Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 6, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Validity of an order which was not signed - Avoidable mistake - Section 160 of CGST Act 2017 is not attracted. An unsigned order cannot be covered under “any mistake, defect or omission therein” as used in Section 160. - Unsigned order is no order in the eyes of law. Merely uploading of the unsigned order, may be by the Authority competent to pass the order, would, not cure the defect which goes to the very root of the matter i.e. validity of the order. - HC
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Exemption form GST - services rendered by the 2nd respondent in respect of wheat imported by the petitioner - the impugned order holding that services of loading, unloading, packing etc., rendered in relation to the wheat imported is not entitled to exemption on the premise that the imported wheat is not meant for primary market as such but it is intended to be converted into maida, atta, sooji etc., in the hands of the recipient i.e., the petitioner herein is unsustainable. - HC
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Rejection of application for GST registration - More than one business entities were running from the same premises - demarcation of the properties - In case, if there is no demarcation of the property, the petitioner-Company is directed to demarcate the property within a period of one (1) week time from the date of issue of GST number - The petitioner shall demarcate the property and file the demarcation report on 27.11.2023. - HC
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Demand of GST u/s 74 - Wrongful / excess claim of transitional credit (Tran-1) - Though the appellant has claimed state tax as transitional input tax credit, but there is no record of local purchase of taxable commodities during the tax period 2016-17 and 2017-18, nor any reflection of tax credit carried forward in the returns submitted by the appellant for the tax period 2016-17 and 2017-18. - it was a clear willful misstatement on the part of the petitioner - Petition dismissed - HC
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Exemption from GST - Letting out of residential property for commercial use - Establishing the branch/office of the Lessee - The property in question has been leased/rented for commercial use. So even if the use of said property has not been changed by JDA but since the so called residential dwellings does not remain as such as it being used for commercia l purpose. The said supply of service i.e. renting for commercial use is covered under 997212 and taxable @ 18% - AAR
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Profiteering - flat bought in the Respondent's project - The Respondent had sold 85 units before receipt of Occupancy Certificate out of which 32 units were in affordable category on which he had charged 8% GST (after 1/3 abatement towards land) remaining 53 units were other than affordable category on which GST was charged @12% (after 1/3rd abatement towards land). Out of the 85 units, 33 units were sold Post-GST and prices were negotiated after ITC adjustments. Hence, there were only 52 units in respect of which benefit of ITC was required to be passed on. - The profiteered amount directed to be refunded - CCI
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Profiteering - The Respondent has resorted to profiteering by way of either increasing the base prices of the service while maintaining the same selling prices or by way of not reducing the selling prices of the service commensurately, despite a reduction in GST rate on “Services by way of admission to exhibition of cinematography films where price of admission ticket was one hundred rupees or less” were reduced from 18% to 12% w.e.f. 01.01.2019 to 30.09.2019. - The amount as calculated, directed to be refunded - CCI
Income Tax
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Validity of attachment orders u/s 281B - issuance of fresh attachment order again and again, i.e. for the fourth time - this Court is of the view that the respondent-Department under the guise of impugned attachment orders, shall not cause any unnecessary hardships to the Bankers in getting back their loans, which were lent by them to the petitioners. - Matter remanded back with directions - HC
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Depreciation - Determination of WDV - Cost of Acquisition - waiver or write of loan - the manner of repayment of loan cannot affect the cost of asset. The actual cost must depend on the amount paid by the assessee to acquire the cost. The amount may have been borrowed by the assessee but even if the assessee did not repay the loan, it will not alter the cost of asset. - AO is not justified to reduce WDV of assets to Rs. Nil and thereby disallow any part of depreciation - AT
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Treatment to income Declared under IDS-2016 - undisclosed income U/s. 68 r.w.s 115BBE OR capital gains - Merely because the assessee failed to discharge the tax liability under IDS-2016 as declared cannot change the character of the income under which it was declared under the IDS-2016. - Thus the income of the assessee shall be taxed as capital gains - To be taxed accordingly - AT
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Addition U/s. 69A r.w.s 115BBE - unexplained cash deposits - the assessee acted merely as an agent to the IDEA Cellular and during the demonetization period, the RBI as well as the Central Government have also approved for making payments towards pre-paid mobile top-up to a limit of Rs. 500/- for every top-up - Additions deleted - AT
DGFT
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Amnesty Scheme - Closure of cases of default in Export Obligation under Advance Authorisation and EPCG Schemes where applications have been filed with PRC/EPCG Committee for relaxation in policy/procedure on grounds of genuine hardship/adverse impact on trade - Trade Notice
Indian Laws
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Professional misconduct - Disciplinary proceedings against Chartered Accountant (CA) - It is well settled that disciplinary proceedings cannot continue after the death of the concerned person. - HC
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Dishonour of Cheque - insufficient funds - The alleged pledging of jewels were not proved and only the complainant produced the redemption of jewels in the year 2010. But the alleged lending money was given in the year 2008. Further the trial Court failed to consider that P.W.2 himself admitted the employment under the first accused company and he only managed the accounts of the company and had transactions with the Bank and the Bank account was inoperative from 24.09.2005 onwards. Thereby the accused has probablized his defense. - Order of acquittal of acqused sustained - HC
IBC
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Validity of Service of notice - e-voting of the Resolution Plan - The voting sheet enclosed with the material on record establishes that Regulation 26 of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 was not violated. Section 25 (2) and Regulation 21 have been complied with by the Respondents as the contents of the Notice for the Meeting and presenting all Resolution Plans at the Meetings of the CoC was duly done by the RP. Therefore, there was no violation of any Regulation of the IBBI - AT
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CIRP - Equity or financial debt - The effect of the aforesaid is that a contract means as it reads. It is not advisable for a Court to supplement it or add to it. It is an unfortunate scenario where the appellant is being left high and dry as there is nothing which it can recover from the sponsor company, there being no assets and funds. - SC
Service Tax
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Refund of the service tax paid - Period of limitation - They have filed the refund claim well in time with KMDA with whom they paid the service tax. As the Notification 41/2016 was not clear with whom the refund application was to be filed, the delay has happened. Thus, the delay in filing the refund application with the service tax department was not due to the fault of the Appellant. - AT
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Levy of Service Tax - Renting of Immovable Property Service - renting of quarters by the Appellant to the employees of the contractors for residential purposes - Not liable to service tax - AT
VAT
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Liability of interest for the delay in remitting the turnover tax - in the absence of the rates prescribed before 26.03.2022, any demand and levy of tax could not have been valid. After the rate of the turnover tax has been prescribed, the petitioners ought to have remitted the tax before 30.04.2022. - Matter restored back to recalculate the interest as per the directions - HC
Case Laws:
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GST
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2023 (12) TMI 161
Provisional attachment of petitioner s bank account - time limitation - cessation of attachment after the expiry of a period of one year from the date of the order made - HELD THAT:- It is informed that final orders on such show cause notice are reserved. In these peculiar circumstances and considering the fact that the impugned provisional attachment order itself is dated 17 March, 2023 and this petition also being filed on 16 October, 2023, it would be appropriate and in the interest of justice that the Adjudicating Authority passes a final order on the show cause notice. The revenue has stated that the orders on the show cause notice shall be passed by the Adjudicating Authority within a period of four weeks from today - such statement is accepted. The petition is disposed off by continuing the ad-interim order passed.
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2023 (12) TMI 160
Cancellation of GST registration of petitioner - cancellation for the reason that the petitioner did not submit returns for a period of six months and more - HELD THAT:- As per the provisions contained in the proviso to sub-rule [4] of Rule 22 of the CGST Rules, 2017, this Court is of the considered view that in the event the petitioner approaches the officer, duly empowered, by furnishing all the pending returns and make full payment of the tax dues, along with applicable interest and late fee, the officer duly empowered, has the authority and jurisdiction to drop the proceedings and pass an order in the prescribed Form. This writ petition is disposed of by providing that the petitioner shall approach the concerned authority within a period of 2 [two] months from today seeking restoration of his GST registration.
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2023 (12) TMI 159
Maintainability of petition - availability of alternative remedy - Recovery of ITC towards SGST and CGST along with interest and penalty - HELD THAT:- As against the impugned order dated 08.05.2023 passed by the first respondent, the petitioner is having a statutory appeal remedy before the Deputy Commissioner, Tirunelveli - this writ petition is disposed of with liberty to the petitioner to file statutory appeal before the Deputy Commissioner, Tirunelveli, within a period of four weeks. Freezing of petitioner's bank account - HELD THAT:- The issue with regard to the freezing of petitioner's bank account shall be decided by the Deputy Commissioner. As an interim arrangement enabling the petitioner to file the appeal, the Deputy Commissioner, Tirunelveli, shall permit the petitioner to take 10% of the amount required for filing the appeal from his Bank Account within a period of four weeks.
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2023 (12) TMI 158
Waiver of the amount of late fee referred to in Section 47 of the CGST Act - HELD THAT:- This Court is of the prima facie view that any person who has filed GSTR 9/9C in respect of the financial years 2017-18, 2018-19, 2019-20, 2020- 21, 2021-22 up to 31st August, 2023 should be eligible for the concessional late fee as mentioned in the said notification otherwise it would amount to violation of Article 14 of the Constitution of India inasmuch as no intelligible differentia is coming out from the Scheme to differentiate an assessee/dealer who had filed GSTR-9/9C before 1st April, 2023 and an assessee/dealer who has filed GSTR-9/9C in between 1st April, 2023 to 31st August, 2023. This Court is of the view that any assessee/dealer who has filed the returns in GSTR- 9/9C in respect of the financial years from 2017-18 to 2021-22 before 31st August, 2023 should be eligible for concessional rate of late fee as prescribed in the said notification.
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2023 (12) TMI 157
Cancellation of GST registration of the petitioner - non compliance of specified provisions of GST Act and the Rules made therein - petitioner could not participate in the proceedings to defend itself in the Show Cause proceedings - allegation that, the petitioner is engaged in Bill Trading without actually supplying the goods - HELD THAT:- The impugned order has been passed on 25.04.2023 is an appealable order in terms of Section 107 of the TNGST Act, 2017. Although attempt is made by the learned counsel for the petitioner to show that the petitioner has a huge place of business from where the petitioner is trading in goods, such disputed question of facts cannot be decided in this summary proceedings under Article 226 of the Constitution of India. This Writ Petition has to fail. However, liberty is given to the petitioner to file a statutory appeal before the Appellate Authority under Section 107 of the TNGST Act, 2017, within a period of 30 days from the date of receipt of a copy of this order - Petition dismissed.
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2023 (12) TMI 156
Principles of natural justice - Validity of an order which was not signed - Avoidable mistake - Scope of Section 160 of GST - HELD THAT:- Section 160 of CGST Act 2017 is not attracted. An unsigned order cannot be covered under any mistake, defect or omission therein as used in Section 160. The said expression refers to any mistake, defect or omission in an order with respect to assessment, re-assessment; adjudication etc and which shall not be invalid or deemed to be invalid by such reason, if in substance and effect the assessment, re-assessment etc is in conformity with the requirements of the Act or any existing law. These would not cover omission to sign the order. Unsigned order is no order in the eyes of law. Merely uploading of the unsigned order, may be by the Authority competent to pass the order, would, not cure the defect which goes to the very root of the matter i.e. validity of the order. Section 169 of CGST Act 2017 is also not attracted. Here, the question is of not signing the order and not of its service or mode of service. This writ petition is allowed in part, on the ground that the order does not contain the signatures. The impugned order is set aside with direction to the Competent Authority to pass fresh order in accordance with law.
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2023 (12) TMI 155
Exemption form GST - services rendered by the 2nd respondent in respect of wheat imported by the petitioner - Scope of Notification No.12 of 2017 Central Tax (Rate) dated 28.06.2017 in particular S.No.54(e) of the said notification - contract between the petitioner and the 2nd respondent for provision of the services - incidence of tax. HELD THAT:- The petitioner's entitlement to exemption must be determined by testing whether the services of loading, unloading, packing, storage or warehousing is rendered to agricultural produce or other than agricultural produce and not on the basis of the process the agricultural produce is meant to be subject to in the hands of the petitioner/ importer. In other words if on applying the definition of agricultural produce to the wheat that is imported and if it qualifies as an agricultural produce , the mere fact that the buyer of agricultural produce intended to subject it to various other processes subsequently resulting in conversion of wheat into maida, atta and sooji would not take the services of loading, unloading, packing, storage and warehousing of the agricultural produce out of Serial No. 54(e) of the Exemption Notification. The reasoning in the impugned order of the 1st Respondent results in importing a condition as to the use to which the agricultural produce would be subject to in the hands of the service recipient. The above test is wholly alien to decide whether a commodity would fall within the definition of agricultural produce contained in the above Notification. The impugned Ruling thus suffers from the vice of arbitrariness inasmuch as it has taken into account aspects/ factors which are irrelevant. This Court also finds that the impugned order is flawed inasmuch as it results in adding conditions to exemption notification which is impermissible. Yet another reason the impugned order warrants interference is the fact that the expression marketable employed in the definition of agricultural produce has been misconceived. A reading of the above definition would show that it only indicates that the agricultural produce must be such that it is marketable i.e., capable of being marketed and it is not required of being actually marketed as such. The construction of the Notification in the impugned order of the 1st Respondent results in converting the expression marketable employed in the definition of agricultural produce into marketed , which is impermissible - Applying the above reasoning to the term marketable used in the definition of agricultural produce it would be clear that it only means that the goods in question in the instant case wheat must be capable of being marketed in the primary market and it is not necessary to show that it is actually marketed. This Court is of the view that the impugned order holding that services of loading, unloading, packing etc., rendered in relation to the wheat imported is not entitled to exemption in terms of S.No.54(e) of Notification No.12 of 2017 on the premise that the imported wheat is not meant for primary market as such but it is intended to be converted into maida, atta, sooji etc., in the hands of the recipient i.e., the petitioner herein is unsustainable. The impugned order is set aside - Petition allowed.
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2023 (12) TMI 154
Cancellation of GST registration with retrospective effect - no reply given to SCN - principles of natural justice - HELD THAT:- The taxpayer s GST registration was cancelled by the impugned order for the reason that no reply had been given to the Show Cause Notice - the impugned order dated 20.09.2022 is also unsustainable as it is not informed by reason. It is considered apposite to direct that the taxpayer s GST registration be considered as cancelled w.e.f. 31.03.2020, as was sought by him. Clearly, if a taxpayer has closed down its business, the respondent cannot insist that his GST registration be kept alive and he be held responsible for filing his returns thereafter - petition disposed off.
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2023 (12) TMI 153
Cancellation of petitioner s GST registration - registration obtained by means of fraud, wilful misstatement or suppression of facts - HELD THAT:- It is apparent that the impugned order is void as it is not informed by reason. The impugned order does not either deal with the replies filed by the petitioner or set out any reason for cancelling the registration. It is also important to note that the petitioner s GST registration was cancelled with retrospective effect from 14.10.2017. The impugned SCN is also clearly unsustainable. Although it alleges that the petitioner had obtained the registration by means of fraud, wilful misstatement, or suppression of facts, it is apparent that the said reason has been selected from the pre-determined set of allegations. The impugned SCN does not mention the fraud alleged to have been perpetrated by the petitioner; does not disclose the wilful misstatement allegedly made by the petitioner or the facts which were suppressed. Thus, in effect, the impugned SCN does not set out the purpose of the show cause notice to enable the noticee to respond to the allegations. The impugned SCN fails to satisfy the said standards - The respondents are directed to restore the petitioner s GST registration forthwith. It is clarified that this order would not preclude the respondents from initiating any appropriate action, including for cancellation of the GST registration, in accordance with law. Petition allowed.
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2023 (12) TMI 152
Rejection of application for GST registration - More than one business entities were running from the same premises - demarcation of the properties - Principles of natural justice - HELD THAT:- In the event, the property referred to by the petitioner, where, the Petitioner-Company is going to run its business either demarcated or not, the respondents are directed to issue GST registration number to the petitioner within one week from the date of receipt of a copy of this order. In case, if there is no demarcation of the property, the petitioner-Company is directed to demarcate the property within a period of one (1) week time from the date of issue of GST number - The petitioner shall demarcate the property and file the demarcation report on 27.11.2023. This Writ Petition stands disposed of - List the case before this Court on 27.11.2023 for Reporting Compliance of this order by both parties.
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2023 (12) TMI 151
Demand of GST u/s 74 - Wrongful / excess claim of transitional credit (Tran-1) - Violation of principles of natural justice - transition of and availment of excess amount of TDS under the VAT regime as transitional credit under the GST regime in terms of Section 140(1) of the Act of 2017 - HELD THAT:- The sub-clause (i) to the proviso of Section 140(1) clearly states that no registered company shall be allowed to take credit in the circumstances where the said amount of credit is not admissible as input tax credit under this Act i.e. GST Act. Sub-clause (ii) thereof also provides that such amount of credit won t be admissible where the company has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date. Sub-clause (c) of Section 17(5) deals with the case of the petitioner and stipulates that input tax credit shall not be available in respect of the works contract service when supplied for construction of immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service. Petitioner, in the instant case, not only seems to have carried forward the excess TDS amount as transitional credit believing it to be eligible ITC; though excepted under Section 17(5) (c), but also seems to have availed it since upon scrutiny of its returns, such discrepancy was found in the notice issued under GST ASMT-10 under Section 61 of the Act of 2017 followed by the notice under Section 74(1) of the Act of 2017. These provisions of the Act of 2017 permit of no exception. The appellate authority rightly held that the petitioner company is not entitled to avail the ITC of GST trade on goods and services used for construction as per Section 17(5) (c) and Section 17(5) (d) of the Act of 2017. The appellate authority has also found that though the appellant has claimed state tax as transitional input tax credit, but there is no record of local purchase of taxable commodities during the tax period 2016-17 and 2017-18, nor any reflection of tax credit carried forward in the returns submitted by the appellant for the tax period 2016-17 and 2017-18. Section 74(1) of the Act of 2017 provides for imposition of tax and penalty equivalent to the tax amount plus interest if the charges leveled under it are found to be true and proved, both the adjudication authority and the appellate authority have found that the petitioner had not only wrongly transitioned ineligible ITC from the VAT regime, but had also availed it; therefore it was a clear willful misstatement on the part of the petitioner, as ignorance of law cannot be pleaded in such matters. This Court does not find any grounds made out to interfere in the adjudication order dated 18.11.2021 and the order of the appellate authority dated 16.03.2023 - Petition dismissed.
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2023 (12) TMI 150
Exemption from GST - Letting out of residential property for commercial use - Scope of residential dwelling for the purpose of notification No. 05/2022-Central Tax (Rate) dated 13/07/2022 - Establishing the branch/office of the Lessee - factors to be included in the definition of Residential Dwelling - reverse charge (RCM) or forward charge mechanism - HELD THAT:- Point 4 (a) of the Lease Agreement entered between the Applicant (Lessor) and Lessee i.e. M/s Back Office IT Solutions Pvt. Ltd. (a company incorporated in India within the meaning of Companies Act, 1956), stipulates that the demised premises shall be used solely for commercial purpose by the lessee i.e. for establishing the branch/office. The property in question has been leased/rented for commercial use. So even if the use of said property has not been changed by JDA but since the so called residential dwellings does not remain as such as it being used for commercia l purpose. The said supply of service i.e. renting for commercial use is covered under 997212 and taxable @ 18% and the Applicant i.e. lessor is supposed to pay GST as mentioned above on forward charge basis. The lessee is not required to pay GST under RCM basis in term of Notification No. 05/2022-Central Tax (Rate) dated 18.07.2022. Thus, No the demised premises will not be covered in the definition of residential dwelling in term of Notification No. 05/2022-Central Tax (Rate) dated 13/07/2022 as it being used for commercial use - The important factors to be included in the definition of Residential Dwelling is the purpose for which the dwelling is put to use and the length of stay intended by the users.
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2023 (12) TMI 149
Profiteering - purchase of Flat - benefit of reduction in the rate of GST not passed on - contravention of provisions of section 171 of CGST Act - HELD THAT:- The Commission finds that if the amount of ITC availed/available to the Respondent in post-GST regime is considered up to 16.07.2017, then it would be very meagre amount of ITC (01.07.2017 to 16.07.2017) and huge amount of ITC available to the Respondent in post GST-regime (17.07.2017 to 31.07.2019) would escape from the computation of profiteered amount which would be incorrect and leaving such ITC would not serve the purpose of Section 171 of the CGST Act, 2017. Hence, in terms of Section 171 of the CGST Act, 2017, the ITC has been rightly taken for the period from 01.07.2017 to 31.07.2019. Thus, the amount of ITC and investigation period considered by the DGAP from 01.07.2017 to 31.0.2019 for the purpose of calculation of profiteering is correct. The Commission observes that the instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017 as the Respondent has neither been benefited from additional ITC nor there has been a reduction in the tax rate in the post-GST period - the application filed by the Applicant No. 1 requesting action against the Respondent for charging GST @ 18% on PLC is not maintainable and hence the same is dismissed.
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2023 (12) TMI 148
Profiteering - flat bought in the Respondent's project - Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in price - contravention of section 171 of CGST Act - Penalty - HELD THAT:- It is clear from the plain reading of Section 171 (1) that it deals with two situations: - One relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period. Hence, the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. This Commission finds that, the ITC, as a percentage of the turnover, that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 4.19%, whereas, during the post-GST period (July-2017 to December, 2019), it was 4.26%. This confirms that in the post-GST period, the Respondent has been benefited from additional ITC to the tune of 0.07% (4.26% - 4.19%) of his turnover and the same is required to be passed on by him to the recipients of supply, including the Complainant. The Respondent had sold 85 units before receipt of Occupancy Certificate out of which 32 units were in affordable category on which he had charged 8% GST (after 1/3 abatement towards land) remaining 53 units were other than affordable category on which GST was charged @12% (after 1/3rd abatement towards land). Out of the 85 units, 33 units were sold Post-GST and prices were negotiated after ITC adjustments. Hence, there were only 52 units in respect of which benefit of ITC was required to be passed on. The Commission also finds that the computation of the amount of ITC benefit to be passed on by the Respondent to the eligible recipients works out to Rs. 6,43,756/- which includes applicable GST (12% or 8%) on the base amount of Rs. 5,79,349/- with respect to 52 homebuyers on the basis of the information supplied by the Respondent. The Respondent has not disputed the methodology adopted by the DGAP or the amount of profiteering worked out by the DGAP. The profiteered amount for the period from 01.07.2017 to 03.12.2019, in the instant case, is determined as Rs. 35,114/- under Section 171 of the CGST Act, 2017. Penalty - HELD THAT:- Respondent has denied the benefit of Input Tax Credit (ITC) to the customers/shop buyers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. However, since the provisions of Section 171 (3A) have come into force w.e.f. 01.01.2020 whereas the period during which violation has occurred is w.e.f. 01.07.2017 to 03.12.2019, hence the penalty prescribed under the above Section cannot be imposed on the Respondent retrospectively. Accordingly, Show Cause Notice directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him, is not required to be issued.
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2023 (12) TMI 147
Profiteering - supply of Services by way of admission to exhibition of cinematography films - Respondent did not pass on the benefit of reduction in the GST rate - contravention of section 171 of CGST Act - penalty - HELD THAT:- The Respondent has resorted to profiteering by way of either increasing the base prices of the services while maintaining the same selling prices or by way of not reducing the selling prices of the service commensurately, despite a reduction in GST rate on Services by way of admission to exhibition of cinematography films where price of admission ticket was one hundred rupees or less from 18% to 12% w.e.f. 01.01.2019 to 31.07.2019. On this account, the Respondent has realized an additional amount to the tune of Rs. 14,62,604/- from the recipients which included both the profiteered amount and GST on the said profiteered amount. Thus, the profiteering amount is determined as Rs. 14,62,604/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent is therefore directed to reduce the prices of his tickets as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. The Respondent is also directed to deposit the profiteered amount of Rs. 14,62,604/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited. Since the recipients, in this case, are not identifiable, the Respondent is directed to deposit the amount of profiteering of Rs. 7,31,302/- in the Central Consumer Welfare Fund (CWF) and Rs. 7,31,302/- in the Telangana State CWF respectively, as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with 18% interest. The above amount shall be deposited within a period of 3 months from the date of this Order failing which the same shall be recovered by the Commissioner CGST/SGST as per the provisions of the CGST Act, 2017. Penalty - HELD THAT:- It is also evident from the above narration of facts that the Respondent has denied benefit of rate reduction to his customers/recipients in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. However, perusal of the provisions of Section 171 (3A), under which liability for penalty arises for the above violation, shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 31.07.2019 when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively for the said period. Application disposed off.
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2023 (12) TMI 146
Profiteering - supply of Services by way of admission to exhibition of cinematography films - Respondent did not pass on the benefit of reduction in the GST rate - increase in the base price to maintain the same cum-tax selling price - violation of section 171 of CGST Act - Penalty - HELD THAT:- The Respondent has resorted to profiteering by way of either increasing the base prices of the service while maintaining the same selling prices or by way of not reducing the selling prices of the service commensurately, despite a reduction in GST rate on Services by way of admission to exhibition of cinematography films where price of admission ticket was one hundred rupees or less were reduced from 18% to 12% w.e.f. 01.01.2019 to 30.09.2019. On this account, the Respondent has realized an additional amount to the tune of Rs. 7,19,1871- from the recipients which included both the profiteered amount and GST on the said profiteered amount. Thus the profiteering amount is determined as Rs. 7,19,187/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent is therefore directed to reduce the prices of his tickets as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. The Respondent is also directed to deposit the profiteered amount of Rs. 7,19,1871- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited. Since the recipients, in this case, are not identifiable, the Respondent is directed to deposit the amount of profiteering of Rs. 3,59,594/- in the Central Consumer Welfare Fund (CWF) and Rs. 3,59,594/- in the Telangana State CWF respectively, as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with 18% interest. The above amount shall be deposited within a period of 3 months from the date of this Order failing which the same shall be recovered by the Commissioner CGST/SGST as per the provisions of the CGST Act, 2017. Penalty - HELD THAT:- It is evident from the narration of facts that the Respondent has denied benefit of rate reduction to his customers/recipients in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. However, perusal of the provisions of Section 171 (3A), under which liability for penalty arises for the above violation, shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 30.09.2019 when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively for the said period.
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2023 (12) TMI 145
Profiteering - Erection and Commissioning service supplied by M/s Eros Elevators Escalators Pvt. Ltd. - the benefit of reduction in tax rate in post-GST era not passed on - benefit of additional ITC on the materials purchased by the Respondent not passed on by way of commensurate reduction in price - contravention of section 171 of CGST Act - HELD THAT:- The Applicant No. 1 has claimed that the Respondent's scope of activities was Design, Manufacturer, Supply Installation of Elevators Escalators as per his ISO 9001: 2015 Certificate No.: UQ-2019110909. Perusal of the above Certificate shows that the Respondent has been issued a Certificate of Registration by a United Kingdom based agency in which he has been shown as manufacture of the lifts. However, during the course of the investigation it has been found by the DGAP that the Respondent had not manufactured the lifts which he has supplied to the Applicant No. 1. He had procured the material from the other manufacturers locally and had supplied the same and installed the lifts. Hence the above claim of the Applicant is not correct. The above Applicant has also claimed that the Respondent had increased the base price in the post GST period and had profiteered an amount of Rs. 2,93,502/-. However, perusal of the initial agreement dated 04.07.2015 executed in the pre GST period and the Quotation Nos. QT41092_R4 dated 04.07.2015, QT52365 R1 dated 3.05.2015 and QT52268 R2 dated 30.05.2015, shows that the base price for the installation of both the lifts was Rs. 23,06,499/- and the total tax applicable was Rs. 2,93,502/- and hence the total price was Rs. 26,00,000/-. Therefore, the total pre-GST tax was 12.72% - there is no question of the Respondent having profiteered and hence both the above allegations of the Applicant No. 1 are incorrect and untenable. Perusal of Rule 128 (1) shows that the Standing Committee on Anti-profiteering is only required to examine the accuracy and adequacy of the evidence submitted by the Complainant and if it is prima facie satisfied that the benefit of ITC or tax reduction has not been passed then it has to forward the complaint to the DGAP for detailed investigation as per Rule 129 (1) of the above Rules. Since the evidence produced by the Applicant No. 1 was found to be adequate and accurate by the Standing Committee it had correctly recommended investigation in the complaint. The Respondent has been given due opportunity to present his case by the DGAP during the investigation and has also been allowed to defend himself as per the provisions of the principles of natural justice by the Authority, on the basis of which no allegation has been established against him. Therefore, he should have no grievance on this account. The Commission finds that the instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. Accordingly, the proceedings initiated against the Respondent under Rule 133 of the CGST Rules, 2017, are hereby dropped.
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Income Tax
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2023 (12) TMI 144
Estimation of income - Bogus purchases - Special leave petitions are dismissed both on the ground of delay as well as on merits
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2023 (12) TMI 143
Addition u/s 44BB(1) and 44BB(2) - whether the service tax collected by the assessees in the course of provision of services and facilities in connection with, or supply of plant and machinery on hire, in the prospecting for, or extraction or production of, mineral oils in India, was liable to be included in the amount paid or payable for the purpose of computation of the presumptive taxable income of the assessee? - As decided by HC [ 2022 (11) TMI 385 - UTTARAKHAND HIGH COURT] amount reimbursed to the assessee (service provider) by the ONGC (service recipient), representing the service tax paid earlier by the assessee to the Government of India, would not form part of the aggregate amount referred to in Clauses (a) and (b) of sub-section (2) of Section 44 BB - HELD THAT:- Though, there is a delay of 272 days in filing the Special Leave Petition. Nevertheless, we have heard learned Additional Solicitor General on merits of the case. Delay condoned.We are not inclined to interfere in the matter. The Special Leave Petition is dismissed.
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2023 (12) TMI 142
Validity of Reopening of assessment u/s 147 - Reasons to believe - method of determining the Fair Market Value of the rights shares issued - as decided by HC [ 2023 (3) TMI 619 - BOMBAY HIGH COURT] only reason and purpose for issuing the impugned notice u/s 148 appears to be that the Assessing Officer has come to a different opinion on the question of valuation from one adopted by the petitioner, which has been accepted in the earlier assessment order, thus the impugned notice u/s 148 of the Act is without jurisdiction and is barred by limitation HELD THAT:- Although, there is a delay of 128 days in filing the Special Leave Petition, nevertheless, we have heard learned Additional Solicitor General on merits of the case. Delay condoned. The Special Leave Petition is dismissed.
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2023 (12) TMI 141
Reopening of assessment u/s 147 - reason to believe - petitioner had claimed deduction on account of notional foreign exchange loss on non payment of imports - as decided by HC [ 2022 (4) TMI 625 - BOMBAY HIGH COURT] As evident from the reasons for reopening that the Assessing Officer had all material facts before him when he made the original assessment. In the reasons for reopening there is not even a whisper as to what was not disclosed - This is a case wherein the assessment sought to be reopened on account of change of opinion - HELD THAT:- The present special leave petition is belated and filed after a delay of 344 days. Even otherwise, we are not inclined to interfere with the impugned judgment. The application for condonation of delay and the special leave petition are accordingly dismissed. Pending application(s), if any, shall stand disposed of.
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2023 (12) TMI 140
Disallowance u/s 14A - connection between the subject expenditure and the exempt income - HELD THAT:- Assessing Officer proceeded on a mere assumption that interest bearing funds could also have been utilized for making the investment in question, because the respondent/assessee had failed to establish that source of investments was its own funds. In view of the stand taken by assessee that the investments were made in the mutual funds in ICICI Liquidity Plan wherein the dividend was automatically reinvested with weekly frequency without any efforts for earning dividend income and that it did not have any borrowings, the Tribunal examined the balance sheets of the respondent/assessee from which it came to a definite conclusion that there were no borrowed funds in the books of the respondent/assessee pertaining to the relevant year, therefore there was no question of using borrowed funds for investments in mutual funds and consequently the impugned disallowance under Section 14A of the Act was unwarranted. Adjustments on account of delay in realization of receivables - Tribunal accepted the claim of the respondent/assessee that it being a debt free company, no adjustment on account of notional interest on receivables was warranted in view of an earlier decision of a coordinate bench of the Tribunal - HELD THAT:- This issue stands clearly covered by the decision of a coordinate bench of this court in the case of PCIT vs Boeing India (P) Ltd [ 2022 (10) TMI 498 - DELHI HIGH COURT] in which after traversing through various judicial precedents, the court held that the assessee company being a debt free company the question of receiving any interest on receivables did not arise so the adjustment made by the Assessing Officer on account of interest on outstanding receivables was liable to be deleted. TP Adjustment - comparable selection - rejection of Accentia Technologies Ltd and TCS E-Serve Ltd - HELD THAT:- The issue stands covered by earlier decisions of this court in the cases PCIT vs Inductis India (P) Ltd [ 2019 (2) TMI 1745 - DELHI HIGH COURT] AND B.C. MANAGEMENT SERVICES PVT. LTD. [ 2017 (12) TMI 255 - DELHI HIGH COURT] wherein Accentia Technologies Ltd., was excluded on the basis that the company was functionally dissimilar and that the segmental data for the assessment year with regard to the comparable segment was not available. The second comparable directed to be excluded i.e. TCS E-Serve Ltd., was on the ground that the concern provided high end online software solutions unlike the assessee, which provided internet based medical health related services. The real services, therefore, were entirely dissimilar. No substantial questions of law arises for present purposes.
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2023 (12) TMI 139
Rectification of intimation sent u/s 143(1) - According to the petitioner, while computing the amount in terms of Section 143(1) an error occurred with regard to the cost of the goods produced by the petitioner - HELD THAT:- It appears that there is an error apparent on face of the record to the extent of mentioning the wrong figures with regard to the cost of goods as (-)Rs. 5,69,68,434/- instead of Rs. 39,87,66,401/-. No doubt, the said error has to be rectified and hence, the petitioner had filed a rectification application before the 1st respondent. However, it was submitted by the learned counsel for the respondents that if there is any rectification in the intimation sent under Section 143(1) of the Act, only the 2nd respondent has to carry out the rectification and hence the first respondent had rightly rejected the application filed by the petitioner. Thus the impugned order is set aside - While setting aside the impugned order, this Court remits the matter back to the 2nd respondent for the purpose of consideration of the rectification application, which has been filed by the petitioner - 2nd respondent is directed to enable the petitioner to file an appropriate application for rectification of intimation issued under Section 143 of the Act and pass order in accordance with law within a period of 30 days from the date of filing of the application.
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2023 (12) TMI 138
Validity of attachment orders u/s 281B - power of the Department to issue fresh attachment order again and again, i.e. for the fourth time - as argued impugned orders u/s 281B have been issued in a mechanical manner for the fourth time and in a routine fashion stating that 'For the purpose of protecting the interest of the Revenue, it is necessary to attach the immovable properties of the petitioners'' - HELD THAT:- First charge holders of the properties are the Bankers and the respondent-Income Tax Department are only the second charge holders of the petitioners properties. Therefore, the first charge holders of the petitioner's properties, being the Bankers, the petitioner has to first satisfy the Bankers, for availing loan facility and only the Bankers are satisfied they would come forward to lend loan facility to the petitioners. This Court would like to point out that, if it had been the real intention of the the respondent-Department to protect the interest of the revenue, they would acted in a way, as pointed out by this Court in the preceding para, however, the way the respondent-Department has acted, i.e. issuing attachment orders again and again, that too, without assigning any valid reason, in respect of similar properties of the petitioners, would only go to show that the respondent with a view to put a spoke to the petitioner's business activities, has passed such impugned orders, since, by means of the impugned orders of attachments, the properties that were mortgaged with the Bankers were attached, due to which, the Bankers would obviously, deprive themselves from extending the working capital loan to the petitioners and the petitioners, owing to non-extension of working capital loan, would find it difficult to run their business, resulting in financial crisis and consequently, the petitioner would be not in a position either to continue the business or repay the loan, ultimately, resulting in closure of business and 5000 workers employed in the petitioner-Company would loose their job, which would automatically affect the welfare of the State. Therefore, this Court is of the view that the respondent-Department under the guise of impugned attachment orders, shall not cause any unnecessary hardships to the Bankers in getting back their loans, which were lent by them to the petitioners. Section 281B(1) of I.T. Act grants power AO to provisionally attach the property of an assessee during the pendency of any proceedings for assessment or reassessment of any income or for imposition of penalty, and in terms of Sub-section 2 of Section 281B, every such provisional attachment shall cease to have effect after the expiry of six months, however, the total period shall not exceed 2 years or 60 days after the order of assessment, whichever is later and such power of extension is subject to the condition that the Principal Commissioner should record his reasons in writing for granting such extension. In the present case, whenever, the attachment orders were passed, the respondent-Department has mentioned the reason for issuance of such attachment order, by stating that ''To protect the interest of the Revenue.'' instead of stating so, the respondent- Department ought to have formed an opinion and pass orders not affecting the business activities of the petitioner in any way. In the present case, attachment orders, which are under challenge in these Writ Petitions are only provisional attachment orders and the same have been passed before quantification of final assessment of tax. Thus, the respondent-Department, while passing such provisional attachment order shall bear in mind the following aspects:- 1) Running Business Activities of an Assessee should not come to stand still by virtue of the provisional attachment. 2) The interest of the Bankers, who are the first charge holders, should not get affected. 3) The welfare of the workers should not be get affected. Thus, for all aforesaid reasons, this Court is inclined to pass the following orders:- i) The petitioners are directed to file a modification application within a period of one week from the date of receipt of a copy of this order to modify the order of provisional attachment issued by the respondent dated 16.08.2023. ii)Thereafter, the concerned respondent is directed to consider the modification applications and directed to pass orders to the extent of lifting the provisional attachment orders dated 16.08.2023 to enable the petitioners to avail the working capital facilities as per the business plan/plan of action, etc., submitted to the bank or to the extent of additional working capital facilities as sanctioned by the Banks to the petitioners, as requested from time to time. iii) The petitioners are directed to file an affidavit/undertaking/status report as required by the respondent-Department, so as to ensure that the fund allotted to the petitioners by the Banks are utilized by the petitioners/has been utilized only for the purpose of working capital facilities.
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2023 (12) TMI 137
Revision u/s 263 - unexplained cash deposits - as per CIT AO had omitted to conduct basic enquiries with regard to abnormal cash deposits during the demonetization period as compared to pre- demonetization period as well as the various claims made by the assessee - HELD THAT:- PCIT has referred to the assessee s return of income wherein it was disclosed that an amount of Rs 4 lacs was deposited during the demonetization period in a bank account maintained with SBI. We find that the matter was duly enquired into by the AO during the course of assessment proceedings and it was explained by the assessee that the said bank account doesn t belong to him but belong to Mr Raj Kumar and a copy of the bank state ment was submitted. Where the AO on review of the bank statement, was satisfied that the said bank account doesn t belong to the assessee but belong to Mr Raj Kumar and accepted the explanation of the assessee regarding the ownership of the said bank account and the transactions reflected therein, we find that no further cause of action lies and if any action is warranted, the same is warranted in hands of Mr Raj Kumar and not in the hands of the assessee. In any case, what further enquiries or verification is warranted is not specified by the ld PCIT. Therefore, on this account, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. Coming to transactions with M/s A.K. Minerals and M/s G.K Laxmi where the assessee has show cash receipts of Rs 5 lacs each against sales made to them and in respect of which, ledger account and a confirmation from these two parties has been filed during the course of assessment proceedings, where the assessee has filed certain confirmations from the aforesaid two parties during the course of assessment proceedings in support of sale transactions and receipt of consideration in cash and the authencity of the said confirmations stood falsified by subsequent confirmations received directly from the same parties even though after the close of the assessment proceedings, the ld PCIT is well within his jurisdiction to hold the assessment order so passed as erroneous in so far as prejudicial to the interest of the Revenue. The subsequent confirmations are very much part of the record which is available at the time of examination of the ld PCIT and the confirmations so received raises a question mark on the authenticity and correctness of the information and documentation available at the time of passing of the assessment order thus leading to a situation where certain incorrect information which goes to the root of entering into the transaction and challenges the very existence of the transaction has been considered by the AO leading to a wrong conclusion and passing of an erroneous order. It is therefore a case where the matter though enquired into by the AO but the transaction itself stood falsified by the subsequent confirmation received directly from the concerned parties and where the PCIT is ceased of the matter and the necessary information is available on record at the time of his examination, we find that he was well within his jurisdiction u/s 263 to set-aside the assessment order on this count and order a de-novo assessment. Contention advanced by the ld AR that remedial action u/s 147 can be taken in this regard and no basis for exercise of jurisdiction u/s 263 - In the instant case, it is an admitted position that the matter was enquired into by the AO during the assessment proceedings and answered by the assessee by way of providing the ledger account and the confirmations from the two parties and thereafter the Assessing Officer does not make any addition in the assessment order. In such situation, it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. Admittedly, assessment order was passed u/s 143(3) on 29.05.2019 and even though the confirmations have been received by the AO on 19.07.2019 and available on record, the AO has not taken any action u/s 147 knowing full well the scope of his reassessment jurisdiction, in such a situation, the ld PCIT is not precluded in exercise of his jurisdiction u/s 263 of the Act and issuance of show- cause u/s 263 dated 2.03.2022. In any case, at the time of issuance of show-cause by the ld PCIT, no reassessment proceedings u/s 147 were either initiated or pending for completion by the AO. Where the ld PCIT is ceased of information/documentation which has direct nexus with passing of an erroneous assessment order by the AO and if we were to go by the argument of the ld AR, the ld PCIT cannot be expected to wait indefinitely for the AO to initiate proceedings u/s 147 and where the AO sleeps over the matter, allow the expiry of limitation to pass the order u/s 263, thus failing in his supervisory and revisionary duty under Section 263 of the Act. Therefore, the contention advanced by the ld AR that remedial action u/s 147 can be taken in this regard and no basis for exercise of jurisdiction u/s 263 cannot be accepted. Assessee's claim of receipt of cash from various persons was false and was not investigated by the AO and the assessee s claim to have received cash from unnamed persons where no documents are available on assessment records to show that the AO has not made any enquiry or verification - The fact that the sales were effected in initial period during the same financial year and the cash has been received in the subsequent period even though during the demonetization period cannot be a basis strong enough to hold the order so passed by the AO is erroneous in so far as prejudicial to the interest of Revenue in absence of any adverse findings regarding availability of requisite stock and the sales so effected by the assessee which are both reported to tax. Where the AO felt satisfied with the documentation and explanation so submitted by the assessee, basis review of the same documentation, the ld PCIT may arrive at a different opinion, however, the same cannot lead to a situation of holding the order so passed as erroneous in so far as prejudicial to the interest of the Revenue. The only caveat here is that the documentation so submitted during the course of assessment proceedings shouldn t stand falsified by subsequent information/documentation as we have seen in case of M/s A.K Minerals and M/s G.K. Minerals and which is not a case as far as these transactions are concerned. Therefore, the findings of the ld PCIT in para 5.2 of the impugned order as regards transactions with Shri Bhupinder Singh, Shri Bindri, Shri Ajmer Singh and M/s Gurleen Traders are hereby set-aside. For retail cash sales - Where the AO felt satisfied with the documentation and explanation so submitted by the assessee, we find that the matter has been duly enquired into by the AO and the findings of the ld PCIT that no enquiry has been conducted by the AO is not borne out of the records and the same thus deserve to be set-aside. Further, there is no adverse finding recorded by the ld PCIT regarding availability of stock of petroleum products and corresponding sales reported by the assessee and where the stock and sales have been accepted, realization of sale proceeds in cash which is permissible under law cannot be held against the assessee or to hold that the assessment order is erroneous in so far as prejudicial to the interest of Revenue. Therefore, the findings of the ld PCIT regarding cash receipts from retail sale is hereby set- aside. Board s Instruction dated 09.08.2019 vide which verification checklist for assistance of AO s for OCM cases and framing of assessment in demonetization related cases was provided and which has not been followed by the AO - We agree with the contention of the ld AR that where the CBDT instructions were issued after passing of the assessment order, the AO cannot be expected to follow the same and on this count, the order so passed by the AO cannot be held as erroneous in not following the CBDT instruction and the findings of the ld PCIT in this regard in para 5.4 are thus set-aside. Gift received by the assessee from his mother - where the ld PCIT examines the matter and comes to a conclusion that the confirmation so filed is half-baked and incomplete and further, there is no explanation regarding the source of cash gift to the assessee and the AO didn t mount further examination and accepted the said incomplete confirmation on face value, we find that the ld PCIT has rightly exercised his discretion in setting aside the assessment order to examine the matter a fresh after providing reasonable opportunity to the assessee. The findings of the ld PCIT in thus upheld. Unsecured loans - We don t find that the ld PCIT has referred to any tangible piece of information or documentation which warrant examination and investigation across all transactions of unsecured loans which are undertaken by the assessee. Further, where the relevant confirmations from the creditors have been called for and examined by the AO, the latter being satisfied with the same and explanation so furnished by the assessee, merely the fact that the AO has not carried out independent enquiries of these confirmations from the creditors cannot be a basis to hold the order as erroneous in so far as prejudicial to the interest of Revenue. The ld PCIT has not pointed out any deficiency or inaccuracy in the confirmations so filed by the creditors unlike some of the other cases as we have noted above and in absence thereof, the order so passed by the AO in this regard cannot be held as erroneous in so far as prejudicial to the interest of Revenue and the findings of the ld PCIT in this regard at para 5.8 and 5.9 of the impugned order are hereby set-aside. Findings of the ld. PCIT that the AO did not even bother to get the copy of the Audit Report alongwith the audited accounts and the assessment has been completed without even examining the Audit Report - Where the AO chooses not to download and keep a copy of the audit report on assessment file, the same cannot take away the factual position that audit report was available for examination by the AO, therefore, the findings of the ld PCIT at para 5.10 are not borne out of record and the same are hereby set-aside.
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2023 (12) TMI 136
Estimation of income - estimation of net profit @ 8% in AY 2018-19 as against the net profit rate of 2.5% declared by the assessee - presumptive taxation for business u/s 44AD relied upon - AO based on the income tax return wherein the assessee inadvertently tick the column for no account case and based on such act at the part of the assessee in filing the return, ld. AO resorted to apply the provisions of Section 44AD of the Act and estimated the profit of the assessee @ 8% - HELD THAT:- So far as Section 44AD is concerned the same relates to special provision for computing profits and gains of business on presumptive basis in the case of an eligible assessee engaged in an eligible business. So far as estimating of profits is concerned, we notice that in the income tax return filed by the assessee on ITR 3 even though it has taken the column no account case but in the Form complete details of the audit report u/s 44AB of the Act are mentioned wherein the assessee stated that it is covered u/s 44AB of the Act and books of accounts have been audited by a Chartered Accountant. The assessee also mentioned the details of the Chartered Accountant company along with date of audit report which is 29.10.2018 and the same stands duly uploaded on the income tax portal. These glaring facts are very much available in the income tax return copy of which was placed before the AO and he ought not to have directly resorted to the provisions of Section 44AD of the Act and should have examined the tax audit report and, if necessary, should have got the limited scrutiny converted to complete scrutiny and thereafter, carry out the assessment proceedings to examine the complete books of accounts and then if any discrepancy could have been noticed then estimation of profits could have come in picture. Since in the instant case, the assessee has properly maintained the books of accounts which have been duly audited and ld. AO has not disputed the book results appearing in the audited financial statement uploaded on the income tax portal we fail to find any justification in the action of ld. AO of estimating the net profit rate of 8% and the book results declared by the assessee showing net profit rate of 2.5% ought to have been accepted. We, thus, set aside the finding of ld. CIT(A) and delete the addition made by ld. AO towards estimating profits over and above the income declared by the assessee. Thus, ground no. 1 2 raised by the assessee are allowed.
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2023 (12) TMI 135
Nature of expenses - foreign travel expenses - whether the expenses are personal in nature and have no relation to assessee s business? - HELD THAT:- AO has made general observation of personal/non-business expenditure which is not at all supported by the details/data analysed by Ld. AR. Further, the CIT(A) has merely approved the AO s notings. Ld. DR is true in arguing that that the CIT(A) has stepped further to initiate penalty proceeding u/s 271(1)(c) but on perusal of his order, it is very much apparent that he has merely upheld AO s observations and not given his independent finding even for the disallowance. From the details of expenditure placed in Paper-Book, we find that the assessee has done significant business at least with Spain and Turkey for which the major expenditure is incurred. That apart, the quantum of expenditure is also very reasonable considering the volume of imports and exports done by assessee. Therefore, we do not find any justification in the disallowance made by lower-authorities, consequently we delete the same. Depreciation on plant and machinery - Determination of WDV - Cost of Acquisition - waiver or write of loan taken for purchase of asset - AO disallowed fully and the CIT(A) upheld disallowance partly - assessee took loan from bank for purchase of plant and machinery, but subsequently, was declared as a sick company by Board for Industrial and Financial Reconstruction (BIFR) and assessee entered into One Time Settlement (OTS) with its lending Bank whereunder the assessee got waiver of the principal amount of loan and once waiver was granted, then assessing authority adopted Nil value of the opening W.D.V. of fixed assets and thereby disallowed the depreciation claimed - HELD THAT:- As various decisions relied upon by assessee it can be concluded that waiver or write of loan taken for purchase of asset cannot reduce the WDV of asset. Regarding the decision of Hon ble Supreme Court in Tata Iron Steels [ 1997 (12) TMI 5 - SUPREME COURT ] we find that the said decision dealt with a situation of exchange gain which arose to assessee from fluctuation in exchange-rate at the time of repayment of loan (the loan was originally taken for acquisition of assets) and the department wanted to reduce the cost of asset by amount of gain and thereafter allow depreciation on reduced cost - As this decision was not on the issue of waiver of bank loan. But while deciding the same, as clearly observed that the manner of repayment of loan cannot affect the cost of asset. The actual cost must depend on the amount paid by the assessee to acquire the cost. The amount may have been borrowed by the assessee but even if the assessee did not repay the loan, it will not alter the cost of asset. This observation-cuminterpretation given by Hon ble Supreme Court has also been used by ITAT, Bangalore in Akzo Nobel Coatings [ 2013 (1) TMI 311 - ITAT BANGALORE ] Thus we too hold that the AO is not justified to reduce WDV of assets to Rs. Nil and thereby disallow any part of depreciation. Consequently, we direct the AO to allow depreciation fully as claimed by assessee. Assessee s ground is allowed. Delayed payment of employees contribution to Provident Fund (PF) - Addition deleted by CIT(A) - HELD THAT:- the employees contribution to PF falls, nature-wise and specifically, u/s 36(1)(va) and the same goes out of scope of section 37(1). Being so, we not inclined to remand this issue back to AO for any re-adjudication as prayed for by Ld. AR. As held by Hon ble Supreme Court in Checkmate Service [ 2022 (10) TMI 617 - SUPREME COURT] we approve the disallowance made by AO. Revenue s ground is allowed. Disallowance of prior period expenses - expenses did not relate to the year under consideration - HELD THAT:- When the Ld. AR claimed that the impugned expenditure has crystallised during the year, we asked Ld. AR to show the details of expenditure. In reply, the Ld. AR submitted his inability to submit details for the reason that the assessee-company has already closed functioning much earlier, it has become a sick company and no details are forthcoming from assessee. Since it is an undisputed fact that the expenditure are prior-period and no assistance is coming from assessee on the details of expenditure, much less having crystallised in current year, we have no reason to interfere with the orders of lower-authorities. Therefore, we uphold the disallowance made by AO. Revenue s ground is allowed. Cessation of liability - addition u/s 41(1) - amounts payable to 11 creditors (list is made by AO in assessment-order) were due for last three years - HELD THAT:- We find that the AO has simply invoked section 41(1) because the amounts were outstanding for three years but there is no evidence brought by him that the liability has really ceased to exist. It is now a settled judicial view that the time-factor is not relevant for the purpose of section 41(1), the revenue has to either demonstrate that the liability has really ceased to exist or the assessee has written off liability in books of account. But, in present case, there is none. Therefore, Ld. CIT(A) is very much correct in deleting the addition. We subscribe to the order of CIT(A). Revenue s ground is dismissed.
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2023 (12) TMI 134
Treatment to income Declared under IDS-2016 - character of the income - undisclosed income U/s. 68 r.w.s 115BBE OR capital gains - as in Statement of undisclosed income the assessee has declared an amount as income from capital gains - treatment of the capital gains as undisclosed U/s. 68 r.w.s 115BBE of the Act and levying a higher tax rate of 60% - HELD THAT:- As per section 197(b) of IDS, 2016 where the assessee fails to pay the tax as per the income declared under IDS, 2016 the undisclosed income shall be chargeable to tax in the previous year in which such declaration is made. We find force in the argument made by the Ld. AR that non-payment of tax under the IDS, 2016 against the income declared cannot change the character of the income declared under IDS, 2016 with respect to character of income assessable in the previous year in which such declaration was made under the Income Tax Act, 1961. In response to the show cause notice assessee has submitted its reply stating that it was the capital gains which was declared under the IDS, 2016 after availing the deduction U/s. 54F of the Act. These facts were not disputed by the Ld. Revenue Authorities. AO while framing the assessment has stated the same as undisclosed income U/s. 68 r.w.s 115BBE of the Act instead of taxing the same under capital gains. Merely because the assessee failed to discharge the tax liability under IDS-2016 as declared cannot change the character of the income under which it was declared under the IDS-2016. Further, IDS-2016 is also silent on the nature of income to be taxed in the event of failure by the declarant to pay the taxes. Thus the income of the assessee shall be taxed as capital gains in the hands of the assessee we therefore direct the Ld.AO to compute the taxes applicable with respect to capital gains disclosed by the assessee. Appeal of assessee allowed.
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2023 (12) TMI 133
Addition U/s. 69A r.w.s 115BBE - unexplained cash deposits - Deposits were made by the assessee during the demonetization period with SBNs which is an unaccounted money under the guise of collection of bills and also providing pre-paid and post paid bookings - it is the contention of the assessee that the sources for the alleged cash deposits are partly out of closing cash balance as on 8/11/2016 and partly out of the receipts during the demonetization period - assessee firm is a service point for IDEA Cellular for collection of bills and also provide pre-paid and post-paid bookings / recharges - HELD THAT:- In this line of business, the assessee like agents / service providers merely collects the cash from the customers after providing services like facility of sales, bill collections, post-paid and prepaid recharges for Mobile SIMs and Top-up sales for which commission is received by the assessee as an agent and deposits the collected amounts initially into the assessee s (service provider or agent) account and later remits the same to the IDEA Cellular s account through ECS. It is also pertinent to note that the assessee being a service provider on behalf of IDEA Cellular is responsible for collection of moneys from the pre-paid and post-paid subscribers and the IDEA Cellular holding the position of Principal pays commission / incentives to its agents / service providers (assessee in the present case). Therefore, the assessee acted merely as an agent to the IDEA Cellular and during the demonetization period, the RBI as well as the Central Government have also approved for making payments towards pre-paid mobile top-up to a limit of Rs. 500/- for every top-up through their Notifications mentioned supra. Further, the Ld. AR has also demonstrated that the assessee remitted the collection of receipts to the IDEA Cellular Services through its books of account. Therefore, we can safely come to a conclusion that the deposit of cash on receipt from various persons for sale of pre-paid and post-paid recharge bookings is not the sales of the assessee nothing but the amount collected on behalf of IDEA Cellular. Considering all these facts and circumstances of the case, we are of the considered the view that the assessee is entitled to deposit the SBNs or the amounts collected during the demonetization period into its bank account and the sources are fully established by the assessee - Appeal of assessee allowed.
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2023 (12) TMI 132
Addition of commission income - undisclosed deposits in bank account - onus to prove - contention of assessee that he received amount partly vide three cheques out of which he received part for year under consideration as commission and remaining paid to said two sellers equally through banking channel - CIT(A) confirmed the view of AO in finding the affidavit filed by the assessee is self serving and not supported by any proof, signatures on kachha receipts were not tallied with the signature of sale deed and failure of the assessee to produce the said two persons for examination - HELD THAT:- As it evident from the assessment order the AO deputed his Inspector to issue summons u/s. 131 of the Act, but however, the said summons could not be served for want of correct address. Further, before the CIT(A) an affidavit and also copy of receipt containing alleged signatures of the said two persons for filed as additional evidences against which the CIT(A) sought remand report from the AO. As discussed above in the remand report the AO doubted the signatures as verified from kachha receipts as well as signatures on sale deed dated 07-03-2009 - CIT(A) was of the opinion, no steps were taken to produce the said persons at least in the remand proceedings before the AO and the assessee failed to bring on record in support of his claim that an amount being the addition made in the year under consideration was paid to two sellers but not his income by way of commission. Therefore, no explanation to the satisfaction of both the authorities below were furnished even before this Tribunal and we find no infirmity in the order of CIT(A) impugned, hence, it is justified. Thus, the sole ground raised by the assessee fails and is dismissed.
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Customs
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2023 (12) TMI 131
Correctness of remanding the matter - absence of there being any stay of the impugned order of the High Court - Refund claim - Benefit of concessional rate of duty - HELD THAT:- It is found that the question as to whether the order of remand was justified or not has been rendered otiose. Therefore, this Special Leave Petition is disposed off on the basis that the order of remand has been given effect to reserving all contentions on both sides to be agitated on merits, in the event any of the parties is unsuccessful before the appropriate forum. It is needless to observe that the disposal in the instant case is solely on the basis that there was no stay of the order of remand and the said order has been given effect to during the pendency of the Special Leave Petition before this Court. Application disposed off.
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2023 (12) TMI 130
Maintainability of appeal - pre-deposit - Appeal rejected on the ground that the petitioner has failed to deposit 7.5% of the amount demanded on account of duty drawback and penalty imposed by the Order-in-Original - HELD THAT:- Having perused the record as also the impugned order, in our opinion, the view taken by the Additional Secretary to the Government of India is too technical to say least. The petitioner has urged specific ground in regard to financial difficulty, which ought to have been considered - the issue on merits of such contention has not at all been touched and what has weighed with the authority is that the Revisional and Appellate authority will have to follow the provisions of Section 129-E of the Customs Act, which is in regard to the pre-deposit of 7.5% of the amount demanded. The interest of justice imminently would require that the impugned order passed by the Appellate Authority as confirmed by the Revisional Authority are quashed and set aside and the petitioner be granted an opportunity of its appeal being adjudicated on merits - order passed by the Appellate Authority as confirmed by the impugned order passed by the Revisional Authority is quashed and set aside. The appeal before the Appellate Authority is restored to the file of the Appellate Authority Commissioner of Customs (Appeals), Mumbai Zone-III to be heard on merits. Petition allowed.
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Insolvency & Bankruptcy
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2023 (12) TMI 129
CIRP - Equity or financial debt - RP rejected the claim of the appellant - Whether the CCDs along with the other documents can be said to be really a debt and not an equity despite the wording of the CCDs which must be read along with the other documents and communications inter se the parties? - Maintainability of appeal after statutory period of limitation. HELD THAT:- The definition of debt under Section 3(11) of the Code would be the liability or obligation in respect of a claim which is due from any person. ICTL does not have a liability or obligation qua the appellant because the appellant is actually an equity participant and does not have a debt to be repaid. The success of a commercial venture pays benefit to the equity participants but with income, which would not inhere in case of the the failure of the venture - if it was a simpliciter debenture, it would have fallen under the category of a financial debt along with bonds etc. However, we are not concerned with a debenture per se. The debenture subscription agreement clearly defines ICTL as the special purpose vehicle while IVRCL is the sponsor company and IFCI is the lender. In terms of Clause 2.4, the rate of interest/coupon rate of 11 per cent per annum, payable quarterly, is applicable till either the buy back of all the CCDs (an option available to the borrowers) or conversion of CCDs into equity. The liability is of the sponsor company for making coupon payments and not of the SPV/ICTL. Further, under Clause 2.8, the buy back is also an arrangement inter se the Sponsor company and IFCI - the appellant was provided security under the Debentures Subscription Agreement but the obligations are of the sponsor company. That being the position, it is difficult to appreciate how the obligation is of the SPV i.e. ICTL. Unless the debt is of the ICTL, the appellant cannot seek a recovery of the amount on the basis of being a creditor of the SPV ICTL. The effect of the aforesaid is that a contract means as it reads. It is not advisable for a Court to supplement it or add to it. It is an unfortunate scenario where the appellant is being left high and dry as there is nothing which it can recover from the sponsor company, there being no assets and funds. The investment was clearly in the nature of debentures which were compulsorily convertible into equity and nowhere is it stipulated that these CCDs would partake the character of financial debt on the happening of a particular event. - The appellant has invoked the guarantees and sought remedy against the sponsor company. The fact that it is not serving any fruitful purpose is not something which can weigh with us. Maintainability of appeal after statutory period of limitation. - The jurisdiction is restricted to a question of law akin to a second appeal. The law does not envisage unlimited tiers of scrutiny and every tier of scrutiny has its own parameters. Thus, the lis inter se the parties has to be analyzed within the four corners of the ambit of the statutory jurisdiction conferred on this Court. The appeal does not raise any such question of law and that the findings of the Courts below are in accordance with settled principles - Appeal dismissed.
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2023 (12) TMI 128
Service of notice - It is the main case of the Appellant that failure to provide an accurate Notice to the 11th CoC Meeting dated 14/12/2022 and the failure to provide Notice to e-voting of the Resolution Plan is in contravention of Regulations 21, 24 and 26 of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 - HELD THAT:- The Appellant herein cannot be said to be prejudiced or his legal right having been injured on account of the Appellant not attending the 11th CoC Meeting at 3.00 p.m. Be that as it may, there are force in the contention of the Learned Counsels for the Respondents that the change in the timing was also intimated and it was the Appellant who did not choose to join the link. The voting sheet enclosed with the material on record establishes that Regulation 26 of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 was not violated. Section 25 (2) and Regulation 21 have been complied with by the Respondents as the contents of the Notice for the Meeting and presenting all Resolution Plans at the Meetings of the CoC was duly done by the RP. Therefore, there was no violation of any Regulation of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 to warrant interference in the approval of the Resolution Plan. Applicability of the ratio in the matter of Vijayakumar Jain Vs. Standard Chartered Bank [ 2019 (2) TMI 97 - SUPREME COURT] is applicable to the facts of this case - HELD THAT:- It is held in Vijaykumar Jain that the Law must ensure that access to this information is made available to all Creditors to the Enterprise, directly or through the RP. In the attendant case, the Appellant was well aware of the Resolution Plan and was part of all the discussions with respect to the evaluation matrix. It is significant to mention that the Appellant had not made any request seeking for the Copy of the Resolution Plan, which is not the case in the facts of the matter of Vijaykumar Jain - the ratio of Vijaykumar Jain cannot be made squarely applicable to the facts of the attendant case on hand. There is no prejudice or injury to any legal right caused to the Appellant herein and there are no illegality or infirmity in the Common Impugned Order dated 05/07/2023, passed by the Adjudicating Authority and hence, these Appeals fail and are accordingly dismissed.
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PMLA
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2023 (12) TMI 127
Money Laundering - rejection of application for grant of permission to travel abroad - HELD THAT:- In the present case, this Court is of the opinion that though it is not disputed that the proclamation issued under Section 82 of Cr.P.C. in relation to present FIR was set aside vide order dated 10.04.2023 and that the petitioner was granted anticipatory bail in this case vide order dated 20.04.2023, one of the conditions in the order by virtue of which he was granted anticipatory bail was that he will not leave the country without the permission of the Court. Thus, the anticipatory bail granted to him was by way of a conditional order, which was accepted by the petitioner and he had returned to India on 25.04.2023. The LOC opened by the State/EOW also stands cancelled vide order dated 26.04.2023 - However, the LOC opened by the Directorate of Enforcement has neither been cancelled nor quashed and remains in existence, alongwith an another LOC opened by the Income Tax Department. Further, while granting regular bail to the petitioner in the case arising out of ECIR dated 08.08.2021 also, the condition to seek prior permission of the Court before travelling abroad was imposed by the learned ASJ. The investigation against the petitioner is pending in both the cases i.e. in FIR registered by the Special Cell (EOW) and in the ECIR registered by the Directorate of Enforcement. The liberty and the fundamental right under Article 21 of the Indian Constitution to travel abroad is not absolute and is subject to reasonable restrictions, and this restriction was imposed upon the petitioner while he was granted anticipatory bail in the present FIR and regular bail in the present ECIR. In this Court s opinion, learned ASJ has rightly held that petitioner has not placed on record any cogent reason to travel abroad and that there is no permanent address of the petitioner in Dubai. This Court finds no reason to interfere with the impugned order dated 08.07.2023 passed by learned Additional Sessions Judge-03, New Delhi District, Patiala House Courts, New Delhi - Petition dismissed.
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Service Tax
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2023 (12) TMI 126
Liability of CHA to pay Service tax on various expenses incurred on behalf of their clients - case of the department is that all these expenses incurred during the course of providing CHA service, therefore the same is includible in the gross value of CHA services provided by the appellant - HELD THAT:- As per the provisions of Rule 5 of the Service Tax (Determination of Value) Rules, 2006, the reimbursable expenses also need to be included in the value of taxable services rendered. However, this rule has been held to be ultra-vires to section 67 by Hon ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] . Hence, the demand of Service Tax on this count is clearly not sustainable. In view of the Hon'ble Apex Court judgment in Intercontinental case and the CBIC Circular No. 119/13/2009-ST dated 12.12.2009, the reimbursable expenses incurred by the appellant on behalf of the service recipient is not includible. The demand cannot be sustained. The impugned order is set aside - Appeal allowed.
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2023 (12) TMI 125
Refund of the service tax paid - Rejection of refund on the ground of time limitation - rejection of claim on the ground that the refund claim was filed beyond the period of six months as prescribed under Section 104(3) of Finance Act, 2017 - HELD THAT:- N/N. 41/2016-S.T. dated 22-9-2016 exempts services received by way of grant of long-term lease of industrial plots from the State Government Industrial Development Corporation/undertakings. The said Notification extended the exemption to prior period by section 104 of the Finance Act 1994, by the Finance Act 2017 for the period 1.6.2007 to 21.9.2016. Section 104(3) prescribed a time limit of 6 months to file the refund application. But, the Notification is silent about the authority with whom the refund application is to be filed. Normally, the refund application is to be filed with the Service tax department. But, the Appellant in this case has not paid the service tax directly to the Service tax Department. They paid the service tax to KMDA, who paid the tax in the Government Account. It is observed that the Appellant made sincere effort to file the refund claim well within the time limit of six months prescribed in Section 104(3). The delay in filing the refund with the service Tax department was only due to inaction by the service tax department and improper advice by KMDA. They have filed the refund claim well in time with KMDA with whom they paid the service tax. As the Notification 41/2016 was not clear with whom the refund application was to be filed, the delay has happened. Thus, the delay in filing the refund application with the service tax department was not due to the fault of the Appellant. Hon'ble Madras High Court in the case of M/S. GRAND TECHNOLOGIES VERSUS THE ASSISTANT COMMISSIONER OF GST CE, PUDUCHERRY [ 2022 (9) TMI 9 - MADRAS HIGH COURT] , allowed the refund claim on similar facts and circumstances by holding that the period of limitation prescribed in Section 104(3) is not applicable - the decision of Hon'ble Madras High Court is squarely applicable in this case. The impugned order rejecting the refund claim on time bar ground set aside - the Appellant is eligible for sanction of the refund by ignoring the time bar aspect as held by the Hon'ble Madras High Court in the case of Grand Technologies - appeal allowed.
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2023 (12) TMI 124
Classification of services - services of construction of sewerage system and allied works including laying of pipes in Indore city under JNNURM project in terms of the work awarded by Indore Municipal Corporation (IMC) - classifiable as erection, commissioning and installation service or commercial or industrial construction as per the definition contained in Works Contract Services? - HELD THAT:- The issue is no longer res integra as an identical issue has been decided in favour of the Appellant by the Tribunal s Chennai Bench in the case of M/s Shriram EPC Ltd v. Commissioner of GST and Central Excise Chennai [ 2018 (11) TMI 1083 - CESTAT CHENNAI] . The same view has been taken by CESTAT Allahabad Bench in the case of Jyothi Buildtech (P) Ltd Vs Commissioner of C.Ex, Cus and S.Tax, Noida [ 2017 (3) TMI 1100 - CESTAT ALLAHABAD] . In this case the Tribunal has relied upon the decision of Larger Bench in the case of Lanco Infratech Ltd. [ 2015 (5) TMI 37 - CESTAT BANGALORE (LB)] and it was held that such works executed by the appellant in the nature of sewerage works, laying of pipe and for water supply falling under Explanation (ii)(b) fall under the definition of works contract service and were also exempted under the classification commercial and industrial construction service prior to 1-6-2007, as explained by the Larger Bench. It is observed that the facts and circumstances of the present case are identical to the decisions cited above. Accordingly, by following the ratio of the decisions cited above, it is held that the demand confirmed in the impugned order is not sustainable. Since, the demand itself is not sustainable, the question of demanding interest or imposing penalty does not arise. The impugned order set aside - appeal allowed.
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2023 (12) TMI 123
Process amounting to manufacture or not - processes of flaking/grinding of used PET bottles and washing of flakes. Revenue was of the opinion that the process amounting to manufacture and were subjected to nil rate of duty and the finished products were subjected to nil rate of duty as per Notification No.24/2012-CE dated 08.05.2012. HELD THAT:- The only ground which is raised by the revenue to counter the findings recorded by the Commissioner in the impugned order is that Polyester staple fiber/polyester Staple yarn was attract nil rate of duty as per exemption Notification No.24/2012-CE dated 08.05.2012. The proviso (2) of the said notification specifically provides that appropriate rate of duty would not include nil rate of duty or duty which is exempted for the purpose of the said notification. The benefit of this Notification No.8/2005 would not be admissible to respondent. As the finished product of M/s Reliance Industries was Polyester staple fiber or polyester staple yarn subjected to nil rate of duty as per Notification No.24/2012. However, it is found that at no stage of investigation nor even at the filing of this appeal any evidence has been produced by the revenue to show that Reliance was clearing the finished products i.e. Polyester staple fiber or polyester filament yarn by availing the benefit of the notification. In absence of any evidence to this effect, the conclusion drawn in the appeal filed by the revenue cannot be substantiated. The Polyester staple fibre or polyester filament yarn manufactured from plastic scrap or plastic waste including waste polyethylene terephthalate bottles was throughout exempted from payment of duty or attracted nil rate of duty. There could not have been any reason for limiting the applicability of Notification No 8/2005-ST dated 01.03.2005 from the 08.05.2012 the date of Notification No 24/2012-CE amending notification No 17/2012-CE dated 01.03.2012. Revenue has in its appeal restricted the demand of service tax from 08.05.2012. Further in its circular dated 29.06.2010, Board has in para 8 clarified multifarious uses of Polyester Staple Fibre etc. No evidence has been produced by the revenue in the appeal or at any stage of the proceedings to show that the finished goods of the M/s Reliance Industries Limited were cleared under exemption. The exemption contained in the notification No 8/2005-ST which was rescinded by the Notification No 34/2012-ST extended by the entry at Sl No 30 of the Notification No 25/2012-ST. The entries made in the two notifications are in respect of the same activities. The contention of revenue in appeal with regards to non admissibility of the exemption under these notifications is supported by any evidence, to show that M/s Reliance Industries Limited was clearing the Polyester Staple Fibre by availing the exemption under the Notifications referred in the appeal. In fact it is not even shown that M/s Reliance was clearing Polyester Staple Fibre or was clearing the product referred in para 8 of the board circular of 2010 on payment of appropriate duty. There are no merits in the appeal filed by the revenue. Appeal is dismissed.
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2023 (12) TMI 122
Levy of Service Tax - Renting of Immovable Property Service - renting of quarters by the Appellant to the employees of the contractors for residential purposes - HELD THAT:- It is observed that the term immovable property for the purpose of levying service under the category of Renting of immovable property does not include building solely used for residential purpose. The quarters rented out by the appellant were only used for residential purpose and not as factories, office buildings, warehouses, theatres, exhibition halls and multiple-use buildings so as to constitute for use in the course of furtherance of business. Thus the activity of renting of quarters for residential purpose would not be liable to service tax. It is a settled legal position that the renting of immovable property for residential purpose is not liable to service tax - In the instant case the appellant has only provided its quarters on rent for residential purpose to the employees of its contractors. The said quarters were also supposed to be provided on rent subject to availability. It is held that the demand of Rs.20,83,934/- along with interest confirmed in the impugned order under the category of 'Renting of Immovable Property Service' is not sustainable. Since the demand itself is not sustainable, the demand of interest and imposition of penalty on this amount is also not sustainable. Imposition of penalty of Rs. 32,26,018/- under Section 78 of the Finance Act - HELD THAT:- The Appellant has paid the service tax of Rs. 32,26,018/- along with interest before issue of the Notice. The remaining service tax of Rs.20,83,934/- has also has been held as not payable - As per Section 73(3) of the Finance Act, no need to issue Notice in such cases where service tax along with interest has been paid before issue of Notice. Thus, this is a fit case for invoking Section 80 of the Finance Act, 1994 to waive the penalty. Accordingly, the entire penalty imposed by invoking section 80 of the Finance Act, 1994 set aside. Thus, the demand of service tax of Rs.20,83,934/-pertaining to 'Renting of immovable property service' confirmed in the impugned order set aside - the entire penalty of Rs. 53,09,952/- imposed in the impugned order also set aside by invoking section 80 of the Finance Act, 1994 - appeal allowed in part.
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2023 (12) TMI 121
Levy of service tax - amount realised as reimbursement of expenses from the principals - period 2009-10 to 2013-14 - Extended period of limitation - HELD THAT:- The present case is covered by the judgment of Hon'ble Supreme Court in the case of UOI Vs Intercontinental Consultant Technocrats (P) Ltd [ 2018 (3) TMI 357 - SUPREME COURT] whereby the issue stands decided in favor of the Appellant as the disputed period in the present case is from 2009-10 to 2013-14 only for which it has been held that service tax is not leviable prior to 14.04.2015. It is also found that Reimbursement expenses are in relation to Freight Charges, Courier charges, Loading unloading charges/ Local cartage, Printing Stationery charges, Legal Expenses, Interest on investment and Misc expenses against copies of agreements with the principals and approves that these expenses are in the nature of reimbursement only - the disputed amounts being 'reimbursement are not includible in the taxable value and the conclusions drawn by the Ld. Commissioner is not tenable factually and legally, as per the judgment of the Larger Bench in Sri Bhagavathy Traders Vs CCE [ 2011 (8) TMI 430 - CESTAT, BANGALORE-LB] . Extended period of Limitation - HELD THAT:- Since records for the period October 2009 to March 2011 were taken for audit in August 2011 it is presumed that records up to September 2009 were taken for audit in July 2010 and earlier audits, as aforesaid. It is not a case of department that material facts of recovering reimbursement were not reflected in records for earlier period. Such information was available in records and audit had not taken any adverse observation thereon during past audits. Department therefore, is not justified to hold that the Appellant has suppressed facts. Facts of recovering reimbursement were reflected in books of account audited by audit team in past, as well. The impugned order cannot be sustained and is accordingly set aside. The appeal filed by the appellant is allowed.
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Central Excise
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2023 (12) TMI 120
SSI exemption - clearance of goods under the brand name of another person or not - HELD THAT:- In the absence of the Appellant s providing any evidence that they were the brand name owners, irrespective of the fact that whether it was registered in their name or not and the market s perception that brand name belonged to somebody else, it is not possible to consider that it did not belong to others. In fact, in this case, sufficient evidence is on record by way of statements and other relied upon documents to the effect that these brand names/trade names were belonging to SRCPL and Farmax. The Appellants reliance on the case law cited is not relevant. In the case of COMMNR. OF CENTRAL EXCISE, HYDERABAD IV VERSUS M/S. STANGEN IMMUNO DIAGNOSTICS [ 2015 (6) TMI 155 - SUPREME COURT] , the issue in the said case was whether two different parties were using the same trademark and logo simultaneously in their own rights, which is not the case here as it is clearly the case where the Appellant has failed to prove that they were the owners of the brand name/trade name of STOP and TODAY . The Hon ble Supreme Court observed that the Assessee, in this case, is using brand name as the owner thereof itself, and was not using brand name as belonging to some other person - The Hon ble Supreme Court further observed that the central idea contained in the aforesaid definition is that the mark is used with the purpose to show connection of the goods with some person who is using the name or mark and therefore, in order to qualify as brand name or trade name , it has to be established that such mark, symbol, design or name, etc., has acquired the reputation of the nature that one is able to associate the said mark with the manufacturer. In this case, as rightly observed by the Commissioner (Appeals), there is sufficient evidence to clearly establish that brand name or trade name belonged to other persons viz., SRCPL/Farmax and not to the Appellant. Further, there is nothing on record to establish that the Appellants were perceived to be the brand name owner for STOP and TODAY in the market. The Order of Commissioner (Appeals) is based on correct appreciation of facts and legal provisions and therefore, the same need not be interfered with - Appeal filed by appellant dismissed.
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2023 (12) TMI 119
CENVAT Credit - time limitation - credit was taken on the input service after long span of 1 to 4 years - credit of security service was denied as the same was used for the unit as well as the residential premises of the director and branch office - denial on the ground that the invoices do not pertain to the appellant - denial on the ground that the invoices do not contain the service tax registration No. of the supplier of input services. Denial on the ground that credit was taken on the input service after long span of 1 to 4 years - HELD THAT:- The reason given for denial of cenvat credit of Rs.77,74,439/- by the Adjudicating Authority that since one year period is provided under Section 11A for demanding of duty the same shall apply for availment of Cenvat credit also. This reason given by the Adjudicating Authority, in our considered view is absolutely absurd and not relevant. The Cenvat Credit Rules, 2004 is independent in itself and in dealing with the Cenvat credit matters, finding given is irrelevant and cannot be imported from the other Rules or Act. Section 11A is strictly for the purpose of issuing show cause notice for demanding of duty even for demanding wrongly availed Cenvat credit, but for the purpose of availment of Cenvat credit, Cenvat Credit Rules, 2004 is applicable - the import of Section 11A to say that 1 year period provided in Section 11A shall apply in the case of availment of Cenvat credit is absolutely illegal, incorrect and imaginary. The Hon ble Delhi High Court in the case of Global Ceramic Pvt Ltd [ 2019 (5) TMI 1432 - DELHI HIGH COURT] clearly held that the time limit shall not apply for the period prior to 11.07.2014 when the amendment of 1 year time limit was prescribed. Thus, the period of 1 year is not applicable during the period when there was no time limit prescribed for availment of Cenvat credit. Therefore, the appellant are eligible for Cenvat credit of Rs. 77,74,439/-. Credit on security service - Denial on the ground that the security service was used for the residential premises of the Director and branch office - HELD THAT:- A very small portion of the service was used in respect of the residential premises of the Director. However, remaining majority of portion of service was used in relation to the business activity by the appellant. Therefore, only the Cenvat credit attributed to the input security service related to the residential premises of Director shall not be available. However, the appellant have reversed the Cenvat credit of Rs. 8189/-. In respect of security service related residential premises of the Director the said reversal is upheld and maintained. However, the remaining amount of Cenvat credit of security service is admissible to the appellant. Credit denied on the allegation that the invoices do not pertain to the appellant - HELD THAT:- Though the invoices copy is not available, however, there is no case of the department that the input service related to this credit was not received by the appellant and used for their overall business operation. It is the submission of the appellant that the invoices were accounted for in the books of account. Therefore, the receipt of service and use thereof is not in dispute, merely because name of the appellant is not mentioned or incorrectly mentioned the credit cannot be denied for this clerical error. Accordingly, the appellant is eligible for Cenvat credit of Rs. 75,752/- also. Credit denied on the ground that invoices do not contain the service tax registration of the supplier of input services - HELD THAT:- Except this small lapse there is no dispute that the appellant have received the invoices, services and the payment of such invoices to the supplier of input service. Therefore, merely because registration no. is not mentioned credit cannot be denied - it is settled that merely because service tax registration was not mentioned on the invoices credit cannot be denied - appellant are eligible for Cenvat credit on the invoices which are not bearing the registration number. The appellant are eligible for Cenvat credit, on all the counts - appeal allowed.
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2023 (12) TMI 118
Valuation - cost + 15% for arriving at the assessable value - inclusion of certain elements of cost in the computation of the total cost or not - revenue neutrality - Show Cause Notice for the period April 2000 to March 2001 was issued on 29.07.2005 - time limitation - HELD THAT:- The issue is squarely covered by the decisions of this Tribunal in M/S. JAI BALAJI INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, BOLPUR [ 2023 (6) TMI 1102 - CESTAT KOLKATA] and M/S. HINDALCO INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, BHUBANESWAR-II [ 2023 (5) TMI 720 - CESTAT KOLKATA] , wherein it has been held that when the duty paid by the parent unit is eligible as Cenvat Credit to the receiving unit, the entire proceeding becomes revenue neutral. There are also force in the Appellant s submissions that the Department has issued the Show Cause Notice in a belated way though all the details were available with the Department in view of their Monthly Returns being filed. Since the issue is that of revenue neutrality, in such a case, it has been held that the question of suppression would not arise. Tforce in the Appellant s submissions that the Department has issued the Show Cause Notice in a belated way though all the details were available with the Department in view of their Monthly Returns being filed. Since the issue is that of revenue neutrality, in such a case, it has been held that the question of suppression would not arise. The appeals allowed both on merits as well as on limitation.
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2023 (12) TMI 117
CENVAT Credit - Business Support Services - Mining Services - nexus with output services. Whether the Appellant is eligible to avail CENVAT Credit of Business Support Services received by them from ABMCPL (group company) for the period from April 2006 to March 2016? - HELD THAT:- The issue is no longer res integra as the same issue has been decided by this Tribunal in Appellant's own case, M/S. HINDALCO INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [ 2023 (6) TMI 457 - CESTAT KOLKATA] where it was held that Appellant is entitled to avail the CENVAT Credit of service tax paid on BSS since they have a nexus with the overall business activity of manufacturing final goods and are essential for the day-to-day operations of the Appellant. In the present case, the department has not challenged the assessment made by ABMCPL in the returns and accepted it. Without challenging the assessment, the department cannot question the Cenvat credit passed on by ABMCPL to the Appellant - the demands confirmed in the impugned orders along with interest and penalty on this count are not sustainable and accordingly, the same is set aside. Whether the Appellant is eligible to avail CENVAT Credit on Mining Services received from Avian Overseas Pvt. Ltd. for the period from April 2006 to June 2011? - HELD THAT:- It is observed that the services ancillary to mining of coal in the Appellant s mine was used for generation of electricity at their Captive Power Plant located in their factory at Hirakud, Sambalpur, Orissa. The said electricity is supplied to their manufacturing unit for use in manufacture of dutiable goods. Thus, the services have intricate nexus with manufacturing of dutiable goods. In the case of India Cements Ltd. v. CCE, Guntur [ 2016 (8) TMI 846 - CESTAT HYDERABAD] , the tribunal has held that the input services used in captive mines are available as credit - In the case of Vikram Cement v. CCE, Indore [ 2006 (2) TMI 1 - SUPREME COURT] , the Hon'ble Supreme Court has held that capital goods and inputs used in captive mines available as credit to the manufacturing unit. Thus, the Appellant is eligible for the Cenvat credit of the input services received and used in the captive mines as the said services were used in mining of coal which was used for generation of electricity at their Captive Power Plant and the electricity was used in the manufacturing unit for manufacture of dutiable goods. Thus, there is a clear nexus between the input services on which Cenvat credit was availed and the manufacturing activity undertaken by the Appellant. Thus, the impugned order demanding reversal of such credit along with interest and penalty is not sustainable. Regarding the grounds taken by the adjudicating authority to confirm the demands in the impugned order, it is observed that the adjudicating authority has observed that AOPL was providing site formation services and not mining services . Hence, it has no nexus with the manufacturing process of excisable goods - The adjudicating authority has also observed that AOPL issued the invoices on the Appellant s mines and not the factory address/ registered premise. On these ground the credit availed by the Appellant was denied. It is observed that even if such invoices were addressed to the mines, the Cenvat credit ought not be denied thereon on account of such procedural infirmities, in the absence of any dispute as to usage of such services by the Appellant. Accordingly, the Cenvat credit cannot be denied on this ground. The umpugned order is set aside - appeal allowed.
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2023 (12) TMI 116
Refund of 100% excise duty paid in cash in respect of final products - benefit of Notification No. 32/1999-CE dated 08.07.1999 availed - applications rejected on the grounds that subject applications are barred by limitation inasmuch as Para 2.1(1) of the Notification No. 32/1999-CE (supra) and Para 3(1) of the Notification No. 20/2007-CE - HELD THAT:- The issue is no longer res integra as an identical issue has been decided by this Tribunal in the case of M/S HINDUSTAN UNILEVER LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, DIBRUGARH [ 2023 (10) TMI 991 - CESTAT KOLKATA ], wherein it has been held that the application filed before the decision of the Hon ble Supreme Court cannot be construed as time barred. Thus, the applications filed by the Appellant for fixation of special rates of valuation on 29.09.2010, for the FY 2009-10 for each of the units, is not time barred - the impugned orders set aside - appeal allowed.
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2023 (12) TMI 115
Denial of permission to make assessment provisional for the period from January, 2017 to June, 2017. The main reason for denial is para 2.2 Chapter 3 Part IV of CBEC Manual which provides the permission is issue based and party based and therefore permission cannot be granted on general basis for provisional assessment . HELD THAT:- Provisional assessment is made for the reason that value are rate of duty could not have been determined finally at the time of clearance. In the present case admittedly the value of the goods cleared is not determined at the time of clearance that the assessments are made provisionally so that the differential duty would be recovered on finalization of the assessment. The definition of relevant date as per Section 11A provides that the relevant date would be date of final adjustment of duty on the finalization of assessments. In the present case, there are no action being taken by the revenue after having denied the permission to make assessments provisional to demand the duty in respect of the clearances made within the prescribed time limit as per Section 11A. In case the submission of the revenue is agreed to, appellant would without even a notice issued under Section 11A within the prescribed time limit whatsoever payments made by the appellant on finalization of assessment could not have been recovered. Provisional assessment is a facility to the revenue to keep the assessments alive and not to the person claiming for provisional assessment which is on account of the reason that the correct value for rate could not have been determined. The issue involved in the present case has become inconsequential. The counsel for the appellant submits that they have from the date of clearance in 2017, in all the cases, the case, determined the final value and paid the differential duty along with the interest as has been held by the Hon ble Apex Court in BHARAT HEAVY ELECTRICALS LTD. VERSUS COMMR. OF CUS. C. EX., KANPUR [ 2023 (2) TMI 181 - SUPREME COURT] . On payment of differential duty along with interest on finalization of value subsequent to the clearance of goods, no further action is due against the appellant except in case where the duty has been short paid, for any reason in pursuance of the impugned order which otherwise by the lapse of time has become inconsequential. The appeal filed by the appellant is in-fructuous but for the statistical purposes the appeal is allowed.
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2023 (12) TMI 114
Clandestine removal - levy of penalty under Rule 209A of the Central Excise Act, 1944 - alleged active participation in removing and dealing with the goods which they know were liable for confiscation - HELD THAT:- This case is, in any case not different from the case where demands have been dropped by the Adjudicating Authority holding the end products as a product of the printing industry. This is the major amount on which in the demand confirmed i.e. total value of the goods as per the table in Para 10.17 is Rs.98,483/-. Nothing has been stated in the impugned order as to why and on what basis invoice value has been changed from Rs 45,501/- to Rs 98,483/- - there are no merit in confirmation of this demand when exact facts in respect of these invoices had not been adduced/adjudicated in the present order. The order in respect of these seven invoices is only made on the basis of surmises and presumptions. The Commissioner has not recorded that the goods that are to be confiscated are excisable goods but he has only expressed his doubt and observed that the unaccounted finished goods are subject to multifarious uses and are leviable to Central Excise duty. In the first part he says these may not be excisable or subject to excise duty as per the facts on record and in the next breath without ascertaining the exact fact and nature of the goods he held them liable for confiscation - It is a settled law that while passing an order for confiscation at least the excisable nature of the goods should have been determined. It is the predetermined mindset of the adjudicating authority whereby he has in respect of these goods without deciding the excisability held the goods to be liable for confiscation. Confiscation cannot be made on the basis of such doubts as expressed by the Commissioner. Thus in the present case the benefit of the doubt which existed in the mind of adjudicating authority should have been extended to the appellant. Order for confiscation and redemption fine needs to be set aside - As demand of duty and order for confiscation are set aside, there are no reason for imposition of penalty under Section 11 AC of the Central Excise Act and these penalties are set aside - As penalties on appellant No.1 is set aside, there are no merit for imposition of penalty on appellant No.2 3 accordingly the same are set aside. Appeal allowed.
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2023 (12) TMI 113
Reversal of CENVAT Credit - Menthol Crystals which was exempted vide notification 4/2008-CE dated 01.03.2008, while DMO remained chargeable to duty - HELD THAT:- The issue is no more res integra and is squarely covered by the judgment of Hon ble High Court of Himachal Pradesh at Shimla in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DRISH SHOES LTD. [ 2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT] where it was held that we hold that an assessee, manufacturing goods chargeable to nil duty, is eligible to avail CENVAT credit paid on the inputs under the exception clause to Rule 6(1), as contained in Rule 6(5) of CENVAT Credit Rules, 2002 and Rule 6(6) of CENVAT Credit Rules, 2004, used in the manufacture of such goods, if the goods are exported. By respectfully following the ratio as laid down by Hon ble High Court of Himachal Pradesh at Shimla and also observing that the appeal filed by the Revenue against the decision of the Hon ble High Court has been dismissed by Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH VERSUS M/S DRISH SHOES LTD. [ 2016 (7) TMI 1415 - SC ORDER] , the impugned order is set aside. The Appeal filed by the Appellant is allowed.
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2023 (12) TMI 112
Denial of CENVAT Credit - effect of amendment in Explanation 2 vide Notification No.16/2009-C.E. (N.T.), dated 07.07.2009 - retrospective or prospective effect - penalty - HELD THAT:- The show cause notice has been issued mainly based on the decision of VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] and the same has been categorically overruled by Hon'ble Chhattisgarh High Court in M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT ]. The Hon'ble High Court has given a specific finding against the finding of retrospective operation of the amendment to the explanation to Rule 2(k) of Cenvat Credit Rules holding that the said amendment will not be retrospectively applicable. Further, the said finding of the learned Adjudicating Authority is in violation of a catena of decisions of several High Courts and Supreme Court allowing the admissibility of credit on inputs used in the fabrication of support structures of capital goods. Similar issue came up for consideration before Hon ble Gujarat High Court in the case of MUNDRA PORTS AND SPECIAL ECONOMIC ZONE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS [ 2015 (5) TMI 663 - GUJARAT HIGH COURT ] and before Hon ble Madras High Court in the case of M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX THE COMMISSIONER OF CENTRAL EXCISE [ 2015 (3) TMI 661 - MADRAS HIGH COURT ] wherein it was held that the exclusion incorporated in Explanation 2 to Rule 2(k) of the Credit Rules w.e.f. 07.07.2009 cannot be given retrospective effect thereby effectively holding that the finding in Vandana Global is erroneous. Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. [ 2010 (7) TMI 12 - SUPREME COURT ], by applying the user test, held that credit availed on steel items for fabrication of Chimney was admissible. The availment of credit on PSC poles is covered by the decision of Hon ble Rajasthan High Court in the case of ADITYA CEMENT VERSUS UNION OF INDIA [ 2007 (3) TMI 190 - HIGH COURT RAJASTHAN ]. It has been held that the railway track material used for transporting of coal and products of cements are eligible for credit as without supply of fuel the plant does not function. Thus, the railway track cannot be kept out of the consideration for availing credit, though, such material was not being used directly in the manufacture of cement. In such situation, imposition of penalty is also not sustainable on the main as well as the other Appellants. The impugned order cannot be sustained and is accordingly set aside - appeal allowed.
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2023 (12) TMI 111
Refund claims for interest - denial on the ground that as per the adjudicating authority interest was not a pre-deposit under Section 35 F as amended w.e.f. 06.08.2014 - HELD THAT:- Appellant had deposited an amount of Rs.1,00,00,000/- as directed by the Hon ble High Court vide order dated 08.07.2014 - Admittedly, in this case the appeal was filed on 27.08.2014 all though it was in respect of the Order-in-Original dated 23.05.2013, no appeal was filed before the appellate authority i.e. CESTAT. The amount was deposited prior to the date of commencement of Finance (No 2) Act, 2014 as per the direction of Hon ble High Court, this appeal was filed on 27.08.2014, i.e after the date of commencement of Finance Act, 2014. The Tribunal has considered this appeal filed after 27.08.2014 in terms of the amended provisions of Section 35F by treating the amount deposited as per direction of Hon ble High Court as a pre-deposit as per Section 35F as amended w.e.f. 06.08.2014. From the proviso to the amendment made in Section 35 F, it is quite evident that the date of filing the appeal is the date for determining the applicability of the amended section and not the date of deposit nor the date of order appealed against is having any relevance. Tribunal has in its order dated 12.12.2014, considered the amount deposited by the appellant as per the directions of the Hon ble High Court, as deposit made under the provisions of amended Section 35F, for purpose of consideration of appeal. Tribunal has considered the amount deposited as per the direction of Hon ble High Court after completion of adjudication proceedings to be in compliance of the conditions of mandatory pre-deposit. It is important to note that amount was deposited as per the direction of Hon ble High Court and was not an deposit made in terms of Section 35 F prior to the commencement of the Finance (No 2) Act, 2014. Accordingly the proviso to Section 35FF would not be applicable in the facts of the present case. Similar has been stated by the Board in its Circular No 984/08/2014 dated 16.09.2014, where it was held that Since the amount paid during investigation/audit takes the colour of deposit under Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962 only when the appeal is filed, the date of filing of appeal shall be deemed to be the date of deposit made in terms of the said sections. Impugned order holding contrary to the above cannot be sustained and the same is set aside - appeal allowed.
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CST, VAT & Sales Tax
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2023 (12) TMI 110
Maintainability of appeal - appellant submitted that these appeals have been rendered infructuous as they are against an interim order passed by the High Court and since the main matter has been disposed of by the High Court, nothing further would survive for consideration by this Court. HELD THAT:- The Civil Appeals are dismissed as having been rendered infructuous.
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2023 (12) TMI 109
Liability of interest for the delay in remitting the turnover tax - Rate of interest was not prescribed during the relevant period - HELD THAT:- Under the notification dated 26.03.2022 in Ext. P2, the turnover tax under Clause (i)(a) of Subsection (2) of Section 5 of the KGST Act on sale of foreign liquor sold for the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021 by the Bar hotels has been reduced to 5%. Not only this, if some dealer has paid the excess turnover tax for the said period, the same was to be adjusted towards the existing or future liability - The notification itself prescribes that for the said period, the turnover tax would be 5%. Thus, it has been given effect to for the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021. Since the rate has been prescribed for parcel sale by the Ext. P2 notification for the said period, the tax paid on the said sale at the rate of 5% on or before 30.04.2022 should be deemed to be within time as per the Cabinet Decision and no interest would be payable on the turnover tax in respect of the said sale up to 30.04.2022. However, if any dealer has paid the tax after 30.04.2022, he would be liable to pay interest and penalty as may be determined by the competent authority. From the notification in Ext. P1, though the petitioners were permitted to effect the parcel sales, the rate was not prescribed, and the rate has been prescribed only by the notification in Ext. P2 dated 26.03.2022 - in the absence of the rates prescribed before 26.03.2022, any demand and levy of tax could not have been valid. After the rate of the turnover tax has been prescribed, the petitioners ought to have remitted the tax before 30.04.2022. In cases where the returns are filed by 31.03.2022, and ToT was cleared on or before 30.04.2022, the FL3/FL11 licensees are not liable to pay interest for delayed payment of the turnover tax for the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021 in Financial Years 2020-21 and 2021-22 - If any FL3/FL11 licensees did not file the return of ToT in respect of the taxable turnover of the parcel sales of IMFL for the period of authorised sale on or before 31.03.2022 and not paid the ToT at 5% by 30.04.2022, such a licensee/dealer would be liable to pay interest for delayed payment of ToT with effect from 01.05.2022 till the date of payment and for delay in filing returns - cases are remitted back to the Assessing Authority to pass fresh Assessment Orders.
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Indian Laws
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2023 (12) TMI 108
Professional misconduct - Disciplinary proceedings against Chartered Accountant (CA) - Abatement of proceedings of death of the accused - Procedure to be followed by Director on a complaint - Correctness of closing the complaint of the Petitioner - direction to the Respondent No. 1 to re-open her complaint and conduct a disciplinary enquiry against the Respondent No. 2 - HELD THAT:- Rule 8 provides for the procedure to be followed by the Director on receiving a complaint. Under Rule 8(1)(b) of the Rules, Director of the Institute has to send a copy of the complaint to the firm calling upon the firm to disclose the name or names of the member or members concerned. In terms of the said Rules, on receiving the complaint of the Petitioner the Respondent No. 1/ICAI vide letter dated 17.08.2020 called upon Respondent No. 2 firm to disclose the name of the member answerable to the complaint and Respondent No. 2 by its letter dated 27.08.2020 informed Respondent No. 1/ICAI that the Audit in question was carried by CA Vijay Kumar Lalla who passed away on 18.11.2017. In terms of Rule 8(2) a member whose name is disclosed by the firm shall be responsible for answering the complaint. Name of CA Vijay Kumar Lalla was disclosed by the Respondent No. 2/Firm. CA Vijay Kumar Lalla was associated as a partner with the Respondent No. 2/Firm at the time of occurrence of the alleged misconduct. It is not the case of the Petitioner that no one has owned the responsibility for the allegations made against the firm and therefore, in absence of such responsibility the disciplinary proceedings can be initiated against Chartered Accountant firm. In the present case, the Respondent No. 2/Firm has disclosed the name of CA Vijay Kumar Lalla, who conducted the Audit of Respondent No. 3/IIC. The complaint was filed by the Petitioner after three years of the report of Audit and by the time the said CA Vijay Kumar Lalla had passed away. It is well settled that disciplinary proceedings cannot continue after the death of the concerned person. Thus, it cannot be said that the Respondent No. 2/Firm has whittled away from its responsibility and the Respondent No. 1/ICAI is at fault for closing the complaint of the Petitioner. Therefore, this Court is of the opinion that the decision of Respondent No. 1/ICAI in closing the complaint of the Petitioner does not require any interference by this Court - petition dismissed.
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2023 (12) TMI 107
Dishonour of Cheque - insufficient funds - whether the complainant has proved the case against the Accused for the offence under Section 138 of the Negotiable Instruments Act? - correctness of conviction of accused - HELD THAT:- A person, who signs a Cheque and makes it over to the Payee remains liable unless he adduces evidence to rebut the presumption that the Cheque had been issued for payment of a debt or in discharge of a liability. The presumption is that the existence of a legally enforceable debt is to be presumed in favour of the complainant and the accused has to adduce evidence to rebut the presumption under section 139 of Negotiable Instruments Act. But in the case on hand the complainant failed to prove the case, per contra the accused probabilished his defence through sufficient evidence thereby the said case laws will not be helpful to decide the case in favour of the complainant. The trial Court in its judgment, has taken a view that the Accused has not denied the signature found in the complaint and the complainant proved her financial capacity to pay the amount by pledging her jewels and mortgaging the properties. But those mortgaged documents are unregistered documents and cannot be relied and those documents were also not marked. Further, the alleged pledging of jewels were not proved and only the complainant produced the redemption of jewels in the year 2010. But the alleged lending money was given in the year 2008. Further the trial Court failed to consider that P.W.2 himself admitted the employment under the first accused company and he only managed the accounts of the company and had transactions with the Bank and the Bank account was inoperative from 24.09.2005 onwards. Thereby the accused has probablized his defense. The trial Court has erroneously convicted the Accused by holding that the complainant has proved her case - the judgment of the trial Court is not sustainable and the judgment of the Appellate Court is well reasoned. There is no perverse or infirmity found on the judgment of the Appellate Court, thereby there is no warrant to interfere by this Court - Criminal appeal dismissed.
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