matter which is between the Applicant and the Bench in which the Respondent is not supposed to have any determinative say, nonetheless, it cannot be unmindful of the fact that the Bench is equally duty-bound to scrutinise the reasons for delay in refiling the petition and cannot allow any unexplained delay to pass muster. Though the rigours of condonation of delay in refiling are not as strict as condonation of delay in filing, it cannot be oblivious of the fact that IBC is a time bound process and no wanton delay can be permitted in IBC proceedings. The prime explanation attributed by the Ld. Counsel for the Applicant was difficulty faced by her in obtaining instructions from the client with regard to refiling the appeal and to take requisite steps for listing of the appeal. In the same breath, we also notice that submission was made by the Ld. Counsel for the Applicant that the Applicant was waiting and watching the proceedings before the CoC in respect of the resolution plan. This submission clearly shows that instead of making genuine endeavours to cure the defects, the Applicant was being opportunistic and trying to fine-tune the optimal timing for pressing the appeal. The Applicant was thus deliberately keeping the appeal in defects as a matter of strategy - the Applicant had slept over the defects wilfully and deliberately for more than three months and grounds now cited in the fresh affidavit cannot be construed to be genuine grounds for delay caused by personal difficulty of Applicant. There are no merit in the Application filed for seeking condonation of 104 days delay in refiling the appeal. The refiling delay application is rejected.
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2024 (12) TMI 92
Adjustment of Security Deposit Towards Pre-CIRP Dues - applicability of Section 14 of the IBC, 2016 - whether a deposit lying with a third party can be adjusted against pre-CIRP dues by it during the moratorium which comes into effect immediately on admission of Corporate Debtor in CIRP, during the pendency of the said CIRP? - HELD THAT:- As per Section 14(1)(c), there is prohibition for any action to foreclose, recover or enforce any security interest created by the Corporate Debtor. Subsection (2) envisages that the Corporate Debtor will continue to run as a going concern and that supply of essential goods or services to the Corporate Debtor shall not be terminated or suspended or interrupted during the CIRP, whereas Sub-section (2A) provides that the supply of essential goods or services shall continue except where Corporate Debtor does not pay the dues arising from such supply during the moratorium period. In Paschimanchal Vidyut Vitran Nigam Ltd. v. HAS Traders Others, [ 2023 (7) TMI 831 - SUPREME COURT ], the Hon ble Supreme Court has held that IBC will prevail over provisions of the Electricity Act, 2003, despite the latter containing two specific provisions which open with non-obstante clauses. In the scheme of the IBC, 2016 once a Corporate Debtor is admitted into CIRP, all recovery action for past dues come to a standstill. During CIRP period, the Corporate Debtor has to be kept as a going concern and all essential supplies of goods or services have to be continued, subject to payment of dues arising from such supply during the moratorium period , that is, on payment of current dues. Recovery of past dues is specifically prohibited and the specified procedure envisages that the creditor will file claim, in proper form, before IRP/RP, which has been done in the present case. The Appellant could not have adjusted the security payment deposit against pre-CIRP dues. In the light of the provisions of IBC, 2016 and the guidance provided by the judgments cited above, it is clear that the Ld. NCLT was correct in directing that the security payment deposit be not adjusted against the past dues of pre-CIRP period, but instead be adjusted only against the dues arising post CIRP. There are no reason to interfere in the order of Ld. NCLT. This appeal, accordingly, is dismissed.
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2024 (12) TMI 91
Admission of Section 9 application filed by the Operational Creditor - initiation of CIRP - pre-existing disputes between the parties or not - payment to the Operational Creditor was due and payable by the Corporate Debtor or not - default committed by the Corporate Debtor or not - operational debt exceeds the prescribed threshold level and is undisputed debt or not - HELD THAT:- The Adjudicating Authority after noting the above admissions made by the Corporate Debtor has observed that the same amounts to be a clear acknowledgment of debt of Rs 1.76 cr being due and payable. It is equally pertinent to note that the letter of 22.04.2015 further explains the financial challenges and precarious situation arising out of ongoing litigations faced by the Corporate Debtor which has led to their outstanding dues in the payment of service charges to their vendors despite all their endeavours to pay off these dues in a timely manner. The email of 07.03.2016 also contains an admission on the part of the Corporate Debtor of the need to clear the dues of the Operational Creditor on priority by resorting to sale of stock lying in the Kolkata warehouse. Thus, no error was committed by the Adjudicating Authority in holding that the Corporate Debtor has duly admitted the outstanding debt and default which is a valid and proper admission in the eyes of law. Whether there is existence of dispute between the parties to satisfy the third test laid down in the Mobilox judgement [ 2017 (9) TMI 1270 - SUPREME COURT ]? - HELD THAT:- The Adjudicating Authority had ordered on 27.03.2023 to explain how the misappropriation of disputes was handled by the Corporate Debtor in their books of accounts following which the Corporate Debtor had submitted a single page screen shot of a ledger reflecting a ledger entry dated 30.06.2016, the amount of which roughly resembled the alleged misappropriated amount as is placed at page 388 of Appeal Paper Book - Besides the fact that the date in the ledger entry happened to be a date which preceded the allegation of misappropriation of goods, we notice that the Adjudicating Authority upon noticing the vulnerability of relying on the one-page screen shot of the ledger produced by the Corporate Debtor, the Corporate Debtor was directed on 23.06.2023 to produce a detailed ledger account. In their detailed ledger as placed at pages 402-437 of APB, no entry contained in the earlier screen shot can be seen - the Corporate Debtor failed to produce plausible evidence before the Adjudicating Authority to corroborate that there was a pre-existing dispute between the parties with regard to Operational Creditor having misappropriated any goods - the ground of disputes raised by the Corporate Debtor therefore deserves to be disregarded being in the nature of a moonshine defence. The findings of the Adjudicating Authority that facts on record speak loud and clear that the Corporate Debtor has all along admitted that it owed an operational debt to the Operational Creditor and that it was end eavouring to clear the dues which amount was in excess of the threshold limit. The contents of the letter dated 22.04.2015 and email dated 07.03.2016 make it amply clear that the Corporate Debtor had admitted the operational debt. The aforementioned admissions by the Corporate Debtor amounts to be a clear acknowledgment of debt being due and payable - the grounds on which alleged disputes have been claimed by the Corporate Debtor are feeble and not supported by credible evidence. This puts a serious question mark on the bona-fide of the bogey of pre-existing disputes raised by the Corporate Debtor. The Adjudicating Authority therefore does not appear to have committed any error in holding that all requisite conditions necessary to trigger CIRP under Section 9 stands fulfilled and that the grounds of pre-existing disputes do not rest on genuine foundations. Thus, even on the third test laid down by Mobilox judgment, the contention of the Appellant fails. Thus, no error has been committed by the Adjudicating Authority in admitting the application under Section 9 of IBC. There are no merit in this Appeal. Appeal is dismissed.
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PMLA
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2024 (12) TMI 90
Seeking grant of bail - Illegal appointment of candidates in TET-2014 - predicate/scheduled offence - evidence to suggest involvement in concealment of any proceeds of crime or laundering of money or not - HELD THAT:- The Hon ble Supreme Court, in the authority in Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT] has held that ' The Court is not required to record a positive finding that the accused had not committed an offence under the Act. The Court ought to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail.' In the said judgment, dealing with section 24 of the PMLA, the Hon ble Supreme Court has observed that only after the prosecution establishes at least three basic or foundational facts, the onus to rebut the presumption laid down under the said provision shifts on the accused. In the case in hand, huge assets and money have been recovered from the petitioner which according to the E.D. is tainted and can be termed as proceeds of crime. On the contrary, it is submitted on behalf of the petitioner that every unaccounted for or disproportionate property does not ipso facto lead to the inference that they are proceeds of crime. The link between the properties and the involvement of the accused in the crime is required to be proved - The petitioner shall be granted an opportunity before the learned Trial Court to substantiate the same and also rebut the presumption under section 24 of the Act. The E.D. intends to rely upon voluminous evidence including 182 statements, 210 documents spanning over 20,000 pages and examine 167 witnesses to substantiate their case. The case is primarily based on documentary evidence which is in custody of the E.D. and there is no scope for the petitioner to tamper with the same. To address the apprehension of the petitioner influencing witnesses of the case, stringent conditions may be imposed upon him while releasing him on bail - It is not in dispute that the petitioner is not at flight risk. The Hon ble Supreme Court has time and again held that prolonged incarceration before being pronounced guilty of an offence should not be permitted to become punishment without trial and in such a case Article 21 applies irrespective of the seriousness of the crime. The right to life and personal liberty enshrined under Article 21 of the Constitution is overarching and sacrosanct. A constitutional Court cannot be restrained from granting bail to an accused on account of restrictive statutory provisions in a penal statute if it finds that the right of the accused/under-trial under Article 21 of the Constitution has been infringed. Even in the case of interpretation of a penal statute, howsoever stringent it may be, a constitutional Court has to lean in favour of constitutionalism and the rule of law of which liberty is an intrinsic part. This Court is inclined to release the petitioner on bail subject to stringent conditions keeping in mind his right to speedy trial under Article 21 of the Constitution as well as his prolonged incarceration without trial - Application for bail allowed.
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Service Tax
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2024 (12) TMI 89
Inclusion of CENVAT credit in the determination of tax dues under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - CENVAT credit only availed but not utilised - HELD THAT:- The Petitioners contentions that the CENVAT credit in this case was only availed but not utilised were raised but rejected in the O-I-O dated 4 February 2019. The expression tax dues for the purposes of the Scheme is to be determined in terms of clause 123. This clause inter alia provides that where a single appeal arising out of an order is pending as of 30 June 2019 before the Appellate Forum, the total amount of duty which is being disputed in the appeal shall be the tax dues. Clause 2(d) of the said Scheme defines amount of duty to mean the amount of Central Excise Duty, the Service Tax and the Cess payable under the indirect tax enactment. On a conjoint reading of the provisions of the Scheme and considering the finding that this was not a case of the credit being availed but not utilised, we cannot fault the calculations made by the Designated Committee and communicated to the Petitioners. The entire argument before us proceeded on the without-prejudice premise that the credit may have been wrongly availed, but the same was never utilised. This premise, at least for the purposes of determining the amount payable under the Scheme, is not correct. If the Petitioners make a representation in the above terms, the Respondents may dispose of it expeditiously and in accordance with the law. The Respondents would also consider the objective of introducing such a Scheme and advert to the peculiarities of the Petitioners case. If the Petitioners make a representation in the above terms, the concerned Respondent are directed to dispose of such representation in accordance with the law and its merits within a reasonable period - petition dismissed.
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2024 (12) TMI 88
Levy of service tax under Entry 97, List I of the Constitution of India - Lottery tickets as actionable claims - Refund of amount already deposited - HELD THAT:- In K. ARUMUGAM VERSUS UNION OF INDIA OTHERS ETC. [ 2024 (9) TMI 182 - SUPREME COURT] the Supreme Court had held that ' The High Courts have lost sight of the definition of goods in clause (50) of Section 65 of the Act while interpreting the expression lottery . As already noted, the definition of goods in clause (7) of Section 2 of Sale of Goods Act, 1930, that is expressly incorporated in clause (50) of Section 65 of the Act, which expressly excludes actionable claims. This Court has by the Constitution Bench in Sunrise Associates opined that lottery tickets are actionable claims. The High Courts have also lost sight of the fact that the sale of lottery tickets by the State is a privileged activity by itself and not rendering of a service for which the assessees are rendering promotion or marketing service.' It is seen that the judgment rendered by the Supreme Court covers the issues raised by the petitioner and therefore, they are entitled to the relief to the extent permissible in view of the judgment of the Supreme Court in K. Arumugam. It is accordingly ordered - petition disposed off.
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2024 (12) TMI 87
Condonation for the 525 day delay in instituting the appeal - refund of tax wrongly paid - HELD THAT:- There was some communication gap and no leave may have sought to withdraw the application. In any event, even assuming that such leave was sought, the same was on the mistaken premise that the matter related to the tax rebate and therefore, the appeal may not have been maintainable. The case does not involve tax rebates. It concerns a refund of tax wrongly paid. Therefore, the appeal filed by the Appellant before the tribunal would have been maintainable and, in these peculiar circumstances, should have been restored by the tribunal. The tribunal s orders dated 22 February 2023 and 5 April 2022 set aside - the Appellants Service Tax Appeal No. 86121 of 2020 restored to the tribunal's file - appeal allowed.
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2024 (12) TMI 86
Levy of service tax on the Shot Gun Manufacturers including the petitioners-firms herein at the rate of 12.36% - stand of the respondents is that the petitioners-firms are required to pay the service tax at the rate of 12.36% under the category Technical Testing and Analysis Service and the same has been made applicable with effect from 01.07.2003 - the stand of the petitioners is that they are licensed manufacturers of guns, their units are located in Jammu and the promoters of the petitioners are also permanent residents of J K - HELD THAT:-Though the learned counsel for respondents have not disputed the provisions of Section 64 (Chapter V) of the Finance Act, 1994 excluding the applicability of the service tax to the State of J K, yet their argument is that in terms of Rule 4 of the Place of Provisions of Services Rules, 2012, the place where the services are actually performed, the service tax is leviable to justify the demand of service tax, as proof testing analysis and certification facilities are being provided by the respondents from outside the geographical boundaries of the State of J K. Further, the Central Board of Excise and Customs, Ministry of Finance, Department of Revenue has given the clarification that the service tax is destination based consumption tax and the principle of consumption of services would determine the liability of the service tax. In view of the ratio already laid down by this Court and considering the nature of work attended to by the petitioners-firms, it is found that there can be no service tax liability on the charges to be paid by the petitioners herein. Hence, there is no question of interest payable by them. The impugned Communication No. T 1000 dated 13.11.2009 in OWP No. 145/2010; impugned Communication No.KH/6519/GEN/V/102 dated 30.06.2009 in OWP Nos. 963/2009, 966/2009 and 1400/2009 as well as impugned Communication No. T 1000 dated 27.07.2010 in OWP No. 955/2010 issued by respondent No. 2 in these petitions are hereby quashed thereby directing the respondents not to levy/charge or recover service tax from the petitioners-firms towards testing fee paid to respondent No. 2 in these petitions - Petition allowed.
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2024 (12) TMI 85
Levy of Service tax - Declared service - Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act. - recovery of penalty charges from the contactors / suppliers for delay in providing the goods/ service - HELD THAT:- The issue is no longer res-integra as the same is covered by the decision of this Tribunal in GUJARAT STATE ELECTRICITY CORPORATION LIMITED VERSUS COMMISSIONER OF C.E. S.T. -SURAT-I [ 2024 (11) TMI 473 - CESTAT AHMEDABAD] where it was held that ' It is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards consideration for tolerating an act leviable to service tax under Section 66E(e) of the Finance Act.' From the above decision, it can be seen that the issue involved in the present case is exactly same as in above cited case law, therefore, the ratio of the above decision is directly applicable in the present case. Following the above decision of the Tribunal, the impugned order is not sustainable, hence the same is set aside. Appeal allowed.
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2024 (12) TMI 84
Levy of service tax - amounts, in addition to Royalty , paid by appellants to District Mineral Foundation (DMF) and to National Mineral Exploration Trust (NMET) - akin to Royality or not - HELD THAT:- It is established that royalty is not tax. It is the consideration in the nature of assignments of rights by the government paid by the Lessee to use natural resources. The activity of assigning the mining rights is rendered by the government to the Lessee of said mine against payment (royalty). The activity is nothing, but is a service rendered by government to the said lessee in terms of section 65B of the Finance act 1994 - There is no denial that royalty is the consideration for the service rendered by government/mine owner/ service provider to the mine Lessee/ lease-holder, the service recipient, the appellants have been regularly paying service tax on Royalty under reverse charge mechanism in terms of notification number 30/ 2012 dated 20.06. 2012. Foremost it can judicially be noticed that impact of mining can occur at local, regional, and global scales through direct and indirect mining practices. Mining operations often result, insignificant, environmental impacts on local ecosystems and broader implications for planetary environmental health - These processes also affect the atmosphere through carbon emissions, which contributes to climate change most of the mining methods, therefore have significant environmental and public health effects hence the mining companies are required to follow, strict, environmental, and rehabilitation codes to ensure that the mined areas return to its original state. In the year 1992, Rio Declaration on Environment and Development coined the concept of Sustainable Development of environment and formulated guiding principles for the purpose, one of those principles is, The Polluter Pays - This principal is now universally accepted as environmental law not only by Organization for Economic, Co-operation, and Development (OECD) and European Countries (EU), United Kingdom, United States of America, France, Canada, Australia but also by India under the environment policy Ecotax . This principle is based on the fact that as much as pollution is unavoidable, the person or industry that is responsible for the pollution must pay some money for the rehabilitation of the polluted environment. Reverting back to section 9B and section 9C of the Mines Act, it is observed that the lease-holder/ the polluter is required to pay an amount, equivalent to certain percentage of amount of royalty paid to the government/ lessor, to DMF NMET requiring them to render them the activity of rehabilitating, the area, and the people in and around the leased mine - Since DMF NMET are the creations of the state government, as apparent from above quoted sections; 9B 9C of the Mines Act, both these trust are the governmental authority in terms of clause 2(s) of notification number 25/ 2012 dated 20.06. 2012. Resultantly the appellant is liable to pay service tax under reverse charge mechanism vis- -vis the amounts paid to both these trusts in terms of notification number 30/ 2012 dated 20.06. 2012. Since the question framed is decided against the appellants, there are no infirmity in the order, confirming the demand of service tax - Resultantly the present appeal is hereby order to be dismissed.
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2024 (12) TMI 83
Rejection of appeal on the ground of limitation without looking into the merits of the appeal - HELD THAT:- As per section 84 of Finance Act 1994 the appeal before Commissioner (Appeals) has to be presented within two months from the date of receipt of the order of original adjudicating authority in the present case. It has been recorded by Commissioner (Appeals) in Para 17 of the impugned order that from the document collected from Assistant Commissioner (Law) CGST Commissionerate Jaipur, its stands revealed that the O-I-O was dispatched to the appellant by registered AD and that the same was duly received by the appellant as the acknowledgement duly stamped by the appellant was being received in the concerned Commissionerate - the receipt of stamed AD is the sufficient compliance of Section 37(C) of the Central Excise Act 1994. The Commissioner (Appeals) has committed no error while adjudicating the plea of limitation against appellant based on the document (Revised AD registered part) before him - there are no reason to differ with the findings in the order under challenge - appeal dismissed.
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2024 (12) TMI 82
Demand of interest and levy of penalty u/s 77(2) of the Finance Act, 1994 - failure to file correct details in their ST-3 returns - reversal of CENVAT Credit when capital goods were removed after their uses as waster/scrap - Rule 3(5A) of the Cenvat Credit Rules, 2004 - HELD THAT:- It is a fact apparent on record that appellant has adopted a particular prescribed method by showing the amount of Cenvat credit available to them in a particular month and amount is required to be reversed in terms of Rule 3(5A) of Cenvat Credit Rules, 2004 and net-off these amount, they are taking Cenvat credit and showing in their ST-3 returns. Apart from that, no discrepancy was found with the appellant in the records. In that circumstances, it cannot be termed that appellant has not reversed Cenvat credit in terms of Rule 3(5A) at the time of filing the ST-3 returns. Therefore, as appellant has not taken access Cenvat credit by reversing Cenvat credit under Rule 3(5A) of Cenvat Credit Rules, 2004, no interest is payable by the appellant. Penalty under Section 77(2) of the Act - HELD THAT:- It is found that as the method adopted by the appellant for availment of Cenvat credit was known to the department and there was intent of the appellant by non-declaration of correct details. In that circumstances, penalty under Section 77(2) of the Act is not imposable. The impugned order is set aside - appeal allowed.
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2024 (12) TMI 81
Recovery of service tax - Non-payment of service tax on amount of royalty collected over and above the bid amount during the period April 2009 to March 2012 - nonpayment of service tax on the rent amount received in lieu of renting the hotel premise which is used solely for running the hotel for the period April 2010 to March 2014 - non-payment of service tax on notional interest on security deposit collected by the appellant as per lease dated 01.01.2010. Non-payment of service tax on amount of royalty collected over and above the bid amount during the April 2009 to March 2012 - HELD THAT:- The said issue has been dealt with by this Tribunal in the case of MATESHWARI INDRANI CONTRACTORS PVT LTD VERSUS C.C.E. S.T. -JAIPUR [ 2018 (6) TMI 665 - CESTAT NEW DELHI] where it was held that ' Service Tax under the category of Business Auxiliary Service would become liable only if the service is rendered in relation to the business of the recipient. In the present case, the appellant, as a contractor, has engaged in collecting statutory levies on behalf of the Government department (CTD)/ statutory authority (NHAI) neither of whom are engaged in business. Secondly, we are of the view that the levy of Service Tax cannot be sustained on the Commission retained by the appellant.' As issue has already been decided by this Tribunal holding that on activity of collection of amount over and above the bid amount, no service tax can be levied on such an activity under the category of Business Auxiliary Service. As appellant was engaged in collecting statutory levies on behalf of the government department which is not engaged in a business. Therefore, following the said decision, the demand against the appellant is not sustainable for non-payment of service tax on an amount of royalty collected over and above the bid amount. In view of this, the demand of Rs.21,87,591/- is dropped. Demand of service tax for the period July 2012 to March 2014 confirmed against the appellant for non-payment of service tax on rent amount received in lieu of renting the hotel premises which is used solely for running a hotel - HELD THAT:- It is found that if appellant is to be given cum tax benefit along with the exemption under Notification No. 6/2005-ST dated 01.03.2005 which is superseded by Notification No. 33/2012-ST dated 20.06.2012, thereafter only the small amount is payable by the appellant of Rs.98,933/-. Rest of the amount, the appellant has already paid along with interest and after the conclusion of argument at this stage, the learned counsel for the appellant conceded that that demand of Rs.98,933/-. Therefore, the demand of Rs.98,933/- confirmed apart from the amount of service tax of Rs.8,14,094/- had already been paid by the appellant. Therefore, appellant is liable to pay an amount of Rs.98,933/-, the same shall be claimed along with the interest. No penalty is imposable on the appellant. Appeal disposed off.
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2024 (12) TMI 80
Levy of service tax - Intermediary services - commission received from the foreign universities for referral services provided to this foreign universities - case of the department is that the referral services provided to the foreign universities are liable to service tax - HELD THAT:- There is no dispute on the fact that the appellant have provided the service to the foreign universities and they have received the commission. Therefore, the service provided by the appellant falls under the category of export of service. Therefore, the same cannot be liable to service tax. This issue is no longer res-integra as on the identical facts this Tribunal has considered the issue in the case of Medway Educational Consultant Pvt. Ltd. [ 2024 (3) TMI 1178 - CESTAT NEW DELHI] wherein the principal bench of the Tribunal held that ' A perusal of the definition of intermediary under the service tax regime vis-a-vis the GST regime would show that the definition has remained similar. Even as per circular dated 20-9-2021 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (GST Policy Wing), the scope of intermediary services has been dealt in Para 2 thereof. In Para 2.2 it stands clarified that the concept of intermediary was borrowed in GST from the Service Tax Regime. The circular after making a reference to the definition of intermediary both under Rule 2(f) of the Place of Provision of Service Rules, 2012 and under Section 2(13) of the IGST Act clearly states that there is broadly no change in the scope of intermediary services in the GST regime vis-a-vis the service tax regime except addition of supply of securities in the definition of intermediary in the GST law.' Thus, it is settled that the service in question being export of service cannot be liable to service tax. Moreover, the service being provided to an educational institute in respect of education has been exempted from the service tax as per the Notification No. 06/2014 dated 11.07.2014, therefore, the issue is no longer res-integra. The impugned order is set aside - Appeal is allowed.
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2024 (12) TMI 79
Demand under works contract service with interest and penalty - Inclusion of material value in works contract - Rule 2A(i) or Rule 2(A)(ii) of Service Tax (determination of value) Rules, 2006 - HELD THAT:- The appellant is prayed that the prayer made in the appeal memo for setting aside the impugned order dated 24.05.2018 be deleted. What appears is that in view of the subsequent events resulting in passing of the order-in-original dated 19.03.2021, the appellant does not wish to pursue the present appeal and in fact the same has become infructuous. There are no merit in the submission of the appellant to add the aforesaid prayer in the appeal memo as the same is not maintainable. In so far as the benefit, if any, that has accrued in terms of the order-in-original dated 19.03.2021, the appellant is free to seek its implementation. The appellant had admitted their service tax liability in the remand proceedings, hence they are liable to pay interest under the provision of 75 of the Act. There are no infirmity in the order imposing penalty under various provisions of the Act. The appeal is accordingly, disposed of.
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Central Excise
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2024 (12) TMI 78
Maintainability of appeal - enhancement in the monetary limit for preferring appeal - HELD THAT:- Insofar as this Court is concerned, the monetary limit has been increased to Rs.5 crores. Appellant states the amount under consideration for the present appeal is Rs. 3,30,81,801/- - In that view of the matter, he does not want to press the present appeals. The appeals are, accordingly, disposed of.
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2024 (12) TMI 77
Denial of CENVAT credit - levy of penalties - huge physical shortage of raw materials, than the recorded stock - HELD THAT:- It is found that the impugned order was passed on the same issue in the matter of four show cause notices. In the matter of two show cause notices bearing Nos. DGCEI/AZU/36-105/2014-15 dated 15.07.2015 and DGCEI/AZU/36-106/2014-15 dated 15.07.2015, this Tribunal in ANUPAM INDUSTRIES LIMITED, DHARAMPAUL ASSOCIATES, KESHAV STEEL AND MEHUL PATEL VERSUS COMMISSIONER OF C.E. CUSTOMS-ANAND [ 2024 (6) TMI 842 - CESTAT AHMEDABAD] allowed the appeals by setting aside the impugned order. Since the present appeals are out of the same impugned order involving same issue and identical facts, the issue in the present case is no longer res-integra. In view of above order, it can be seen that issues in the present appeal as well as in the appeals disposed of by the above order are identical in all respect, therefore, following the ratio of the above decision, in the present case also, the demand is not sustainable. Appeal allowed.
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2024 (12) TMI 76
Reversal of CENVAT Credit on input services - amount of 10.3% reversed by the appellant in terms of Rule 6(3) of Cenvat Credit Rules, 2004 - application of Section 11D of Central Excise Act, 1944 - HELD THAT:- From the plain reading of Section 11D, it is found that firstly the recovery under Section 11D can be made only when an asseesee recovers any amount in the name of excise duty and does not deposit to the government exchequer. In the present case the amount so recovered, firstly not a duty of excise and secondly, the same amount has been reversed by the appellant. Therefore, on both the counts Section 11D cannot be invoked. This very issue has been clarified by the CBEC Circular No.870/08/2008-CX dated 16.05.2008 - From the circular it is has been clarified that any amount reversed under erstwhile Rule 57CC of Central Excise Rules, 1944 or Rule 6 (3) (1) of Cenvat Credit Rules, 2004and even though the same is recovered from the customers, the provision of Section 11D shall not apply. Therefore, the present issue stands clarified by the board under the aforesaid circular. Thus, the amount reversed by the appellant under Rule 6(3) and even though recovered from the customer, provision of Section 11D shall not apply. Hence, the demand under Section 11D is not sustainable. The impugned order is set aside - Appeal is allowed.
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2024 (12) TMI 75
Clandestine removal - evasion of Central Excise Duty by diversion of duty paid inputs i.e. imported plastic granules of various grades from Mumbai port to Halol, Ahmedabad, Vadodara, Vapi - non-receipt of the inputs in the factory of the Appellant - shortages of finished goods detected at the time of visit of the officers - denial of Cenvat credit. Evasion of duty - HELD THAT:- Inasmuch as in the present case the entire case of the Revenue is based upon the shortages detected at the time of visit of the officers, without there being any other evidence. It is seen that the judicial view is that the stock taking would be conducted in a proper manner and considering all the stock lying in the factory. It cannot be on the basis of eye estimation or otherwise. The Hon ble Gujarat High Court in the matter of COMMR. OF C. EX., CUS. SER. TAX, DAMAN VERSUS NISSAN THERMOWARE P. LTD. [ 2010 (12) TMI 487 - GUJARAT HIGH COURT] , observed that mere statement of the representative of the assessee at the time of stock verification is not sufficient which was retracted subsequently. The confessional statement of an accused in criminal proceedings cannot be put on a par with a statement recorded during preventive checks - In the present case, it is found that Appellant claimed that the said materials were lying at their factory and during the search officers not considered the finished goods available in various sections/sheds, appellant also produced the CCTV footage which was also not considered by both the adjudicating authority and no enquiry was conducted thereon - the shortage found at the time of physical verification is not sustainable and that the allegations in the instant case of clandestine removal of the finished goods is not sustainable Accordingly, demand on this account is set aside. Denial of Cenvat credit of Rs. 72,91,056/- on the allegation that the appellant has availed Cenvat Credit on the strength of invoices issued by M/s. Siddhi Trading Corporation, M/s Eskay-Bee International Pvt. Ltd., M/s. Deluxe Karan Imports Pvt. Ltd. and M/s. Kookey Multi Trading Corporation without receipts of the inputs in their factory - HELD THAT:- On perusal of orders we find that the request for cross-examination of the persons whose statements have been relied upon has been turned down on the ground that witnesses did not appear for cross examination. The reasons assigned by the Ld. Adjudicating authority below to reject cross-examination is clearly unsustainable in legal parlance for the obvious reason that no adverse inference can be drawn against assessee whose statements are to be relied by the Revenue without ascertaining the veracity in the absence of cross-examination - In an almost identical situation, this Tribunal in the case of ARSH CASTINGS PVT. LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, CHANDIGARH [ 1995 (9) TMI 156 - CEGAT, NEW DELHI] has observed that ' If witness do not turn up for cross-examination, it is open to the adjudicating authority to proceed with the adjudication without relying on these statements against the person so charged. Failure of a witness to appear for cross-examination will not be a ground to penalise the appellants in law when the appellant is entitled to an opportunity of cross-examination of third party on whose statement s reliance is placed.' The statement of persons whose cross-examination was allowed but they do not turn up for cross-examination cannot be relied upon and have to be excluded from evidences. On the basis of said statements no cenvat demand is sustainable. Revenue if chooses not to examine any witnesses in adjudication their statement are not considerable as evidence - the Tribunal in the case of M/S NIDHI AUTO PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA-I [ 2019 (6) TMI 899 - CESTAT ALLAHABAD] , while relying on the ratio laid down by the Hon ble High Court in the case of Parmarth Iron Pvt. Ltd. has held that when the Revenue does not allow cross-examination of any prosecution witness then Revenue cannot rely on the statement given by such prosecution witness for confirmation of demand. In the present matter receipts of the goods in factory clearly established by the Appellant with documentary evidences. Further, the investigation is silent as to how the Appellant-manufacturer, manufactured finished material without receiving the inputs. The law is settled that as long as duty payment is accepted on outputs, the benefit of credit available on input cannot be denied. Therefore, there are no substantial evidences which result the disallowance of credit - the appellant have satisfied the requirement of receipt of inputs along with cenvatable invoices in their factory and accordingly, the Cenvat credit taken by them is in accordance with the scheme of the Act read with Cenvat Credit Rules. The impugned order is set aside - appeal allowed.
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2024 (12) TMI 74
Refund claim of CVD and SAD paid - non-fulfilment of export obligations in respect of goods imported before 01.07.2017 under AA and EPCG schemes - HELD THAT:- The appellant have paid CVD SAD for the relevant period that is prior to 01.07.2017 at that time the appellant was eligible for Cenvat credit in respect of CVD SAD, since the said duties were paid after 01.07.2017, neither the same could have been used as Cenvat credit under Cenvat Credit Rules, 2004 nor the same can be credited to electronic credit ledger to meet these eventualities. The legislature have provided the refund of the said amount under Section 142 (3) of CGST Act, 2017 read with Section 11B of Central Excise Act, 1944. Therefore, there is absolutely no ambiguity in the provision for refund of such duties which was availed as Cenvat credit for the period prior to 01.07.2017 in terms of Section 142 (3) of CGST Act, 2017. This issue is no longer res-integra as the same has been decided in various judgments - In CCE v. Aculife Healthcare Pvt. Ltd [ 2024 (5) TMI 190 - CESTAT AHMEDABAD] wherein, this Tribunal has upheld the granting of refund to the assessee of CVD SAD paid after introduction of GST, on imports made prior to introduction of GST, due to non-fulfilment of export obligations. This Hon ble Tribunal has upheld the granting of refund under Section 142(3) of the CGST Act, 2017 read with Section 11B of Central Excise Act, 1944, after taking into consideration the judgment of the Hon ble Tribunal at Chennai in the case of Servo Packaging Ltd. [ 2020 (2) TMI 353 - CESTAT CHENNAI] . The appellant are legally entitled for the cash refund of Cenvat credit of CVD SAD, eventhough, paid after 01.07.2017 in terms of Section 142 (3)of the CGST Act, 2017. The impugned order is not sustainable, hence the same is set aside. The appeal is allowed.
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2024 (12) TMI 73
CENVAT Credit - availment of credit based on forged invoices without getting material - rejection of cross-examination of witnesses - violation of principles of natural justice - HELD THAT:- This Tribunal in the case of M/s Mittal Ceramics [ 2024 (11) TMI 397 - CESTAT CHANDIGARH] arising out of the same investigation, has remanded the matter back to the adjudicating authority for a fresh decision after affording opportunity of cross-examination of the material witnesses after relying upon the decision of the Hon ble Punjab Haryana High Court in the case of Jindal Drugs Pvt. Ltd. Vs UOI [ 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT] as well as by this Tribunal in the case of M/s Lauls Ltd. [ 2023 (7) TMI 1113 - CESTAT CHANDIGARH] and M/s Tibrewala Industries (P) Limited [ 2023 (7) TMI 1112 - CESTAT CHANDIGARH] wherein it was held that the cross-examination of witnesses whose statements were relied upon by the Revenue to make out a case against the assessee has to be allowed. By following the ratio of the above said decisions, the impugned orders are not sustainable and therefore, the same is set aside and the cases remanded back to the Adjudicating Authority for a fresh decision after affording opportunity of cross-examination of the material witnesses and by following the procedure as prescribed in Section 9D of the Central Excise Act. The appellants are directed to cooperate with the Adjudicating Authority for a speedy disposal of the case - appeals are allowed by way of remand.
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