TMI Tax Updates - e-Newsletter
February 20, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax CST, VAT & Sales Tax Indian Laws

Articles

• INITIATION OF INSOLVENCY RESOLUTION PROCESS BY AND AGAINST PERSONAL GUARANTORS
• SUPREME COURT ON REVIEW PETITION
• Cess levied under Goa Cess Act is valid and not subsumed by the GST Laws

News

• A two-day All Chief Commissioners' Conference on Customs matters organised by CGST, Central Excise and Customs, Bhopal Zone

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• APEDA facilitates export of Bananas from India to Moscow, Russia via Sea

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• Financial assistance for rubber sector raised by 23% to Rs 708.69 crore for FY24-25 and FY25-26

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• India on track to become $35 trillion, fully developed economy by 2047: Shri Piyush Goyal

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• Government will appoint Member to the 16th Finance Commission in lieu of Dr. Niranjan Rajadhyaksha

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Circulars / Instructions / Orders

Income Tax

• F. No. 375/02/2023-IT-Budget - dated 13-2-2024
  Remission of Certain Outstanding Direct Tax Demands

Customs

• PUBLIC NOTICE No. 01/2024 - dated 6-2-2024
  Special measures for liquidation of pending Drawback claims-Reg

Highlights / Catch Notes

GST

• Levy of GST - transfer of development rights of land by the land owners to the petitioner by way of a Joint Development Agreement - sale of land by the land owners or not - The High court found that the transfer of development rights is a service and not an outright sale of immovable property. The JDA facilitates development but does not, in itself, transfer ownership. Thus, such transfers are subject to GST and cannot be considered under Entry 5 of Schedule-III of the GST Act. - The court upheld the constitutionality of the notification, noting that it is based on the recommendations of the GST Council and issued within the powers conferred by the GST laws and the Constitution.
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• Refund of amount in question alleged to be forcibly recovered/collected through DRC-03 by the DGGI - requirement to make an application u/s 54 - The High court grants the petitioner liberty to file an application under Section 54 of the CGST Act within ten days from the date of the order. - HC specifies that if the petitioner submits the application within the stipulated time, it will be considered for refund within two weeks from the date of receipt. - GST officer directed to dispose of the application, if filed, in accordance with law.
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• Validity of assessment orders passed for the years 2018-2019 to 2022-2023 - The High court notes that each assessment order gives rise to a separate cause of action, and challenges against multiple orders in a single petition are not warranted unless lack of jurisdiction is specifically alleged. - The HC deems it fit to dismiss the writ petition while granting the petitioner the liberty to file appeals against specific orders within the prescribed timeframes.
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• Scope of Advance Ruling - Validity of Ruling dated 20/01/2021 - The Authority for Advance Ruling (AAR) declared the advance ruling void ab initio under section 104 of the CGST Act, 2017, due to suppression of material facts and misrepresentation by the applicant. The AAR found that the applicant was aware of the investigation and had even paid differential duty accordingly but did not disclose this information when seeking the advance ruling. - The AAR, referencing various legal precedents, established that the ongoing inquiries and investigations by DGGI into the classification of plastic toys and related tax liabilities constituted 'proceedings' under the GST law.
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Income Tax

• Capital gain - nature of land sold - whether the land would not be covered under definition of capital asset as stated in Section 2(14)(iii)? - Despite being directed to re-examine the evidence, the AO issued a fresh assessment order, disregarding the ITAT's directions. The High Court quashed the assessment order and remanded the matter again to the AO, emphasizing the need for a thorough examination of evidence and compliance with statutory provisions.
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• Addition u/s 68 - Share premium - Transaction in the nature of Capital Account - violation of the provision of Section 78(2) of the Companies Act, 1956 - The High court found in favor of the appellant, stating that the share premium received on the issuance of shares is on capital account and does not constitute income. Even if there were violations of Section 78 of the Companies Act, 1956, it would not turn the share premium amount into a revenue receipt. The Assessing Officers failed to understand the difference between utilization of funds and the creation of share premium account in the books of accounts. - Accordingly, the additions so made by AO deleted.
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• Estimation of income - bogus purchases - The Revenue argued that when purchases are proven bogus, the entire amount should be added to the income. However, the court cited precedents and upheld the ITAT's decision, stating that the factual finding of 8% as a fair profit margin was reasonable and in line with established legal principles.
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• Refund of excess TDS deducted u/s 195 - Unjust Enrichment of the Government - whether the respondents are authorised by law to withhold the excess TDS paid by the petitioner? - Latin maxim “jure naturae aequum est, neminem cum alterius detrimento, et injuria fieri locupletioremit” - The High Court, after considering constitutional provisions, legal principles, and precedents, held that the excess TDS deposited by the company should be refunded. It emphasized that tax collection should only be done in accordance with the law.
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• Disallowance u/s 80P(2)(d) - Interest income on deposits placed with Kangra Central Cooperative Bank (KCCB) Ltd. - the Tribunal found that the Assessee met the conditions for deduction under section 80P(2)(d) since the income was derived from investments with another cooperative society, namely the KCCB Ltd. - ITAT clarified that it is not relevant to examine whether the interest income is earned from any specified cooperative activity or whether it is a case of surplus fund deployment.
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• Unexplained money u/s 69A r.w.s. 115BBE - Cash seized in search - The assessee provided a cash reconciliation statement, demonstrating that the cash balance remained consistent after the inter-branch transfer. The statement showed that the cash was transferred from the Kolkata branch to the Gurgaon branch, with corresponding entries in the cash books of both branches. Additionally, the cash transferred was recorded in the books with a slight delay, but the company as a whole maintained sufficient cash balance to explain the seized amount. - ITAT deleted the additions.
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• Deduction u/s 80IA - profit of Generation of electricity - notional income from savings in Low Sulphur Heavy Stock (LSHS) due to steam generation by the assessee's captive power plant. - The tribunal emphasized that the assessee had fully disclosed the computation of profits, including the method of valuing steam generation, which constituted an integral part of the income from the industrial undertaking. The ITAT thus upheld the assessee's claim, affirming that notional income from steam generation could be considered for deductions under Section 80IA.
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• Addition u/s 56(2)(viib) - issue of shares at premium - working of fair market value as per 11UA(2)(a) - The ITAT observed that Rule 11UA(2) provides an option to the company to select any method for determining the valuation of unquoted equity shares. The AO's action to shift from the DCF method to the ALV method without verifying the correctness of the projected figures was found not tenable.
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• Addition u/s 68 - bogus LTCG - penny stock transaction - The ITAT observed that even though characteristics of penny stock transactions were present, there was no direct evidence linking the assessee to any manipulative activities. Citing various judicial precedents, including decisions where similar transactions were deemed genuine, the ITAT allowed the assessee's claim of LTCG exemption under section 10(38).
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• Addition proposed in the draft assessment order as TP adjustment - Non following mandatory provisions of Sec. 144C while issuing draft assessment order - The ITAT found merit in the assessee's argument, holding that the assessment order was void as the AO failed to follow the mandatory procedure laid down under Section 144C of the Act. The ITAT referred to various judicial precedents, including decisions of the Hon’ble Karnataka High Court and other ITAT decisions, supporting this view.
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Customs

• Validity of permitting export in violation of notification - Supply of non-basmati Indian white rice - The Revenue (Department) contended that permitting export in violation of the notification was impermissible and against the government's policy to safeguard food security and control prices. They argued that the notification should have been either upheld or set aside by the court. - The High Court set aside the judgment and order of the learned single Judge and remanded the matter for fresh consideration along with other related petitions.
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• Levy of interest u/s 28AA - short paid duty amount was paid without demur or protest and in time, on issuance of SCN - Tribunal set aside the demand for interest, concluding that the underpayment of duty was promptly rectified by the appellant, and there was no delay in payment. Therefore, subjecting the appellant to interest under Section 28AA was deemed unwarranted and unduly harsh.
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• Classification of import of UPS - Benefit of exemption - The department observed that the imported Home UPS were actually household inverters used for running home appliances, not exclusively for Data Processing Equipment as claimed by the appellant. - The Tribunal analyzed the wording of the exemption notification and emphasized that it does not restrict the benefit to any specific end use of the goods. It concluded that the requirement for availing the duty benefit is that the product should be a "Static Converter for Data Processing Equipment. - Benefit of exemption under Notification No. 25/2005 Cus allowed.
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• Confiscation of goods - Import of old and used worn clothing, completely fumigated / old and serviceable garments - Valuation - The Tribunal upheld the confiscation of goods under Section 111(d) due to non-compliance with licensing requirements but reduced the redemption fine and penalty.
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Indian Laws

• Dishonour of Cheque - Petitioner is an agent of the accused no. 1 firm - vicarious liability of the petitioner - It noted that there were no specific allegations against the petitioner except being labeled as an agent. - The High court found that the offense under Section 138 of the Act was not made out against the petitioner. - It observed that the complaints failed to establish that the petitioner was in charge of or responsible for the conduct of the business of Laycana - The complaint against the petitioner quashed.
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IBC

• Extension of the CIRP period of the Corporate Debtor by 60 days - The commercial wisdom of the CoC is paramount and non-justiciable, except on limited grounds specified under the IBC. The tribunal underscored that the Adjudicating Authority cannot substitute its views for that of the CoC's commercial wisdom and, therefore, cannot direct the issuance of fresh Form-G when the CoC decided against it after due deliberation​​​​. - That part of the impugned order is set aside wherein the Adjudicating Authority has directed the RP to invite fresh expression of interest through wider publication of Form-G
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• Rejection of section 7 application - Existence of financial debt or not - status of allottee for sale of plots (real estate project) - The Adjudicating Authority has also rightly come to the conclusion that obligation of payments of money under the agreement of sale by no stretch of imagination can be construed as a financial debt.
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• Rectification of defects in section 7 application - ambit of a Power of Attorney - Home Buyers - NCLT rejected the application for initiation of CIRP - The appellate tribunal directed the adjudicating authority to consider whether the authorization letters met the legal requirements for representing the appellants in the filing of the petition, including any requirements for attestation and compliance with the laws of the countries where appellants reside. - The appellate tribunal instructed the adjudicating authority to reassess whether the appellants met the threshold requirement for initiating CIRP, taking into account the rectified authorization letters and any additional evidence presented by the appellants.
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Service Tax

• Negative listed service or not - Levy of service tax - renting of immovable property - renting out land and shops to traders - Agricultural Produce Market Committee - scope of section 66 (D) (d) of the Finance Act, 1994 - Following the decision of the Supreme Court, the Tribunal held that activities of Agricultural Produce Market Committees in renting out space/immovable property after 01.07.2012 are included in the Negative List, meaning they are exempt from service tax.
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VAT

• Valuation - Tax on Luxuries - inclusion of an amount towards ayurveda income after giving all deductions as per law in calculation of assessable value - The High Court noted that the Tribunal's decision was based on the submissions and figures provided by the petitioner. As the petitioner failed to substantiate any figures with accounts, the Court upheld the Tribunal's decision to tax the ayurveda income.
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Case Laws:

• GST

• 2024 (2) TMI 903
  Refund in terms of Section 142(3) read with Section 54 and Section 49(6) of the Central Goods and Service Tax Act, 2017 permitted - Low tax effect - maintainability of appeal - HELD THAT:- Para 1.3 of instruction dated 17.08.2011 states that irrespective of the amount involved where constitutional validity of the provisions of an Act or Rule is under challenge or where a notification/instruction/order or circular has been held to be illegal or ultra vires, it is permissible for the Department to pursue the appeal irrespective of low tax effect. In the instant case it is noticed that neither the constitutional validity of any provision of an Act or rule is under challenge nor any notification/instruction/order or circular has been held to be illegal or ultra vires. The Tribunal has noticed the peculiar facts of the present case and specifically held in the facts of the present case , the appellant is entitled to refund in terms of Section 142(3) read with Section 54 and 49(6) of the Act. The appeal would be barred in view of the low tax effect in term of instruction dated 22.08.2019 - appeal is dismissed having low tax effect.

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• 2024 (2) TMI 902
  Levy of GST - transfer of development rights of land by the land owners to the petitioner by way of a Joint Development Agreement - sale of land by the land owners or not - covered by Entry 5 of Schedule III of Goods and Services Tax Act, 2017 and the Telangana Goods and Services Tax Act, 2017 - constitutional validity of Notification No. 4 of 2018-Central Tax (Rate) (Annexure P1) dated 30.09.2019 imposing GST on transfer of development rights of land by the land owners under a JDA. Whether the transfer of development rights of the immovable property of the landowners can be brought within the scope of GST? - HELD THAT:- Reading of the clauses of JDA reproduced in the preceding paragraphs would by itself reflect that the landowners have bundle of rights attached to his immovable property. One of the rights is that of getting the property developed by engaging an agency of his choice, on his terms and in the manner he deems fit - By virtue of the JDA, the petitioner would have the permission/license to enter into the subject property of the landowners for the purpose of undertaking and execution of the development activities on the said property. In terms of the JDA, upon the petitioner developing the entire property, the landowners would be granting a share in the land proportionate to the built-up area for which the petitioner is entitled towards consideration for the development. It is evident that the petitioner is offering construction services to the landowners in exchange for the landowners transferring the development rights to the petitioner. Only on account of the development rights thus the petitioner gets the right to enter into the land to undertake construction over the said property. The transfer of ownership from the landowner goes directly to the purchaser of the constructed property and not in favour of the petitioner unless and until the land stands transferred in the name of the petitioner. The same cannot be brought within the ambit of sale - Transferring of the development rights does not result in transfer of ownership rights. The reliance of the circular dated 10.02.2012 i.e. Circular No. 151/2/2012-ST, may not be of any relevance for the dispute in the present writ petition as the same was issued under service tax regime under which service tax was levied only on those services which figured in the specified list of services and where sale of land by the landowner was held to be non-taxable. This definitely does not also say that the transfer of development rights would also automatically become non-taxable. From plain reading of the JDA, what is reflected is that there are two sets of transactions to be met in its entirety. One is agreement between the landowner and the petitioner and another is the supply of construction services by the petitioner to the landowners and only thereafter sale of constructed area to third party buyers. Both these transactions qualify as supplies made and would attract GST subject to clause (b) of paragraph 5 of Schedule II and both these supplies would fall under Section 7 of the GST Act i.e. construction services further read with Entry 5(b) of Schedule II. Under no circumstances can the aforesaid two supplies can be termed as sale of land under Entry 5 of Schedule- III. Notification No. 4 of 2018 dated 25.01.2018 as amended by Notification No. 23/2019-Central Tax (Rate), dated 30.09.2019 deals with the time of supply of services of transfer of development rights which was otherwise always taxable, since introduction of GST, has now been postponed to a time when the petitioner transfers the possession of the constructed/developed area to the landowner. Taking into consideration the provisions of Article 246A of the Constitution of India and also considering the extraordinary powers which have been conferred upon the GST Council and upon whose recommendation the Government has issued the notification clarifying the aspect of transfer of development rights being attracted to GST/TGST, the challenge to the notification issued by the Government of India can be safely held to be devoid of merits. The grounds and contentions raised by the petitioner in respect of the reliefs sought for is not sustainable and the writ petition sans merit and therefore deserves to be and is accordingly, dismissed.

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• 2024 (2) TMI 901
  Refund of amount in question alleged to be forcibly recovered/collected through DRC-03 by the DGGI - requirement to make an application under Section 54 of the CGST Act before the authority concerned in accordance with law and in proper form, for claiming the refund - HELD THAT:- This writ petition is disposed of by granting liberty to the petitioner to make application under Section 54 of the CGST Act in proper form before the authority concerned within ten days from date and if such application is made by the petitioner within the time stipulated herein the same shall be considered for refund in question within two weeks from the date of receipt of such application.

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• 2024 (2) TMI 900
  Maintainability of order - Jurisdiction - Appellate Authority against an assessment order passed under the provisions of the CGST/SGST Act - HELD THAT:- This Court is not an appellate authority against an assessment order passed under the provisions of the CGST/SGST Act. There is a specific provision of appeal under Section 107 of the CGST / SGST Act. In the exercise of the jurisdiction under Article 227 of the Constitution of India, the Constitutional Court can only examine whether the order is without jurisdiction or has any procedural impropriety or an error apparent on the face of the record. The writ petition is wholly misconceived, which is hereby dismissed. However, the petitioner can avail any other remedy as may be available to him against the impugned assessment order if so advised.

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• 2024 (2) TMI 899
  Validity of assessment orders passed for the years 2018-2019 to 2022-2023 and for the period April, 2023 to July, 2023 - invocation of remedy under Article 226 of the Constitution of India despite the availability of statutory remedy of appeal - invocation of Extraordinary Jurisdiction - violation of principles of natural justice - HELD THAT:- It is seen from the grounds that the assessment orders passed have been challenged as without jurisdiction and in violation of principles of natural justice; but bland assertions made without any substantiation thereof. The petitioner has also made averments against the inspection conducted alleging that the reasons to believe in the authorization of 12.08.2023 are mere reproduction of the provisions of Section 67(1) of the Bihar Goods and Services Tax Act, 2017. Immediately, it is to be noticed that the authorization for inspection through produced as Annexure-7, it has not been challenged in the relief portion. Assessment made on various grounds of reversal of Input Tax Credit of purchase returns having not been effected - HELD THAT:- There being no legal grounds for demand, computation of demand having not been properly substantiated, mismatch of outward supply figures in the return for outward supplies vis-avis figures in the e-way bill, utilization of Input Tax Credit on account of GSTR-2A/GSTR-3B mismatch and the penalty imposed on failure to furnish consumption details; all of which are matters which could be challenged in appeal. Jurisdiction - HELD THAT:- There is no lack of jurisdiction alleged on the Assessing Officer to proceed for assessment nor is it specifically pleaded that in the course of assessment the Assessing Officer has travelled beyond his jurisdiction. There are no reason to invoke the extraordinary jurisdiction under Article 226 to interfere with the assessment orders passed at this stage. Invocation of extraordinary jurisdiction - It is submitted that the writ petition has been filed within the time provided for appeal; which alone cannot be a reason to bypass the appellate remedy and invoke the extraordinary jurisdiction - HELD THAT:- It is seen that the orders for Assessment Years 2018-2019 to 2022-2023 (Annexure 1 to 5) were passed on 31.10.2023. With respect to the said orders, the appeal time stands expired today. The petitioner has still a month s time to file an appeal with an application for condonation of delay. With respect to Annexure-6 order, which is for the period April 2023 to July, 2023, the order was passed on 30.11.2023, which can be challenged within one month without a delay condonation application and even within a month thereafter, with proper explanation for the delay. The writ petition having been filed within the period provided for appeal, we deem it fit to direct the Appellate Authority to consider the appeal filed against Annexures 1 to 5, on merits, if it is filed within five weeks from today. In so far as the other order, (Annexure-6) is concerned, the petitioner has still one month time to file an appeal, as provided under the BGST Act and then again a further month, with application to condone delay. Petition dismissed.

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• 2024 (2) TMI 898
  Maintainability of petition - non-availability of statutory remedy of appeal - non-constitution of the Tribunal - petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112 - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed - Petition disposed off.

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• 2024 (2) TMI 897
  Rejection of appeal for reason of delay of five days - HELD THAT:- Section 107(4) of the B.G.S.T. Act clearly stipulates a period of three months time for an appeal to be filed and a further period of one month within which a delayed appeal has to be filed. Going by the statutory provisions, there is absolutely no power vested either in the Appellate Authority or in a Constitutional Court acting under Article 226 to extend the period of limitation, especially when there is a specific stipulation and period prescribed for the purpose of filing a delayed appeal. The notification which was brought out on 02.11.2023 only permits appeals to be filed from orders passed by the proper officer on or before 31.03.2023, in cases in which it was not instituted in time or within the time permitted for a delayed appeal, and in cases where such delayed appeals beyond the stipulation in 107(4) has been rejected. The petitioner would not squarely fall under the notification - there are no rationale for the date fixed of 31.03.2023, as a cut off date. It is noticed that the notification itself was brought out on 02.11.2023 and in such circumstances any order passed in at least three months before that date; the time provided for filing an appeal, ought to have been considered for such beneficial treatment. The petitioner also can be allowed to comply with the conditions in Notification No. 53 of 2023 upon which the order passed in appeal would stand set aside and a fresh consideration will be made by the first Appellate Authority - petition allowed.

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• 2024 (2) TMI 896
  Scope of Advance Ruling - Validity of Ruling dated 20/01/2021 - Investigation proceedings were ongoing - Appropriate classification rate of GST applicable - supply of plastic toys under CGST SGST - claim of ITC in relation to CGST-IGST separately in debit notes issued by the supplier in the current financial year i.e. 2020-21, towards the transactions for the period 2018-19 - whether a person who is chargeable with tax and who opts to pay the differential duty along with interest for whatever reasons, can the applicant post such payment claim that no proceedings under the Act were initiated/pending against him? - HELD THAT:- The proceedings were initiated against the applicant were never disclosed to the authority. In-fact, in the personal hearing dated 8.5.2023, the applicant on being asked informed that the said fact was not informed to the authority. In view thereof, the aforementioned GAAR order dated 20.1.2021 is void in terms of section 104 of the CGST Act 2017 on non-disclosure of fact of pendency of proceedings. Our view is also substantiated by the below mentioned findings. Proviso to section 98(2), ibid, clearly states that the AAR shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act; that the rejection of the application will be only after providing a reasonable opportunity and that the reasons for such rejection shall be specified in the order. Pending proceedings is not defined under the CGST Act, 2017. However, the issue is no longer res Integra having already been decided by various fora - The Hon ble High Court of Andhra Pradesh in the case of M/S MASTER MINDS VERSUS APPELLATE AUTHORITY FOR ADVANCE RULING (GST) , COMMISSIONER OF CENTRAL TAX, COMMISSIONER OF STATE TAX, UNION OF INDIA, STATE OF ANDHRA PRADESH [ 2022 (12) TMI 1029 - ANDHRA PRADESH HIGH COURT ] has held the proper officer under this Act shall have the power to summon any person either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure. Such enquiry referred to in sub-section (1) shall be deemed to be judicial proceedings within the meaning of section 193 and 228 of the Indian Penal Code. Thus, the proceedings conducted by the investigating authority under the provisions of this Act shall be construed as judicial proceedings as per the CGST/APGST Act. Section 104, ibid, spells out the circumstances which would render the advance ruling to be void. The situations stipulated arc when a ruling under 98(4) has been obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, section 104, ibid, states that the authority may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the applicant as if such Advance Ruling had never been made. The Hon ble Andhra Pradesh High Court has already held that when investigation has already commenced prior to the filing of application, the Advance Ruling Authority shall not admit the application as per proviso to sub-section (2) of Section 98. In this case, the facts reveal that the applicant was aware of the fact DGGI Pune was conducting an investigation and in agreement where to the applicant had without protest paid the differential duty. Post this, the applicant cannot feign ignorance more so since they had deposited a huge sum as differential duty, which is mentioned in the Incident Report issued by DGGI. The ruling by GAAR vide its Order No. GUJ/GAAR/R/10/2021 dated 20.01.2021 [ 2021 (4) TMI 558 - AUTHORITY FOR ADVANCE RULING, GUJARAT] was obtained by the applicant by suppression of material facts and misrepresentation of facts and is therefore clearly hit by section 104 of the CGST Act, 2017 - the said order is termed as void in terms of section 104 of the CGST Act, 2017.

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• Income Tax

• 2024 (2) TMI 895
  Application for settlement of cases u/s 245C - disclosure of income - under valuation of stock - as decided by HC [ 2016 (8) TMI 1358 - ALLAHABAD HIGH COURT] ITSC in the case in hand warrants no interference as there is no contravention of any provision of statute and ITSC has not committed any manifest error so as to warrant interference in writ jurisdiction under Article 226 of the Constitution of India - HELD THAT:- We find that (i) the principles laid down by this Court in Ajmera Housing Corporation and another vs. Commissioner of Income Tax [ 2010 (8) TMI 35 - SUPREME COURT] have been correctly understood by the High Court; (ii) keeping in view the peculiar facts and circumstances of the cases in hand, the High Court has rightly affirmed the order(s) passed by the Settlement Commission. On re-appreciation of the facts of each case, we are satisfied that there was no deliberate attempt on the part of the respondent-assessees to suppress or conceal any material information. There was faithful compliance of Section 245-C as interpreted by this Court in Ajmera Housing Corporation case (supra). No case to interfere with the impugned judgment(s) is made out. The civil appeals are, accordingly, dismissed.

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• 2024 (2) TMI 894
  TDS u/s 194I OR 194C - External Development Charges ( EDC ) paid to Haryana Urban Development Authority ( HUDA ) - as decided by HC [ 2023 (4) TMI 399 - DELHI HIGH COURT] Petitioners in these petitions were required to deduct TDS from EDC under Section 194-I HELD THAT:- Following the order of this Court in Principal Commissioner Of Income Tax (CENTRAL III) ANR. vs. BPTP Limited [ 2021 (2) TMI 623 - SC ORDER] these special leave petitions are also dismissed. Pending application(s), if any, shall also stand disposed of.

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• 2024 (2) TMI 893
  Disallowance of the interest expenses claimed u/s 36(1)(iii) - interest bearing funds were given to subsidiary company as interest free deposits in guise of share application money - ITAT confirmed CIT(A) order deleting the addition - HELD THAT:- CIT(A) and the ITAT arrived at finding of fact that the amount advanced to subsidiaries was for the business purposes as the same are linked with the business of the subsidiary in which assessee had deep interest - valuation of Telecom business at the relevant time was very high and hence, it was a commercially expedient decision to invest in that business. Both the CIT(A) and the ITAT accepted assessee s view point that if the subsidiary company expands and progresses, assessee will be benefited by the same as the valuation and net-worth of assessee will also increase. Moreover, the transaction was approved and authorised by the Board of Directors in the normal course of business activities and hence, any interest paid on funds utilized for the purpose of such business activity is allowable expenditure under Section 36(1)(iii) - On facts also, it was concluded that assessee had an aggregate share holding of 64% in the subsidiary and, therefore, it cannot be contended that share application money made is not for business purpose. Since both the CIT(A) as well as the ITAT had come to a factual finding and the law is also clear that if an assessee for commercial expediency and in the normal course of its business activities takes loan to invest in shares of its subsidiary, the interest paid on these advances utilized is allowable expenditure under Section 36(1)(iii) of the Act - no substantial question of law arises. Appeal dismissed.

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• 2024 (2) TMI 892
  Capital gain - nature of land sold - whether the land would not be covered under definition of capital asset as stated in Section 2(14)(iii)? - ITAT has directed the AO to adjudicate denovo - HELD THAT:- The order of the ITAT must be read and understood in the proper context and in law. All that is stated in the order itself. There was considerable force in the submission of Petitioner that the order must be read as restricting the scope of the AO only to question the evidence filed by petitioner and nothing more, and to ascertain whether the land would not be covered under definition of capital asset as stated in Section 2(14)(iii) of the Act. Moreover, the ITAT has not disturbed the findings of the CIT(A) that actual carrying on of agricultural operation is not a necessary condition for deciding that a particular parcel of land was agricultural land. The matter has been restored to the AO only to examine the evidence filed by petitioner and conducting enquiry, if necessary, with the concerned authorities of the Government to find out the true nature and character of the land sold and only if, the AO comes to a conclusion on the basis of material brought on record that the lands sold by petitioner are not in the nature of agricultural land, can he come to conclusion that the land would come within the purview of capital asset as defined under Section 2(14) of the Act. We hereby quash and set aside the impugned order dated 24th March 2022 and remand the matter for passing the fresh assessment order. The AO will only examine whether the evidence brought on record to establish the claim that the lands sold are in the nature of agricultural land, was authentic. If the AO has to reject the evidence filed by petitioner, he shall bring contrary material on record. For that, the AO has to conduct an enquiry to ascertain the authenticity of the certificates filed by petitioner. AO may take such steps as required by conducting necessary enquiry with the concerned Government authorities. The contention of petitioner cannot be rejected purely on presumption that the lands sold were not an agricultural lands because petitioner sold the parcels of lands within two years of purchase. If the AO is satisfied that the parcels of land actually are not situated in an area which will fall under Section 2(14)(iii), the AO shall proceed on the basis that in the facts and circumstances of the case, actual carrying on of agricultural operation is not a necessary condition for deciding that the parcels of lands were agricultural lands.

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• 2024 (2) TMI 891
  Addition u/s 68 - Share premium - Transaction in the nature of Capital Account - violation of the provision of Section 78(2) of the Companies Act, 1956 with respect to the utilization of the share premium account - addition of entire share premium received as unexplained cash credit as there was no justification for charging share premium and there was violation of the provisions of Section 78(2) of the Companies Act, 1956. Whether the money received as premium of share issued on account of a capital account transaction can give rise to income? HELD THAT:- The charge of tax under the Act is on income. The receipt of share premium on the issue of fresh shares is on capital account and constitutes a capital receipt, which is not chargeable to tax under the Act. There is no provision under the Act to tax the receipt of share premium for the assessment year under consideration. As held in Vodafone India Services (P) Ltd. ( 2014 (10) TMI 278 - BOMBAY HIGH COURT ) the amount received on issue of shares is admittedly a capital account transaction not separately brought within the definition of income during the relevant period. Thus, capital account transaction not falling within the statutory explanation cannot be brought to tax. Share premium received by issuance of shares is on capital account and gives rise to no income. Since the Act does not stipulate that non-compliance of any provision of other Act would result in turning a capital receipt into a revenue receipt, even assuming for the sake of argument that appellant had breached the provisions of Section 78(2) of the Companies Act, 1956, it would not turn the share premium amount received into a revenue receipt. As observed in Credit Suisse Business Analysis (India) (P.) Ltd. ( 2016 (8) TMI 375 - ITAT MUMBAI] , for determining the due taxes, AO should avoid bringing far-fetched fancies and ideas. Without understanding the basic philosophy of income they have referred to the provisions of Companies Act, 1956 so that the amount in question can be taxed at any cost. It is not a fair or judicious approach to deal with the subjects of the State. Even if the assessee had violated the provisions of Companies Act, 1956, it will be penalised by the provisions of that Act and it would never turn a capital receipt into revenue receipt or vice versa. There is nothing on record from the balance sheet filed that the share premium amount has been utilized for purposes other than what is prescribed in Section 78(2) of the Companies Act, 1956. Just because the amount has been invested does not mean that the amount has been utilized for purposes other than what is prescribed in Section 78(2) of the Companies Act, 1956. We are satisfied that the closing balance and the opening balance of the share premium money only indicates that there is an increase in the share premium account by way of infusion of funds and not depletion. There is nothing to indicate that the assessee has used the share premium money to invest in shares. The Assessing Officers have failed to understand the difference between utilization of funds and creation of share premium account in the books of accounts for the share premium receipt which was also the case in Finproject India (P.) Ltd.[ 2018 (5) TMI 502 - ITAT MUMBAI] - Decided in favour of assessee.

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• 2024 (2) TMI 890
  Estimation of income - bogus purchases - HELD THAT:- We are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same price. We have to reduce the selling price accordingly as a result of which profit comes to 5.66 %. Therefore, considering 5.66 % of Rs. 3,70,78,125/- which comes to Rs. 20,98,621.88 we think it fit to direct the revenue to add Rs. 20,98,621.88 as gross profit and make necessary deductions accordingly. Accordingly, the said question is answered partially in favour of the assessee and partially in favour of the revenue. It is impossible in this appellate jurisdiction to investigate what the product was and what should have been the profit margin. Moreover, the CIT(A) and the ITAT have on facts come to a conclusion that 8% is the reasonable figure. Therefore, in our view, the judgment of N.K. Industries [ 2016 (6) TMI 1139 - GUJARAT HIGH COURT ] does not assist Appellant case.

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• 2024 (2) TMI 889
  Refund of excess TDS deducted u/s 195 - whether the respondents are authorised by law to withhold the excess TDS paid by the petitioner? - whether the deductor is entitled for refund of the said payment of excess TDS? HELD THAT:- Reliance can be placed to the latin maxim jure naturae aequum est, neminem cum alterius detrimento, et injuria fieri locupletioremit which translates to and settles the position that by natural law, it is just that no one should be enriched by another s loss or injury. Put otherwise, no one can be unjustly enriched at the expense of others. By no prudent stretch of imagination, the respondents are entitled to withhold the excess TDS deposited by the petitioner in lieu of the anticipated liability for concerned AY as the same would amount to collection of tax without any authority of law. Writ petition is allowed. The impugned orders are, hereby, set aside. The respondents are directed to issue a refund of excess TDS along with the applicable rate of interest as per extant law as expeditiously as possible not exceeding beyond six months.

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• 2024 (2) TMI 888
  Disallowance u/s 80P(2)(d) - Interest income on deposits placed with Kangra Central Cooperative Bank (KCCB) Ltd. - HELD THAT:- We find that the matter is squarely covered by our own findings in case of Jagadhri Co-operative Marketing Cum Processing Society Ltd [ 2024 (1) TMI 693 - ITAT CHANDIGARH] what needs to be seen for the purpose of Section 80P(2)(d) is that firstly, the income should be by way of interest earned by Cooperative Society from its investment and secondly such investment should be with any other cooperative society. These are only two conditions which have been provided in the statute as apparent from the plain reading of the provisions of Section 80P(2)(d) of the Act and nothing more has to be read and applied/tested besides these two conditions. More particularly, it is not relevant to examine whether interest income is earned from any specified co-operative activity or for that matter, it is a case of deployment of surplus funds. Section 80P(2)(4) is relevant only where the assessee claiming the deduction under Section 80P of the Act is a cooperative bank and not where a co-operative society is claiming deduction on deposits placed with a co-operative bank. In the instant case, there is an admitted and undisputed fact that the assessee is a Cooperative Society (and not a co-operative bank) registered with Registrar, Cooperative Society, Himachal Pradesh which was engaged in providing short term credit facility to its members besides acting as an agent on behalf of the Government of Himachal Pradesh for supplying the food grains under PDS System. Secondly, the Kangra Central Cooperative Bank Ltd. is also a Cooperative Society registered with Registrar, Cooperative Society and necessary registration certificate has been duly submitted before the lower authorities and the same has not been disputed. Therefore, interest income has been earned on deposits placed with a co-operative society and duly eligible for deduction under section 80P(2)(d) of the Act. No justifiable basis in denying the claim of deduction by the assessee society under section 80P(2)(d) in respect of interest income on deposit placed with Kangra Central Cooperative Bank Ltd and the same is hereby directed to be allowed. Assessee appeal allowed.

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• 2024 (2) TMI 887
  Addition / variations on account of commission, brokerage and discount expenses - HELD THAT:- In consonance with the view taken in Assessment Year 2017-18 2024 (1) TMI 157 - ITAT DELHI] the impugned additions made on account of commission, brokerage, discount expenses is not sustainable in law and facts. Disallowance u/s 14A - As pointed out assessee has declared exempt income by way of dividend to the extent of Rs. 6,97,835/- while suo motu disallowance itself stands at Rs. 7,30,000/- which is in excess of exempt income - HELD THAT:- As in Assessment Year 2017-18 2024 (1) TMI 157 - ITAT DELHI] it is well settled law that disallowance under Section 14A can be made only in respect of those investments which have yielded tax free income during the year as held in Caraf Builders [ 2018 (12) TMI 410 - DELHI HIGH COURT] and ACB India Ltd.[ 2015 (4) TMI 224 - DELHI HIGH COURT] - The AO is thus directed to delete the disallowance under Section 14A made over and above the disallowance offered by the assessee. Disallowance of ESOP expenditure - HELD THAT:- As decided in Assessment Year 2017-18 [ 2024 (1) TMI 157 - ITAT DELHI] addition made towards ESOP expenses are allowed as held expenses are incurred with a view to retain the talent / staff for the benefit of the company and consequently such expenses are allowable as business expenditure. TP Adjustment on account of commission on standby letter of credit - HELD THAT:- As identical issue in assessee s own case in Assessment Year 2017-18 [ 2024 (1) TMI 157 - ITAT DELHI] wherein held as no cost has been borne by the assessee company and in the absence of any rebuttal to the assertion that actual bank commission charges incurred has been fully recovered from the AEs, we hardly see any justification in the Transfer Pricing Adjustment on this score. We thus are not inclined to address the alternative plea of excessive estimation.

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• 2024 (2) TMI 886
  Unexplained money u/s 69A r.w.s. 115BBE - Cash seized in search - HELD THAT:- As cash has been transferred prior to the date of search on 29.05.2018, the same was only recorded with a delay of 4 days in the books of respective branches. Either way, the company as a whole did have sufficient cash balance to explain the seized cash of Rs. 13 lakhs on 29.05.2018. We find that there was no negative cash balance on any given day during the year. Admittedly, the cash book submitted by the assessee has not been rejected by the revenue. Hence, there is absolutely no case for the revenue to treat the cash seized as unexplained money warranting addition u/s 69A of the Act. accordingly, the grounds raised by the assessee are allowed.

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• 2024 (2) TMI 885
  Rejection of application filed in Form 10AB in regard to section 12A and exemption u/s 80G - Provisional registration u/s 12A(1)(ac)(vi) of the Act was granted to the assessee in Form 10AC - All the details called for by the ld CIT(E) in the questionnaire were duly replied by the assessee by furnishing voluminous documents HELD THAT:- In our considered opinion, these documents are not appreciated by the ld CIT(E) while denying the registration to the assessee. Hence, we deem it fit and appropriate to restore to file of the ld CIT(E) for de novo adjudication in accordance with law and in the light of various documentary evidences submitted by the assessee which are enclosed in the Paper Book filed before us. Further the assessee is given liberty to furnish fresh evidences, if any, in support of its contentions. Accordingly, the grounds raised by the assessee in both appeals are allowed for statistical purposes.

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• 2024 (2) TMI 884
  Maintainability of appeal before this Tribunal - As assessee submitted that the present Appeal is not maintainable before this Tribunal as the assessment order passed by the A.O. Circle-6, Kolkata and this Tribunal has no territorial jurisdiction over the matter. HELD THAT:- DR has also not disputed the above said fact and settled position of law. Considering the ratio laid down in the case of Balak Capital Pvt. Ltd. [ 2023 (1) TMI 75 - SC ORDER] and in view of the settled position of law, we dismiss the present appeal filed by the Revenue with a liberty to file an appeal within 60 days from the date of receipt of this order before the appropriate Jurisdictional Tribunal. Accordingly, the Appeal filed by the Revenue is dismissed with liberty.

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• 2024 (2) TMI 883
  Deduction u/s 80IA - profit of Generation of electricity - notional income from savings in Low Sulphur Heavy Stock (LSHS) due to steam generation by the assessee's captive power plant. - HELD THAT:- We observe that assessee has a captive power plant which co-generates power and steam. The captive power plant of Visakh refinery is based on co-generation of power and steam leading to more energy efficient use of fuel as compared to conventional power plants. It is also brought to our notice the captive power plant includes two gas turbo generators and two heat recovery steam generators. The Steam is generated in the heat recovery steam generators by using hot exhaust gases from gas turbo generators. Each heat recovery steam generator has a capacity of generating 27 Tons per hour steam. It is brought to our notice that the captive power plant is not only to generate electricity but also based on co-generation of power and steam. In this operation steam generation is unavoidable. The steam generation in the captive power plant is a newly established industrial undertaking which is accepted as a separate unit by itself. Assessee utilized the electricity generated by it for the captivate purpose and the steam generated by the same plant was also utilized for captive consumption in the generation of electricity as well as in refinery. Therefore, the expenditure incurred by the assessee in this particular captive power plant to the extent of material consumption of ₹. 7213.97 lakhs and direct and indirect expenditure including material consumption of ₹. 8557.03 lakhs. From the above expenditure assessee was able to generate power to the value of ₹. 6023.93 lakhs and value of steam [LSHS] to the extent of ₹. 3505.43 over and above utilized for power generation, which were transferred to refinery which is recognized in the books as saving in LSHS. Therefore, the claim of the assessee to the extent of additional steam generated by the assessee in this plant are transferred to the refinery. Therefore, the assessee has to adjust the transfer value of steam to the refinery otherwise are to be adjusted in the value of material consumption, by doing so the net result will be the net profit in this operation. The facts brought to us which is similar to the facts in the A.Y.2002-03 [ 2010 (6) TMI 56 - BOMBAY HIGH COURT] in which the Hon ble Bombay High Court has considered the same issue and decided the issue in favour of assessee Deduction u/s 80IB - inclusion of marketing margin - AO disputed the fact that the margin derived by the marketing division is nothing but the notional profit derived by the market division which is nothing but the administration operation - HELD THAT:- We observe that this issue under consideration is not a new issue raised during the current assessment year. This is an issue raised in the earlier year also. The Coordinate Bench in A.Y.2005-06 wherein the revenue has raised similar issue in its appeal before the ITAT and the Coordinate Bench has dealt with the issue and allowed the claim of the assessee as directed to accept the appellant s claim of profit from the VERP II for the purpose of deduction u/s 80 IB. Nature of expenses - sundry expenses and other charges - break-up of this amount shows that an amount has been included therein towards construction expenses under Marketing Division, this expenditure is in addition to the repairs and maintenance charges pertaining to Marketing Division - HELD THAT:- We observe from the record which is submitted before Assessing Officer and Ld. CIT(A) that assessee has submitted a detailed break-up of the various construction expenditures carried in the various retail outlets across country. The assessee has given a detailed break-up before the authorities for claiming of the above said expenditures, these expenditures are incurred by the assessee in the outlets which is spread across the country and such construction expenses are repairs of the outlets therefore these are revenue in nature and which is nothing but the running expenditure to be carried on by the assessee to upkeep the various outlets in the various locations in the country. Therefore, we hold that the above expenditure claimed by the assessee is allowable expenditure. By incurring these expenditures there is no creation of new assets. Accordingly, we are inclined to accept the findings of the Ld.CIT(A). Accordingly, ground raised by the revenue is dismissed.

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• 2024 (2) TMI 882
  Addition u/s 56(2)(viib) - issue of shares at premium - huge variations of the projection with that of the actual figures has been found by the AO - working of fair market value as per 11UA(2)(a) - HELD THAT:- As decided by M/s. Cinestaan Entertainment Pvt. Ltd [ 2021 (3) TMI 239 - DELHI HIGH COURT] when the assessee respondent has adopted a recognized method of valuation and further Revenue was unable to show that the assessee adopted a demonstrably wrong approach, or that the method of valuation was made on a wholly erroneous basis, or that it committed a mistake which goes to the root of the valuation process, interfering with the finding of the valuer by the Ld. AO, is found to be not permissible. As we find in the instant case that the assessee determined the fair market value of the unquoted equity shares following the manner and method laid down under Clause (b) of Rule 11UA(2) and particularly when no verification into the correctness of the projected figures had been made by the Ld. AO, the order impugned passed by the Ld. CIT(A) deleting the addition made by the Ld. AO is found to be just and proper so as to warrant interference. Revenue s appeal is found to be devoid of any merit, therefore, dismissed.

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• 2024 (2) TMI 881
  Addition u/s 68 - bogus LTCG - penny stock transaction - AO heavily relied on the investigations carried out by the Investigation Wing of the Department - HELD THAT:- We observe that the assessee is not the regular investor and had specifically made the investment in the scrip under consideration. It is fact on record that the financials of the company are not commensurate with the purchase and sale price in the market. The assessee has purchased the shares from open market, D-mated the scrips and subsequently sold the same in the stock exchange. It clearly raises several doubt on the purchase and sales transactions recorded in this case. There is no discrepancies in the documents filed by the assessee claiming the deductions u/s 10(38) of the Act. At the same time, even though all the characteristics of the penny stock exists in the present case, still the revenue has not brought on record any materials linking the assessee in any dubious transactions relating to entry, price rigging or exit providers. We can only presume that the assessee is one of the beneficiary in this transactions merely an investor, who has entered in investment fray to make quick profit. Even the assessing officer has applied the presumptions and concept of human probabilities to make the additions without their being any material against the assessee. Thus grounds raised by the assessee allowed.

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• 2024 (2) TMI 880
  Deduction u/s 35AC denied - HELD THAT:- As CIT(A), after verifying the facts, came to the conclusion that there is no claim of deduction u/s 35AC of the Act. Therefore, there is no question of any disallowance or addition. Before us, the ld. DR could not bring any factual error or infirmity in the findings of the ld. CIT(A). Addition being interest on loans and advances - Before us, assessee vehemently stated that the ld. DR could not bring any evidence to show that the impugned amounts are loans and advances given to the sister concern - CIT(A) as explained that the transactions mentioned in the chart are self explanatory and are business transactions entered into in normal course of business and are certainly not loans and advances - HELD THAT:- On the contrary, on proper appreciation of facts, we find that the outstanding balances are outcome of business transactions and certainly not loans and advances and further, the AO has erred in imputing an imaginary income which neither accrued nor arose to the assessee. We, therefore, decline to interfere. Ground stands dismissed. Disallowance u/s 14A - CIT(A) deleted addition - HELD THAT:- The undisputed fact is that the assessee has not claimed any exempt income. Therefore, provisions of section 14A r.w.r 8D of the Rules are not at all applicable as held in Cortech Energy [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] Applicability of amendment brought in the Statute by the Finance Act, 2022 is concerned, the Hon'ble High Court of Delhi in the case of Era Infrastructure [India] Ltd [ 2022 (7) TMI 1093 - DELHI HIGH COURT] has held that amendment by the Finance Act, 2022 to section 14A of the Act will take effect from 01.04.2022 and cannot be presumed to have retrospective effects. Addition on account of interest income - CIT(A) deleted addition - HELD THAT:- After verifying the facts from the ledger account and after being satisfied with the entries/narrations, the ld. CIT(A) deleted the impugned addition. Before us, the ld. DR could not bring any factual error in the findings of the ld. CIT(A). Assessing Officer has not properly appreciated the facts in true perspective and on proper appreciation of facts, we decline to interfere. Revenue appeal dismissed.

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• 2024 (2) TMI 879
  Addition proposed in the draft assessment order as TP adjustment - Non following mandatory provisions of Sec. 144C while issuing draft assessment order along with demand notice and penalty notice in the case of the assessee - HELD THAT:- On perusal of the draft assessment order it is noticed that assessing officer has categorically mentioned assessed u/s 143(3) r.w.s 144C(1) of the Act and also stated give credit for the taxes paid if any as per system after due verification and tax and interest are as per ITNS 150A with which forms part of the draft assessment order. It is also mentioned to issue demand notice u/s 156 of the Act and penalty proceedings u/s 271(1)(c) of the Act are being initiated separately Facts demonstrate that assessing officer has not followed the mandatory provisions of Sec. 144C of the Act while issuing draft assessment order along with demand notice and penalty notice in the case of the assessee. We have perused the decision of Teleperformance Global Services pvt. Ltd. [ 2022 (12) TMI 223 - ITAT MUMBAI] and Cisco Systems Services B.V. [ 2023 (3) TMI 416 - KARNATAKA HIGH COURT] wherein held that at stage of passing draft assessment order when the ACIT also issued a demand notice procedure followed by the ACIT was contrary to law and said mistake could not be cured u/s 292B of the Act. In the various decisions of the coordinate benches of the ITAT Mumbai on identical issue on similar facts held that in case assessing officer has failed to follow the mandatory procedure laid down u/s 144C of the Act at the stage of passing draft assessment order, then final assessment order passed is null and void as the mistake committed in the draft assessment order is not curable u/s 292B of the Act. Thus we find merit in the submission of the assessee, therefore, we allow the additional ground raised by the assessee and quash the assessment order.

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• Customs

• 2024 (2) TMI 877
  Validity of permitting export in violation of notification - Supply of non-basmati Indian white rice - prohibited goods or not - challenge to notification bearing No. 20/2023, dated 20.07.2023. Petitioner took a stand that if the petitioner was not permitted to export the quantity of the aforesaid rice as per the contracts entered into by it, it would attract heavy damages by foreign buyers and result in huge financial loss to the petitioner. HELD THAT:- From the record, it can be seen that while in some writ petitions, Courts had permitted as an interim measure the export of rice, which was stored in the godowns of such petitioners, yet by virtue of the judgment and order impugned in the present Appeal, the learned single Judge appears to have permitted the export of the entire quantity of 18,900 MTs of the said rice which was otherwise a subject matter of contract between the petitioner and the foreign buyers, which, runs contrary to the notification, which was impugned in the writ petition, on which a view had to be expressed and the notification impugned had to be either upheld or set aside, which did not happen in the present case, in view of the fact that after obtaining the interim relief, the petitioner very conveniently sought to withdraw the challenge to the notification itself, which was impermissible. Matter remanded to the learned single Judge for consideration afresh along with the batch of petitions which are stated to be listed tomorrow i.e., on 16.02.2024, before the concerned Bench as per the roster. Registry to post the matter accordingly. Appeal disposed off.

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• 2024 (2) TMI 876
  Levy of interest on short paid duty under section 28AA of the Customs Act - short paid duty amount was paid without demur or protest and in time, on issuance of SCN - HELD THAT:- It is settled law that interest is compensatory in character and not punitive, we also take note of the fact that the short levy in the present case, in no way can be attributed to the assessee s fault. Section 28AA calls for payment of interest on short levied duty amount due in terms of Section 28 - It is noted that no sooner had the appellant been served with the Show Cause Notice, they paid the differential duty even before the lower authorities as observed from the Order-in-Original, the appellant never disputed the short paid duty and only contested the payment of interest thereon. As it was not attributable (a) to any fault on their count, (b) that there have been no short payment of assessed duty, in terms of what the Customs EDI System foretold and (c) that there was no case of any willful misstatement or suppression of facts. The Appellant has also brought to notice yet another case in the case of COMMISSIONER OF CUSTOMS VIJAYAWADA VERSUS RUCHI SOYA INDUSTRIES LIMITED [ 2016 (7) TMI 88 - CESTAT BANGALORE] , wherein duty as assessed by the Customs Officer was paid by the importer on the very day as required under Section 47 of the Customs Act. However, because of the lag in time span between the day of assessment and that of entry inwards there was an enhancement in the rate of duty. The assessee however paid the differential duty as required under law and within the time specified. Upon reference to the Third Member it was held by the Tribunal that the importer in the said case was not liable to pay interest as the duty leviable under Section 47 of the Customs Act, stood duly discharged and there was no delay in payment thereof. The present case is somewhat similar, while in the cited case it was a change in the rate of duty in the time interlude between assessment and grant of entry inwards, in the present case it is a variation of duty rates that between the time of presentation of Bill of Entry and the enactment of the Finance Bill. The fact is that in both the cases, upon payment of import duty, out of charge order for home clearance, by the Proper Officer under Section 47 of the Act was appropriately issued, and it was only subsequent that demand for differential duty was raised. There being no delay in payment of this differential in duty it was held that no interest was therefore payable, as there was no late payment. In view of the fact that short paid duty amount was paid without demur or protest and in time, no sooner the Department brought the same to the importer s notice, besides the fact that duty short paid in the first instance, can in no way be attributed to any fault on the part of the importer/appellant, there are sufficient compliance of the requirements of Section 47 as at the time of clearance, and that is why order permitting clearance for home consumption was granted by the proper officer. Under the circumstances, subjecting the importer to levy interest on duty as short paid in terms of Section 28 is not warranted besides being unduly harsh, particularly when there is no omission on account of any fault attributable to the importer. The demand for interest is set aside and the appeal filed is allowed.

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• 2024 (2) TMI 875
  Classification of import of UPS - Admissibility of exemption Notification No. 25/2005 Cus- dated 01.03.2005 vide Sl. No. 4 to imports of Home UPS - related party transaction - whether Home UPS were mere power supply units for Data Processing Equipments and were not eligible to be treated as Static Converter for use in Data Processing Machines, to which the notification applied to? - HELD THAT:- It is well known that an exemption notification is to be read the way it is worded and no words can be added or deleted therefrom. The adjudicating authority reading the said terminology used in the notification to as to be used exclusively (implying solely or only) does not flow from the plain wordings of the exemption notification - the interpretation rendered the learned Commissioner and to impute malafides into the matter cannot be agreed upon, as it is found that the importer has truthfully declared the item contained and for ascertaining the technical parameters, the literature of the goods was also found enclosed. It would be worthwhile to place on record the technical parameters of the imported goods. Under the circumstances, there are no merit in denying the exemption benefit referred to supra to the imported goods. Further, in view of the findings that there is nothing amiss in the declaration and nothing has been concealed, the case does not warrant confiscation of the imported goods and imposition of penalties. The impugned goods are eligible for exemption benefits as claimed by the importer/appellant in terms of Notification No. 25/2005 Cus dated 01.03.2005 (vide Sl. No.4) - the order for confiscation of the goods and imposition of penalty is set aside - appeal allowed.

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• 2024 (2) TMI 874
  Confiscation of goods - import of old and used worn clothing, completely fumigated / old and serviceable garments - Valuation - Restricted goods or not - enhancement of value - Redemption Fine - Penalty - HELD THAT:- This issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [ 2018 (11) TMI 625 - CESTAT MUMBAI] , wherein this Tribunal has observed The failure of the original authority to comply with the direction in remand to disclose the margin of profit that prompted the fine and penalty, the matter would normally have to be remitted back by another remand order. However, the paucity of evidence and the negligible scope for ascertainment at this stage deters us from doing so. Against the confirmed duties and the penalties the Redemption Fine imposed by the Adjudicating Authority, the Respondents have not filed any Appeals. The redemption fine and penalty imposed on the Respondents by the adjudicating authority is sufficient to meet the end of justice. Therefore, the redemption fine and penalty confirmed by the adjudicating authority are upheld - there are no infirmity in the impugned orders and the same are upheld. Appeal of Revenue dismissed.

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• Insolvency & Bankruptcy

• 2024 (2) TMI 873
  Extension of the CIRP period of the Corporate Debtor by 60 days - Directing Issuance of fresh Form-G in the CIRP of the Corporate Debtor - CoC had already decided against this course of action - HELD THAT:- Despite lapse of four years, no resolution had fructified so far. Inspite of issue of Form G on five occasions, no viable resolution plans had cropped up compelling the CoC to recommend liquidation of the Corporate Debtor. However, on an application filed by the Appellant seeking consideration of their Resolution Plan, the Adjudicating Authority taking note that the object of the IBC is to rescue the Corporate Debtor in distress allowed the consideration of the Resolution Plan of the Appellant on 16.01.2023. The subsequent decision of the Adjudicating Authority on 08.02.2023 to recall its order of 16.01.2023 was set aside by this Tribunal. This Tribunal on 25.04.2023 taking note of the fact that Resolution Plan of the Appellant was already submitted and the majority member of the CoC holding 86% share had expressed its no objection to consider the same, allowed consideration of the Resolution Plan of the Appellant. The decision of the CoC not to issue fresh Form-G has been also canvassed by the Learned Counsels of the Appellant, RP and Union Bank of India. It has been contended by them that fresh publication of Form-G would run counter to the stringent time lines prescribed by the IBC for completion of the CIRP process - when a resolution plan has already been received by the CoC and the CoC in the exercise of its commercial wisdom has decided to only consider this plan, allowing other potential resolution applicants by the Adjudicating Authority to paradrop afresh at this stage when CIRP period is over and that too contrary to the deliberations of the CoC cannot be countenanced. Ultimately it is the commercial wisdom of the CoC which operates to approve what is to be the best resolution plan. The Adjudicating Authority with the limited powers of judicial review available to it cannot substitute its views with the commercial wisdom of the CoC. In view of the above, the Adjudicating Authority has committed an error in directing the issuance of fresh Form-G while allowing the extension of the CIRP by 60 days when the CoC had deliberated at length on this issue and had decided against the option of having other potential resolution applicants from joining the fray. That part of the impugned order is set aside wherein the Adjudicating Authority has directed the RP to invite fresh expression of interest through wider publication of Form-G - that part of the impugned order is affirmed wherein the period of CIRP has been extended by 60 days - application disposed off.

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• 2024 (2) TMI 872
  Rejection of section 7 application - Existence of financial debt or not - status of allottee for sale of plots (real estate project) - what is the nature of transaction between the parties whether the transaction can be held to be financial debt within the meaning of Section 5(8) of the Code? - HELD THAT:- On accepting the submission of the Appellant that appellant is an allottee, application under Section 7 was required to be complied with the provisions of Section 7(1) as amended by Act 1/2020, thus Application has to be filed by not less than 100 of such creditors in a class or not less than 10% of total number of such creditors. Appellant having not filed the application as allottee has not even pleaded that the Application under Section 7 which was filed on 29th July, 2021 fulfils the conditions as provided in section 7(1) thus even if we accept that Appellant as an allottee within the meaning of Section 2(d) of the RERA, there being no compliance of Section 7(1), the Application under Section 7 cannot succeed on the ground that Appellant is an allottee in the Real Estate Project. Thus the submission of the Appellant that Appellant is an allottee does not render any benefit to the Appellant and on the said submission the application filed as an allottee cannot be admitted and was liable to be rejected due to non-compliance of Section 7(1) of the Code. Submission of the Appellant that transaction in question falls within the definition of Section 5(8)(f) of the Code - HELD THAT:- All transactions which are covered under Section 5(8) which has to be treated as a financial debt, has to be necessarily disbursal against the consideration for the time value of money. Agreement entered between the parties was for sale and purchase of the land on consideration fixed in the agreement i.e. 21,000 per sq. m. The Appellant who was to bring allottees in whose favour the leases were to be executed by the Respondent, it was open for the Appellant to sell the land at any price i.e. even higher to the amount fixed between the parties and the excess amount on which any lease is executed by the Respondent shall be treated as commission of the Appellant - The transaction was thus clearly transaction for sale and purchase of the assets and it cannot be said that disbursal was for time value of money. The transaction between the parties does not fall under Section 5(8)(f) of the Code - also held that application filed by the Appellant cannot be sustained under Section 7 as an allottee of the real estate project as the Appellant being allottee of Real Estate Project thus under Section 5(8)(f) claim of the Appellant as Real Estate Project allottee is unsustainable. The Adjudicating Authority in the Impugned Order has come to the conclusion that transaction as described in MoU / Agreement to Sale / Addendum is essentially in the form of arrangement of selling, marketing , promoting and bringing prospective allottees to the Respondent Radiant Hotels Pvt. Ltd. The Adjudicating Authority has also rightly come to the conclusion that obligation of payments of money under the agreement of sale by no stretch of imagination can be construed as a financial debt - the finding of the Adjudicating Authority while rejecting the application filed under Section 7 of the Code agreed upon. Thus, no error has been committed by the Adjudicating Authority in rejecting the Section 7 Application filed by the Appellant. There is no merit in the Appeal - The Appeal is dismissed.

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• 2024 (2) TMI 871
  Rectification of defects in section 7 application - ambit of a Power of Attorney - Home Buyers - NCLT rejected the application for initiation of CIRP - the authorization letters from the appellants were not attested by an advocate or notary - It is the version of the Appellants, as per Section 7(5) of the Code, the Adjudicating Authority/Tribunal should have granted an opportunity to Appellants, to rectify the defects in the Application - HELD THAT:- Under Part IV of Application under the Head, particulars of Financial Debt, of the Applicant , the total amount of debt granted it was mentioned that a total financial debt of Rs.1,27,05,10,277 (Rs. One hundred and twenty seven Crores five lakhs ten thousand two hundred seventy seven only) was the due sum defaulted, as the Respondent/corporate debtor have cumulatively defaulted the financial debt, paid by the Applicants/Financial Creditors/Allottees towards the purchase of their respective Units. The Appellants in Section 7 Application had mentioned the amount claimed in default as Rs.191,65,13,949/- (Rupees One hundred ninety one crores sixty five lakhs thirteen thousand nine hundred forty nine only). The Default, according to the Appellants, was continuing as soon as, since the year 2016. Further, it was mentioned that the Default was committed by the Respondent/Corporate Debtor as soon as since the years 2016 (being the latest date of Default committed by the Corporate Debtor as per the Agreement). The maximum time, in accordance with the agreement of the Applicant/Allottees for delivering the possession was mentioned as 2016. Also that the Default is continuing even till date, as the construction of Project was not complete and the possession was not handed over. This Tribunal, keeping in mind of the prime fact that in Law, there is no Estoppel against Statute, to raise all Factual and Legal issues / contentions in a Legal Proceedings before the Competent Forum, at this stage, without delving deep into the merits of the matter nor expressing any opinion, one way or the other on the controversies / disputes centring around the Case, permits the Appellants to raise all Factual and Legal Pleas. This Tribunal, based on Fair Play, Good Conscience quite in the fitness of things, remits back the petition for a de novo enquiry to be conducted, by the Adjudicating Authority/Tribunal and to proceed with the matter by providing opportunity of hearing to both parties, by adhering to the principles of natural justice and to proceed further on merits, and to dispose of the petition in a fair, just and in an unbiased manner, by passing a reasoned speaking order in a dispassionate manner, dealing with the issues/points so raised and to render a finding in accordance with Law and in the manner known to Law, of course, uninfluenced and untrammelled with any of the observations made by this Tribunal, in this Appeal. Appeal disposed off.

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• Service Tax

• 2024 (2) TMI 878
  Non-payment of service tax - recovery agent services - confirmation of demand alongwith interest and penalty - HELD THAT:- Nothing has been brought out in the memo of appeal to contradict the finding recorded by the Commissioner (Appeals) that the appellant rendered recovery agent service. The Commissioner (Appeals) granted relief to the appellant for the Financial Year 2010-11 and 2013-14, since the appellant was entitled for benefit of exemption upto the value of Rs. 10 lakhs. The relief for the Financial Year 2009-10 was not granted as the appellant did not produce any evidence. The demand was, accordingly, reduced from Rs. 8,13,338/- to Rs. 6,65,559/-. Penalty - suppression of facts or not - HELD THAT:- The Commissioner noted that the appellant had suppressed facts from the department as such facts could only be obtained from the ICICI Bank and, therefore, the penalties were correctly imposed. However, the quantum of penalty under section 78 of the Finance Act was reduced to Rs. 6,65,559/-. There is, therefore, substance in the submissions advanced by the learned authorized representative appearing for the department that there is no error in the order passed by the Commissioner (Appeals) - The appeal is, accordingly, dismissed.

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• 2024 (2) TMI 870
  Negative listed service or not - Levy of service tax - renting of immovable property - renting out land and shops to traders - Agricultural Produce Market Committee - scope of section 66 (D) (d) of the Finance Act, 1994 - whether section 66 (D) (d) of the Finance Act would not cover renting of shops or other building structures and would cover only renting of vacant land with or without structure? - HELD THAT:- The issue now stands decided in favour of the respondent by the Supreme Court in KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ALWAR [ 2022 (2) TMI 1113 - SUPREME COURT] . The Supreme Court held that the activity of the Mandi Samiti in renting out space/immovable property after 01.07.2012 is included in the Negative List and, therefore, service tax cannot be levied. In view of the aforesaid decision of the Supreme Court, there is no merit in this appeal - appeal dismissed.

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• CST, VAT & Sales Tax

• 2024 (2) TMI 869
  Valuation - Tax on Luxuries - inclusion of an amount towards ayurveda income after giving all deductions as per law in calculation of assessable value - HELD THAT:- The contention of the petitioner with regard to the inclusion of an amount of Rs. 3,12,13,293/- towards ayurveda income after giving all deductions as per law cannot be legally countenanced - it is based on the submissions of the assessee himself and the figures declared by the assessee that the said turnover was subjected to tax under the Kerala Tax on Luxuries Act. In the absence of any figures substantiated by the accounts maintained by the assessee, produced at any stage before the authorities below, there are no reason to doubt the correctness of the decision of the Tribunal confirming the demand of tax under the said head. Addition of miscellaneous income - HELD THAT:- During the pendency of this OP(TAX), the assessing authority passed the consequential order (Ext. P12) purportedly in compliance with the direction issued by the Tribunal in Ext. P10 order - if the petitioner has any grievance regarding the correctness of the said order of the assessing authority, to the extent it does not adhere to the directions of the Tribunal in Ext. P10 order, it is for him to agitate the same before the appellate authority, on merits. Petition dismissed.

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• Indian Laws

• 2024 (2) TMI 868
  Dishonour of Cheque - cheque issued by the petitioner or not - Petitioner is an agent of the accused no. 1 firm - vicarious liability of the petitioner - HELD THAT:- A reading of the complaints would show that barring the assertion that the petitioner had acted as an agent of the accused no. 1, there is no other assertion that the petitioner, in any manner, was incharge of the firm of the accused no. 1 or had any say in its working. The cheques are not stated to be issued by the petitioner. It is trite law that for a person to be subjected to criminal proceedings, specific averments have to be in a complaint. It is also imperative to establish that a person who is sought to be made criminally liable should, at the time of the commission of the offence, be in charge of and responsible for the conduct of the business of the company, to initiate proceedings under Section 141 of the Negotiable Instruments Act, 1881 The petitioner herein is averred to only be an agent of the accused no. 1 firm. There is not even an assertion in the complaint that the petitioner was in any manner in charge of or was responsible to the accused no. 2 for the conduct of its business - Applying the above test to the facts of the present case, therefore, the offence under Section 138 of the Act is not made out against the petitioner. The prejudice caused to the petitioner is evident from the fact that though the complaint has been filed in the year 2014 and was re-filed before the learned MM in 2017, the accused nos. 1 to 3 are yet to be served with the summons issued by the Court. As far as the plea of the learned counsel for the respondent that the petitioner be allowed to be summoned by the respondent as a witness in the subject complaints, as the petitioner is now not an accused in the complaints, the respondent shall be at liberty to move an appropriate application, if so advised, to include the petitioner in the list of witnesses to be examined. Petition allowed.

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