Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 15, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI Short Notes
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Breach of principles of natural justice - Petitioner was unaware of the notices and the impugned assessment orders until she received an oral intimation from the office of the respondent - The High court acknowledges the change in portal design, with notices and orders now specified under the 'View Notices' and 'View Additional Notices' tabs. However, it finds merit in providing the petitioner an opportunity to contest the proceedings. - The court quashes the impugned assessment orders but imposes a condition requiring the petitioner to remit sums equal to 7.5% of the disputed tax demand.
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Taxability of supply - services of disposal and treatment of Bio-Medical Waste obtained from clinical establishments - The AAR ruled that the services of disposal and treatment of Bio-Medical Waste from clinical establishments are liable to GST - The AAR determined that the applicable GST rate for the services of disposal and treatment of Bio-Medical Waste from clinical establishments is 12% (comprising CGST at 6% and SGST at 6%).
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Exemption from GST - upfront amount charged by the Applicant (as lease premium) for granting long-term lease of ninety years - The AAR concludes that long-term leases are not considered sales of land under GST, and hence, the upfront amount charged by NOIDA is within the scope of GST. - The AAR rules that the lease premium charged by NOIDA for granting long-term leases is exempt from GST under Entry No. 41 of Notification No. 12/2017-CT (Rate) if the lease is for an industrial plot or infrastructure development for financial business and fulfills specified conditions.
Income Tax
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Validity of reopening of assessment - scope of old unamended law and new inserted section 148A - The High court held that notices issued under the newly inserted Section 148A(b), treating them as if issued under the old Section 148 post-April 1, 2021, for assessment years 2013-14 and 2014-15 were invalid. The court found that the extension of time for issuing notices under the old Section 148, based on TOLA and subsequent CBDT notifications, was unauthorized after the old provisions were superseded by the Finance Act, 2021, without any saving clause for the old reassessment provisions.
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Addition u/s 68 - The Tribunal, in dismissing the revenue's appeal, noted that while the AO had raised suspicions regarding the genuineness of the transaction, no tangible material was brought on record to support such suspicions. The assessee had disclosed the names of the jewellers to whom the jewellery was sold, along with evidence of payment through banking channels. - Now High Court confirmed the order of ITAT.
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Penalty 271(1)(c) - additions on account of donation and charity, and on account of loss on sale of assets, which were debited to the profit and loss account - The ITAT held that, assessee made bona fide mistakes in the computation of its total income while filing its original return of income, which were corrected by the assessee by filing the revised computation during the assessment proceedings. Thus it is is not a fit case for the levy of penalty u/s 271(1)(c).
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Approval granted u/s 10(23C)(iv) revoked - charitable activity u/s 2(15) questioned - The Revenue alleges that the assessee is promoting its own products under the guise of charitable activities. However, the assessee argues that its activities are genuine charitable endeavors aimed at benefiting the target population. - The ITAT held that, the activities of the assessee are in the category of medical relief to the poor. Thus, if we interpret the provisions of section 2(15) of the Act strictly, the proviso would not apply. - The impugned order passed by learned CIT (Exemption) withdrawing the approval granted under section 10(23C)(iv) of the Act is unsustainable.
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Deduction u/s 80IA in respect of profits of captive power plants ('CPPs') - The tribunal, referring to the Comparable Uncontrolled Price (CUP) method and previous rulings, held that the market value for computing profits from the CPP should be based on the rate at which the State Electricity Board (SEB) supplied power to consumers. The tribunal directed the deletion of the transfer pricing adjustment and allowed the deduction under Section 80IA based on the transfer price of Rs. 8.48 per unit.
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TDS u/s 195 - disallowance u/s. 40(a)(i) - chargeability of amount to tax in India - rendering of technical services under India-Singapore tax treaty - whether being reimbursement of cost without any mark-up? - The Tribunal, after carefully considering the arguments and examining the relevant agreement, concluded that the payments made by the assessee to BYK Singapore were not reimbursement. The Tribunal noted that the agreement does not support the claim of reimbursement made by the assessee - Receipt of a fixed amount, which may be more or less than the actual outgo, cannot be designated as `reimbursement’.
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Taxability of income in India - income from the sale of Software licenses subscription - India - Japan DTAA - CIT(A) held that the consideration received by the assessee from Indian end customers for sale of software products does not constitute royalty income and is not taxable under Article 12 of the India-Japan DTAA and is not business profits under Article 7 of the India Japan DTAA - The ITAT dismissed the appeals of the Revenue, upholding the CIT(A)'s decision to delete the addition made by the AO.
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Taxability as capital gain or not - Surrender / transfer of tenancy rights - Applicability of section 50C for valuation - The AO treated the transaction as a surrender of rights by the assessee and computed LTCG - The ITAT examined the terms of the tenancy agreements and found no evidence to support the conclusion that the transaction constituted a sale or transfer of ownership rights. They noted that the agreements were in accordance with the Maharashtra Rent Control Act, 1999, and there was no consideration passed between the parties. - Additions made as long term capital gains deleted.
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Benefit of exemption u/s 11/12 - Effective date of grant of registration u/s 12A - Initially application was rejected by CIT(E), but the same was approval on the direction of ITAT w.e.f. 1.4.2017 - Assessee claimed the exemption u/s 11/12 for preceding AY 2016-17 and 2017-18 also - ITAT directed the AO for carrying out verification of fulfillment of condition (iii) discussed above and if that is held to be satisfied, to verify and allow exemption u/s 11/12.
Customs
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Seeking release of seized gold - no show cause notice for seizure of the said gold chain - The High court observed that there is no provision in the Customs Act permitting the detention of goods instead of their seizure. It notes that the customs authorities cannot circumvent the statutory requirements by resorting to detention. - Citing previous judgments, the court affirms that failure to issue a show cause notice within the statutory period specified in Section 110(2) of the Act entitles the person from whom the goods were seized to their return.
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Provisional release of detained goods - The department's insistence on a 100% bank guarantee of Rs. 25,00,000/- was deemed arbitrary and onerous, especially considering the goods were approved for domestic consumption by the FSSAI, similar to past consignments. - Accordingly, the High Court directed the provisional release of the goods upon furnishing a bank guarantee of Rs. 3,49,000/- for the first bill of entry and Rs. 2,00,000/- for the second, alongside a bond for the full value of the goods.
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Valuation of imported goods - Sludge/Sediments found in the vessel imported for breaking - The Tribunal held that, the department could not establish conclusively that the goods claimed by the appellant as sludge/sediments is lubricating oil. Therefore, applying the price of the lubricating oil i.e. USD 420 per MT, is without any basis. Hence, the same cannot be sustained. - adjudicating authority directed to reconsider the entire case and bring any evidence, if available, to establish that the goods found in the vessel is Lubricating Oil and not sludge/sediment and thereafter matter may be decided a fresh.
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Valuation of imported goods - electronic goods including branded and non - The tribunal held that the adjudicating authority and the Commissioner (Appeals) failed to provide cogent reasons and evidence for rejecting the declared transaction value. - The tribunal enhancement of value based solely on NIDB data without additional evidence or proper analysis was erroneous. - The CESTAT further held that, there no evidence of misdeclaration or undervaluation by the appellant. - Rejection of value declared on a Bill of Entry is a serious action that should be supported by compelling provision, evidence and justifiable reasons.
IBC
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CIRP - Classification of Appellant as Operational Creditor and Exclusion from COC Meetings - Financial Creditor or Operational Creditor - The Supreme Court held that the RP's classification of the appellant as an operational creditor, based on the nature of the transaction (lease premium payments), was incorrect. The court emphasized that the appellant's claim, supported by statutory provisions under the U.P. Industrial Area Development Act, 1976, constituted a secured interest over the assets of the corporate debtor, thereby warranting treatment as a secured creditor.
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Approval of Resolution Plan Without Adequate Consideration of Appellant's Claim - Greater Noida - - The Supreme court found that the resolution plan's approval was flawed as it did not properly acknowledge or incorporate the appellant's claim or its status as a secured creditor. The plan's failure to provide for the appellant's claim, as required under Section 30(2) of the IBC, rendered the approval process defective.
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Code of Conduct for the CoC - The Delhi High Court directed the Insolvency and Bankruptcy Board of India (IBBI) to frame or finalize a code of conduct/guidelines for the effective functioning of the Committee of Creditors (CoC) in insolvency resolution processes, without undermining the 'commercial wisdom' of the CoC or the legislative intent of the Insolvency and Bankruptcy Code (IBC). This directive aims to ensure that decision-making by the CoC adheres to principles of reasonableness, fairness, proportionality, and natural justice.
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Admissibility of section 7 application - CIRP - existence of debt and default or not - The NCLAT held that the financial distress and inability of the corporate debtor to repay its debt as per schedule led to the correct application of the Insolvency & Bankruptcy Code, 2016 (IBC). Additionally, the Tribunal supported the commercial wisdom of the Committee of Creditors (CoC) in approving a resolution plan that provided for the full claim of the secured financial creditor along with accrued interest, emphasizing the limited scope of judicial review over the CoC's decisions.
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Right of counsel to communicate with the Court except by filing appropriate application(s) and affidavit(s) in the proceeding pending before the Court - Influencing the decision-making process. - The NCLAT held that, the Order impugned is an order by which both the Members recused themselves from the matters. The Order dated 09.01.2024 recusing by both the members is subject matter of the Appeal - the decision taken by both the members to recuse themselves from the matter cannot be interfered with in exercise of our appellate jurisdiction. - The President of the NCLT is master of roster. All administrative powers are vested with the President.
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Maintainability of Section 7 Application - Initiation of CIRP - threshold limit of 100 allottees - NCLT admitted the application - The Tribunal found no error in the Authority's decision to reject the IAs and observed that the Appellant's actions were motivated by malafide intent to delay the proceedings. As a result, the Section 7 Application filed by the homebuyers/allottees is upheld, and the Appellant's attempt to challenge its maintainability is unsuccessful.
Service Tax
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Supply of Tangible Goods Service - lease agreement - acquiring CESSNA make air craft on lease - After analyzing the lease agreement and legal provisions, the Tribunal concluded that the transaction did not fall within the definition of "Supply of Tangible Goods Service". It found that the lease involved the transfer of right to use goods and was not subject to service tax.
Central Excise
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Recovery of interest on the wrongly availed credit - The Tribunal upheld that interest under Rule 14 is liable on wrongly taken credit, irrespective of its utilization, aligning with the Supreme Court's interpretation in the case of Union of India Vs Ind-Swift Laboratories Ltd. Additionally, it rejected the applicability of amendment arguments regarding "substitution" in Rule 14, emphasizing strict interpretation of taxing statutes without room for implications beyond the clear statutory language.
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Denial of CENVAT Credit - services provided to the employee for transportation to and fro the workplace by bus, provision for canteen services, Mathadi services - The CESTAT held that, when all these services are specifically held by this Tribunal and confirmed by the Appellate Courts like Hon'ble High Courts and Hon'ble Supreme Court to be valid inputs for the purpose of manufacture, there is no reason for us to depart from the judicial precedent set by this Tribunal when they themselves are integral part of manufacture process for which these services availed by the Appellant can be said to be valid input services against which credit are admissible.
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Refund of the excess amount that was subsequently refused to be paid to the Appellant by the Refund Sanctioning Authority - Finalization of provisional assessment - Sale through C & F Agents/Depot/Consignment agent - The tribunal held that, it is apparently keeping these provisions in mind, the provision of refund of differential duty after financial assessment is codified in Rule 7 itself, in which Department would have refunded the amount on its own without any refund application being filed under Section 11(B) of the Central Excise Act, 1944 and burden of examination of passing/non-passing of duly element would have been done by itself.
VAT
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Waiver of pre-deposit condition or grant right to appeal subject to a part-deposit or security - The Karnataka High Court allowed the petition filed by an infrastructure company, engaged in constructing sub-stations/switchyards, facing financial distress and unable to pay the 30% pre-deposit required for prosecuting its appeal against the tax liability under the Karnataka Value Added Tax Act (KVAT Act). - Appellate Tribunal directed to entertain the appeal and pass appropriate orders on merits without insisting for payment of 30% pre-deposit.
Case Laws:
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GST
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2024 (2) TMI 718
Rejection of two appeals filed by the petitioner on the ground that the same were time barred - self-certified copy of the decision or order was not made available within time as per proviso to Rule 108 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- Upon a perusal of the impugned order, it clearly appears that the appeal was electronically filed within the time permitted, that is, three months as per Section 107 of the Central Goods and Services Tax Act, 2017. Furthermore, the first and second proviso to Rule 108 of the Rules would not apply, as is clear from the literal interpretation of the first proviso itself. The impugned order dated October 18, 2023 is quashed and set aside with a direction upon the appellate authority to de novo hear the appeals filed by the petitioner and pass a reasoned order on merits within a period of three months from date - Petition allowed.
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2024 (2) TMI 717
Seeking GST exemption and exemption from TDS - seeking direction to 1st respondent to consider and dispose of the petitioner's representation dated 28.01.2019 - HELD THAT:- The communication dated 15.11.2018 from the Commissioner, Civil Supplies and Consumer Protection Department to the Commissioner, Commercial Taxes and Registration Department is in the form of a request to exempt wholesale kerosene dealers from the levy of TDS at 2%. The subsequent communication of 19.12.2018 from the Additional Chief Secretary/Commissioner of Commercial Taxes to the Principal Secretary to the Government, Commercial Taxes and Registration Department is with regard to raising the issue of exemption from the provisions of Section 51 of the SGST/CGST Acts in respect of wholesale kerosene suppliers, who supply PDS kerosene to fair price shops. In view of these two communications, the petitioner has made out a case for the consideration of the representation dated 28.01.2019. Petition is disposed of by directing the 1st respondent to consider the representation dated 28.01.2019 and dispose of the same after providing a reasonable opportunity to the petitioner.
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2024 (2) TMI 716
Maintainability of petition - availability of alternative remedy - Seeking cancellation of old GST registration and to transfer the ITC credited from the old GST registration to the new GST registration - HELD THAT:- The petitioner has an alternative remedy of filing an appeal under Section 107 of U.P. Goods and Service Tax Act, 2017 before the appellate authority. While challenging rest of the findings, petitioner can also raise the findings before the appellate authority who can look into the matter and decide the same in accordance with law. The writ petition is consigned to record.
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2024 (2) TMI 715
Breach of principles of natural justice - Petitioner was unaware of the notices and the impugned assessment orders until she received an oral intimation from the office of the respondent - reversal of Input Tax Credit (ITC) - HELD THAT:- The documents on record disclose that the respondent issued both an intimation in Form GST DRC-01A and the show cause notice in Form GST DRC-01 and reminders before issuing the impugned assessment orders. Admittedly, these notices and assessment orders were uploaded on the 'View Additional Notices' tab in the GST portal. Earlier, such notices and orders were uploaded on the 'View Notices' tab. It was also brought to my notice that the GST authorities have redesigned the dashboard of the portal in January 2024 and clearly specified the type of notices and orders which may be viewed under the 'View Notices' tab and the 'View Additional Notices' tab. In the above circumstances, solely with a view to provide an opportunity to the assessee to contest the proceedings, the impugned orders call for interference, albeit by putting the petitioner on terms. The orders impugned herein are quashed subject to the condition that the petitioner remits sums equal to 7.5% of the disputed tax demand under each assessment order within a period of four weeks from the date of receipt of a copy of this order - Petition disposed off.
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2024 (2) TMI 714
Validity of assessment orders - impugned assessment orders were issued without considering the petitioner's replies and that such orders disclose non-application of mind - violation of principles of natural justice - HELD THAT:- The impugned assessment orders record the finding that the tax payer did not clarify whether the director is a whole time director, independent director or part time director. It is further recorded therein that the company did not clarify whether such director was paid salary. On examining the reply dated 15.06.2023 of the petitioner, it is found that the petitioner has stated categorically that remuneration was paid to Dinesh Victor, Managing Director of the company. In view of such reply, the conclusion that the petitioner did not clarify the category of directorship is unsustainable. Material documents such as the employment contract, if any, or the terms of employment, TDS deduction particulars and the like were, however, not submitted by the petitioner. Miscellaneous expenses - HELD THAT:- The petitioner, in its reply of 15.06.2023, relied upon notifications under which registered persons are exempt from paying GST under reverse charge mechanism up to a specified limit or for a specified period. The petitioner also explained that some of the purchases under each head were from registered dealers. In these circumstances, the imposition of tax, penalty and interest on the basis of the total expenditure incurred towards advertisement and business promotion, repairs and maintenance, and computer and software maintenance, by drawing on figures provided in the respective financial statement is a conclusion reached without proper application of mind. Exempted turnover - HELD THAT:- The petitioner relied upon Notification No.12/2017 and submitted that it provides training or coaching in relation to art and culture which are exempted supplies. In spite of the petitioner's replies to such effect, the Assessing Officer recorded the bizarre conclusion that the petitioner was engaged in the sale of painting and art works. These conclusions indicate non-application of mind to the material placed on record. Hence, the orders impugned herein warrant interference. These matters are remanded for reconsideration by the Assessing Officer - petition allowed by way of remand.
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2024 (2) TMI 713
Cancellation of registration of petitioner - time barred appeal - non-reasoned order - violation of principles of natural justice - HELD THAT:- In the present case, the facts are similar to one in Surendra Bahadur Singh's case [ 2023 (8) TMI 1262 - ALLAHABAD HIGH COURT] , wherein the appeal was barred by time under Section 107 of the Act. However, the Division Bench in Surendra Bahadur Singh's case took into consideration the original order and set aside the same being non-reasoned and allowed the petitioner therein to file reply to the show cause notice. The orders impugned herein are liable to be set aside. Accordingly, the order in original dated October 17, 2019 and the appellate order dated July 12, 2022 are quashed and set aside. The petitioner is directed to file its reply to the show cause notice within three weeks from date and the adjudicating authority is directed to proceed de novo and pass order after granting opportunity of hearing to the petitioner. The writ petition is allowed.
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2024 (2) TMI 712
Vires of Clause (c) of Sub-section (2) of Section 16 of the Odisha Goods and Services Tax Act, 2017/ Central Goods and Services Tax Act, 2017 - Input Tax Credit - HELD THAT:- Issue notice to the opposite parties. One extra copy of the writ petition be served on Mr. P.K. Parhi, learned DSGI and three extra copies of the brief be served on Mr. Sunil Mishra, learned Standing Counsel appearing for the Revenue by tomorrow (07.02.2024) enabling them to obtain instruction in the matter and file counter affidavit. As an interim measure, it is directed that the petitioner shall deposit 20% of the tax as determined vide assessment order dated 17.12.2023 passed under Section 73 of the OGST/CGST Act within a period of four weeks from today. In the event of such deposit, no coercive action shall be taken against the petitioner till disposal of the writ petition. List this matter along with W.P.(C) No.13302 of 2022 on the date fixed therein.
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2024 (2) TMI 711
Condonation of delay in filing the revocation application - HELD THAT:- The delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. A copy of this order will be produced by the Petitioner before the proper officer, and subject to the Petitioner complying with the above conditions, the proper officer will open the portal to enable the Petitioner to file the GST return - Petition disposed off.
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2024 (2) TMI 710
Non-payment of the Goods and Services Tax (GST) - Seeking issuance of writ of certiorari to set aside the pre-intimation notice as well as Summary of Show Cause Notice and the order passed under Section 73(9) of the Karnataka Goods and Services Tax Act - also seeking for issuance for writ of mandamus directing respondent No.2 to enter into a Supplementary Tender Agreement - HELD THAT:- The pre-intimation notice at Annexure- G , Summary of Show Cause Notice at Annexure- H and impugned order under Section 73(9) of the Act at Annexure- J as well as impugned order at Annexure- K are set aside and writ of mandamus is issued in terms of observations made in [ 2023 (6) TMI 93 - KARNATAKA HIGH COURT] as prayed for - respondent No. 2 is directed to enter into necessary Supplementary Tender Agreement as is permissible in terms of the observations made in W.P. No. 9721/2019. Needless to state that this order would be subject to any order in appeal against the order passed in W.P. No. 9721/2019. If that were to be so, the notice at Annexures- G and H would stand revived. Petition disposed off.
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2024 (2) TMI 709
Classification of services - services of disposal and treatment of Bio-Medical Waste obtained from clinical establishments - services would fall under Chapter Heading 999433 of the SAC or not - registered dealer is liable to pay GST on the above services or not - rate of GST - Applicability of GST, as mentioned in the clause (X) under point (A) of the S. No. 742 of Notification No. 03/2022-Central Tax (Rate) dated 13.07.2022 - HELD THAT:- The Services of disposal and Treatment of Bio Medical Waste obtained from clinical establishments was exempted vide Entry No. 75 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 - The said Entry No. 75 was omitted vide Notification No. 04/2022-CT (Rate) dated 13.07.2022 (effective from 18.07.2022). The service of disposal and treatment of Bio Medical Waste obtained from clinical establishment (9994) was made taxable vide Notification No. 03/2022-CT (Rate) dated 13.07.2022 (effective from 18.07.2022) by amending Notification No. 11/2017-CT (Rate) dated 28.06.2017. Thus, the services of disposal and treatment of Bio-Medical Waste obtained from clinical establishments (9994) is taxable from 18.07.2022 and the rate leviable thereon is 12%.
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2024 (2) TMI 708
Exemption from GST - upfront amount charged by the Applicant (as lease premium) for granting long-term lease of ninety years, in respect of allotment of plots to the industrial units or the developers, for the development of industrial infrastructure in the notified industrial town of NOIDA, such as for residential, commercial, retail, hospital, logistics etc. - Applicability of Entry No 41 of Notification No 12/2017-CT (Rate) dated 28.06.2017 (as amended by Notification No 32/2017-CT (Rate) dated 13.10.2017) and Entry No 41 of Notification No KA NI-2-843/XI-9(47)/17 (UPGST-Rate) dated 30.06.2017 - Whether the upfront amount charged by the Applicant (as lease premium) for granting long-term lease of ninety years is in the nature of transaction for sale of land and therefore outside the scope of levy of GST? HELD THAT:- The infrastructure for financial business may include commercial/ mixed use. Thus, the commercial/ mixed use plot is exempted from GST as long as it is for development of infrastructure for financial business and other conditions as stipulated in the Notification 12/2017-CT(Rate) are satisfied - The model lease deed submitted by the applicant state that development of infrastructure for financial business. Hence, the leasing of industrial plots or plots for development of infrastructure for financial business by NOIDA to the industrial units or the developers in this notified area for commercial/ mixed use is exempted from the tax. In cases other than that, the applicable rate of Goods and Services Tax in case of leasing services is 18%. In Jharkhand Advance Ruling in the case of M/s. Ranchi Smart City Corporation Limited [ 2022 (1) TMI 1300 - AUTHORITY FOR ADVANCE RULING, JHARKHAND ], the advanced ruling held the leasing of industrial plots or plots for development of infrastructure for financial business, a Government entity, to the industrial units or the developers in this Area Based Developed property for commercial/ mixed use is exempted from the tax. In cases other than that, the applicable rate of Goods Services Tax in case of leasing services is 18%. Whether the long-term lease is in the nature of sale of land, hence outside the scope of supply under the provisions of CGST Act? - HELD THAT:- Para 2(a) of the Schedule II to the CGST Act stipulates that, any lease, tenacy, easement, licence to occupy land is a supply of services . There is no differentiation between long term or short-term lease. Further long-term lease cannot be equated to sale land since in the case of long term lease, the ownership of the leasehold land vests with the lessor. A lease deed is executed between both the parties. The relationship between both parties is that of Lessor and Lessee and not seller and buyer. Further Entry at SI No 5C of Notification 13/2017-CT (Rate) as amended, Entry at Sr No 41 of Notification 12/2017-CT (Rate) contain specific reference to the long term lease of land. Hence long-term lease of land is not outside the scope of supply under the provisions of CGST Act. The upfront amount charged by the Applicant (as lease premium) for granting long-term lease of ninety years, in respect of allotment of plots to the industrial units or the developers in the notified industrial town of NOIDA for development of infrastructure for financial business is exempt from payment of GST in terms of Entry No 41 of Notification No 12/.2017-CT (Rate) dated 28.06.2017 (as amended by Notification No 32/2017-CT (Rate) dated 13.10.2017) and Entry No 41 of Notification No KA.NI-2-843/XI-9(47)/17 (UPGST-Rate) dated 30.06.2017 - Further, the upfront amount charged by the Applicant (as lease premium) for granting long-term lease of ninety years is in not in the nature of transaction for sale of land and therefore the same is not outside the scope of levy of GST.
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2024 (2) TMI 707
Taxability - activity relating to Sale of leasehold land and also to obtain permission for such sale - scope of service recipient - HELD THAT:- The activities of the taxpayer being a recipient, are not related to the supply being undertaken or proposed to be undertaken by him. Further, reference needs to be made to section 103 of CGST Act, 2017 which provides for applicability of the advance ruling. Clause (a) of sub-section (l) of the said section clearly provides that the advance ruling is binding only upon the applicant. After examining the AAR application dated 16.03.2023 (Received in office on 03.07.2023) of Applicant M/s. S.K. Food Equipment's Private Limited that it is receiver of the Goods/Services provided by the M/s. Fena Private Limited. Therefore, it falls under category of Service recipient. In light of point provided under Section 95 of CGST Act 2017, only supplier of the services/Goods can file Application for Advance Ruling. Accordingly, the application for consideration/ruling on merits is not admitted as applicant does not fall under the definition of supplier under Advance Ruling and cannot get the Advance Ruling under the Act.
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Income Tax
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2024 (2) TMI 706
Validity of Revision u/s 263 set aside by HC - as per CIT Large other expenses claimed in profit and loss account, Payments made to related parties u/s 40(A)(2)(b), Current liabilities, Payments made to the contractors and Payment made towards stamp duty - as decided by HC [ 2023 (3) TMI 673 - DELHI HIGH COURT] for the PCIT to exercise jurisdiction under Section 263 of the Act, twin conditions have to be fulfilled, that is, not only should the order be erroneous, but it should also be prejudicial to the interest of the revenue. Clearly, some expenses which were deleted, their reversal would cause prejudice to the revenue. However, in this case, to our minds, the first condition was not fulfilled, which is that the order was erroneous, as has been categorized by the PCIT. HELD THAT:- Having regard to the facts of the present case, we are not inclined to interfere in the matter. Special leave petition is hence, dismissed.
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2024 (2) TMI 705
Extension of stay on recovery - stay being in excess of 365 days - Constitutional validity of the third proviso to Section 254(2A) - automatic vacation of a stay as granted on the completion of 365 days HELD THAT:- As submitted at the Bar that ITA has been disposed of by the Income Tax Appellate Tribunal, [ 2023 (5) TMI 508 - ITAT MUMBAI] and, therefore, this petition has been rendered infructuous since the benefit of the impugned order was available to the respondent/assessee during the pendency of the proceedings before the ITAT. In the circumstances, the Special Leave Petition would not survive for consideration on merits and hence is disposed of accordingly. Even otherwise, it was also brought to our notice that the issue which arises in this petition has been covered by a judgment of this Court in the Case of Deputy Commissioner of Income Tax Anr. V/s. Pepsi Foods Limited (Now Pepsico India Holdings Private Limited) reported in ( 2021 (4) TMI 369 - SUPREME COURT )
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2024 (2) TMI 704
Validity of reopening of assessment - scope of old unamended law and new inserted section 148A - period of limitation for notices issued on or after 1st April, 2021, by the CBDT, relating to assessment years 2013-14 and 2014-15, under Section 148 (old) of the Income Tax Act, 1961 by converting/treating the same as under newly inserted Section 148A - scope of provisions of TOLA - extending the period of limitation for the purpose of issuance of notice under Section 148 by converting or treating the same as notice under Section 148A(b) of the Income Tax Act, 1961, relating to assessment years 2013-14 and 2014- 15 after 31st March, 2021 for the period 1st April, 2021 to 30th June, 2021 HELD THAT:- As per relevant provisions of law including unamended old Sections 147, 148, 149 and 151 of the Income Tax Act, 1961 as stood on March 31, 2021, prior to enactment of the Finance Act, 2021, and present substituted Sections 147, 148, 149, 151 and newly inserted Section 148A of the Income Tax Act, 1961 as enacted by Finance Act, 2021, without having any savings clause for the old provisions relating to reassessment proceedings, Section 3 of the Taxation and Other Laws (Relaxation and Amendment of certain Provisions) Act, 2020 (TOLA), Notification No. 20/2021 dated 31st March, 2021 and Notification No. 38/2021 dated 27th April, 2021 issued by the CBDT in exercise of alleged delegated power conferred under TOLA, for aiding the old provisions relating to reassessment proceedings which stood and remained in force till 31st March, 2021, various judgments relied upon by the parties referred hereinabove and on reading all together we are inclined to hold that all the impugned notices issued under newly inserted Section 148A(b) of the Income Tax Act, 1961 by Finance Act, 2021, relating to assessment years 2013-14 and 2014-15, which have been issued on or after 1st April, 2021 by extending the time of limitation by the CBDT for issuance of notice under Section 148 of the old Act in exercise of power under Section 3 of TOLA is unauthorised in law and all such impugned notices are barred by limitation and that all subsequent proceedings on the basis of the aforesaid impugned notices are not sustainable in law and accordingly the same are quashed. Revenue Respondent no. 3/Central Board of Direct Taxes ( CBDT ) has erroneously resorted to Instruction No. 1 dated 11.05.2022 by contending that the Apex Court decision in Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT ] read with TOLA permits the notices to travel back in time to their original date when such notices were to be issued i.e., on or before 31.03.2021 and that consequent notices issued from 01.04.2021 to 30.06.2021 are within time permitted it will be contrary to the intention of legislating Finance Act, 2021, coming into effect from 1st April, 2021 subsisting the old law relating to reassessment. The aforesaid interpretation canvassed in the CBDT Instruction is, in fact, is again in direct conflict with the judgments of various Hon ble High Courts, which have duly been affirmed by the Apex Court in Ashis Agarwal (supra). In view of the aforesaid declaration that the impugned notices issued on or after 1st April, 2021, by the CBDT, relating to assessment years 2013-14 and 2014-15, under Section 148 (old) of the Income Tax Act, 1961 by converting/treating the same as under newly inserted Section 148A of the Income Tax Act, 1961, by Finance Act, 2021 which came into effect from 1st April, 2021, in exercise of power under TOLA being barred by limitation, all subsequent proceedings on the basis of aforesaid impugned notices being not sustainable in law, are quashed and all legal consequences will follow automatically.
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2024 (2) TMI 703
Orders of assessment passed by HC not adhered / complied with - HC directing assessing authority as required to undertake the exercise of fact finding by determining the Fair Market Value of the Shares in question as required in the Explanation to Section 56 - Income from other sources - Determining the FMV of the shares in terms of Explanation to Section 56(2)(viib) - assessing authority imposed tax treating the said 'Share Premium' as Income from Other Sources - Tribunal held that the provisions of Section 56(2)(viib) cannot be invoked in the case of assessee company when cash or asset is transferred by a mother to her daughter - directions issued by this Court in [ 2019 (5) TMI 952 - MADRAS HIGH COURT] , viz., that the assessing authority would undertake the exercise of fact finding by determining the fair market value of the shares in terms of Explanation to Section 56(2)(viib) was not adhered / complied with. HELD THAT:- To a pointed question as to whether the impugned order has been made in compliance with the directions of this Court, no response was forthcoming. It is thus evident that the direction of this Court has not been complied. Any order contrary / disregarding the direction of this Court cannot be sustained as it renders the order bad for want of jurisdiction, in this regard it may be relevant to refer to the decision of the Hon'ble Supreme Court in the case of East India Commercial Co. Ltd. v. Collector of Customs,[ 1962 (5) TMI 23 - SUPREME COURT] to hold that the law declared by the highest court in the State is binding on authorities or tribunals under its superintendence, and that they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding. If that be so, the notice issued by the authority signifying the launching of proceedings contrary to the law laid down by the High Court would be invalid and the proceedings themselves would be without jurisdiction. In view of the same, the impugned order is set aside and the writ petition stands disposed of. It is open to the assessing officer to complete the assessment orders in compliance with the directions issued by this court.
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2024 (2) TMI 702
Addition u/s 68 - non providing the source and proof of old jewellery sold by the depositor - ITAT deleted addition - HELD THAT:- Other than the suspicion raised by the assessing officer as to the genuineness of the transaction, no credible/ tangible material was brought on record by the assessing authority as may have led to any satisfaction or finding that the transaction was not genuine. The assessee not only disclosed the name of the jeweller s to whom the jewellery was sold by the creditors of the assessee but it also established the mode of payment through banking channel. No doubt was raised by the assessing authority as to the genuineness on these critical aspects. Thus, no inquiry, whatsoever was made from the jeweller, from where it purchased jewellery,. Once the money was thus made available to the creditors of the assessee, they had the source available to make the deposit with the assessee. Existence of such deposit is also not in dispute. Thus the finding recorded by the Tribunal are findings of fact, based on the evidence and material on record. Decided against revenue.
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2024 (2) TMI 701
Disallowance being amortization of lease payment - HELD THAT:- As respectfully following the findings of the co-ordinate bench, in assessee s own case for A.Y. 2016-17 [ 2022 (11) TMI 1447 - ITAT DELHI] amortization portion of the lease taken from Noida authority is decided against the assessee and the challenge in respect of land at Vishakapatnam and Tuticorn is restored to the file of the Assessing Officer to be decided as per directions given in Assessment Year 2012-13.Appeals of the assessee are partly allowed for statistical purposes. Disallowance u/s 14A r.w.r. 8D - assessee submitted that admittedly for the assessment years under consideration the assessee has not earned any exempt income and therefore provisions of section 14A of the Act could not be attracted - HELD THAT:- There is no dispute that the assessee has not earned any exempt income during the assessment years in question. The Coordinate Bench in assessee s own case for A.Y. 2016-17 [ 2022 (11) TMI 1447 - ITAT DELHI] has adjudicated identical issue in favour of the assessee. Claims of deemed tax credit under DTAA between India and Oman - HELD THAT:- As decided in assessee s own case for A.Y. 2016-17 [ 2022 (11) TMI 1447 - ITAT DELHI] tax exemption on dividend is granted with the objective of promoting economic development within Oman by attracting investments.
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2024 (2) TMI 700
Unverified sundry creditors - only reason of the rejection of sundry creditors was that the sundry creditors have not made any response in relation to the issuance of notice or process of verification of the Revenue - HELD THAT:- The assessee is registered under the West Bengal VAT Act, 2003/CST Act, 1956. There is no such enquiry done by the Revenue or any negative comment was received from the indirect tax authority related to purchase of the goods. There is no such significant effort that inquiry was done from the end of the VAT Authority also. There is no discrepancy in the purchase of goods or payment. Only the opening balance was added to the total income of the assessee. In our considered view that the assessee is protected from the coherent evidence like that all payments, purchase bill, VAT Registration, Return of VAT Act, 2003, confirmation of parties and reply of parties in persuasion of notice u/s. 133(6) of the Act. DR has agitated the point of non-verification of parties. But verification of parties not only concentrated by non- compliance of notice u/s. 133(6) or inspection conducted by the Inspector of revenue. The purchase and sales of assessee during impugned assessment year are accepted by the ld. AO. DR is not able to bring any contrary order of earlier years where the sundry creditors or purchase are rejected by the ld. AO. Only for the cross verification u/s 133(6) is in dispute, cannot the good reason for rejection of sundry creditors - thus entire addition is unjustified considering the submission of the assessee, which were filed before both the lower authorities. Decided in favour of assessee.
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2024 (2) TMI 699
Penalty 271(1)(c) - additions on account of donation and charity, and on account of loss on sale of assets, which were debited to the profit and loss account, however, the same were not been added by the assessee in the computation of income - assessee filed a revised computation of income including the aforesaid amount towards donation and charity HELD THAT:- It is not a case wherein the assessee has disputed the discrepancies pointed out by the AO during the scrutiny proceedings. Further, we find that once the aforesaid discrepancies were pointed out the assessee accepted its mistake and filed the revised computation of income, and paid the tax difference. It is undisputed that the assessee has not further challenged the aforesaid additions made by the AO in the present case. Further, the fact that the donation given was stated in the Tax Audit Report and the deduction u/s 80G was also computed by the tax auditor, however even then the assessee failed to claim a deduction u/s 80G of the Act supports the claim of the assessee that the mistakes were sheer inadvertent human error. We find that the plea of the assessee is supported by the decision of Price Waterhouse Coopers (P.) Ltd. 2012 (9) TMI 775 - SUPREME COURT] . Therefore, assessee made bona fide mistakes in the computation of its total income while filing its original return of income, which were corrected by the assessee by filing the revised computation during the assessment proceedings. Thus it is is not a fit case for the levy of penalty u/s 271(1) (c) - Decided in favour of assessee.
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2024 (2) TMI 698
Revocation of Approval granted u/s 10(23C)(iv) - charitable activity u/s 2(15) questioned - as stated by CIT(E) assessee could not give any proper explanation and failed to counter the findings of the Special Audit Team that the assessee is operating as a commercial pharmaceutical company by making its own products and maximising its projects. The activities of the assessee were not charitable and purely commercial in nature. HELD THAT:- The Tribunal vide its order [ 2023 (1) TMI 755 - ITAT DELHI] held that the said order passed by the Ld. CIT(E) withdrawing the approval granted under section 10(23C)(iv) of the Act is unsustainable as compliance conditions have to be examined in each assessment year and, in case, there is any violation in compliance conditions in any assessment year, assessee's claim of exemption for the said assessment year can be rejected. However, that cannot be a reason to revoke the approval granted under section 10(23C)(iv) of the Act. One more factor which needs consideration is, till date, assessee's registration under section 12A of the Act as a charitable institution subsists. In fact, approval granted under section 80G of the Act is still continuing. These facts reflect the dichotomy in the stand of the revenue. For the purpose of section 12A and 800 of the Act the assessee is recognized as charitable institution, whereas, for the purpose of section 10(23C)(iv) assessee loses its charitable status. This approach of the revenue is unacceptable. The approval under section 10(23C) of the Act cannot be revoked, more so, when the objects of the assessee have remained same. We, for a moment, do not say that the competent authority under no circumstances can revoke the approval granted under section 10(23C)(iv) of the Act. However, for doing so, the revenue must bring on record cogent material to demonstrate that the assessee has deviated from the core objects based on which approval under section 10(23C)(iv) was initially granted to the assessee. It is also a fact on record that the activities of the assessee are in the category of medical relief to the poor. Thus, if we interpret the provisions of section 2(15) of the Act strictly, the proviso would not apply. That being the case, by referring to the proviso to section 2(15) of the Act, it cannot be said that the assessee is engaged in any activity of business or commercial nature, hence, not existing for charitable purpose. Thus hold that the impugned order passed by learned CIT (Exemption) withdrawing the approval granted under section 10(23C)(iv) of the Act is unsustainable. Decided in favour of assessee.
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2024 (2) TMI 697
Assessment of capital gains/loss - assessee has declared the fair market value as on 01.04.1981 which is higher than the estimate made by the DVO - value adopted by the DVO can be taken for computing fair market value or not? - HELD THAT:- It is clear that where value of capital assets shown by the assessee being less than its fair market value, reference can only be made to DVO in that condition, but in case the value of capital asset shown is more than fair market value, reference cannot be made as held by Hon ble Bombay High Court in the case of Daulal Mohta (HUF), [ 2008 (9) TMI 890 - BOMBAY HIGH COURT] In the present case, the assessee has declared value as on 01.04.1981 at Rs. 21,58,689/- and hence, the value determined by the DVO is less than that at Rs. 27,000/- and hence, the value adopted by the DVO cannot be taken for computing fair market value. Hence, we allow this issue of assessee s appeal and reverse the orders of lower authorities on this issue.
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2024 (2) TMI 696
Deduction u/s 80IA in respect of profits of captive power plants ('CPPs') - acceptance of the rate per unit for selling electricity in CPP - assessee had entered into specific domestic transaction during the relevant financial year. And the case was transferred to TPO for determination of the Arms Length Price (ALP) as per provision of Section 92CA of the Act wherein observed and compared that eligible unit of the assessee with same companies amount to Rs. 3.23 per unit has been adopted as ALP and in the way the transfer price of power for eligible unit was reduced HELD THAT:- As per Hon ble Apex Court in the case of CIT vs. Jindal Steel Power Ltd [ 2023 (12) TMI 417 - SUPREME COURT] electricity unit would be charged as per the rate prevail by the WBSEB in case of selling to the consumer without any further conditions. The assessee has taken the calculation in CUP method the Ld. CIT(A) has taken the issue in external CUP method and accordingly deleted the addition. TPO has considered the comparable who are not generating thermal power which the assessee dealt in. Here, the supply power in between eligible unit to non-eligible unit. The assessee had adopted the power tariff which is said to be ALP and the WBSEB was maintain this rate by selling the consumer. The rate was adopted by the ld. TPO in CUP method cannot be accepted as the WBSEB is not tested party. The assessee has only transactions with AE, not any other party. The fair market value is clearly covered in order of Jindal Steel and power Ltd. [ 2023 (12) TMI 417 - SUPREME COURT] and Birla Corporation Ltd. [ 2023 (2) TMI 341 - ITAT KOLKATA] . We respectfully relied on both the orders. We are not interfering in the appeal order in this issue. The assessment order is unjustified in this issue. Accordingly, the grounds of the revenue for ground nos. 1 and 3 are dismissed. Addition u/s 14A r.w.r.8D - HELD THAT:- We find that both Ld. AO and the Ld. CIT(A) had added back under Rule 8D(2)(iii) of the Rules 0.5% on average investment of Rs. 296.17 Lakh which works out amount to Rs. 1,48,085/-. But all the investments are not dividend yielding as a result only amount to Rs. 25,000/- was earned dividend by the assessee during the impugned assessment year. We relied on the argument of Appellant and accordingly the addition should be restricted to Rs. 3,131/-.
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2024 (2) TMI 695
Unexplained cash credit/bank transaction in case of firm - partnership firm has been dissolved and the business of the firm was taken over a sole proprietorship concern - In the absence of dissolution deed and such bank account is not reflected in the balance-sheet having its old PAN , AO treated the transaction in the bank account as unexplained cash credit - Assessee submitted that the partnership firm stand closed on 01.04.2008 and the ex-partner of assessee-firm filed his affidavit and contended that original dissolution deed in not traceable as more than 10 years have passed - CIT(A) confirmed the action taking view that source of deposits in the bank account is unexplained as the assessee ailed to discharge his onus to explain the nature and source - as submitted mistake was committed by bank authority, the account is account of proprietary of M/s Vasant Traders and PAN of partnership firm was inadvertently mentioned in the account. HELD THAT:- We find that before AO as well as ld. CIT(A), the assessee categorically contended that in bank account of proprietorship, the PAN of erstwhile partnership firm was inadvertently migrated at the time of data migration. The assessee in the statement of fact also categorically contended that such PAN of firm was wrongly mentioned by its banker. We find that banker of assessee has given certified that while migrating the data of PAN was inadvertently mentioned as AAEFV7806M instead of PAN of proprietary concern of Mr. Dilipbhai Vasantlal Sheth. We find that such evidence was furnished by assessee before Ld.CIT(A). No verification of fact was conducted by Ld.CIT(A) either of their own or through Assessing Officer. On perusal of books of account of proprietary concern of Dilipbhai Vasantlal Sheth, we find that such bank account was duly disclosed in the audit report and all the transactions are considered by while filing return of income in the proprietary concern. AO was not justified in making addition without verification of all facts. This ground of assessee s appeal is allowed.
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2024 (2) TMI 694
Revision u/s 263 - period of limitation - HELD THAT:- Assessment Order in this case has been passed on 13.12.2017 and the order u/s. 263 by the ld. PCIT has been passed on 18.03.2021 Hence, keeping in view the provisions of Sub-Section 2 of Section 263, wherein held that no order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. Thus we hold that the order passed by the ld. PCIT is barred by limitation. Appeal of the assessee is allowed.
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2024 (2) TMI 693
TDS u/s 195 - disallowance u/s. 40(a)(i) - chargeability of amount to tax in India - rendering of technical services under India-Singapore tax treaty - whether being reimbursement of cost without any mark-up? - Payment of fixed sum on monthly basis - HELD THAT:- We find nowhere in the agreement in the definitions, no specific clause that the payments made by the assessee to BYK Singapore are in the nature of reimbursement. The said agreement, as discussed above entered between BYK Germany and BYK Singapore. Therefore, the said agreement does not come to the rescue of the assessee in supporting the claim of payment made to Singapore as reimbursement. The customer is responsible for paying the expenses actually incurred by BYK in connection with the delivery of the IT services relating to acquisition of third party software and hardware in connection with the IT services delivered to customer. Admittedly, the assessee is not the customer of BYK Germany and we find that the assessee s head office i.e. BYK Singapore is the customer to BYK Germany. Therefore, we find no force in the argument of ld. AR that the assessee is responsible for paying expenses actually incurred by the BYK in connection with the delivery of IT services. Having failed to bring on record the necessary evidences in support of assessee s contention inspite of reasonable opportunity, we hold that the assessee failed to place cogent evidences for our adjudication. Therefore, we treat the same as there were no evidences - significant accounting policies under revenue recognition is clearly mentioned revenue from services rendered is recognized on the basis of an agreed mark-up on net costs incurred, and in accordance with arrangements entered into with the parent company. Indian BO was allowed mark-up on such expenses of Rs. 1.22 crore, which was duly offered for taxation . Thus, in view of the above, the contention of assessee and the arguments of ld. AR are rejected. A cursory look at the provision transpires that deduction of tax at source is warranted, inter alia, on any other sum chargeable under the provisions of this Act. Thus, the chargeability of amount to tax in India in the hands of recipient is sine-quanon so as to trigger deduction of tax at source u/s. 195 of the Act. Chargeability under the provisions of the Act pre-supposes some profit element involved in the receipt. If the recipient simply recovers the amount spent by it without any profit element, such a receipt, being reimbursement, cannot be characterized as any `sum chargeable under the provisions of this Act and hence would be immune from tax deduction at source. Two fundamental conditions must co-exist in order to fall within the domain of reimbursement. The first is that one-to-one direct correlation between the outgo of the payment and inflow of the receipt must be established; and the second is that the receipt and payment must be of identical amount. The first condition gets satisfied when there is a directly identifiable amount which is spent on behalf of another and later on it is recovered as such from the latter. It means that incurring of the expenditure, at the stage of incurring itself, is known to be for the benefit of the other and not the payer. The second condition gets satisfied when the receipt back of the amount originally spent is not laced with any mark-up inasmuch as exact amount incurred is recovered. Per contra, receipt of a fixed amount, which may be more or less than the actual outgo, cannot be designated as `reimbursement - Appeal of assessee is dismissed.
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2024 (2) TMI 692
Taxability of income in India - income from the sale of Software licenses subscription - India - Japan DTAA - CIT(A) held that the consideration received by the assessee from Indian end customers for sale of software products does not constitute royalty income and is not taxable under Article 12 of the India - Japan DTAA and is not business profits under Article 7 of the India Japan DTAA - HELD THAT:- DR was unable to point any distinction of fact or any proposition of law, to show that ld. CIT(A) has fallen in error in making the deletion. After the judgement of Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT] wherein held the receipts as non-taxable in for AY 2018-19 and 2019-20, as concluded that the impugned receipts were not in the nature of royalty within the meaning of Article 12 of India-Japan DTAA the issue with regard to taxability of the income from the sale of Software licenses subscription, stands settled and same is followed by ld. CIT(A), so there is no infirmity in the impugned orders, requiring interference. Decided against revenue.
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2024 (2) TMI 691
Disallowance u/s 14A r.w.r. 8D - assessee on its own has made the disallowance u/s 14A - sufficiency of own funds - HELD THAT:- It is clear that the assessee has more interest free funds available with it in the form of share capital and reserves and surplus then the amount of investment made which yielded tax free income during the year. Therefore, the presumption would be available in favour of the assessee that amount of investment made in such exempt income yielding investments are made of interest free funds available. Therefore, there could not have been any disallowance under rule 8D (2) (ii)of the income tax rules 1962 under section 14 A of the Act. Such a finding was given in the case of the assessee for assessment year 2014 15 by the coordinate bench [ 2023 (10) TMI 1361 - ITAT MUMBAI] . The same is also covered by the decision of South Indian bank Ltd [ 2021 (9) TMI 566 - SUPREME COURT] . Accordingly, we hold that such disallowance made by the learned assessing officer is not correct. The learned assessing officer is directed to delete the same. While working out disallowance u/s 14A of administrative expenses u/r 8D (2) (iii) made AO could have been made only after taking only those investments which have yielded exempt income during the year - This is also supported by the decision of Cargo motors private limited [ 2022 (10) TMI 571 - DELHI HIGH COURT] wherein it has been held that for the purpose of making disallowance of expenses under section 14A as per rule 8D only those investments were to be considered for computing average value of investments which yielded exempt income during the year. Therefore, both the grounds in the appeal of the assessee are allowed. Disallowance u/s 14A of the act cannot be applied more than exempt income earned during the year for the impugned assessment year. MAT computation u/s 115JB - Disallowance made by AO u/s 14 A by invoking the provisions of rule 8D of the act could also be imputed under the computation of book profit under section 115JB has already been decided in case of Vireet Investments P Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] . Same is now also covered in favour of the assessee by the decision of Gujarat Fluorochemicals Ltd [ [ 2023 (12) TMI 713 - GUJARAT HIGH COURT] - accordingly we do not find any merit in the appeal of the learned assessing officer.
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2024 (2) TMI 690
Validity of approval granted by the JCIT u/s.153D - Validity of assessment order passed in contrary to the provisions of section 153D - certain information belonging to the assessee were retrieved from the HD s / Pendrives/ DVD s particularly from the hard disc of the computer of an employee of the concerns - HELD THAT:- As seen from the approval letter 18 cases were approved u/s. 153D of the Act and what is glaring is the stamp put wherein it has been stated Draft assessment order received late on 30.12.2016 beyond the time and thus having very little time for proper examination of the facts of the case records etc . This approval clearly shows the haste and the mechanical manner there being no application of mind on the part of the approving authority. On identical set of facts on the very same approval exhibited elsewhere this Tribunal in one of the group cases of M.G. Metalloy Private Limited [ 2023 (10) TMI 686 - ITAT DELHI] held the assessment order illegal in pursuance of hollow and cosmetic approved u/s. 153D. Assessee appeal allowed.
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2024 (2) TMI 689
Profit estimation - addition @ 12.5% of the turnover of the assessee by rejecting the books of accounts due to nonproduction of vouchers of expense - HELD THAT:- CIT(A) has only taken cue from the provisions of Section 44AD but not applied said section. CIT(A) estimated based on the entirety of the business. Having gone through the record, in the absence of any other details, we hold that the interest of justice would be well served by directing the revenue authorities to estimate profit @ 5%. The appeal of the assessee on this ground is partly allowed. Disallowance u/s 43B - PF ESI payable - as submitted that the amount payable to PF ESI does not belong to relevant year rather it belongs to earlier years - HELD THAT:- As we hold that the revenue authorities erred in making addition on account of PF ESI because assessee did not claim this as a deduction in the year under consideration. Non-payment of TDS u/s 43B - As we hold that there is a separate section 40(ia) of Act which provides that if an assessee fail to deduct any tax at source or after deduction fails to deposit the said TDS to the Govt, account before due date of filing of return of income u/s 139(1) of the Act then the AO may made addition equivalent to 30% of the amount on which such tax deducted. Section 43B mainly covers expenses that are allowed to be claimed as deduction only in case of actual payment. TDS is not an expense but a tax which is deducted on the behalf of the deductee and deposited to the government's treasury. In the Instant case the Assessing Officer made addition u/s 43B of the Act which do not support the action of the Assessing Officer. Hence, the same is directed to be deleted.
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2024 (2) TMI 688
Taxability as capital gain or not - surrender / transfer of tenancy rights - Applicability of section 50C for valuation - AO was of the opinion that the assessee had surrendered his rights in the properties and offered stamp duty value as sale consideration for both floors and calculated the Long Term Capital Gain - according to CIT(A) action of the AO confirmed by holding that money paid to the tax-payers for regularizing the tenancy agreement is to be treated as income in the hands of the tax-payers in the nature of the tenancy rights and as the cost of acquisition is nil, the excess amount need to be taxed as capital gain. HELD THAT:- We find that there is no material on record to find that the registered agreement between parties be treated as sale/transfer of properties in question. Assessee is one of four (4) co-owners of two flats and from the averments of the registered tenancy agreement, the DR could not show that title of the property has been passed on to the tenant. From the terms of the agreement between the assessee who was one of the four (4) owners of the facts in question, we find it is a tenancy agreement and the terms of the agreement shows that provisions of MRC Act, 1999 are incorporated and therefore applies to the agreement between parties. Moreover, there was no evidence of any consideration being passed between the assessee and Shri Chunnilal and Shri Tejaram. The agreement between parties was for giving the flats in question on rent. Thus, the Ld. CIT(A) erred to upholding the action of the as AO erroneously treated the transaction of tenancy/rental agreement to be that of transfer of property without any material to hold otherwise. Therefore, we are inclined to delete the addition made by AO, that also by applying section 50C of the Act, which deeming provision in no case is applicable to the facts of the case. Appeal of assessee allowed.
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2024 (2) TMI 687
Benefit of exemption u/s 11/12 - Effective date of grant of registration u/s 12A - Initially application was rejected by CIT(E), but the same was approval on the direction of ITAT w.e.f. 1.4.2017 - Assessee claimed the exemption u/s 11/12 for preceding AY 2016-17 and 2017-18 also - HELD THAT:- As the Co-ordinate Bench of ITAT Indore M/S. BARKATULLAH VISHWAVIDYALAYA VERSUS DCIT (E) BHOPAL [ 2022 (6) TMI 1459 - ITAT INDORE] following the decision of Shri Bhanushali Mitra Mandal Trust Vs. ITO [ 2016 (4) TMI 578 - ITAT AHMEDABAD] has accepted in principle that going by the purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate- authority should be deemed to be 'assessment proceedings pending before the assessing officer' within the meaning of that term as envisaged under the proviso to section 12A(2). Therefore, the condition (ii) is also satisfied. Now what remains is the last condition (iii) according to which the object and activities of the assessee should remain same for preceding assessment year i.e. AY 2016-17 and 2017-18 in these cases. AR submitted that the assessee is a Govt. owned society and its object and activities remained same year after year. We prima facie find merit in the submission of Ld. AR but still the AO should get an opportunity to verify this condition (iii). Moreover, the claim of exemption u/s 11/12 involves a different type of working based on application and accumulation of income which the AO has not verified till now because he did not grant exemption for want of registration u/s 12A. For these reasons, we feel it most appropriate to remand these matters back to the file of AO for carrying out verification of fulfillment of condition (iii) discussed above and if that is held to be satisfied, to verify and allow exemption u/s 11/12. Appeals of assessee are allowed for statistical purpose.
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Customs
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2024 (2) TMI 686
Seeking release of seized gold - no show cause notice for seizure of the said gold chain - petitioners seek release of the gold chains that have been seized from the petitioners under the garb of a detention receipt - HELD THAT:- Reference may be had to the judgment of a co-ordinate bench of this Court in MOHD SALMAN KHAN VERSUS UNION OF INDIA AND OTHERS [ 2016 (4) TMI 97 - DELHI HIGH COURT ], wherein a co-ordinate bench has held that there is no provision in the Customs Act 1962 which permits detention of goods in lieu of seizure. Said bench has noticed that since no show cause notice was issued under section 124 (a) of the Act within six months of the detention/ seizure, the goods were liable to be returned to the person from whose possession they have been seized in terms of section 110 (2) of the Act. Section 110 (1) of the Act provides that where the proper office has reason to believe that any goods are liable to confiscation, he may seize such goods. Section 110 (2) mandates that where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure, the goods shall be returned to the person from whose possession they were seized. Proviso to Section 110 (2) grants power to the Principal Commissioner of Customs or Commissioner of Customs for reasons to be recorded in writing to extend the said period by a further period of six months. As held in Mohd. Salman Khan there is no provision under the Act which permits detention of goods instead of seizure. The Custom Department cannot take shelter under the device of detention in order to avoid the consequences of seizure. In terms of Section 110 (2) of the Act if the Show Cause Notice under Section 124 of the Act is not issued within the statutory period the goods have to be released. By resorting to detention instead of seizure the custom authorities cannot circumvent the mandate of Section 110 (2) of the Act - In the instant case, the Gold Chains were taken possession by the Custom Authorities by issuing a detention receipt which infact amounted to seizure of the said Gold Chains. There is no dispute that the Gold Chains are lying in the custody of the Customs Authorities since their seizure dated 20.12.2022, i.e., over a period of one year. The respondents/Customs Authorities are directed to forthwith release the gold chains seized from the petitioners in terms of section 110 (2) of the Act - Petition allowed.
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2024 (2) TMI 685
Imposition of condition of furnishing 100% bank guarantee (on provisional release) - FSSAI has approved the goods for domestic consumption (which was a situation also in respect of the earlier seven consignments) - whether now new condition of a 100% bank guarantee cannot be foisted on the petitioner, if there is no difference whatsoever in the goods which are subject matter of the bills of entries? - HELD THAT:- The petitioner is a proprietorship and a small importer, the pattern of imports have also been quite consistent. The goods in question are certainly edible goods which are perishable. The petitioner ought not to have been meted out such discriminatory treatment of denying clearance. Also it is imperative that harsh and unreasonable conditions cannot be imposed and more so when there is not an iota of material on the part of the department, as placed before the Court indicating as to why a different yardstick would be required to be applied to the present consignments when earlier seven consignments were released at 16% to 28% bank guarantee. Respondents are directed to grant provisional release of the goods to the petitioners, subject matter of bills of entry No. 8219403 and 8362251, by accepting the bank guarantee from the petitioner of Rs. 3,49,000/- in respect of the first bill of entry and bank guarantee of Rs. 2,00,000/- in respect of the second bill of entry. Necessary action in that regard be taken within 10 days from today - In addition to the said bank guarantees, the petitioner shall furnish a bond as per the conditions as incorporated in the letter of Assistant Commissioner, of Custom dated 15 November 2023 for the full of the goods which is of Rs. 37,34416/-. Return of the bank guarantee - HELD THAT:- The petitioner is at liberty to make a representation to the respondents for return of the bank guarantee which be made within a period of two weeks from today. If such a representation is made the same shall be considered by the designated officer on its merits and in accordance with law and communicate its decision within a period of four week from the submission on such representation. Petition disposed off.
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2024 (2) TMI 684
Seizure of Gold - Ownership of gold - it is claimed that the said confiscation 32.380 kgs of gold included the said gold of the Petitioner - HELD THAT:- The request made by the learned Counsel for the Petitioner is reasonable and, therefore, Respondent Nos. 1 2 would have to be directed to decide the representations made by the Petitioner within a period of six months from the date of intimation of this Order, without being influenced by the Order-in-Original dated 13th January, 2023. As requested by the learned Counsel for the Petitioner, till a decision is taken in respect of the representations of the Petitioner, status-quo should be maintained in respect of the said gold. Further, in the event of the Petitioner succeeding in proving its case, the Respondents will have to be directed to restore to the Petitioner the said gold or equivalent amount of gold or to compensate the Petitioner by making payment of an amount equivalent to the market value of the said gold as on date. Respondent No. 1 is directed to consider the representations made by the Petitioner by letters dated 21st June, 2019 and 11th April, 2023 and take a decision in respect of the same within a period of six months from the date of intimation of this Order, after giving a personal hearing to the Petitioner, and without being influenced by the Order-in-Original dated 13th January, 2023 - Petition disposed off.
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2024 (2) TMI 683
Valuation of imported goods - Sludge/Sediments found in the vessel imported for breaking - value should be USD 120 per MT or USD 420 per MT? - lubricating oil or not - case of appellant is department could not establish that the sludge/sediments found in the vessel imported for breaking is a lubricating oil - HELD THAT:- For valuation of the item in dispute referred as sludge/sediment, one cannot compare the value of sludge/sediment being declared by other importers at the material time. It is found that during first round of litigation, department had produced two bills of entry - No. SBY-III/24/98-99 dated 29.05.1998 filed by M/s. G. N. Ship Breakers, Bhavnagar and No SBY-III/22/98-99 dated 28.05.1998 filed by M/s Kothi Ship Breaking Industries, Bhavnagar, wherein the respective importers had shown Sludge Oil and valued the same @ USD 120 PMT. However, as discussed above, this price cannot be taken to be value of the goods in question - the two importers viz. M/s. G. N. Ship Breakers as well as M/s. Kothi Ship Breaking Industries have declared the value of Lubricating Oil at USD 420 PMT in their respective bills of entry and therefore, the SCN has taken that value for calculating the demand amount on the oil (so called sediment/sludge). However, the noticee has contended that since it contains impurities, the same cannot be valued at the price of Lubricating Oil. No material evidence was adduced by the department to come to conclusion beyond doubt that the goods found in the vessel was lubricating oil and not the sludge/sediments. Therefore, without any evidence, applying the value of USD 420 MT which is of lubricating oil is on assumption and presumption basis. In the finding itself, it was admitted that the value of the sludge oil is USD 120 per MT. It is also fact that the department could not establish conclusively that the goods claimed by the appellant as sludge/sediments is lubricating oil. Therefore, applying the price of the lubricating oil i.e. USD 420 per MT, is without any basis. Hence, the same cannot be sustained - adjudicating authority must reconsider the entire case and bring any evidence, if available, to establish that the goods found in the vessel is Lubricating Oil and not sludge/sediment and thereafter matter may be decided a fresh - Appeal allowed by way of remand.
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2024 (2) TMI 682
Valuation of imported goods - electronic goods including branded and non - branded flash memory cards - rejection of value declared by the appellant - redetermination/enhancement of value of goods as per NIDB data under Rules of Customs Valuation Rules, 2007 - Confiscation - penalty - HELD THAT:- It is observed that the Custom Valuation Rules outline a detailed chronological methodology that should be adopted in order to reject and re determine assessable value. Section 14 of the Customs Act 1962 read with Custom Valuation Rules makes it abundantly clear that transaction value in the ordinary course of commerce is to be taken as assessable value. In the event where transaction value is rejected thereafter Custom Valuation Rules need to be satisfied for enhancement of the value. In the instant case no basis of such re-assessment can be made out as the department has failed to warrant reasons for rejection of transaction value in the first place. It is observed that rejection of value declared on a Bill of Entry is a serious action that should be supported by compelling provision, evidence and justifiable reasons. Rule 5 is to be read subject to Rule 3 which should be read with Rule 12 of the Customs Valuation Rules, 2007 which brings us down to the very essence of the Valuation Rules that in order to re-determine assessed value, transaction value should be rejected based on cogent reasons and evidence. The transaction value of the appellant has been rejected merely on the ground that similar goods have been imported at higher value at various other custom stations without providing any evidence in support of their claim and failing to examine the applicability of Rule 12 of Customs Valuation Rules in the present case. It is found that neither the Adjudicating authority nor the Commissioner (Appeals) have established such circumstances as prescribed by law for rejection of transaction value and rejected it merely on the ground that goods have been imported at a higher value without properly examining the applicability of Rule 5 read with Rule 12 of Customs Valuation Rules, 2007. In the present case no effort was made by the adjudicating authority to ascertain quality, quantity and characteristics of the goods of the contemporaneous import, the authorities have failed to carry out any test to ascertain that the goods of contemporaneous import are similar under what circumstances. Only reports of NIDB have been relied upon. No assessment with regards to comparable quantity and quality of the goods have been established by the Department when re-assessing the value of the said goods. Based on the facts we note that the data relied upon by the department does not wholly correspond to the time at which the investigation was conducted and different parameters ought to have been considered while adjudicating upon such serious allegations. Penalties - HELD THAT:- The department in its show cause notice issued to the appellant has not raised any discrepancy towards the declared quantity of goods in order to attract confiscation under Section 111(m) of the Act. Neither from the records is it evident that any misdeclaration of value in respect of any entry has been made under the Customs Act nor was the Commissioner (Appeals) able to adduce any evidence regarding their claims - Reliance on the tribunal judgements in the case of WEST COAST PAPERS MILLS LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [ 2000 (10) TMI 478 - CEGAT, CHENNAI] has been correctly placed as the Hon ble Tribunal has observed that penalty is not sustainable when bonafide of the importer are not in doubt and there is no intent to mis declare the goods - In this view confiscation of the goods does not sustain and is set aside. The impugned orders are set aside - appeal allowed.
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Insolvency & Bankruptcy
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2024 (2) TMI 681
Approval of the Resolution Plan - Financial Creditor or Operational Creditor - Status of Greater Noida - commercial wisdom of the COC is not justiciable - despite lapse of seven months between the date of filing its claim in January, 2020 and the date of approval of the plan in August 2020, the appellant took no steps against the RP for not taking a decision on its claim - Recall Application is maintainable or not - barred by time limitation or not - resolution plan put forth by the resolution applicant met the requirements of sub-section (2) of Section 30 of the IBC read with Regulations 37 and 38 of the CIRP Regulations, 2016 or not. Whether in exercise of powers under sub-section (5) of Section 60, the Adjudicating Authority (i.e., NCLT) can recall an order of approval passed under sub-section (1) of Section 31 of the IBC? - HELD THAT:- A Tribunal or a Court is invested with such ancillary or incidental powers as may be necessary to discharge its functions effectively for the purpose of doing justice between the parties and, in absence of a statutory prohibition, in an appropriate case, it can recall its order in exercise of such ancillary or incidental powers. In a recent decision in UNION BANK OF INDIA (ERSTWHILE CORPORATION BANK) VERSUS DINKAR T. VENKATASUBRAMANIAN ORS. [ 2023 (7) TMI 209 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] , a fivemember Full Bench of NCLAT held that though the power to review is not conferred upon the Tribunal but power to recall its judgment is inherent in the Tribunal and is preserved by Rule 11 of the NCLT Rules, 2016. It was held that power of recall of a judgment can be exercised when any procedural error is committed in delivering the earlier judgment; for example, necessary party has not been served or necessary party was not before the Tribunal when judgment was delivered adverse to a party. It was observed that there may be other grounds for recall of a judgment one of them being where fraud is played on the Court in obtaining a judgment. In the case on hand, the recall application was filed by claiming that,- (a) the appellant was not informed of the meetings of the COC; (b) the proceedings up to the stage of approval of the resolution plan by the Adjudicating Authority were ex parte; (c) the RP misrepresented that the appellant had submitted no claim when, otherwise, a claim was submitted of an amount higher than what was shown outstanding towards the appellant; and (d) there was gross mistake on part of the Adjudicating Authority in approving the plan which did not fulfil the conditions laid down in sub-section (2) of Section 30 of the IBC. The grounds taken qualify as valid grounds on which a recall of the order of approval dated 04.08.2020 could be sought - the recall application was maintainable notwithstanding that an appeal lay before the NCLAT against the order of approval passed by the Adjudicating Authority. Whether the application for recall of the order was barred by time? - HELD THAT:- As regards the plea that the recall application was barred by time, suffice it to say that I.A. No.344/ 2021 was filed on 6.10.2020 upon getting information on 24.09.2020 from the monitoring agency regarding approval of the plan. Likewise, I.A. No.1380/ 2021 was filed on 15.03.2021 immediately when suspension of the period of limitation for any suit, appeal, application or proceeding, between 15.03.2020 and 14.03.2021, was lifted in terms of this Court s order in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER] - there are no substance in the plea that the applications were barred by limitation. Whether the resolution plan put forth by the resolution applicant did not meet the requirements of sub-section (2) of Section 30 of the IBC read with Regulations 37 and 38 of the CIRP Regulations, 2016? - HELD THAT:- The resolution plan did not meet the requirements of Section 30(2) of the IBC read with Regulations 37 and 38 of the CIRP Regulations, 2016. The resolution plan fails not only in acknowledging the claim made but also in mentioning the correct figure of the amount due and payable. According to the resolution plan, the amount outstanding was Rs. 13,47,40,819/- whereas, according to the appellant, the amount due and for which claim was made was Rs. 43,40,31,951/- This omission or error, as the case may be, materially affected the resolution plan as it was a vital information on which there ought to have been application of mind. Withholding the information adversely affected the interest of the appellant because, firstly, it affected its right of being served notice of the meeting of the COC, available under Section 24 (3) (c) of the IBC to an operational creditor with aggregate dues of not less than ten percent of the debt and, secondly, in the proposed plan, outlay for the appellant got reduced, being a percentage of the dues payable. In our view, for the reasons above, the resolution plan stood vitiated. However, neither NCLT nor NCLAT addressed itself on the aforesaid aspects which render their orders vulnerable and amenable to judicial review. The resolution plan did not specifically place the appellant in the category of a secured creditor even though, by virtue of Section 13-A of the 1976 Act, in respect of the amount payable to it, a charge was created on the assets of the CD. As per Regulation 37 of the CIRP Regulations 2016, a resolution plan must provide for the measures, as may be necessary, for insolvency resolution of the CD for maximization of value of its assets, including, but not limited to, satisfaction or modification of any security interest. Further, as per Explanation 1, distribution under clause (b) of sub-section (2) of Section 30 must be fair and equitable to each class of creditors. Nonplacement of the appellant in the class of secured creditors did affect its interest. However, neither NCLT nor NCLAT noticed this anomaly in the plan, which vitiates their order. Under Regulation 38 (3) of the CIRP Regulations, 2016, a resolution plan must, inter alia, demonstrate that (a) it is feasible and viable; and (b) it has provisions for approvals required and the time-line for the same. In the instant case, the plan conceived utilisation of land owned by the appellant. Ordinarily, feasibility and viability of a plan are economic decisions best left to the commercial wisdom of the COC. However, where the plan envisages use of land not owned by the CD but by a third party, such as the appellant, which is a statutory body, bound by its own rules and regulations having statutory flavour, there has to be a closer examination of the plan s feasibility - whether the resolution plan envisages necessary approvals of the statutory authority is an important aspect on which feasibility of the plan depends. Unfortunately, the order of approval does not envisage such approvals. But neither NCLT nor NCLAT dealt with those aspects. As to what relief, if any, the appellant is entitled to? - HELD THAT:- Neither NCLT nor NCLAT while deciding the application /appeal of the appellant took note of the fact that,- (a) the appellant had not been served notice of the meeting of the COC; (b) the entire proceedings up to the stage of approval of the resolution plan were ex parte to the appellant; (c) the appellant had submitted its claim, and was a secured creditor by operation of law, yet the resolution plan projected the appellant as one who did not submit its claim; and (d) the resolution plan did not meet all the parameters laid down in sub-section (2) of Section 30 of the IBC read with Regulations 37 and 38 of the CIRP Regulations, 2016, we are of the considered view that the appeals of the appellant are entitled to be allowed and are accordingly allowed. The impugned order dated 24.11.2022 is set aside. The order dated 04.08.2020 passed by the NCLT approving the resolution plan is set aside. The resolution plan shall be sent back to the COC for re-submission after satisfying the parameters set out by the Code - Appeal allowed.
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2024 (2) TMI 680
Settlement proposal under Section 12A of IBC - Resolution Plan already approved by the CoC - whether settlement proposal under Section 12A can be given at any stage even after approval of the Resolution Plan? - it was held by NCLAT that The application for approval of the Resolution Plan which has already been filed and pending consideration, the Adjudicating Authority ought to have considered and decided the Application for approval of the plan - HELD THAT:- There are no reason to interfere with the order of the National Company Law Appellate Tribunal - appeal dismissed.
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2024 (2) TMI 679
Initiation of CIRP - NCLT admitted the application u/s 7 - period of limitation - case is that Section 7 application which was filed after 18 years in October 2019 was way beyond the prescribed limitation period of 3 years under Section 18 of the Limitation Act, 1963 and thus the petition stood barred by limitation - it was held by NCLAT that There are no error in the impugned order passed by the Adjudicating Authority admitting the Section 7 application - HELD THAT:- There are no reason to interfere with the impugned order dated 17 November 2023 passed by the National Company Law Appellate Tribunal - appeal dismissed.
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2024 (2) TMI 678
Insolvency process of the company called SU-KAM which was initiated by the Adjudicating Authority - various disputes arose in the CIRP of the Corporate Debtor - no eligible resolution plan could be evolved - HELD THAT:- It is crystal clear that the sacrosanct intention behind this Code is to revive the Corporate Debtor from the shackles of the debt trap by protecting the Corporate Debtor from its own management and from a corporate death by liquidation. The CoC is the pivotal body under the Code which is responsible for making decisions on various aspects i.e., whether a resolution plan should be adopted or not, whether the resolution plan should be adopted in the same form as presented to it or in a modified form and whether the attempt for the revival of the Corporate Debtor is made or not. The final decision on a resolution plan is taken by the CoC and for approval, a resolution plan is required to be voted in favour by not less than 66% of the voting share of the financial creditors, as per Section 30(4) of the Code. It is also relevant to point out that though the Resolution Professional is obligated to run the business of the Corporate Debtor as a going concern during the CIRP but as per Section 28(3) of the Code, he cannot take certain decisions relating to the management of the Corporate Debtor without prior approval of the CoC by a vote of at least 66% of the voting share. It is crystallized that the entire CIRP is aimed at bringing the Corporate Debtor back on its feet and it is acknowledged that the appropriate disposition of a defaulting Corporate Debtor and the choice of solution, to keep the Corporate Debtor as a going concern or to liquidate it, is to be made by the financial creditors, who could assess the viability and may take decisions in terms of the existing liabilities. It is undoubtedly clear that in this saga of the entire CIRP procedure, the protagonist is the CoC and the commercial wisdom of the CoC acts like the North Star for the resolution process and its participants. The commercial wisdom of the CoC is the guiding light to every decision-making of the CoC in pursuance of the financial distress faced by the Corporate Debtor. The underlying idea behind this concept is to acknowledge the business acumen of the CoC as well as its keenness to arrive at a mutually satisfactory resolution since their own interests are entangled with the resolution process - this court shall now examine the need for a code of conduct for the efficient functioning of the CoC in the entire CIRP in light of the legislative mandate and bonafide objectives of the Code. Code of Conduct for the CoC - HELD THAT:- It is reiterated that CoC, while discharging the crucial decisions under the Code, shall be bound by a certain code of conduct for the effective delivery of its duty as per the legislative intent of the IBC. The CoC, which effectively comes into the picture during the CIRP of the Corporate Debtor, cannot act dehors the bonafide objectives which the Code strives to achieve - A key element envisaged in the code of conduct for the CoC is adherence to the due process in decision-making. The concept of procedural due process involves various elements and one of the most fundamental ones is the Wednesbury principles of reasonableness. The aim of administration proceedings is to rescue and rehabilitate insolvent but potentially viable companies. An Administrator is a person or persons appointed under Schedule B1 of the Insolvency Act, 1986 to manage the company s affairs, business and property. On appointment, an Administrator becomes an officer of the court. The Administrator must generally perform his/her functions in the interests of the creditors as a whole. The Administrator is duty bound to follow the Statements of Insolvency Practice (SIP) which is a set of guidance notes issued to insolvency practitioners with a view to maintain standards by setting out required practice and harmonising practitioners approach to particular aspects of insolvency. The purpose of SIPs is to outline basic principles and essential procedures with which insolvency practitioners are required to comply. The Adjudicating Authority has the authority to regulate the conduct of the CoC through powers of judicial review as formulated aforesaid to ensure that it is functioning as per the role and responsibilities delineated under the Code. The Adjudicating Authority maintains a supervisory role over the entire CIRP and is empowered under Section 60 of the Code to take action in any question relating to the insolvency proceedings. As per the mandate of the IBC, the IBBI is entrusted with the responsibility of framing guidelines with respect to the insolvency professionals, insolvency professional agencies and information utilities and other institutions, in furtherance of the purposes of this Code. Section 196(1)(u) of the IBC also gives the mandate to the IBBI to perform any other function as may be prescribed - the respondent-IBBI has submitted that the IBBI notified a Discussion Paper on 27.08.2021 on various issues involving CIRP, including the code of conduct for the CoC. Comments were invited on that Discussion Paper and the IBBI is still in the process of framing guidelines. However, till date, there exists no code of conduct or guidelines framed by the IBBI for the effective functioning of the CoC. Considering the significant role which the CoC plays in the entire CIRP and the sanctity of the commercial wisdom of the CoC which is protected by the legislative mandate from unnecessary interference, there is a compelling need for the code of conduct/guidelines for the effective working of the CoC in order to fulfil the bonafide objectives of the Code. The need for a code of conduct assumes greater importance in light of the fact that once a decision is taken by the CoC, the aggrieved party is deprived of the legal remedies, except to a limited extent. Therefore, what attains significance is that the decision-making process should itself be infused with sufficient safeguards of reasonableness, fair-play, proportionality and adherence to the principles of natural justice. The IBBI is directed to frame/finalise a code of conduct/guidelines in accordance with its stand set out in the instant case, principles mentioned hereinabove and as per other relevant considerations, within a reasonable period of time, preferably, within three months from the date of the passing of this judgment, for the effective functioning of the CoC, without diluting the sanctity of the commercial wisdom of the CoC and the legislative intent of the IBC - Petition allowed in part.
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2024 (2) TMI 677
Admissibility of section 7 application - CIRP - existence of debt and default or not - whether the Adjudicating authority was right in admitting the application under Section 7 of the Code of the Respondent No. 1 or the application should have been rejected on the ground that there was no debt and default by the Corporate Debtor? - HELD THAT:- After declaring the account of the Corporate Debtor as NPA, by allowing the sanction or renewing Holding on Operation with various cut-back portions of the Respondent No. 1 could not treated on part of any debt and default. It is opined that permission by the Respondent No. 1 such Holding on Operations are being conducted as normal baking practices and does not give any right to the Corporate Debtor in denying the repayment of debt and default on such account have to be factored into consideration by the Adjudicating Authority. It is found from the Impugned Order that the Adjudicating Authority has gone into these aspects and thereafter correctly came to the conclusion of debt and default. The total outstanding principals amount was Rs. 8.77 Crores and outstanding interest component were Rs. 3.61 Crores thus the total outstanding dues payable by the Corporate Debtor to the Respondent No. 1 was Rs. 12.38 Crores, which is more than the threshold limit of Rs. 1 Crore as provided in the Code for accepting the application filed under Section 7 of the Code - the Corporate Debtor has indeed acknowledged and confirmed the loans credit facilities availed by it from the Respondent No. 1. There are no error in the Impugned Order - appeal dismissed. Approval of the Resolution Plan which was favourably considered by the CoC and approved by the Adjudicating Authority - payment of Rs. 1 Crore over and above the admitted claims of the Respondent No. 2 which allegedly was done at the cost of the Shareholders of the Corporate Debtor i.e., Promoters - HELD THAT:- It is up to the Resolution Applicant who tries to revive the Corporate Debtor as per his own scheme and provide the amount in the Resolution Plan which should be sufficient to meet the CIRP costs, the payment to the Financial Creditors, Operational Creditors, Statutory dues, workmen dues employees dues and payment towards dues of the other creditors to the extent possible. Such Resolution Plan is submitted for consideration of the CoC which applies its commercial wisdom and send the same through the Resolution Professional for approval of the Adjudicating Authority. The Resolution Plan has fairly distributed the amount and taken care of almost all Stakeholders strictly in accordance with the provisions of the Code - the Adjudicating Authority has carefully analysed various facts and laws while approving the Resolution Plan of the Respondent No. 3 including the aspect of payment of Rs. 1 Crore over and above the admitted claims for the Respondent No. 2. There are no error in the Impugned Order. The appeal is devoid of any merit, therefore, it deserves to the dismissed.
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2024 (2) TMI 676
Right of counsel to communicate with the Court except by filing appropriate application(s) and affidavit(s) in the proceeding pending before the Court - Influencing the decision-making process. - interference with the judicial proceedings pending in the Court - HELD THAT:- The Hon ble Supreme Court in its Judgment in O.P. Sharma Ors. Vs. High Court of Punjab and Haryana [ 2011 (5) TMI 1123 - SUPREME COURT] had quoted Bar Council of India Rules which contains a duty to the Court by a professional. One of the rule 3 of Section 1 under heading duty to the court is relevant. The proceeding before a Court or a Tribunal between the parties are proceeding which are conducted in the open court in a transparent manner. Both the parties are fully entitled to make their respective submissions, file their pleadings after serving the copy of the pleadings to other side. Justice P.B. Gajendragadkar, C.J. speaking on behalf of Constitution Bench in Naresh Shridhar Mirjakar and Ors Vs. State of Maharashtra and Ors. [ 1966 (3) TMI 77 - SUPREME COURT] had emphasised that it is well settled that in general all cases brought before the Courts whether Civil, Criminal or other must be heard in open court. All proceedings have to be conducted before a Court or judicial tribunal, in open court which serves transparency and create confidence in public in the fairness, objectivity and impartiality of the justice as has been laid down by Supreme Court in the above case. It is due to above principal that private communication with the Judge by litigants or their advocates is forbidden. All the submissions, applications and affidavits and proceedings have to be filed in the Court for consideration of Court and no litigant or counsel is entitled to send any separate communication. The Order impugned is an order by which both the Members recused themselves from the matters. The Order dated 09.01.2024 recusing by both the members is subject matter of the Appeal - the decision taken by both the members to recuse themselves from the matter cannot be interfered with in exercise of our appellate jurisdiction. The President of the NCLT is master of roster. All administrative powers are vested with the President. It is always open for the Appellant or any aggrieved party to bring into the notice of the President on the administrative side to take appropriate measures with regard to the matter in question or for considering issuance of such order or direction as the President may deem fit and proper in accordance with law. Thus, no purpose shall be served in entertaining this Appeal - appeal dismissed.
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2024 (2) TMI 675
Maintainability of Section 7 Application - threshold limit of 100 allottees for filing of Section 7 Application is not fulfilled in the Application - Financial Creditors have filed false, fabricated and forged documents and affidavits - Section 340 r/w Section 195(1)(b) of CrPC - HELD THAT:- Section 7 Application was filed by 143 Applicants on 11.10.2021. The Appellant was impleaded as Respondent No.3 in Section 7 Application, who opposed the maintainability of the Application on the ground that threshold limit as required under Section 7 of the Code is not fulfilled and the Application is not made by 100 valid allottees. The said objection raised by the Appellant was rejected by the Adjudicating Authority vide its order dated 21.10.2022, against which order Company Appeal (AT) (Insolvency) No.1478 of 2022 was filed by the Appellant, which was decided by this Tribunal on 17.11.2023 [ 2023 (11) TMI 782 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] . In the Appeal, one of the issues framed was whether Section 7 Application filed by the allottees fulfils the threshold as prescribed under the IBC. The Hon ble Supreme Court in the case of Amarsang Nathaji [ 2016 (11) TMI 1658 - SUPREME COURT] has held that Court has to form an opinion that it is expedient in the interests of justice to initiate an inquiry into the offences of false evidence and offences against public justice and more specifically referred in Section 340(1) CrPC. The Adjudicating Authority has rightly not initiated proceeding under Section 340 of CrPC. In view of the facts of the present case, there are no error in decision of the Adjudicating Authority not to direct any action under Section 340(1) of the CrPC. Penalty under Section 65 of the Code can be imposed when there is fraudulent or malicious initiation of proceedings. In the present case, the Applicants who are allottees in real estate project have filed the Application to protect their rights and it is not disputed that they are allottees of the project, which is developed by the Appellant. There is no ground to hold that initiation of Section 7 proceedings by allottees was fraudulent or malicious. Hence, no error has been committed by the Adjudicating Authority in rejecting the prayer of the Appellant to impose the penalty under Section 65. The present is not a case that the Applications filed by the Appellant are rejected by the Adjudicating Authority on the ground of delay, rather the Adjudicating Authority has entered into the allegations and found the allegations not sufficient to grant any relief. Hence, the judgment of the Hon ble Supreme Court relied by the Appellant in AJIT KR. BHUYAN AND ORS VERSUS DEBAJIT DAS AND ORS [ 2018 (10) TMI 2021 - SUPREME COURT] , does not help the Appellant in the present case. The Adjudicating Authority did not commit any error in rejecting IAs filed by the Appellant - The Adjudicating Authority has rightly observed that the intention of the Appellant is malifide and objections are only to delay the adjudication of Section 7 Application - there are no error in the impugned order, as no ground is made out to interfere with the order, the appeal is dismissed.
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PMLA
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2024 (2) TMI 674
Seeking grant of bail - money laundering - offence punishable under Section 3 of the Prevention of Money-laundering Act, 2002 - HELD THAT:- The appellant is entitled to be enlarged on bail in accordance with Section 45(1)(ii) of the PMLA on appropriate terms and conditions, till the disposal of the complaint case filed by the first respondent/Directorate of Enforcement under the PMLA. In view of the fair stand taken by the learned ASG, the detailed reasons not recorded. Appeal allowed.
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2024 (2) TMI 673
Violation of principles of natural justice - order was passed without giving opportunity to the petitioner Enforcement Directorate to file a reply - on seeking of bail, high court held that the petitioner qualifies the triple test under Section 45 of the Act and, therefore, the present application is allowed - HELD THAT:- Though there are some reservations with the impugned order, as it appears that the order was passed without giving opportunity to the petitioner Enforcement Directorate to file a reply, the impugned order need not be interfered with. Hence, the special leave petitions are dismissed.
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2024 (2) TMI 672
Illegal detention of the petitioners in Tihar Jail for want of judicial order remanding them to judicial custody - it was held by the High Court that the learned ASJ-04 has rightly issued production warrants against the petitioners on 07.12.2023 for production of the petitioners and the petitioners remain in lawful custody of learned ASJ-04 - HELD THAT:- There are no reason to interfere with the impugned order - SLP dismissed.
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Service Tax
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2024 (2) TMI 671
Levy of service tax - Supply of Tangible Goods Service - appellant had entered into a lease agreement with the foreign company namely M/s. Cessna Financial Corporation, Kansas, USA on 11.12.2007 to acquire CESSNA make air craft on lease, based on the conditions agreed between them - period May 2008 to January 2013 - extended period of limitation - HELD THAT:- From the agreement, it is seen that it is a dry lease agreement and the crew is not supplied along with the air craft. The aircraft is delivered to appellant and is in the lawful possession of appellant. The entire staff / crew of the air craft is employed by the appellant and the air craft is also operated as per the registrations and licenses applied and issued to the appellant. It cannot be then said that the possession and effective control is not transferred to the appellant. Thus for the period prior to 01.07.2012, the transaction does not fall within the definition of Supply of Tangible Goods . After 01.07.2012, changes have been effected in the service tax law and all services falling under declared service (66B) is subject to levy of service tax. Section 66E of the Finance Act, 1994 deals with the concept of declared services. Clause (f) to Section 66E states that transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer or right to use such goods is a declared service. It means a lease agreement which does not have the character of transfer of right to use goods is taxable service - In the present case, the possession of the aircraft is transferred to the appellant who has taken delivery of the same. So also, the air craft is operated by the crew employed by the appellant. Appellant has to undertake maintenance and repair of the air craft and has to take insurance for the risk of loss etc. These would go to show that the effective control over such goods is also transferred to the appellant. The demand cannot sustain and requires to be set aside - Appeal allowed.
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2024 (2) TMI 670
Exemption from service tax - commission paid to foreign agents - Benefit of Notification No. 14/2004-ST dated 10.09.2004 - denial of benefit on the ground that the appellant is involved in export of fabrics and not in textile processing - HELD THAT:- The issue is no more res integra as in a catena of judgments which are identically placed, the Tribunal Chennai has held that textile exporters who have paid overseas agency commission to promote their exports are eligible for the benefit of the exemption Notification No. 14/2004-ST dated 10.09.2004. In the cases Arvind A Traders and Others Vs. Commissioner of Central Excise and Service Tax, Trichy [ 2015 (11) TMI 1176 - CESTAT CHENNAI] , Texyard International and Others Vs. Commissioner of Central Excise, Trichy [ 2015 (8) TMI 794 - CESTAT CHENNAI ] and Aruppukottai Sri Jayavilas Ltd. and Others Vs. Commissioner of Central Excise, Madurai [ 2015 (9) TMI 732 - CESTAT CHENNAI] the demands were set aside on merits as well as on limitation. Further, the Department s appeal filed against the decision in the case of CCE (A) TRICHY VERSUS ARVIND A TRADERS, ANARTEX EXPORTS OTHERS [ 2015 (11) TMI 1176 - CESTAT CHENNAI ] before the Hon ble Apex Court has been dismissed. Thus, the appellant is eligible for the benefit of the Notification No. 14/2004-ST dated 10.09.2004 and the impugned Order-in-Appeal No. 720/2016 (STA-I) dated 29.12.2016 cannot be sustained and so ordered to be set aside - appeal allowed.
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Central Excise
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2024 (2) TMI 669
Recovery of interest on the wrongly availed credit - penalty under Rule 15 of the Cenvat Credit Rules, 2004 - HELD THAT:- The issue involved in the present case is squarely covered by the decision of Hon ble Supreme Court in the case of M/s Ind-Swift Laboratories Ltd. [ 2011 (2) TMI 6 - SUPREME COURT] following has been held Rule 14 specifically provides that where CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest would be recovered from the manufacturer or the provider of the output service. The issue is as to whether the aforesaid word OR appearing in Rule 14, twice, could be read as AND by way of reading it down as has been done by the High Court. If the aforesaid provision is read as a whole we find no reason to read the word OR in between the expressions `taken' or `utilized wrongly' or `has been erroneously refunded' as the word AND . On the happening of any of the three aforesaid circumstances such credit becomes recoverable along with interest. It is quite evident that the N/N. 18/2012-CE (NT) clearly provides the date from which the word or has been substituted in Rule 14 of The CENVAT Credit Rules, 2004. It is unambiguously provided that the substitution is being made from 17th March 2012, and no retrospective effect has been given to the said amendment/ substitution - It is settled position in law that physical statute need to be interpreted in a literal sense on the basis of what have been stated in the law or statute. There is no room for indictment or according to any beneficial construction to the appellant/assessee. It is also settled law that interest is a statutory/ contractual liability for the wrongly taken credit or is equivalent to the time value of the money/credit. It is an absolute liability as has been held by the courts in the various decisions for the same no person could claim the benefit and claim that interest as provided by the statute could not have been recovered as has been held the same is barred by limitation. It was for the appellant to have paid the interest along with the reversal of the excess credit taken. It is also observed that during the period of dispute section 11A did not provided, for recovery of interest and hence was not applicable. The recovery of interest was made in terms of Section 11AB/ 11AA which did not provided for any limitation. As the demand made within the period of five years for recovery it is upheld, there are no merits in the submissions made for not imposition of the penalties imposed under Rule 15, in view of the decision of the Hon ble Apex Court in the case of Rajasthan Spinning and Weaving Mills Ltd [ 2009 (5) TMI 15 - SUPREME COURT ]. There are no merits in the appeal filed by the appellant - appeal dismissed.
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2024 (2) TMI 668
Entitlement for interest on the refund sanctioned - change of opinion of the Court in a subsequent matter of another party would give any leverage to the appellants to re-open the decision which has attained finality or not. Appellants argues that interest is a natural corollary of the refund granted and the rights of the appellants cannot be taken away for the reason that the Hon ble Apex Court has overturned the decision in M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI [ 2017 (11) TMI 655 - SUPREME COURT] vide their decision in the case of M/S. UNICORN INDUSTRIES VERSUS UNION OF INDIA OTHERS [ 2019 (12) TMI 286 - SUPREME COURT] . HELD THAT:- It is found that consequent to the passing of judgment by the Hon ble Supreme Court in the case of M/s Unicorn Industries, the Department has raised a number of demands on the refunds already granted to various assessees; Hon ble High Court of Jammu Kashmir in the case of COMMISSIONER OF CGST AND COMMISSIONER OF CENTRAL EXCISE, J K, JAMMU VERSUS NARBADA INDUSTRIAL BARI BRAHMANA JAMMU [ 2021 (10) TMI 1426 - JAMMU KASHMIR AND LADAKH HIGH COURT] , has held that the change of opinion of the Court in a subsequent matter of another party would not give any leverage to the appellants to re-open the decision which has attained finality. If the Department is barred from raising demands for the refunds already granted, the appellants also cannot seek interest on the refunds already granted. It is further found that CBEC clarified vide Circular No.682/73/2002-CX dated 19.11.2002 that the provisions of Section 11B of the Central Excise Act, 1944 are not applicable in the case of Exemption Notifications No.56/2002 and No. 57/2002 both dated 14.11.2002. The findings of the learned Commissioner (Appeals) that the mechanism of refund has been put in place in order to operationalize the exemption contained in the notifications and to the extent, refunds arising out of these notifications cannot be considered to be refunds under Section 11B of the Central Excise Act, 1944, is agreed upon. The appellants have not made out any case for grant of interest - Appeal rejected.
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2024 (2) TMI 667
Denial of CENVAT Credit - services provided to the employee for transportation to and fro the workplace by bus, provision for canteen services, Mathadi services - denial on the ground that there was no statutory requirement/obligation to provide those services - HELD THAT:- On renovation of executive toilets and housekeeping of administrative building, the denial was on account of the fact that those were not used by the workmen nor having any nexus to the manufacture of final product and on denial of professional fee as well as maintenance of canteen building, no reason is assigned by the leaned Commissioner. This being the observation of the Commissioner on record, it is apparently cleared that he has accepted only the core work including laborious activities undertaken during the production process and excluded all other ancillary and incidental activities that go with the manufacturing process and form its integral part. Be that as it may, when all these services are specifically held by this Tribunal and confirmed by the Appellate Courts like Hon'ble High Courts and Hon'ble Supreme Court to be valid inputs for the purpose of manufacture, there is no reason for us to depart from the judicial precedent set by this Tribunal when they themselves are integral part of manufacture process for which these services availed by the Appellant can be said to be valid input services against which credit are admissible. The order passed by the Commissioner of Central Excise, Thane-II is hereby set aside - Appeal allowed.
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2024 (2) TMI 666
Taxability - Excisable goods or not - waste and scrap namely paper/paper boards, corrugated boxes, aluminium foils etc., arose during manufacturing of cigarettes - HELD THAT:- Section 2(d) provides the definition of excisable goods and its explanation on goods includes any article, material or substance which is capable of being bought or sold for a consideration and such goods shall be deemed to be marketable but the starting lines of the Central Excise Act, 1944 says that the Act is passed to consolidate and amend the law relating to Central Duties of Excise as it was expedient to consolidate and amend the law relating to Central Duty of Excise on goods manufactured or produced in certain parts of India - Taking both the provisions together, it has been consistently held by the Court of law that to levy duty of Excise, both manufacturing and marketability conditions are required to be fulfilled and the same view continues even after proviso is introduced in Section 2(d). It has also been consistently held even by the Hon'ble Supreme Court that waste and scrap, in West Coast Industrial Gases Ltd. (Res.) [ 2003 (4) TMI 110 - SUPREME COURT ] and also in respect of bagasse and other waste products, DSCL Sugar Ltd. case [ 2015 (10) TMI 566 - SUPREME COURT ] are not excisable articles on which duty liability can be fastened. The following order in order to maintain consistency and predictability to the order passed by this Tribunal and to carry forward the judicial precedent set by it - Appeal allowed.
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2024 (2) TMI 665
Refund of the excess amount that was subsequently refused to be paid to the Appellant by the Refund Sanctioning Authority - Finalization of provisional assessment - Sale through C F Agents/Depot/Consignment agent - Appellant failed to discharge the burden of Unjust Enrichment - HELD THAT:- The refundable amount accrued in favour of the Appellant was on account of duty paid by it while making temporary clearance from the depot under Rule 7 and the duty actually received from the customers at the time of sale and clearance of goods to them. There is no dispute that the actual discount or sale at a lesser price was not extended to the customers since, the Assistant Commissioner has noted in his findings at Para 5 that Superintendent had verified the reports and statements concerning clearance of goods at the factory gate and at the C F Agents and submitted his report that discounts were actually passed on by the C F Agents to the dealers, as indicated in their invoices. This being so, the entire amount of excess payment of duty can be considered as borne by the Appellant alone, since duties from the customers/ dealers were actually realized at C F Agents end and paid to the department. In such fulfilment of the procedural requirement there would be hardly any scope that Appellant would be able to collect duty element separately from its customers dealers to compensate the duties paid by it at the ex-clearance from the factory gate. It is apparently keeping these provisions in mind, the provision of refund of differential duty after financial assessment is codified in Rule 7 itself, in which Department would have refunded the amount on its own without any refund application being filed under Section 11(B) of the Central Excise Act, 1944 and burden of examination of passing/non-passing of duly element would have been done by itself. Having regard to the fact that this is a case where refund should have been granted immediately upon final assessment, the following order is passed - Appeal allowed.
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CST, VAT & Sales Tax
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2024 (2) TMI 664
Revisional jurisdiction of High Court - Clandestine Removal - cigarettes - committed error in counting the stock which resulted in noting shortage of 480 cartons - HELD THAT:- It is settled principle of law that the Tribunal is the primary body responsible for fact-finding, and when this Court exercises its revisionary authority, it does not re-examine facts already adjudicated upon by the Tribunal. The revisional jurisdiction exercised by High Courts is limited, focusing primarily on jurisdictional errors, perversity and procedural irregularities. In a revision petition, the High Court should abstain from undertaking a fresh enquiry into factual matters already adjudicated by the tribunal, unless compelling reasons necessitate an intervention of such a nature by the High Court. In VINOD KUMAR TEWARI VERSUS STATE OF U.P. AND ORS. [ 2015 (3) TMI 1433 - ALLAHABAD HIGH COURT] , this Court outlined the difference between appeal and revision and marked the boundaries within which revisional jurisdiction is to be exercised. What becomes apparent from a reading of the aforesaid judgment is that legislature s conferment of the right to appeal in one instance and the discretionary remedy of revision in another. This implies the creation of two distinction jurisdictions, differing in scope and content. While appeal typically entails a comprehensive review encompassing both law and fact initiated by an aggrieved party, revision is akin to a power of superintendence, sometimes invoked even without the party s initiative. The extent of revisional jurisdiction is circumscribed by the statue conferring such authority, generally aimed to ensuring conformity to legal principles and procedural propriety. Appeal can be seen as a judicial examination seeking the reversal of a lower authority s decision by the superior court. Meanwhile, revision empowers the superior court to scrutinize the records of an appeal to assess its legality, propriety, or regularity of procedure, and to issue orders accordingly. Revisional jurisdiction, as envisaged under the UPVAT Act, 2008, is meticulously tailored to address jurisdictional errors and excesses of law that may have permeated the adjudicative process at lower echelons of the judicial hierarchy. It is incumbent upon High Courts, when exercising revisional jurisdiction, to vigilantly scrutinize the legal landscape and ascertain whether the impugned judgment or order suffers from any infirmities of jurisdictional import or egregious deviations from the normative contours of legal propriety - Revisional jurisdiction is not conceived as a vehicle for the protracted re-examination of factual matrices, or the interminable redressal of grievances already exhaustively adjudicated upon by the lower courts or tribunals. Rather, it constitutes an instrumental mechanism for rectifying egregious legal errors or jurisdictional excesses that may have vitiated the adjudicative process, thereby ensuring the equitable and efficacious administrative of justice. The Revisionist in the instant case, has tried to invite this court to reassess the factual matrix, as adjudicated upon by the second appellate authority. Such an exercise, in absence of any perversity in the factual adjudication by the second appellate authority runs counter to the settled principles governing the exercise of revisional jurisdiction. The second appellate authority, in my opinion, has cogently addressed the nuances of this case and rendered a reasoned decision, devoid of any palpable error of infirmity - In the absence of any glaring defect or legal transgression warranting revision, it is not inclined to interfere with the impugned order dated January 25, 2023, passed by the second appellate authority. The impugned order dated January 25, 2023, does not warrant any intervention - the instant revision is dismissed.
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2024 (2) TMI 663
Recovery of 22 (twenty-two) different brands of non-duty paid Overseas foreign Liquor - unlawful transport, storage, possession of unregistered non-duty paid Foreign Liquor in contravention of Sections 10, 12, 16, 18(1) of the B.E. Act 1909 read with Rule 118 of W.B. Excise (F.L) Rules 1998 - Commitment of offence punishable under u/s 46A(c), (e) Sec 52 of the said Act - HELD THAT:- The petitioner herein has filed documents of the custom office to show valid import of the articles specifically marked Samples Not for Sale - Duty as required has been paid to the Custom Authorities. From the materials on record, it appears that the petitioner and another accused Chhote Prasad have been made accused s in this case, but the Company, Duomo Distribution Pvt. Ltd. AC-120 Prafulla Kanan, Krishnapur Baguiati has not been made an accused. The petitioner admittedly is a director of the said Company, and it is from the company premises that the accused was arrested and the articles seized. The Supreme Court in Dayle De Souza Vs Government of India Through Deputy Chief Labour Commissioner (C) and Anr., [ 2021 (11) TMI 67 - SUPREME COURT] , held Criminal law should not be set into motion as a matter of course or without adequate and necessary investigation of facts on mere suspicion, or when the violation of law is doubtful. It is the duty and responsibility of the public officer to proceed responsibly and ascertain the true and correct facts. Execution of law without appropriate acquaintance with legal provisions and comprehensive sense of their application may result in an innocent being prosecuted. In the present case, a) The company has not been made an accused. b) The petitioner a director of the company has been made an accused. c) The place of seizure and the seized articles on which the case has been initiated, is the registered office of the company. The petitioner has also been arrested from the office of the company - Therefore, in the absence of the company being arraigned as an accused, a complaint against the petitioner is not maintainable - This is in clear violation of Section 46B of the Bengal Excise Act, 1909. Admittedly the company has not been made as an accused - Thus the proceedings in this case being not in accordance with law is an abuse of the process of law. Revision allowed.
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2024 (2) TMI 662
Waiver of pre-deposit condition or grant right to appeal subject to a part-deposit or security - usage/lease rental charges are not being paid by the aforesaid holding company i.e., WWIL, which is now before the National Company Law Appellate Tribunal - Section 63(4) of KVAT Act - HELD THAT:- The judgments in Hare Krishna Enterprises Vs. State of Karnataka and others [ 2023 (3) TMI 1458 - KARNATAKA HIGH COURT] and Bharat Electronics Ltd Vs. State of Karnataka and others [ 2016 (4) TMI 609 - KARNATAKA HIGH COURT] will clearly indicate that it cannot be said that this Court while exercising its power under Article 226 of the Constitution of India is powerless either to reduce the quantity of pre-deposit or to waive it completely depending on the facts obtaining in the specific cases. Insofar as the judgments relied upon by learned HCGP is concerned, the same were rendered in the facts and circumstances obtaining in the said case and no ratio, much less any principle of law is laid down to the effect that this Court does not have powers / jurisdiction under Article 226 of the Constitution of India to waive / reduce the pre-deposit. Depending on the peculiar / special facts and circumstances of a case, it is always open for this Court to waive / reduce, etc., the pre-deposit condition prescribed under Section 63 (4) of the KVAT Act, especially in the light of the judgment of this Court in Hare Krishna Enterprises case and Bharat Earth Movers Limited - In the instant case, the material on record discloses that the petitioner has not earned any revenue for over five years and being a holding company, petitioner is also undergoing corporate insolvency resolution process / proceedings. Further, moratorium has been declared as long back as on 20.02.2018 and there is complete and total financial instability insofar as the petitioner is concerned as is clear from the financial statements produced by the petitioner, which is sufficient to come to the conclusion that the petitioner is not in a position to pay any amount for the purpose of maintaining the appeal, much less pre-deposit of 30% as required under Section 63(4) of the KVAT Act. The cumulative effect of the facts and circumstances narrated and the judgments of this Court in BEML s case and Hare krishna Enterprises case is sufficient to come to the conclusion that in the peculiar / special facts and circumstances obtaining in the case on hand including the financial distress and inability on the part of the petitioner to make payment of 30% pre-deposit. Petitioner is permitted to maintain and prosecute Sales Tax Appeal No. 400/2018 before the Karnataka Appellate Tribunal, Bengaluru, which is hereby directed to entertain the appeal and pass appropriate orders on merits without insisting for payment of 30% pre-deposit, in accordance with law, as expeditiously as possible - Petition allowed.
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Indian Laws
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2024 (2) TMI 719
Forfeiture of gratuity - employees have been terminated for an act which constitutes an offence involving moral turpitude - commitment during the course of their employment - requirement of determination by the management that the act for which the services of the employees have been terminated, constitutes an offence involving moral turpitude - HELD THAT:- It has been categorically held by the Hon ble Supreme Court in Union Bank of India [ 2018 (8) TMI 934 - SUPREME COURT ] that it is not the conduct of a person involving moral turpitude that is required for forfeiture of gratuity but the conduct or the act should constitute the offence involving moral turpitude. and that To be an offence, the act should be made punishable under law. That is absolutely in the realm of criminal law. What has been highlighted in the above decision after explaining the scope and purview of the phrase offence and its meaning within the context of section 4(6)(b)(ii) of the Act, is that it is not for the Bank to decide whether an offence has been committed. It is for the court. This emphatic statement on point of law and interpretation by the Hon ble Supreme Court is binding and fully applicable to the facts of this case - Even though in Union Bank of India, the management had not registered an FIR, the principle laid down therein is on the very interpretation of said provision of section 4(6)(b)(ii) of the Act and would hold ground. This aspect has been reiterated in and applied by a Division Bench of this Court in Rajiv Saxena v. The Chief General Manager Ors. [ 2018 (11) TMI 1952 - DELHI HIGH COURT ], where gratuity was forfeited by the management pursuant to punishment of compulsory retirement by the disciplinary authority and a registration of a criminal case by the CBI. In fact, in that case a show cause notice specific on the issue of forfeiture of gratuity was issued as well. In the said petition preferred by the worker challenging forfeiture of gratuity, this Court held that the case therein had progressed merely till the stage of filing of charge sheet. Subsequently, it observed that, The criminal court concerned will hereafter apply its mind to the contents of said charge sheet and pass an order on charge. The progress of the criminal case will depend on whether charges are framed against the Appellant; whether he is sent up for trial on those charges; whether he is convicted for the offences with which he is charged and whether such conviction attains finality. Other courts have also followed Union Bank of India and held that forfeiture of the gratuity would require initiation of criminal proceedings that would have culminated in conviction for an offence. Considering the principles laid down by the Hon ble Supreme Court, as well as the consistent view taken by various courts including this Court, the submission of the petitioners has to be accepted - No purpose would be served in assessing the other submission relating to the change of the stand of the management from termination due to misconduct to termination due to loss of confidence . In fact, the said alteration from misconduct to loss of confidence as the final reason for termination further dilutes the stand taken by the respondent-management. The impugned decisions dated 11th October, 2018 passed by the Deputy Chief Labour Commissioner (Central) and the Appellate Authority under the Payment of Gratuity Act, 1972 are set aside - petition allowed.
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