TMI Tax Updates - e-Newsletter
February 17, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise

Articles

1. How Does Section 10AA of the Income Tax Act Affect Private Companies?

   By: Ishita Ramani

2. INSURANCE CLAIM FOR TRUCK CAUGHT FIRE

   By: DR.MARIAPPAN GOVINDARAJAN

3. Proceedings under Section 73 of the CGST Act for denial of ITC and imposing interest and penalty on availment of Credit under wrong head not maintainable

   By: Bimal jain

4. ehrms.upsdc.gov.in up: A Comprehensive Guide to the Uttar Pradesh E-HRMS Portal

   By: shubham jadhav

5. Retrospective GST Cancellations: A Hidden Risk That Can Shut Down Your Business

   By: Pradeep Reddy

6. How to Lodge a complaint against frivolous or misleading claims mentioned/depicted on the labels of packaged/processed food items/products.

   By: YAGAY andSUN

7. Telangana HC upheld the validity of notifications extending the limitation period for issuing SCN

   By: Pradeep Reddy

8. Banned Additives in Processed Food items, BUT WHY?

   By: YAGAY andSUN

9. GST Circular: ECOs Must Pay GST Liability Under Section 9(5) in Cash

   By: Pradeep Reddy

10. How Indian Customs Department has improved its' Dwell Time?

   By: YAGAY andSUN

News

1. GST fraud: SC refuses to grant protection from arrest to absconding accused

2. J&K CM Abdullah to present his maiden budget on March 7, continues pre-budget consultations

3. DPIIT Secretary chairs PMG Review of Mega Infrastructure Projects of Gujarat and Rajasthan

4. Income Tax department activates section wise mapping of I-T Act, Tax bill

5. Panda to head 31-member select committee to examine I-T Bill

6. Select Committee of Lok Sabha to examine Income Tax Bill constituted

7. BJP-led govt prioritizes social, economic upliftment of Divyangjan: Virendra Kumar

8. Kerala on steady path of economic growth: CM Vijayan

9. RBI supersedes New India Coop Bank board; fund misappropriation led to action

10. Fund misappropriation led to RBI action on New India Co-operative Bank

Notifications

Customs

1. 10/2025 - dated 14-2-2025 - Cus (NT)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

GST - States

2. F.12(5)FD/Tax/2025-117 - dated 16-1-2025 - Rajasthan SGST

Seeks to amend notification no. F.12(56)FD/Tax/2017-Pt-I-55 dated 29.06.2017 to change definition of specified premises

3. F.12(5)FD/Tax/2025-116 - dated 16-1-2025 - Rajasthan SGST

Seeks to amend notification no. F.12(56)FD/Tax/2017-Pt-I-51 dated 29.06.2017 to bring supply of the sponsorship services provided by the body corporates under Forward Charge Mechanism etc

4. F.12(5)FD/Tax/2025-115 - dated 16-1-2025 - Rajasthan SGST

Seeks to amend notification no. F.12(56)FD/Tax/2017-Pt-I-50 dated 29.06.2017 to exempt GST on the contributions made to the Motor Vehicle Accident Fund

5. F.12(5)FD/Tax/2025-113 - dated 16-1-2025 - Rajasthan SGST

Seeks to amend notification no. F.12(56)FD/Tax/2017-Pt-II-173 dated 25.01.2018 to increase the GST rate from 12% to 18 % on sale of all old and used vehicles

6. F.12(5)FD/Tax/2025-112 - dated 16-1-2025 - Rajasthan SGST

Seeks to amend notification no. F.12(56)FD/Tax/2017-120 dated 18.10.2017 to extend the concessional 5% GST rate on food inputs of food preparations under HSN 19 or 21

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/18 - dated 14-2-2025

Industry Standards on “Minimum information to be provided for review of the audit committee and shareholders for approval of a related party transaction”

GST

2. 247/04/2025 - dated 14-2-2025

Clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 55th meeting held on 21st December, 2024, at Jaisalmer

Highlights / Catch Notes

GST

• GST Council Clarifies Rates: 5% on Pepper, Tax-Free Raisins, Different Rates for Popcorn Types

  Circulars : CBEC issued comprehensive GST rate clarifications following GST Council's 55th meeting recommendations. Pepper of genus Piper attracts 5% GST, with exemption for agriculturist suppliers. Agriculturist-supplied raisins are GST-exempt. Ready-to-eat popcorn with salt/spices attracts 5% GST (non-packaged) or 12% GST (packaged), while caramel popcorn draws 18% GST. AAC blocks with >50% fly ash content fall under HS 6815 attracting 12% GST. SUV compensation cess amendments regarding ground clearance apply from July 26, 2023. Past disputes on popcorn GST rates until February 14, 2025, are regularized on 'as-is-where-is' basis. These clarifications aim to ensure uniform implementation nationwide.
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• Small Retailer Gets Final Chance to Restore GST Registration by Filing Returns and Paying Dues Within Four Weeks

  Case-Laws - HC : HC set aside GST registration cancellation and appellate authority's order, granting petitioner one final opportunity to remedy default. Following precedent in Subhankar Golder case, court allowed restoration of GST registration conditional upon petitioner filing all pending returns and paying applicable tax, interest, penalties within four weeks. Failure to comply would result in automatic dismissal of petition and immediate reinstatement of registration cancellation. Decision balanced regulatory compliance with business continuity, particularly considering small retailer status. Court emphasized need for tax compliance while providing reasonable opportunity for rectification.
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• GST Refund Claim Rejection Invalid: Authority Must Give Reasoned Order Under Section 39(9) for CESS Column Error

  Case-Laws - HC : HC quashed deficiency memo dated 21.02.2024 regarding CESS refund claim for AY 2017-18. Petitioner claimed clerical error in placing SGST figures in CESS column. While authority has discretion on refund eligibility under Section 39(9) and 54(1) of Act 2017, rejection requires reasoned order uploaded to portal enabling appeal rights. Court directed authority to reconsider refund application dated 05.02.2024 after providing hearing opportunity, pass reasoned order, and upload promptly to relevant portal. Matter concerns procedural compliance rather than substantive refund determination. Authority must follow due process in handling correction requests within statutory timeframes.
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Income Tax

• Tax Reassessment Under Section 147 Invalid When No Material Facts Were Concealed And 4-Year Period Expired

  Case-Laws - HC : HC quashed reassessment proceedings initiated under Section 147 after expiry of 4-year limitation period. Court found no failure by assessee to disclose material facts fully and truly, as required by first proviso to Section 147. Information relied upon for reopening was already available in documents filed with return and during original assessment. Where matter was previously examined during assessment after raising queries, allowing reassessment would amount to impermissible review power. Reopening notice held invalid as reasons recorded failed to specify any non-disclosure of material facts by assessee.
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• Tax Authorities Must Re-examine Trading Results and Form 26AS Discrepancies After Assessee Provides Complete Documentation

  Case-Laws - AT : ITAT remanded matters concerning discrepancies between Form 26AS receipts and ITR, and rejection of trading results back to AO for de novo consideration. Assessee failed to adequately explain mobilization advances and reconciliation differences. CIT(A)'s order was deemed cryptic and non-speaking regarding GP ratio mismatch. AO directed to re-examine gross profit after assessee provides documentary evidence. Assessee bears responsibility to substantiate claims during consequential proceedings. If assessee fails to respond to notices or provide required documentation, AO empowered to adjudicate based on available facts and law. Revenue's grounds allowed for statistical purposes.
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• Taxpayer's Section 10(26AAA) Sikkimese Exemption Claim Remanded for Fresh Assessment with New Evidence (26AAA)

  Case-Laws - AT : ITAT addressed exemption claim under section 10(26AAA) regarding unexplained cash withdrawals in FY 2017-18. While CIT(A) upheld AO's denial of Sikkimese exemption, it improperly admitted additional evidence under Rule 46A and classified deposits as contract income without giving AO hearing opportunity. Given new documentation presented at ITAT stage not previously available to AO, matter remanded for de novo assessment. ITAT clarified that for 10(26AAA) exemption, both Sikkimese status and Sikkim-sourced income must be established. Assessee permitted to present all relevant submissions supporting exemption claim during fresh assessment. Both assessee's and Revenue's appeals allowed for statistical purposes.
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• Property Transaction Additions Under Section 69A Deleted Due to Banking Evidence and Source Documentation

  Case-Laws - AT : ITAT examined three key issues regarding property transactions and unexplained funds. On unexplained money under s.69A, the Tribunal upheld CIT(A)'s deletion of AO's addition, finding sufficient evidence for property acquisition. However, the short-term capital loss claim was rejected as it wasn't declared in the original return per s.80. Regarding unexplained investment, ITAT confirmed deletion of addition as payments were through banking channels with substantiated sources, except for INR 32.5 Lakhs stamp duty payment which was remanded for AO verification. On cash deposits, ITAT ruled AO exceeded limited scrutiny scope by examining bank deposits not included in original assessment reasons, and found sufficient cash balance explanation, thereby deleting the addition.
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• Assessment Order Under Section 56(1)(vii) For Rs. 139.67 Crores Quashed Due To Uncorroborated Third-Party Search Evidence

  Case-Laws - AT : ITAT quashed assessment order regarding additions under section 56(1)(vii) amounting to Rs. 139.67 crores made on basis of third-party documents found during search operations. Tribunal held that search material lacked evidentiary value without independent corroboration, following Supreme Court precedent in Common Cause case. Additional CIT's jurisdiction was challenged due to absence of valid order under section 120(4)(b). Tribunal ruled assessment order void ab-initio, citing TATA Communications Ltd case where similar jurisdictional defect invalidated proceedings. Key factors included lack of corroborative evidence linking documents to assessee, denied allegations regarding pen drive discovery, and failure to allow cross-examination of evidence. Appeal allowed in favor of assessee.
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• Life Membership and Institutional Fees Not Eligible for Section 11(1)(d) Tax Exemption as Non-Corpus Funds

  Case-Laws - AT : ITAT upheld the AO's decision to treat one-time life membership and institutional membership fees as non-corpus funds, making them ineligible for exemption under Section 11(1)(d). The Tribunal determined these fees were not voluntary contributions, rendering irrelevant whether they were specifically directed to form part of the corpus fund or their revenue/capital nature. The receipts were classified as income from property held under trust, with the AO permitting a 15% set-apart allowance. The appellant's challenge was dismissed, affirming that such membership fees must be included in the assessee's taxable income.
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• Trade Payables Outstanding Since 2011 and Fixed Asset Investment Under Section 41(1) and 69 Not Taxable

  Case-Laws - AT : ITAT reversed additions made under sections 41(1) and 69 of Income Tax Act. Regarding s.41(1), outstanding trade payables to supplier since FY 2011-12 for defective materials were consistently shown in books, with no cessation of liability established. Following precedent, mere non-payment without remission does not satisfy s.41(1) requirements. Previous ITAT ruling for AY 2012-13 had already examined creditor authenticity. On s.69 addition, demand draft for land registration was properly recorded as fixed asset in FY 2014-15 books, negating unexplained investment presumption. Revenue's contradictory position in subsequent year deemed improper. Appeal allowed with both additions deleted.
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• Tax Authority Sets 8% Profit Rate on Unexplained Purchases Under Section 69C, Rejects Double Addition for Unaccounted Sales

  Case-Laws - AT : ITAT ruled on unexplained purchases under s.69C and unaccounted sales. For unexplained purchases in non-edible oil business, ITAT directed estimation of profit at 8% based on industry GP rates and assessee's past performance (weighted average GP of 7.96% during AY 2014-18). Regarding unaccounted sales addition based on seized Shubh Laxmi Group documents, ITAT rejected AO's addition since statement of witness was used without providing cross-examination opportunity, violating natural justice principles. Further, AO had already made additions for unaccounted purchases and short stock as unaccounted sales, making separate sales addition unjustified. ITAT emphasized past trading history as key determinant and applied doctrine of equity in profit estimation.
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• Trust's Form 10AC Registration Already Final Under Section 12A, Making New Application Redundant As Per CBDT Circular

  Case-Laws - AT : ITAT recalled its earlier order upon finding a mistake apparent on record regarding trust registration status under section 12A. Initially, ITAT had set aside CIT(E)'s rejection of trust's application for final registration, directing reconsideration. However, pursuant to CBDT Circular No. 11/2022, it was clarified that Form 10AC registrations issued during FY 2021-22, despite being labeled "provisional," were to be treated as final registrations. The trust already possessed valid final registration until AY 2026-27, making subsequent application unnecessary. ITAT acknowledged the error stemming from Form 10AC's incorrect provisional designation and recalled its previous order, effectively upholding CIT(E)'s original rejection of the redundant registration application.
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• Penalty Under Section 271AAA Waived for Disclosed Income During Search, Upheld for Post-Search Land Transaction Declarations

  Case-Laws - SC : SC held that penalty under Section 271AAA(1) was not applicable on Rs.2,27,65,580/- as the appellant satisfied all conditions by admitting undisclosed income during search, substantiating its source, and paying tax with interest, albeit delayed. However, penalty was upheld on Rs.2,49,90,000/- related to land transactions not declared during search. The court interpreted "found in the course of search" broadly, including documents collected from third parties as a result of initial search. Since this amount was disclosed only during assessment proceedings after AO's intervention, it didn't qualify for exemption under Section 271AAA(2). The court emphasized that while AO's penalty power is discretionary, it must be exercised judiciously and not arbitrarily.
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Customs

• Finance Ministry Revises AIDC Rates: Bourbon Whiskey at 50%, Other Alcoholic Beverages Remain at 100% Under Section 25(1)

  Notifications : MoF amended Notification 11/2021-Customs by exercising powers under s.25(1) of Customs Act 1962 and s.124 of Finance Act 2021. The amendment modifies Agriculture Infrastructure and Development Cess (AIDC) rates for alcoholic beverages. For bourbon whiskey (tariff items 2208 30 11 and 2208 30 91), AIDC is set at 50%, while other alcoholic beverages under headings 2204, 2205, 2206, and 2208 retain 100% AIDC rate. The notification took immediate effect upon issuance on February 13, 2025, implementing differential AIDC treatment for bourbon whiskey compared to other alcoholic beverages.
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• Mobile Phone Importer's CVD Refund Claim Rejected Due to Time Limit, Missing Reassessment, and Unjust Enrichment Under Section 27

  Case-Laws - AT : CESTAT dismissed an appeal concerning refund claims for excess Countervailing Duty (CVD) on mobile phone imports. The tribunal upheld rejection on three grounds: time-bar (claim filed in 2019 for 2014 payments exceeded one-year limitation under Section 27 of Customs Act, with no evidence of protest payment), lack of prerequisite reassessment (77 Bills of Entry remained unmodified despite appellant's amendment request), and failure to overcome unjust enrichment presumption (insufficient evidence that duty burden wasn't passed to buyers). The appellant's incomplete CA certificate failed to discharge the burden of proof required under Section 11B of Central Excise Act and Section 27 of Customs Act.
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• Black Pepper Import Value Restored as DGFT Notification Allows Trade Above Rs.500/kg CIF Price Under SAFTA

  Case-Laws - AT : CESTAT ruled in favor of the appellant regarding valuation of imported black pepper. The tribunal held that the goods were not absolutely prohibited under DGFT Notification 21/2015-2020, as imports were permitted above CIF Rs. 500/kg. The proper officer's rejection of declared value and subsequent redetermination was found unsustainable. The tribunal emphasized that Free Trade Agreements under SAFTA and GATT formed part of international law, and the government had granted concessional BCD rates. The Commissioner's enforcement of non-tariff restrictions through Minimum Import Price was deemed inappropriate. Consequently, penalties imposed under Sections 112 and 114AA of Customs Act were set aside, and the original declared assessable value was restored.
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• Gold Jewelry Seizure Case Overturned as Owners Prove Legitimate Purchase Through RTGS Payments Under Section 123

  Case-Laws - AT : CESTAT ruled in favor of appellants in a gold jewelry smuggling case, overturning earlier decisions by Adjudicating Authority and Commissioner (Appeals). The Tribunal found that appellants successfully demonstrated legitimate ownership of seized gold through consistent statements and documented RTGS payments to M/s Jain Jewellers. Revenue failed to establish reasonable belief of smuggling under Section 123 of Customs Act, 1962. Distinguished from Om Prakash Khatri case where burden of proof was not met by intercepted persons. Tribunal emphasized that revenue's assumptions were insufficient without concrete evidence of smuggling, while appellants provided satisfactory explanations regarding gold ownership. Appeals allowed with merit.
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DGFT

• Gold Bullion Import Quota: New Rules for TRQ Allocation Require Certified Turnover Data and Financial Statements Under CEPA

  Circulars : Ministry of Commerce & Industry established procedures for Tariff Rate Quota (TRQ) allocation of Gold Bullion under India-UAE CEPA for FY 2025-26. Applicants must submit detailed turnover data for manufacturing and trading activities under specified HS Codes (7108, 7113, 7114, 7118) by 28.02.2025. Financial statements require CA certification based on GST filings. Special EFC will determine allocation modalities for 180MT quota based on submitted information. TRQ allocation subject to bi-annual review per PN 12/2023. Previously submitted applications can be amended to include new requirements. System implements strict compliance monitoring for proper TRQ utilization.
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• DGFT Sets Import Quotas: 0.8 MT Calcined & 1.9 MT Raw Petroleum Coke for Aluminum Industry FY 2025-26

  Circulars : DGFT issued allocation procedures for importing Calcined Petroleum Coke (CPC) and Raw Petroleum Coke (RPC) for FY 2025-26, following CAQM's order dated 15.02.2024 and SC directions. Import limits set at 0.8 Million MTs of CPC for Aluminum industry and 1.9 Million MTs of RPC for CPC manufacturing units. Applications must be submitted online through DGFT's Import Management System by February 28, 2025, under 'Import of Pet Coke' category. The notice maintains conditions from previous PN 49/2023 while implementing import restrictions to regulate petroleum coke usage in compliance with environmental regulations.
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FEMA

• Exim Bank's $120M Credit Line to GO-VNM for High-Speed Guard Boats under FEMA 10(4) and 11(1)

  Circulars : Exim Bank established a USD 120 million Line of Credit agreement with GO-VNM, effective January 20, 2025, for procuring High-Speed Guard Boats. The LoC, supported by GOI, facilitates exports of eligible goods and services from India, subject to Foreign Trade Policy compliance. The disbursement period extends to 60 months post-project completion. No agency commission is directly payable under the LoC, though exporters may utilize their own resources or Exchange Earners' Foreign Currency Account balances for commission payments after export realization. The directive, issued under FEMA sections 10(4) and 11(1), requires AD Category-I banks to process transactions in accordance with these terms.
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• Export-Import Bank's $180M Credit Line for Offshore Patrol Vessels Must Follow FEMA 10(4) and 11(1) Guidelines

  Circulars : Exim Bank established a USD 180 million Line of Credit (LoC) agreement with GO-VNM for financing 4 Offshore Patrol Vessels procurement. The LoC, effective January 20, 2025, operates under GOI support with a 60-month post-project completion disbursement window. Exports must comply with India's Foreign Trade Policy and RBI regulations. Agency commission payments are prohibited under the LoC but may be processed through exporters' EEFC accounts post-realization of full export value. The directive, issued under FEMA sections 10(4) and 11(1), mandates AD Cat-I banks to facilitate eligible transactions within the prescribed framework while ensuring adherence to foreign exchange management protocols.
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Corporate Law

• Private Companies Get Extended Deadline Until June 30, 2025 For Securities Dematerialization Under Rule 9B Amendment

  Notifications : MCA amended Rule 9B of Companies (Prospectus and Allotment of Securities) Rules, 2014 through notification dated Feb 12, 2025. The amendment extends compliance deadline to June 30, 2025, for private companies (excluding Producer companies) that were not classified as small companies as of March 31, 2023, regarding issuance of securities in dematerialized form. The amendment applies retrospectively with assurance that no interests will be adversely affected. The notification exercises powers under various sections of Companies Act, 2013, including sections 26, 27, 28, 29, 31, 39, 40, and 42 read with section 469.
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IBC

• Resolution Plan Cannot Be Changed After CoC Approval Even If Joint Venture Partner Withdraws From Approved Plan

  Case-Laws - AT : NCLAT dismissed an appeal challenging the rejection of a new resolution plan submission. The tribunal held that once a resolution plan is approved by the Committee of Creditors (CoC) and pending before the Adjudicating Authority, the CoC cannot entertain alternative plans. The CoC's approval creates a binding relationship between the CoC and Successful Resolution Applicant (SRA), even prior to the Adjudicating Authority's final approval. The appellant's argument regarding SRA's non-existence due to JV partner withdrawal was insufficient to override this principle. The tribunal affirmed established precedent that CoC lacks authority to consider new resolution plans after approving one that awaits adjudication.
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PMLA

• Dean in Covid Centers Money Laundering Case Gets Bail Under PMLA After 1.5 Years Due to Weak Evidence

  Case-Laws - HC : HC granted bail in a money laundering case where the accused was charged with signing fabricated invoices while serving as Dean of Covid Centers. Despite ED's arrest under PMLA, the court found insufficient prima facie evidence linking the accused to proceeds of crime. Key factors influencing bail: accused's cooperation during investigation, completed prosecution complaint, 1.5+ years of incarceration, unlikelihood of immediate trial commencement, and position-related allegations no longer relevant due to temporary role. The court emphasized that continued detention would violate Article 21 rights guaranteeing speedy trial and personal liberty. Bail granted subject to conditions, noting documentary evidence nature of case minimizes tampering risks.
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• Money Laundering Bail Order Overturned: Section 45 PMLA Conditions Not Met, Reasonable Grounds Test Failed

  Case-Laws - SC : SC held that the HC's bail order in a money laundering case was unsustainable due to non-compliance with mandatory conditions under Section 45 of PMLA. The HC failed to establish reasonable grounds for believing the accused's non-guilt and likelihood of not reoffending while on bail. The Court emphasized that money laundering is not an ordinary offense but has transnational impact on financial systems and sovereignty. The casual approach in granting bail without considering PMLA's rigors was deemed improper. The matter was remanded to HC for fresh consideration by a different bench, with strict instructions to evaluate bail application under Section 45's mandatory requirements. The Court also clarified that money laundering is an independent offense concerning proceeds of crime, regardless of involvement in predicate offenses.
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SEBI

• Government Securities Trading Rules Modified Under Section 16 to Control Speculation and Regulate Sale-Purchase Contracts

  Notifications : RBI amended notification S.O. 2192(E) under Section 16 of Securities Contracts (Regulation) Act, 1956 regarding prevention of undesirable speculation in securities. The amendment modifies clause (A)(1) to regulate contracts for sale/purchase of Government Securities, gold related securities, and money market securities. Exemptions include spot delivery contracts, recognized stock exchange trades permitted under applicable rules, and specifically RBI-permitted contracts. The modification aims to strengthen regulatory oversight of securities trading while maintaining legitimate market operations. Amendment effective upon Official Gazette publication. This revision supersedes previous provisions while maintaining core regulatory framework for securities trading supervision.
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Service Tax

• Show Cause Notices Invalidated Due to Missing Mandatory Pre-Notice Consultation Under Master Circular 2017

  Case-Laws - HC : HC quashed multiple show cause notices (SCNs) due to lack of mandatory pre-SCN consultation as required under Master Circular dated March 10, 2017. The court found the SCNs vague and lacking reference to petitioners' contentions raised during pre-consultation. In one case (SCA 5685/2022), though the SCN contained liability elements, it merely highlighted discrepancies between Form 26AS and ST-3 returns. The subsequent Order-in-Original was also set aside. Department retains liberty to initiate fresh proceedings or revive original SCNs subject to Supreme Court's pending decision. The ruling emphasizes that absence of pre-SCN consultation is fatal to notice validity, following precedent set in L&T Hydrocarbon Engineering Ltd. case.
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• Electrical Transmission Tower Materials and Services Qualify for CENVAT Credit Under Rule 2(a)(A)

  Case-Laws - AT : CESTAT ruled in favor of appellant regarding CENVAT credit eligibility for electrical transmission tower materials and related services. The tribunal held that transmission towers qualify as components/accessories of capital goods under Rule 2(a)(A) of CENVAT Credit Rules, 2004. Health insurance and supervision services were deemed eligible input services. While appellant must reverse Rs.25,544 with interest, the larger credit amount of Rs.9,40,359 was allowed. Extended period limitation invocation was invalidated due to absence of evidence showing suppression intent. Penalties were set aside. The ruling aligned with Supreme Court precedent in similar cases regarding treatment of transmission equipment as capital goods components.
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• Service Tax Demands Limited to Normal Period as No Evasion Found; Abatement Claims Rejected Under N/N 01/2006

  Case-Laws - AT : CESTAT ruled that service tax demands for rent-a-cab, tour operator, and business auxiliary services cannot be extended beyond normal limitation period due to absence of tax evasion intent. Appellant's claim for abatement under N/N. 01/2006-S.T. and N/N. 38/2007-S.T. was rejected due to lack of supporting evidence and billing on gross amounts. While penalty under Sec. 78 of Finance Act was set aside, penalties under Sec. 77(1)(a) and 77(2) were upheld for non-registration under tour operator and business auxiliary service categories. Appellant remains liable for service tax within normal limitation period with interest.
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• Dumpers Under Operating Lease Denied CENVAT Credit Due to Registration Requirements Under Notification 25/2010-CE

  Case-Laws - AT : CESTAT partially allowed the appeal concerning CENVAT credit on dumpers/tippers under operating lease. While credit was previously permitted, Notification 25/2010-CE mandated registration in service provider's name for eligibility. As vehicles were registered with lessor SEFPL, not appellant, credit was disallowed. Interest demand upheld per SC's compensatory principle in Pratibha Processors. However, extended period limitation and penalties were set aside due to genuine belief supported by prior favorable rulings before March 2011 notification. CESTAT found no evidence of duty evasion intent, concluding appellant acted under reasonable interpretation of Rule 4(3) during the ambiguous period.
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• Set Top Box Supply to Customers Qualifies as Deemed Sale, Not Service - No Service Tax Under Finance Act

  Case-Laws - AT : CESTAT ruled that Set Top Box (STB) supply by Multi-System Operators to customers constitutes deemed sale rather than service, making it ineligible for service tax levy under Finance Act, 1994. The appellant had correctly determined and discharged service tax liability, certified by Chartered Accountant, prior to filing appeal. Following precedent in Dish TV India Limited case, Tribunal held STB provision is a one-time equipment supply activity distinct from DTH services of television channel transmission. The original authority's demand was invalidated for failing to establish specific grounds, while merely relying on UCN Cable Network precedent without proper analysis. Impugned order set aside and appeal allowed, confirming STBs are subject to VAT under State legislature rather than service tax.
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Central Excise

• Company Entitled to 12% Interest on Rs.19.47 Lakh Voluntary Deposit Made During Coumarin Investigation

  Case-Laws - AT : CESTAT allowed interest on refund of voluntary deposits made during investigation of unauthorized Coumarin removal. Following established precedents and CBE&C Circular No. 984/8/2014-CX, the Tribunal confirmed appellant's entitlement to 12% per annum interest on pre-deposit amount of Rs.19,47,750/- from date of deposit until refund. The decision aligned with prior rulings in Parle Agro Private Limited and Pace Marketing Specialties cases, which relied on Sandvik Asia Limited judgment. Original authority's refund sanction was upheld as lawful, with interest payment ordered per statutory provisions. The Tribunal maintained consistency with coordinate bench decisions on interest eligibility for voluntary deposits during investigations.
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• Related Parties' Excise Duty: Siblings' Company Selling to Parents' Firm Must Value Based on Distributor's Price

  Case-Laws - AT : CESTAT ruled on short payment of excise duty involving related parties under Section 4(3)(b) of Central Excise Act. Company directors (siblings) held 99% shares and made clearances to distributor firm owned by their parents, establishing related party relationship. Differential pricing pattern revealed mutual interest, with distributor receiving goods at lower prices. Tribunal held transaction value must be based on distributor's selling price per Rule 9 of CEVR 2000. Interest payment required on differential duty, though penalty was not imposed as department filed no cross-objection. Established principle prevents appellant from being placed in worse position upon appeal. Appeal rejected, affirming duty valuation and interest payment requirements.
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• Factory Construction, Insurance, Catering & Travel Services Qualify as Input Services for Cenvat Credit Under 2004 Rules

  Case-Laws - AT : CESTAT allowed appeal regarding Cenvat credit eligibility on various services under pre-April 2011 input service definition. Factory construction services qualified as input service due to direct nexus with manufacturing. Outdoor catering services were eligible being statutory requirement under Factories Act, though interest payable on recovered amounts. Insurance services for both building (50%) and employee health coverage qualified as business-related input services. Air travel agent services for expatriate employees' international travel related to plant procurement and technical training were eligible. Tribunal confirmed services directly or indirectly connected to manufacturing or statutory obligations qualify as input services under Cenvat Credit Rules 2004.
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Case Laws:

• GST

• 2025 (2) TMI 585
  Cancellation of GST registration of the petitioner - petitioner did not file its return in accordance with law for consecutive six months - HELD THAT:- The issue has already received the attention of the Hon ble Division Bench in the matter of Subhankar Golder Vs. Assistant Commissioner of State Tax [ 2024 (5) TMI 1262 - CALCUTTA HIGH COURT] . The Hon ble Division Bench had observed that we are of the view that the appellant can be provided with one more opportunity to remedy the bridge as the appellant being an individual since a small retailer of imitation jewellery, we deem it appropriate that the appellant should be permitted to remedy the bridge. The show cause notice dated January 14, 2023 at page 32 to the writ petition, the order of cancellation of GST registration dated January 11, 2023 at page 39 to the writ petition and the order of the appellate authority dated December 24, 2024 at page 59 to the writ petition stand set aside and quashed subject to petitioner files his GST returns for the entire period of default and pays requisite amount of tax, interest, fine and penalty and/or late fees within four weeks from date. Subject to fulfilment of the above conditions by the petitioner the GST registration of the petitioner shall be restored by the jurisdictional officer. However, if the petitioner fails to comply with the direction and fulfil the conditions as above, the benefit of this order will not enure to the petitioner and the writ petition would stand automatically dismissed, without any further reference to this court. Consequently, the cancellation of the GST registration would be restored and effected with an immediate effect. Petition disposed off.

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• 2025 (2) TMI 584
  Seeking issuance of appropriate writ against the respondent No. 2 authority for recalling and/or for cancelling and/or for rescinding the deficiency memo order - seeking refund of CESS amount paid during the assessment year 2017-18, contending that the demand was erroneous - HELD THAT:- On perusal of the provision of Section 39 (9) read with Section 54 (1) of the said Act of 2017 it appears that admittedly legislatures in their own wisdom have set a cut off date for making an application either for correction of any omission or incorrect particulars as well as for claim of refund. On perusal of the annexures to the instant writ petition being copies of the different applications and the deficiency memos it appears to this Court that it has been contended before the respondent No. 2 authority by the writ petitioner that due to clerical mistakes he put SGST figure in CESS column and for which he seeks refund. Whether the writ petitioner is entitled to get the refund or not that aspect completely falls under the domain of the respondent No. 2 authority but this Court considers that while rejecting the prayer for remand the respondent No. 2 ought to have assigned a reason by passing an appropriate order and should upload the said order in the relevant portal so as to enable the writ petitioner to prefer an appeal before the appropriate authority. While disposing the instant writ petition this Court quashes the deficiency memo dated 21.02.2024 as issued by the respondent No. 2 authority with a direction to the respondent No. 2 authority to consider the refund application dated 05.02.2024 as made by the writ petitioner in accordance with law after giving opportunity of hearing to the writ petitioner and thereafter to pass a reasoned order on such application and to upload the same in the relevant portal forthwith. Conclusion - The respondent authority was directed to comply with the order promptly, and the parties were granted certified copies of the order upon request. Petition disposed off.

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• Income Tax

• 2025 (2) TMI 583
  Penalty u/s 271AAA - Appellant did not make payment of tax - As argued Revenue Authorities without satisfying themselves as to the satisfaction of undisclosed income as stipulated in Section 271AAA(1) levied the penalty HELD THAT:- Section 271AAA(1) stipulates that the Assessing Officer may, notwithstanding anything contained in any other provisions of the Act 1961, direct the Assessee, in a case where search has been carried out to pay by way of a penalty, in addition to the tax, a sum computed at the rate of 10% (Ten per cent) of the undisclosed income of the specified previous year. However, the imposition of penalty is not mandatory. Consequently, penalty under this Section may be levied if there is undisclosed income in the specified previous year. This Court is of the view that though under Section 271AAA(1) of the Act 1961, the Assessing Officer has the discretion to levy penalty, yet this discretionary power is not unfettered, unbridled and uncanalised. Discretion means sound discretion guided by law. It must be governed by rule, not by humour, it must not be arbitrary, vague and fanciful. [See: Som Raj and Others vs. State of Haryana and Others, [ 1990 (2) TMI 306 - SUPREME COURT ]. Section 271AAA(2) stipulates that Section 271AAA(1) shall not be applicable if the assessee (i) in a statement under sub-section (4) of Section 132 in the course of the search, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income. (See: Chaturvedi Pithisaria s Income Tax Law Seventh Edition). Consequently, if the aforesaid conditions (i) and (ii) are satisfied and the tax together with interest on the undisclosed income is paid upto the date of payment, even with delay, in the absence of specific period of compliance, then penalty at the rate of 10% (Ten per cent) under Section 271AAA is normally not leviable. The expression Undisclosed Income has been defined in Explanation (a) appended to Section 271AAA.The onus is on the Assessing Officer to satisfy the condition precedent stipulated in the said Explanation, before the charge for levy of penalty is fastened on the assessee. Consequently, it is obligatory on the part of the Assessing Officer to demonstrate and prove that undisclosed income of the specified previous year was found during the course of search or as a result of the search. Expression specified previous year has been defined in Explanation (b) appended to Section 271AAA of the Act 1961. Since in the present case, the search was conducted on 25th November, 2010 and as the year for filing returns under Section 139(1) of the Act 1961 which ended prior to that date had expired on 31st July, 2010, Explanation b(i) is not applicable so as to make AY 2010-11 the specified previous year. Consequently, by virtue of Explanation b(ii), AY 2011-12 (the year in which the search was conducted) is the specified previous year in the present case for the purpose of Section 271AAA(1) of the Act 1961. Penalty levied - In the present case, the Appellant admitted Rs.2,27,65,580/- as income for AY 2011-12 during the search before DDIT (Inv.) as well as substantiated the manner in which the said undisclosed income was derived and paid tax together with interest thereon, albeit belatedly. Consequently, all the conditions precedent mentioned in Section 271AAA(2) stand satisfied and, therefore, penalty under Section 271AAA(1) is not attracted on the said amount. Penalty @ 10% levied - It is an admitted position that the Appellant had not offered in the declaration before the DDIT(Inv.) any income on land transactions belonging to Mr. Sharab Reddy and Mr. NHR Prasad Reddy. The argument that the said transactions had not been found in the search at the Appellant s premises but had been found due to copies of sale deeds collected from the society cuts no ice with this Court as the sale deeds had been collected as a result of the search and in continuation of the search. This Court is of the view that as the causation for collecting the sale deeds from the Society was the search at the Appellant s premises, it cannot be said that the said documents were not found in the course of the search. Further, this Court is of the opinion that the expression found in the course of search is of a wide amplitude. It does not mean documents found in the assessee s premises alone during the search. At times, search of an assessee leads to a search of another individual and/or further investigation/interrogation of third parties. All these steps and recoveries therein would fall within the expression found in the course of search . Since income of Rs.2,49,90,000/- constitutes undisclosed income found during the search, penalty under Section 271AAA(1) of the Act 1961 is leviable on the said amount. Also, as the said amount was not admitted in the declaration before the DDIT(Inv.) during the course of search but was disclosed by the Appellant only during the assessment proceedings, and that too, after the Assessing Officer had asked for copies of the sale deeds from the Society, this Court is of the view that the exception carved out in Section 271AAA(2) is not attracted to the said portion of the income.

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• 2025 (2) TMI 582
  Reopening of assessment u/s 147 - Notice after expiry of period of 4 years from the end of the relevant assessment order - HELD THAT:- As per the first proviso of Section 147 re-assessment proceedings cannot be initiated after period of 4 years from the end of the relevant assessment year unless there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. In the case of Hindustan Unilever Limited [ 2004 (2) TMI 41 - BOMBAY HIGH COURT ] has held that there has to be not only the allegation that there is a failure on the part of the assessee to disclose fully and truly all material facts but the reasons should also state what are the material facts which were not disclosed. On a perusal of the reasons recorded in the present case, we do not find any allegation of any failure to disclosure fully and truly of material facts necessary in the assessment. But on the contrary on a perusal of the reasons recorded, it shows that the information on the basis of which re-opening is sought was based on the documents filed by the petitioner alongwith the return of income and in the assessment proceeding. Therefore, on this short ground itself the impugned proceedings are required to be quashed and set aside. If a query is raised and the assessee files its reply and the issue form subject matter of the assessment order, there can be no question of any failure to disclose fully and truly all material facts but on the contrary allowing the respondents to pursue the present proceeding would amount to empowering power of review on respondents which the Act does not provide and which is not permissible under the Act. Therefore, even on this ground, the impugned proceedings are required to be quashed and set aside.

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• 2025 (2) TMI 581
  Addition made due to the difference in receipts as per 26AS and ITR - HELD THAT:- The assessee has failed to properly explain the impugned amount as mobilization advance or other advance, or for the work to be carried-out or for other materials. Before CIT(A), the assessee has furnished the details for the purpose of reconciliation of the above contradictions which were not confronted to the Assessing Officer by the learned CIT(A). We, therefore, remit the matter in issue back to the file of learned jurisdictional Assessing Officer with a direction to re-decide the issue de novo, after affording reasonable opportunity of being heard to the assessee. Rejection of trading results - As argued books of accounts of the assessee company were duly audited u/sec.44A - AO disbelieved the contentions of the assessee-company and noted that the assessee was failed to substantiate it s claim of mismatch in inventories with supporting documentary evidence - HELD THAT:- CIT(A) has passed a cryptic, non-speaking order and has accepted the contention of the assessee without giving any cogent reasons. We, therefore, remand the matter in issue back to the file of jurisdictional AO with a direction that the assessee-company shall furnish documentary evidence to prove it s case of difference in GP ratio. We remit the matter in issue back to the file of learned jurisdictional Assessing Officer to examine the gross profit of the assessee company. It is the risk and responsibility of the assessee to plead and prove it s case in consequential proceedings. If the assessee did not respond to the notice(s) issued by the learned jurisdictional Assessing Officer or taking adjournments under any pretext or failed to furnish requisite documents as called for, AO is at liberty to decide the matter in issue as per fact and law. Grounds raised by the Revenue are allowed for statistical purposes.

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• 2025 (2) TMI 580
  Unexplained investment u/s 69 - cash withdrawals made during the financial year 2017-18 - Denial of assessee s claim of exemption u/s 10(26AAA) - HELD THAT:- For claiming exemption u/s 10(26AAA) not only the assessee should be a Sikkimese as per the provision specified but the source of income should also be from within the State of Sikkim. CIT(A), accepted the contention of the AO in denying the claim of benefit u/s 10(26AAA) however, without allowing an opportunity of being heard to the AO, treated the entire deposit as income from contract by admitting additional evidence in violation of Rule 46A of the Income Tax Rules, 1962. Some of the documents filed before us were not filed before the Ld. AO and additional evidence has been admitted by the Ld. CIT(A), after examining the facts of the case, we deem it appropriate to set aside the orders of the Ld. CIT(A) as well as of the Ld. AO and remit the matter back to the file of the Ld. AO for passing the assessment order de novo as the evidence filed before us along with the grounds of appeal for claiming exemption under section 10(26AAA) of the Act were not filed before the Ld. AO and some of them were admitted by the Ld. CIT(A). Assessee shall be at liberty to make all submissions in support of the claim that the income was exempt u/s 10(26AAA) of the Act as per the provisions thereof. Appeals filed by the assessee as well as the Revenue are allowed for statistical purposes.

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• 2025 (2) TMI 579
  Assessment u/s 153A - Addition of bogus Purchase transactions - assessee has raised ground on no incriminating material - HELD THAT:- As query raised by the Assessing Officer relates to AY 2014-15. Therefore, the finding in search was not relevant to the present assessment year. The addition made by the Assessing Officer in original assessment u/s 143(3) was relating to the same transaction. Further we observed that the year under consideration is unabated and there is no material on record which shows that income escaped in the current assessment year. The findings during search relating to AY 2014-15, therefore, there is no incriminating material relevant for the current assessment year. Therefore, it is settled position of law that no addition can be made u/s 153A without there being any incriminating material relating to unabated assessment year. Therefore, we are inclined to delete the additions made in the assessment order.

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• 2025 (2) TMI 578
  Unexplained money u/s 69A - assessee sold his property - CIT(A) deleted addition - assessee has filed detailed reply alongwith the additional evidences alongwith prayer under Rule 46A of the Income Tax Rules, 1962 - HELD THAT:- The evidences filed in respect of the acquisition of the property were also examined by the AO in the remand proceedings and no contrary view was given by the AO and therefore, in our considered opinion, the Ld.CIT(A) has rightly deleted the addition made by AO. Accordingly Ground No.1 of Revenue is dismissed. With regard to the claim of loss, we find that this transaction was not disclosed by the assessee in the return of income nor any details were filed before the AO. It is the fresh claim of short term capital loss which was made before the Ld.CIT(A) for the first time. As this loss was not claimed in the return of income filed, in terms of provision of section 80 of the Act, such loss cannot be allowed to be carried forward to the assessee. Addition u/s 69A as unexplained investment - HELD THAT:-Assessee alongwith his brother has purchased 20% shares in the property and out of that 20% share, brother through an affidavit has affirmed that purchase consideration to the extent of his share of 10% was paid by him out of his own sources. With regard to the source of the investment the assessee has been able to substantiate its claim of making such investment out of explained funds by filing the necessary evidences before the AO during remand proceedings. CIT(A) after considering these evidences, has deleted the addition made. As all the payments were made by the assessee were through banking channels and immediate source of the same were duly substantiated therefore, we are not inclined to interfere with the order of CIT(A) to this extent. With regard to the issue of payment of Stamp Duty out of loan taken from one Shri Vijay Kumar, brother of the assessee, we find that the Ld. CIT(A) has accepted the contention of the assessee on the basis of confirmation and bank statement of Shri Vijay Kumar without confronting and obtaining a report from the AO on the same. Under these circumstances, the issue of source of investment of INR 32.5 Lakhs in stamp duty is sent back to the file of the AO for making necessary verification. Unexplained cash deposits - AO based on AIR information observed that the assessee has made cash deposits in various accounts - CIT(A) has not accepted the claim of the assessee by observing that under limited scrutiny, the AO can examine the investment in property and since the cash deposit was utilized for making investment in properties, the AO was well within the jurisdiction to examine the issue - HELD THAT:- Form the reasons for selection of assessee s case for limited scrutiny, we find that none of the reasons indicate the verification of cash deposited in the bank accounts. AO has enlarged the scope of verification from the investment in property to examine cash deposits in banks which was not permitted in the eyes of law as the reason for limited scrutiny was not for examination of cash deposit in bank accounts. From the perusal of the cash flow statement, we find that the assessee has sufficient cash balance when cash was deposited in the bank accounts therefore, even on merits also, no addition is required to be made in the hands of the assessee. We hereby delete the addition made on account of cash deposited in bank accounts.

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• 2025 (2) TMI 577
  Addition u/s 68 - creditworthiness of the creditor/party - Party from whom the Assessee has received the loan had declared an accumulative total income of only Rs. 2.26 crore during the last four Assessment Years and the accounts are not audited and assets and liabilities were not declared in the ITR and there is no official records are available on the capital balance of him as assets and liabilities were not declared to the Department - also AO observed that there is no existence of other transaction like sale of assets during past four years to explain the source of funds to advance huge unsecured loan HELD THAT:- CIT(A) finding that the Assessee has repaid the loan and also paid interest and TDS was duly deducted of such interest payment and further finding that the AO has considered the cumulative total loans received by the Assessee from the ledger, however ignored the repayment and fresh receipt of loans from lender. Thus, we are of the opinion that the CIT(A) has rightly deleted the addition. Finding no merit, we dismiss the Ground No.1 of the Revenue. Admission of additional advances - Revenue contended that the Assessee erred in holding that the balance sheet was furnished along with the return by the creditor whereas the A.O. observed otherwise and the CIT(A) has not remanded back the issue to the A.O. under Rule 46A of the I. T. Rules, 1962 - During the appeal proceedings, against specific query of the CIT(A), the Assessee submitted complete details of every customer with its address, PAN, total sell amount and various discounts or rebates allowed by the Assessee. Those documents were submitted as per a specific query raised by the CIT(A). Therefore, the Rule 46A of the Rules will not come in the way of the Assessee. Considering the fact that the copy of the ITR etc. were available with the AO there was no requirement for the Ld. CIT(A) for calling for the Remand from the A.O. as there is no application for additional evidence was filed by the Assessee under Rule 46A of the Rules. Disallowance of expenses u/s 69C - DR submitted that the Assessee has failed to furnish the substantive documents evidencing the actual purchases and transportation of goods and failed to establish the genuineness of the transaction - HELD THAT:- Assessee Company has constructed new factory building of 15.06 crore and purchased the sand and Bajri from Hardev Singh and the said transaction was subjected to applicable GST at 5% and also considering the fact that those payments have been made from term loan raised by the Assessee from the Bank, we find no reason to interfere with the findings and conclusion of the CIT(A) and we find no error or infirmity in the order of the Ld. CIT(A) in deleting the addition. Accordingly, Ground No. 3 of the Revenue is dismissed. Addition u/s 37 - expenses claimed by the Assessee were aimed to reduce the purchase cost of third parties which were not accrual business expenses - HELD THAT:- AO was of the opinion that in the transaction related to discount the nexus existents between the Assessee s expenses and it is distributor s income and not that all the Assessee, therefore, the same cannot be said to be made out of Assessee s business. AO opined that the Assessee had aimed at reducing the purchase price of the third parties who are independent entities cannot be said to be under the premises of business expediency. During the appellate proceedings, the said disallowance has been reversed by the Ld. CIT(A). It is found that the total rebate and discount allowed by the Assessee was less than 1% and all the rebates and discounts are well account for and while disallowing the expenses the Ld. A.O. has not rejected the books of account. Appeal filed by the Revenue is dismissed.

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• 2025 (2) TMI 576
  Addition u/s 56(1)(vii) - amount received on sale of shares held as agent/benamidar of the assessee - consideration received by third party for sale of shares of a company - Relevancy of search material found in any search HELD THAT:- As in Common Cause (A registered Society Vs. UOI [ 2017 (1) TMI 1164 - SUPREME COURT] where, it has been held that search material found in any search do not have any evidentiary value and the transactions recorded in such papers etc. would have to be corroborated by independent evidence to proceed against the person, whose names appear as beneficiaries in such documents. In the present case, the entire addition hinges on evidence gathered from third party document, without any corroborative evidence to suggest that in the so-called documents that have been found and account by name Shri J Reddy or JR as the assessee and the assessee is beneficiary of whatever amount recorded therein. Although the AO claimed that the pen drive was found in the possession of an employee, subsequently those employees have denied allegation of the Assessing Officer and stated that no such pen drive was found during the course of search. Even Mr. Puneet Dalmia, Managing Director of Dalmia group also denied having knowledge of any pen drive found in the possession of employee and contents recorded therein. Therefore, the presumption with regard to contents of documents has been drawn against the assessee, without there being any corroborative evidence to link such documents to the assessee. If at all any presumption can be drawn on such documents, then the same can be drawn against Dalmia group and the onus shall be on the Dalmia group to produce cogent material to rebut presumption u/s 132(4A). The Dalmia group never alleged that the transactions belong to the assessee. The additions made by the AO on the basis of third-party evidence, without providing this evidence to the assessee and allowing cross examination is contrary to law and settled position. AO is erred in making additions towards consideration received by Dalmia Bharat Enterprises Ltd. towards sale of shares of Bharati Cement Corporation Ltd to M/s Parcifim SAS, amounting to Rs. 139.67 crores as income of the assessee u/s 56(1)(vii). CIT(A), after considering the relevant facts has rightly deleted the additions made by the AO towards cost of acquisition of on protective basis and substantive addition in the hands of the assessee. Addl. CIT Jurisdiction to pass order - Whether the Ld. Addl. CIT who passed the assessment order is vested with jurisdiction and authority to pass such order in absence of proper order u/s 120(4)(b)? - HELD THAT:- This issue is squarely covered in favour of the assessee by the decision of Coordinate Bench of the ITAT, Mumbai in the case of TATA Communications Ltd. [ 2019 (8) TMI 1446 - ITAT MUMBAI] where the Tribunal after considering arguments of both sides, including the case laws cited by the Ld. AR for the assessee as well as the Ld. DR, came to the conclusions that unless the Add. CIT who passed the assessment order possesses valid jurisdiction and authority by virtue of order u/s 120(4)b of the Act, he cannot act as an A.O and pass assessment order consequently, the assessment order passed by the A.O is null and void-ab-initio and liable to be quashed. The assumption of jurisdiction by the Addl.CIT, Range-2, Hyderabad and consequent assessment order passed by the Assessing Officer without an valid order u/s 120(4)(b) of the Act is illegal, void ab-initio and liable to be quashed. Thus, we quash the assessment order passed by the Assessing Officer u/s 143(3). Appeal of assessee is allowed.

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• 2025 (2) TMI 575
  Estimation of net profit on the alleged purchases made in cash by the assessee - HELD THAT:- All the details of books of account and ledger account have been provided to the AO, however, he has not rejected the book results prior to estimation. Assessee has contended that estimation of profit without rejecting the book results in itself vitiates the assessment proceedings and the impugned addition deserves to be deleted. Although ld. AO has not specifically mentioned about the rejection of book results and has not mentioned section 145(3) of the Act, however, in the assessment order AO has made certain observations which questions the correctness of books and Net Profit estimated by the assessee. So far as this plea of the assessee that books of account not being rejected will result into deletion of the impugned addition, I do not find any merit. After considering the details filed by the assessee, financial statements for the years under appeal and considering the net profits offered by the assessee in subsequent years showing the turnover of Livestock/Poultry products equal to the amounts of goods brought from VHPL on behalf of his clients and the assessee adds back the profit which is normally the commission per kg basis and declares the sales, the activity of business of Livestock and earning commission per kg basis for transporting Livestock from VHPL to the retailers of Dhule District remain proved but the AO has estimated the profit as applicable to retailer traders which is not applicable to assessee since he is engaged in the business of transportation of Livestock and is not a retailer. Income earned on the alleged transaction of purchases referred in the assessment order - Net profit offered in the past and in subsequent period and also considering the fact that assessee is mainly involved in transporting of livestock and poultry products and the income is in the nature of Commission which is earned on per kg basis, deem it proper to apply the net profit rate of 1.50% on the turnover of Rs. 2,85,94,760/- referred in the assessment order and calculate the profit at Rs. 4,28,921/-. However, since the assessee has already offered the profit of Rs. 3,50,828/- in the income-tax return, the excess amount of profit at Rs. 78,093/- is sustained in the hands of assessee. Finding of ld.CIT(A) is set aside and grounds of appeal raised on merits by the assessee is partly allowed.

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• 2025 (2) TMI 574
  Addition of one time life membership fees as non-corpus fund and not eligible for exemption u/s 11(1)(d) - HELD THAT:- The life and institutional membership fees received are not voluntary contributions. Hence whether or not they have been given with a specific direction to form a part of the corpus fund or not is not material as is the issue whether such receipts are revenue or capital in nature. There is no infirmity in the order of the AO to add these such fees to the income of the assessee. As has been held in the case of CIT vs Divine Light Mission [ 2004 (4) TMI 25 - DELHI HIGH COURT] such receipts are income from property held under trust which the AO has considered and has allowed set apart of income upto 15%. The only ground of appeal raised is dismissed.

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• 2025 (2) TMI 573
  Reopening of assessment u/s 147 - disallowance of the Bad-debts claimed - change of opinion - HELD THAT:- From the perusal of the reasons recorded as well as perusal of the observation of the AO in disposing the objections raised by the assessee, we find that there is no quarrel that assessee has not truly and fully disclosed all the material facts necessary for the purpose of assessment. In the original assessment proceedings, the AO after considering all the material has framed an opinion that the income declared by the assessee is true and correct. There was nothing more to disclose and a person cannot be said to have omitted or failed to disclose something when, of such thing, he had no knowledge. Not only material facts were disclosed by the assessee but also they were fully scrutinized by the AO in the original assessment proceedings and figure of income as well as the deductions were worked out by the AO. The claim of bad debts is duly disclosed in the Profit Loss account which was available with the AO while framing the assessment. Now on the same material AO has tried to cover up the error and omission by way of reopening the assessment without any fresh material which is nothing but mere change of opinion. No new information and/ or tangible material was found and the formation of any opinion based on same facts which were then available with the AO at the time of original assessment is not permissible By respectfully following the judgement of Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT ] we are of the considered opinion that the reopening in the instant case is not based on fresh material and is in the nature of mere change of opinion. Accordingly, the notice issued u/s 148 is hereby quashed. The ground of appeal No 1 of the assessee is allowed.

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• 2025 (2) TMI 572
  Addition u/s 41(1) - assessee contended that the liability was duly disclosed in its books of account and there was no cessation of liabilities - HELD THAT:- The assessee in its explanation vide letter dated 11.12.2017 is clearly submitted that outstanding balance of M/s Baba Panchanan Construction Suppliers was lying since FY 2011-12. It has also been stated by the assessee that amount has not been paid due to supply of bad materials. We have gone through the cited decision of Dattatray Poultry Breeding Pvt. Ltd. [ 2019 (4) TMI 1171 - GUJARAT HIGH COURT ] wherein it has been held that while the assessee has continued to declare the trading liability in its books of accounts no benefit can be said to have been obtained in respect of such trading liability by way of remission or cessation thereof and thus the requirement of Section 41(1) is not satisfied. We further find that for AY 2012-13 in the assessee s own case ITAT, Kolkata Bench has decided the specific issue of old liabilities and creditors were examined and AO did not raise any doubt or suspicion about the list of creditors except for certain payables. Hence, once such assessment is complete the revenue authorities cannot in a subsequent year take a diametrically opposite view and consider the same to be ingenuine. Addition u/s 41(1) is hereby to be bad and illegal. Accordingly, amount as made u/s 41(1) is directed to be deleted. Addition u/s 69 - Assessee had purchased a demand draft for registration of land at Hatia - It is pertinent to mention that demand draft for registration has been spent by the assessee for FY 2014-15, it was accounted for under fixed asset held for that year. Hence we are in this view that section 69 does not apply because all investment has duly recorded in the books of account. Accordingly, addition under this head made and directed to be deleted. Appeal of the assessee is allowed.

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• 2025 (2) TMI 571
  Addition u/s 69C - unexplained purchases - taxed the same u/s 115BBE - HELD THAT:- The assessee is in the business of non-edible oil and other soap material, therefore, the profit embedded in unexplained purchases should be estimated taking into consideration the GP which has been shown in the identical industry. The past history of the assessee is best guiding factor of trade results. As decided in the case of CIT Vs Bhawan Va Path Nirman (Bohra) [ 2002 (4) TMI 26 - RAJASTHAN HIGH COURT] has held that the past history of the assessee is best guiding factor. The fact remains that the Ld. CIT (A) estimated the profit on short stock by applying profit rate of 6.97% and the weighted average rate of GP is 7.96% for A.Y. 2014-15, 2015-16, 2016-17 and 2017-18. Therefore, keeping in mind the doctrine of equity, justice and good conscious business income should be estimated @ 8% on the unexplained purchases. Addition of unaccounted sales - AO made the addition treating the same as cash sales out of the books in the hands of the assessee on the basis of documents found from Shubh Laxmi Group seized - HELD THAT:- AO used the statement of Birendra Taparia against the assessee without providing the copy of the statement to the assessee and without providing opportunity of cross examination which is against the principle of natural justice. AO has not reproduced the relevant part of the statement in the assessment order although he mentioned in assessment order that he is reproducing the relevant part of statement. AO has made separate addition on account of unaccounted purchases and short stock treating the same as unaccounted sales therefore, the separate addition on account of sales out of the books cannot be made. Therefore AO has not justified in making the addition on account of unaccounted sales.

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• 2025 (2) TMI 570
  Mistake apparent on record has occurred in the order of the Tribunal - trust had already been granted final registration, while the assessee believed it had provisional registration and applied for final registration - whether the trust s registration u/s 12A was provisional or final? Assessee Trust was an existing charitable Trust u/s 12A before 01.04.2021 and the assessee had applied for fresh registration u/s 12A(1)(ac)(i) and fresh registration was granted on 06.04.2022 which was valid up to AY 2026-27. Assessee again applied for registration u/s 12A(1)(ac)(iii) which was rejected by the CIT (Exemptions), Kolkata observing that the registration of the assessee was valid till AY 2026-27 and there was no need to apply again. Assessee filed appeal before this Tribunal and the Tribunal set aside the order of ld. CIT (Exemption) and held that there was no bar in moving the application for final registration and restored the matter to ld. CIT (Exemption) to consider the application of the assessee for final registration HELD THAT:- Where due to technical glitches, Form No. 10AC has been issued during FY 2021- 2022 with the heading Order for provisional registration or Order for provisional approval instead of Order for registration or Order for approval , then all such Form No. 10AC shall be considered as an Order for registration or approval and, in such cases where Form No. 10AC has been issued. Therefore, all registrations issued by CPC, Bengaluru under sub-clause (i) of section 12AC(1) would be construed as if granted for regular purposes. Department has come with Miscellaneous Application stating therein that the observation of this Tribunal is based on incorrect assumption of facts and that the Tribunal has assumed that the assessee has been granted provisional registration whereas, the registration granted to the assessee earlier vide order dated 03.07.2020 was a regular/final registration. As noted above, the aforesaid observation of the Tribunal was on account of the aforesaid confusion created on account of incorrect mention in the relevant columns of Form 10AC stating the said order to be a provisional order. The said confusion stood clarified by the CBDT under circular No. 11 of l2022 (supra), vide which it has been clarified that the provisional registration will be construed as regular registration u/s 12A(1)(ac)(i) read with Section 12AB(1)(a) of the Act. Therefore, there was no requirement of setting aside this matter to the file of the ld. CIT (Exemption). Therefore, under these circumstances, an inadvertent error apparent on record has occurred in the order of the Tribunal because of not bringing the aforesaid developments before this Tribunal. Therefore, the impugned order of the Tribunal[ 2024 (1) TMI 1437 - ITAT KOLKATA] is hereby recalled.

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• Customs

• 2025 (2) TMI 569
  Condonation of gross delay of 499 days in filing the appeal - no satisfactory reason for delay - Refund of differential duty at the higher rate @ 12.5% instead of @ 7.5% for the import of Edible Grade Crude Palm Oil - change in duty rates through Notification No.46/2015-Cus dated 17.09.2015, which was published in the Gazette Notification on 21.09.2015 - It was held by CESTAT that The Notification No.46/2015-Cus dated 17.09.2015 is not applicable to the facts and circumstances of the case. The differential duty is not payable by the respondent. HELD THAT:- There is a gross delay of 499 days in filing the appeal which has not been satisfactorily explained - There is no good reason to interfere with the impugned order passed by the Customs Excise and Service Tax Appellate Tribunal, Kolkata. The appeal is, therefore, dismissed on the ground of delay as well as on merits.

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• 2025 (2) TMI 568
  Valuation of imported goods - Black Pepper - rejection of declared value - re-determination of transaction value - prohibited goods or not - Confiscation - penalty u/s 112 114AA of CA, 1962 - whether the importer had contravened the MIP price fixed by the DGFT N/N. 21/2015 20 dated 25.07.2018 or not? - HELD THAT:- There is no dispute that in terms of Explanation (1) (i) to Rule 12 ibid, when the proper officer has reason to doubt the declared value and where the declared value is rejected, the value shall be determined by proceeding sequentially in accordance with rules 4 to 9 . Is the goods imported, a prohibited goods in India? - HELD THAT:- The answer is no, since, firstly the DGFT Notification No. 21/2015-2020 though prohibits the import as a policy, however the policy condition is not absolute. The same is subject to the condition that import is free if CIF is above Rs. 500/- per Kg. So, the subject goods is made prohibited , once again in a grave defiance of the condition of a guiding Rule/Circular issued in this regard, by ignoring that the prohibition is only a conditional one and not an absolute one. References were made to clause (d)/para 2 of Article III, Article 5 of the SAFTA, apart from Article III of GATT, to highlight that Free Trade Agreements are part of International Law, accordingly the Govt. of India had granted concessional rate of Basic Customs Duty (BCD) for the impugned goods, but unfortunately, the Commissioner is only enforcing non-tariff restriction in the guise of MIP by treating the goods in question as prohibited . Conclusion - The declared assessable value of the impugned goods did not warrant any interference, much less any re-determination as done by the proper officer in the impugned order and hence, the impugned order cannot sustain. Consequently, there cannot be any room also to impose any penalties under Sections 112 114AA of the Customs Act, 1962 on the Appellants. Appeal allowed.

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• 2025 (2) TMI 567
  Wrongful classification of imported goods - pudding and jelly - failure to affix stickers declaring RSP on the individual packets of imported goods - levy of penalty u/s 112 (a) of Customs Act, 1962 for allegations of contraventions and misdemeanors - HELD THAT:- The case against the main party on the issue of Notification was decided M/S MAGNUM CHOCOLATIER VERSUS C.C. AHMEDABAD [ 2019 (9) TMI 1221 - CESTAT AHMEDABAD ]. However, the contents of the decision in the matter of M/s. Magnum Chocolatier do not indicate whether the issue of labelling of consignment was before the Division Bench of this Tribunal or was given relief of to the party at any stage earlier, before the contest in the Tribunal. Since, the decision delivered does not show any context on the point of RSP, it will be reasonable for this Court to conclude that the same was not agitated to the prejudice of the party by the department. As far as, the issue of classification is concerned even from the judgment, it is clear that it has gone in favour of the importer, therefore, the main party stands exonerated of the charges. The question of any allegation sustaining against the CHA, therefore, does not arise. The decision cited by the learned advocate are clearly in support of the proposition that there was no prior knowledge of the contents of the container or how they were going to be presented before the Customs authority for examination. The actions taken by the CHA on the basis of documents presented to him by his client, who as on date also stands absolved do not leave any scope for imposition of penalty. Conclusion - The actions taken by the Custom Broker were based on the information provided by the importer, absolving them of any penalty. The appellant was not liable for misclassification of goods and penalty under Section 112(a) of the Customs Act, 1962. The impugned order is set aside - appeal allowed.

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• 2025 (2) TMI 566
  Refund claim for excess Countervailing Duty (CVD) paid - applicability of the principle of unjust enrichment - appellant passed on the incidence of the duty to the buyers or not - rejection also for want of reassessment - principles of unjust enrichment. Refund claim for excess Countervailing Duty (CVD) paid - HELD THAT:- The refund claim in the present case is with respect to the excess CVD as was paid at the time of import of the mobile phones in the Year 2014. The claim has been filed in the Year 2019 pursuant to the judgment of Hon ble Supreme Court in the case of M/s. SRF Ltd. [ 2015 (4) TMI 561 - SUPREME COURT] - in any refund application on any ground whatsoever the same is required to be filed within one year from the date when the duty/excess duty, the refund whereof is claimed, was paid. The second proviso clarifies that one year limitation shall not apply if the duty/excess duty was paid under protest. The appellant otherwise has taken the plea the duty at the rate of 6% was paid under protest which otherwise was to be deposited at the rate of 1%. But there are no document on record to corroborate and justify the said testimony. There are no fault when it has been held that the refund claim was filed much after the completion of one year from the date of payment of duty ass well as from the date of order of Hon ble Supreme Court in SRF Ltd. The order to that extent is therefore hereby upheld. Rejection for want of reassessment - HELD THAT:- It is observed that vide the same letter vide which the impugned claim was filed i.e. the letter dated 25.11.2019, the appellant had requested for amendment of 77 number of Bills of Entry which were of the impugned Bills of Entry. Apparently and admittedly, the said request has been rejected. Admittedly there is no challenge to the said rejection by the appellant. The outcome remains is that the Bills of Entry, though were self-assessed but have not got modified/amended/reassessed prior filing of the impugned refund claim - the grounds of grievance raised by the appellant against the impugned order are not sustainable. The order under challenge is therefore found no infirmity to this extent also. Rejection on the ground of unjust enrichment - presumption about incidence of duty passed on to the buyer or not - HELD THAT:- HELD THAT:- The claims of refund except where provision is held unconstitutional, is to be preferred and adjudicated upon either under Section 11B of Central Excise Act, 1944 or under Section 27 of Customs Act, 1962. It shall be incumbent for the claimant to establish that the burden of duty has not been passed on to third party. The refund claim shall not be maintainable nor even by way of a civil suit the only possible remedy of that under Article 226 before Hon ble High Court or under Article 32 before the Hon ble Apex Court - the law of land and in absence of any evidence, other than the afore observed incomplete C.A. Certificate, to discharge the burden, there are no reason to differ with the findings arrived at by Commissioner (Appeals). Conclusion - i) Refund claims under Section 27 of the Customs Act require adherence to the one-year limitation period unless duty was paid under protest, which must be substantiated with evidence. ii) Reassessment or amendment of self-assessed Bills of Entry is a prerequisite for processing refund claims under Section 27. iii) The principle of unjust enrichment applies to refund claims, and claimants must provide substantial evidence to prove that the duty incidence was not passed on to buyers. Appeal dismissed.

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• 2025 (2) TMI 565
  Smuggling of gold jewelry - burden of proof regarding the origin of the gold lies with the appellants or the Customs Department under Section 123 of the Customs Act, 1962 - HELD THAT:- The appellants satisfactorily proved that seized gold belongs to them. There are no any material retractions or contradictions in their statement. Their statements are natural. No any special delays in statement of Appellant No. 1 on 05.04.2022 and 23.05.2022. Findings of Adjudicating Authority as well as Commissioner (Appeals) are based on assumptions and presumptions. M/s Jain Jewellers accepted to receive payment through RTGS. In business, payment as such in the statement are natural transaction. Hon ble Supreme Court in the case of Union of India Vs Kasambhai Umerbhai Kureshi [ 1979 (2) TMI 216 - BOMBAY HIGH COURT ] held that where there was nothing on record to show that the goods were seized by the Police on reasonable belief that they were smuggled goods, Section 123 would not apply. Revenue relied on Commissioner of Customs, Cochin Vs Om Prakash Khatri [ 2019 (3) TMI 457 - KERALA HIGH COURT ] in which it is held that Burden of proof, reasonable belief, unmarked gold recovered from the possession of two persons and their statements as to the source of the gold sufficient to have a reasonable belief that gold is smuggled. No satisfactory explanation given to prove the legitimacy of the gold carried by intercepted persons. Burden of proof under Section 123 of Customs Act, 1962 being only of a reasonable belief, effectively discharged by Department. Mere fact that interception and seizure not affected in an international border or near an airport or seaport irrelevant. Onus to prove that the gold was not smuggled, so as to upset the reasonable belief entertained by Department shifted and squarely rested on owner. Registered produced and the transactions alleged as well as the quantity seized and that seen from the alleged Travel Authorisation Vouchers not tallying . The seized gold or ornament, there is no sufficient reason to believe the gold is smuggled. Appellants have given satisfactory explanation about the seized gold. Therefore, this case law is not applicable in this case. Conclusion - Revenue prima facie failed to establish reasonable belief that they are smuggled gold. Whereas appellants successfully proved the legitimacy of the gold carried by them. Appeals have merit and are liable to be allowed.

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• Insolvency & Bankruptcy

• 2025 (2) TMI 564
  Seeking approval of Resolution Plan - Authority to submit a Resolution Plan for consideration after the approval of another Resolution Plan by the Committee of Creditors - HELD THAT:- Resolution Plan submitted by SRA has been approved by the CoC and Application for approval of Resolution Plan is filed by the RP, which is pending consideration. There are various Applications, which were filed objecting to the Resolution Plan, which are also pending consideration before the Adjudicating Authority. The Adjudicating Authority by the order impugned itself, adjourned the Applications to next date, i.e., 09.12.2024. When a Resolution Plan has been approved by the CoC, the CoC is clearly bound by such approval of Resolution Plan. The law in this reference is well settled by the Hon ble Supreme Court in Ebix Singapore Pvt. Ltd. vs. Committee of Creditors of Educomp Solutions Ltd. Anr. [ 2021 (9) TMI 672 - SUPREME COURT ], wherein it has been held by the Hon ble Supreme Court that Resolution Plan even prior to the approval of the Adjudicating Authority is binding inter se the CoC and the SRA. The CoC is clearly not entitled to consider any other request for consideration of any Resolution Plan, after it has approved the Resolution Plan, which is pending consideration for approval before the Adjudicating Authority. The learned Counsel for the Appellant submitted that the SRA itself is no longer in existence and one of the JV Partner has withdrawn and it has requested to opt another JV Partner, which itself makes the Plan unimplementable. Conclusion - The rejection of the Appellant s Application was upheld as it was not within their jurisdiction to submit a new Resolution Plan. Appeal dismissed.

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• PMLA

• 2025 (2) TMI 563
  Legality of granting bail - Money Laundering - proceeds of crime - illegal mining and selling of sand without using the departmental pre-paid transportation E-challan - compliance with Section 45 of the PMLA or not - admissibility of statements recorded - HELD THAT:- It is well settled position of law that Section 45 of the PMLA starting with a non-obstante clause has an overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. Section 45 imposes two conditions for the grant of bail to any person, accused of an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule. The two conditions are that (i) the prosecutor must be given an opportunity to oppose the application for bail; and (ii) the Court must be satisfied that there are reasonable grounds for believing that the accused person is not guilty of such offence and that he is not liable to commit any offence while on bail. As well settled, these two conditions are mandatory in nature and they need to be complied with before the accused person is released on bail. It is further required to be noted that Section 65 of PMLA requires that the provisions of Cr.P.C. shall apply insofar as they are not inconsistent with the provisions of the PMLA and Section 71 provides that the provisions of PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Hence the conditions enumerated in Section 45 will have to be complied with even in respect of application for bail made under Section 439 of Cr.P.C. So far as facts of the present case are concerned, the High Court in a very casual and cavalier manner, without considering the rigours of Section 45 granted bail to the respondent on absolutely extraneous and irrelevant considerations. There is no finding whatsoever recorded in the impugned order that there were reasonable grounds for believing that the respondent was not guilty of the alleged offence under the Act and that he was not likely to commit any offence while on bail. Noncompliance of the mandatory requirement of Section 45 has, on the face of it, made the impugned order unsustainable and untenable in the eye of law. There are no substance in the submission made by learned Senior Advocate Ranjit Kumar for the respondent that the respondent has not been shown as an accused in the predicate offence. It is no more res integra that the offence of money laundering is an independent offence regarding the process or activity connected with the proceeds of crime, which had been derived or obtained as a result of criminal activity relating to or in relation to a schedule offence. Hence, involvement in any one of such process or activity connected with the Proceeds of Crime would constitute offence of money laundering. This offence otherwise has nothing to do with the criminal activity relating to a schedule offence, except the Proceeds of Crime derived or obtained as a result of that crime. As well settled, the offence of money laundering is not an ordinary offence. The PMLA has been enacted to deal with the subject of money laundering activities having transnational impact on financial systems including sovereignty and integrity of the countries. The offence of money laundering has been regarded as an aggravated form of crime world over and the offenders involved in the activity connected with the Proceeds of Crime are treated as a separate class from ordinary criminals. Any casual or cursory approach by the Courts while considering the bail application of the offender involved in the offence of money laundering and granting him bail by passing cryptic orders without considering the seriousness of the crime and without considering the rigours of Section 45, cannot be vindicated. The impugned order passed by the High Court being in teeth of Section 45 of PMLA and also in the teeth of the settled legal position, it is opined that the impugned order deserves to be set aside, and the matter is required to be remanded to the High Court for fresh consideration. Accordingly, the impugned order is set aside, and the matter is remanded to the High Court for consideration afresh with the request to the Chief Justice to place the matter before the Bench other than the Bench which had passed the impugned order. Conclusion - i) Section 45 of the PMLA imposes mandatory conditions for granting bail, requiring courts to be satisfied of the accused s non-guilt and low likelihood of reoffending. The High Court s failure to adhere to these conditions rendered its bail order unsustainable. ii) Statements recorded under Section 50 of the PMLA are admissible, and Article 20(3) does not apply to investigative processes under this section. Appeal allowed by way of remand.

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• 2025 (2) TMI 562
  Money Laundering - seeking grant of bail - signing and approving fabricated invoices - Section 439 of the Code of Criminal Procedure, 1973 - applicability of twin conditions under Section 45 of the PMLA - HELD THAT:- The statutory legal position as applicable is required to be considered and stated. Chapter III of the Constitution of India enumerates the fundamental rights which have been time and again construed to be inherent and any law which abrogates and abridges such fundamental rights would be violative of the basic structure doctrine including right of protection imposed against arrest and detention in certain cases contemplated under Article 22 of the Constitution of India. In the present case it is seen that on 19.07.2023 Applicant was summoned by ED in connection with the investigation however ED exercised its power under Section 19 (1) of the PMLA arrested Applicant on the same day. It is seen that no grounds of arrest as mandated under Section 50 of Cr.P.C were provided save and expect an arrest memo. It is prima facie seen that Applicant before me has fully co-operated with the investigation and made all disclosures which is evident from the prosecution complaint appended at page No. 54 of the Application. Prosecution Compliant is filed on 15.09.2023. The sole allegation against the Applicant is that he signed and approved fabricated invoices based on falsified attendance sheets of staff records thereby facilitating alleged fraudulent activities and generation of proceeds of crime. The Applicant held his position for only five months and verified 15 bills / invoices, one of the bill / invoice is appended at page Nos. 494 and 495 of the Application. There is no impediment or provision in EOI guidelines that mandated Dean of Jumbo Covid Centres to physically verify deployment of staff, their attendance or doctor to patient ratio which has been brought to my notice prima facie since that is one of the allegation in the prosecution complainant. Instead, designated staff members performed this duty and reported to the Dean - If at all it is prosecution case that Applicant aided fraudulent activities of M/s. Lifeline Hospital Management Services, prima facie there is no material on record to substantiate this allegation. The chargesheet encloses statements of co-accused which is the sole basis of allegation so as to come to conclusion that illegal proceeds of crime under the contract were routed to the Applicant via his driver once again will be a matter of trial. However, no recovery has been made till date. When the investigation is completed, can twin conditions under Section 45 of PMLA be applied mechanically despite in absence of prima facie evidence, warranting further incarceration of the Applicant or otherwise? - HELD THAT:- It is seen that Applicant is not made an accused in predicate offence or in the ECIR. Chargesheet has been filed in predicate offence, however charges are yet to be framed. Trial is not likely to commence hence trial in PMLA offence cannot commence. Applicant is incarcerated for 1 year 6 months 25 days after duly co-operating with the investigation. The existence of proceeds of crime at the time of trial of the offence under Section 3 of the PMLA can be proved only if the Scheduled Offence is established in prosecution of the Scheduled Offence. This clearly envisages that even if trial of the case under the PMLA proceeds it cannot be officially tested unless the trial of the Scheduled Offence concludes. In the present case before me in the Scheduled Offence, Chargesheet has been filed but trial is not likely to start in the near foreseeable future. Therefore prima facie, I see no possibility of both trials concluding in the foreseeable future. Applicant before me is in judicial custody pending trial for more than one year. The Supreme Court in the case of Gudikanti Narasimhulu Ors. Vs. Public Prosecutor, High Court of Andhra Pradesh [ 1977 (12) TMI 143 - SUPREME COURT ] has reiterated the same principle. Keeping the aforesaid principle in mind and the facts of the present case, it is prima facie seen that the present case would largely depend upon documentary evidence which is already seized by the prosecution and is made part of the Chargesheet. As such there is no possibility of tampering with the evidence. The present case in hand is restricted to grant of bail on account of incarceration of the under trial accused / Applicant having fully co-operated in the investigation and made all disclosures, it is refrained to comment on any of the merits of the matter. Any comment made above on the merits is cursory and only to the extent of considering the Applicant s case for grant of bail and is not an opinion expressed by the Court so as to influence the trial which may be noted. Conclusion - Given the incarceration of Applicant and the absence of any foreseeable conclusion of the trial, continued detention would violate the Applicant s fundamental right under Article 21 of the Constitution, which guarantees a speedy trial and personal liberty. The primary allegation relates to the Applicant s temporary position which no longer persists, mitigating concerns of tampering with the evidence. Any such apprehension can be addressed through appropriate conditions. Continued incarceration of the Applicant would be unwarranted and would amount to punitive detention prior to the establishment of guilt. Applicant is granted bail subject to the fulfilment of conditions imposed - bail application allowed.

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• Service Tax

• 2025 (2) TMI 561
  Issuance of the show cause notices (SCNs) by the respondents without pre-SCN consultation - violation of Master Circular dated 10th March 2017 or not - SCNs issued fall within the exceptions outlined in the Circular No. 1079/03/2021-CX dated 11th November 2021 or not - HELD THAT:- The SCN itself is absolutely vague and without reference to any of the contentions which are raised by the petitioners in pre-consultation which is already decided by the respondents-authorities vide order dated 19.10.2023 passed disposing such contentions during the pendency of these petitions. In the facts of the case, the Adjudicating Authority has also passed an Order-in-Original dealing with such contentions of the petitioners confirming the demand. However, the show cause notice dated 29th September, 2020 did not contain any of the grounds on which Order-in-Original is passed or the grounds on which the objections are disposed of in pre-consultation during the pendency of these petitions. In such circumstances, the respondents-authorities is required to issue a fresh show cause notice in accordance with law. In view of the decision of this Court in case of L AND T Hydrocarbon Engineering Ltd. [ 2022 (4) TMI 70 - GUJARAT HIGH COURT ], it is opined that none of the show cause notice except Special Civil Application No. 5685 of 2022 can be sustained in absence of pre-consultation notice. Even in Special Civil Application No. 5685 of 2022, the show cause notice contained the ingredients of the issue of liability of the petitioner but it only refers to the difference in value of income as per Form 26AS and as per Form ST-3 returns filed by the petitioner. In such circumstances, the show cause notices issued in the respective petitions are hereby quashed and set aside and therefore as a consequence the Order-in-Original if any shall also be quashed and set aside, with a liberty to the respondent-Department to initiate the proceedings or to revive the original show cause notice subject to outcome of the pending proceedings before the Hon ble Apex Court in accordance with law. Conclusion - Absence of mandatory pre-SCN consultation is fatal the the present SCN. Petition disposed off.

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• 2025 (2) TMI 560
  Abatement of appeal - Non-payment of Service Tax under Goods Transport Agency Services on freight amounts paid to M/s. Gaerish Logistics (P) Ltd. for handling export goods - eligibility for exemption under N/N. 18/2009-ST. - HELD THAT:- As the NCLT, Chennai has ordered for Liquidation of the appellant vide its order dated 19.03.2018 and as the Liquidator has confirmed non receipt of claim from the Deputy Commissioner of GST and Central Excise, Trichy and also as no application as per Rule 22 has been made by the Official Liquidator appointed by the NCLT for continuance of the appeal, the appeal should abate in terms of the above referred Rule. As such the appeal gets abated in terms of Rule 22 of the CESTAT (Procedure) Rules, 1982.

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• 2025 (2) TMI 559
  Denial of CENVAT Credit - capital goods/input services - Electrical Transmission Tower Materials - 132 KVD/CTLNT Towers - Mild Steel Section for Templates - Health Insurance of staff and family - Consultancy for construction of railway line - Supervision charges for construction of Electrical Transmission Towers - denial of CENVAT Credit on the grounds of Excess credit availed and Credit availed on improper documents - applicability of the extended period of limitation - imposition of penalties. Whether the goods such as Electrical Transmission Tower Materials, 132 KVD/CTLNT Towers, and Mild Steel Section for Templates qualify as capital goods under Rule 2(a) of the CENVAT Credit Rules, 2004? - HELD THAT:- These items have been used by the Appellant in relation to transmission of electricity through Power Transmission Lines and thus the same are to be treated as components or accessories of capital goods falling in terms of Rule 2(a)(A) of the CENVAT Credit Rules, 2004. These Power Transmission lines cannot be erected without transmission towers; the transmission towers, hence, are the necessary component of Power Transmission Line and thus the same are to be treated as the components or accessories of the capital goods falling under clause (i) of the Rule 2(a)(A) of the CENVAT Credit Rules, 2004; as per clause (iii), the components, spares and accessories of the goods specified at clause (i) and (ii) of Rule 2(a)(A) of the Rules are eligible as capital goods - the transmission towers are eligible capital goods in terms of clause (iii) of Rule 2(a) (A) of the CENVAT Credit Rules, 2004 and the CENVAT Credit of duty of Rs.90,44,256/- has correctly been correctly availed by the Appellant in respect of such goods. This issue is no more res integra as an identical issue has already been examined in the case of M/s. Bharti Airtel Ltd. v. Commissioner of Central Excise, Pune [ 2024 (11) TMI 1042 - SUPREME COURT] wherein the Hon ble Apex Court has allowed the credit in respect of similar items/goods holding the same as components/accessories of capital goods falling under sub-clause (i) of Rule 2(a)(A) of the CENVAT Credit Rules, 2004. Thus, the Appellant is eligible for the credit in respect of Electrical Transmission Tower Materials , 132 KVD/CTLNT Towers and Mild Steel Section for Templates . Accordingly, the denial of CENVAT Credit to the appellant on this count is set aside. Whether services like Health Insurance of staff and family, Consultancy for construction of railway line, Supervision charges for construction of Electrical Transmission Towers, and others qualify as Input services under Rule 2(l) of the CENVAT Credit Rules, 2004? - HELD THAT:- The provision of medical facilities within the Port Area is a pre-requisite for obtaining approval for the port under the Major Port Trust Act, 1963 and the Indian Ports Act, 1908. It has been stated by the Appellant that they have an insurance policy to cover the hospitalization expenses of the employees and their family members as per the company s policy of the Corporate Social Responsibility . Therefore, the same are input services for availing credit of Service Tax - the denial of credit in respect of Health Insurance of staff and family vide the impugned order is not sustainable. Whether the denial of CENVAT Credit on the grounds of Excess credit availed and Credit availed on improper documents is justified? - HELD THAT:- The submission of the Appellant that discrepancies pointed out by Revenue in the Show Cause Notice such as Telephone bills in name of employee, non-mentioning of Service Tax Registration number in invoices, invoices in name of previous entity viz. Tata Steels, Jurisdictional details not mentioned, etc., are procedural infractions due to which substantive benefit of credit cannot be denied to the Appellant, are agreed upon. Accordingly, the CENVAT Credit availed by the Appellant in this regard remains allowed, as they are covered within the definition of input services . However, the Appellant is liable to reverse the credit of Rs.25,544/- out of the credit of Rs.9,65,903/-, along with interest, which the Appellant had agreed to reverse before the ld. adjudicating authority. Consequently, the Appellant is eligible for the credit of Rs.9,40,359/- [Rs.9,65,903/- - Rs.25,544/-] denied by the ld. adjudicating authority and they are liable to reverse the credit of Rs.25,544/-, along with interest, if not reversed already. Extended period of limitation - HELD THAT:- The issues involved in the present appeal were subject matters of litigation before various legal fora. Further, the Department has not brought in any evidence to establish the allegation of suppression with intention to evade tax on the part of the Appellant. In these circumstances, the invocation of extended period of limitation is not sustainable. Therefore, the Appellant succeeds on merits as well as on limitation. Levy of penalties - HELD THAT:- The penalties are not imposable on the Appellant. Accordingly, the penalties imposed are set aside. Conclusion - i) The denial of CENVAT Credit for items listed as capital goods and input services was set aside. ii) The Appellant was required to reverse specific amounts of credit they agreed to, but the remaining credit was deemed eligible. iii) The demand raised by invoking the extended period of limitation was set aside, and no penalties were imposed. Appeal disposed off.

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• 2025 (2) TMI 558
  Liability to pay service tax - rent-a-cab scheme operator s service - tour operator s service - business auxiliary service - abatement under N/N. 01/2006-S.T. for rent-a-cab services and N/N. 38/2007-S.T. for tour operator services - extended period of limitation - penalties u/s 78 and Sections 77(1)(a) and 77(2) of the Finance Act, 1994. Abatement under N/N. 01/2006-S.T. for rent-a-cab services and N/N. 38/2007-S.T. for tour operator services - HELD THAT:- The appellant submits that rightly paid service tax on the liability payable by them and differential Service Tax liability confirmed in the impugned order is on account of not allowing the abatement provided under N/N. 01/2006-S.T. dated 01.03.2006. The appellant claims that they are eligible for the abatement which has not been extended to them by the ld. adjudicating authority. However, it is found that the ld. adjudicating authority has observed that the appellant has raised the bill for Service Tax on the gross amount without availing any abatement. It is found that the appellant has not disputed this finding of the Ld. adjudicating authority. It is also found that the appellant has also not produced any evidence to substantiate their claim of eligibility for the abatement. Extended period of limitation - HELD THAT:- The appellant has been registered with the Service Tax Department and had been paying Service Tax regularly and also filing returns. Thus, the demand of Service Tax short paid, if any, should have been raised within the normal period of limitation as there is no suppression of facts with intention to evade payment established in this case. It is held that the extended period of limitation cannot be invoked to demand Service Tax in this case. Accordingly, the demand of Service Tax by invoking the extended period of limitation is not sustainable. Penalty under Section 78 of the Finance Act, 1994 - HELD THAT:- Penalty under Section 78 of the Finance Act, 1994 is not imposable on the appellant. Consequently, the penalty imposed under Section 78 of the Act is set aside. Penalties imposed under Section 77(1)(a) and Section 77(2) of the Finance Act, 1994 - HELD THAT:- The appellant has not made any submission for non-imposition of penalties under these sections. We find that the appellant has not registered for rendering service under the category of tour operator s service and business auxiliary service . Thus, the penalties under Sections 77(1)(a) and Section 77(2) of the Finance Act, 1994 has been rightly imposed. Accordingly, the penalties imposed under these sections upheld. Conclusion - i) The demands for Service Tax under the categories of rent-a-cab scheme operator s service , tour operator s service , and business auxiliary service are not sustainable for the extended period of limitation due to lack of evidence of suppression or intent to evade tax. ii) The appellant is liable to pay Service Tax for the normal period of limitation along with interest. iii) The penalty under Section 78 of the Finance Act, 1994 is not imposable, while penalties under Sections 77(1)(a) and 77(2) are upheld. Appeal disposed off.

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• 2025 (2) TMI 557
  CENVAT Credit - dumpers/tippers were received from M/s SREI Equipment Finance Pvt. Ltd. (SEFPL) under operating lease agreement and not registered in their name - penalty - demand of interest - extended period of limitation. HELD THAT:- The issue relating to availment of Cenvat Credit on Dumpers/Tippers prior to 22.06.2010 is no more res integra. Reliance placed on the decision of Commissioner of Central Excise, Bhopal vs Hindustan Copper Ltd [ 2016 (8) TMI 1127 - CESTAT NEW DELHI ] in the regard. This Tribunal in the case of Commissioner, C.Ex CGST, Delhi-III vs Brahmaputra Infrastructure Ltd., [ 2018 (7) TMI 438 - CESTAT NEW DELHI ] has held appellant would be eligible for Cenvat credit 6 ST/53655 of 2015 on dumpers / tippers as inputs which are used for providing the output service. However, the controversy stand resolved with effect from 22/06/2010 with issue of notification No. 25/2010-CE which has amended the Cenvat Credit Rules to allow Cenvat credit for dumpers / tippers registered in the name of service provider for providing taxable service for providing site formation etc. The definition of capital goods in clause (C) was inserted to provide availment of Cenvat credit on Dumpers/Tippers provided such dumpers and tippers are registered in the name of the service provider. When there was ambiguity in the said Rules, the Tribunal and other Appellate forum allowed the credit on such dumpers/tippers following the Apex Court decision in the case of Belani Ores Ltd. Etc. vs. State of Orissa Etc. [ 1974 (9) TMI 115 - SUPREME COURT ]. However, once a specific provision had been inserted in the Cenvat Credit Rules, 2004, it would have to be given a strict interpretation. In the present case, it is noted that the dumpers/tippers on which Cenvat credit had been availed, was not registered in the name of the appellant, as it was in the name of SREI Equipment Finance Pvt Ltd. As the aforesaid notification clearly laid down that such credit could be availed only if the dumpers/tippers were registered in the name of the service provider, the same was not available to the appellant. Demand of interest - HELD THAT:- Supreme Court in the case of Pratibha Processors Ors vs Union of India Ors [ 1996 (10) TMI 88 - SUPREME COURT ] has held that Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. Accordingly, the demand for interest is also upheld. Extended period of limitation - HELD THAT:- Prior to the N/N. 3/2011-CE(NT) dated 01.03.2011, the issue was settled in the favour of the appellant by several decisions of the Tribunal and other appellate fora. The appellant was under the genuine belief that the Cenvat credit on such dumpers/tippers were available to him, under Rule 4(3) of the said Rules. There is no evidence of their intention to evade duty. Thus, the penalty under Rule 14 is not attracted. The demand for the extended period is set-aside. Conclusion - i) Since the dumpers/tippers were not registered in the appellant s name, Cenvat Credit was not admissible. ii) The demand of interest upheld. iii) Demand for the extended period is set-aside. Appeal allowed in part.

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• 2025 (2) TMI 556
  Levy of service tax - value of turnover towards cable network service charges and sale of Set Top Box (STB) as shown in the Profit Loss account enclosed with ITR-V Income Tax Return for the Financial Year 2014- 2015 in terms of the Finance Act, 1994 - HELD THAT:- Though the SCN was issued in the present case prior to the issue of the instructions dated 26.10.2021, the crux of the above instructions squarely apply to the present case. Firstly, the original authority did not discuss the issues under consideration for coming to a conclusion and for confirming the demands raised in show-cause notice, and the learned Commissioner (Appeals) had upheld such order, on the basis of the decision taken by the Tribunal in the case of UCN Cable Network Pvt. Ltd. [ 2016 (9) TMI 188 - CESTAT MUMBAI ] without discussing how the present facts of the case fits in to such relied upon decision. The issue of supply of Set Top Box (STB) by the MSO to their customer, whether it would amenable to levy of service tax or not, was examined by the Co-ordinate Bench of this Tribunal in the case of Dish TV India Limited Vs. Commissioner of Central Excise and Service Tax, Aurangabad [ 2023 (7) TMI 1238 - CESTAT MUMBAI ], wherein it was held that supply of STBs by the appellants is not a service, rather it is a deemed sale, leviable to VAT under the State legislature. The appellants themselves have correctly determined the service tax payable by them, from their financial records duly certified by the Chartered Accountant, and thus have fulfilled all the requirements for discharge of service tax liability along with applicable interest and penalty voluntarily, before filing this appeal before the Tribunal on 28.06.2021. In the above circumstances and on the basis of the discussions, there are no strong grounds found to hold that the appellants did not pay service tax in respect of the differential amount demanded in the show cause proceedings, owing to the reason that the service tax on the taxable value of turnover relating to the financial year 2014-2015 as detailed, have been duly paid by the appellants and the same has been accepted by the Department. Conclusion - The nature of activity undertaken by the DTH operator in providing STB to a subscriber, is provision of an equipment, which is one-time activity, and it is not a part of DTH service in providing television channels for viewing by the subscriber. STBs are deemed sales and not subject to service tax. The impugned order set aside - appeal allowed.

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• Central Excise

• 2025 (2) TMI 555
  Denial of CENVAT Credit - input services - Goods Transport by Road (Freight Inward) - Manpower Recruitment or Supply Agency service - Business Support Service - recovery with interest and penalty - HELD THAT:- It is observed that the appellant has reversed the credit involved on the exempted products and have also paid the interest due. The fact that the excess availed is only Rs 4,03,509/- has not been contested by the Ld. Original Authority. He however felt that the proper procedure had not been followed and demanded the amount payable in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004. The whole issue is procedural in nature and while the appellant was required to follow the prescribed procedure, no act of deliberate deception with the design of securing an unfair advantage has been made out. This being so and considering that demand is disproportionately higher than the advantage if any gained by the appellant and which has subsequently been reversed along with interest, the ends of justice would be met by confirming the credit reversed along with interest already paid and the dispute brought to a close. No purpose would be served in pursuing this low tax amount now that the Finance Act 1994, itself has been repealed. Conclusion - While acknowledging procedural lapses, there are no deliberate deception by the appellant to gain an unfair advantage. In the peculiar facts and circumstances of the case, consideration of justice and expediency requires that the impugned order be set aside and the credit reversed and interest already paid by the appellant be confirmed. Appeal disposed off.

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• 2025 (2) TMI 554
  Clubbing of clearances for excise duty purposes - clearance of M/s Macons Engineers are required to be clubbed with the clearances of M/s Maxocrete Equipments (M/s Macons Equipments) or not - M/s Macons Engineers was a dummy unit - HELD THAT:- The unit of M/s Macons Engineers was considered as a dummy unit by the Central Excise authorities and therefore the documented clearances of M/s. Mecons Engineers cleared from the premises 37-C/A were considered to be that of Ms/ Maxocrete Equipments i.e. the present appellant. The appellants in the instant case has sought to rely on the various case laws as cited above (para 3.1 of this order refers) in their submissions that the show cause notice if not issued to alleged dummy unit, all proceedings initiated against the principal unit would be vitiated. The above said proposition is a question of trite law emanating from above cited rulings which can be raised at any time. Therefore, the Learned Commissioner (Appeals) has clearly erred in denying them the benefit of legal proportion as indicated by appellants which mostly developed later. As things stand today, it is fairly well settled that the show cause notice is required to be issued both to Principal unit as well as alleged dummy unit. Same having been done by the department, the case against principal unit cannot stand. The violation of GIDC agreement, if at all exists is a matter between GIDC and the appellants. Apart from, the above proposition additionally the overwhelming evidence indicates that M/s Macons Engineers was a unit in existence duly documented by various agencies and statement under Section 14 if any to the contrary cannot be given precedence over such documentary evidence. Conclusion - i) The proceedings against a principal unit cannot stand without issuing a Show-cause Notice to the alleged dummy unit. ii) The documentary evidence presented by M/s Maxocrete Equipments sufficiently established the separate existence of M/s Macons Engineers, thereby nullifying the department s allegations. Te order of Commissioner (Appeals) is set aside and appeal is allowed.

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• 2025 (2) TMI 553
  Interest on refund of amount deposited during investigation - relevant date for calculation of interest - removal of Coumarin without payment of duty - whether interest is payable to the appellants in respect of voluntary payments/deposit made towards alleged removal Coumarin without payment of duty from 19th May, 2001 to 24th January, 2004, or otherwise? - HELD THAT:- The final demand confirmed by the Tribunal is limited to the adjudged demands in respect of seized goods alone and the issues have attained finality. These have been duly taken into account by the original authority in his order dated 01.04.2019 and he had accordingly sanctioned the refund of Rs.19,47,750/- and ordered for the said amount to be remitted separately by RTGS/NEFT to the appellant. Thus, the amount of refund has been sanctioned as per law by the original authority and the same bas been duly confirmed by the first appellate authority also. As regards the appellant s claim of interest, it is found that the issue with regard to payment of interest on voluntary deposit made during investigation has been examined by the co-ordinate Bench of the Tribunal in the similar set of facts in the case of Parle Agro Private Limited [ 2017 (2) TMI 984 - CESTAT ALLAHABAD] and it was held that interest is payable from the date of deposit till the date of payment. The Central Board of Excise and Customs (CBE C) has also issued instructions to the departmental field formations vide Circular No. 984/8/2014-CX dated 16.09.2014, wherein it has been clarified that the appellant is entitled for interest on refund of pre-deposit from the date of deposit to the date of refund. In the case of Pace Marketing Specialties [ 2011 (8) TMI 796 - ALLAHABAD HIGH COURT] , the Hon ble High Court of Allahabad upon consideration of the judgement of the Hon ble Supreme Court in the case of Sandvik Asia Limited [ 2006 (1) TMI 55 - SUPREME COURT] had granted interest at the rate of 12% in similar case. In view of the specific stand taken by the co-ordinate Bench of the Tribunal in the case of Parle Agro Pvt. Ltd., this Bench cannot take a different view contradicting the stand already taken therein. Conclusion - The appellant is entitled to interest on the refund of the pre-deposit amount at the rate of 12% per annum. Appeal allowed.

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• 2025 (2) TMI 552
  Short payment of duty - clearances to related persons were to be assessed under Rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rule, 2000 (CEVR) or in terms of Section 4(1) of the Act read with Rule of CEVR - Mutuality of ineterst - Penalty under Section 11AC - HELD THAT:- The Appellant is a Private Limited Company with 2 directors, who are siblings, holding together 99% shares of the company. The Appellant is reportedly effecting most of the clearances to M/s. Harris and Menuk, their main Distributor in which the parents of the 2 directors of the Appellant Company are the Partners. The Appellant and the distributor are related and therefore fall within the ambit of Section 4(3)(b). In terms of Section 4(3)(b) of the Central Excise Act, 1944, it is obvious that both the appellant company and the distributor partnership firm are relatives, and they are so associated with each other, they have interest directly or indirectly in the business of each other. Audit verification has revealed that the price adopted to the distributor was much less than the price adopted at which these goods were sold to ultimate Customers. The pricing pattern itself reveals the mutuality of interest as the Appellant was benefited by reduced tax outflow and benefit to the distributor company was by way of reduction in cost of purchase and payment resulting in the distributor seeking increased supply of goods from the appellant, thus resulting in mutual benefit. The Appellant in their reply to Show Cause Notice or in the Grounds of Appeal have never contested the fact that there did exist a different and depressed price for the sales made by the appellant to their parent s distributorship firm and further they have not disputed the differential duty arising out of such undervalued sales which stood paid up. Such payment of short paid duty according to the price difference as suo motu assessed and computed by them itself evidences the differential pricing and the extent of duty evasion. The transaction value on which the duty is required to be paid is the value of the goods at which the distributor has sold the goods. The Appellant Company and the distributor firm are related persons and the clearances have to be valued in terms of Rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. As such, there are no reasons to interfere with the impugned Order-in-Appeal. Demand of interest - HELD THAT:- Evidently the duty incidence has been passed on to the end customer. It is only after six months from commencement of differential duty payment by appellant, and a month after payment of the final installment of differential duty due upto October 2014 in March 2014, that in May 2014, the SCN came to be issued. The appellant is liable to pay interest on the differential duty suo moto paid by the appellant. Since the duty paid without protest to the exchequer is already merged with the consolidated fund of India, any exercise in appropriation is a mere superfluity. Penalty under Section 11AC - HELD THAT:- While the Ld. Commissioner (Appeals) has set aside the impugned Original-in-Original of the Adjudicating Authority, he has not rendered any finding or discussed about the penalty proposed. The Department too has not filed any cross objection against the non-imposition of penalty. It is a settled principle in law that the appellant cannot be put in an worse off position upon the appellant s preferring of the appeal. Conclusion - i) The transaction value on which the duty is required to be paid is the value of the goods at which the distributor has sold the goods. The Appellant Company and the distributor firm are related persons and the clearances have to be valued in terms of Rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. ii) The appellant is liable to pay interest on the differential duty suo moto paid by the appellant. iii) The Department too has not filed any cross objection against the non-imposition of penalty. It is a settled principle in law that the appellant cannot be put in an worse off position upon the appellant s preferring of the appeal. Appeal rejected.

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• 2025 (2) TMI 551
  Cenvat Credit - services related to setting up and expansion of the factory building under the Cenvat Credit Rules, 2004 - outdoor catering services provided to employees under the statutory obligation of the Factories Act, 1948 - insurance services for factory buildings and employees - air travel agent services used for international travel of expatriate employees in relation to business activities. Whether the appellant is eligible to Cenvat Credit on these impugned services up to 31.03.2011 under the un-amended definition of input services as provided in Rule 2(l) of Cenvat Credit Rules? - HELD THAT:- Cenvat Credit on construction of the factory building has been denied only on account of lack of nexus between the construction services and the manufacturing of the goods. In this regard, it is to be noted that the construction relates to the setting up of the factory which in turn, is directly used for manufacturing and is directly covers under the inclusive part of the definition of input service . Moreover, during the relevant period, construction service was included in the definition of input service and it is only after 01.04.2011 that it has been specifically excluded from it. Reference made to the decision of the Hon ble Punjab Haryana High Court in the case of CCE vs. Bellsonica Auto Components India P Ltd [ 2015 (7) TMI 930 - PUNJAB HARYANA HIGH COURT ], wherein the Hon ble Punjab Haryana High Court has held The Tribunal rightly did not agree with the Commissioner s findings that the services in question had been used for brining into existence an immovable property and not for the manufacture of the final product. The said services cannot be said to be remotely connected to the final product as observed by the Commissioner. Outdoor catering service for the employees - HELD THAT:- This service is also covered under the definition of input service prior to 01.04.2011 because the outdoor catering service is an activity relating to appellant s business and hence, is included in means clause of Rule 2(l) and moreover, under the Factories Act, 1948 also, it is a statutory obligation. Further, as regards reversal of recovered amount by the appellant, the appellant is liable to pay interest on that portion, which will be calculated by the original authority and the appellant would be liable to pay the same. Cenvat Credit on insurance services - HELD THAT:- The learned Commissioner has allowed 50% of the Cenvat Credit availed in relation to insurance of the building, but has denied the Cenvat Credit on insurance of the employees amounting to Rs.1,21,261/-. The insurance policies procured for group health insurance of the employees, are also included in means clause of Rule 2(l) as the health insurance of the employees is an activity relating to business and it has been held in the cases relied upon by the learned Consultant for the appellant that this activity is an input service . Cenvat Credit on air travel agent service - HELD THAT:- The said service was used for international travel of expats for visiting their home country as well as for purchasing plants machineries, tools dies and attending technical training at Japan office of the appellant which is used in relation to manufacture of final product. During the relevant time, Rule 2(l) of the Cenvat Credit Rules explicitly covers input services used by the manufacturer directly or indirectly in relation to manufacture or clearance of final products as held in the cases relied upon by the learned Consultant for the appellant. Conclusion - The services directly or indirectly related to manufacturing activities or statutory business obligations qualify as input services under the Cenvat Credit Rules. Appeal allowed.

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