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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter February 21, 2022 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy FEMA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles Interplay between the General Law and Special Law – Cr.P.C Vs PMLA By L. Venkateswara Rao, Additional Commissioner, CESTAT, HYDERABAD Apex Court allowed the Bail as the accused has already undergone custody of 25 months when the maximum sentence is for 5 years. GST ON GUEST LECTURES News UAE and India Sign Historic Trade Pact, Marking a New Era of Economic Cooperation India and UAE sign the historic CEPA aimed at boosting goods trade to US$ 100 billion over next five years Circulars / Instructions / Orders FEMA 26 - dated 18-2-2022 Regulations Review Authority (RRA 2.0) – Interim Recommendations –Discontinuation/Merger/Online Submission of Returns Highlights / Catch Notes GST Input tax credit - expenditure incurred for 'Civil and Interior Works' - said property is further used for letting out to different tenants on rental basis viz. for furtherance of business - Clause (c) and (d) of section 17(5) restricts ITC in respect of works contract services and goods or services used towards construction of immovable property. As such, input tax credit (ITC) of GST paid in relation to 'civil and interior works' in building and on 'construction of commercial complex' does not seems to be admissible. - AAR Visit to Get Source Classification of services - providing on-line text based information such as online books, newspapers, periodicals, directories etc (judgements/Notifications/Bare Acts/Rules/E-books/News/Articles) through their website - Database and journals or periodicals are different thing and exemption is not available to online database, online books, newspapers, directories and non-educational journals - AAR Visit to Get Source Levy of GST - electricity charges paid to UPCL for the power consumed by residents in their residential apartments and recovered from them on actual cost basis - pure agent services - In the instant case, it is found that the applicant is using “Electricity” procured from the UPCL (Electricity supply authority) for furtherance of his interest in as much as all the infrastructure developed by them is fully dependent on the electricity (and for that matter water also) and in turn the services of MIANTENANCE & FACILITIES so offered to the Community is absolutely dependent on the electricity - the applicant does not fulfil, two criteria out of the four, as specified in explanation to Rule 33 of the CGST Rules, 2017, to be considered as a pure agent - Liable to GST - AAR Visit to Get Source Classification of goods - Coach Work like DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains of Railway Rolling Stock - The "classification of DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains", manufactured as per the specific design and layout provided by the Railways and supplied to the Indian Railways only and no-where else, falls under Chapter 86.07 of the GST Tariff - AAR Visit to Get Source Levy of GST - promotional scheme of extra packs of cigarettes - taxable value which can be attributed to such extra packs of cigarettes for levy of GST - There would no tax liability on additional 30 packs of cigarettes supplied with 100 packs of cigarettes. Further, ITC shall also be available to the supplier for the inputs, input services and capital goods used in relation to Supply of goods or services or both as part of such offers. - AAR Visit to Get Source Levy of GST - Works contract or not - service of transportation of goods by road to be provided by the company under one of its contracts - Even if the considerations for two taxable supplies are separately quoted or there is single consideration for two supplies, both types of scenarios are covered under composite supply till the conditions as mentioned above for composite supply are fulfilled (i.e. naturally bundled supplies and one being principal supply and other ancillary supply to principal supply). The entire transaction of providing the goods and the services is naturally bundled and hence this is clearly a case of composite supply of goods and supply of services. - liable to GST @ 18% - AAR Visit to Get Source Income Tax Nature of receipt - sales tax remission benefit derived by the assessee - All the judgments cited before us also lay down the same ratio. Even otherwise subsidy is included in the definition of Income u/s 2 (24) (xviii) with effect from 1/4/2016. Accordingly, we hold that Sales tax incentive money received being the amount retained by the company in accordance with Section 41 of the West Bengal sales tax act, 1944 read with the West Bengal incentive scheme, 1999 was a capital receipt not chargeable to tax under the income tax act. - AT Visit to Get Source Addition of bogus share application money u/s 68 - explanation to source of the source - with effect from assessment year 2013-14 section 68 of the Act has been amended to provide that if a closely held company fails to explain the source of share capital, share premium or share application money received by it to the satisfaction of the A.O., the same shall be deemed to be the income of the company u/s 68 of the Act. The said amendment has been held to be prospective and not retrospective - AT Visit to Get Source Customs Penalty u/s 112(a) of the Customs Act, 1962 - Show cause notice is the basis on which any order can be passed against a person. This is the basic requirement of the principles of natural justice. As the show cause notice was not issued to the appellant, the appellant did not file any reply. The appellant cannot be faulted for not filing a reply since the show cause notice did not call upon the appellant to file a reply. - The impugned order against the appellant deserves to be set aside. - AT Visit to Get Source Request for conversion of free shipping bills to advance authorization shipping bills rejected - there is no requirement under section 149 of the Customs Act, 1962 that the conversion can be allowed only if the goods have been subjected to physical examination. Therefore, the rejection of the request for conversion on the ground that physical examination was not conducted before export is without any legal basis.- AT Visit to Get Source Rejection of request for extension of warehousing period and reexport in respect of 21 consignments of imported capital goods - In the present case neither the goods were cleared for home consumption nor the department has initiated any action for sale of the goods. Therefore, in terms of the board circular 03/2003-Cus dated 14.01.2003 the appellant is entitled for re- export of the goods without payment of duty and consequently also entitled for extension of warehousing period - AT Visit to Get Source IBC CIRP - Carry forward of losses - The benefit of carry forward of losses can be availed by the Appellant subject of opportunity to be given to Income Tax Authority to pass appropriate orders in accordance with Section 79 - the observations made in paragraph 238 and 244 of the order of the Adjudicating Authority need to be deleted and are hereby deleted and the benefit of carry forward losses can be claimed by the Appellant subject to decision by appropriate Income Tax Authority as per Section 79 of the Income Tax Act. - AT Visit to Get Source Service Tax Recovery of interest and imposition of penalty under Sections 77 & 78 is justified - Rule 14(1)(i) of CENVAT Credit Rules, 2004 provides that where the CENVAT Credit had been taken wrongly but not utilized, the same shall be recovered under the provisions of Section 11A of the Central Excise Act, 1944 and Section 73 of the Finance Act, 1994 as the case may be. Further Rule 14(1)(ii) provides that where CENVAT Credit has been taken and utilized wrongly or has been erroneously refunded the same shall be recovered along with interest - there is clear distinction made in the statute that interest is to be recovered only in case of utilization of CENVAT Credit taken wrongly. - AT Visit to Get Source Central Excise CENVAT Credit - transfer of unutilized credit, on shifting of factory - Transfer of unutilized credit also denied on the ground that appellants have shifted on inputs and not shifted the capital goods - it is not necessary that the inputs and capital goods have to be transferred. Rule 10(3) uses the expression “inputs or capital goods”. The appellant in the present case has transferred the inputs into the Puducherry unit. Thus, as per Rule 10(3), they are entitled for transfer of the unutilized credit. - AT Visit to Get Source VAT Quantum of penalty under section 10(A) of the CST Act - The Tribunal after detailed analysis, came to the conclusion that there was mensrea on the part of the petitioner and hence, they were liable to pay penalty. At the same time, the Tribunal observed that the penalty levied by the assessing officer, was too excessive and therefore, the same was modified by restricting to 100% and not 150% - this court is of the opinion that the levy of penalty has to be modified by restricting it to 50%, instead of 100% as done by the Tribunal. - HC Visit to Get Source Case Laws: GST 2022 (2) TMI 831 Classification of supply - supply of Iron and Steel (HSN Code: Chapter 72) to M/s Dewan India, Moradabad for manufacturing as raw material of its items approved by the Government of India, Ministry of Commerce and Industry Department of Commerce, Moradabad Special Economic Zone, Moradabad - Zero Rated Supply or not - refund on Inputs, if supplies are made without payment of tax against Letter of Undertaking - levy of penalty or tax if supplies made by him to M/s Dewan India, Moradabad are consumed used by recipient for any purpose other those mentioned in its LOA (i.e approved purpose) - documents required to be maintained by the applicant - liability on Applicant Company under Reverse Charge Mechanism (RCM). Whether supply of Iron and Steel to M/s Dewan India, Moradabad for manufacturing of its items approved by the Government of India, Ministry of Commerce and Industry Department of Commerce, Moradabad Special Economic Zone, Moradabad will fall under supply for approved purpose? - HELD THAT:- The said question (i.e. whether any supply will be covered in supply to SEZ unit for approved purpose) is not covered in any category under Section 97(2) of the CGST Act, 2017. Whether supply of Applicant will be treated as Zero Rated Supply? - HELD THAT:- The said question is also not covered in any category under Section 97(2) of the CGST Act, 2017. Whether the applicant is entitled to claim refund on Inputs, if supplies are made without payment of tax against Letter of Undertaking? - HELD THAT:- The said question is also not covered in any category under Section 97(2) of the CGST Act, 2017. Whether the applicant can be held liable for any penalty or tax if supplies made by him to M/s Dewan India, Moradabad are consumed used by recipient for any purpose other those mentioned in its LOA? - HELD THAT:- The said question is also not covered in any category under Section 97(2) of the CGST Act, 2017. Documents required to be maintained by the applicant - HELD THAT:- The said question is also not covered in any category under Section 97(2) of the CGST Act, 2017. Whether there is any liability on Applicant Company under Reverse Charge Mechanism? - HELD THAT:- From the definition of advance ruling, it is evident that an applicant can seek an Advance Ruling only in relation to supply of goods or services or both undertaken or proposed to be undertaken by them. Accordingly, the question on tax liability under reverse charge mechanism is not liable for admission before the authority of advance ruling. 2022 (2) TMI 830 Input tax credit - expenditure incurred for 'Civil and Interior Works' - said property is further used for letting out to different tenants on rental basis viz. for furtherance of business - ITC on construction of commercial complex - Section 16 of the CGST Act, 2017 - HELD THAT:- The applicant has agreed to renovate and built out interior of the Demised Office Space as per the specification of tenants and the cost of such renovation would be part of rent which would be calculated by adding 10% profit element (as interest cost) over the actual expenditure of renovation/furnishing/interior works and it shall be recoverable within the span of maximum five years as a component of rent payable on monthly basis Section 17 of the CGST Act, 2017 provides for apportionment of credit and blocked credit. It is pertinent to have a look at the relevant legal provisions under Section 17(5) of the CGST Act - According to Section 16 (1) of the CGST Act, 2017, every registered person is entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used by him in the course or furtherance of his business. It is found that apart from conditions as laid down under Section 16 of the CGST Act, 2017; Section 17 provides for restrictions and factual position and situations where ITC would not be available. ITC restricted in case of construction undertaken on own account - HELD THAT:- Clause (d) restricts input tax credit of goods and services used by a person for construction of an immovable property (except plant and machinery) on his own account. Thus, if a person purchases construction material and engages a labor contractor to provide the constructions services using the purchased material, ITC shall not be available of both the goods purchased and the services of the labor contractor procured. ITC restricted in case of works contract services only to the extent expenses are capitalized - HELD THAT:- Clause (c) and clause (d) use the word 'construction' and as per the Explanation to clause (c) and clause (d) construction is only to the extent of capitalization. Consequently, ITC of any expenditure related to construction that is capitalized in the books of accounts shall be blocked. This shall not only cover the value of materials and works contract services but also expenditure directly related to the construction like inward supply of services from real estate agent, architect, interior decorators as these are involved in the establishment of the immovable property. ITC eligible when works contract services used in respect of construction of plant and machinery - HELD THAT:- Clause (c) and (d) of section 17(5) restricts ITC in respect of works contract services and goods or services used towards construction of immovable property. However, both the clauses clearly exclude 'plant and machinery'. This means that the ITC restrictions are applicable only in case of immovable property. These restrictions are not applicable on plant and machinery - the effect of this explanation is that ITC on input of any goods or services including works contract service used towards construction of immovable property that is desired to be capitalized in the books of accounts shall not be admissible. Clause (c) and (d) of section 17(5) restricts ITC in respect of works contract services and goods or services used towards construction of immovable property. As such, input tax credit (ITC) of GST paid in relation to 'civil and interior works' in building located at C-32, Sector-62, Noida and on 'construction of commercial complex' located at Plot No. 18, Block C, Sector-153, Noida does not seems to be admissible. 2022 (2) TMI 829 Exemption from GST - transmission of electricity - applicability of Entry No. 25 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - eligibility to claim Input Tax Credit (ITC) of the tax paid on services received from UPPTCL - liability to deduct Tax at Source (TDS) on the amount paid to UPPTCL for services supplied by it. Whether the services supplied by UPPTCL to the Applicant are exempt from payment of GST under Entry No. 25 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017? - HELD THAT:- It is evident that an applicant can seek an Advance Ruling only in relation to supply of goods or services or both undertaken or proposed to be undertaken by them - In the instant case, the supply is being undertaken by UPPTCL and the applicant is the only recipient of supply. Accordingly, this question is not liable for admission before this authority and therefore not admitted for consideration on merits of the case. Whether the Applicant is eligible to claim Input Tax Credit (ITC) of the tax paid on services received from UPPTCL? - HELD THAT:- If an action or event is subject to something, it needs something to happen before it can take place. It means the second question is subject to answer of first question. If the services supplied by the UPPTCL to the applicant are exempt, then there is no question of input tax credit of the same. The question of input tax credit only arises, when the services supplied by the UPPTCL to the applicant are taxable. As we have not admitted the first question for the advance ruling, the answer of second question (being subject to first question) is not being answered because the same is out of purview of authority of advance ruling. Whether the Applicant is liable to deduct Tax at Source (TDS) on the amount paid to UPPTCL for services supplied by it? - HELD THAT:- If an action or event is subject to something, it needs something to happen before it can take place. It means the third question is subject to answer of first question. If the services supplied by the UPPTCL to the applicant are exempt, then there is no question of deduction of TDS. The question of deduction of TDS only arises, when the services supplied by the UPPTCL to the applicant are taxable - as the first question for the advance ruling is not admitted, the answer of third question (being subject to first question) is not being answered because the same is out of purview of authority of advance ruling. 2022 (2) TMI 828 Classification of services - providing on-line text based information such as online books, newspapers, periodicals, directories etc (judgements/Notifications/Bare Acts/Rules/E-books/News/Articles) through their website www.manupatra.com to law firms, lawyers, companies, government, judiciary, law schools - to be classified under SAC code 997331 or not - Applicability of N/N. 12/2017-Central Tax (Rate) dated 28th June 2017 further amended by N/N. 02/2018-Central Tax (Rate) dated 25th January 2018, against Serial number 66 - HELD THAT:- The nil rate of tax is applicable only on supply of online educational journals or periodicals under sl. No. 66(b)(v) of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended and the said entry does not cover supply of E-books, Newspapers, directories and non-educational journals or periodicals - the invoices issued by the applicant to different educational institutions have mention of description 'Annual Subscription Online Database' and the same have no mention of online educational journals or periodicals . As such, the applicant is collecting a subscription fee which is nothing but the fee charged to gain access to the data available in the database and to download the articles or information. The said invoices are not in respect of supply of online educational journals or periodicals. Database and journals or periodicals are different thing and exemption is not available to online database, online books, newspapers, directories and non-educational journals under sl. No. 66(b)(v) of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. 2022 (2) TMI 827 Levy of GST - electricity charges paid to UPCL for the power consumed by residents in their residential apartments and recovered from them on actual cost basis - electricity charges paid to UPCL (Electricity supply authority) for the power consumed towards common area and recovered from residents on actual cost basis - Asset Replacement Deposits collected from residents - pure agent services - HELD THAT:- A pure agent is one who while making a supply to the recipient, also receives and incurs expenditure on some other supply on behalf of the recipient and claims reimbursement for such supplies from the recipient of the main supply and while the relationship between them in respect of the main service is on a principal to principal basis, the relationship between them in respect of other ancillary services is that of a pure agent, but the important thing to note is that a pure agent does not use the goods or services so procured for his own interest and this fact has to be determined from the terms of the contract. Hence, to ascertain the above facts proper scrutiny of the documents submitted by the applicant with the instant application is imperative. From the lease deed and maintenance and facilities agreement, there are no doubt in coming to the conclusion that the services offered by the applicant is a wholesome and combined package of services, which cannot be performed without the supply of electricity (water also), to the infrastructure, which in an integral part of the Community' - and once an Lessee, there is no option available for himself or herself, to disassociate him or her, from the ambit of the services so provided by the Lessor and opt only for paying electricity charges (and for that matter water charges if applicable) on actual consumption basis, without availing any other services, as the Lessee has no other option. This fact is evidently established, as in the 'LEASE DEED' it has been clearly mandated that with the execution of the Lease Deed, the Lessee(s) have signed a separate agreement with the Lessor (the Maintenance Facilities Agreement ) for the provision of certain services including the maintenance and operation of the Club and the Common Area, as set out in the Maintenance Facilities Agreement (the Services ). The term have signed a separate agreement suggest that it is compulsory and not optional. In the instant case, it is found that the applicant is using Electricity procured from the UPCL (Electricity supply authority) for furtherance of his interest in as much as all the infrastructure developed by them is fully dependent on the electricity (and for that matter water also) and in turn the services of MIANTENANCE FACILITIES so offered to the Community is absolutely dependent on the electricity - the applicant does not fulfil, two criteria out of the four, as specified in explanation to Rule 33 of the CGST Rules, 2017, to be considered as a pure agent, hence we hold that the electricity charges paid to the UPCL (Electricity supply authority) for the power consumed by residents in their residential apartments and recovered from them on actual cost basis and the electricity charges paid to the UPCL (Electricity supply authority) for the power consumed towards common area and recovered from residents on actual cost basis are liable to GST. Whether the amounts collected by the applicant towards Asset Replacement Deposits, would form part of consideration towards the services being provided by them or not? - HELD THAT:- There are certain distinguishable features of both advance and deposit and the advances differ from the deposits. We find that the applicant, while seeking advance ruling, has accepted the fact that in accordance to mutual agreement between the applicant and the residents and in order to meet any planned or unplanned capital outlay in future, they recover an amount (on the basis of super area), known as Asset Replacement Deposits, which would be non-refundable deposits - in the instant case, as admitted, these deposits are in accordance with the agreement and are directly proportional to the super area and are to meet any planned or unplanned capital outlay in future, which is clearly a consideration to meet any contingency, which may arose in future and hence there is no iota of doubt regarding the true picture of such deposits. Coining and using any other term to camouflage such deposits, would not take away its basic characteristics of consideration . These deposits are to be charged from the residents/ owners for undertaking /execution of any services in future (planned or unplanned). And since these deposits are for services to be executed in future, they would be non-refundable in nature and would depend upon the super area taken on lease by the service recipient/ resident/owner and by all means this is an advance sought for by the applicant for future supply of services. The basis for calculating these amounts is directly proportional to the super area taken on lease, as per the lease deed executed between them, is indicative of fact that the element of service is inbuilt, although for a future date - In the instant case the applicant receives the payment earlier and hence the time of supply is the date of receipt of amount towards the Asset Replacement Deposits, therefore, the said amounts are liable to GST as they are advances towards future supply of services and not the deposits and hence liable to GST at the time of issuing/raising of debit notes. Asset Replacement Deposit is a consideration being collected by the applicant for provision of supply. 2022 (2) TMI 826 Classification of goods - Coach Work like DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains of Railway Rolling Stock - to be classified under HSN 8607 or not - HELD THAT:- In the instant case, it is observed that the DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains of Railway Rolling Stock would be manufactured by the applicant, strictly as per the specification and design provided by the Indian Railways (RDSO) and meant to be solely used in railway rolling stock and nowhere else. Accordingly, we observe that the ratio of the above referred judgments is squarely applicable in the instant case and the DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains of Railway Rolling Stock are classifiable under Tariff heading 86079920 i.e. Parts of tramway, locomotives and running stock . It is found that in Form GST ARA-01, the applicant has sought ruling on the question classification of Coachwork like DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains of Railway Rolling Stock only but in their letter dated 12.08.2021, the applicant has also sought ruling on the questions that if the above product is supplied to the Indian Railways or through other vendors/suppliers, what would be provision and classification of the products and rate of GST on said products supplied to Railway through its vendors. The question mentioned in statutory 'Form GST ARA-01' is to be answered only and other questions raised in forwarding letter are not worth consideration by the Authority of Advance Ruling. 2022 (2) TMI 825 Levy of GST - promotional scheme of extra packs of cigarettes - taxable value which can be attributed to such extra packs of cigarettes for levy of GST - extra packs of cigarettes would be exempt supplies or free samples - applicability of provisions of Section 17(2) of the UPGST Act, 2017 read with Rule 42 of the UPGST Rules, 2017, or clause (h) of Section 17(5) of the UPGST Act, 2017 - HELD THAT:- The promotional scheme of additional 30 packs of cigarettes on every purchase of 100 packs of cigarettes for the payment of 100 packs of cigarettes is a taxable supply of 130 packs of cigarettes on the price of 100 packs of cigarettes. There would no tax liability on additional 30 packs of cigarettes supplied with 100 packs of cigarettes. Further, ITC shall also be available to the supplier for the inputs, input services and capital goods used in relation to Supply of goods or services or both as part of such offers. The provisions relating to 'supply' with respect to related persons and / or distinct persons are specifically covered within schedule I of the CGST Act, 2017 i.e. Activities to be treated as supply even if made without consideration. As per the said provisions, any supply of goods or services or both when made in the course or furtherance of business between the related persons or between the distinct persons, the same would be treated as supply even when the supply is made without consideration. As such, any transaction between the related persons or between the distinct persons, irrespective of the consideration, would be treated as 'supply' and hence taxable under GST. The cigarettes would not be supplied through sole distributor (i.e. related person) and in case of any divergence from the said disclosure (i.e. in case of supply to related person or distinct person), the ruling will be void ab-initio as per Section 104 of the CGST Act, 2017. 2022 (2) TMI 824 Levy of GST - Works contract or not - service of transportation of goods by road to be provided by the company under one of its contracts - HELD THAT:- The scope of work is Erection, Procurement and commissioning package, for 1x660 MW Harduaganj TPS Extn. II Thermal Power Station and all the contracts were awarded to the applicant in response to a single tender notification. Apart from this, all the contracts are linked by a 'cross fall breach clause' which means that a breach in one contract will automatically be classified as a breach of the other contract. Thus, the 'cross fall breach clause' provides the recipient M/s UPRUVNL an absolute right to either terminate all the contracts or claim damages accordingly. The 'cross fall breach clause', settles unambiguously that supply of goods, their transportation to the contractee's site, delivery and related services are not separate contracts, but only form parts of an indivisible composite works contract supply, as defined under Section 2 (119) of the CGST Act, 2017. The composite nature of the contract is clear from the facts that first Contract and second contract cannot be performed satisfactorily unless the goods have been transported and delivered to the contractee's site as per third contract. The 'cross fall breach clause', settles unambiguously that supply of goods, their transportation to the contractee's site and related services of insurance, unloading and handling at site, installation including civil work, testing etc. are not separate contracts, but only form parts of an indivisible composite supply of goods and services with single source responsibility - it is seen that the supply of the goods and the supply of services are inextricably linked with each other. The contract awarded in substance and essence is a composite contract as defined in section 2(30) of the C.G.S.T. Act, 2017 for supply of goods and services. The Contracts involve two supplies, one for the supply of goods and the other for the supply of services. The contracts fulfill the conditions of the 'composite supply' as the supply of goods and services are naturally bundled in the sense that both the goods and services may require to fulfill the intention of the buyer in completion of the contract. The supply of goods and services are provided as a package and if one or more is removed, the nature of the supply would be affected - Even if the considerations for two taxable supplies are separately quoted or there is single consideration for two supplies, both types of scenarios are covered under composite supply till the conditions as mentioned above for composite supply are fulfilled (i.e. naturally bundled supplies and one being principal supply and other ancillary supply to principal supply). The entire transaction of providing the goods and the services is naturally bundled and hence this is clearly a case of composite supply of goods and supply of services. Whether the contracts/agreement is a 'works contract as defined in clause (119) of section 2 of the CGST Act, 2017 or otherwise? - HELD THAT:- It is seen from the nature of contract which envisages installation, which involves civil works to erect the structure for execution of the project in its entirety. It is an entire system comprising of a variety of different structures which are installed after a lot of prior work which involves detailed designing, ground work. Further foundations in cement concrete, cement concrete walls as well as cement concrete structures are to be constructed during the execution of the project - The object of annexation, as said earlier, cannot be to make it movable from one place to the other. Hence considering the scope of the work, it can be concluded that completion of the installation, erection of the total project is resulting into immovable property wherein transfer of property in goods is involved. What can be seen is that when machines are embedded with no visible intention to dismantle them and they are intended to be used for a fairly long period of time, they are 'immoveable property' - the total project assigned to the applicant is nothing but composite supply of works contract as envisaged under Section 2 (119) of CGST Act, 2017 and the entire contract is a supply of services as per entry 6(a) of schedule II of the GST Act and liable to GST @ 18% as per entry at Sr. no. 3(ii) of the Notification No. 11/2017 of Central Tax (Rate) dt. 28/06/2017 and corresponding notification under the UPGST Act. Income Tax 2022 (2) TMI 823 Computation of deduction u/s 10B - Tribunal held that the expenditure incurred in foreign exchange for providing technical services outside India by way of onsite development of computer software should not be excluded from the export turnover for the purpose of computing deduction - whether Tribunal was right in holding that even if the expenditure referred to in the preceding question was to be excluded from the export turnover, then the same should be excluded from the total turnover also? - HELD THAT:- Issue involved herein has already been decided in favour of the assessee, in view of the decision rendered in the case of Commissioner of Income Tax v. Mphasis Ltd [ 2014 (8) TMI 690 - KARNATAKA HIGH COURT] also confirmed by Supreme court [ 2019 (11) TMI 1383 - SUPREME COURT ] held that 'the expenditure incurred by the Assessee in foreign currency will be includible in the definition of 'export turnover' for the purpose of computing deduction under Section 10B. Decided in favour of the assessee. 2022 (2) TMI 822 Recovery proceedings - Order u/s 115 (O) of the Income Tax Act, 1961 in respect of certain transactions arising out of buy-back and payment of amounts to the persons from the shares were purchased - petitioner submits that although the petitioner has deposited the amounts mentioned above, the continuance of lien over the bank account deposit and the bank guarantee furnished cannot be countenanced in the light of the circular of CBDT issued for the purpose of Section 220 (6) of the Income Tax Act, 1961 vide Ciruclar Instruction No.1914 dated 20.02.1993 - HELD THAT:- This writ petition is disposed by directing the respondents not to encash the bank guarantee or the amounts lying in deposit pursuant to order of this Court pending further orders by the CIT Appeals. In case, adverse orders are passed and appeal is filed by the petitioner within the time stipulated under the provisions of the Income Tax Act, 1961 total recovery cannot exceed 20% in terms of circular issued under Section 220 (6) of the Income Tax Act, 1961 and excess lying as security shall be refunded back to the petitioner. 2022 (2) TMI 821 Validity of National Faceless Assessment procedure incorporated u/s 144B - gross violation of principles of natural justice - HELD THAT:- The time given for the petitioner to respond for a notice consisting of 56 pages within a period of two days has resulted in a gross violation of principles of natural justice as the Assessment proceedings has been conducted in a mechanical manner. Assessment order has been passed on 21.09.2021 i.e,. one day after the date of the deadline was fixed in the show cause notice dated 17.09.2021 shows that the National Faceless Assessment procedure incorporated under Section 144B has not achieved the purpose it was envisioned. The idea of Faceless Assessment is to ensure that there is no personal interaction and no physical contact to rule out any irregularities which were noticed prior to incorporation of Section 144B of the Income Tax Act. As the Assessment orders runs to 56 pages and has been passed within two days of the time fixed shows it has been passed in gross violation of principle of natural justice. The impugned order is set aside and the case is remitted back to the respondents to pass a fresh speaking order within a period of forty five (45) days from the date of receipt of a copy of this order. The petitioner is directed to upload all the information and rely that were called for by the respondents under Section 142(1) within a period of fifteen (15) days from the date of receipt of a copy of this order. The Assessment proceedings shall be carried out in accordance with law. 2022 (2) TMI 820 Income accrued in India - Taxability of Royalty Payment - payments received by the assessee on sale of software to India resellers/distributors is in the nature of Royalty chargeable to tax u/s 9(1)(vi) of the Act and under Article 12 of the India USA Double Taxation Avoidance Agreement [DTAA] - HELD THAT:- A careful perusal of the agreement entered into by the assessee with the resellers in India and keeping in mind the aforementioned specific clauses, in our considered opinion, it is clear that such agreements are entered into solely for the sale of software products and not in any way entail transfer of patent, copy right or any other intellectual property right. The quarrel is squarely covered in favour of the assessee and against the Revenue by the decision of the Hon'ble Supreme Court in a land mark judgment in the case of Engineering Analysis Center of Excellence Pvt Ltd.[ 2021 (3) TMI 138 - SUPREME COURT] . Thus we are of the considered view that no right in copy right is being transferred and accordingly, consideration received by the assessee cannot be brought to tax as per India USA DTAA. - Decided in favour of assessee. 2022 (2) TMI 819 Penalty u/s 271(1)(c) - undisclosed income - bogus purchase - HELD THAT:- Assessee s business being in the nature of dairy and vegetable, the assessee would not be knowing that whether income from dairy firm was liable to tax or not - during the assessment proceedings, the assessee offered this as undisclosed income which has been confirmed in appeal before the ld.CIT(A) and the issue has attained finality. On examination of the facts on hand, it is apparent that the claim was neither mala fide nor false. It was under bona fide belief that the income generated out of purchase and sales of dairy products are exempt from the income tax. Assessee in the assessment proceedings disclosed this fact and offered the same to tax. In these circumstances, the assessee fulfilled both the conditions to be outside the purview of Explanation (1) to Section 271(1)(c). In the present case, on account of bogus purchase, the ld.CIT(A) has restricted addition to ₹ 11,88,357/- from ₹ 43,53,429/- on estimate basis. Such an estimation is made without any concrete material but on adhoc basis. Hon ble jurisdictional High Court in the case of CIT Vs. Valimkbhai H. Patel [ 2005 (7) TMI 35 - GUJARAT HIGH COURT ] has held that where addition has been made on estimation basis, no penalty under section 271(1)(c) could be made qua such addition. 2022 (2) TMI 818 Disallowance of deduction u/s 80(IB) in respect of the fertilizer unit of Haldia - HELD THAT:- As relying on MEGHALAYA STEELS LTD [ 2016 (3) TMI 375 - SUPREME COURT] assessee is eligible for deduction u/s 80 IB of the Income Tax Act on fertilizer subsidy received by it. Accordingly, we hold that the fertilizer subsidy income received by the assessee is income derived from the business of the industrial undertaking and is eligible for deduction u/s 80 IB of the income tax act. Nature of receipt - whether sales tax remission benefit derived by the assessee is not chargeable to income tax as it is a capital receipt? - HELD THAT:- As held by Honourable Supreme court in CIT Madras Vs Ponni Sugar [ 2008 (9) TMI 14 - SUPREME COURT] it is the object for which the subsidy/assistance is given which determines the nature of the incentive subsidy. The form of the mechanism through which the subsidy is given is irrelevant. In the present case when once the object of subsidy is to industrialize state, it is capital receipt. All the judgments cited before us also lay down the same ratio. Even otherwise subsidy is included in the definition of Income u/s 2 (24) (xviii) with effect from 1/4/2016. Accordingly, we hold that Sales tax incentive money received being the amount retained by the company in accordance with Section 41 of the West Bengal sales tax act, 1944 read with the West Bengal incentive scheme, 1999 was a capital receipt not chargeable to tax under the income tax act. 2022 (2) TMI 817 Reopening of assessment u/s 147 - return was not filed as per the database of the Department - Assessee has purchased residential property and the same is not verifiable from the return of income filed for the AY 2006-07 and the assessee has not furnished the return of income - HELD THAT:- From the above, it is clear that the reopening was made on the ground that the assessee has not filed the return of income and, therefore, the income to the extent has escaped assessment. Since the assessee has already filed the return of income, a fact brought on record by the AO himself in the body of the assessment order itself, therefore, the very reason for which the case of the assessee was reopened is factually incorrect. As held in various decisions that when the AO reopened the case of the assessee on the premise that the return was not filed as per the database of the Department although it was already filed, then, such reassessment proceedings are not in accordance with the law and has to be quashed. We rely on the decision in the case of PCIT vs. RMG Polyvinyal (I) Ltd. [ 2017 (7) TMI 371 - DELHI HIGH COURT] and the Vijay Haishchandra Patel [ 2017 (12) TMI 865 - GUJARAT HIGH COURT] relied on the assessee. The various other decisions relied on by the ld. Counsel on this issue also support his case to the proposition that when reopening was based on the premise that the assessee has not filed his return of income as per database of the Department, but, the assessee has actually filed the return of income, then, such reopening is not in accordance with the law and has to be quashed since such reopening was based on wrong facts. We, therefore, quash the reassessment proceedings initiated by the AO and subsequent proceedings are accordingly quashed. Appeal of assessee allowed. 2022 (2) TMI 816 Power of AO to levy penalty when the matter was considered by the settlement commission - Proceedings with by Hon'ble ITSC u/s.245D(1) and 245D(2C) - Rectification order u/s 154 levying penalty u/s 271AAC - assessee had filed a petition before the ITSC on 05.12.2019 which stood admitted and allowed to be proceeded with u/s 245D(1) by the ITSC - HELD THAT:- Wherein an application made u/s 245C has been allowed to be proceeded with u/s 245D, then the ITSC shall, until and unless an order is passed under sub-section (4) of section 245D, subject to the provisions of section 245D(3), the exclusive jurisdiction to exercise powers and perform the functions of an income-tax authority under this Act lies with ITSC. This proposition has been reiterated by the Hon ble Delhi High Court in the case of M/s. Omaxe Limited [ 2014 (5) TMI 147 - DELHI HIGH COURT ] Once that is so, then AO did not had any jurisdiction to initiate or levy penalty u/s 271AAC. CIT (A) should have held that the penalty order itself is without jurisdiction and infructuous but instead held that the CIT (A) does not have any jurisdiction. Since AO did not have any jurisdiction to pass any order or levy any penalty on the same matter which is sub-judice before the ITSC then impugned order dated 27.01.2020 levying penalty is quashed as infructuous. On this ground alone, the appeal of the assessee is allowed and the penalty is deleted. 2022 (2) TMI 815 Addition on account of unaccounted / suppressed sales - assessee was reflecting only 20% to 50% of actual sale consideration in the registered sale deeds - HELD THAT:- Only on the basis of few instances, to presume that such concealment was done by the assessee in all the transactions, in a blanket manner, was not a correct presumption. It could also be seen that AO has also not considered the fact that the assessee might have incurred expenditure on cost of construction and other expenses in the same manner for which benefit should have been granted to the assessee. The sale figures could not be said to be the income of the assessee. It is trite law that only the real income earned by the assessee could be brought to tax. It is the finding that the assessee has sold developed sites during these years which would entail incurring of expenditure on the part of the assessee. Therefore, it would be in the fitness of things to estimate profit element embedded in unaccounted sale transactions since entire sales figures could not be held to be the income of the assessee. As per statutory mandate, a presumptive rate of 8% is applicable on civil construction business. Taking cue from the same, we apply the same rate to the unaccounted sales as computed by Ld. AO. Accordingly, Ld. AO is directed to estimate profit rate of 8% on unaccounted sales Unaccounted investment in Land - HELD THAT:- To presume that the assessee would have paid 5 times of the registered sale deed value would not be correct particularly when there was no adverse material on record. The value of land would depend upon various factor such as location of site, extant market conditions, position of the parties, nature of sale etc. and all these relevant factors could not be brushed aside. Moreover, it was incumbent on Ld. AO to prove that extra money was paid by the assessee. There was no such finding on record. The extrapolation done by Ld. AO had no basis and the action of Ld. AO in estimating the additions could not be upheld. The action of Ld. AO was totally untenable and devoid of any merits for it was based on conjectures and surmises. Therefore, the addition made in all these three years was deleted. We find that the revenue has accepted the findings of Ld. CIT(A) for all the three years and the issue has thus, attained finality. Development Expenditure disallowance - HELD THAT:- The assessee had brought tracts of land and developed the plots into saleable lay outs by converting these lands into plots. It could not be possible to have developed layouts without incurring any expenditure like clearing of debris, levelling of grounds, lay out of roads, installation of posts etc. The finding is also acceptable that some the activities would involve engagement of labour and service provider in unorganized sector. Therefore, a disallowance as high as 70% was not justified. The estimation of 40% as made by Ld. CIT(A), in our considered opinion, is quite reasonable and fair. Therefore, the same would not require any interference on our part. The grounds raised in assessee s appeal as well as revenue s appeal, on this issue, stand dismissed. Sales Commission disallowance - AO has estimated this disallowance @70% which has been confirmed by Ld. CIT(A) - HELD THAT:- Most of the payment was stated to be below ₹ 5000/- which would not require TDS compliance on the part of the assessee. These payments were one-time payment as referral payment. Therefore, we estimate this disallowance @40% as done for development expenses. The Ld. AO is directed to restrict the disallowance to 40% as against 70% confirmed by Ld. CIT(A). The assessee s ground of appeal, for all the year, stand partly allowed. 2022 (2) TMI 814 Exemption u/s 11 - Non grant of registration u/s.12AA - assessee filed an application in Form No. 10A alongwith the requisite documents - HELD THAT:- We observe that in the Ground No. 1 itself, the assessee has admitted the non-compliance of the notices but also stated that assessee is a State Government Organisation and at the time of notices, it was in the process of shifting its office and therefore could not attend the hearing. Having regard to this fact and the consent of Ld. D/R to set aside the matter to CIT(Exemption), we think it appropriate to refer the matter back to the file of Ld. CIT(Exemption) for deciding the matter afresh. CIT(A) shall give an opportunity to the assessee and decide the application on merit after considering the response of assessee. 2022 (2) TMI 813 Levy of penalty u/s. 271(1)(c) - defective notice u/s 274 - Non specification of charge - HELD THAT:- Since the AO, in the instant case, has not specified under which limb of the provisions of section 271(1)(c) i.e., whether for concealment of income or for furnishing of inaccurate particulars of income he has initiated the penalty proceedings, therefore, such penalty proceedings not being in accordance with the law, cannot be sustained. Accordingly, the penalty levied by the AO and sustained by the CIT(A) is directed to be cancelled.- Decided in favour of assssee. 2022 (2) TMI 812 Disallowance of expenses u/s.14A r.w.r.8D - HELD THAT:- It is well established principle of law that if there is no exempt income for relevant assessment year, then there cannot be any disallowances of expenses relatable to exempt income u/s. 14A of the Act. This principle is supported by the decision in the case of CIT Vs. Chettinad Logistics Pvt. Ltd. [ 2018 (7) TMI 567 - SC ORDER] In this case, on perusal of the order passed by the Assessing Officer, there is no observation with regard to exempt income earned for relevant assessment year. Even before the learned CIT(A), although the assessee did not appear before the learned CIT(A), but the learned CIT(A) has disposed off appeal filed by the assessee on technical grounds for non-prosecution of appeal, without discussing issue of disallowance of expenses u/s. 14A of the Act. Therefore, considering facts circumstances of this case, we are of the considered view that the issue needs to go back to the file of the Assessing Officer to reconsider the issue in light of our observations hereinabove. AO is directed to re-examine the issue in light of dividend income earned by the assessee for relevant assessment year, to determine disallowance of expenses relatable to exempt income. In case there is no exempt income for relevant assessment year, then Assessing Officer is directed to delete additions made towards disallowance of expenses u/s. 14A - Appeal filed by the assessee is treated as allowed for statistical purposes. 2022 (2) TMI 811 TP Adjustment - comparability - claim of turnover filter - HELD THAT:- AO has disregarded the fact that the assessee had set up a new plant and the new plant had commenced production during the relevant assessment year. The details of the same are placed. The Tribunal in the case of IKA India (P.) Limited [ 2018 (10) TMI 923 - ITAT BANGALORE] had held that capacity utilization adjustment shall be granted. It was further held by the Tribunal that in absence of details, adjustment can be made on the tested party also. We are of the view that the AO/TPO has to conduct fresh TP analysis. Therefore, grounds/issues raised in this appeal as regards the TP issues are restored to the files of the AO/TPO. AO/TPO is directed to restrict the TP adjustment to the international transaction. Further, the AO/TPO by following the dictum laid down by the Tribunal in the case of IKA India (P.) Limited v. ACIT (supra), shall consider the claim of the assessee as regards the capacity utilization, RPT filter, etc. 2022 (2) TMI 810 TP Adjustment - including the comparables i.e. M/s. Jain Granites Projects India Ltd. and M/s. Somany Ceramics Ltd. for determining the adjustments made of Arm's Length Price under Section 92CA - HELD THAT:- We find that, by including the above two comparables raised in the grounds of Appeal, the Arm Length Price charges would change to 37.5% to 41%, which is still within the tolerance margin of 5% of the TP guidelines. We, by taking note of the concerns expressed by the ld. CIT, DR and make it clear that as a result of the dismissal of the Revenue's appeal on the ground of low tax effect, the said order would not act as a precedent where there is a tax effect in any subsequent or prior year where the Revenue would want to agitate the issues on similar grounds before the ITAT on merit. Accordingly, in the light of the submissions of the ld. AR and the DR, the appeal of the Revenue is dismissed. 2022 (2) TMI 809 Non-deposit of the employees' contribution towards PF/ESIC before the prescribed due dates - disallowance u/s 36(1)(va) - HELD THAT:- We find that Hon'ble Delhi High Court in the case of CIT vs. AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT ] has held that no disallowance under section 36(1)(va) of the Act is called for when the amounts are deposited before filing the return of income. As far as the applicability of amendment made by Finance Act 2021 is concerned, we find that the Co-ordinate Bench of Tribunal in the case of Indian Geotechnical Services [ 2021 (9) TMI 182 - ITAT DELHI ] has held that amendment made by Finance Bill 2021 shall take effect from 1st April 2021 and will accordingly apply to A.Y. 2021-22 and subsequent years. In the present case assessment year involved is 2018-19 and therefore following the aforesaid decision in the case of Indian Geotechnical Services (supra), we are of the view that the amended provisions would have no application to the case under consideration. Thus we are of the view that no addition u/s. 36(1)(va) of the Act is called for in the present case. Therefore we direct the AO to delete the addition. Thus the ground of assessee is allowed. 2022 (2) TMI 808 Validity of Assessment u/s 153C - Assessment in case of search or requisition - HELD THAT:- As noted except for the statement of Shri Abhinandan Lodha, there is no material whatsoever, that the cash seized at the premises which did not belong to the assessee belong to the assessee. In such circumstances, the said cash account cannot be said to be material found under the proceedings of section 153C giving jurisdiction to the AO to frame the assessment. Same is a situation of the material found relating to receipt of on money. These are also based upon materials found in the case of search of Lodha group and the statement of other employees of Lodha group and the statement of Abhinandan Lodha. There is no material whatsoever specifying the material pertaining to the assessment year found belonging to the assessee company. In this view of the matter, there is a jurisdictional defect in the assessment framed under section 153C and the same is liable to be set aside on the account itself. Addition of on money received and the cash found relating to undeclared sale of parking space and flats - The assessee is a separate legal entity. There is no mention whatsoever regarding the nature of particular material belonging to the assessee company, which gives rise to the inference of on money receipt. This is based upon statement of other employees of Lodha group and that of Shri Abhianndan Lodha. As pointed out by us above, assessee has already disputed that assessee is a distinct legal entity and the term Lodha group cannot be used to incriminate the assessee and that Shri Abhinandan Lodha is not at all related to the assessee company. Hence, the material referred are not germane and hence, the addition on merits is also not sustainable. None of the statement referred here are identified to be belonging to the assessee company. In these circumstances, we note that none of the case laws referred by ld.CIT(A) expound that statement of persons not belonging to the assessee company can be an evidence against the assessee and which can be the basis of addition of undisclosed income. CIT(A) has elaborately dealt with evidences and evidences act, his order is conspicuously silent on the evidences of electronic data referred in this case and the compliance with the above exposition of law. We are conscious that this issue has not been raised, but then it is also settled that there is no estoppel as to law. In the background of aforesaid discussion and precedents in our considered an addition of merits also is not sustainable. - Decided in favour of assessee. 2022 (2) TMI 807 Addition of bogus share application money u/s 68 - explanation to source of the source - scope of amended provisions of section 68 - assessee receiving a credit has to testify its case through the 'triple marker test' of Identity, Creditworthiness and Genuineness of Transactions - HELD THAT:- In the instant case, the credit is in the form of receipt of share capital from share applicants. The nature of receipt towards share capital is seen from the entries passed in the respective balance sheets of the companies as share capital and investments. In respect of source of credit, the assessee has to prove the three necessary ingredients i.e. identity of share applicants, genuineness of transactions and creditworthiness of share applicants. For proving the identity of share applicants, the assessee furnished the name, address, PAN of share applicants together with the copies of balance sheets and Income Tax Returns. With regard to the creditworthiness of share applicants, we noted that these share applicants are having capital and reserves and the investment made in the assessee company is only a small part of their capital. These transactions are also duly reflected in the balance sheets of the share applicants, so creditworthiness is proved. Even if there was any doubt, if any, regarding the creditworthiness of the share applicants was still subsisting, then AO should have made enquiries from the AO of the share subscribers. We note that with effect from assessment year 2013-14 section 68 of the Act has been amended to provide that if a closely held company fails to explain the source of share capital, share premium or share application money received by it to the satisfaction of the A.O., the same shall be deemed to be the income of the company u/s 68 of the Act. The said amendment has been held to be prospective and not retrospective by Gagandeep Infrastructure Private Limited[ 2017 (3) TMI 1263 - BOMBAY HIGH COURT] . We note that in assessee`s case under consideration, the amended provisions of section 68 are not applicable, as the assessment year involved in the assessee`s case is assessment year 2012-13, hence the assessee need not to explain the source of the source. We note that with effect from assessment year 2013-14 section 68 of the Act has been amended to provide that if a closely held company fails to explain the source of share capital, share premium or share application money received by it to the satisfaction of the A.O., the same shall be deemed to be the income of the company u/s 68 of the Act. The said amendment has been held to be prospective and not retrospective by Hon`ble Bombay High Court in Gagandeep Infrastructure Private Limited [ 2017 (3) TMI 1263 - BOMBAY HIGH COURT] - We note that in assessee`s case under consideration, the amended provisions of section 68 are not applicable, as the assessment year involved in the assessee`s case is assessment year 2012-13, hence the assessee need not to explain the source of the source - Decided in favour of assessee. 2022 (2) TMI 806 Rectification u/s 154 - Question of debatable issue - disallowance of unabsorbed depreciation loss while determining the book profits u/s. 115JB(2) - AO allowed this claim of the assessee in the order u/s. 143(3) and issued notice u/s. 154 and withdrew the same - HELD THAT:- In the present case there was no brought forward business loss as on 1.4.2009 at the beginning of the FY 2009-10 relevant to AY 2010-11 and the loss was already absorbed by capital reduction and there is no question of debate on this issue and the statute is clear. Explanation 1 to clause (iii) of section 115JB(2) of the Act is directly applicable to the facts of the present case. Accordingly this not being a debatable issue, the AO was justified in exercising his powers u/s. 154 of the Act. Therefore, the orders of the lower authorities are confirmed. - Decided against assessee. Customs 2022 (2) TMI 805 Penalty u/s 112(a) of the Customs Act, 1962 - evasion of anti-dumping duty by over valuating the goods imported from China - Principal Commissioner, even though the show cause notice did not require the appellant to show cause, imposed a penalty upon the appellant under section 112(a) of the Customs Act - HELD THAT:- It is a fact that the show cause notice was not issued to the appellant. It was issued only to five persons including Amit Agarwal, who is the Director of the appellant. The appellant has stated that since it was not required to file reply to the show cause notice, no reply was filed - Show cause notice is the basis on which any order can be passed against a person. This is the basic requirement of the principles of natural justice. As the show cause notice was not issued to the appellant, the appellant did not file any reply. The appellant cannot be faulted for not filing a reply since the show cause notice did not call upon the appellant to file a reply. The impugned order against the appellant deserves to be set aside. It would, therefore, not be necessary to examine whether the Directorate of Revenue Intelligence had the jurisdiction to issue the show cause notice under section 28(4) of the Customs Act - the impugned order, in so far as it imposes a penalty of ₹ 10,00,000/- on the appellant under section 112(a) of the Customs Act, deserves to be set aside and is set aside - appeal allowed - decided in favor of appellant. 2022 (2) TMI 804 Request for conversion of free shipping bills to advance authorization shipping bills rejected - rejection on the ground of time limitation - rejection also on the ground that goods exported have not been physically examined - Circular No. 36/2010 dated 23.9.2010 - HELD THAT:- The period involved in these shipping bills are after the amendment of section 149 of the Customs Act, 1962 with effect from 1.8.2019. The amended provision states that the proper officer can allow amendment of a document if presented within such time, subject to restriction and conditions as may be prescribed. However, so far there is no notification issued prescribing time limit or stipulating any conditions for amendment of shipping bill. The department has relied upon Board Circular No. 36/2010 dated 23.9.2010. The said Circular was issued prior to this amendment. The Circular stipulates a time limit of three months from the date of issuance of LEO. The said circular being much prior to the amendment of section 149 of the Customs Act, 1962, the same cannot be applied to reject the request for conversion of shipping bill, when the Courts and Tribunal has repeatedly held that when the statute does not provide any time limit, the request for amendment cannot be rejected as time barred applying the Board Circular. The Hon'ble High Court of Madras in the case of CC Vs. Diamond Engineering (Chennai) Pvt. Ltd. [ 2019 (5) TMI 492 - MADRAS HIGH COURT] Madras High Court considered the issue of time limit of three months stipulated in the Board Circular and held that the same is not applicable. Second ground for rejection for conversion of free shipping bills is that the goods exported have not been physically examined - HELD THAT:- It thus becomes evident that the goods have been stuffed under the supervision of the Preventive Officer who has verified the invoice, packing list etc. before stuffing the goods into the container. Moreover, there is no requirement under section 149 of the Customs Act, 1962 that the conversion can be allowed only if the goods have been subjected to physical examination. Therefore, the rejection of the request for conversion on the ground that physical examination was not conducted before export is without any legal basis. The rejection of request for conversion of free shipping bills to Advance Authorization shipping bills are not justified - Appeal allowed - decided in favor of appellant. 2022 (2) TMI 803 Levy of penalty under Regulation 12(8) of Handling of Cargo in Customs Area Regulation, 2009 - smuggling of red sanders - callous approach of the custodian towards their responsibilities in following HCCAR, 2009 - HELD THAT:- It is seen that though the appellant has filed a reply to the Show Cause Notice, they have not filed any objections / counter representations after receiving the copy of the inquiry report. Regulation 12 of HCCAR, 2009 provides for the procedure for suspension or revocation of approval and imposition of penalty. As per Regulation 12(6), the appellant is to file a representation on the inquiry report within 30 days from the receipt of the inquiry report. Though various contentions have been raised in regard to the inquiry report, the appellant has not filed any representation against the inquiry report. It is also seen that the appellant can ask for examination of witnesses, cross-examination of witnesses relied by the inquiry officer - After considering the submissions made and the fact that the custodian is Airports Authority of India, which is a legal body, the appellant has to be given a further chance to establish their case. The appeal is allowed by way of remand to the Commissioner and he is directed to give a chance to the appellant to file objections / counter representations on the inquiry report under Regulation 12(6) of HCCAR, 2009. 2022 (2) TMI 802 Suspension/revocation of Customs Broker License - prohibition order - Regulation 19/20 of Customs Broker Licensing Regulations, 2013 - CBEC Circular No. 9/2010-Customs - HELD THAT:- Ongoing through the relevant provisions of law and the Board‟s Circular issued in this regard, it is found that the prohibition order was issued by the Commissioner of Customs of the station where the appellants have been given licence whereas, the same is to be given only by the Commissioner of Customs where the Customs broker is permitted to operate under C‟ form, in terms of the above cited circular. It is also found that till date the due notice for revocation of licence if any, as contemplated under Regulation 20 of CBLR, 2013, has been issued even after the lapse of the prescribed period of 90 days. It is also found that as submitted by the learned Counsel for the appellants, the said period is also over by a wide margin and as such no proceedings can be initiated against the customs broker, at this juncture, on the offence report given by Port authorities way back, under the said Regulation 20. Therefore, it is also found that the present appeal filed by the department is not maintainable either on the facts or on the law and is liable to be dismissed. The appeal filed by the Revenue is dismissed. 2022 (2) TMI 801 Rejection of request for extension of warehousing period and reexport in respect of 21 consignments of imported capital goods - rejection only on the ground that with reference to the bonded goods the SCN was issued and demand was confirmed and the same was upheld by the Tribunal - HELD THAT:- Even though the demand was confirmed but the goods are still lying in the warehouse and not cleared there from the custom duty is payable only at the time of clearance from the warehouse for home consumption. So long the goods remained in the warehouse no custom duty required to be paid - In the present case the appellant s request is to allow the re-export of the bonded goods. When the bonded goods isexported without taking a clearance for home consumption no custom duty can be demanded on such re- export of the goods. On perusal of provision of Section 69 it is clear that warehouse goods are allowed to be exported from the warehouse without payment of duty. In the present case this fact is not under dispute that the goods which sought to be exported are indeed warehoused goods as the same are still lying in the Warehouse. As per this statutory provision even though the duty was otherwise confirmed by the adjudication process the same is payable only when the goods are cleared for home consumption but by virtue of Section 69 when the appellant seeks export of goods from the warehouse itself the same shall be allowed without payment of duty. As regard the provision under Section 72(1)(d) of the Customs Act, 1962 it indicates that where bonded warehoused goods have not been cleared from home consumption, the proper officer may demand the duty and the owner of such goods shall forthwith pay full amount of duty chargeable on account of such goods together with all penalties , rent, interest etc and if owners fails to pay the amount demanded under subsection(1) the proper officer may detain the said goods and thereafter sell them after notice to the owner in terms of Section 72(1) (d)ibid. In our view this provision applies firstly when the department wish to sell the goods by auction. Secondly, only in case when the appellant failed to clear the goods for home consumption. In the present case it is the appellant s request to allow the re-export of the goods therefore, in terms of the circular dated 14.01.2003 despite the provision under section 72(1)(d) the re-export is permissible without payment of duty. Therefore, there is no conflict between the board circular 03/2003-Cus dated 14.01.2003 and Section 72(1)(d) of the Customs Act, 1962 as the said section is applicable only in case when the goods are cleared for home consumption or in case the appellant do not intend to clear the goods and department proceed to sell the goods by auction. In the present case neither the goods were cleared for home consumption nor the department has initiated any action for sale of the goods. Therefore, in terms of the board circular 03/2003-Cus dated 14.01.2003 the appellant is entitled for re- export of the goods without payment of duty and consequently also entitled for extension of warehousing period - the re-export of the imported goods was allowed on payment of 2% differential duty. This benefit is alternatively available to the present appellant also. However, since the appellant sought to export the goods from warehouse itself, even the appellant is not required to pay 2% duty as it is already held that in the case of warehoused goods the export should be allowed without payment of duty. The appellant is allowed to re-export the warehoused goods without payment of duty/fine/penalty if any - the warehousing period of the imported goods shall also be extended for 6 Months or further period within which the goods are re-exported - appeal allowed - decided in favor of appellant. Insolvency & Bankruptcy 2022 (2) TMI 800 Jurisdiction - power of IBBI to decide the question of payment of fees of the Appellant - HELD THAT:- There is no quarrel to the preposition that it is the Adjudicating Authority which has power to take a final decision with regard to payment of fee to which IRP or RP may be entitled - In this context, judgment of the Hon ble Supreme Court is referred in ALOK KAUSHIK VERSUS BHUVANESHWARI RAMANATHAN AND ORS. [ 2021 (3) TMI 1242 - SUPREME COURT] . It is thus settled law that the Adjudicating Authority is clothed with jurisdiction to take a final decision regarding entitlement of IRP or RP claiming his fee because i.e. part of the CIRP costs. The general power of framing regulations to carry out the provisions of this Code encompasses in itself the power to regulation regarding Insolvency Professionals. The Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 has already been framed where as per Regulation 7(2)(h), the Insolvency Resolution Professional has to be abide by the Code of Conduct specified in the First Schedule to these Regulations - IBBI is fully clothed with jurisdiction to regulate payment of remuneration of RP and IRP both by framing regulation or by issuing executive instructions till regulation are not framed can regulate the subject. IBBI till necessary regulations are not framed regulating fee is empowered to issue executive instructions in this regard. The issue of payment of fee to the IRP/RP occur very frequently which needs to be regulated by Regulating Authority who is clothed with the power. The mere fact that IBBI has been asked to submit its recommendations by the Adjudicating Authority, in the present case, there are no reason to question the jurisdiction of IBBI to submit a recommendation. The recommendations may be helpful to determine the issue in accordance with guidelines and circulars issued by the IBBI in this respect, if any - the Appeal is disposed of. 2022 (2) TMI 799 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditors or not - whether the Dispute raises a plausible contention which requires more examination in the form of an investigation and it not a Dispute which is a patently weak legal argument or an assertion of fact? - HELD THAT:- Section 5(21) defines operational debt meaning a claim in respect of the provisions of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority - Before the Adjudicating Authority , the Appellant/Operational Creditor alongwith the application had only mentioned the details of 1110 Nos of invoices but had not enclosed the copies of the said invoices and as such the application was treated as an incomplete one by the Adjudicating Authority . Even the copy of the ledger account was not placed on record before the Adjudicating Authority . One cannot remain oblivion to the prime fact that in the case on hand, the Appellant/Operational Creditor and Respondent/Corporate Debtor were supplying materials mutually and under such circumstances the Appellant/Applicant singly to be considered as an Operational Creditor qua the Corporate Debtor - it cannot be brushed aside that the Appellant had received the services/goods from the Respondent/Corporate Debtor and in that context, the claim arose between the parties. A Debt may not be due if it is not payable in law or in fact. The application must be complete with a view to enable an Adjudicating Authority to admit the same. While scrutinising an application under Section 9 of the Code, an Adjudicating Authority is to determine (a) whether there is an operational debt as per Section 4 of the Code (b) whether the material/documentary evidence submitted with the application indicates that the aforesaid debt is due and payable and the same was not paid. (c) whether there is existence to a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed prior to the receipt of the Demand Notice of the unpaid operational debt pertaining to a dispute - If anyone of the above said conditions is lagging behind, then the application is to be rejected in the eye of law. It is to be remembered that an adjudicating authority is to follow the particular mandate of Section 9 (5) of the Code, and admit or reject the application based on the ingredients enumerated in Section 5 of the Code. This Tribunal considering the facts and circumstances of the present case and also on going through the impugned order passed by the Adjudicating Authority comes to a consequent conclusion that the application project by the Applicant/Operational Creditor before the Adjudicating Authority is devoid of necessary qualitative and quantitative details, coupled with the candid facts that the Appellant is not an operational creditor pertaining to the Respondent/Corporate Debtor and viewed in that perspective, the conclusion arrived at by the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) in dismissing the application is free from legal infirmities - Appeal dismissed. 2022 (2) TMI 798 CIRP - Carry forward of losses - Resolution Professional has during pendency of approval of the plan issued notice to the Income Tax Authorities but no objection was filed - Adjudicating Authority has disallowed carrying forward of losses on the ground that the liability of the Corporate Debtor has been extinguished - HELD THAT:- The Third Proviso of Section 79 sub-clause (b) provides that nothing contained in Section 79 shall apply to a company where a change in the shareholding takes place in a previous year pursuant to a resolution plan approved under the Insolvency and Bankruptcy Code, 2016 after affording a reasonable opportunity of being heard to the jurisdictional Principal Commissioner or Commissioner - The amendment in Section 79 of the Income Tax Act, 1961 providing for exception in case of a company where change in shareholding takes place pursuant to Resolution Plan was with purpose and object. Thus, claim of carry forward of losses is not impermissible but can only be granted giving opportunity to the appropriate Income Tax Authority. The benefit of carry forward of losses can be availed by the Appellant subject of opportunity to be given to Income Tax Authority to pass appropriate orders in accordance with Section 79 - the observations made in paragraph 238 and 244 of the order of the Adjudicating Authority need to be deleted and are hereby deleted and the benefit of carry forward losses can be claimed by the Appellant subject to decision by appropriate Income Tax Authority as per Section 79 of the Income Tax Act. It is open for the Appellant to claim benefit of carry forward losses as per Section 79 of the Income Tax Act before appropriate competent Income Tax Authority which shall decide the claim in accordance with law. Appeal disposed off. 2022 (2) TMI 797 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The respondent case that the petition is barred by limitation wherein the date of default is between 01.07.2017 to 02.03.2018 and thus, the limitation stands expired on 01.03.2021. Also, Supreme Court had excluded the period of limitation w.e.f. 15.03.2020 owing to the outbreak of COVID-19. Thus, the limitation period expiring on 30.06.2020 was extended by the order of Hon'ble Supreme Court. Hence the petition is not time barred. Further the respondent corporate debtor has admitted its liability to pay the operational debt via reply dated 24.02.2021. The corporate debtor in its reply dated 24.02.2021 admitted the default and further sought time till 01.12.2021 to pay the amount. Since the corporate debtor already admitted its liability to clear its debt which is evident from reply dated 24.02.2021, the present application deserves to be allowed - application allowed - moratorium declared. 2022 (2) TMI 796 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - service of demand notice - HELD THAT:- The fact that Section 8 notice was issued by the Corporate Debtor find mention in the Section 9 application and adopted for initiating Section 9 proceeding. Observation of the Adjudicating Authority that notice under Section 8 was singed and issued by an unidentified person, cannot be approved. If the Adjudicating Authority had any doubt about details of person signing the notice, an opportunity ought to have been given to the Appellant to explain before the Adjudicating Authority and remove defects, if any, including details of authorization of person issuing notice. There is no dispute that the application under Section 9 was filed by the person who was duly authorized by the Board Resolution dated 15.11.2019 - Finding of Adjudicating Authority that there is different signatory in the demand notice and Section 9 application and name of person who signed notice is not clearly mentioned cannot be ground for rejecting application under Section 9. The Adjudicating Authority ought not have rejected application on aforesaid ground. Now the materials have been brought on record to the effect that person who has given the Section 8 notice was Director of the Appellant, it is satisfying that notice was issued by a competent person - the order of the Adjudicating Authority is set aside - the application before the Adjudicating Authority which may be considered and decided by the Adjudicating Authority after hearing the parties is revived. Appeal allowed - decided in favor of appellant. 2022 (2) TMI 795 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Service of demand notice - HELD THAT:- The demand notice dated 06.08.2019 was sent via registered post and email on 07.08.2019 to the corporate debtor and its directors. The postal receipt and tracking report are found to be attached at Page 647-652 (Annexure-9) of the Application. Whether the operational debt was disputed by the Respondent? - HELD THAT:- The Respondent Corporate Debtor has filed reply and argued that they had been dissatisfied with the supply and the quality of the goods however they have not submitted any communication to substantiate the same. Thus, as per documents placed on record with the adjudicating authority, there is no dispute as to the outstanding liability of the Respondent Corporate Debtor towards the Applicant Operational Creditor. It has been shown that the Corporate Debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. It is also observed that the conditions under Section 9 of the Code stand satisfied. Hence, this Adjudicating Authority is inclined to commence CIRP against the Corporate Debtor as envisaged under the provisions of IBC, 2016. Application admitted - moratorium declared. FEMA 2022 (2) TMI 794 Violation of provisions of FCRA, 2010 - Suspension of certificate - suspension u/s 13(1) of the FCRA, 2010 - HELD THAT:- This Court, in the facts of that case had set aside the suspension order on two grounds, firstly, no reasons have been spelt out in the suspension order and secondly, the respondents have neither issued Show Cause notice nor initiated an inquiry by the time the suspension order was passed. Insofar as, stating the reasons for suspension is concerned, as concluded above, the reasons have been given in the impugned order. To that extent, the judgment has no applicability. Insofar as the conclusion of the Court by the time the suspension order was passed neither an inquiry was initiated nor any Show Cause notice was issued is concerned, it is my conclusion that the process of inquiry was started in the year 2017. So, it is not a case where neither any inquiry was initiated nor any Show Cause notice was issued. So, the judgment relied upon by Mr. Datar and Mr. Singh is clearly distinguishable. Insofar as the reliance placed by Mr. Datar and Mr. Singh on the judgment in the case of Modern Dental College and Research Centre and Ors. [ 2016 (5) TMI 1366 - SUPREME COURT] the same is inapplicable to the present case, inasmuch as, the impugned order suspending the petitioner is in consonance with the object which the instant legislation/statute strives to achieve and has not gone in excess of that object, as my findings above would depict, and as such, satisfies the doctrine of proportionality. Service Tax 2022 (2) TMI 793 Refund of tax paid - refund claim was rejected by the adjudicating authority on the ground of time bar that the appellant has filed the refund claim beyond one year after reversal of the duty in R.G.23A - Section 11B of CEA - HELD THAT:- Firstly the appellant have not represented the case before the adjudicating authority therefore, the adjudicating authority had no occasion to verify the facts regarding adjustment of duty paid on the audit objection, date of realisation of foreign exchange and submission of proof of export. There are also no evidence such as any correspondence regarding adjustment of duty by the department against the payment made by the appellant. In this fact, the matter needs to be reconsidered by the adjudicating authority. It is noted that in the peculiar facts of the present case since non-filing of proof of export beyond the control of the appellant, they had also not realized the export proceed the period from payment of duty till adjustment of duty by the department/receipt of export proceed/receipt of proof of export should be deducted for computing the time limit of one year in terms of Section 11B. The matter remanded to the adjudicating authority for passing a fresh order after observance of principal of natural justice - appeal allowed by way of remand. 2022 (2) TMI 792 Recovery of interest and imposition of penalty under Sections 77 78 is justified - Suo moto reversal of excess CENVAT Credit - excess credit was never utilized - time limitation - contumacious conducts like suppression or falsification of record - HELD THAT:- The impugned order is under the teeth of the Hon'ble Supreme Court as per the law laid down in the case of Chandrapur Magnet Wires (P) Ltd. [1995 (12) TMI 72 - SUPREME COURT], wherein it has been held that the CENVAT Credit taken and which have been suo moto reversed without utilization, amounts to CENVAT Credit never to have been taken. Rule 14(1)(i) of CENVAT Credit Rules, 2004 provides that where the CENVAT Credit had been taken wrongly but not utilized, the same shall be recovered under the provisions of Section 11A of the Central Excise Act, 1944 and Section 73 of the Finance Act, 1994 as the case may be. Further Rule 14(1)(ii) provides that where CENVAT Credit has been taken and utilized wrongly or has been erroneously refunded the same shall be recovered along with interest - there is clear distinction made in the statute that interest is to be recovered only in case of utilization of CENVAT Credit taken wrongly. Further admitted fact of the present case is that the appellant had given cogent explanation that the excess credit occurred due to system error. The appellant had reversed the credit suo moto under proper intimation to the Department and also had their quantum of refund reduced proportionately. It is apparent that the show-cause notice is issued after more than three years from the date of reversal and its intimation to the Department. Appeal allowed - decided in favor of appellant. Central Excise 2022 (2) TMI 791 CENVAT Credit - capital goods or not - MS Angles, MS Channels, etc. - appellant contended that the impugned goods in the nature of MS Angles, MS Channels etc. have not been used for civil work and these have been used for fabrication of capital goods, their parts, components and accessories - Rule 2(a) of CENVAT Credit Rules, 2004 - suppression of facts or not - extended period of limitation - HELD THAT:- In the case of [ 2015 (4) TMI 569 - SUPREME COURT ], similar issue came up for consideration as to the eligibility of credit on railway track materials used for handling raw materials, where it was held that the appellant has rightfully claimed for MODVAT credit in respect of this item which credit is wrongly reversed by the authorities below. The Hon'ble jurisdictional High Court in the case of Thiru Arooran Sugars [ 2017 (7) TMI 524 - MADRAS HIGH COURT ] analysed the issue whether the MS structural steel used to support plant and machinery would be eligible for credit. It was observed that without such support structure, the machinery cannot be kept in position to be used in the manufacturing activity and it was held that whether the user test is applied, or the test that they are the integral part of the capital goods is applied, the Assessees, in these cases, should get the benefit of Cenvat Credit, as they fall within the scope and ambit of both Rule 2(a)(A) and 2k of the 2004 Rules. An amendment was introduced in the definition of capital goods with effect from 7.7.2009 which restricted the availment of credit of MS Angles, MS Channels etc. used for support structures of capital goods and for laying foundation. The Larger Bench of the Tribunal in the case of VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ] held that the said amendment has retrospective application. The adjudicating authority has heavily relied upon the said decision to give retrospective application to the amendment. The period involved in the present appeal is from April 2005 to December 2006. The amendment of the definition of capital goods was introduced only with effect from 7.7.2009. There was nothing in the amendment which suggested that it applies retrospectively - The Larger Bench (Vandana Global case) took the view that the same applies retrospectively. The said decision was held to be not good law by the Hon'ble High Court of Gujarat in the case of Mundra Port SEZ [ 2015 (5) TMI 663 - GUJARAT HIGH COURT ] - the disallowance of credit on the impugned goods cannot sustain and requires to be set aside. Extended period of limitation - suppression of facts and misrepresentation or not - HELD THAT:- The department has not produced any evidence to establish that there was willful suppression of facts with intention to evade payment of duty. In fact, the appellant has availed the credit and declared the same in their ER-1 returns. Further, they have taken steps to get a report by a Chartered Engineer as to the details of the quantity of impugned goods used for fabrication of capital goods, parts, accessories and also the quantity of structural steel used for civil work. The Range Officer who conducted physical inspection and verification of the invoices and job work of the contractor has not been able to point out any infirmities on these details furnished by the appellant - the invocation of extended period alleging suppression of facts and misrepresentation cannot sustain. The appeal succeeds on the ground of limitation as well. Appeal allowed - decided in favor of appellant. 2022 (2) TMI 790 CENVAT Credit - transfer of unutilized credit, on shifting of factory - factory is closed down at Bangalore and appellant confined the manufacturing activity to Puducherry unit, there is no merger or transfer of units - Rule 10 of CENVAT Credit Rules, 2004 - HELD THAT:- Rule 10 of CEVAT Credit Rules, 2004 provides for transfer of unutilized CENVAT credit in the case of sale, merger, amalgamation, transfer of unit etc. In the present case, the appellant had closed the factory at Bangalore and transferred the inputs lying in stock to their unit at Puducherry. They then requested for transfer of the unutilized credit availed on inputs lying as balance in their unit at Bangalore. The request for transfer of CENVAT credit has been denied mainly on two grounds. (i) The closing down of the factory at Bangalore and the shifting of inputs lying in stock to the Puducherry unit cannot be considered as shifting of a factory. (ii) That the appellant has not shifted any capital goods and only inputs were shifted - Rule 10(1) will not apply. Transfer of unutilized credit also denied on the ground that appellants have shifted on inputs and not shifted the capital goods - HELD THAT:- In the case of Ispat Industries (supra) it was held that it is not necessary that the inputs and capital goods have to be transferred. Rule 10(3) uses the expression inputs or capital goods . The appellant in the present case has transferred the inputs into the Puducherry unit. Thus, as per Rule 10(3), they are entitled for transfer of the unutilized credit. The disallowance of transfer of unutilized credit cannot be justified - Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2022 (2) TMI 789 Violation of principles of natural justice - assessment order disallowing a huge amount of Input Tax Credit on the ground of unreconciled input tax credit is passed, without issuing any SCN - HELD THAT:- The writ applicant, being dissatisfied and aggrieved by such assessment order, preferred an appeal under Section 73 of the VAT Act before the first Appellate Authority. It appears that the first Appellate Authority, having regard to a strong prima facie case, admitted the appeal and also granted stay against the recovery pursuant to the assessment order subject to pre-deposit of an amount of ₹ 1 Lakh - It is the case of the firm that the first Appellate Authority intended to allow the appeal and in such circumstances, the file of the firm was sent to the G.R. Cell in accordance with the procedure prescribed by the circular dated 30th July 2016. It appears that based on the suggestions by the G.R. Cell, again, a notice 23rd October 2019 came to be issued to the firm calling upon the firm to produce evidences in respect of the claim of Input Tax Credit. Ultimately, the first Appellate Authority dismissed the first appeal. It is the case of the firm that the first Appellate Authority dismissed the first appeal on the ground which never formed part of the assessment order - the firm, thereafter, preferred a Second Appeal before the Tribunal. The Tribunal passed an order asking the writ applicant firm for a pre-deposit of ₹ 10 Lakh. The appellant is hereby directed to deposit ₹ 10,00,000/- (20% of tax amount of ₹ 49,78,555/-) as a pre-deposit within the period of one month from the date of this order - Amount the appellant has paid as a pre-deposit at the stage of first appeal is adjusted against pre-deposit - application disposed off. 2022 (2) TMI 788 Quantum of penalty under section 10(A) of the CST Act - petitioner availed tax concession at the reduced rate of Central Sales Tax at 4% by issuing Form 'C' declaration for certain items, which were not covered in the Form 'B' registration certificate issued by the second respondent to them - HELD THAT:- The petitioner admitted its liability to pay tax for the purchases made in respect of goods that were not covered under Form 'B' registration certificate issued by the second respondent. They disputed only the quantum of penalty levied by the authorities below. Therefore, this court is inclined to look into the orders of the authorities below to that extent alone. It is seen that the assessing officer, after inspection and verification of records, found that the petitioner claimed concessional rate of CST at 4% by issuance of form 'C' declaration in respect of certain items that were not covered under the certificate of registration in form 'B' issued to them by the second respondent and thereby committed the offence as contemplated under section 10(b), warranting penalty under section 10(A) of the CST Act, 1956 - there was no false representation as alleged by the department and the concept of 'mens rea' would not arise for levy of penalty under section 10(A) of the CST Act. Being dissatisfied with the explanation submitted, the assessing officer ultimately completed the assessment, levying penalty at the rate of 150% of the tax due. The Tribunal after detailed analysis, came to the conclusion that there was mensrea on the part of the petitioner and hence, they were liable to pay penalty. At the same time, the Tribunal observed that the penalty levied by the assessing officer, was too excessive and therefore, the same was modified by restricting to 100% and not 150% - considering the fact that the petitioner made applications seeking amendment of the Form B registration certificate, which disclosed that they had made inter-state purchases on the bonafide impression that the disputed items would have been included in the Form B registration certificate issued by the second respondent; and subsequently, they had admitted their liability to pay tax in respect of the disputed items, this court is of the opinion that the levy of penalty has to be modified by restricting it to 50%, instead of 100% as done by the Tribunal. Petition disposed off. 2022 (2) TMI 787 Validity of assessment order - Section 55 of the Tamil Nadu General Sales Tax Act, 1959 - levy and collection of resale tax u/s 3H of the Tamil Nadu Government Sales Tax - Super Kerosene Oil - Assessment Year 2002-2003 - HELD THAT:- The order of this Court in W.P.No.10423 of 2019 dated 25.10.2019 and the order passed by the Appellate Commissioner on 04.03.2021 has not discussed the issue on merits. Merely because, the appeal was rejected and the writ petition was disposed, does not mean that the application filed under Section 55 of the TNGST Act can be dismissed without any discussion. The petitioner appears to have made out a case for rectification. This aspect has not been discussed in the impugned order. The case is remanded back to the respondent to pass a speaking order on merits as to whether indeed application under Section 55 of the TNGST Act, 1959 is maintainable on facts - this writ petition stands disposed by directing the respondent to pass appropriate orders within a period of three months from the date of receipt of a copy of this order. 2022 (2) TMI 786 Classification of goods - disallowance of deduction for sale returns - seeking direction to not to take any coercive steps against the petitioner for the recovery of disputed tax amount, and interest - responsibility of respondent to decide the classification related dispute concerning the products of the petitioner conclusively - levy of interest in a demand arising out of classification dispute - levy of interest when petitioner is not covered under section 39(4) of the Bihar Value Added Tax, 2005 - wrongful availment of input tax credit in excess - concealment of particulars of sale/purchase, or wrongly declared its turnover, or wrongly claimed input tax credit, the levy of interest - classification on the basis of previous Audit Objection and treating the same to be sacrosanct - intention of the Respondents is not to decide the matter on merits but elongate the life of the litigation without serving the cause of justice. HELD THAT:- At this stage, Shri Suraj Samdarsi states that the petitioner does not press the present petition on merits reserving liberty to file an appeal within a period of four weeks from today. However direction be issued for expeditious disposal of appeal - Shri Vikash Kumar, learned S.C.-11 states that if the appeal is preferred within the said period, the issue of limitation would not come in the way of the petitioner and the appeal would positively be heard and decided on merits, in accordance with law. Petitioner shall file appeal, if not already filed, within a period of four weeks from today - Petitioner shall comply with the condition of pre-deposit for hearing of the appeal - Petition disposed off. 2022 (2) TMI 785 Validity of assessment order - respondent has confirmed the demand proposed in the notice as the petitioner failed to participate and respond to the notice - HELD THAT:- Though the facts indicate that the petitioner has been negligent in not furnishing the required documents and informations which were called for under Section 22(3) of the TNVAT Act, 2006 on 27.08.2018, 15.10.2018 and on 20.08.2019, the fact remains that when the Show Cause Notice dated 31.07.2020 which preceded the impugned Assessment Order dated 27.01.2021 was issued the Country was under lockdown. Districts in Tamil Nadu were under complete lockdown. The impugned Assessment Order is quashed and the case remitted back to the respondent to pass a speaking order within a period of forty five days from the date of receipt of a copy of this order - Liberty is given to the petitioner to file all the documents and the informations within a period of fifteen days from the date of receipt of a copy of this order. The first date of hearing before the respondent is hereby fixed on 10.01.2022. Petition disposed off. Indian Laws 2022 (2) TMI 784 Seeking release of 30% of the cheque amount in favour of the applicant pending the captioned revision application - demand of money for maintenace of livelihoods as no other source of income exists - HELD THAT:- According to this Court, there is no suppression made by the present applicant in praying for withdrawal of the amount of 30% deposited by the respondent no. 2 herein. It appears from Annexure-A2 ion for fixing date of early hearing was not pressed by the present applicant and sought permission to withdraw the same and according, the permission as sought for was granted by this Court vide order dated 11.11.2019. Withdrawal of the application for fixing early date of hearing of Criminal Revision Application preferred by the respondent no. 2 herein would not debar him to prefer this application for withdrawal of the amount deposited by the respondent no. 2 herein - Section 148(3) of the Negotiable Instruments Act also permit the complainant to withdraw such amount deposited by the accused persons during the pendency of the appeal. Indisputably, the jurisdiction of this court cannot be debarred or interpreted in a narrow manner as submitted by learned advocate for the respondent no. 2 herein. This Court, being revisional jurisdiction certainly allow the original complainant/present applicant to permit her to withdraw the amount deposited by the respondent no. 2 herein as envisaged under Section 148(3) of the Negotiable Instruments Act - the applicant is hereby permitted to withdraw 30% amount deposited by the respondent no. 2 herein before the trial court - application allowed.
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