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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter December 7, 2024 Case Laws in this Newsletter: GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST High court gives relief, directs fresh hearing on depositing 50% dues if missed appeal deadline. Case-Laws - HC : The High Court, considering that the petitioner's certain pleas were not taken into account while issuing the notice u/s 74(1) and that the limitation for filing an appeal had been lost, directed that if the petitioner deposits 50% of the demanded amount of Rs. 73,87,225.92, after adjusting any amount already paid within four weeks, the impugned order dated 24.07.2023 shall stand set aside. The respondent would then afford an opportunity of hearing to the petitioner and pass a fresh order, upholding the principles of natural justice. Visit to Get Source Petitioners' appeal against profiteering determination rejected; conditional stay on 50% deposit. Case-Laws - HC : The High Court held that the petitioners have no right of appeal against the determination made by the authority regarding the profited amount u/s 171 of the CGST Act. However, as an interim relief, the Court granted a conditional stay, subject to the petitioners depositing 50% of the profited amount, excluding interest, within 8 weeks. The Court observed that granting such conditional stay would serve the interests of justice in the present case. Visit to Get Source Unfair tax assessment quashed due to lack of proper notice & hearing. Case-Laws - HC : The High Court set aside the impugned order of assessment due to violation of principles of natural justice as the show cause notice and the order were not served properly to the petitioner. The petitioner was directed to deposit 25% of the disputed tax within four weeks and submit objections along with supporting documents within four weeks from receipt of the order. The respondent was directed to consider the objections after providing a reasonable opportunity of hearing to the petitioner and pass orders in accordance with law. The writ petition was disposed of. Visit to Get Source Tax evasion case dismissed: Trader failed to file GSTR-3B & pay GST despite self-assessing in GSTR-1. Court: No discretion allowed. Case-Laws - HC : The High Court dismissed the writ petition. The petitioner failed to file GSTR-3B returns and discharge the tax liability, despite having self-assessed and filed GSTR-1. The court held there was no scope for exercising discretion by extending the payment period, as the petitioner ought to have filed GSTR-3B and paid the tax. Furthermore, more than two years had elapsed since the impugned order dated 13.04.2022, providing ample time for the petitioner to pay the amount during the pendency of the writ petition. Visit to Get Source Taxpayers get relief: Delayed input tax credit allowed for 2017-2021 under amended CGST Act. Case-Laws - HC : The High Court allowed the writ petition and set aside the impugned order. The matter was remitted back to the respondent authority to pass a fresh order on merits in accordance with the statutory amendment of Section 16(5) of the CGST Act, 2017. Section 16(5) permits belated availing of input tax credit for the assessment years 2017-2018 to 2020-2021, which was notified by the Central Government vide Notification No. 22/2024-Central Tax dated 08.10.2024. The Court held that the Parliament has extended an olive branch to taxpayers by inserting Section 16(5) to address the issue of delayed availing of input tax credit. Visit to Get Source Income Tax IT Deduction for Software Unit u/s 10A Upheld Based on Consistency Principle. Case-Laws - HC : The High Court held that the NOIDA-II unit was entitled to deduction u/s 10A of the Income Tax Act for its profits and gains derived from the NOIDA-I unit. The court applied the principles of consistency and certainty in taxation, stating that once the Revenue accepts the findings in favor of the assessee in the initial year(s), it cannot be re-agitated on the same set of facts in subsequent years without any change in circumstances or new facts. Regarding transfer pricing adjustment, the court ruled that the Transactional Net Margin Method (TNMM) should be applied at the enterprise level, considering the singularity of the agreement between the associated enterprises and the interlacing of funds and unity of management. The court decided in favor of the assessee on the issue of crystallization and accrual of liability towards payroll taxes, holding that the liability arose when the reconciliation was conducted at the end of the Australian tax year. Visit to Get Source Income Tax Reassessment: Fresh Notice Allowed for Non-Disclosure of Income. Case-Laws - HC : The High Court held that the Assessing Officer is not restricted from issuing a fresh notice u/s 148 of the Income Tax Act, even after filing of earlier reassessment proceedings, provided it is within the limitation period. In the present case, the petitioner had not disclosed income truthfully before the Settlement Commission. This gave the Assessing Officer a new cause of action to initiate fresh proceedings u/s 148 based on the Commission's observations of non-disclosure. The objections raised against the fresh reassessment were without basis. The Court recalled its interim order and directed the respondents to continue and pass the final assessment order based on the reassessment proceedings initiated under the fresh notice, following due process as per law. Visit to Get Source Trademark acquisition not an international transaction for that year: High Court. Case-Laws - HC : The High Court held that the acquisition of the trademark 'FABINDIA' during the financial year 2006-07 could not be treated as an international transaction within the meaning of Section 92B of the Income Tax Act for the assessment year 2011-12. The transaction to purchase an asset is a singular transaction, and if it is an international transaction, the arm's length price determination is required in the assessment year relevant to the previous year in which the transaction was entered into. The Income Tax Appellate Tribunal's direction to the Assessing Officer was to examine the admissibility and quantum of depreciation allowable on the trademark, not to make a reference to the Transfer Pricing Officer. Since no international transaction was entered into in the relevant year, the reference made by the Assessing Officer to the Transfer Pricing Officer was without jurisdiction, and the impugned order was set aside by the High Court. Visit to Get Source Assessee's settlement under Vivad se Vishwas Act confined to trading loss issue; Revenue's appeal unrelated. Case-Laws - HC : The High Court allowed the petition and directed that the certificate issued by the designated authority under the Direct Tax Vivad Se Vishwas Act, 2020 be confined to the declaration made by the assessee. The Court held that the assessee can confine the settlement of disputes to the issue regarding disallowance of loss claimed in respect of trading in derivatives, which was the subject matter of its appeal disposed of by the ITAT. The revenue's consolidated appeal against the ITAT order would not detract from the fact that the appeals pertained to separate issues not interlinked. The respondents were directed to take steps for issuing a modified certificate u/s 5(1) of the Act. Visit to Get Source Opportunity for video hearing denied despite request violated natural justice - Orders set aside. Case-Laws - HC : The High Court held that denial of opportunity for personal hearing through video conferencing to the petitioner assessee, despite a specific request, violated the principles of natural justice. Since no standards or procedures were framed by the competent authority for approving such requests, the statutory authority was bound to afford a personal hearing to the assessee through video conferencing. Consequently, the impugned orders were set aside due to this infraction. Visit to Get Source Tax penalty order quashed due to delay by competent authority beyond 6-month limit from reference date. Case-Laws - HC : The High Court held that the penalty order u/s 271D was barred by limitation as the order imposing penalty was required to be passed within six months from the end of the month in which the reference from the Assessing Officer was received by the competent authority. Since the reference was received on 18.01.2023, the penalty order should have been passed by 31.07.2023. However, the competent authority delayed the proceedings by asking for further documents after almost one year, which was beyond the permissible period. Consequently, the assessee's appeal against the penalty order was allowed by the High Court. Visit to Get Source Penalty u/s 271DA for cash transaction violation quashed due to delay by authorities. Case-Laws - HC : The High Court allowed the assessee's appeal, holding that the order imposing penalty u/s 271DA for contravention of Section 269ST was passed beyond the statutory limitation period prescribed u/s 275(1)(c). The court observed that the penalty proceedings are initiated on the date of receipt of the reference by the competent authority from the Assessing Officer. Since the reference was received on 24.03.2023, the order imposing penalty should have been passed within six months from the end of that month. However, the competent authority delayed the proceedings by almost a year by seeking further documents, which was beyond the prescribed period for passing the penalty order. Consequently, the impugned penalty order was held to be barred by limitation. Visit to Get Source Inadequate proof for tax exemption claim leads to revision order. Case-Laws - AT : The Principal Commissioner of Income Tax rightly invoked revision u/s 263 against the assessment order. Despite being afforded multiple opportunities, the assessee failed to provide supporting documents to substantiate its claim for exemption u/ss 10(23C)(iiiab) and 10(23C)(iiiac) for a substantial sum. The Assessing Officer, despite noting the lack of proof, did not make any disallowance regarding the exemption claim in the assessment order. This rendered the order erroneous and prejudicial to the Revenue's interests, justifying its revision. Consequently, the assessee's appeal was dismissed by the Appellate Tribunal. Visit to Get Source Infra project sub-contractor eligible for tax deduction on profits u/s 80IA(4) . Case-Laws - AT : The Income Tax Appellate Tribunal allowed the assessee's claim for deduction u/s 80IA(4) of the Income Tax Act for profits derived from development of an infrastructure project. Although the assessee did not directly enter into an agreement with the government authorities, it executed the project on a sub-contract basis from the main contractor. The Tribunal held that since the main agreement allowed sub-contracting, the sub-contract agreement was akin to an agreement with the statutory authorities for developing the infrastructure facility. Therefore, the assessee satisfied the conditions for availing deduction u/s 80IA(4) as a developer of an eligible infrastructure project. Visit to Get Source Taxman's assumptions rejected, professional fees allowed as business expense. Case-Laws - AT : The Income Tax Appellate Tribunal held that the assessing officer did not have credible evidence to make an addition based on a piece of paper found containing details of cash components for flat sales. The Tribunal relied on the Metro Construction Company case, stating that the officer could not resort to extrapolation based on assumptions and presumptions. Consequently, the entire addition was deleted. Regarding the disallowance of professional fees, the Tribunal ruled in favor of the assessee, stating that the initial onus was discharged by showing the purpose of the payments through banking channels with TDS deduction. The failure of recipients to file returns or respond to notices cannot penalize the assessee. The professional fees were paid for negotiating a loan, which is a legitimate business expense. Visit to Get Source Customs Petitioners to avail appeal remedy, HC dismisses plea for adequate opportunity. Case-Laws - HC : The High Court dismissed the petition, holding that the petitioners should avail the alternate remedy of appeal instead. It was not a case of complete lack of opportunity or notice, but rather an alleged lack of adequate opportunity. Mere allegation of non-furnishing of some documents is insufficient; the impact and relevance of such documents need to be examined. The Appellate Tribunal u/s 129B of the Customs Act has substantial powers to pass appropriate orders after considering additional evidence, if necessary. Therefore, the available appeal remedy is efficacious, and no case is made out for entertaining the petitions instead of relegating the petitioners to the appeal process. The petitioners are free to appeal the impugned order dated June 28, 2024. Visit to Get Source Importer wins case to import 8,000 MT more corn, court strikes down arbitrary import restrictions. Case-Laws - HC : The High Court allowed the petition, declaring that the petitioner is entitled to authorization to import an additional 8,000 Metric Tonnes of Maize Corn/Pop Corn. The Court held that the respondents' refusal to grant the balance authorization of 8,000 Metric Tonnes to the petitioner for importing Maize Corn/Pop Corn was arbitrary and violative of Article 19(1)(g) of the Constitution of India. The Court directed the respondents to issue the authorization for the remaining 8,000 Metric Tonnes expeditiously, within four weeks from the date of the order. The Court found that the restrictions imposed by granting authorization for only 2,000 Metric Tonnes were without statutory backing u/ss 3 and 9A of the Act of 1992 and the Foreign Trade Policy 2023. The exercise of discretion by the respondents in limiting the authorization was held to be unfair and contrary to the principles of due process and legitimate expectation. Visit to Get Source Customs duty default interest calculation rules relaxed for bona fide EPCG license holders. Case-Laws - HC : The High Court set aside the order of the Settlement Commission affirming the petitioner's liability to pay further amounts towards interest, over and above the customs duty payable for default in meeting the Export Obligation under the EPCG license. The court held that the amendment vide Notification No. 46/2013-Cus and Public Notice No. 22(RE-2013)/2009-2014 dealt only with default in Export Obligation when duty is paid, regularizing the interest amount not exceeding the duty payable. It did not cover cases of bona fide default by the importer. Consequently, the determination of defaulted interest by the Deputy Commissioner and affirmation by the Settlement Commission was held arbitrary and contrary to the notifications. The petitioner's application before the Settlement Commission was allowed by the High Court. Visit to Get Source Circular on monetary limits inapplicable for smuggling cases involving absolute confiscation without redemption rights. Case-Laws - HC : The High Court held that the circular setting monetary limits for filing appeals before tribunals and courts would not apply in cases involving smuggling where orders for absolute confiscation of goods and imposition of penalties are issued without any right of redemption upon payment of duty and penalties. Since one possible outcome in the present case was absolute confiscation without redemption rights, the appeal could not be dismissed on the ground that the duty payable was less than the prescribed monetary limit. Consequently, the objection regarding maintainability of the appeal was rejected, and the matter was listed for further hearing. Visit to Get Source Customs tribunal overturns public bonded warehouse license cancellation, cites delay & theft incident mishandling. Case-Laws - AT : The Customs, Excise and Service Tax Appellate Tribunal set aside the order cancelling the public bonded warehouse licence issued to the Appellant u/s 58B(1) of the Customs Act, 1962. The Tribunal held that the delay in installing the audit trail facility in the computerized system was due to circumstances beyond the Appellant's control, and this alone did not warrant licence cancellation without providing an opportunity to comply. Regarding the theft incident, the Tribunal observed that one isolated incident cannot conclude inadequate security measures, and the Department can advise enhancing security instead of licence revocation. The matter was remanded for fresh examination and verification of the warehouse infrastructure's compliance with regulations before taking appropriate action. Visit to Get Source Importer denied duty exemption for non-compliant footwear labelling, faces confiscation, fines and penalties. Case-Laws - AT : The appellant imported footwear with MRP less than Rs. 500 per pair, claiming exemption from additional customs duty (SAD) and countervailing duty (CVD). However, the exemption condition required the MRP to be indelibly marked or embossed on the footwear itself, which the appellant circumvented by merely stitching a removable cloth label. The appellant also failed to declare the VAT registration number as mandated. Consequently, the appellant was held ineligible for the exemption and liable to pay SAD, CVD along with interest u/s 28AA of the Customs Act. The goods were held confiscated u/s 111(o), and a fine of Rs. 25,00,000/- was imposed u/s 125. The extended period of limitation, penalty u/ss 112 and 114A equal to the duty amount for collusion and wilful mis-statement were also upheld. The appeals were dismissed by the CESTAT. Visit to Get Source LED panel imports for TV manufacturing cleared, no complete set undervaluation. Case-Laws - AT : The appellants had imported LED panels along with a few parts of TVs for manufacturing, but not all essential parts required to constitute a complete TV set. The imported goods were parts and components of TVs, distinct from complete TVs in SKD condition. Hence, Rule 2(a) of the General Interpretation Rules cannot be invoked. The appellants are entitled to the duty exemption benefit under Notification No. 50/2017 for import of parts for TV manufacturing. The allegations of undervaluation and misdeclaration regarding branding were unfounded, as the department failed to provide sufficient evidence. The extended period of limitation was wrongly invoked, as all relevant facts were already known to the department. Consequently, the order confirming differential duty demand and imposing penalties on the appellants was set aside by the Appellate Tribunal, and the appeals were allowed. Visit to Get Source IBC NCLAT rules reversal of input tax credit not a preferential or moratorium violation transaction. Case-Laws - AT : The NCLAT held that the deposit of Rs.17,12,094/- by VE Commercial Vehicles Limited before the Commercial Tax Department, in response to a notice for reversing the input tax availed by it as the Corporate Debtor had not deposited the GST amount, did not constitute a preferential transaction u/s 43 of the IBC or violation of the moratorium u/s 14. The Commercial Tax Department did not recover any amount from the Corporate Debtor or its assets. VE Commercial Vehicles Limited had merely reversed the input tax benefit taken by it. The NCLAT allowed the appeal and set aside the Adjudicating Authority's order directing VE Commercial Vehicles Limited to refund the amount. Visit to Get Source PMLA Alleged fund collection by PFI members before Delhi riots; no money laundering prima facie. Bail granted citing delay & Article 21 rights. Case-Laws - HC : The petitioners, members/office bearers of the banned organization PFI, were alleged to have collected funds from unknown sources and provided fake receipts to utilize those funds for terrorist activities (scheduled offences). The court held that the proceeds of crime has to be generated as a result of criminal activity (scheduled offence), but in the present case, the collection of funds preceded the alleged crime (Delhi Riots). Therefore, prima facie, the offence of money laundering was not made out against the petitioners. Considering the delay in trial and long incarceration, and invoking Article 21 (right to life and personal liberty), the court directed the release of petitioners Parvez Ahmed, Mohd Ilyas, and Abdul Muqeet on bail, subject to fulfillment of terms and conditions. Visit to Get Source Tribunal rules investments not "proceeds of crime" in coal block allocation case due to lack of predicate offence finding. Case-Laws - AT : The Appellate Tribunal allowed the appeal and held that the allocation of the coal block to the appellant company did not constitute proceeds of crime under the Prevention of Money Laundering Act, 2002 (PMLA). Although the appellant company was convicted for the scheduled offence of obtaining the coal block allocation through misrepresentation, there was no predicate offence registered or investigated regarding the flow of investments from outside investors into the company. Consequently, the Directorate could not assume or investigate such a link, being empowered only to investigate money laundering offences and not the scheduled offence itself. In the absence of a finding on the misrepresentation or fraud in attracting investments during the investigation of the predicate offence, the attempt to treat the flow of funds as proceeds of crime failed. Visit to Get Source Money laundering case stumbles: Tribunal overturns attachment order based on unrelated FIR allegations. Case-Laws - AT : The Appellate Tribunal set aside the Provisional Attachment Order passed under the Prevention of Money Laundering Act, 2002. The order was found unsustainable as it was based on allegations from an initial FIR that pertained to undervaluation of reserve price during an auction, which had already been held erroneous by the Additional Sessions Judge and the Bombay High Court. The attachment order stemmed from a separate 2019 FIR regarding irregularities in cooperative societies' lending and borrowing practices, unconnected to the facts of the initial FIR relied upon. Consequently, the appeal against the Provisional Attachment Order was allowed. Visit to Get Source Unexplained cash deposits, property acquisitions deemed proceeds of crime despite acquittals; tribunal upholds attachment. Case-Laws - AT : The Appellate Tribunal dismissed the appeal, upholding the attachment of properties under the Prevention of Money Laundering Act (PMLA) 2002. Despite acquittals in some cases, the Enforcement Case Information Report (ECIR) and cognizance of the money laundering offence remained against the accused. The irregular cash deposits in bank accounts, failure to disclose the source of cash used for property acquisitions, and the routing of funds through multiple persons without justification, led the Adjudicating Authority to conclude that the properties were acquired from proceeds of crime. The Income Tax Returns did not sufficiently establish the lawful source of income. The Tribunal found no reason to interfere with the order attaching the properties. Visit to Get Source Money laundering case: Bank accounts used as 'parking place' for crime proceeds, Tribunal upholds asset freeze. Case-Laws - AT : The Appellate Tribunal dismissed the appeal, upholding the Provisional Attachment Order (PAO) under the Prevention of Money Laundering Act (PMLA). The court held that the requirement of filing a Prosecution Complaint within 90 days of the confirmation of the PAO, as per Section 8(3)(a) of PMLA, was met as the initial Prosecution Complaint was filed before the impugned order confirming the PAO. The filing of a supplementary complaint later, naming the appellant as an accused, did not impact the validity of the PAO, as the objective of PMLA is to immobilize the proceeds of crime, irrespective of it being in the hands of the accused or any other person, until confiscation. The appellant's bank accounts provided a 'parking place' for the proceeds of crime. Visit to Get Source SEBI Court rejects challenge to SEBI circular, cites abuse of process and attempt to frustrate claimants. Case-Laws - HC : The High Court dismissed the petition filed by the Petitioner challenging Clause 7 of the SEBI Circular on the grounds that the Petitioner was abusing the court's extraordinary jurisdiction. The court found that the Petitioner had initially withdrawn its request for arbitration and later sought to revive it, despite lacking funds to comply with the IGRC's directions. The court held that the Petitioner's objective appeared to be to frustrate the claimants' attempts to secure amounts based on the IGRC order. The court declined to address the issue of the constitutionality or reasonableness of the impugned clause, as any decision on this issue at the behest of such a Petitioner might foreclose a serious challenge by a genuine party. The petition was dismissed with costs of Rs. 25,000/- imposed on the Petitioner. Visit to Get Source VAT Exports Triumph: Court Upholds Input Tax Credit Refund for Zero-Rated Sales Despite Time Limits. Case-Laws - HC : The High Court dismissed the Revenue's petition challenging the order of the Single Judge. The court held that u/s 18(3) of the Tamil Nadu Value Added Tax Act, 2006, and Rule 11(2) of the Tamil Nadu Value Added Tax Rules, 2007, the Respondent's refund claims for Input Tax Credit on zero-rated sales were filed beyond the prescribed 180-day period from the date of accrual of such Input Tax Credit. However, the court emphasized that export incentives in the form of refund of Input Tax Credit should not be denied as exports bring precious foreign exchange to the country. The statutory restrictions were put in place only after 2010 through amendments to Section 18(3) of the Act and Rule 11(2) of the Rules. Therefore, the Respondent's refund claims filed prior to the amendments were valid. Visit to Get Source Service Tax Customs tribunal rules: Interpretation differences don't invite extended limitation. Case-Laws - AT : The Tribunal held that the extended period of limitation of five years under proviso to Section 73(1) of the Finance Act could not have been invoked in the present case. The Tribunal observed that for invoking the extended period, at least one of the five elements of fraud, collusion, wilful mis-statement, suppression of facts or contravention with intent to evade payment of service tax must be established. Mere difference of opinion between the department and the assessee regarding leviability of duty does not amount to wilful suppression of facts. In the present case, the show cause notice was issued beyond the normal period of one year, without invoking the proviso. The facts were already in the knowledge of the department through public documents and earlier show cause notices. The issue involved interpretation of law and there was no suppression of facts with intent to evade service tax. Visit to Get Source Tax authority overruled for presumptive service tax demand based solely on Income Tax Return without proper investigation. Case-Laws - AT : The department had initiated action based on the appellant's Income Tax Return (ITR) and compared it with the Service Tax Returns (STR), considering the entire amount shown as 'Sale of Service' in the ITR as the presumptive value of services rendered during the financial year 2015-16. However, the Tribunal held that the ITR could have triggered an inquiry into the non-payment of service tax, if any, but it cannot be the basis for determining the value of services rendered, especially under the extended period of time by invoking fraud, suppression, etc., without any investigation or proof of evasion. The burden of proof lies on the revenue to establish the blameworthy conduct of the appellant. The Tribunal set aside the impugned order, considering it a violation of the principles of natural justice. Visit to Get Source Company not liable for GST on one-time upfront lease charges paid in installments. Case-Laws - AT : The Appellate Tribunal held that the term "One Time Upfront Amount" (referred to as premium, salami, cost, price, development charges, etc.) relates to a one-time payment made at the beginning of a lease, but it does not necessarily mean payment in one lump sum. The nature of such payments is that they are paid only once during the lease period, as opposed to recurring lease rent. The Revenue's contention that payment in installments cannot be considered a "One Time Payment" was incorrect. Consequently, the Revenue's appeal was dismissed. Visit to Get Source Software License Payments Exempted from Service Tax: Tribunal Rules Amortization Entries Not Taxable Services. Case-Laws - AT : License Fees, Documentation Fees, and Computer Software. The Tribunal held that these amounts were towards amortization disclosure required under Indian Accounting Standard (Ind AS) 38A and not consideration for receipt of any service during the disputed period. The appellant did not receive any service from foreign vendors during this period for which they were required to pay service tax on reverse charge basis. The demand treating these services under Transfer of Intellectual Property Rights Service was unsustainable. The findings that overseas vendors carried out activities for consideration were incorrect as no activity was performed by them for these amounts during the disputed period. These were mere book entries towards license fees, documentation fees, computer software, etc. As the demand was set aside on merits, the Tribunal did not record separate findings on the issue of limitation or penalty. Visit to Get Source Milk pouch packaging and loading services not classified as "Manpower Supply Agency" - No service tax payable. Case-Laws - AT : The Tribunal held that since the contract was not for manpower supply but for specific jobs on a per-piece rate basis, the client was unconcerned about manpower or manhours involved. Hence, the activities cannot be classified as "Manpower Recruitment or Supply Agency Services." Relying on the CESTAT Bangalore ruling in S.S. Associates case, the Tribunal categorically held that when the job is undertaken by the contractor at rates based on quantum of work and not manpower/manhours, it is not covered under "Manpower Recruitment or Supply Agency Services" up to 30.06.2012, and thus no service tax is payable. For the period from 01.07.2012 onwards, under the negative list regime, the appellant's activity amounted to manufacture of milk pouches under the Central Excise Act, 1944, and was exempted vide Notification No. 25/2012-ST. Therefore, no service tax was payable for this period as well. The impugned order was set aside, and the appeal was allowed. Visit to Get Source Central Excise Biotech firm & employee exonerated in duty exemption case; No intent to evade, no penalty. Case-Laws - AT : The CESTAT held that the importer was entitled to exemption under Notification No. 12/2012-CUS entry Sr. No. 108 description (A) for their drugs and bulk drugs, which did not involve conditions prescribed under description (B). Since the duty demand itself was unsustainable against the company, the personal penalty imposed on their employee (the appellant) u/r 26 of Central Excise Rules, 2012 for aiding or abetting duty evasion was set aside. The Tribunal observed no suppression of facts or mala fide intent by the company or the appellant in availing the notification. Relying on a Gujarat High Court decision, the personal penalty was held unsustainable for an interpretational issue. Consequently, the appeal was allowed. Visit to Get Source Delayed adjudication violates natural justice, orders set aside for non-compliance with statutory time limit. Case-Laws - AT : The Appellate Tribunal set aside the impugned orders, allowing the appeals with consequential relief, if any, to the appellant. The adjudication of the show cause notice was not completed within the statutory time limit of one year prescribed under sub-section (11) of Section 11A of the Central Excise Act. Despite stipulating that the matter would be adjudicated ex-parte if no cause was shown within thirty days, the Adjudicating Authority failed to adhere to this stipulation or provide reasons for the delay. The delayed adjudication violated the principles of natural justice, and the Adjudicating Authority could not endlessly wait, disregarding the statutory time limit. The order was set aside solely on the ground of non-adherence to the prescribed time limit for adjudication u/s 11A(11) of the Central Excise Act. Visit to Get Source Articles FPI to FDI reclassification: New RBI framework Simplifying Compliance: Understanding AGM for OPC ATTESTATION OF DOCUMENTS UNDER SEBI REGULAIONS Refund rejection order not proper when required information for defending the claim made is not provided to the Appellant News Recognised startups create over 16.6 lakh direct jobs across more than 55 varied industries Centre approves 12 new industrial smart city projects worth Rs 28,602 crore for development of trunk infrastructure packages Monetary Policy Statement, 2024-25 Resolution of the Monetary Policy Committee December 4 to 6, 2024 Notifications Customs G.S.R. 751(E) - dated 5-12-2024 - ADD Corrigendum - Notification No. 26/2024-CUSTOMS (ADD), dated the 4th December, 2024 DGFT 42/2024-25 - dated 5-12-2024 - FTP Export of Broken Rice to Senegal and Gambia through National Cooperative Exports Limited (NCEL) GST - States 15/2024-State Tax - dated 20-11-2024 - Delhi SGST Amendment in Notification No. 52/2018-State Tax, dated the 02nd September, 2019 04/2024-State Tax (Rate) - dated 20-11-2024 - Delhi SGST Amendment in Notification No. 12/2017- State Tax (Rate), dated the 30th June, 2017 23/2024-State Tax - dated 29-10-2024 - Gujarat SGST Provide waiver of late fee for late filing of NIL FORM GSTR-7 (GST TDS Return) - Supersede notification No.22/2021-State Tax, dated 9th June, 2021 22/2024-State Tax - dated 29-10-2024 - Gujarat SGST Notifies the special procedure for rectification of for Input Tax Credit Orders issued under Section 73, 74, 107, 108 which confirming demand for wrong availment of input tax credit 24/2024-State Tax - dated 10-10-2024 - Gujarat SGST Amendment in Notification No. 5/2017-State Tax, dated the 21st June, 2017 06/2024-State Tax(Rate) - dated 10-10-2024 - Gujarat SGST Amendment in Notification No. 4/2017-State Tax (Rate), dated the 30th June, 2017 SEBI SEBI/LAD-NRO/GN/2024/216 - dated 4-12-2024 - SEBI Securities and Exchange Board of India (Intermediaries) (Second Amendment) Regulations, 2024. SEBI/LAD-NRO/GN/2024/215 - dated 4-12-2024 - SEBI Securities and Exchange Board of India (Prohibition of Insider Trading) (Third Amendment) Regulations, 2024. Circulars / Instructions / Orders DGFT Trade Notice No. 23/2024-25 - dated 6-12-2024 Launch of Revamped Preferential Certificate of Origin (eCoO) 2.0 System Case Laws: GST 2024 (12) TMI 341 Challenge to order for recovery of interest passed against the petitioner - respondent- Authority has taken into consideration the reply sent by the petitioner - HELD THAT:- In view of the above fact situation, wherein in response to the notice issued, a reply was filed by the petitioner, which has not been taken into consideration by the respondent-Authority while passing the order dated 17.09.2024 (Annexure No. 1), the said order cannot be sustained. The order impugned dated 17.09.2024 is set aside. The matter is remanded back to the Authority, which would take into consideration the response filed by the petitioner and pass a fresh order in accordance with law - Petition disposed off by way of remand. 2024 (12) TMI 340 Challenge to SCN issued in Form GST DRC-01 and DRC-7 order - few pleas raised by the petitioner have not been taken into consideration while issuing the notice - limitation of filing appeal has been lost - principles of natural justice - HELD THAT:- A perusal of the show cause notice, issued under Section 74(1) (Annexure-6), reveals that though the reply filed by the petitioner has been considered, apparently, only part of it (para 18 to 22 of the same) has been quoted and the other pleas which were raised, apparently, have not been taken into consideration. As apparently, no response to the show cause notice was filed and no appearance was made, while passing the order in DRC-01, the same show cause notice has been reproduced noticing that no response has been given and no appearance has been made. In the overall fact situation of the case, wherein the respondent on account of circumstances, as noticed, has lost the limitation for filing appeal and the fact that to some extent, the pleas raised by the petitioner have not been taken into consideration while issuing the notice under Section 74(1) of the Act, in the peculiar circumstances of the case, it is deemed appropriate and therefore, ordered that in case, the petitioner deposits 50% of the demand Rs. 73,87,225.92/- raised, after taking into consideration the amount, if any, already deposited, within a period of four weeks, the order dated 24.07.2023 (Annexure-7) shall stand set aside, the respondent would afford opportunity of hearing to the petitioner and pass fresh order. The writ petition stands disposed of. 2024 (12) TMI 339 Challenge to impugned order dated 10 July 2024 - availability of efficacious remedy - HELD THAT:- There are no averments based upon which are persuaded to depart from the practice of exhaustion of alternate remedies before which a Petition is directly entertained under Article 226 of the Constitution. This Petition is not entertained but the Petitioner relegated to the alternate remedy of appeal - petition disposed off. 2024 (12) TMI 338 Rejection of petitioner s appeal - petitioner has an alternate and efficacious remedy against this order - HELD THAT:- Section 107 of the CGST Act 2017 states that the appeal must be ordinarily instituted within 3 months. However, suppose the appellate authority is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within 3 months. In that case, the appellate authority may allow it to be presented within a further period of 1 month - In this case, the appeal was not instituted within 3 months but within 18 days of the expiry of these 3 months. Thus, it was instituted within the condonable period. On 29 January 2024, the appellant's authorised representative was not available, so an email application for adjournment was made. The appellate authority accepted the motion for adjournment and, by email dated 30 January 2024, fixed the next date for the personal hearing as 06 February 2024 - On the next date, i.e. 01 February 2024, the appellate authority changed its mind and emailed the petitioner that the hearing scheduled for 06 February 2024 had been cancelled. Before the petitioner could react, the appellate authority made the impugned order dated 31 January 2024, rejecting the petitioner s appeal on the ground that the same was time-barred. This was communicated to the petitioner on 05 February 2024. In the circumstances, such rejection was without a hearing opportunity for the petitioner. The impugned order dated 31 January 2024 is set aside and the matter remanded to the appellate authority to consider the petitioner s application for condonation of delay of 18 days since such application was well within the condonable period - petition allowed by way of remand. 2024 (12) TMI 337 Constitutional validity of Section 171 of the CGST Act - HELD THAT:- In this case, the authority has made a determination. Though the petitioners have their objections to the methodology employed or the determination of profits, the same could be examined since it is pointed out that the petitioners have no right of appeal against such determination. However, since the petitioners seek interim relief, it is only appropriate that in the facts of this case, if the petitioners deposit 50 per cent of the profited amount referred to in paragraphs 49 and 50 of the impugned order (by excluding the interest thereon), in this Court within 8 weeks from today. The interests of justice would be best served by granting such a conditional stay. There shall be ad-interim relief in terms of the prayer clause (h) subject to petitioners depositing 50 per cent of the profited amount referred to in paragraphs 49 and 50 of the impugned order (by excluding the interest thereon), in this Court within 8 weeks from today. 2024 (12) TMI 336 Maintainability of petition - availability of alternative remedy - confirmation of demand of service tax, interest and levying of penalty upon the Petitioner - HELD THAT:- The record shows that the show cause notices dated 17 October 2018 and 14 October 2019 were issued to Dewan Housing Finance Corporation Limited (Corporate Debtor), requiring the Corporate Debtor to show cause why service tax amounts should not be recovered. Pending the adjudication of the show cause notices, the Reserve Bank of India (RBI) filed Company Petition (IB) No. 4258/MB/2019 before the NCLT initiating the corporate insolvency resolution process against Corporate Debtor. This Petition was admitted by the NCLT on 03 December 2019 - The Impugned Order-in-Original was made on 29 April 2022. On this date, the NCLAT s order dated 12 July 2021 was not pointed out to the 2nd Respondent since the personal hearing had concluded on 25 February 2021. The 2nd Respondent has, therefore, relied upon the direction in paragraph 95 (ii) of the NCLT s order dated 07 Jun 2021, which now stands modified. The Impugned Order dated 29 April 2022 is set aside and the matter remanded to the 2nd Respondent for a fresh decision following law and on its own merits - petition allowed by way of remand. 2024 (12) TMI 335 Disallowance of ITC - delay in filing of return by GSTR-3B - HELD THAT:- Petitioner has moved Court invoking writ jurisdiction on not having filed appeal. In the circumstances, circular dated 15th October, 2024 issued by Central Board of Indirect Taxes and Customs, GST policy wing requiring petitioner to apply for rectification is to be complied with. This observation is on noticing that the circular was issued after the writ petition was presented. Considering departmental procedure is now in place for petitioner to comply with in having impugned order rectified and time for making the application is still available to petitioner, the writ petition is disposed off accordingly. The writ petition is disposed of. 2024 (12) TMI 334 Fraudulent availment of ineligible input tax credit - credit of input tax has been availed on the strength of tax invoices or debit notes or any other documents prescribed under Rule 36 issued by the supplier, who had been found to be not conducting any business from any place for which registration has been obtained - neither the SCN nor the impugned order of assessment have been served by tendering to the petitioner or by registered post, instead it was uploaded in the common portal - Violation of principles of natural justice - HELD THAT:- The impugned order is set aside and the petitioner shall deposit 25% of the disputed tax within a period of four (4) weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material. If any such objections are filed, the same shall be considered by the respondent and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner. The Writ Petition stands disposed of. 2024 (12) TMI 333 Challenge to order related to tax period of July 2018 to March 2019 under Section 73 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- As is ex facie apparent, the order impugned is wholly unreasoned and fails to engage with or deal with the various objections which had been urged by the petitioner in respect of the audit findings as well as the proposed additions. The impugned order quashed - petition allowed. 2024 (12) TMI 332 Maintainability of petition - availability of alternative remedy - statutory requirement of pre-deposit - appealable order or not - Challenge to order passed by the Joint Commissioner of CGST and Central Excise - HELD THAT:- Admittedly, the impugned order dated 30 May 2024 is appealable under the provisions of the CGST Act. Accordingly, it is quite surprising with the first sentence in paragraph 13 of this Petition wherein it is pleaded that the Petitioner has no alternative, much less an efficacious remedy against the impugned actions of the Respondents 2 and 4. The circumstance that the statute requires a pre-deposit for instituting an appeal can hardly be a ground to bypass the statutory remedy - This petition does not question the constitutional validity of this provision; however, several High Courts have upheld it. The impugned order holds that the facts attract the provisions of Section 16 (2) (c) of the CGST Act. The petitioner disputes this position and, in any event, relies on a circular. The only reason for the non-exhaustion of the alternate remedy is the statutory requirement of pre-deposit. It is evident that the Petitioner, by instituting this Petition, only intended to take a chance and see whether any relief can be obtained by bypassing the statutory remedy and bypassing the requirement of pre-deposit. The extraordinary and discretionary jurisdiction under Article 226 of the Constitution cannot be exercised for such purposes. In KOTAK MAHINDRA BANK PVT. LIMITED VERSUS AMBUJ A. KASLIWAL ORS. [ 2021 (2) TMI 1251 - SUPREME COURT] the Hon ble Supreme Court held that the High Court gravely erred in giving the pre-deposit entirely in its writ jurisdiction, merely because the significant portion of the debt due stood paid to the bank. The Court held that the same, at best, could be a reason to reduce a pre-deposit to the lowest figure permitted by the statute, i.e., 25% of the late fee. The pre-deposit amount could not have been reduced below the statutory remedy, and discretion under Article 226 of the Constitution cannot be exercised against the mandatory requirement of statutory provision. This Petition is dismissed, leaving it open to the Petitioner to avail of all alternate remedies under the CGST Act. 2024 (12) TMI 331 Failure to file the returns in Form GSTR-3B - failure to discharge the tax liability - petitioner had requested time for paying the amounts purportedly in terms of Section 80 of the Central Goods and Services Tax (CGST) Act, 2017 - HELD THAT:- There are no infirmity in the Impugned Order as there is no scope for exercising discretion by extending the period for payment of tax particularly when there was self-assessment made by filing the returns in form GSTR-1. The petitioner ought to have also filed form GSTR-3B and paid the tax - Even otherwise more than two years have lapsed since the Impugned Order dated 13.04.2022 was passed. Therefore, the petitioner could have paid the amount during the pendency of the present writ petition. This Writ Petition is liable to be dismissed. 2024 (12) TMI 330 Availment of Input tax credit - Interpretation and application of Section 16(5) of the CGST Act, 2017 - HELD THAT:- The issue arising out of belated availing of input tax under Section 16 of CGST Act, 2017 has been addressed by the Parliament by inserting Section 16 (5) of the Act. In fact, this Court has taken note of the same and passed an order in M/S. SAGAR BRUSH INDUSTRIES, REP. BY ITS PROPRIETOR PREM SAGAR, MADURAI VERSUS THE STATE TAX OFFICER, OFFICE OF THE ASSISTANT COMMISSIONER (ST) , MADURAI. [ 2024 (8) TMI 386 - MADRAS HIGH COURT] where it was held that ' Wherever there is a delay in availing input tax credit for the Assessment Years 2017-2018 upto 2020-2021, the Parliament has extended an olive branch to taxpayers in terms of the proposals contained in Clause 114 of the Finance (No.2) Bill, 2024.' Now 16(5) is a reality and has also notified by the Central Government under Notification No.22/2024-CENTRAL TAX dated 08.10.2024. The impugned order is set aside and the matter is remitted back to the respondent to pass a fresh order on merits and in accordance with the statutory amendment of Section 16 of CGST Act, this writ petition stands allowed. 2024 (12) TMI 329 Seeking refund of Rs. 15,49,01,792 recovered by the authorities - It is the specific case of the petitioner that the petitioner was arrested by the State authority under authorization from the Commissioner of Central Taxes (CGST) and therefore the 1st respondent who is the central authority have no jurisdiction to investigate or to issue Show Cause Notice - HELD THAT:- The 1st respondent cannot retain the aforesaid amount without appropriation of the same in accordance with law. To appropriate the amount collected from the petitioner, the 1st respondent ought to have issued a Show Cause Notice - The petitioner has made only the 1st respondent as a party to the proceedings although the petitioner was arrested by the State authority. The 1st respondent is directed to co-operate with the 2nd respondent and who shall issue proper Show Cause Notice to the petitioner under Section 73, 74 of the respective GST enactments to demand tax that had been purportedly evaded by the petitioner. Petition disposed off. 2024 (12) TMI 328 Withdrawal of writ petition with liberty to avail benefits of amendments and amnesty scheme by the Governments - amnesty scheme - HELD THAT:- The writ petition is dismissed as withdrawn with liberty to the petitioner to avail the benefit of the amendments and amnesty scheme of the Governments. Income Tax 2024 (12) TMI 327 Validity of reopening of assessment - whether the Trust fulfilled the condition laid down in Section 13 r.w.s.11 and whether the income earned from the business is exempt from Tax as it has been utilized for the beneficiaries and by keeping separate accounts? - As decided by HC 2013 (7) TMI 224 - PUNJAB HARYANA HIGH COURT] return was finalized in terms of Section 143(3) of the Act. The Assessing Officer was within its jurisdiction to issue a show cause notice for re-assessment. The order of assessment, as reproduced above, shows that the Assessing Officer has returned a finding that income has been applied for the purpose of the Trust in view of the noting of the assessee in the return filed. The reason for re-assessment is that the AO has not examined; the question whether the Trust fulfilled the condition laid down in Section 13 read with Section 11 of the Act and whether the income earned from the business is exempt from Tax as it has been utilized for the beneficiaries and by keeping separate accounts. Since the question was not examined by the Assessing Officer while framing assessment under Section 143(3) of the Act, and that the assessment framed was in ignorance of the statutory provisions and thus, the test that the income has escaped assessment on the basis of return filed stands satisfied. HELD THAT:- These appeals may be dismissed as withdrawn. 2024 (12) TMI 326 Validity of reopening of assessment - Notice issued beyond period of four years - addition of dividend income - gross delay of 457 days in filing the Special Leave Petition - As decided in HC [ 2017 (7) TMI 1010 - DELHI HIGH COURT] reopening of assessments after a period of four years, ought to be an exception and not the rule. The purpose of this provision is to ensure that there is some finality which is attached after the period of four years, for assessments which have been completed u/s 143 (3) - AO has to necessarily record that there has been a failure on the part of the Assessee to disclose fully and truly all material facts necessary for his assessment, failing which the reopening of the assessment cannot be triggered. The reasons stated by the AO do not satisfy the mandatory legal requirement for reopening the assessment since they failed to record the failure on the part of the Assessee to disclose fully and truly all material facts necessary for the assessment. Impugned notice does not satisfy the rigors of Sections 147/148 of the Act as there has been no non-disclosure of the material facts by the Petitioner. In fact, even the reasons accompanying the impugned notice do not even say that there is any failure by the Petitioner to disclose fully and truly all the material facts. HELD THAT:- We have heard for the petitioner as well as the learned counsel for the respondent on the said application and perused paragrpahs 4 and 5 of the affidavit filed in support of the application seeking condonation of delay. On the perusal of the same, we find that the reasons assigned are neither satisfactory nor sufficient in law so as to condone the delay of 457 days in filing the special leave petition. Hence, the application seeking condonation of delay is dismissed. Consequently, the Special Leave Petition is dismissed on delay. 2024 (12) TMI 325 Reopening of assessment against deceased - Rights of legal representatives - initial Notices being issued in the name of a dead person and the subsequent participation of the legal representatives in the proceedings before the Assessing Office - High Court [ 2023 (7) TMI 1506 - BOMBAY HIGH COURT] as noted that since the legal representatives were substituted by the respondents and thereafter the proceeding could be continued, disposed of the Writ Petition by holding that the legal representatives could take all contentions available to them except the fact that the initial notice was issued in the name of a dead person and consequently disposed of the Writ Petition - main impediment in the case of the appellant herein is that the High Court has curtailed their right to take a contention that the impugned Notices were initially issued in the name of a dead person; that solely because the appellant as a legal representative subsequently responded to the notices would not imply that the proceeding initiated was valid HELD THAT:- We set aside paragraph 4 of the impugned order and we permit the appellant herein to take the contention with regard to the initial Notice being issued in the name of a dead person-original assessee being defective and also take all other contentions available to the appellant before the Assessing Officer. Consequently, the impugned order to that extent is set aside. It is needless to observe that the Assessing Officer shall consider all contentions to be raised by the appellant herein on their own merits and in accordance with law. 2024 (12) TMI 324 Second unit entitled to deduction u/s 10A - whether it is not a part or mere extension of the first unit ? - HELD THAT:- In the present case, the fact that NOIDA-II unit was engaged in the same business is not dispositive of the question whether the said undertaking does not fulfil the criteria as specified in Clauses (ii) and (iii) of sub-section (2) of Section 10A of the Act. The Assessee had explained that it would set up the new undertaking to cater to its growth plans. It had hired a separate space from NOIDA (New Okhla Industrial Development Authority) for establishing the said unit. It had made an investment in the additional assets for setting up the said unit and resultantly not only the Assessee s gross block but also the seating capacity had doubled. As noted before, the Assessee s claim that the sitting capacity had increased from 300 seats to 700 seats with the establishment of the new undertaking (NOIDA-II unit) has not been controverted. The question whether a new undertaking has been set up, which is eligible for deduction u/s 10A of the Act is, therefore, most relevant in the initial year of operation. Since the Revenue accepts in the initial year of operation that a new undertaking has been set up and does not fall within the exclusionary clauses that is, it is not formed by the splitting up, or the reconstruction of an extant business or by transfer to a new business of machinery or plant previously used for any purpose the controversy must rest for future years as well. This is of course subject to the condition that no additional material or facts, which establish otherwise are found subsequently. It would be debilitating to the rule of consistency and certainty in the matter of taxation, if the question of eligibility of a unit is permitted to be re-agitated on the same set of facts despite the Revenue having accepted the findings which are essentially factual findings in favour of the Assessee in the initial year(s). It is difficult to accept that the Revenue could accept a set of facts in one year and yet challenge the same in another, without any change in circumstances or any new fact coming to light. The proceeding relating to each assessment year are separate and it is settled law that the principle of res judicata does not apply to the subsequent assessment proceedings. However, this is a fit case where it would be apposite to apply the principles enunciated by the Supreme Court in the case of Radhasoami Satsang Saomi Bagh, Agra [ 1991 (11) TMI 2 - SUPREME COURT] Thus, no infirmity with the decision of the learned ITAT in upholding the view that NOIDA-II unit was entitled to deduction under Section 10A of the Act in respect of its profits and gains derived from NOIDA-I unit. TP Adjustment - method used by the AO for benchmarking the ALP on the basis of external comparables - TPO had determined the PLI (operating profit over total cost) in respect of each of the three STP units and had proceeded to determine the quantum of ALP adjustment as required for each of the three separate unit- Assessee s challenge to the TP adjustment as directed by the TPO, inter alia, on the ground that there was no significant functional difference in the software development and maintenance services - HELD THAT:- In the present case, the TPO benchmarked each of the three STP units separately. However, the profit margin of external uncontrolled transactions was determined on entity level and not on a unit or segmental level. Whilst TNMM is tolerant to minor functional dissimilarities, it will be necessary that the comparable international transactions are of a similar nature. It would be impermissible to use uncontrolled comparable transaction with different parameters that controlled international transactions. It is also relevant that reasonably accurate and authentic data of the uncontrolled transaction is available so as to reasonably determine the profit margin arising from the said transaction. As noted at the outset, the object of undertaking the transfer pricing analysis is to impute a real value to the transaction that would obtain in case the same was not controlled on account of being inter se AE. Thus, it is necessary to determine the profit margin if a similar transaction was executed by an unrelated entity. In this regard, the facts that the agreement between the AE under which services were rendered by the Assessee through its various undertaking is the same, it would be apposite to compare the services provided by unrelated entity under a similar agreement. The singularity of an agreement would be relevant for determining the overarching transaction that is required to be benchmarked. This would not permit the overarching transactions to be split up between various undertakings for comparing the profit margin derived by an unrelated entity from a comparable uncontrolled transaction. In addition to the above, the learned CIT (A) had also noticed that there was interlacing of funds and unity of management which are necessary aspects required to be factored while using TNMM for determining the ALP. If in a given case, the transactions fall within the scope of a domestic specified transaction under Section 92BA of the Act, the said exercise of determining the ALP would be required. However, if a particular transaction does not fall within the sweep of the statutory provisions, it is obvious that it will not be permissible to readjust the prices on account of a possible domestic transactions that may possibly distort the quantum of benefit available u/s 10A of the Act. The only question to be addressed is whether the decision of the learned CIT (A) and the learned ITAT to direct that the ALP be determined on the basis of TNMM by comparing the PLI at an enterprise level is erroneous or contrary to the guidelines for determining the ALP as prescribed under the Rules. - Decided in favour of assessee. Crystallization and accrual of liability towards payroll taxes - date on which the liability to pay had arisen - HELD THAT:- As the reconciliation of payroll tax was conducted at the end of Australian tax year in July, 2003 and the amount in question was crystallized on such reconciliation. Decided in favour of assessee. 2024 (12) TMI 323 Proceedings initiated u/s 120B r/w section 420, 467, 468 and 471 of the Indian Penal Code - Family conspiracy to cheat the Income Tax Department - A1 namely the brother of the petitioner is the Income Tax Consultant and he had employed number of persons to assist him in his consultancy business. The petitioner is a Secondary Grade Teacher and has studied Income Tax related special course, without obtaining the permission from the department. A1, A2 and A3 conspired together and collected particulars of the numerous persons and they manipulated their signature and obtained the income tax refund amount and swindled the amount by making credit in their own account and there was a deposit in the petitioner's account also HELD THAT:- Admittedly, in the petitioner's account, there is a fraudulent entry of Rs.21,83,150/-. His digital signature also was used by A1. The entire family members namely, A1, A2 and A3 swindled the income tax amount. They have contrived scientific fraud in withdrawing the refund of Income Tax amount belonging to other tax payers, which is clearly revealed from the approvers statements. In the said circumstances, this Court need not go into further deliberation on the argument of the learned counsel appearing for the petitioner. If any further deliberation is made, it would affect the defence of the petitioner, during the course of the trial. Hence, this Court is not inclined to quash the petition by making the detailed deliberation on the defence raised by the petitioner in his written submission and oral submission. As rightly pointed out by the second respondent's counsel that on the basis of the judgment of [ 2009 (4) TMI 906 - SUPREME COURT] and [ 2014 (2) TMI 1399 - SUPREME COURT] , this Court has no jurisdiction to entertain the defence of the accused at this stage. More over, in this case, prima facie case is made out by the CBI for framing the charges against the petitioner. More particularly, the digital signature of the petitioner was misused by A1 and deposit of amount of Rs.21,83,150/- in his account is found and the petitioner in this quash petition, also admitted that without obtaining permission, he had undergone the course of the income tax Department. These incriminating circumstances are sufficient to frame the charges against the petitioner and hence, this Court is not inclined to entertain the quash petition at this stage. Criminal Original Petition is dismissed. The Petitioner is at liberty to raise all the points before the learned Chief Judicial Magistrate, Madurai, and substantiate his defence during the course of the trial. 2024 (12) TMI 322 Second notice u/s 148 issued after the filing of the earlier reassessment proceedings - re-assessment based on disclosure made before the Settlement Commission - HELD THAT:- In our opinion, the language of Section 148 does not in any manner restrict the Assessing Officer to issue notice afresh, after filing of the earlier proceedings, provided the same is within the limitation period, if any. In the present case, the petitioner had filed a return earlier u/s 143 (1) after the notices were issued to her u/s 148, revised return was not filed showing undisclosed income and the petitioner on the other hand proceeded to move applications for settlement stating that the said amount was a loan, as already reflected in her earlier return. Since the Settlement Commission ultimately reached to the conclusion that there is non-disclosure and also not full and true disclosure of her income at the time of moving her application for settlement, we can safely presume that the Assessing Officer derive a new cause of action to initiate proceedings under Section 148 of the IT Act afresh based on the observations of the Settlement Commission of not providing full and true disclosure. Reasons which were provided by AO to initiate proceedings u/s 148 earlier, reflected about the receiving of drafts from Bank account of M/s AG Exports, whereas, the petitioner impugned the notice issued under Section 148 of the IT Act, by the Assessing Officer. However, on query being raised to the assessee, the Assessing Officer also demanded the assessee to provide details relating to the loan, stated to have been accepted from M/s Bee Bee International in the subsequent notice, which have been issued now under Section 148 respondents have provided reasonings for reopening of the assessment u/s 148 of the IT Act for A.Y. 2000-2001, with regard to the non-disclosure of income, which has been found to be by way of accommodation entries. Thus, we find that the objections raised with regard to the fresh re-assessment are without any basis and the action taken by the respondents cannot be said in any manner to be unjustified. We, therefore, recall our interim order and direct the respondents to continue and pass final assessment order on the basis of re-assessment proceedings initiated under the notice. In this regard, the provisions of the issuing of notice to the assessee for final assessment, would have to be issued in terms of the provisions of law, as they stood at the relevant time. 2024 (12) TMI 321 Rejecting the application for grant of benefit of exemption u/s 80G (5) - assessee s application u/s 12AA was granted and is continuing in operation - HELD THAT:- In view of the decision rendered in Hiralal Bhagwati [ 2000 (4) TMI 14 - GUJARAT HIGH COURT] approved by the Supreme Court in Surat City Gymkhana s case [ 2008 (4) TMI 16 - SUPREME COURT] we have no hesitation to hold that since the respondent assessee stands registered as charitable institution u/s 12AA the only corollary is, its application under Section 80G (5) of the IT Act also deserves to be allowed which the ITAT has rightly noticed to be the correct legal position and directed the CIT(E) to grant approval to the assessee under Section 80G (5). As such, the substantial question of law is answered in favour of the assessee. 2024 (12) TMI 320 Disallowance of depreciation for the trademark 'FABINDIA' u/s 32 - AO found that since the ALP of the asset FABINDIA had been determined at Nil, there was no question of claiming any depreciation in respect of the said asset - HELD THAT:- Clearly, the acquisition of the trademark during the financial year 2006-07 could not possibly be treated as an international transaction within the meaning of Section 92B of the Act, which was entered into during the previous year relevant to the AY 2011-12. The transaction to purchase an asset is a singular transaction, if the same is an international transaction under Section 92B of the Act, the same may require to be benchmarked for determining the ALP under Section 92C of the Act. This determination is required to be made in the AY relevant to the previous year in which the said transaction was entered into. In view of the above, the order remanding the controversy to the TPO/AO to decide afresh as directed by the learned ITAT cannot be construed as a reference to the TPO in regard to the issue of determining the ALP of the transaction relating to purchase of the trademark FABINDIA. In terms of the order passed by the ITAT, the AO was required to examine the admissibility and the quantum of depreciation allowable in respect of the asset in question, namely, the trademark FABINDIA. Revenue has misconstrued the direction of the ITAT to mean that it required to make a reference to the TPO for the purpose of assessment for AY 2010-11. Since no international transaction was entered into in this year, the reference made by the AO is fundamentally flawed. The petitioner s challenge to the impugned order dated 28.01.2021 passed by the TPO under Section 92(CA) of the Act, is without jurisdiction. The same is accordingly set aside. 2024 (12) TMI 319 Benefit of Direct Tax Vivad Se Vishwas Act, 2020 - settlement of disputes - declaration as furnished by the petitioner u/s 3 of the DTVSV Act was modified to include settlement of certain disputes that were not the subject matter of the declaration made by the Assessee. Whether the Assessee can confine the settlement of disputes to the issue regarding disallowance of loss claimed by it in respect of trading in derivatives, which was subject matter of its appeal as disposed of by the ITAT by its order dated [ 2019 (12) TMI 1185 - ITAT DELHI ]? - HELD THAT:- Section 3 of the DTVSV Act provides that where a declarant files a declaration before the designated authority in accordance with Section 4 of the DTVSV Act in respect of tax arrears then notwithstanding anything contained in the Act or any other law for the time being in force, the amount declared as payable would be computed in accordance with the tabular statement as set out in the said section. The term declarant is defined u/s 2 (1)(c) of the DTVSV Act to mean a person who files a declaration u/s 4 of the DTVSV Act. As is apparent from the aforesaid definition, the term tax arrears would include the aggregate amount of disputed tax as well as interest chargeable or charged on such disputed tax. The expression disputed tax is defined in clause (j) of Section 2 (1) of the DTVSV Act. It is necessary to note that the DTVSV Act also contains provisions to address the question of disputes when an order has been passed by the AO, CIT(A), or the learned ITAT and the time for filing the appeal against the said order has not expired. In such cases, the person in whose case such an order has been passed would also fall within the meaning of the term appellant as defined u/s 2 (1)(a) of the DTVSV Act. In such cases, the disputed tax would amount to the tax payable by the appellant after giving effect to the order so passed. In the present case, Assessee had filed a declaration in respect of its appeal. The disputed tax paid is confined to the tax, interest and penalty payable in respect of the loss in derivatives which was the subject matter of appeal The fact that the Revenue had preferred a consolidated appeal against the order passed [ 2019 (12) TMI 1185 - ITAT DELHI ] would not in any manner detract from the fact that Revenue s appeal to this Court is in respect of order relatable to two separate appeals. The issue involved in the two appeals are not interlinked. The present petition is allowed and the certificate issued by the designated authority in Form no.3 is directed to be confined to the declaration made by the Assessee. The respondents are accordingly directed to take steps for issuing a modified certificate under Section 5(1) of the DTVSV Act. 2024 (12) TMI 318 Validity of Faceless assessment - denial of opportunity for personal hearing through video conferencing - HELD THAT:- In the present case, the petitioner assessee has specifically requested for personal hearing through video conferencing. It may be true that in the online mode the assessee had not exercised the option. That is not a ground to deny the opportunity of hearing when the statute provides otherwise and no standards, procedures and processes for approving the request for personal hearing have been framed by the competent authority. In the present case, admittedly, the assessee specifically made request for a personal hearing, which has not been considered. Therefore, there has been violation of the principles of natural justice, and hence, the petitioner has rightly invoked the provisions of Article 226 of the Constitution. Having regard to the facts and circumstances, the statutory authority was bound to afford a personal hearing to the petitioner through video conferencing as mentioned above. The result of this infraction would be that the impugned orders will have to be set aside. 2024 (12) TMI 317 Bar of limitation for imposing penalties - Penalty imposed u/s 271D - HELD THAT:- The controversy, as to the date on which the penalty proceedings are to be construed as initiated, is no longer res integra. The said issue is covered by the decision of this court in JKD Capital Finlease Ltd. [ 2015 (10) TMI 1281 - DELHI HIGH COURT] and Turner General Entertainment Networks India Pvt. Ltd. [ 2024 (11) TMI 506 - DELHI HIGH COURT] the date of receipt of the reference is required to be considered as the date of initiation of the proceedings. The order of penalty was required to be passed within six months from the end of the month in which the reference was received. There is no dispute that the reference was received by respondent no. 3 from the AO on 18.01.2023. As the proposal to initiate the penalty proceedings had been forwarded by the AO to respondent no. 3 on 18.01.2023. Further, this court is also unable to countenance that respondent no. 3 had not taken any steps immediately after receipt of the said reference and it waited almost one year to ask for further documents, which was beyond the period prescribed for passing the impugned order u/s 271DA of the Act. Assessee appeal allowed. 2024 (12) TMI 316 Bar of limitation for imposing penalties - Penalty u/s 271DA - Contravention of the provisions of Section 269ST - whether the impugned order was passed beyond the period of limitation as prescribed u/s 275 (1) (c) ? - HELD THAT:- The controversy, as to the date on which the penalty proceedings are to be construed as initiated, is no longer res integra. The said issue is covered by the decision of this court in JKD Capital Finlease Ltd [ 2015 (10) TMI 1281 - DELHI HIGH COURT] and Turner General Entertainment Networks India Pvt. Ltd [ 2024 (11) TMI 506 - DELHI HIGH COURT] the date of receipt of the reference is required to be considered as the date of initiation of the proceedings. The order of penalty was required to be passed within six months from the end of the month in which the reference was received. There is no dispute that the reference was received by respondent no. 3 from the AO on 24.03.2023. As the proposal to initiate the penalty proceedings had been forwarded by the AO to respondent no. 3 on 24.03.2023. Further, this court is also unable to countenance that respondent no. 3 had not taken any steps immediately after receipt of the said reference and it waited almost one year to ask for further documents, which was beyond the period prescribed for passing the impugned order u/s 271DA of the Act. Assessee appeal allowed. 2024 (12) TMI 315 Rectification u/s 154 - rectification application to rectify the order u/s. 143(1) for allowing his claim of interest paid u/s 24(b) - HELD THAT:- We find ourselves in agreement with the contention of the DR that failure to raise the ground cannot said to be a mistake apparent from record. There is no doubt that the assessee furnished the necessary evidence in support of the said interest payment in course of the rectification proceedings before the AO. The fact remains that when the return was processed by the AO, no details/evidence in respect of said interest payment were available from the return filed. We further find that it is a settled law that if clear data is not available, it is not obligatory on the part of the AO to pass rectification order u/s. 154. Therefore, the action of the AO of rejecting the request of the assessee for rectification, cannot be faulted, hence, Ld. CIT(A) rightly affirmed the aforesaid action of the AO, which in our considered view, need not be interfered. 2024 (12) TMI 314 Addition on account of cash found during the search - Addition on relying on the statement of the assessee, recorded on oath during search and seized during search being the cash to be received back against purchase bill to be discussed and reconcile with management - HELD THAT:- CIT(A) relied on submissions of assessee that surrender in hands Director of companies made by the assessee regarding seven pages of diary Annexure-1 was due to wrong impression and under coercion, assessee had made surrender on 10/11/2016 at 11.30 A.M. Assessee was not given enough time to consulting Sh. Sandeep Kumar Pandit (only five minutes time was allowed for the same) and statement of Sandeep Pandit who had written pages of Annexure-1 was not recorded. Entries made in seven pages of Annexure-1 were explained as mere projections and not the income. The detail in Annexure-A (1) were sought to be explained. CIT(A) had analyzed pages of spiral note book and analyzed that the Explanation offered by the assessee was allowable. The act of assessee from his statement during search based on evidence found during the search was justified and upheld. Therefore, the arguments of Learned Authorized Representative for Department being devoid of merit are untenable and deserve dismissal. The grounds of appeal of department are dismissed. 2024 (12) TMI 313 Addition u/s 68 - unexplained cash credit - As argued 68 has no application as the amounts have been received towards CSR which cannot be considered as unexplained - HELD THAT:- We observe that in the instant facts, the assessee has been able to establish the identity of the person giving the funds to the assessee during the impugned year under consideration, being the company which had incorporated the assessee company to carry out it s CSR activities. Therefore, the identity of the person giving the amount to the assessee and its creditworthiness are not under dispute per se. Assessee has not obtained the necessary approvals for carrying out CSR activities at the time of receipt of funds - Before us, the counsel for the assessee drew our attention to Form number 10 Ab dated 16-01-2024 issued in favour of the assessee, granting approval u/s 12AB(1)(b) for assessment years 22-23 to 2026-27. Accordingly, we observe that albeit subsequently, the requisite approvals for undertaking CSR activities had been duly obtained by the assessee, for the impugned assessment year. Assessee is not able to utilise the funds for carrying out the CSR activities, then whether this would have implications u/s 68 - Looking into the specific provisions of section 68 in our view, section 68 has no applicability of the instant set of facts for the reasons that the identity and creditworthiness of the lender has been duly established, the purpose for which the amount was given to the assessee has also been established and the same has not been doubted, the assessee had also obtained the requisite approvals for carrying out CSR activities for the impugned year under consideration, the lender has also not claimed deduction in respect of this amount from its taxable income and also there is no specific assertion that this amount has flown back to the lender in any form whatsoever. Accordingly, CIT(Appeals) erred in facts and in law in confirming the applicability of section 68 - Assessee appeal allowed. 2024 (12) TMI 312 Assessee-in-default u/s. 201(1) and 201(1A) - non-compliance of TDS provisions u/s. 194C with respect to payment - HELD THAT:- The assessee has filed copy of challan of payment of TDS and interest amount for which challan and Form No. 27A. Assessee has also produced on record Form. No. 16A issued by Revenue as downloaded from Traces for the fourth quarter of financial year 2016- 17 (assessment year 2017-18) (Certificate No. DNYYWOO), wherein said TDS amount is found credited to the credit of PNC Infratech Ltd for deduction of tax at source u/s. 194C on amount paid/credited by the assessee in favour of PNC Infratech Limited and said Form No. 16A is placed. These documents/evidences are filed for the first time before ITAT. Thus, based upon these documents /evidences, which are now filed before me for the first time and the statement made by assessee before the Bench, the assessee must succeed in this appeal. However, since the documents are filed for the first time before me, they require verification. Allow the appeal of the assessee and direct AO to grant appropriate credit for TDS/Interest deposited by the assessee after verifying the documents. Before Parting, I would also like to highlight unfortunate manner in which the authorities below has dismissed the contentions of the assessee. The department is well equipped with the latest technologies and the filing and processing etc are now being done electronically by department. Almost all the data s are now available digitally with the department and the relevant officers can access these digital data online. 2024 (12) TMI 311 Revision u/s 263 - claim of exemption u/s. 10(23C)(iiiab) and 10(23C)(iiiac) - HELD THAT:- As assessee was given as many as seven opportunities of hearing and despite the same, the assessee remained non-compliant. The assessing officer despite noting specifically that in absence of any details/proof filed by the assessee, it is not possible to verify the above transactions, while finalising the assessment order, did not make any additions with respect to the aforesaid claim of exemption of a sum crores in the assessment order. We are of the considered view that Principal CIT has correctly observed that despite having given/afforded several opportunities of hearing, and despite the assessing officer having taken note of the fact that the assessee had failed to give any material in support of claim of exemption for a sum, since the assessing officer did not make any disallowance with respect to the above claim of exemption in absence of any supporting documents/materials, the assessment order was liable to be set aside as being erroneous and prejudicial to the interests of the Revenue. Appeal of the assessee is dismissed. 2024 (12) TMI 310 Deduction u/s 80IA - profits derived from development of infrastructure project Assessee got project on subcontract basis - Deduction denied on the ground that the appellant had not entered into any agreement with Central Government or State Government or local authority or any statutory body and which is a pre-condition for claiming deduction under the said provisions of the Act - determination of contract- subcontractor relationship between the appellant and M/s. HCC Ltd. - contention of the assessee before the AO that the appellant is a developer of infrastructure facility, as defined u/s 80IA(4) and the profit derived from the development of infrastructure facility, is eligible for deduction u/s 80IA(4) - scope of agreements and sub-contracting in the context of Section 80IA(4). HELD THAT:- As per provisions of Section 80IA(4) an Enterprise should be owned by a company registered in India or by a consortium of such companies. Further, it shall enter into agreement with the Central Government or a State Government or any local authority or any other statutory body for developing or, operating and maintaining or developing, operating and maintaining any infrastructure facility. Finally, it should start operating and maintaining the infrastructure facility on or after the 1st day of April of 1995. Only dispute is with regard to entering into an agreement with the Central Government or a State Government or any local authority or any other statutory body - Considering the nature and size of the infrastructure facility, the developer i.e., Government of Andhra Pradesh, Irrigation and C.A.D. Department itself has provided for sub-contracting up to 50% of the work to the other eligible contractors upon satisfying the eligibility criteria and having required experience and strength to carry out the development work, which is provided in Clause 43 of the Agreement between the JV and the Government of Andhra Pradesh. Since the condition of sub-contracting portion of work to other contractor is ingrained in the agreement between the JV and Government of Andhra Pradesh itself, in our considered view, the agreement between the appellant company and M/s.HCC for developing the project (civil works) is akin to agreement with the Central Government or a State Government or any local authority or any other statutory body. Once the project is considered to be eligible project in terms of provisions of Section 80IA(4) of the Act and there is a provision for sub-contracting portion of the work to the other contractor, as per clauses of the agreement between the parties, in our considered view, the agreement between the appellant company and one of the JV partners is as good as, the agreement between the authorities and the developer for developing the project and it goes back to the date of original agreement. Therefore, we are of the considered view that AO upon satisfying the fact that the profits derived from the project of development of infrastructure facility is eligible for claiming deduction u/s 80IA(4) erred in disallowing the claim of the appellant only on the ground that the agreement between the appellant and M/s.HCC is not in terms of section 80IA(4) of the Act, and thus, in our considered view, reasons given by the Assessing Officer is incorrect and cannot be accepted. Thus, going by the nature of work and the work executed by the assessee, it is not less than to any developer, who develops a big infrastructure project like irrigation projects. Therefore, having noticed that the assessee has carried out development of infrastructure project, as defined u/s 80IA(4), upon satisfying the conditions of the BID document, in our considered view, the AO ought not to have rejected the claim of the appellant merely for the reason that the appellant has not entered into any direct agreement with the Central Government or a State Government or any local authority or any other statutory body. In our considered view, if you go by the provisions to Section 80IA(4) of the Act, it even allows deduction u/s 80IA(4) to a successor entity, in case of transfer of project to other entity for operating and maintaining of infrastructure facility, and thus, in our considered view, the proviso does not require that there should be a direct agreement between the transferee enterprise and the specified authority for availing the benefit u/s 80IA of the Act, and this legal principle is supported by the decision of Chettinad Lignite Transport Services (P.) Ltd. [ 2019 (4) TMI 683 - MADRAS HIGH COURT] Thus, once the successor entity is eligible to claim deduction under Section 80IA, then there is no question of denying the said benefit to any enterprise, which is a joint partner of said infrastructure facility. Since the appellant is one of the partners of the development of irrigation project, in our considered view, the appellant is entitled for deduction u/s 80IA(4) of the Act. Also relying on Megha Engineering and Infrastructure Ltd. [ 2024 (9) TMI 1662 - ITAT HYDERABAD] we are of the considered view that the appellant is entitled for deduction u/s 80IA(4) towards profits derived from development of infrastructure facility. Decided in favour of assessee. 2024 (12) TMI 309 Estimation of net profit - Determination of taxable income based on net profit rate - appeal was migrated to NFAC, who estimated the profit margin @4% as against 8% estimated by the AO, by holding that the profit margin of 8% taken by the AO seemed to be on the higher side - HELD THAT:- It is true that the assessee had neither filed his return of income in terms of section 139(1) of the Act nor had produced/uploaded the Audited Balance Sheet and Profit and Loss Account within the prescribed time limit or even before the NFAC. Therefore, the claim of the assessee that the net profit rate @ 0.59% was the actual profit earned by the assessee during the year under consideration is not verifiable. Also considered the prayer of the Ld. A.R. that direction may be given to complete the assessment by applying the net profit rate of 1% and the prayer of the Ld. Sr. D.R. that the file may be restored to the office of the AO. However, find that in the absence of comparative data, even the rate of 1% remains unverifiable and no useful purpose will also be served by setting aside the file to the office of the AO. Interest of justice would be served, if the net profit of 2% of the gross sales is applied. We direct the AO to complete the assessment and compute the tax liability thereon by applying the net profit rate of 2% and make no further addition. 2024 (12) TMI 308 Estimation of income - bogus purchases - CIT(A) after following the decision of Mohammad Haji Adam Co. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT ] restricted the additions to the extent of gross profit declared on genuine purchases - HELD THAT: Following the decision of Mohammad Haji Adam Co.[supra] we do not find any reason to interfere in the decision of ld. CIT(A). Decided against revenue. 2024 (12) TMI 307 Unaccounted receipts - addition of cash component mentioned in the paper found in search - as addition entirely on the basis of a piece of paper found from the drawer of the table of one of the directors of the assessee and said paper contained details relating to sale price, cheque amount, cash amount of five flats - Whether the above said piece of paper can be considered to be a credible evidence in the eyes of law in order to prove the receipt of unaccounted money by the assessee in respect of all the flats sold by it? - HELD THAT:- We are of the view that the AO did not have any credible material with him to support the impugned addition. As held in Metro Construction Company [ 2016 (1) TMI 1514 - BOMBAY HIGH COURT] the AO could not have resorted to extrapolation on the basis of assumptions and presumptions, in the facts of the present case. Hence the entire addition is liable to be deleted. Since we have deleted the entire addition, the question of estimation of the profit on the above said amount does not arise. Disallowance of professional fees - assessee did not prove the nature of services rendered by the persons to whom the above said amount was paid - onus to prove - HELD THAT:- There cannot be any dispute that the initial onus to prove the expenditure claimed by the assessee is placed upon the assessee. In the instant case, in our view, the onus has been discharged by the assessee by showing that the professional fee has been paid for a purpose, which is also corroborated from the financial statements. Payments have been made through banking channels and TDS has also been deducted. On the contrary, AO has disbelieved, as stated earlier, for the failure of the recipients to file return of income or to respond to the notices issued by the AO. In our view, in the facts and circumstances of the case, the assessee cannot be penalized for the failure, if any, of the recipients mentioned above. It is well settled proposition that the assessing officer cannot sit upon the arm chair of the business man and dictate the manner of conducting business. If the recipients of professional fees are able to arrange loan funds for the assessee, then a business man would necessarily pay fees. We notice that loan was obtained by the assessee from PNB Housing finance and the professional fees has been paid for negotiating the above said loan. Accordingly, we are of the view that the AO was not justified in disallowing the claim of payment of professional. Decided in favour of assessee. Customs 2024 (12) TMI 306 Fraudulent drawback claim - Misdeclaration of goods and serial numbers - it was held by High Court that 'The Appellant has been unable to show that any relevant piece of evidence has been overlooked or that the appreciation of the evidence by the Commissioner or the CESTAT is perverse.' - HELD THAT:- There are no reason to interfere with the impugned order passed by the High Court. The Special Leave Petition is, accordingly, dismissed. 2024 (12) TMI 305 Violation of principles of natural justice and fair play - availability of alternate remedy of appeal - HELD THAT:- This is not a case where we should entertain the petitions rather than relegating the petitioners to avail of alternate appeal remedies. Whether documents were indeed not furnished as claimed, whether such documents were relevant, whether they were relied upon for making the impugned order, whether they were vital to the Petitioner s defence, whether any real prejudice resulted from the alleged non-furnish are all matters that are best examined by the appellate authority. Merely alleging that some documents were not furnished is insufficient in such matters. The impact of the allegedly non-furnished documents also needs to be considered. This is not a case of no notice or no opportunity even going by the allegations in the Petition. At the highest, this is a case where the allegations concern a lack of adequate opportunity. In such a case, the Petitioner must plead and establish prejudice because there is nothing like a mere technical breach of natural justice. Section 129B of the Customs Act, 1962, confers substantial powers on the Appellate Tribunal. The Tribunal is empowered to pass such orders as it thinks fit, confirming, modifying, or annulling the decision or order appealed against. The Tribunal may also refer the case back to the authority that passed such decision or order with such directions as it thinks fit for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary. Therefore, considering the scope of powers of the Appellate Tribunal and the facts in the present case, no case is made to entertain these petitions or not relegate the petitioners to avail of the alternate remedy of appeal. The remedy of appeal available to the Petitioner is, thus, efficacious. Petition dismissed, leaving the petitioners free to appeal the impugned order dated 28 June 2024. 2024 (12) TMI 304 Liability for the payment of fiscal penalty under Section 11 (2) of the Foreign Trade (Development and Regulation) Act, 1992 - failure to give the petitioner any show cause notice or opportunity of hearingviolation of principles of natural justice - HELD THAT:- Based on the material on record, it is satisfying that no show cause notice was issued to the petitioner, and consequently, no opportunity for a hearing was also granted to the petitioner. The impugned orders and the liabilities imposed upon the petitioner based thereon undoubtedly visit the petitioner with civil consequences. Accordingly, minimum compliance with the principles of natural justice and fair play was a must. On this short ground, the impugned orders dated 28 March 2018 and 11 October 2017 set aside. Petition allowed. 2024 (12) TMI 303 Imposition of quantitative restrictions on import of Maize Corn/Pop Corn - the petitioner s application for grant of permission to import 10,000 Metric Tonnes of Pop Corn/Maize Corn from Brazil-South came to be partially allowed whereby the permission to import only 2000 Metric Tonnes is granted - HELD THAT:- The fact about the respondents having power to make provisions relating to imports and exports under Section 3 of the Act of 1992 is not in dispute. The Central Government in such an eventuality is required to publish an order in the official gazette making provisions for the development and regulation of foreign trade by facilitating imports and increasing exports. Sub-Section 2 of Section 3 of the Act of 1992 contemplates that the Central Government may by Order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods or services or technology. The stand taken by the respondents that under the FTP-2023, since authorization is not a right, the petitioner can only be granted authorization for 2,000 Metric Tonnes to import Pop Corn/ Maize Corn cannot be said to be substantiated based on exercise of statutory powers, rather such restrictions imposed by the respondents by granting authorization for only 2,000 Metric Tonnes of import of Maize Corn is without authorization under Section 9A of the Act of 1992 and also in absence of statutory provision to import Maize Corn - The exercise of discretion in the case in hand which is sought to be justified based on the examination of capacity of the petitioner is also not recognized under any of the statutory provisions or the rules framed under the provisions of the Act of 1992 or the FTP-2023. Admittedly, there are no principles to guide the Licensing Authority in the matter of grant of authorization and in such an eventuality, the expectation from the Licensing Authority or the Authority granting authorization is to act fairly and to adopt a procedure which can be said to be fairplay in action - In M/s Kamdhenu Cattle Feed Industries [ 1992 (11) TMI 275 - SUPREME COURT ], the Apex Court has held that due observance of the statutory obligation as a part of good administration raises a reasonable or legitimate expectation in fairly treating every citizen. As a sequel of the impugned decision, the same will lead the petitioner suffering a business loss as it would be unable to work in the capacity that it has. There are no such statutory restrictions under Sections 3 and 9A of the Act of 1992, it is held that the reliance placed by the respondents on Clause 2.13 of the FTP-2023 lacks merit. Therefore the contention canvassed by the Deputy Solicitor General of India that the said clause confers ab.solute right in the respondents to reject authorization does not hold any water. The decision of the respondents in refusing to grant balance 8,000 Metric Tonnes authorization to the petitioner to import Maize Corn/Pop Corn pursuant to the application at Exhibit D is not sustainable and is held to be arbitrary and violative of Article 19 (1) (g) of the Constitution of India. It is declared that the petitioner is entitled for authorization to import another 8,000 Metric Tonnes of Maize Corn/Pop Corn pursuant to the application at Annexure D and such aurhorization be issued in favour of the petitioner expeditiously and in any case within a period of four weeks from the date of production of this order. Petition allowed. 2024 (12) TMI 302 Challenge to notice issued, seeking to recover duty foregone under Section 143 of the Customs Act, 1962 - time limitation for recovery of duty - non-submission of the Export Obligation Discharge Certificate against Advance Authorization - HELD THAT:- Admittedly, there is no dispute that no time limit is provided under Section 143 of the Customs Act for recovery of duty foregone. However, it is a settled position that where the Act is silent on the limitation, the proceedings have to be initiated within a reasonable period, and the said reasonable period has to be ascertained based on a holistic reading of the Scheme of the Act. In the instant case, admittedly, the impugned notice is issued for non-submission of Export Obligation Discharge Certificate dated 23 September 1996, after almost 26 years. On a reading of the Customs Act, the reasonable period for initiating any proceedings for recovery of dues can certainly not be 26 years, even where a bond may have been executed. Section 28 of the Customs Act, and that too, in a case where suppression or fraud is alleged, provides a time limit of 5 years. This period gives a clue and could, therefore, provide guidance in determining a reasonable time when the legislature offers no specific time limit. In this case, there are no allegations of any fraud or suppression. Therefore, there is nothing reasonable in seeking to make recoveries after 26 years. Not even an attempt is made to explain this inordinate delay. The impugned notice dated 15 December 2022 is quashed and set aside - Petition disposed off. 2024 (12) TMI 301 Challenge to order passed by the Settlement Commission - bonafide defaults - benefit of N/N. 46/2013-Cus dated 26.09.2013 read with P.N.No.22(RE-2013)/2009-2014. It is the specific case of the petitioner that the petitioner was unable to discharge Export Obligation duty adverse marking condition and therefore was unable to discharge Export Obligation for a period of nine years as per the EPCG Licence issued by the Original Authority under the provisions of the Foreign Trade Policy, 1992 r/w Foreign Trade Policy. HELD THAT:- The amendment at Sl.No.22 Notification No.49/2000-Cus. dated 27.04.2000 deals with only default in Export Obligation, when the duty on the goods is paid, to regularise the default amount of interest paid by the importer and it shall not exceed the amount of duty with such regularisation in terms of Public Notice No.22(RE-2013)/2009-2014 of the Government of India, Foreign Trade Policy in Ministry of Commerce. It is clear from a reading of the Public Notice No.22(RE-2013)/2009-2014, all the pending cases of the default in meeting Export Obligation (EO) can be regularised by an authorisation holder on payment of applicable customs duty, corresponding to the shortfall in export obligation, along with interest on such customs duty. The interest component to be so paid was not to exceed the amount of customs duty payable for this default. The above Public Notice which is basis for amendment to Notification No.49/2000-Cus.dated 27.04.2000 vide Sl.No.22 and Notification No.46/2013-Cus dated 26.09.2013. Thus, it is clear that Public Notice No.22(RE-213)/2009-2014 was not in the context of bonafide default by the importer. The intention of the Commerce Ministry under Public Notice No.22 (RE-2013)/2009-2014, has been reflected in the form of amendment through several notifications of the customs dealing with various scheme announced under the Foreign Trade Policy which were implemented under Notifications issued under Section 25(1) of the Customs Act, 1962. The amendment to Notification No.49/2000 Cus dated 27.04..2000 vide Sl.No.22 Notification No.46/2013 Cus dated 26.09.2013 also does not refer to the case of the bonafide defaulter. It only talks about default simplicitor in Export Obligation. Therefore, the views taken by the Settlement Commission is contrary to the Public Notice No.22 (RE-2013)/2009-2014 and therefore it has to be held as arbitrary. Consequently the determination of defaulted interest component vide communication dated 03.09.2013 of the Deputy Commissioner being report of the Deputy Commissioner bearing FN.S.Misc.188/2011-SIIB was incorrect. The impugned order of the Settlement Commission affirming the same is hereby set aside to that extent it asks the petitioner to pay further amounts towards interest - the application filed by the petitioner before the Settlement Commission deserves to be allowed - This writ petition thus stands allowed. 2024 (12) TMI 300 Maintainability of the appeal under the Circular setting monetary limits for filing appeals before CESTAT, High Courts, and Supreme Court - Circular:390/Misc./30/2023-JC dated 2nd November, 2023 - HELD THAT:- First of all, the intent and purpose of the Circular is very plain. Where realisation of duty and other levies are involved, the Government would only challenge any adverse order, if on success in the proceedings, it would be able to realize an amount equal to or above the threshold limit indicated in the notification. Any realization below the threshold limit did not seem to have been considered significant by the Government. This notification clearly would not cover cases of smuggling where orders for confiscation and imposition of fine, penalty etc. are provided, without any right given to the delinquent to redeem the goods upon payment of duty, penalty etc. This is a case where no such right has been given. Therefore, if the revenue succeeds the order-in-original is likely to be restored resulting in absolute confiscation of the goods along with other penalties. If the respondents succeed, it would result in affirmation of the order of the Tribunal. So if one possible result is absolute confiscation of the goods without any right of redemption on payment of duty, penalty etc. there is no question of the appeal being dismissed on the ground that the duty payable would be less than Rs.1 crore. The point of maintainability does not succeed and it is hereby rejected - List the appeal and the application for admission on 5th December, 2024. 2024 (12) TMI 299 Cancellation of public bonded warehouse licence issued to the Appellant, under Section 58B(1) of the Customs Act, 1962, for alleged contravention of the provisions of the Act - theft in the warehouse - contravention of provisions of Regulation 4(c) and 11 of the said Regulations read with paragraphs 2 and 7 of Circular No. 25/2016-Cus. dated 08th June, 2016 - HELD THAT:- The main ground on which the warehousing licence issued to the Appellant was revoked is that the feature of audit trail was not incorporated in the computerized system operated by the Appellant in the warehouse. The Ld. Principal Commissioner of Customs has cited the Circular No. 25/2016-Cus. dated 08th June, 2016 and alleged contravention of the provisions of the said Regulations on account of non-provision of audit trail in the computerized system - the Circular was issued mainly for administrative and procedural purposes. We agree with the observations of the Ld. Principal Commissioner that it is the duty of the License holder to provide all the infrastructure required in the warehouse. However, there are merit in the submission of the appellant that the delay in installing the audit trial was caused mainly due to COVID pandemic and the circumstances which were beyond their control. There is no finding contrary to this in the impugned order. Accordingly, the delay in inclusion of an audit trail in the computerized system does not amount to violation of the provisions of the Regulations warranting cancellation of the licence. It is observed that the revocation of the Licence without giving any opportunity to the Appellant to install the audit trail in the system, is legally not tenable. In these circumstances, the revocation of licence on account of this alleged violation is not proper. Theft in the warehouse - HELD THAT:- It is observed that an FIR had been filed and the Appellant has already paid the duty involved in respect of the stolen goods. The finding of the Ld. Principal Commissioner agreed upon that adequate security measures are essential for operation of the warehouse. However, it is observed that one isolated incident of theft cannot be a reason to come to the conclusion that the security measures in the warehouse were not adequate. The Department can advise the License-holder to increase the security and to provide adequate staff for security and maintenance of the warehouse - there are merit in the submission of the appellant that they were operating with minimum staff during COVID pandemic and the operations in the warehouse were very few; the officers have no occasion to assess the experience of the warehouse keeper appointed by them. The reasons submitted by the appellant for the delay in installation of the audit trail in the computerized system are very valid and reasonable. Further, the Appellant informed that they have installed the audit trail facility now and the same is functioning properly. This requires verification by the Officers, to ensure that the Appellant have complied with the requirement of Audit Trail at present. In respect of the other allegation made in the impugned order regarding not providing proper security and other staff for administration of the warehouse, it is observed from the submission of the Appellant that they have provided all the facilities now and the same is required to be verified by the Officers. The impugned order is set aside - matter remanded to the adjudicating authority for examination of the issue afresh and for verification of the infrastructure available in the warehouse as required under the said Regulations and to take appropriate action, as deemed fit, as per law. 2024 (12) TMI 298 Rejection of appeal - rejection of first check and subsequent show cause notice for mis-declaration of imported goods - mis-declaration of goods - Section 46 of Customs Act - HELD THAT:- It is a fact that department did not challenge that order but at the same time did not implement the order of the Ld. Commissioner and instead issued the impugned show cause notice dated 18.04.2011 alleging mis-declaration of the goods imported vide Bill of Entry 2123393 dated 28.07.2010. After obtaining the report of the Charter Engineer the Original Authority confirmed the demand of custom duty of Rs. 4,62,818/- on re-determined value of Rs. 19,90,591/- under Section 28 of the Customs Act, 1962 along with interest. Further, the order of the Original Authority was confirmed by the Commissioner (Appeals) vide the impugned order. It is found that the chartered Engineer in his report dated 16.10.2010 has opined that machines do not appear to be reconditioned and appears to have been lifted on as is where is basis and machines were 20-50 years old and expected residual life is more than 8 years and further he has opined that the value of the new machines is approximately Rs. 53,55,000/- and on that basis seizure value has been taken as 16,06,500/- after allowing 70% depreciation on the machinery as per Board circular no. 07/2008 Custom dated 12.02.2008. Further the Chartered Engineer has not disclosed the basis of opining value of impugned goods and there is no reference to any technical manual or information based on which he has determined the value of the machines. The Original authority is directed to assess the goods as scrap after effective mutilation under custom supervision at appellant s cost - The appeal is accordingly allowed. 2024 (12) TMI 297 Exemption of SAD and CVD - whether the appellant is entitled to claim exemption from Additional duty of Customs (SAD) vide N/N. 21/2012 dated 17.03.2012 (Sl.No.2), as amended by N/N. 32/2012 dated 08.05.2012 and counter-veiling duty (CVD) vide N/N.12/2012, CE dated 17.03.2012 (Sl. No.180)? - HELD THAT:- There is no dispute that the footwear imported by the appellant was having MRP less than Rs.500 per pair and hence they were exempted from payment of excise duty subject to the condition that the retail sale price is indelibly marked or embossed on the footwear itself. The requirement under Condition No.15 is not merely that it should be marked or embossed in any manner but that it should be indelibly marked or embossed. The intent behind incorporating the term 'indelibly' with the expression marked or embossed is obvious that there is no possibility to remove the MRP/RSP. This is clear from the dictionary meaning of the term 'indelibly', which means, it cannot be removed and cannot be washed away or erased, something which is imperishable. The appellant has deliberately circumvented the compliance of the said condition by merely putting the MRP/RSP on a piece of cloth stitched on one side. This kind of labelling can be easily removed, which implies that the appellant has not complied with the condition in its true spirit as enumerated in the notification. The appellant being a trading concern is regularly importing goods in question, however, without satisfying the pre-condition under the notification, they wrongly claimed the exemption. The attempt on the part of the appellant to justify that registration under the Delhi VAT Act was unnecessary though the notification mandates the declaration of VAT registration number was wilful mis-statement of facts. The failure to declare the TIN number at the time of import violates the conditions of the exemption notification. The appellant also misled the Department that the goods imported are properly marked with the MRP/RSP. Having failed to comply with the mandatory conditions of the notification, the appellant was not eligible to the exemption claimed and was, therefore, liable to pay SAD and CVD along with interest as per Section 28AA of the Act. In the circumstances, the goods were held to be liable for confiscation under Section 111(o) of the Act and since the goods were not available, the Adjudicating Authority rightly imposed the fine of Rs.25,00,000/- under Section 125 of the Act. Consequently, there are no fault with the invocation of the extended period of limitation and imposition of penalty under Section 112 and also 114A of the Act, which mandates penalty equal to the duty in case of collusion, wilful mis-statement or suppression of facts. There are no infirmity in the impugned order and the same is, accordingly upheld. The appeals, therefore stand dismissed. 2024 (12) TMI 296 Evasion of customs duty - mis-declaration with respect to brand of goods/description of goods - undervaluation in import of goods - applicability of benefit of Exemption N/N. 50/2017 dated 30.06.2017 - invocation of Extended period of limitation. Whether the appellant had imported complete TV sets/TV sets in SKD condition or the imported goods were the parts and panels of the TV as different from the complete TV? - Whether Rule 2(a) of General Interpretation Rules applies to given set of facts and circumstances? - HELD THAT:- The TV is a complicated electron i.e. product and a product namely LED panel in itself is highly insufficient to be called as TV. There are many other parts and components which are collectively required to hold that the LED monitor has an essential character of being called as TV. As already held department has not got the technical evaluation done about the impugned imported goods. There is no evidence produced by the department to prove the allegations. As per the dictionary meaning, TV is an electronic system of transmitting transient images of fixed or moving objects together with sound over a wire or through space by apparatus that converts light and sound into electrical waves and reconverts them into invisible light and audible sounds. The Department of Electronics, Government of India vide their Letter No. 22(1)/93/Exp dated 10.08.1993 have clarified as to what constitutes a TV set - the literature about smart TV is perused piece by piece as provided by the appellant. According to the said literature, complete TV set has as many as 25 main essential parts. The decision in Sony India [ 2008 (9) TMI 19 - SUPREME COURT] has already appreciated about the technicality of the manufacturing procedure of TV and the several number of parts required to give any monitor, the essential character of TV. The Hon ble Apex Court in Salora International Ltd. [ 2012 (9) TMI 276 - SUPREME COURT] had concluded that the imported goods had the essential character of being called the TV receivers/TVs - the imported goods are the parts and components of the TV as different from the complete TV in SKD condition and Rule 2 of GRI cannot be invoked in such situations. Both the issues therefore stand decided in favour of the appellants. Whether the appellant is entitled for the exemption benefit of Notification No. 50/2017 dated 30.06.2017 entry at Sl.NO. 514? - HELD THAT:- Since it has been held that appellant has imported LED panels along with few of the parts of TV for manufacturing and few essential parts have not been imported. Also some of the imported goods have been sold by the appellants to other TV manufacturers. Hence the imported goods cannot be called as complete TV but the parts thereof. The above noted entry exempts the import of parts for manufacture of TV from payment of duty, hence, appellant is held entitled for the benefit of the said notification. With these observations, this issue also decided in favour of the appellants-importers. Whether appellant has undervalued the imported goods and has wrongly mentioned those as unbranded? - HELD THAT:- As apparent from show cause notice the allegations of undervaluation have been leveled based on the higher amount found mentioned in performa invoices as got retrieved by the proprietors of the importing firms from their e-mail IDS got opened by them in the Officer of SIIB at the computer systems of the said office. Primarily the admissibility of computer print-outs has been objected by the appellant for want of certificate as required under Section 138C of the Customs Act which talks about the admissibility of micro films facsimile copies of documents and computer print outs as document and as evidence - in the present case the computer print outs of the performa invoices have not been retrieved by the officers of the department nor from the seized laptop. In the present case the label of Samsung brand was only on packing material. It is not the case of the department that other components were too small in size to have labels of brands. It is also nowhere denied that the Samsung Brand was affixed only on Chip in addition to be affixed on the packing material. Chip is admittedly of Samsung Brand but rest all the imported parts/ components are denied to be branded. Department has failed to get the imported goods examined by the Chartered Engineer. (CE) Earlier Bill of Entry no. 5131023 dated 03.05.2016 of the year 2016 importing similar goods was detained and the goods were got examined by the CE. Hence the present case is neither of misdeclaration vis- -vis brand name nor of undervaluation. This issue also stands decided in favour of the appellants. Whether the extended period of limitation has rightly been invoked while issuing the impugned show cause notice? - HELD THAT:- The appellants, admittedly, have all the necessary permissions to carry out manufacturing as well as assembling of all the local products in his warehouse. The GST Certificate, BIS Certificate, ITR Returns of last 3 years, MSME Registration Certificate, Pollution Certificate, Factory Licenses MCD, Procedure of BIS Making were also duly submitted by the appellant. Thus every fact was already in the knowledge of the department. These observations are sufficient to hold that there is no mala fide nor any mis-declaration found on part of the appellant. There is no evidence by the department that the consignments in question have different goods than those which were imported in the year 2016. The burden of proving the allegations was upon the revenue - the extended of limitation has wrongly been invoked. Show cause notice itself is held barred by time. This issue also stands decided in favour of the appellant and against the department. The appellant is entitled for the duty exemption benefit of N/N. 50/2017. There is no evidence of alleged mis-declaration and undervaluation. The order imposing penalties is also not sustainable. Accordingly, the order under challenge confirming differential demand and imposing penalties on three of the appellant is hereby set aside. Consequent to entire above discussion, the appeals are hereby allowed. Securities / SEBI 2024 (12) TMI 295 Petitioner deprived of the arbitration remedy - challenge to Clause 7 of SEBI Circular[SEBI/HO/MIRSD/DPIEA/CIRP/2020/2015] on the grounds that it is arbitrary and unconstitutional - the impugned clause provides that once a member is disabled or show cause is issued for declaring such member as a defaulter to a Trading Member (TM)/Clearing Member (CM) (whichever is earlier), no further Investor Grievance Redressal Committee ( IGRC )/arbitration meetings shall be conducted HELD THAT:- We are satisfied that the petitioner is abusing our extraordinary and discretionary jurisdiction to buy time, having solemnly declared that it has no means to pay. The Petitioner made but unconditionally withdrew his request for arbitration. Therefore, the Petitioner, at least prima facie, cannot now urge that it wishes to proceed with arbitration. However, on account of Clause 7, which is now challenged in this Petition, it cannot do so. Petitioner claims to have no funds to secure the IGRC s directions. Petitioner has openly flouted the discipline imposed by the SEBI circular dated 26 September 2013. We regret to say that the entire objective appears to be to somehow keep the pot boiling and frustrate the claimants attempts to secure any amounts based on the IGRC order. Surprisingly, the petitioner has not even bothered to implead the claimant, Blue Sea International, as a Respondent in this Petition. In somewhat similar circumstances, this Court had declined to exercise its extraordinary and discretionary jurisdiction favouring the Petitioner in Dealmoney Securities Pvt Ltd Vs National Stock Exchange of India [ 2019 (2) TMI 2121 - BOMBAY HIGH COURT] after referring to the SEBI s circular dated 26 September 2013 to streamline and make the investor grievance mechanism more effective. The record shows that several constituents have filed complaints against the Petitioner for large amounts. Now, by order dated 26 November 2024, the Petitioner has already been declared the defaulter. All these circumstances suggest that the Petitioner only wants to depart from the discipline imposed by SEBI s circulars or the NSE s by-laws for reasons which, at least prima facie, do not appear to be valid or even bona fide. Although Respondents did try to make some submissions about how the impugned clause is not unconstitutional or unreasonable, at least in this Petition and at the behest of the Petitioner, we do not wish to address or discuss this issue. The bald contention about arbitrariness is far from substantiated. Any decision on this issue at the behest of such a petitioner might foreclose serious challenge at the behest of some genuine relator. Petitioner before us is also a member of the National Stock Exchange. The methodology prescribed in the circular of 2013 has been operative for almost 11 to 12 years. The Petitioner is very aware of this methodology and, therefore, declared his intention to resort to arbitration within seven days of the ICRC s order. However, soon after that, the Petitioner withdrew this intimation by explicitly stating that the Petitioner does not wish to pursue arbitration. After a show cause notice was issued on 5 January 2022, the Petitioner made the volte-face and wrote to the NSE that it wanted to pursue the arbitration. Admittedly, this intimation exceeded the timelines prescribed in the SEBI circular. Fortunately, the petitioner has not questioned the SEBI s circular dated 26 September 2013. The bald contention about arbitrariness is far from substantiated. Any decision on this issue at the behest of such a petitioner might foreclose serious challenge at the behest of some genuine relator. We decline to entertain this Petition and dismiss it with costs of Rs 25,000/-, which the Petitioner must pay within four weeks of today. Insolvency & Bankruptcy 2024 (12) TMI 294 Preferential Transaction under Section 43 of the Insolvency and Bankruptcy Code (IBC) - deposit of VAT by VE Commercial Vehicles Limited - violation of Moratorium imposed under Section 14 of the IBC. Whether the transaction in question was a Preferential Transaction under Section 43 of the Insolvency and Bankruptcy Code? - HELD THAT:- The condition precedent for attracting Section 43(1) is whether the Corporate Debtor has at any relevant time given a preference in transaction. The present is a case where no transaction was made by the Corporate Debtor which was questioned in Application filed by the RP. Transaction in question was act of depositing of Rs.17,12,094/- by M/s. VE Commercial Vehicles Limited before the Commercial Tax Department in consequence of the Notice dated 03.07.2019. Thus, clearly Section 43 was not attracted and Application under Section 43 was wholly misconceived. Whether the deposit of the VAT Tax by M/s. VE Commercial Vehicles Limited can be treated to be in violation of Moratorium imposed under Section 14 against the Corporate Debtor? - HELD THAT:- Present is a case where no recovery has been affected by Commercial Tax Department from the Corporate Debtor, the GST Tax Liability of the Corporate Debtor which was not satisfied by the Corporate Debtor was directed to be discharged by M/s. VE Commercial Vehicles Limited which has taken benefit of input tax without GST dues being deposited by the Corporate Debtor. As noted above, under Section 28 of the MP VAT Act, 2002, the recovery can be from any person who holds any money for on account of such dealer or person. M/s. VE Commercial Vehicles Limited has contended before the Adjudicating Authority that it has reversed input tax benefit taken by it by depositing the amount of Rs.17,12,094/-, since the Corporate Debtor did not deposit the GST amount - The transaction which was questioned by the RP before the Adjudicating Authority of M/s. VE Commercial Vehicles Limited depositing the amount of Rs.17,12,094/- before the Commercial Tax Department to reverse the input tax availed by it cannot be in any manner said to be violate provisions of Section 14 of the IBC. Commercial Tax Department did not recover any amount from the Corporate Debtor or form its assets, the amount was recovered from an entity, M/s. VE Commercial Vehicles Limited which had taken the benefit of input tax where GST had not been deposited, hence M/s. VE Commercial Vehicles Limited reversed it benefits of input tax taken from Commercial Tax Department - there was no applicability of Section 14, the transaction in question under which the M/s. VE Commercial Vehicles Limited deposited the amount of Rs.17,12,094/- before the Commercial Tax Department in response of statutory Notice dated 03.07.2019 cannot be said to be in violation of Section 14 of the IBC. The Adjudicating Authority committed error in directing the Appellant to refund the amount of Rs.17,12,094/-. The Order passed by the Adjudicating Authority directing the Appellant to refund the aforesaid amount is unsustainable and is set aside - appeal allowed. PMLA 2024 (12) TMI 293 Seeking grant of Regular Bail - money laundering - proceeds of crime - scheduled offences - violation of right to liberty - requirements of section 45 of PMLA fulfilled or not - Delay in trial and long incarceration. HELD THAT:- PMLA legislation was brought in to prevent and control the issue of money laundering, to seize the proceeds of crime, and to punish the perpetrators. Now what exactly is money laundering, to put in simple words, an act of dealing with illegal money or assets i.e. money obtained or derived as result of criminal act relating to scheduled offence. The Hon ble Supreme Court in Vijay Madanlal Choudhary v. Union of India [ 2022 (7) TMI 1316 - SUPREME COURT] has very categorically laid down the distinction with respect to proceeds of crime . The above paras hold that any property derived or obtained directly or indirectly as a result of criminal activity which is a scheduled offence under the PMLA is proceeds of crime. In other words, any property obtained following the commission of the scheduled offence or from the proceeds of the scheduled offence will be the proceeds of crime. In the present case, ED has alleged that all the petitioners are members/office bearers of the banned organisation i.e. PFI. The role of the petitioners are that they have collected funds for and on behalf of the organization from unknown sources, thereafter they provided fake receipts/showed the collections as legitimate donations to utilize those funds to commit terrorist activities (scheduled offences). Hence, the funds so collected by the petitioners are the proceeds of crime - On perusing the Complaint, there is no evidence to show that any scheduled offence has been committed, it is stated that the petitioners participated in the anti-CAA protests in Delhi which culminated in Delhi Riots. Learned counsels for the petitioners have rightly pointed out that in the present case i.e. collection of funds precedes the crime i.e. Delhi Riots. The proceeds of crime has to be generated as a result of criminal activity (scheduled offence). In the present case, the role of the petitioners is that they collected funds and deposited the same to the accountant or PFI s account. Hence, in this scenario, prima facie, the dominion and control over the generation of alleged proceeds of crime is not of the petitioners herein. In the present case, the twin conditions of section 45 have been met. The Special Counsel for ED has been given an opportunity to oppose the bail applications. Prima facie, the offence of money laundering is not made out against the petitioners herein. Delay in trial and long incarceration - HELD THAT:- Special statutes have stringent conditions for grant of bail but they should not become means to detain the accused without there being any possibility of concluding the trial, expeditiously. Merely charging an accused person under the provisions of these special statutes should not become a punishment in itself which violates Article 21. A perusal of the aforesaid judgment also shows that Article 21 prevails over the stringent conditions of section 45 of PMLA and in case the accused has been incarcerated for a reasonably long period of time without there being any reasonable chance of concluding trial, Article 21 will take primacy. In the present case, it is stated that the matter is at the stage of 207/208 proceedings for supply of documents and thereafter charges are yet to be framed. As per the Complaint and Supplementary Complaints filed by the ED, it is stated by the learned counsels for the petitioners that there are total 185 prosecution witnesses which are proposed to be examined and the trial is to be conducted jointly with all co-accused persons, there are 456 relied upon documents and digital evidence running into lakhs of pages. The same factual position is not disputed by the learned counsel for the ED. Thus, it is evident that there is no hard and fast formula as to what is the minimum period which is to be considered as substantial period undergone but keeping in view the timelines of the Hon ble Supreme Court and the trial will take considerable time to conclude, the petitioners i.e. Parvez Ahmed, Mohd Ilyas and Abdul Muqeet are directed to be released on bail subject to the fulfilment of terms and conditions imposed - bail application allowed. 2024 (12) TMI 292 Money Laundering - proceeds of crime - allocation of the coal block to the appellant company constituted proceeds of crime under the Prevention of Money Laundering Act, 2002 (PMLA) - HELD THAT:- It is undisputed that the Appellant Company along with others has been convicted for the scheduled offence by the Ld. Special Judge (PC Act) (CBI) Rouse Avenue, New Delhi. The reasons given in the judgment dated 13.11.2019 has categorically brought out that the letter of allocation of coal block was issued because the Appellant Company and its Directors had misrepresented and exaggerated their financial status as well as their progress already made for setting up the Sponge Iron Plant in Lohardaga. The additional investment including the purchase of 50% shares by Shri R.S. Rungta and his family members happened after the issuance of letter of allotment of coal block. Shri Rungta has admitted this fact in his statement u/s 50 of PMLA - there is no predicate offence for which any investigation has been carried out about the misrepresentation or cheating or deceiving to the investor either in the chargesheet already decided or in a separate chargesheet. The conviction in the trial for the predicate offence for the reason that the letter of allocation of Coal Block was obtained through misrepresentation, with dishonest and fraudulent intentions as held in the judgment dated 13.11.2019 of the Court of Ld. Special Judge, (PC Act) (CBI), Rouse Avenue, New Delhi has not held anyone guilty for attracting additional investments through such misrepresentation, dishonesty and fraud. Since the letter of allocation of Coal Block has been held as conferment of valuable right, it cannot by itself be regarded as proceed of crime - the indelible connect between the scheduled offence cannot possibly be construed, unless the chargesheet for scheduled offence and the judgement thereupon would have incorporated such link. In the absence of such finding in the course of investigation of the predicate offence, the Respondent Directorate could not have either assumed existence of such link or even undertake to investigate such link, being only empowered to conduct investigations of the offence of money laundering and not that of the scheduled offence. In the absence of any predicate offence having been registered and investigated with respect to the flow of investment from outsider investors into the Appellant Company, the attempt by the Respondent Directorate to make such flow of funds as proceeds of crime fails. The Appeal is therefore allowed and pending applications are accordingly disposed of. 2024 (12) TMI 291 Legitimacy of the Provisional Attachment Order under the Prevention of Money Laundering Act, 2002 - undervaluation of reserve price - HELD THAT:- The facts on record shows that initially a complaint was filed under Section 200 Cr. P.C. and in pursuance to it, the cognizance of the offence was taken by the learned Judicial Magistrate First Class vide its order dated 14.10.2011 for the offence under Section 120-B read with Section 409,420,468,471 and 34 IPC. It is, however, a fact that the allegation levelled in the said FIR was pertaining to the auction of the factory and sale it to M/s Guru Commodity Services Pvt. Ltd. in an illegal manner. The allegation was for undervaluation of the property for auction. However, the allegations aforesaid were tested by the Additional Sessions Judge followed by the judgment of Bombay High Court holding allegations to be erroneous. It would be gainful to refer and quote the relevant para of the order of the learned Additional Sessions Judge which would otherwise deal with the main issue raised by the appellants. The attachment order has been passed in reference to the FIR registered in the year 2019 pursuant to the order of the Bombay High Court in a PIL. The allegation in the PIL was of general nature regarding working of the co-operative societies at different levels. The FIR was registered in pursuance to the order of the High Court to deal with the irregularities in the functions of the co-operative societies in lending and borrowing the loans - the issue raised in the Provisional Attachment Order to make out a case is on the basis of facts unconnected to FIR registered in the year 2019. It was totally on different issues. In view of the above, the reasons for the police to give closure report though it is pending consideration before the competent court. The perusal of the order of the Adjudicating Authority shows brief facts of the case and even the outcome of the investigation pursuant to the FIR registered in the year 2019 but the respondents and Adjudicating Authority were persuaded to have taken initial FIR and allegation contained therein to be the basis for passing the impugned orders. It is not found that the impugned order can sustain - the impugned orders are set aside - The appeal is allowed. 2024 (12) TMI 290 Money Laundering - proceeds of crime - attachment of properties - Compliance with procedural requirements under Section 8 of PMLA 2002 - HELD THAT:- The facts on record reveals that Ashok Yadav was a reckoned criminal against whom as many as 26 cases were registered out of which he has been acquitted in majority of the cases. The orders of acquittal have been submitted but it is not in all the cases. The fact, however, remains that ECIR was recorded against the accused followed by cognizance of offence which has not been set aside by the court thus not only ECIR remains against the accused but cognizance of offence has also been taken. The aforesaid is relevant and reflects that even after the acquittal, the ECIR records a case of money laundering in the hands of the appellant. To come out with the allegation of money laundering, the appellants were having opportunity to disclose the source for acquisition of the properties. The perusal of Section 8(1) of the Act of 2002 would reveal that Adjudicating Authority give notice to call upon the parties to disclose source for acquisition of the properties. In the PMLA investigation, it was revealed that cash was utilized for purchase of all the properties though deposited in the bank first but source to acquire the cash to deposit in the bank has not been disclosed - Perusal of account statement shows irregular cash deposits which do not match with profile of any kind of business activity. Further, he did not appear before the investigation and did not produce any evidence in respect of the source of this cash utilized for making cash deposits and for acquisition of properties. Hence, in view of the charge sheet filed by state police, it is logical to conclude that the cash utilized for acquisition of properties and for making deposits in the bank accounts of Ashok Yadav, are proceeds of crime. The analysis of income by the Income Tax Department would be for charging the tax. They would not analyze as to whether the amount deposited is a proceeds of crime . Thus, the ITR submitted under the Income-Tax Act is for different purpose than to be analyzed under the Act of 2002 to find out whether rightful source of income has been disclosed to acquire the property. It is no doubt true that the source has been disclosed but the minute scrutiny revealed that it was after utilizing cash with deposit of the amount directly in the bank account of Bibha Devi or routing through many persons without giving justification as to why the amount was routed through other persons - the Adjudicating Authority has even made reference of the LPG Dealership in the name of Bibha Devi and even acquisition of benami liquor shop. The appellant tried to disclose the source of income but the way income was generated itself is sufficient to prove the case against them. The cash deposited in bank without disclosure of source would indicate it to be tainted money otherwise no one prevented the appellants to produce documents to show the business transaction coupled with the receipt of payment towards it. It is more so when they produced certain documents along with the rejoinder but failed to produce any document to prove the business transactions in the relevant years to generate sufficient funds which was used for the purchase of the property In the background aforesaid, there are no reason to cause interference in the order. Appeal dismissed. 2024 (12) TMI 289 Provisional Attachment Order (PAO) under the Prevention of Money Laundering Act (PMLA) - proceeds of crime - compliance with the statutory timeline for filing a Prosecution Complaint under Section 8(3) of PMLA - Impact of supplementary prosecution complaints on the validity of the PAO - HELD THAT:- It is not disputed that the first Prosecution Complaint under PMLA was filed by the Respondent Directorate on 18.07.2018 that is even before the impugned Order dated 20.07.2018 which confirmed the PAO dated 01.02.2018 was passed. It is also not disputed that the Appellant was made an accused in the Supplementary Prosecution Complaint under PMLA which was filed on 17.12.2018. The provision of the statute viz. Section 8(3)(a) of PMLA required investigation to be completed within 90 days of the confirmation of the Provisional Attachment Order. It is therefore on record that the Prosecution Complaint was filed even before the confirmation of Provisional Attachment Order. On reading of the provisions of Section 8(3) of PMLA, it is obvious that while the investigations had to be completed within 90 days of the confirmation of the Provisional Order, there is no such requirement as to the investigations per se the person whose property has been attached was to be completed within the said 90 days. In fact, it is on record that the investigations were completed and the Prosecution Complaint under PMLA was lodged on 18.07.2018, even before the passing of the impugned Order on 20.07.2018. Perusal of the judgment of the Apex Court in Vijay Madanlal Chaudhary [ 2022 (7) TMI 1316 - SUPREME COURT ] clearly brings out that the objective of the Act is to immobilize the proceed of crime, irrespective of it being in the hands of the accused or any other person, till it s confiscation. The provisions of Section 8(3) (a) while providing for confirmation of either the attachment or seizure of the proceed of crime till the completion of investigation within the period stipulated therein, does not have the requirement of filing the Prosecution Complaint under PMLA against every person whose property has been either attached or seized. In the facts of the present Appeal the Prosecution Complaint was filed even before the passing of the impugned Order confirming the attachment. The bank accounts of the Appellant and of his proprietorship firm provided for the parking place for the proceed of crime. The filing of the Supplementary Prosecution Complaint on 17.12.2018 in which the Appellant came to be named for the first time, does not impinge in any manner on the requirement of the provisions of Section 8 (3) (a) of PMLA to complete the investigation and file the Prosecution Complaint within the stipulated period of time, since the Prosecution Complaint in the matter had already been filed on 18.07.2018. Thus, in the present appeal that requirement was met with the filing of the Prosecution Complaint before the passing of the impugned Order. The argument of the Appellant has no merit - the Appeal accordingly fails and is dismissed. 2024 (12) TMI 288 Condonation of Delay in filing the appeal - lack of knowledge about impugned order and provisional attachment order - non-service of notice - violation of principles of natural justice - HELD THAT:- The appellant could know about the order only when he sent the counsel to verify the status of the disputed property. The application is silent about the date when verification of the status of the property was sought from the Registrar Office and even the date of information thereof. The application is further silent as to how the appellant could know about the impugned order because the information is not said to have been given by the Registrar Office. The application is vague on that aspect as to how the copy of the order was received on 04.08.2024. In fact, if one is not a party to the litigation, justification of delay in filing the appeal may remain but in the instant case, the appellant could know about that attachment of the property at the earliest and even sent an application to the ED who remains with no authority to release the property after attachment. Appellant did nothing and filed the appeal after 11 months. There are no justification for Condonation of Delay in pursuance to the vague application with conflict of statement to para 6 of the appeal. The application is accordingly dismissed so as the appeal. Service Tax 2024 (12) TMI 287 CENVAT Credit - short payment of an amount equivalent to Cenvat credit attributable to exempted services - contravention of provisions of sub rule 2 and 3 of Rule 6 of Cenvat Credit Rules, 2004 - HELD THAT:- Appellant is holding service tax registration for providing various taxable services like Management Consultancy Services, Internet Cafe Services and Mandap Keeper Services - The appellant is also rendering few services which are exempted from payment of tax - The appellant is not maintaining the separate register for the inputs used in providing taxable as well as exempted services like Food Sale in Restaurants, Boarding and Lodging facilities of guests etc - Sub-clause (ii) of Rule 6 (3) of Cenvat Credit Rules, 2004 has been complied with by the appellant. While applying Rule 6 (3A) of Cenvat Credit Rules, 2004 appellant had reversed the proportionate Cenvat Credit of Rs. 28,42,027/- for the Year 2010-11 with an intimation thereof to the department vide letter dated 30.06.2011 and has also reversed the proportionate Cenvat credit of Rs. 28,32,413/- for the Year 2011-12 under intimation to the department vide letter dated 29.06.2012. Financial Year 2010-11 - HELD THAT:- The amount of Cenvat credit was not supposed to be reversed vis- -vis Management Consultancy Services. The original adjudicating authority also in Para 4.4.1 in sub-para 2 has held that appellant to be entitled to avail 100% credit of the same irrespective of their utilization in taxable or non-taxable service during the period under question. However, relief has been denied as the said sub-rule (5) was omitted vide Notification No. 3/2011. However, it is observed that the said notification is dated 01.03.2011 which omits sub-rule (5) of Rule 6 of Cenvat Credit Rules, 2004 w.e.f. 01.04.2011. The period in question is March 2010 to March 2011 which means the notification has wrongly been applied by the adjudicating authority for denying the availment of 100% credit on the Management Consultancy Services. April 2012 to June 2012 - HELD THAT:- The amount of Rs. 4,65,651/- as claimed as re-credit by the appellant against excess reversal in previous Financial Year has already been denied to be subjected to proportionate reversal in the ratio of exempted services provided in the subsequent period. The already reversed Cenvat credit under intimation to the department has also been acknowledged by the adjudicating authority in the said para itself. The proportionate value of Cenvat credit has already been reduced. There are no reason to interfere with those findings. July 2012 to March 2013 - HELD THAT:- The use of Wi-fi Services in providing number of exempted services has not been denied by the assessee. Rather the assessee themselves had exercised the option under Rule 6 (3)(ii) of Cenvat Credit Rules, 2004 for payment of proportionate amount attributable to exempted services as they were not in a position to identify a particular input service with a particular output service. In the light of the said admitted facts, it has been held that there is no justification in showing use of a particular input service exclusively in taxable output service and to claim full Cenvat credit on a subsequent occasion without having withdrawn the option availed of Rule 6 (3) of Cenvat Credit Rules, 2004. There are no reason to differ from these findings. Accordingly, once the appellant exercised option to pay under Rule 6 (3) (ii) of Cenvat Credit Rules, 2004 they were under legal obligation to pay the amount as determined under the said rule. The demand for the period 2010-11 vis- -vis the amount of Cenvat credit availed on Management Consultancy Services is hereby set aside. The demand from April 2012 to June 2012 stands modified - The order with respect to demand for the period July 2012 to March 2013 is also upheld. Appeal allowed in part. 2024 (12) TMI 286 Invocation of extended period of limitation under section 73(1) of the Finance Act - suppression of facts - Appeal against order confirming demand of service tax - rent-a-cab service - renting of immovable property - income from taxation fees - HELD THAT:- It would be seen from a perusal of sub-section (1) of section 73 of the Finance Act that where any service tax has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the service tax which has not been levied or paid, requiring him to show cause why he should not pay amount specified in the notice. The proviso to section 73(1) of the Finance Act stipulates that where any service tax has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Chapter or the Rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax, the provisions of the said section shall have effect as if, for the word one year , the word five years has been substituted - There can be a difference of opinion between the department and an assessee. An assessee may genuinely believe that duty is not leviable, while the department may believe that duty is leviable. The assessee may, therefore, not pay duty in the self-assessment carried out by the assessee, but this would not mean that the assessee has wilfully suppressed facts. To invoke the extended period of limitation, atleast one of the five necessary elements must be established and their existence cannot be presumed merely because the assessee is operating under self assessment. In the present case, even though the show cause notice was issued to the appellant after the expiry of one year from the relevant date, the proviso to section 73(1) of the Finance Act has not been invoked. Though the appellant specifically denied that any facts had been suppressed, neither the Joint Commissioner or the Commissioner (Appeals) have dealt with this issue. It cannot be alleged by the department that facts were not in the knowledge of the department since two show cause notices dated 12/13.03.2013 and 26.03.2013 had been issued to the appellant. There is, therefore, no reason as to why the show cause notice should have been issued on 22.10.2014 beyond the normal period of limitation for the period from April 2012 to March 2013. It is, therefore, clearly a case where the facts were in the knowledge of the department and the department cannot allege that facts had been suppressed. This apart, service tax has been demanded on the basis of profit and loss account and balance sheet, which are public documents which the department could have ascertained. The issue involved in this appeal also relates to interpretation of law. The decisions referred to above have clearly held that in such circumstances there can be no suppression of facts with an intent to evade payment of service tax. The impugned order dated 21.08.2017 passed by the Commissioner (Appeals), therefore, deserves to be set aside on the sole ground that the extended period of limitation contemplated under the proviso to section 73 (1) of the Finance Act could not have been invoked in the facts and circumstances of the case nor it has been invoked - Appeal allowed. 2024 (12) TMI 285 Non-payment of service tax - Business Auxiliary Service - Commercial Training or Coaching Services - Extended period of limitation - interest and penalties. Business Auxiliary Service - Commercial Training or Coaching Services - HELD THAT:- It is observed that the adjudicating authority has appropriated only Rs.3,05,00,000/-. The Appellant submitted that initially, they have paid Rs. 3,05,00,000/- and balance Rs. 33,87,824/- was paid subsequently in instalments. Thus, they requested for the appropriation of the remaining amount of service tax paid. In this regard, it is observed that the Ld. Adjudicating authority has recorded in para 3.2.2 of the impugned order, wherein he observed that initially the appellant has paid Rs.3,05,00,000/- and subsequently they have paid Rs.33,87,824/- after issue of the Notice. Thus the entire payment amounting to Rs.3,39,72,906/-stands paid and the same is acknowledged by the adjudicating authority in the impugned order. Since the entire payment of Rs. Rs.3,39,72,906/- has already been paid, the same is appropriated against their liability under the category of 'Consulting Engineer's Service, Erection, Commissioning or Installation Service and GTA Service . Demand of service tax of Rs.24,38,975/- under the category of Business Auxiliary Services - HELD THAT:- It is observed that the Appellant has rendered service to M/s. Thales, which is having its establishment outside India. It is observed that the services rendered by them, namely, business auxiliary service, falls under Rule 3(1)(iii) of Export of Services Rules, 2005. As per the clarification issued by Board Circular 111/05/2009-ST dated 24.02.2009, the relevant factor that decides whether the service rendered is 'export of service' is the location of the service receiver and not the place of performance of the service. In this case, the training has been received abroad and hence the services rendered are received abroad. Thus, the services rendered fall within the ambit of 'export of service' and accordingly, it is held that no service tax is payable by them on such services. Demand of service tax of Rs.4,23,586/- under the category of Commercial Training or Coaching Services - HELD THAT:- It is observed that the appellant has sent their personnel abroad for training and the expenditure in foreign currency was incurred for training their personnel abroad. Thus, the service was received by the appellant in a foreign country which is not liable for service tax in India. Accordingly, the demand of service tax under the category of 'Commercial Training or Coaching Services' is not sustainable. Demand of interest for extended period of limitation - HELD THAT:- There is no suppression of facts with intention to evade the tax established in this case. The entire demand has been raised on the basis of the information available in their Balance Sheet and Profit and Loss Account. In such circumstances, the extended period of limitation not invokable. However, the appellant has paid the service tax demanded for the extended period also. The Appellant submitted that they will not claim any refund of the service tax already paid for the extended period and prayed for waiver of interest. It is observed that, just because the appellant has paid service tax including the extended period of limitation, the interest also cannot be demanded for the service tax voluntarily paid by them for the extended period, which is otherwise not payable - the Appellant is not liable to pay interest for the service tax paid by them for the extended period of limitation. Interest under Section 75 of the Finance Act, 1994, for the delay in payment of service tax in respect of the normal period - HELD THAT:- The Appellant have submitted, vide letter dated 13.11.2024, that they have paid interest amounting to Rs.21,32,542/- for the delay in payment of service tax for the normal period of limitation. They have enclosed copy of the e-Receipt Challan [bearing CTIN No. 2409692124] pertaining to the above payment in support of their claim. Accordingly, the interest of Rs.21,32,542/- paid by them appropriated towards their interest liability. Imposition of penalty under Section 78 of the Act - HELD THAT:- It is observed that initially the Appellant has not paid the Service Tax under reverse charge mechanism. However, when the liability was pointed out, the Appellant accepted their liability and discharged Service Tax thereof. Thus, there is no suppression of facts with intent to evade payment of Service Tax existing in this case - the penalty imposed on the Appellant under Section 78 of the Finance Act, 1994 is set aside. Penalties under Section 77(1)(a) and Section 77(2) of the Act are imposed for non-registration and non-filing of ST-3 returns - HELD THAT:- It is observed that these penalties have been rightly imposed and we have no reason to interfere with these penalties imposed. Accordingly, the same are upheld. Appeal disposed off. 2024 (12) TMI 284 Non-payment of service tax based on information from third-party data source - appellant did not file ST-3 returns (STR) for the year 2015 16 - Violation of principles of natural justice - HELD THAT:- This is a case where the department has initiated action after obtaining the ITR of the appellant and comparing it with the STR. The entire amount shown as Sale of Service as per the ITR was taken as the presumptive value of the service rendered during the FY 2015-16 and Service Tax of 3,29,123/- was demanded under the extended period of time along with interest and penalties under various provisions of law. No investigation into the information received from the ITR appears to have been attempted. While the ITR could have triggered an enquiry into the non-payment of Service Tax, if any, by the appellant, it cannot be the basis of determining the value of service rendered during any period of time. Much less under the extended period of time, invoking fraud, suppression etc. without an iota of investigation or proof of evasion of duty. Mere entertaining of suspicion cannot be the basis to put a citizens right to do business in difficulty and oblige him to pay tax which is improperly demanded. The burden of proof is on revenue to establish the blame worthy conduct of the appellant - no purpose would be served in remanding the matter to the Original Authority to cure the breach of natural justice at this stage, since the grounds in the current notice are inadequate and inclusion of additional ground/ new ground would involve fresh investigation into facts, which cannot be permitted. Thus, it is also a well-accepted norm of judicial discipline that a Bench of lesser quorum / strength should follow the view taken by Bench of larger quorum / strength, in a case whose ratio covers the legal issue involved in the impugned matter. The impugned order merits to be set aside and is so ordered - The appeal is allowed. 2024 (12) TMI 283 CENVAT Credit of service tax paid - input services - appellant on deposit insurance premium to Deposit Insurance and Credit Guarantee Corporation (DICGC) - HELD THAT:- The registration of the banks with DICGC is not optional but compulsory. All Banks have to obtain a licence from Reserve Bank of India u/s 22 of the Banking Regulation Act without which no bank can function and all of them have also to compulsorily obtain registration with the DICGC in order to protect the interest of depositors. The registration can be obtained by the banks only on payment of insurance premium to DICGC. If a Bank fails to pay premium to DICGC, its registration would be cancelled, which ultimately would result in cancellation of licence granted to the Bank by Reserve Bank of India. Which means without payment of insurance premium to DICGC, the Bank will not be able to function or provide any banking and other financial services. Therefore payment of insurance premium to DICGC is an integral part of banking and other financial services and is an input service for which Cenvat Credit can be availed by the banks. The impugned orders are set aside - the appeals filed by the Appellant are allowed. 2024 (12) TMI 282 Interpretation of the term One Time Upfront Amount (called as premium, salami, cost, price, development charges or by any other name) - Revenue is of the opinion that One Time Upfront Amount has to be paid in one go - HELD THAT:- The term One Time Upfront Amount (called as premium, salami, cost, price, development charges or by any other name) relates to the payment made One Time Upfront Amount of premium, salami, cost, price, development charges, etc. One Time Upfront payment in this context means payment of one time expense like premium, salami, cost, price, development charges, etc made at the beginning of lease and it does not means payment in one go. The nature of the payment is premium, salami, cost, price, development charges, etc. All the heads are paid one time during the lease period. The nature of these payments is One Time payment as premium, salami, cost, price, development charges, etc. is paid only one time and not in recurring manner during the lease period. The amount of lease rent is paid in recurring manner and the respondents are discharging Service Tax on the same. In this background the claim of revenue that payment of premium, salami, cost, price, development charges, etc. in installments is not a One Time Payment is incorrect - Consequently, the appeal of revenue is without merit and the same is dismissed. 2024 (12) TMI 281 Recovery of service tax with interest and penalty - Taxability of amounts paid for License Fees, Documentation Fees, and Computer Software as a service under the Finance Act, 1994 - Extended period of limitation - HELD THAT:- It is evident that the fact of actual amounts paid by the appellant have not been considered. It is specific stand of the party before the Commissioner that the entries against which the current demands are being made in the book entries as per the Indian Accounting Standard have not been considered. The impugned order itself records that these amounts would already subject to matter of show cause notice issued by the divisional office earlier to the appellant. This fact could have been verified by the adjudicating authority and the findings recorded rather than observing non-submission of any evidence in this regard. It is inclined to accept the submissions made by the appellant that these amounts indicated in the trial balance of the appellant were towards the amortization disclosure required to be made by them as per Indian Accounting Standard (Ind AS) 38A and not consideration for receipt of any service during the period of dispute. In fact appellant have not received any service from foreign vendor during this period for which they were required to pay service tax on reverse charge basis against this expense - the demand made by treating these services under the category of Transfer of Intellectual Property Rights Service cannot be sustained. The findings recorded by the impugned order to the effect that overseas vendors are carrying out some activities for the appellant for consideration, do not stand in the test of law, as no activity has been done by any overseas vendors for these amounts during the period of dispute these amortization cost are only towards account entries towards certain license for license fees, Documentation Fees, Computer Software, License Fee-ALH, Documentation etc. As these amounts are not in respect of any services received by the appellant during the period after 01.07.2012 are book entries, there are no merits in the said findings. As the demand is being set aside on merits, it is not found necessary to record separate findings on the ground of limitation or the penalty imposed. As the demand is set aside, the impugned order along with penalties imposed on the appellant is set aside - appeal allowed. 2024 (12) TMI 280 Liability to pay differential Service Tax - differential service value on account of FOREX rate fluctuation - invocation of time limitation only for dropping of penalty - HELD THAT:-The appellants have raised the issue of limitation only for dropping of penalty. However, they have paid the service tax along with interest and the service tax paid by them was taken as a Cenvat credit as submitted by the learned Counsel. Since, the appellant was eligible for Cenvat credit, the entire situation was revenue neutral as held in the various judgments cited by the appellant above. Therefore, the demand itself was not sustainable on time bar. However, since the appellant have paid service tax along with interest, the same is maintained. Since, there is no mala fide intention on the part of the appellant the ingredients required for imposing penalty under Section 78 do not exist. As regard the reliance placed by the Learned AR in case of UNION OF INDIA VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS AND COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VERSUS M/S. LANCO INDUSTRIES LTD. [ 2009 (5) TMI 15 - SUPREME COURT] , it is found that the said judgment has held that once 11AC is applicable, the mandatory penalty of equal amount of duty is imposable. Therefore, before deciding that whether the penalty 11AC is impossible, it is to be seen that the ingredient such as suppression of facts, fraud, collusion, etc. exist in a given case, then only equal penalty can be imposed. However, in the present case as discussed above, there is no mens rea on the part of the appellant. Therefore, the equal penalty under section 78 cannot be imposed. The penalties imposed by the adjudicating authority and upheld by the Commissioner (Appeals) are set aside - The Appeal is allowed. 2024 (12) TMI 279 Eligibility of sub-contractor provided service in SEZ on behalf of the main contractor for exemption from service tax - N/N. 09/2009-ST dated 03.03.2009 as amended by N/N. 15/2009-ST dated 20.05.2009 as well as subsequent N/N. 17/2001-ST dated 01.03.2011, 40/2012-ST dated. 20.06.2012 and N/N. 12/2013 dated 01.07.2013 - HELD THAT:- It is found that the service provided by the appellant as a sub- contractor to the main contractor for the authorized operation of SEZ is not liable to Service Tax. This issue has been considered in the appellant s own case RANDHAWA CONSTRUCTION VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA-I [ 2024 (4) TMI 429 - CESTAT AHMEDABAD] , wherein the following order has been passed ' it is settled that the service of sub- contractor provided in SEZ shall be eligible for exemption under Notification No. 04/2004-ST and other identical notifications.' In the view of the above judgment in appellant s own case, as well as various judgments cited by the appellant, the issue that whether the sub-contractor though provided the service in SEZ for and on behalf of the main contactor is liable to service tax, has been settled in the appellant s favour. Accordingly, the issue is no longer res-integra. The impugned order is not sustainable, hence, the impugned order is set aside - Appeal is allowed. 2024 (12) TMI 278 Exemption from service tax - site formation and clearance, excavation and earth moving work for road construction and water supply - quantification of mandatory penalty. Demand of Rs. 58, 249/- on renting of JCB machines and excavator under the head of supply of tangible goods for use service - HELD THAT:- It is found that as per the facts of the present case and the submission made by the Learned Counsel, this service tax is in relation to the transportation of construction material related to the construction of road. In such case the appellant being a proprietary firm the service tax liability is on the recipient of service in terms of Notification No. 13/2012-ST dated 01.07.2012 by which reverse charge was applicable on the recipient of the service. Therefore, the demand of Rs. 58,249/- against the appellant is clearly not sustainable. Demand of Rs. 27,226/- for road construction work and Rs. 10,64,431/- related to water supply project - HELD THAT:- It is found that these services are related to construction of road provided to M/s L T and in turn L T has got the work done from the appellant for execution of contract for the governmental authority i.e. GIDC (Gujarat Industrial Development Corporation) - From the above reading of exemption under Notification No. 25/2012-ST dated 20.06.2012 (w.e.f. 01.07.2012) under Sr. No. 12 13(a), it is found that if a service is provided to the government or governmental authority by way of construction of pipe line or plant for water supply, the same is exempted. Similarly, under Sr. No. 13., the services provided by way of construction of road transportation used by general public is also exempted. In the present case the appellant s activity involved is to construct the water supply system and also related to the construction of road. Therefore, the appellant s activities are clearly covered under both the entries i.e. Sr. No. 12 13 of Notification No. 25/2012-ST. The Learned AR Shri Rajesh Nathan argued that the appellants have provided the service to M/s L T is not a government or governmental authority, therefore, the appellant s activities are not covered under exemption - in this regard it is held that since the entire project of the main contractor i.e. M/s L T is meant for government and appellant being a sub-contractor also providing the service for the government - it is an usual practice that a main contractor who is allotted the project by the government major part of the work is done by sub-contractor only and if on this ground the exemption is denied then the whole purpose of the modification will be defeated - even though the service is provided by the sub-contractor but since the same undisputedly meant for the government i.e. GIDC, the activities are covered under Sr. No. 12 and 13 of the notification No. 25/2012-ST. The demand of service tax amounting to Rs. 58,249/-, Rs. 27,226/-, Rs. 10,64,431/- set aside. However, the demand of Rs. 32,514/- for which the appellant is not contesting is upheld - appeal allowed in part. 2024 (12) TMI 277 Classification of services - Manpower Recruitment or Supply Agency Services or not - appellant had carried out the activities namely packing/filling of milk pouches, loading/unloading of crates and ancillary activities to Mehsana District Co-Operative Milk Producers Union Ltd. on rate contract basis during the period from 2010-11 to 2014-15 - HELD THAT:- It is necessary to refer to the contract between the appellant and their client. On perusal of such contract, it is found that firstly the contract is not for supply of manpower but for undertaking particular jobs involving filling and packing of milk pouches, loading and unloading of crates and ancillary and the rate for the such job is also on the per piece basis. Therefore, the client is not concerned about the number of manpower or manhours involved in the job under taken on their behalf. Therefore, with this undisputed fact, the activities cannot be classified as Manpower Recruitment or Supply Agency Services . In case of SS. ASSOCIATES VERSUS COMMISSIONER OF CENTRAL EXCISE, BANGALORE [ 2009 (12) TMI 152 - CESTAT, BANGALORE] wherein Hon'ble CESTAT held that ' No agreement for utilization of services of an individual- Lump-sum work not covered under Manpower Recruitment or Supply Agency service.' In view of the above judgment, it is categorically held that any job under taken by the contractor and the rate for the same is as per the quantum of the job and not on the basis of number of manpower or manhours. In the present case also, the appellants have not taken the service charge as against the wages/ salary of the manpower deputed to the appellant. Therefore, the service is not covered under the Manpower Recruitment or Supply Agency Services up till 30.06.2012, therefore, no service tax is payable. As regard the period with effect from 01.07.2012, there was a negative list regime and the definition of individual service was done away so all the activities are taxable, except falling under negative list or under exemption Notification No. 25/2012-ST, if any applicable in the present case. In this regard, we find that the activity under taken by the appellant is clearly manufacturing activity, in terms of Central Excise Act, 1944 for the reason the product milk pouches is falling under Chapter Heading 04.02 of Central Excise Tarif Act, 1985 - their activity amount to manufacture in terms of Section 2(f) of Central Excise Act, 1944. The process in the present case is clearly amount to manufacture and leviable to central excise duty under the Central Excise Act, 1944. Therefore, the activity in the present case being amount to manufacture under Central Excise Act, 1944, the same is exempted under Sr. No. 30(i) read with Clause (ya) of para 2 of the Notification. Therefore, for the period from 01.07.2012 also no service tax is payable on the appellant s activity. The impugned order is set aside - Appeal is allowed. 2024 (12) TMI 276 Levy of service tax - Works Contract Service - work under taken by the appellant is only of design, engineering, documentation, manufacture, supply of equipments and machinery and the supervision of erection and commissioning of such machinery - extended period of limitation. Whether the activity rendered by the appellant can be called as Works Contract Service? - HELD THAT:- Apparently and admittedly contractor/TOSCOTEC, Italy had not only supplied the tissue plant equipment and machineries but also had agreed to supervise the entire procedure of erection, installation and commissioning of the said equipment and machinery. Not only this, they have also agreed to train the employees of the appellant for the upkeep and maintenance of the plant supplied by them. Hence, the activity of the appellant is an act for the purposes of carrying out erection, commissioning or installation of the tissue paper plant which is manufactured by TOSCOTEC, Italy and is supplied by TOSCOTEC itself to the appellant along with all such services of getting the same properly erected and installed and commissioned. In light of this observation, the mere fact that the erection, installation, commission and construction of civil structure for the purpose has got done from other Indian companies is irrelevant for the purpose. The act of supervising the erection, commissioning and installation is held to be an act for the purposes of carrying out erection, commissioning and installation. It is observed that the contract is a composite contract of supply and services as the price of goods has not been separately mentioned than the price of services. The contract price is the CISF price of goods at the rate of 69,50,000 Euros (Rs.44,79,27,500). This price is mentioned to have included the price of services, freight price, price of insurance from Italian port to mill site Amlai. Hence, it is clear that the contract in question is a composite contract for supply of goods and for rendering services. The services which are meant for the purpose of carrying out erection, commissioning and installation of the goods supplied. Hence, the activity rendered by TOSCOTEC, a company situated at place other than India, to the appellant in India is an activity of Works Contract Service. Resultantly, in terms of Section 66A of the Finance Act, 1994, appellant is liable to pay service tax under Reverse Charge Mechanism - issue stands decided in favour of department and against appellants. Whether the appellant is liable to pay service tax on the expenditure incurred for erection and commissioning of the plant by engaging various sub-contractors in terms of Rule 2A of Service Tax Valuation Rules? - HELD THAT:- Since the contract between the appellant and TOSCOTEC is already held to be composite contract with no distinction in the price of goods and that of services, it is also held to be a Works Contract Service. Hence the charges paid by the appellant to various contractors as mentioned in Annexure A to the show cause notice are held includable in the gross value of the impugned contract between appellant and TOSCOTEC, Italy. Hence, there are no infirmity neither in the show cause notice nor in the order under challenge where the service tax liability upon the total value of contract including the cost paid to the contractors for erection, commissioning and that the liability of appellant is being included in the amount/value for rendering Works Contract Service - the adjudicating authority has failed to appreciate that appellant had already paid an amount of Rs.48,99,102/- on 17.12.2008 itself on account of Works Contract Services. This fact has been recorded in the show cause notice Para 4 thereof also. The adjudicating authority has also failed to take into consideration the service tax paid by the appellants vis- -vis invoices raised by the various contractors. The amount of service tax already paid by the appellant vis- -vis the activity in question should have been set off against the impugned demand. Hence we order the modification in computation of amount of liability. Extended period of limitation - HELD THAT:- It is observed that the show cause notice itself has alleged that the appellant has failed to furnish the taxable value of Rs.2,49,15,31,31/- to the notice of the department and thus have concealed/suppressed the same with an intent to evade the payment of service tax amounting to Rs.3,07,95,328/-. The adjudicating authority also in Para 22 of the order under challenge has recorded that the liability of service tax came to the notice when they first made the payment to M/s. TOSCOTEC on 30.06.2008. For this, the ST-Return was required to be filed on 25.10.2008 but the appellant failed to discharge their liability during the appropriate period. The said act is rightly held to be a deliberate attempt for non-payment of service tax in contravention of provisions of Section 68 of Finance Act, 1994. Hence, it is held that proviso to Section 73 of Finance Act has rightly been invoked. Show cause notice cannot be held to be barred by time. The order under challenge is accordingly upheld - However, with the modification that the amount of service tax already paid be set off against the demand confirmed - the appeal is hereby order to be dismissed. 2024 (12) TMI 275 Appeal withdrawn by the Department on the grounds of amount involved being less than monetary limit prescribed therein - levy of service tax on the retained amount collected in the name of ocean freight - HELD THAT:- Sub-section (1) of Section 67 provides that where service tax is chargeable on any taxable service with reference to its value, then such value shall, where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by the service provider. It is, therefore, clear that only such amount is subject to service tax which represents consideration for provision of service and any other amount which is not a consideration for provision of service cannot be subjected to service tax. It would be appropriate to refer to the decision of the Supreme Court in Union of India v. Intercontinental Consultancy and Technocrats [ 2018 (3) TMI 357 - SUPREME COURT] . The Supreme Court observed that service tax is on the value of taxable services and, therefore, it is the value of the services which are actually rendered which has to be ascertained for the purpose of calculating the service tax. It is for this reason that the expression such occurring in Section 67 of the Act assumes importance. Consideration, which is taxable under Section 67 of the Finance Act, should be transaction specific. Incentives, on the other hand, are based on general performance of the service provider and are not to be related to any particular transaction of service. It needs to be noted that commission, on the other hand, is dependent on each booking and not on the target. If the air travel agent does not achieve the predetermined target, incentives will not be paid to the travel agents. The Larger Bench of this Tribunal in the case of Kafila Hospitality Travels Pvt. Ltd. vs. Commissioner of Service Tax, Delhi [ 2021 (3) TMI 773 - CESTAT NEW DELHI (LB)] has dealt with this issue and has held ' They are paid on general performance of service provider and not to related to particular transaction. Hence, they are not consideration liable to Service Tax under Section 67 of Finance Act, 1994.' The demand confirmed on commission is also ordered to be set aside - appeal is allowed. Central Excise 2024 (12) TMI 274 Clandestine removal of goods - evasion of duty - shortage of 3500 Kgs of copper scrap - assessee had been receiving substantial quantity of copper scrap without any bills/documents and was not entering the details of sale in the statutory records - proof beyond doubt - preponderance of probabilities - HELD THAT:- In criminal cases, the standard of proof as required to prove the charges in a criminal trial is proof beyond doubt , whereas, the adjudication proceedings are in the nature of civil proceedings and not criminal proceedings and therefore, the standard of proof of civil proceedings i.e. preponderance of probability is applicable in adjudication proceedings. It is equally well settled that in adjudication proceedings to establish the charge of clandestine removal and under valuation, Revenue is not required to prove the case with mathematical precision. Such charges are to be established on the basis of preponderance of probabilities. However, the conclusions to be drawn are necessarily to be logical and not on the basis of presumptions and assumptions. Suspicion, howsoever grave, cannot replace the test of proof. The mere fact that the respondent agreed to deposit the duty amount to avoid any kind of litigation, itself cannot be held to be the basis for confirming the duty demand against the respondent. CESTAT found that the case of unaccounted manufacture and clearance was built upon only sketchy evidence without concrete corroboration and whatever evidences formed basis for the case of Revenue, fell short of the minimum requirement of credible case of clandestine removal - the CESTAT conducted a meticulous exercise to examine and appreciate the evidence on record in the light of settled principles and came to a categoric finding that the case of unaccounted manufacture and clearance was built on sketchy evidence without any concrete corroboration and whatever evidence formed basis of the case of the Revenue fell short of the minimum requirement of credible case of clandestine removal. In the absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods from the premises of the respondent, we hold that the impugned order dated 08.06.2017 passed by the CESTAT does not suffer from any serious error and does not merit interference. The appeal is therefore dismissed. 2024 (12) TMI 273 Suppression of facts by the respondent to evade excise duty - Interpretation and applicability of N/N. 52/2002-CE and N/N. 8/2004-CE. - whether the Notification No. 8/2004-CE dated 21.01.2004 and the amended Notification, No. 28/2004-CE dated 09.07.2004, the whole of the duty of excise leviable on the finished product was exempt or the same was chargeable Nil rate of duty and thereby the Judgment of this Hon ble Court is squarely applicable in the present case? - applicability of Extended period of limitation. HELD THAT:- Here in the case at hand though substantial questions of law has been framed on the issue of exemption of excise duty or suppression of material facts before the assessing authorities looking the matter from the question of limitation or of any other technicalities, this Court feels that for whatever the reasons the inspecting or audit authorities who are supposed to conduct periodical/regular audits and inspections could have raised the demand and also issued show cause notice on yearly basis but not acting upon for years together and to the surprise of the respondent, notices are issued and demand is raised before a concern to this Court and a huge amount of excise duty is important. This Court on the ground of technicalities and for certain laches committed by the department officials as pointed out by the respondent counsel is not inclined to decide the case in favour of the respondent. But keeping in mind, the quantum of excise duty and its ancillary duties which are in total of Rs. 98,03,22,312/- approx., this Court feels that the matter needs consideration as to where the things are properly attended or not. This Court feels that it is a case to remand back the matter to the Commissioner of Central Excise, Morellow Compound M.G. Road, Shillong-793001 in the respective cases for reconsidering the issue of purchase of the compound i.e. kimam and the records relating to the same and make an enquiry as to who is the supplier and in the event if the supplier has already paid the sufficient excess due, the same need not be collected earlier from the respondent herein - this Court is of the opinion that the issue of levy of excise duty and considering the exemption is concerned, an opportunity needs to be given for ascertaining whether any due has been already paid by the supplier and the same needs to be considered by the Commissioner of Central Excise, Morellow Compound M.G. Road, Shillong-793001. Appeal disposed off by way of remand. 2024 (12) TMI 272 Maintainability of appeal filed under Section 117 of the Central Goods and Service Tax Act, 2017 - Jurisdiction of the High Court versus the Supreme Court regarding appeals related to taxability of services rendered - appropriate forum - Interpretation of Section 35L of the Central Excise Act, 1944 - HELD THAT:- Under Section 117 of the Act of 2017, an appeal lies to the High Court against any order passed by the Appellate Tribunal and the appeal may be admitted by the High Court subject to there being satisfaction that the case involves substantial question of law. The definition of Appellate Tribunal is found under Section 2 (9) of the Act of 2017 which again refers to Section 109 of the same Act. Section 109 provides for constitution of Appellate Tribunal and Benches thereof by the Government to be known as Goods and Services Tax Appellate Tribunal for hearing appeals under the order passed by the Appellate Authority or the Revisional Authority. No material has been placed to show that an Appellate Tribunal had been constituted in terms of the said provision. There also cannot be any dispute to the fact that an appeal to this Court under Section 117 would have to be an order passed by the Appellate Tribunal under Section 113 of the Act of 2017. It may be seen that apart from the orders passed by the High Court in an appeal filed under Section 35G or a reference under Section 35H, an appeal lies to the Supreme Court from any order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment. Further, for the purpose of determining any question having relation to the rate of duty, the determination of taxability or excisability of goods would be included for the purpose of assessment. As may be noticed, the core issue which requires determination in the instant case is as to whether the services rendered by the respondent is taxable. Challenge made in COMMISSIONER, CENTRAL GOODS SERVICES TAX, GUWAHATI VERSUS M/S OIL INDIA LIMITED [ 2023 (5) TMI 440 - GAUHATI HIGH COURT] was to the decision of CESTAT which held that the respondent-assessee was a seller and not a service provider and hence, in absence of service provider/service recipient relationship, there could not be any question of levy of service tax and therefore, the demand could not be sustained. Accordingly, the demand of service tax interest and penalty raised by the Adjudicating Authority and affirmed by the Appellate Authority was quashed and set aside. Coming back to the present case, upon having an overall consideration of the issue raised including the grounds of appeal taken by the appellant, since the issue of taxability of the services rendered by the respondent is the issue to be decided and therefore, the same squarely falls within the purview of the Hon ble Supreme Court under Section 35L of the Act of 1944. The appeal is therefore dismissed with liberty to the appellant to avail the remedy as is available in law. 2024 (12) TMI 271 Recovery of Cenvat Credit wrongly availed and utilized along with interest under Rule 14 of the Cenvat Credit Rules, 2004 read with Sections 11A and 11AB of the Central Excise Act, 1944 and penalty - seeking demand of central excise duty in cash on the pet bottles on the ground that the appellant had cleared the goods captively during the period August, 2008 to May, 2010 - invocation of Extended period of limitation - HELD THAT:- The appellant was manufacturing pet bottles in their factory since August 2008 for captive consumption but was not paying the duty on the same and did not get the registration of the same; but in June 2010 they came to know that they are liable to pay duty and then informed the Department regarding the liability to pay duty and subsequently paid the duty for the period August, 2008 to June, 2010 out of the Cenvat Credit on inputs and capital goods and also paid the interest of Rs.8,84,585/- in cash and intimated the same to the Department vide their letters dated 13.06.2010 and 23.06.2010. The appellant also paid some amount as demanded by the Department along with interest which is not disputed. When the appellant paid the duty along with interest voluntarily and the same was not disputed by the Department, then as per the provisions of sub-section (2B) of Section 11A of the Central Excise Act, 1944, there was no necessity to issue the Show Cause Notice - Department has wrongly relied on the provisions of Rule 8(3A) of the Central Excise Rules, 2002, because Rule 8(3A) is applicable in cases where assessees are otherwise paying duty but for certain reasons commit default in not paying duty by due date. Also, the benefit of credit cannot be denied if subsequently duty is held to be payable on the final product. Time Limitation - suppression of facts or not - HELD THAT:- In the present case, there is no suppression on the part of the appellant as the appellant voluntarily informed the Department vide their letter dated 17.06.2010 and subsequently paid the duty along with interest also; whereas the Show Cause Notice was issued after the expiry of more than two years which is time barred, because the ingredients for invoking the extended period of limitation do not exist in the present case. Penalty under Rule 26 on Personal Penalty on Authorized Signatory (Individual) - HELD THAT:- Imposition of penalty is also bad in law because the ingredients for imposition of penalty under Rule 26 do not exist in the present case. The impugned order is not sustainable in law, therefore the same is set aside by allowing both the appeals. 2024 (12) TMI 270 Levy of Personal Penalty for aiding or abetting duty evasion - Denial of exemption admissibility of Notification No. 12/2012-CE (Sr. No. 108) dated 17.03.2012 in respect of the drugs - plea of the appellant is that the appellant s product i.e. drugs covered under description No. (A) of the Sr. No. 108 of the table appended to the notification which does not carry condition as prescribed for description No. (v) - whether the same would fall under description (A) or (B) of Sr. No. 108 of Notification No. 12/2012-CUS? - Levy of penalty under Rule 26 of Central Excise Rules, 2012 - HELD THAT:- The drugs and bulk drugs are one and the same. Therefore, the company M/s. Sterlling Biotech Ltd was entitled for exemption Notification 12/2012-CUS entry Sr. No. 108 description (A) which does not involve any condition such as following the procedure of Central Excise (removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001. Therefore, entire basis of the department that such procedure was not followed is not relevant. Since, the duty demand itself is not prima facie sustainable on the company, there is no question of imposing personal penalty on the employee of M/s. Sterlling Biotech Ltd. who is the appellant herein. The issue involved is pure interpretation of the notification. The company M/s. Sterlling Biotech Ltd had been declaring the entire facts about the availment of the notification and declaring in their ER-1 return the product discretion, notification number, Sr. number of the entry. Therefore, there was no suppression of fact or mala fide either on the part of the company M/s. Sterlling Biotech Ltd or on the part of the present appellant. For this reason, also the penalty on the appellant is absolutely unsustainable. The appellant have relied upon the decision of S K Shah [ 2008 (7) TMI 433 - HIGH COURT OF GUJARAT AT AHMEDABAD] Hon ble Gujarat High Court wherein on the issue of interpretation of notification personal penalty under Rule 26 was held to be not impossible. The penalty imposed on the appellant under Rule 26 is not sustainable. Hence, same is set aside - Appeal is allowed. 2024 (12) TMI 269 Determination of amount of duty under sub-section (10) of section 11A of the Central Excise Act beyond the period prescribed under sub-section (11) of section 11A of the Central Excise Act - admissibility of electronic evidence - section 36B of the Central Excise Act - provisions of section 9D of the Central Excise Act relating to relevance of statements under certain circumstances were not complied with - Violation of principles of natural justice. HELD THAT:- The show cause notice, in the present case, was issued on 28.04.2015. It called upon the noticees to show cause within thirty days from the date of receipt of notice, failing which it was specifically provided that the matter would be adjudicated ex-parte without any further communication. It is seen that the period one year from 28.04.2015 expired on 27.04.2016. Even if cause was not shown by the noticees to the said notice, the Adjudicating Authority should have proceeded to decide the matter ex-parte, but what is seen is that the Adjudicating Authority even let this statutory time limit of one year pass without even adhering to the stipulation contained in the show cause notice that the matter would be decided ex-parte even if no cause is shown within thirty days. It appears that it is only on 07.09.2016 i.e. almost after a period of five months after the expiry of one year that the first hearing was fixed by the Adjudicating Authority on 07.09.2016 - There is absolutely no reason assigned in the written submissions or in the date and event chart as to why the cross-examination process continued for almost three years from 2018 upto 2021, when the adjudication itself was required to be completed within one year. Three dates for personal hearing were fixed in 2021 at an interval of almost one month and thereafter the show cause notice was adjudicated after nine months from the last date of personal hearing on 14.06.2022. A clear statutory time limit of one year is provided in sub-section (11) of section 11A for the Adjudicating Authority to adjudicate the show cause notice but no reason has been given in the impugned order as to why it was not feasible or practicable for the Adjudicating Authority to adjudicate the show cause notice - The Adjudicating Authority has to record reasons in the order adjudicating the show cause notice and not leave it to the department to speculate why the Adjudicating Authority could not adhere to the time limit provided to it under a Statute to adjudicate the show cause notice. The principles of natural justice do not admit of such delayed adjudication where time limit is fixed under a Statute to adjudicate the matter. The Adjudicating Authority cannot endlessly wait and has to utilize its discretion in a fair and reasonable manner so as to balance between the principles of natural justice and the time set out in the Statute for adjudication of the show cause notice. The show cause notice required the noticees to file a reply within thirty days, failing which it was mentioned that the matter would be adjudicated ex-parte. The impugned order would have to be set aside only for the reason that the adjudication was not completed within the time limit prescribed under sub-section (11) of section 11A of the Central Excise Act. The impugned orders would have to be set aside and are set aside - The appeals are, accordingly, allowed with consequential relief(s), if any to the appellant. CST, VAT & Sales Tax 2024 (12) TMI 268 Rejection of refund claims filed by the Respondent for the refund of Input Tax Credit under Section 18(3) of Tamil Nadu Value Added Tax Act, 2006 - refund claims were filed beyond 180 days from the date of expiry of period prescribed - HELD THAT:- As per Section 18(3) of the Tamil Nadu Value Added Tax Act, 2006, a refund claim had to be made within a period of 180 days from the date of accrual of such Input Tax Credit and not from the date of zero rate sales during the period in dispute - Similarly, under Rule 11(2) of the Tamil Nadu Value Added Tax Rules, 2007, as it stood during the period in dispute, a dealer who has effected zero rated sales as is contemplated under Section 18(1) of the Tamil Nadu Value Added Tax Act, 2006 could file a refund claim in electronic form W from accrual of such claim. In this case admittedly there are no records to indicate that returns were assessed and therefore the accrual of refund of such Input Tax Credit cannot be said to have arisen either on the date of purchase of the inputs or on the date of export that is Zero Rated Sales as defined in Section 2(44) of the Tamil Nadu Value Added Tax Act, 2006 or within 180 days of the actual export during the period in dispute. The export incentives in the form of refund of Input Tax Credit should not be denied and ought not to be denied as export bring precious foreign exchange to the country. These export incentives were conceived of and are being given at the time when the country was facing shortage of foreign currency when foreign exchange reserves were depleted impelling the Parliament as also the State Legislatures to boost exports in a bid to usher the foreign exchange into the country. Question of restrictions if any statutorily can be said to have been put in a place only after 2010 pursuant to amendment to Section 18(3) of the Tamil Nadu Value Added Tax Act, 2006 vide Amendment Act 9 of 2010 with effect from 1st April 2010 as notified by G.O.Ms.No.24AA dated 02.03.2010 and amendment to Rule 11(2) of the Tamil Nadu Value Added Tax Rules, 2007 vide Notification No.SRO A-11/2010 dated 06.04.2010 with effect from the date of amendment to Section 18(3) of the Tamil Nadu Value Added Tax Act, 2006. There are no error in the order passed by the learned Single Judge - petition by the Revenue dismissed. Indian Laws 2024 (12) TMI 267 Quantification of interest on refund claim - Refund to flat buyers - HELD THAT:- It is stated at the Bar that out of 14 complainants as mentioned in the list, the matter has been amicably settled with 11 complainants and so the issue only remains in respect of the 03 complainants - As per the settlement, the appellants are required to pay the amount received from each of the complainants along with interest @ 9% per annum. Since the matter is settled with a large number of complainants with interest @ 9% per annum, the remaining three complainants should also be given interest at the same rate - appellants had already deposited the principal amount alongwith interest at the rate of 9 per cent per annum in the Registry of this Court. Whether the actual amount should be paid or it should be paid after deducting the TDS, as per the provisions of the Income Tax Act? - HELD THAT:- The payment of interest should be made without deducting TDS. The appeals are partly allowed.
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TMI Tax Updates - e-Newsletter December 7, 2024

Highlights / Catch Notes

GST

High court gives relief, directs fresh hearing on depositing 50% dues if missed appeal deadline.

Petitioners' appeal against profiteering determination rejected; conditional stay on 50% deposit.

Unfair tax assessment quashed due to lack of proper notice & hearing.

Tax evasion case dismissed: Trader failed to file GSTR-3B & pay GST despite self-assessing in GSTR-1. Court: No discretion allowed.

Taxpayers get relief: Delayed input tax credit allowed for 2017-2021 under amended CGST Act.

Income Tax

IT Deduction for Software Unit u/s 10A Upheld Based on Consistency Principle.

Income Tax Reassessment: Fresh Notice Allowed for Non-Disclosure of Income.

Trademark acquisition not an international transaction for that year: High Court.

Assessee's settlement under Vivad se Vishwas Act confined to trading loss issue; Revenue's appeal unrelated.

Opportunity for video hearing denied despite request violated natural justice - Orders set aside.

Tax penalty order quashed due to delay by competent authority beyond 6-month limit from reference date.

Penalty u/s 271DA for cash transaction violation quashed due to delay by authorities.

Inadequate proof for tax exemption claim leads to revision order.

Infra project sub-contractor eligible for tax deduction on profits u/s 80IA(4) .

Taxman's assumptions rejected, professional fees allowed as business expense.

Customs

Petitioners to avail appeal remedy, HC dismisses plea for adequate opportunity.

Importer wins case to import 8,000 MT more corn, court strikes down arbitrary import restrictions.

Customs duty default interest calculation rules relaxed for bona fide EPCG license holders.

Circular on monetary limits inapplicable for smuggling cases involving absolute confiscation without redemption rights.

Customs tribunal overturns public bonded warehouse license cancellation, cites delay & theft incident mishandling.

Importer denied duty exemption for non-compliant footwear labelling, faces confiscation, fines and penalties.

LED panel imports for TV manufacturing cleared, no complete set undervaluation.

IBC

NCLAT rules reversal of input tax credit not a preferential or moratorium violation transaction.

PMLA

Alleged fund collection by PFI members before Delhi riots; no money laundering prima facie. Bail granted citing delay & Article 21 rights.

Tribunal rules investments not "proceeds of crime" in coal block allocation case due to lack of predicate offence finding.

Money laundering case stumbles: Tribunal overturns attachment order based on unrelated FIR allegations.

Unexplained cash deposits, property acquisitions deemed proceeds of crime despite acquittals; tribunal upholds attachment.

Money laundering case: Bank accounts used as 'parking place' for crime proceeds, Tribunal upholds asset freeze.

SEBI

Court rejects challenge to SEBI circular, cites abuse of process and attempt to frustrate claimants.

VAT

Exports Triumph: Court Upholds Input Tax Credit Refund for Zero-Rated Sales Despite Time Limits.

Service Tax

Customs tribunal rules: Interpretation differences don't invite extended limitation.

Tax authority overruled for presumptive service tax demand based solely on Income Tax Return without proper investigation.

Company not liable for GST on one-time upfront lease charges paid in installments.

Software License Payments Exempted from Service Tax: Tribunal Rules Amortization Entries Not Taxable Services.

Milk pouch packaging and loading services not classified as "Manpower Supply Agency" - No service tax payable.

Central Excise

Biotech firm & employee exonerated in duty exemption case; No intent to evade, no penalty.

Delayed adjudication violates natural justice, orders set aside for non-compliance with statutory time limit.

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TMI Tax Updates - e-Newsletter
December 7, 2024