Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 22, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Cancellation of GST registration of petitioner - The High Court found that the cancellation orders were arbitrary as they did not consider the returns filed by the petitioner, which disclosed substantial business activities. The High Court observed that, merely because at the place of business no stock was found it was concluded that the petitioner did not conduct any business activity. There is no law which mandates a businessman to always retain stock at the place of business. Order of cancellation set aside.
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Validity of assessment order - difference of turnover between P & L account and balance sheet, on the one hand, and GSTR-9, on the other - The High Court Noted that the assessing officer accepted explanations for certain defects raised by the petitioner but failed to apply proper reasoning in addressing others. Identified jurisdictional errors in the determination of tax liabilities, particularly regarding turnover differences and transitional credit. - Matter restored back to AO for reconsideration.
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Cancellation of GST registration of the petitioner with retrospective effect - vague SCN and impugned order - The court noted that the petitioner's response to the show cause notice was belated but highlighted the lack of details and reasoning in both the notice and the impugned order. Emphasized that GST registration cannot be cancelled with retrospective effect mechanically, and such cancellation must be based on objective criteria, not merely due to late filing of returns. - The GST registration of the petitioner is restored. Petitioner shall comply with Rule 23 and its provisos of Central Goods and Services Tax Rules, 2017.
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Retrospective cancellation of GST registration of the petitioner - The High Court set aside the impugned order of GST registration cancellation was due to procedural flaws and lack of reasoning. The petitioner was granted an opportunity to file a reply to the Show Cause Notice, and adjudication proceedings were directed to be concluded within a specified timeframe.
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Under declaration of output tax - excess claim of Input Tax Credit - impugned order is a cryptic order without adverting to any of the submissions raised by the petitioner - The High Court set aside the impugned order and show cause notice due to procedural flaws. - The matter was remitted to the GST Officer for re-adjudication after providing the petitioner with an opportunity for a personal hearing.
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Validity of assessment order and attachment notice - no allegations of fraud, wilful-misstatement or suppression of facts - The High Court held that, on examining the impugned assessment order and the show cause notice which preceded it, however, it is noticeable that the impugned order is unreasoned. It is also noticeable that the ingredients of Section 74 are not satisfied. For these reasons, the orders impugned herein warrant interference, albeit by putting the petitioner on terms. - Matter restored back subject to the condition of deposit of 10% of disputed tax.
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Seeking grant of Regular Bail - fictitious firms created and opened in the name of the present Applicant and his wife and the benefit of input tax credit availed in the names of the said fictitious firms - The High Court held that, taking into consideration the facts of the case, nature of allegations, gravity of accusation, availability of the Applicant Accused at the time of Trial etc. and the role attributed to the present Applicant accused, the present Application deserves to be allowed and accordingly stands allowed.
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Seeking grant of regular bail - availment of irregular credit - invoices have been issued without any underlying supply of goods - The High Court held that, mere fact that applicant is in jail since 7.2.2023 cannot be a ground to enlarge him on bail, particularly when there is submission of learned counsel for non-applicant that investigation is still going on. - The present is not a fit case to allow application of applicant for grant of regular bail and it is, accordingly, rejected.
Income Tax
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Entitlement for relief u/s 89(1) - Can be equated to refund amount or not - Employee under suspension from 01.03.1996 to 16.04.2007 got ‘subsistence allowance’ for the said period. - The court clarified that the relief u/s 89 of the Income Tax Act is a form of rebate or adjustment in the computation of tax liability, not a direct refundable amount. It highlighted that the relief aims to adjust the tax liability when income is received in arrears or advance, impacting the tax rate applied. - The court found no error in the Income Tax Department's calculation of the refund amount. It noted that after accounting for the relief u/s 89, the correct refundable amount was determined and paid to the petitioner.
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Rejection of Revision application u/s 264 - Exemption u/s 11 denied to assessee - benefits denied merely on the ground that the donor has deducted TDS u/s 194C and 194J while allocating requisite grants to the assessee - scope of principle of consistency in taxation matters - The High Court held that, the deduction of TDS under specific sections was deemed an insufficient basis to deny exemptions under Sections 11 and 12. The court underscored that such deductions, possibly made under a misconception by the donors, should not adversely affect the Foundation's eligibility for exemptions. - Benefit of exemption allowed.
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Revision u/s 263 - unexplained cash deposit during the demonization period - The tribunal noted that the AO had conducted an adequate inquiry into the assessee's cash deposits, purchases, and sales, and had accepted the return of income after verification. It was found that the PCIT's order u/s 263 was based on re-evaluation of the same material already considered by the AO without any new evidence or inquiry that justified a revision u/s 263. - The ITAT concluded that the AO's order was not erroneous nor prejudicial to the interest of the revenue.
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Addition u/s 56(2)(vii)(b) - Difference between the agreed consideration and Valuation adopted by the DVO - Assessee is one of the party who along with four others entered into a deed of conveyance for purchase of property being land - The ITAT held that, the Assessee received 1/5th share in the above property in excess of agreed consideration. Therefore, the addition in the hands of the Assessee can only be made at the rate of 1/5th of the above difference amount.
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Accrual of income in India - existence of DAPE - PE in India or not? - The ITAT previously ruled in favor of the Assessee regarding the existence of a fixed place PE. However, the DRP's directions in the present assessment were based on a misunderstanding of the previous decisions. - The Tribunal sets aside the assessment order and directs the DRP to re-examine the issue of the existence of DAPE, providing an opportunity for the Assessee to be heard.
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Addition u/s 68 - unexplained cash credits - Onus to prove - CIT(A) deleted addition - The Tribunal found that the assessee failed to discharge its onus of proving the identity, creditworthiness, and genuineness of the transaction. - The ITAT held that, in view of such facts the observations of Ld. AO cannot be rejected at threshold, in absence of submission of requisite documents pertaining to the alleged creditor by the assessee having primary onus to satisfy the Ld. AO according to the provisions of section 68, who is supporting its contentions only by producing certain internal documents and bank statements. - Therefore, the addition made by the AO under section 68 was upheld.
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Assessment u/s 153A - Addition u/s 68 - bogus LTCG - penny Stocks - whether documents found during the course of search were of incriminating nature? - The tribunal noted that the documents seized (share certificates and contract notes), alleged to be incriminating, corroborated the disclosed transactions of the purchase and sale of shares, thus not qualifying as 'incriminating evidence' discovered during the search. - The ITAT also observed that reliance on statements recorded outside the assessee's search operation, particularly from a broker, cannot augment the material found during the search to categorize it as incriminating. - Additions deleted.
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Excess stock found during the course of survey - unexplained investments u/s 69 r.w.s.115BBE - The ITAT concluded that the addition made by the AO was not justified. They noted that the assessee had reconciled the differences in stock with supporting evidence, and neither the AO nor the CIT(A) had pointed out any defects or discrepancies in the reconciliation. - The Tribunal held that mere existence of differences in stock during a survey does not warrant automatic additions if the assessee has reconciled the differences with supporting evidence.
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Bogus purchase bills from certain ‘hawala’ dealers - The Tribunal found the assessee failed to substantiate the genuineness of the purchases from alleged Hawala dealers, with various evidences like returned notices, inability to produce vendors, and lack of stock register verification supporting the Assessing Officer's conclusions. - The Tribunal rejected the assessee's argument for restricting disallowance to a certain percentage of gross profit, emphasizing the absence of concrete evidence like a stock register to establish the actual receipt and sale of goods corresponding to the bogus purchases. - Addition against entire amount of bogus purchase confirmed.
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Disallowance of finance lease rental payments - claim of the assessee to claim the lease rent as an expenditure in their computation - The ITAT held that the payment made for the use of leased assets under finance lease should be allowed as a revenue expenditure.
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Addition on account of provision made on performance guarantee/warranty - The ITAT found that the provision for performance guarantee/warranty was consistent with the company's business practices and the prior year's judicial decisions. It was considered a necessary expense directly linked to sales and customer obligations, thus not merely a tool for tax evasion. - The ITAT dismissed the Revenue's appeal.
Customs
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Confiscation of the currency seized - validity of order for release on payment of redemption fine - The High court found that the seizure and confiscation of foreign currency were justified under Sections 113(d), 113(e), and 113(h) of the Customs Act, 1962, read with the Foreign Exchange Management (Export and Import of Currency) Regulations, 2015. - The Court found that, there are no notifications issued u/s 11-I of the Customs Act, 1962. - The court observed that the appellate authority properly exercised discretion u/s 125 by allowing the redemption of the seized currency upon payment of a fine, modifying the Order-in-Original to reduce the penalty and allow for the currency's redemption.
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Revocation of Customs Broker License - Deemed revocation - The tribunal observed that, the the appellants had performed due diligence in verifying the exporter's details as required under Regulation 10(n). - The ineligible claim for export incentives was found by the department only on the basis of specific investigation conducted by the NSPU/R&I customs authorities, and hence the appellants CB cannot be found fault for the reason that they did not advise their client importer to comply with the provisions of the Act. - The Tribunal held that, the procedure outlined in Regulation 17 for revoking a license or imposing a penalty was not followed correctly, particularly regarding the opportunity for cross-examination. -
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Re-exported goods after three years - Violation of Notification No. 27/2002-Cus - The Commissioner (Appeals) considered the appellant's financial problems but ultimately concluded that the non-compliance with the notification's conditions was not excusable. - The CESTAT sustained the order of Commissioner (Appeals)
Corporate Law
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Constitutional Validity of Rule 37(8) - Rejection of conversion of the Petitioner's company from an “Unlimited Liability Company” to a “Limited Liability Company” - The High court concluded that the 2016 Amendment, being curative in nature and intended to protect creditors' interests, applies retrospectively to pending applications. This means that the additional criteria introduced by the amendment for conversion applications must be satisfied for approval. - The HC found the RoC's concerns about protecting creditors and stakeholders to be justified, given the petitioner's significant financial losses and the lack of clearances or undertakings from all shareholders supporting the conversion.
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Legality of SFIO Investigation - non-maintenance of the registered office at the address mentioned in Form No.10 - The High court found no statutory or legal impediment to assigning the investigation to the SFIO under Section 212, even if investigations under Section 210 were already underway. The statutory framework does not prohibit such action, and it serves the purpose of a thorough and multidisciplinary investigation. - The court determined that at the investigation stage, the application of the principles of natural justice is not mandatory. The non-service of the order to the petitioner does not vitiate the proceedings.
IBC
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Withdrawal of application which was admitted earlier for CIRP - Manner of computation of voting with regard to application u/s 12A - The NCLAT clarified that for a proposal under Section 12A to be approved, it must receive the support of 90% of the CoC's voting share. It rejected the Adjudicating Authority's interpretation that a majority vote within the homebuyers' class could be extrapolated to mean 100% support from that class for the purpose of Section 12A approval. - The NCLAT held that, since the proposal u/s 12A having not been approved by 90% vote share of the CoC, the order dated 24.05.2023 has to be set aside reviving the CIRP of the Corporate Debtor.
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Initiation of CIRP - existence of pre-existing disputes - arbitration case pending before the Hon’ble High Court - The NCLAT after discussing all the issues in detail, dismissed the appeal, upholding the Adjudicating Authority's order to admit the CIRP against Sinnar Thermal Power Ltd.
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Rejection of valuation report obtained by the RP from its valuers - The NCLAT observed that, Resolution Professional appointed valuers for asset valuation under CIRP regulations, and resolution plan was approved by CoC. Appellant raised valuation concerns in CoC meetings, but the resolution plan was already approved. Respondent cites a Supreme Court judgment supporting rejection of post-approval valuation challenges. Tribunal finds no error in the Adjudicating Authority's decision to reject the appellant's application.
Service Tax
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Classification of services - banking and other financial services or not - service of giving bank guarantee - The tribunal, while setting aside the demand, held that insofar as levy of service tax is concerned, the same should be on the amount of consideration received for provision of such service. Thus, prima facie it appears that there is no element of service inasmuch as there is no consideration involved in providing corporate guarantee by the assessee appellants.
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SVLDRS - The dispute revolves around whether 50% of the amount paid by the petitioner under the Service Tax Voluntary Compliance Encouragement Scheme, 2013, should be set off against the amount due under the Sabka Vishwas Scheme, 2019. - The High Court noted that, as per Sub section (2) to Section 124 of the Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019, the relief calculated under Sub section (1) shall be subject to the condition that any amount paid as pre deposit at any stage of appellate proceeding under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant.
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Levy of penalty u/s 78 - The CESTAT held that, No evidence of positive act of suppression to evade payment of duty. Extended period cannot be invoked without evidence of intent to evade payment. Mere non-payment of service tax and non-filing of returns not sufficient to extend limitation period. - Order set aside, appeal allowed with consequential relief as per law.
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Reversal of Cenvat Credit - The tribunal agreed with the department that the assessee had not demonstrated that common input services were not used for exempted activities. However, on the matter of invoking the extended period for the demand, the tribunal found in favor of the assessee, concluding that there was no suppression of facts justifying the extended period's invocation.
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Declared Service u/s 66 E(e) of FA or not - Business Transfer Agreement (BTA) entered by the Appellant having a non-compete clause - The tribunal held that, Adjudication authority confirmed demand but failed to acknowledge the exemption under Notification No. 25/2012-Service Tax. Non-compete clause was a routine condition for transferring a running business concern. Terms of the agreement must be read as a whole; non-compete clause cannot be separated to bring the transaction under service tax. - Demand set aside.
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Classification of services - management and business consultant service - The tribunal held that the activity of disbursal of wages to the unskilled rural labours as a measure of employment generation under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), does not cover under “Management and Business Consultant” Services. Therefore, for the period prior to 01.07.2012, the appellants are not liable to pay service tax. - Merely because, there was an agreement and in terms of the agreement, the service tax was inclusive which is to be borne to the appellants, no demand of service tax can be sustained.
Central Excise
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Recovery of of erroneously availed refund u/s 11A of the Central Excise Act, 1944 along with interest - The appellant argued bonafide belief in not availing Cenvat Credit on furnace oil. The CESTAT found that the appellant complied with conditions of the exemption Notification and did not avail Cenvat Credit on furnace oil intentionally. - Moreover, it is not the stand of the Department that it has sanctioned/approved, refund of duty which was not paid by the appellant, but this is the case, in which the Department has sanctioned refund equal to the amount which was paid by the appellant in cash or through PLA, therefore, it cannot be said that this is a case of excess availment of refund by not complying with the condition of the said Notification. - Demand set aside mainly on the ground of limitation and revenue neutral situation.
VAT
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Applicability of doctrine of finality and res-judicata - The High Court held that, the principles of res-judicata do not apply squarely for one assessment year to the other. However, in view of the decision of Supreme Court, the High Court held that, keeping in mind the doctrine of finality, unless there is a marked change from one assessment year to the other, the department cannot be allowed to take a different stand.
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Jurisdiction - violation of principles of natural justice - The High Court noted that, admittedly, the impugned order is an ex-parte order. There is nothing on record to justify that the petitioner was issued any show cause notice or the petitioner was heard, before the deputy commissioner could come to a conclusion that the demands as set out in the impugned order are required to be made against the petitioner. The High Court quashed the impugned orders/communications and directed the department to refund the amount with interest.
Case Laws:
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GST
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2024 (2) TMI 1008
Validity of assessment order - opportunity not provided to petitioner to contest the tax demand - violation of principles of natural justice - HELD THAT:- The amount communicated in the intimation is much lower than the amount in respect of which the petitioner was called upon to show cause. Similarly, the tax demand under the impugned assessment order is much higher than the amount in respect of which the petitioner was called upon to show cause. The petitioner has also place on record the request for adjournment. As a result of the denial of such request, it is clear that the impugned order came to be issued without considering the submissions of the petitioner. In the overall facts and circumstances, the impugned assessment order calls for interference. The impugned order dated 09.10.2023 is quashed and the matter is remanded for re-consideration. The petitioner is permitted to file a reply to the show cause notice within a maximum period of fifteen days from the date of receipt of a copy of this order.
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2024 (2) TMI 1007
Cancellation of GST registration of the petitioner - petitioner was not provided proper opportunity of being heard - violation of principles of natural justice - HELD THAT:- From the show cause notice, it appears that the proposed cancellation was on the basis of a report from the State Tax Officer, Investigation Survey Unit-I, Erode Division to the effect that the petitioner was not carrying on business activities at the registered place of business. The impugned order records that the petitioner did not appear in person or through an authorised representative upon receipt of the show cause notice. It also records that the petitioner did not reply to the show cause notice. Thus, the statement recorded in the impugned order of cancellation is not in consonance with the submission of learned Government Advocate on instructions. The record reveals that the petitioner was not heard before the impugned order of cancellation was issued. The petitioner should be provided an opportunity to contest the cancellation of registration. Solely for this reason, the impugned order of cancellation is interfered with by quashing the same - the matter is remanded to the first respondent for re-consideration, and the petitioner is permitted to file a reply to the show cause notice within a maximum period of two weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.
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2024 (2) TMI 1006
Cancellation of GST registration of petitioner - Non-maintenance of stock at the registered premises - Authorities fount that petitioner does not conduct any business at the declared place of business and that he does not submit any response to the show cause notice issue to him - drive to curb bogus firms which have been created only to claim the benefit of Input Tax Credit - conditions prescribed under Section 29 (2) of the Act of 2017 are existing in the present case or not - HELD THAT:- Considering the provisions contained under Section 29 (2) along with the facts of the present case it is noticed that there is no denial of the fact that the petitioner has, in fact, conducted business from the said address in as much as returns have been filed for the financial years 2021-22 and 2022-23 and this fact has not been denied by any of the authorities. Both the authorities should have taken into consideration the returns filed by the petitioner who had disclosed substantial business activities conducted by him for two financial years. Cancellation of registration has serious consequences. It takes away the fundamental right of a citizen etc. to engage in a lawful business activity. In the present case, undisputedly, the registration claimed by the assessee had been granted by the respondent authority. Therefore, a presumption does exist as to such registration having been granted upon due verification of necessary facts. If the respondents propose to cancel the registration thus granted, a heavy burden lay on the respondent authority to see that statutory provisions contained under Section 29 (2) of the Act of 2017 are fulfilled and any one of the five conditions are placed to the assessee for cancellation. Examining the entire facts of the case this Court is of the considered opinion that the findings returned by the adjudicating authority as well as the appellate authority are perverse in as much as the petitioner submitted that he had filed his returns for the financial years 2021-22 and 2022-23. No further examination of the same was undertaken. Merely because at the place of business no stock was found it was concluded that the petitioner did not conduct any business activity. There is no law which mandates a businessman to always retain stock at the place of business - The authorities have failed to discharge the duties and merely because the place of business did not contain any stock the registration of the petitioner was cancelled. This Court is of the considered opinion that both the impugned orders are illegal and arbitrary and accordingly set aside. The writ petition succeeds and is allowed.
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2024 (2) TMI 1005
Validity of assessment order - difference of turnover between P L account and balance sheet, on the one hand, and GSTR-9, on the other - jurisdictional error with regard to the determination of transitional credit - HELD THAT:- It is found that the assessing officer has accepted the explanation of the petitioner with regard to certain defects. Difference of turnover between P L account and balance sheet, on the one hand, and GSTR-9, on the other - HELD THAT:- As contended by learned counsel for the petitioner, the assessing officer has recorded findings without applying his mind to the fact that the turnover for an entity operating in multiple States in India, as reflected in the financial statements, and the turnover attributable to its operations in Tamil Nadu would vary. From the findings, it also appears that tax liability was imposed merely because the Chartered Accountant's certificate did not provide State-wise turnover. This finding does not stand to reason because only the bifurcation of total and Tamil Nadu turnover is germane. It also appears that GST has been imposed at 36% instead of the applicable rate of 18%. Even with regard to GST at 18%, from the return placed on record by the petitioner, it appears that the tax liability in respect of the turnover of Rs. 80,89,05,068/- was duly discharged. The total tax imposed under this head is about Rs. 14.56 crores and the patent errors justify interference with the assessment order even without examining the order in respect of other defects for which liability was imposed. Therefore, the impugned assessment order cannot be sustained. The impugned assessment order is quashed and the matter is remanded for reconsideration - assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order in accordance with law - Petition allowed by way of remand.
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2024 (2) TMI 1004
Cancellation of GST registration of the petitioner - application of the petitioner seeking revocation has also been dismissed - petitioner never received the Show Cause Notice and accordingly did not respond thereto - violation of principles of natural justice - HELD THAT:- The grounds for cancellation are different from the grounds in the Show Cause Notice. Petitioner was never intimated as to the real ground for cancellation. Cancellation order also suffers from infirmity in as much as the officer seems to have considered a reply of the petitioner when no such reply has been filed. Further, petitioner was never put to notice that the registration is liable to be cancelled retrospectively. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Petitioner thereafter filed an application seeking revocation. Pursuant to the application for seeking revocation, a Show Cause Notice dated 04.01.2024 was issued to the petitioner, seeking to reject the revocation application. Said Show Cause Notice also required the petitioner to appear once again before the undersigned i.e., the signatory of the notice, however, again, we notice that neither the name nor the designation of the officer issuing the notice was mentioned - Said Show Cause Notice is also defective. The Petitioner thereafter filed a reply on 08.01.2024 to the said Show Cause Notice. Pursuant to the Show Cause Notice, impugned the order dated 16.01.2024 has been passed which states that petitioner has not submitted a reply. Hence, the Show Cause Notice has been adjudicated and the revocation application rejected. Both the Show Cause Notices dated 27.12.2022 and 04.01.2024 as also the impugned order dated 09.01.2023 cancelling the registration of the petitioner retrospectively, and order dated 16.01.2024 rejecting the revocation of cancellation application suffer from infirmity and cannot be sustained - Petitioner shall comply with the provisions of Rule 23 and its provisos of The Goods and Services Tax Rules, 2017 - Petition disposed off.
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2024 (2) TMI 1003
Cancellation of GST registration of the petitioner with retrospective effect - vague SCN and impugned order - violation of principles of natural justice - HELD THAT:- Neither the Show Cause Notice dated 15.09.2023 nor the impugned order dated 15.01.2024 give any details of the alleged invoices /bills that have been issued by the petitioner without underlying supply of goods or services. The Show Cause Notice and the impugned order are bereft of any details accordingly the same cannot be sustained. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria - It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted - Further, there is no reasoning in the said show cause notice and in the impugned order as to why the cancellation has been done retrospectively, nor has the petitioner been put to notice that the registration is liable to be cancelled retrospectively. The impugned order dated 15.01.2024 and the Show Cause Notice dated 15.09.2023 are set aside. The GST registration of the petitioner is restored. Petitioner shall comply with Rule 23 and its provisos of Central Goods and Services Tax Rules, 2017 - Petition disposed off.
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2024 (2) TMI 1002
Cancellation of GST registration of the Petitioner with retrospective effect - failure to pay tax to the account of the Central/State Government beyond a period of three months from the date on which such payment becomes due - SCN does not put the petitioner to notice that the registration is liable to be cancelled retrospectively - no opportunity to even object to the retrospective cancellation of the registration was provided - violation of principles of natural justice - HELD THAT:- In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. In view of the fact that Petitioner does not seek to carry on business or continue the registration, the impugned order dated 15.12.2021 is modified to the limited extent that registration shall now be treated as cancelled with effect from 04.09.2021 i.e., the date when the Show Cause Notice was issued - It is clarified that Respondents are also not precluded from taking any steps for recovery of any tax, penalty or interest that may be due in respect of the subject firm in accordance with law. Petition disposed off.
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2024 (2) TMI 1001
Violation of principles of natural justice (non-speaking order) - impugned order is cryptic order merely using a template and does not give any reason - demand under Section 16 (2)(c) and 17 (5) of the Goods and Services Tax Act, 2017 - HELD THAT:- Perusal of the order shows that the order is a cryptic order without giving any details. After narrating the recitals, it merely records in view of above, there is no option but to proceed with the demands mentioned in the Show Cause Notice . The impugned order is accordingly set aside. Petitioner is given an opportunity to file a reply to the Show Cause Notice within one week from today. On such a reply being filed, the proper officer shall adjudicate the Show Cause Notice afresh within a period of four weeks after giving an opportunity of personal hearing to the petitioner to the petitioner. The proper officer shall pass a detailed speaking order. Petition disposed off.
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2024 (2) TMI 1000
Retrospective cancellation of GST registration of the petitioner - firm had been found to be non-existent at the registered principal place of business - SCN did not give sufficient time to the petitioner to either respond or appear - violation of principles of natural justice (audi alterem partem) - HELD THAT:- Perusal of the Show Cause Notice clearly establishes that the Show Cause Notice did not give sufficient time to the petitioner to either respond or appear. The Show Cause Notice also does not mention the name or designation of the officer issuing the same and as such clearly the petitioner was denied an opportunity of representing its case before the Proper Officer - Further, the order of cancellation also is bereft of any reason. It s a two-line order which refers to the Show Cause Notice and states that the effective date of cancellation is 15.07.2022. There is no reason mentioned in the impugned order as to why a retrospective cancellation has been ordered. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. The impugned order dated 16.01.2024 is set aside. Petitioner is granted one week s time to file reply to the Show Cause Notice with the office of the Principal Commissioner of Goods and Service Tax, West Delhi i.e. the respondent, who shall thereafter have the same forwarded to the Proper Officer for adjudication of Show Cause Notice - Petition disposed off by way of remand.
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2024 (2) TMI 999
Under declaration of output tax - excess claim of Input Tax Credit - impugned order is a cryptic order without adverting to any of the submissions raised by the petitioner and records that the reply was not found satisfactory - violation of principles of natural justice - HELD THAT:- A perusal of the show cause notice shows that the Department has given specific details of alleged under declaration of output tax, excess claim Input Tax Credit [ITC], under declaration of ineligible ITC and ITC claim from cancelled dealers, return defaulters and tax non-payers. To the said show cause notice, detailed replies were furnished by the petitioner giving full particulars under each of the heads. The impugned order, however, after recording the narration, records that the reply uploaded by the tax payer is not satisfactory. It merely states that And whereas, after analyzing, examining and evaluating the reply filed by the taxpayer and details available, as on date on the GST portal, reply of the tax payer is found to be vague and miserably fails to counter the demands mentioned in the DRC-01. - In case the GST Officer was of the view that reply was vague or further details were required, the same could have been sought from the petitioner, however, the record does not reflect that any such opportunity was given to the petitioner to clarify its reply or furnish further documents/details - Further petitioner was not provided with an adequate opportunity to defend the show cause notice by way of a hearing. The impugned order records that petitioner has not furnished the requisite details. The GST Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner and petitioner shall furnish the same - issue raised by the petitioner with regard to the Notification dated 31.03.2023, contravening provisions of Section 168A of the Act is left open. The impugned order dated 29.12.2023 and show cause notice dated 23.09.2023 are set aside. The matter is remitted to the GST Officer for re-adjudication after giving an opportunity of personal hearing.
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2024 (2) TMI 998
Validity of assessment order and attachment notice - no allegations of fraud, wilful-misstatement or suppression of facts - requirements of Section 74 of TNGST Act not satisfied - unreasoned order - violation of principles of natural justice - HELD THAT:- The impugned assessment order refers to the intimation dated 08.05.2023 and the show cause notice dated 12.06.2023. It also records that the petitioner did not comply with the tax demand or file any objections. In these circumstances, it cannot be said that an opportunity was not provided to the petitioner to respond to the tax demand. On examining the impugned assessment order and the show cause notice which preceded it, however, it is noticeable that the impugned order is unreasoned. It is also noticeable that the ingredients of Section 74 are not satisfied. For these reasons, the orders impugned herein warrant interference, albeit by putting the petitioner on terms. The assessment order and the consequential attachment notice are quashed subject to the condition that the petitioner remits 10% of the disputed tax demand within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off.
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2024 (2) TMI 997
Seeking grant of Regular Bail - fictitious firms created and opened in the name of the present Applicant and his wife and the benefit of input tax credit availed in the names of the said fictitious firms - HELD THAT:- From the record, it emerges that the investigation is over and the charge sheet is also filed so also considering the nature of offence and the role attributed to the present Applicant, the Application deserves consideration. This Court has also considered the fact that Section 132 of the GST Act describes punishment of imprisonment which may extend to 5 Years and with fine for the offence alleged against the present Applicant. Considering this aspect, the Application deserves consideration. Taking into consideration the facts of the case, nature of allegations, gravity of accusation, availability of the Applicant Accused at the time of Trial etc. and the role attributed to the present Applicant accused, the present Application deserves to be allowed and accordingly stands allowed. This Court has also gone through the FIR and police papers and also the earlier order passed by the learned Sessions Court where the learned Sessions Judge has disallowed the bail Application at initial stage. The Applicant Accused is ordered to be released on bail in connection with the aforesaid FIR on executing a personal bond of Rs. 10,000/- with one surety of the like amount to the satisfaction of the trial Court, subject to the conditions imposed. Bail application allowed.
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2024 (2) TMI 996
Seeking grant of regular bail - availment of irregular credit - invoices have been issued without any underlying supply of goods - HELD THAT:- From the documents placed before this Court by learned counsel for non-applicant, it is reflecting that applicant was served with notice under Section 70 of the Act of 2017 and during investigation, non-applicant has found applicant involved in creating forged invoices availing input tax credits to the tune of Rs. 20,96,89,839/-. Mere fact that applicant is in jail since 7.2.2023 cannot be a ground to enlarge him on bail, particularly when there is submission of learned counsel for non-applicant that investigation is still going on. Hon'ble Supreme Court in case of NIMMAGADDA PRASAD VERSUS CENTRAL BUREAU OF INVESTIGATION [ 2013 (5) TMI 920 - SUPREME COURT] observed that Taking note of all these aspects, without expressing any opinion on the merits of the case and also with regard to the claim of the CBI and the defence, we are of the opinion that the appellant cannot be released at this stage, however, we direct the CBI to complete the investigation and file charge sheet(s) as early as possible preferably within a period of four months from today. Further, in SANDEEP GOYAL VERSUS UNION OF INDIA [ 2020 (5) TMI 240 - SC ORDER] the Hon'ble Supreme Court even after considering the submission of learned counsel for applicant therein that applicant is in jail for last one year and eight months; some of accused persons are released on bail, has refused to grant bail to applicant taking note of the fact that investigation is not complete, and disposed of SLP observing that the State shall make endeavour to complete the investigation within specified period. In the case at hand also, the applicant is involved in the economic offence, investigation is still going on. The present is not a fit case to allow application of applicant for grant of regular bail and it is, accordingly, rejected.
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2024 (2) TMI 995
Recovery of tax alongwith interest and penalty - availability of alternative remedy of filing an appeal under Section 107 of the CGST Act, if not satisfied with the order passed by the 6th respondent - HELD THAT:- Petitioner instead of approaching the appellate forum has approached this Court by filing this writ petition. This Court finds no ground to entertain this writ petition and the petitioner has equally efficacious alternative remedy of executing the appeal under Section 107 of the CGST Act/SGST Act, 2017. Thus the present Writ Petition is dismissed, leaving it open to the petitioner to pursue any other remedy, as may be applicable to him on regular.
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2024 (2) TMI 994
Seeking to restraint respondents from taking any coercive action to recover the Input Tax Credit (ITC) together with interest thereon and penalties - whether the petitioners are liable to pay GST @ 28% on tubes and flaps? - HELD THAT:- Prima facie, the contentions advanced by the petitioner are not insubstantial. Accordingly, it is considered apposite to restrain the respondent from taking any coercive steps, pursuant to the order dated 13.09.2023, till the next date of hearing. List on 01.03.2024.
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2024 (2) TMI 993
Maintainability of petition - availability of Alternative remedy of appeal - non-constitution of the Tribunal - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves - Petition disposed off.
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2024 (2) TMI 992
Rejection of appeal filed under sub-Section (1) of Section 107 of the Odisha Goods and Services Tax Act, 2017 - petitioner contended that the petitioner is not liable to pay the tax and penalty and, as such, against the order passed by the 1st appellate authority though second appeal lies, the 2nd appellate tribunal has not yet been constituted - contravention to sub-sections (1) (4) of Section 107 of the GST Act - HELD THAT:- Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted, as an interim measure subject to the Petitioner depositing entire tax demand within a period of fifteen days from today, the rest of the demand shall remain stayed during the pendency of the writ petition. Application disposed off.
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Income Tax
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2024 (2) TMI 991
Entitlement for relief u/s 89(1) of IT Act - Employee under suspension from 01.03.1996 to 16.04.2007 got subsistence allowance for the said period. - IT department submits that petitioner preferred present petition without understanding calculations and under belief that relief u/s 89(1) has not been granted to him. However, the same was extended to petitioner and after adjusting amount, net payable amount was calculated and petitioner was found eligible for interest @ 0.5% per month according to Section 244A(1) of IT Act. Whether amount of relief granted under Section 89 of I.T. Act itself can be equated to refund amount? - HELD THAT:- If assessee has received any sum in the nature of salary which was not for the assessment year, he may claim relief for not adding said amount for the purpose of assessment of income tax payable on the amount of salary received for the relevant financial year and be spread over in all relevant assessment years for the purpose of calculation of Income Tax. The relief under Section 89 is to be considered at the time of calculating payable amount of tax. There is no such provision in IT Act to refund the amount of relief granted under Section 89 as it is. There may be situation wherein even after adjusting / grant of relief under Section 89 of IT Act, assessee may be liable to pay tax. Amount of relief is adjustable or deductable from the amount of tax. Relief under Section 89 is a relief or rebate not a refund. First question is answered accordingly. Rectification of mistake u/s 154 - Relief under Section 89 of IT Act was duly extended to petitioner as claimed by him in petition and therefore, there was no mistake on the part of respondent in calculating refundable amount to the tune of Rs. 2,05,030/-. Whether petitioner is entitled for interest @ 18% p.a. despite statutory stipulation for payment of interest in Section 244(1)(b) of IT Act ? - Chartered Accountant calculated total payable amount of interest to Rs. 1,04,565/- in his both reports whereas Income Tax Department has paid interest to the tune of Rs. 1,08,650/- which is higher than amount calculated by Chartered Accountant and therefore, it cannot be accepted that Income Tax Department has committed any mistake in calculation of interest. When the rate of interest is already prescribed in the Section itself, no direction can be issued for payment of interest at any higher rate and it cannot be accepted that the interest was not calculated as per directions issued by this Court [ 2019 (3) TMI 143 - MADHYA PRADESH HIGH COURT ] Petitioner has not suggested any provision under which he is entitle to claim interest @ 18% p.a. It was also not pointed out by petitioner that if the amount of refund be considered as judgment debt, under which provision the same will fetch interest @ 18% p.a. In view of above calculations, we do not find any error, mistake, irregularity and illegality in calculation of refundable amount and interest. Accordingly, petition is dismissed.
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2024 (2) TMI 990
Rejection of application for Revision u/s 264 - Exemption u/s 11 denied to assessee - benefits denied merely on the ground that the donor has deducted TDS u/s 194C and 194J while allocating requisite grants to the assessee - scope of principle of consistency in taxation matters - revisional authority dismissed the revision petition of the assessee while reiterating the conclusion arrived at by the AO inter alia holding that the assessee s foundation falls under the sixth limb of Section 2(15) of the Act i.e. Advancement of any other object of general public utility HELD THAT:- Sole reason to construe the receipt Received by donors under the tax regime is founded on the assumption that the same is towards professional/technical services or contractual income as TDS was deducted under the Sections 194C and 194J is not acceptable sole reason firstly, that alone cannot be the basis to conclude the aforesaid receipt to be considered under the category of consultancy fees and contractual income. Secondly, there is no element of activity in the nature of trade, commerce or business, or any activity or rendering any service in relation to any trade, commerce or business. Thirdly, in absense of any cogent reason, receipts in question cannot be 'advancement of any other object of general public utility'. If the deductor in its Income Tax Return, under misconception, deducts TDS under Sections 194C and 194J of the Act, the same would not disentitle the assessee to claim benefit under Sections 11 and 12 of the Act unless the case of assessee is specifically hit by the Proviso of Section 2(15) of the Act, which is not the case here. Proviso to Section 2(15) of the Act would not get attracted merely on the basis of deduction of TDS by the donor under a particular head. Deduction of TDS by donor would not be the determinative factor for denial of benefits under Sections 11 and 12 of the Act. The respondent-Revenue, in the instant case, in the preceding years as well as in the succeeding years, under almost similar circumstances, has accepted the exemption claimed by the assessee under Sections 11 and 12 of the Act and, therefore, should not have deviated from its consistent approach in denying benefits to the assessee. Principle of consistency - The elementary need of following a consistent approach for subsequent AYs, when there is no material change in the facts, is also stressed upon by this Court in the case of CIT v. Neo Poly Pack (P) Ltd. [ 2000 (4) TMI 26 - DELHI HIGH COURT] which clearly demonstrates the requirement to follow the principle of consistency in taxation matters. Also in case of Radhasoami Satsang v. CIT [ 1991 (11) TMI 2 - SUPREME COURT] stressed on consistent approach by the respondent-Revenue in taxation matters held that as in the absence of any material change justifying the Revenue to take a different view of the matter - and if there was no change it was in support of the assessee - we do not think the question should have been reopened. Thus writ petition is accordingly allowed and the impugned orders are hereby, set aside. The receipt of shall not be treated as income and the assessee is entitled for exemptions enshrined under Sections 11 and 12 - Decided in favour of assessee.
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2024 (2) TMI 989
Revision u/s 263 - unexplained cash deposit during the demonization period - difference between no enquiry and inadequate enquiry - as per CIT assessee has deposited cash in old currency notes during the period of demonization and non-furnishing of bills of sales HELD THAT:- Coming to specific findings of PCIT regarding non-furnishing of bills of sales, the ld AR has submitted that copy of cash book has been furnished during the course of assessment proceedings which contains bill wise details of sales made by the assessee. Regarding sales in cash and that too for a month, the ld AR has submitted that the said fact has been duly noted by the AO that the assessee was engaged in seasonal trade activity of hosiery items and there is no bar under law to undertake cash sales. In the instant case, where the assessee has carried out seasonal trade in hosiery items duly supported by documentary evidence, the AO having examined the same and having formed a considered view accepting the said transactions and resultant profit has been brought to tax, the ld PCIT cannot be permitted to invoke his jurisdiction merely because he believes that there are certain deficiency in the documentation so maintained and furnished by the assessee and therefore, the order so passed is erroneous as the same require further examination and verification. There was proper application of mind on the part of the AO and the matter has been duly examined by the AO during the course of assessment proceedings. It is not a case where necessary inquiries have not been carried out by the AO, and in such cases, it is important that for holding the order so passed by the AO as erroneous and prejudicial to the interest of the Revenue, certain further verification and inquiries should have been conducted by the Ld. Pr. CIT which has not happened in the present case and therefore the basic condition for invoking the provision of Section 263 are not satisfied in the instant case. Merely stating that detailed and deep enquiries are required in the instant case will result in taking away a vested right of the assessee in terms of completed assessment where it has already gone through the rigorous examination by the AO and the same cannot be sustained in the eyes of law even drawing support from the explanation 2(a) to Section 263 unless it is pointed out as to which enquiry or verification was not made by the AO before passing the assessment order as held in case of Pr. CIT (Central) Vs. Kanin (India)[ 2022 (5) TMI 1414 - PUNJAB AND HARYANA HIGH COURT] Also in case of Ganpati International [ 2023 (3) TMI 1231 - ITAT CHANDIGARH] have held that where the AO had made the enquiry and Id. PCIT is trying to substitute the plausible view taken by the AO with his own view, the said course of action is not permissible under the revisionary provisions under section 263 of the Act We find that where the matter relating to source of cash deposit during the demonization period has been duly examined by the AO and there is due application of mind as discernable from the assessment order and underlying assessment records, there is no justifiable basis to invoke the revisionary jurisdiction u/s 263 of the Act - Assessee appeal allowed.
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2024 (2) TMI 988
Addition u/s 56(2)(vii)(b) - Difference between the agreed consideration and Valuation adopted by the DVO - Assessee is one of the party who along with four others entered into a deed of conveyance for purchase of property being land - HELD THAT:- As in view of the provisions of Section 56(2)(vii), if an individual or a HUF receives from any person from 1st day of October, 2009 but before 1st day of October 2017 any immovable property for consideration which is less than the stamp duty valuation by an amount exceeding Rs.50,000/-, then the stamp duty of such property in excess of such consideration is the income chargeable under the head income from other sources. Where the value of the property is disputed, the Ld. AO may make the reference for value of such property to the district valuation officer and such valuation shall be final. In the present case, the Assessee received 1/5th share in the above property in excess of agreed consideration. Therefore, the addition in the hands of the Assessee can only be made at the rate of 1/5th of the above difference between agreed consideration and valuation made by the Ld. DVO. This is the only request of the AR before us. The ground No.1 challenging the valuation of the property as agricultural land was not pressed. The ground No.2 was only made with respect to the restriction of the addition to the extent of 1/5th of Difference between the agreed consideration and Valuation adopted by the ld DVO. . In view of the above facts, we dismiss ground No.1 and allow ground No.2 of the appeal. Argument of the AR that Shri Murarilal Surajmal Mody is also taxed on the identical amount, therefore addition could not have been made in the hands of the Assessee is devoid of any merit. This is so because Shri Mody have received the above property on the basis of release deed from the five joint owners including the Assessee. Assessee received the property by purchase deed. Therefore, this argument cannot be accepted. Appeal of the Assessee is partly allowed.
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2024 (2) TMI 987
Accrual of income in India - existence of DAPE - PE in India or not? - AO's conclusion of the assessee having a PE in India and consequently attributing 25% of receipts on account of Software License Fees from Indian clients as taxable in India as business income - As argued there being no dependent agent PE in India still the Ld. AO in final assessment order has held about existence of the DAPE. HELD THAT:- On considering the findings of Ld. DRP we are of the considered view that Ld. DRP seems to have fallen in factual error in mentioning the plea of the assessee that the issue of DAPE of the assessee in India has been considered by the Tribunal in AY 2018-19 and 2019-20. While that is not correct as with regard to the fixed place PE of the assessee the issue certainly stands settled in favour of the assessee. DRP has erred in not dealing with the issue of assessee company having a DAPE in India on merits and erroneously directed AO for verifying if the issue of DAPE was decided in favour of assessee by the Tribunal in AY 2018-19 and 2019-20, which admittedly is not covered in earlier years. Thus, we are inclined to set aside the order of the Ld. DRP with regard to examination of the question of existence of DAPE in the relevant assessment year. Resultantly the impugned final assessment order is set aside. The Ld. DRP, after giving an opportunity of hearing to the assessee, shall pass fresh order in regard to the issue of existence of DAPE and consequential directions be accordingly issued to the AO.
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2024 (2) TMI 986
Addition u/s 68 - unexplained cash credits - Onus to prove - CIT(A) deleted addition - CIT(A) recorded his satisfaction regarding the discharge of onus by the assessee w.r.t. substantiating the main ingredients as mandated under the provisions of section 68 i.e. identity and creditworthiness of the creditor and genuineness of the transaction - HELD THAT:- Such view of CIT(A) found to be against the facts of the case since the requisite documents to establish the prerequisite elements of section 68 like confirmation, ITR, bank statement, financials, complete address of the creditor are not made available by the assessee either to the AO or before the Ld. CIT(A). In view of such facts and circumstances, it is incomprehensible to concur with the decision of the CIT(A). In view of such facts the observations of Ld. AO cannot be rejected at threshold, in absence of submission of requisite documents pertaining to the alleged creditor by the assessee having primary onus to satisfy the AO according to the provisions of section 68, who is supporting its contentions only by producing certain internal documents and bank statements. While deciding this issue, we rely upon the judgment of Raja Kaimoor Breweries Private Limited [ 2024 (2) TMI 455 - ITAT RAIPUR] wherein the assessee was failed in producing necessary details before the Ld. AO, therefore, in absence of such details / evidence the addition made u/s 68 was sustained. Substance in the observations and findings of CIT(A) to be concurred with, specifically in a situation wherein the assessee company had squarely failed in discharging the onus cast upon it to provide essential information/ documents and evidence in the form of confirmation, ITR, bank statement financials of the creditor and to produce the creditor before the AO for witness if so required, which is the prime responsibility of the assessee to establish the identity and creditworthiness of the creditor, consequently, the genuineness of transaction. Accordingly, the order of CIT(A) is set aside, and the addition made by the Ld. AO u/s 68 is upheld. Decided against assessee.
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2024 (2) TMI 985
Assessment u/s 153A - Addition u/s 68 - bogus LTCG - penny Stocks - whether documents found during the course of search were of incriminating nature? - pre-arranged accommodation entry for LTCG which the assessee has taken - certificates found from the locker of family members HELD THAT:- Admittedly and undisputedly, the facts and circumstances of the case are identical and the matter is thus squarely covered by the decision of Shri Ashish Jain Others [ 2014 (1) TMI 1942 - ITAT CHANDIGARH] as the copy of share certificates found from the locker of family members and not that of the assessee, corroborate and confirm the disclosed transaction of purchase of shares and cannot be termed as incriminating in nature. The statement of Shri S K. Khemka is availability of other material/documentation which has come in the knowledge and possession of the AO for the first time during the course of reassessment proceedings and the said statement cannot augment/supplement the material found during the course of search in terms of share certificates and therefore cannot be used to turn the share certificates as incriminating in nature. Being a case of completed/unabated assessment, in absence of any incriminating material found during the course of search in case of the assessee, the addition so made cannot be sustained and is hereby directed to be deleted. In the result, the ground of the assessee s appeal is allowed.
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2024 (2) TMI 984
Excess stock found during the course of survey - unexplained investments u/s 69 r.w.s.115BBE - HELLD THAT:- Assessee having given the explanation which was plausible explanation which stands verified in inquiry by the AO the same cannot be rejected arbitrarily by indulging into surmises - Assessee has produced complete books of accounts during assessment proceedings. No defects have been pointed out and the books of accounts have been accepted. Thus when the difference in physical stock found during survey and as recorded in the books is duly reconciled by the assessee and supporting evidences have also been furnished before the AO CIT(A) in which no defect or discrepancy whatsoever has been pointed out by the AO or CIT(A), no addition is called for. Merely because some differences were found in stock during survey would not indicate any automatic addition be made in the hands of the assessee when assessee has duly reconciled the differences with necessary evidences and neither the AO nor CIT(A) has pointed out any defects or discrepancies in the reconciliation submitted by assessee or the documents and evidences furnished by the assessee. Thus, addition made by the AO on account of excess stock found during the course of survey is directed to be deleted - Decided in favour of assessee.
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2024 (2) TMI 983
Bogus purchase bills from certain hawala dealers - reliance on information provided by Sales Tax Department, Maharashtra - HELD THAT:- Assessee has to demonstrate that the alleged bogus purchases have been entered into the stock register and the corresponding sales bills through which those goods have been delivered to the subsequent buyers. In the case the AO has not doubted the sales of the assessee but the assessee has failed to demonstrate whether the goods purchased through those bogus bills have been actually transmitted further to the subsequent buyers. Since, the assessee has not succeeded in either producing the stock register and or to link the quantity corresponding to the bogus purchases with the quantity sold in the sales bills. In such a situation, it cannot be presumed that assessee had made purchases from grey market and only bogus bills were received from those hawala dealers. Wherever, goods sold are tallied or linked with the goods recorded in the stock register as purchased, in those cases , it could be presumed that an assessee might have purchased goods in cash from grey market, but in the case of the assessee in absence of stock register this could not be verified and therefore, we justify the action of the CIT(A) and uphold disallowance of the entire bogus purchases. Decided against assessee.
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2024 (2) TMI 982
Disallowance of finance lease rental payments - claim of the assessee to claim the lease rent as an expenditure in their computation - HELD THAT:- The same set of transaction on which lessor (Cisco Systems Capital (India) Private Limited) was allowed to claim the deduction/depreciation in their computation and the resultant of the same transaction i.e., in the case of lessee (i.e. assessee), revenue cannot take a different view. Therefore, in our considered view the claim made by the assessee is on the same lease, therefore, we respectfully following decisions of the Hon ble Karnataka High Court [ 2021 (7) TMI 121 - KARNATAKA HIGH COURT] and Hon ble Supreme Court in the case of ICDS Limited[ 2013 (1) TMI 344 - SUPREME COURT] we are inclined to allow the claim of the assessee to claim the lease rent as an expenditure in their computation. This case being peculiar we are inclined to allow the ground raised by the assessee. Accordingly, ground raised by the assessee is allowed. Disallowance of expenses treating the same as provisions - HELD THAT:- Before us, Ld.AR of the assessee brought to our notice summary of expenses disallowed by the AO along with the supporting evidences which was also submitted before Ld. CIT(A). The various expenditures claimed by the assessee are disallowed without there being any proper verification. Therefore, we are inclined to remit this issue along with the various supporting evidences submitted by the assessee to the file of the AO with a direction to verify the same as per law. It is needless to say that assessee may be given proper opportunity of being heard. Accordingly, Ground No. 2 raised by the assessee is allowed for statistical purpose. Foreign Tax Credit - assessee had inadvertently failed to claim credit of foreign taxes in its return of income - AR submitted that the assessee is eligible to claim credit of foreign taxes paid in Japan to avoid any double taxation in respect of same income. HELD THAT:- During the course of assessment proceedings, the assessee submitted a claim for credit of foreign taxes to the AO. AO did not grant credit of foreign taxes paid without giving any reason for the same. The Assessing Officer ought to have granted credit of foreign taxes in light of CBDT Circular 14 (XL-35) dated 11.4.1955 which states that it is the duty of the Assessing Officer to give to the Assessee any legitimate and legal tax relief to which the Assessee is entitled but has omitted to claim for one reason or another - Thus considering the overall merits on the submissions made by the assessee and there is merit in claim of the assessee. Therefore, we are inclined to remit this issue back to the file of assessing officer with a direction to verify the records submitted by the assessee on merit and as per law.
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2024 (2) TMI 981
Addition on account of provision made on performance guarantee/warranty - AO concluded that the assessee was using provision for contingent liability as a tool to reduce taxable income and thereby evading the payment of tax, provision for performance guarantee / warranty was disallowed - CIT(A) deleted the addition - HELD THAT:- As decided in assessee s own case for A.Y. 2011-12 [ 2022 (7) TMI 548 - ITAT RAJKOT] provisions made in one year was reversed in the next year by offering the same as income. Therefore, it is not the case of the assessee that it has been claiming deduction on account of the provisions made against the sales of each year consistently without giving effect of the opening balance of the provision for the guarantee/warranty - No infirmity in the claim made by the assessee in its books of accounts for the provisions against the sales made in the year under consideration. Thus we reverse the order of the authorities below and direct the AO to delete the addition made by him. - Decided in favour of assessee. Disallowance u/s 14A r.w.r. 8D - CIT(A) deleted the addition - HELD THAT:- looking into the assessee s facts, wherein it is not disputed that no dividend income was earned by the assessee and the decision of Hon ble ITAT, Rajkot Bench in assessee s own case for A.Y. 2011-12 [ 2022 (7) TMI 548 - ITAT RAJKOT] we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. Decided against revenue.
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Customs
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2024 (2) TMI 980
Confiscation of the currency seized - validity of order for release on payment of redemption fine - whether the confiscation of foreign currency valued at Rs.46,44,120/- (676 US $) carried by the petitioner in person which was seized and ordered to be confiscated is justified or not under the provisions of the Customs Act, 1962 - confiscation ordered u/s 113(d), 113(e) 113(h) of the Customs Act, 1962 read with the Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 - HELD THAT:- There are no notifications issued u/s 11-I of the Customs Act, 1962. Under Section 113(d) of the Customs Act, 1962 any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force shall be liable for confiscation. Foreign Trade (Development and Regulation) Act, 1992 r/w Foreign Trade (Regulation) Rules, 1993 read with The Foreign Trade Policy 2015-2020 and the provisions of the Foreign Exchange Management Act, 1999 read with The Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 thus contain restriction on import and export of foreign currency. Section 125 of the Customs Act, 1962 gives a discretion to the Adjudicating Authority to impose fine in lieu of confiscation. There is no doubt that the currency that was attempted to be exported out of country without proper declaration by the petitioner was liable for the confiscation under the provisions of the Customs Act, 1962 and the provisions of the regulations mentioned above framed under the provisions of the Foreign Exchange Management Act, 1999. Therefore, without doubt, it is clear that import or export of foreign currency is prohibited if it is in contradiction of the above Regulation. Thus, discretion is to be exercised by the Adjudicating Officer u/s 125 of the Customs Act, 1962, to allow redemption of prohibited goods of payment of redemption fine. The Appellate Commissioner has modified by giving an option to the petitioner to pay redemption fine and has reduced the penalty. Although the Central Government is empowered to file revision to modify any order of the Appellate Commissioner, I find the discretion was properly exercised while modifying Order-in-Original No.61/2020-2021-Commissionerate-1 by the Appellate Commissioner vide Order-in-Appeal Airport. Cus.I No.206 of 2020(F.No.C4/I/99/O/2020-AIR) while ordering reduced penalty and release of the currency on payment of redemption fine. Unless the discretion was wrongly executed by the Appellate Commissioner, while passing Order dated Order-in Appeal Airport. Cus.I No.206 of 2020(F.No.C4/I/99/O/2020-AIR), such exercise of discretion cannot be disturbed u/s 129DD of the Customs Act, 1962. Therefore, the seized currency ordered to be confiscated under the provisions of the Customs Act, 1962 in view of Section 113(d), 113(e) 113(h) of the Customs Act, 1962 is directed to be released subject to the petitioner paying the redemption fine and penalty imposed by the Commissioner of Customs (Appeals-I) vide Order dated Order-in Appeal Airport. Cus.I No.206 of 2020(F.No.C4/I/99/O/2020-AIR) dated 20.08.2020 within a period of thirty (30) days from the date of receipt of a copy of this order. In the result, this writ petition stands allowed with the above observation.
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2024 (2) TMI 979
Revocation of Customs Broker License - Deemed revocation - Validity of order passed under Regulation 17(4) - forfeiture of security deposit - imposition of penalty - Violation of Regulations 10(a), 10(d) and 10(n) of CBLR, 2018 - whether the appellant Customs Broker has fulfilled all his obligations as required under CBLR, 2018 or not - HELD THAT:- There is no legal provision under Regulation 17(7) ibid, for issue of an order as deemed revocation of CB license to take into effect on a future date, in case the earlier order of the same authority is set aside in any appellate forum, immediately with effect from such order of the appellate authority. Thus, the legal provision under Regulation 17(7) ibid, on this ground alone the impugned order is liable to be set aside. In the absence of any document to prove the claim of mis-declaration of export goods, the findings given by the learned Principal Commissioner of Customs in the impugned order that the appellants has aided and abetted the exporter in availing ineligible export incentives, is difficult to be proved for fastening such liability on the appellants CB for holding them responsible for violation of Regulation 10(a) ibid. The ineligible claim for export incentives was found by the department only on the basis of specific investigation conducted by the NSPU/R I customs authorities, and hence the appellants CB cannot be found fault for the reason that they did not advise their client importer to comply with the provisions of the Act. Further, the voluntary statement given by Shri Sachin Sitaram Shinde, Proprietor of the appellants CB firm was on 03.03.2022 i.e., almost 3 years subsequent to before Customs investigation authorities clearly show that such mis-declaration was not known to the appellants CB. Thus, there is no possibility for the appellants CB to bring to the notice of the Deputy Commissioner of Customs (DC) or Assistant Commissioner of Customs (AC) about the mis-declaration of imported goods. Thus, we are of the considered view that the violation of Regulation 10(d) ibid, as concluded in the impugned order is not sustainable. We find that CBIC had issued instructions in implementing the KYC norms for verification of identity, existence of the importer/exporter by Customs Broker in Circular, and verification of any two documents among specified documents is sufficient for fulfilling the obligation prescribed under Regulation 10(n) of CBLR, 2018. We find that in the present case, the appellants CB had obtained the KYC documents and submitted the same to the Customs Department. Thus, we do not find any legal basis for upholding of the alleged violation of Regulation 10(n) ibid by the appellants in the impugned order on the above issue. Thus, we do not find any merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in deemed revocation of the CB license of the appellants; for forfeiture of security deposit second time and for imposition of penalty, inasmuch as there is no violation of regulations 10(a), 10(d) and 10(n) ibid, and the findings in the impugned order is contrary to the facts on record. Further, the impugned order is not sustainable as it has been issued in violation of Regulation 17(7) ibid and in non-compliance with the provisions contained in Regulation 17(4) ibid in terms of the judgement of the Hon ble Supreme Court in the case of Shasta Freight Services Pvt. Ltd.[ 2019 (9) TMI 363 - TELANGANA AND ANDHRA PRADESH HIGH COURT] , inasmuch as the principles of natural justice in affording the opportunity for cross examination was not followed in the impugned order. Therefore, by setting aside the impugned order, we allow the appeal in favour of the appellants.
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2024 (2) TMI 978
Re-exported goods after three years - Violation of Notification No. 27/2002-Cus - Show Cause Notice issued - HELD THAT:- Since Notification No. 27/2002-Cus is a conditional Notification, the conditions specified therein have to be fully complied with by the importer in order to enjoy the exempted benefit. The Commissioner (Appeals) vide impugned OIA has given the findings that ; '' The appellant did not submit any application to the competent authority for the extension of the period to one year, and did re-export after three years of the limit of extended period gets over, thus prima facie the Notification No. 27/2002-Cus has been violated, and on this basis only the appeal can be considered to be disposed off. The financial trouble of the appellant can not be the basis of his defence.'' Thus, he has dismissed the Appeal. Since the facts are not in dispute, we do not see any reason to interfere with the detailed and considered order passed by the Commissioner (Appeals). Accordingly, we dismiss the present Appeal.
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Corporate Laws
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2024 (2) TMI 977
Constitutional Validity of Rule 37(8) of the Companies (Incorporation) Third Amendment Rules, 2016 - rejection of conversion of the Petitioner's company from an Unlimited Liability Company to a Limited Liability Company - HELD THAT:- This Court is of the opinion that the lacuna in the Companies (Incorporation) Rules, 2014 is being sought to be cured by the 2016 Amendment. Since the purpose of the amendment is to cure the defects which existed in the law by giving discretion to the RoC to satisfy himself that there are sufficient means in the company to answer their debts even after conversion, it cannot be said that it would operate only to applications filed after the 2016 amendment. Merely filing an undertaking as mandated under Section 18(3) would not take care of the interests of the creditors which is now sought to be protected under the 2016 amendment. The Division Bench of this Court in its [ 2020 (3) TMI 527 - DELHI HIGH COURT] had only directed the RoC to decide the application of the Petitioner afresh in accordance with law. As of today there is no challenge to the 2016 Regulations. This Court is of the opinion that since the 2016 Amendment was only curative in nature and only intended to protect the interests of the creditors, the amended rules, therefore, must apply to applications which are pending with the RoC, and the same must apply to the application of the petitioner/company. The right of the Petitioner for conversion from unlimited company to limited company has not been taken away. In fact, the petitioner/company had no vested right to be granted a certification of conversion to a limited liability company. The reasons given by the RoC for rejecting the application of the Petitioner on the ground that various prosecutions have been filed by the Serious Fraud Investigation Organization against the Petitioner for offences under the Companies Act and the IPC and that the e-Form 27 which was to be filed with the Registrar of Companies was not in compliance with Rule 37 of the 2016 Rules cannot be said to be so perverse especially keeping in mind the interest of the shareholders and the interest of the creditors. The RoC has also observed that the petitioner/company has suffered substantial financial losses and has a net deficit in current liabilities over the assets in excess of Rs. 2100 Crores. The registrar was also not provided with an NOC or undertaking from all the shareholders to support the conversion application and the petitioner did not even issue a public advertisement inviting objections from various creditors/stakeholders on the issue of conversion. The anxiety on the part of the Registrar of Companies that the creditors and stakeholder should not be left high and dry cannot be said to be completely unjustified. Petition dismissed.
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2024 (2) TMI 976
Legality of SFIO Investigation - Alleged incorrect address mentioned in Form No.10 filed by the petitioner/Company with Registrar - Invocation of Section 12 of Companies Act, 2013 for the alleged non-maintenance of the registered office at the address mentioned in Form No.10 filed before the Registrar - HELD THAT:- Once investigation has commenced under Section 210, the statute does not render the Government of India powerless, to assign the investigation under Section 212 to the SFIO. It neither results in duplication of investigation, nor takes away any right of the petitioner. Sub-section (2) clearly mandates that once the SFIO is entrusted with investigation under Section 212, any other investigation already initiated shall not be proceeded further and further, those agencies who are/were conducting any investigation, shall transfer all the relevant documents and records in respect of those offences to the SFIO. The powers of SFIO is statutorily determined from sub-section (3) to sub-section (17) of Section 212 and for conduct of investigation there is procedure in place which need not require elaboration at this juncture. The submission of the learned senior counsel for the petitioner is that when the proceedings under Section 210 are underway, assignment of investigation to the SFIO cannot take place. The strength on which the said submission is made is that there should a report under Section 210, as is directed, and only then the investigation can be handed over to the SFIO. The effect of such submission is that handing over of investigation to the SFIO, should precede a final report under Section 210. This submission is sans countenance as it travels on a slippery slope. Section 210 does speak of a report, the report can be either interim or final it need not be the final report only - It is entrusted to the SFIO which is created under the Act, i.e., in terms of Section 211 with elaborate functions under Section 212. The protection to any Company from duplication of proceedings is kept tight under sub-section (2) of Section 212 and above all, and after all, it is investigation. A bleak attempt is made by the learned senior counsel to submit that the phrase interim report is found only in sub-section 11 of Section 212, and nowhere in Section 210 suffers from want tenability, as observed hereinabove, the report under Section 210, can either be interim or final. The said report will not result in any penalty being imposed straight away against any Company. It is for the purpose of investigation. Investigation is for the purpose of unearthing the alleged unethical activities of any Company, in the case at hand, the petitioner/Company. The Apex Court, in plethora of cases, has observed that with the advancement of technology, economic offences have become a real threat to the functioning of the financial system of the country. Those offences become a great challenge for Investigating Agencies to detect and comprehend intricate nature of transactions, as also the role of persons involved therein. No reasons provided to invoke Section 212 of the Act - non-application of mind - HELD THAT:- The statement of objections are, in defence of interim report necessitating assignment of investigation. If the Union of India has thought it fit to entrust the investigation to the SFIO, owing to certain factors which have emerged while conduct of investigation under Section 210 and in public interest, this Court in exercise of its jurisdiction under Article 226 of the Constitution of India would not by a stroke of pen, annul such opinion of the Union of India, unless it is contrary to the statute or the action is demonstrably arbitrary. Neither of the two is present in the case at hand, as the projection of the two, by the learned senior counsel for the petitioner is sans acceptance. Therefore, there is no warrant to interfere at this stage. Insofar as the judgments relied on by the leaned senior counsel in support of his submissions in the case of MODERN DENTAL COLLEGE AND RESEARCH CENTRE v. STATE OF MADHYA PRADESH [ 2016 (5) TMI 1366 - SUPREME COURT] and in the case of UTTAM DAS CHELA SUNDER DAS v. SHIROMANI GURDWARA PRABANDHAK COMMITTEE [ 1996 (5) TMI 431 - SUPREME COURT] are inapplicable to the facts situation at this juncture. Reliance is placed on paragraph 60 of the judgment of the Apex Court in the case of MODERN DENTAL COLLEGE AND RESEARCH CENTRE which deals with doctrine of proportionality. It is the submission that the statute should be used only for the designated proper purpose. In the considered view of the Court, the statute is used for the designated proper purpose. Proportionality is not what can be considered at this stage of the proceedings. The stage, as observed in the course of the order, is conduct of investigation and the Apex Court is clear that investigation process should not be interdicted or annihilated unless the grounds projected are in support of such interdiction - the judgments relied on would not lend any support to the submissions of the learned senior counsel for the petitioner, in any manner. The action impugned does not suffer from any statutory aberration and therefore, the petition does not deserve any entertainment. Petition dismissed.
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Insolvency & Bankruptcy
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2024 (2) TMI 975
Withdrawal of application which was admitted earlier for CIRP - Manner of computation of voting with regard to application under Section 12A - proposal under Section 12A of the Code permitting withdrawal of the CIRP accepted - voting summary and opinion minuted by the Resolution Professional rejected. Resolution Professional has challenged the order of the Adjudicating Authority dated 24.05.2023 by which order the Adjudicating Authority has rejected the voting summary and opinion minuted by the Resolution Professional holding that 12A proposal is not approved since it was not approved by 90% votes. HELD THAT:- The Appellant, Resolution Professional whose summary of voting holding that 12A application was not approved has been set aside by the Adjudicating Authority. The Resolution Professional is duty bound to ensure that the CIRP process is conducted in accordance with provisions of IBC and Regulations. In the facts of the present case where opinion of the Resolution Professional, who was Chairman of the CoC holding that 12A proposal is not approved has been overturned by the Adjudicating Authority, the Resolution Professional is an aggrieved person from the said decision since the decision of the Adjudicating Authority directly overturns the decision of the Resolution Professional. In so far as judgement of the Hon ble Supreme Court in Regen Powertech Private Limited vs. Giriraj Enterprises Anr. [ 2023 (9) TMI 1406 - SUPREME COURT] relied by the Respondent No.4, the judgment of the Hon ble Supreme Court held that The Resolution Professional should have maintained a neutral stand. It is for the aggrieved parties, including the Committee of Creditors of Regen Powertech Private Limited (RPPL) and Regen Infrastructure and Services Private Limited (RISPL), to take appropriate proceedings or file an appeal before this Court. Recording the aforesaid, the present appeals preferred by the Resolution Professional are dismissed as not entertained. - on looking into the above judgment, it is clear that the said judgment was in the facts and circumstances of that case where the Supreme Court held that the Resolution Professional should have maintained a neutral stand and could not have filed an appeal. The present is a case where the Resolution Professional is required to conduct the proceeding of the CoC according to the IBC and take a decision on the result of voting. There can be no question of Resolution Professional taking, in the present case, any sides. Computation of votes - HELD THAT:- The Resolution Professional is required to compute the votes as per the statute. Hence, the judgment of the Hon ble Supreme Court in Regen Powertech Private Limited vs. Giriraj Enterprises Anr. [ 2023 (9) TMI 1406 - SUPREME COURT] which was in the facts of the said case cannot be said to be applicable in the present set of facts - the appeal could not be held to be not maintainable, at the instance of the Resolution Professional. It is relevant to the notice that the said order has also been challenged by Homebuyer Mr. Vijay Saini in Company Appeal (AT) (Ins.) No.982 of 2023 with regard to which there is no issue of maintainability. The proposal under Section 12A having not been approved by 90% vote share of the CoC, the order dated 24.05.2023 has to be set aside reviving the CIRP of the Corporate Debtor. The order passed by the Adjudicating Authority is set aside - CIRP of the Corporate Debtor- Sidhartha Buildhome Pvt. Ltd. is revived which proceeding shall confine to Project Estella - The Project NCR Green be kept out of the CIRP which henceforth commences. The promoter/director is solely responsible to complete and handover all units of the Project NCR Green to the unit holders and in event there is any failure on the part of the Respondent No.4 to handover the units to all unit holders, it shall be open for the Financial Creditors in class to make an application before the Adjudicating Authority for appropriate relief including relief of revival of CIRP with regard to NCR Green Project also - The Resolution Professional shall issue fresh Form G with regard to Estella Project and complete the CIRP within a period of 90 days from the date of issuance of Form G. Resolution Professional before issuing Form G with regard to Estella Project shall constitute the CoC for the Project Estella and proceed further as per decision of the CoC so constituted. Appeal filed by Resolution Professional of the Corporate Debtor and Homebuyer allowed.
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2024 (2) TMI 974
Rejection of valuation report obtained by the RP from its valuers and direct him to consider the valuation reports dated 21.12.2022 given by Mr. Anil Kumar Saxena and Ms. Aditi Aggarwal - seeking appointment of fresh valuer to ascertain a fair value and liquidation value of the assets of Group Housing Society Known as IRIDIA in the matter of M/s Horizon Buildcon Pvt. Ltd. - HELD THAT:- The Resolution Professional in the CIRP proceedings, appointed two valuers under Section 35 of the CIRP Regulations and the two valuers have submitted their valuation reports. There being difference of more than 10% in the valuation of two valuers, a third valuer was appointed. After completion of the valuation exercise, resolution plan was placed before the CoC for consideration. The CoC approved the Resolution Plan and application has already been filed by the Resolution Professional for approval of the plan before the Adjudicating Authority. Reliance placed on judgment of Hon ble Supreme Court in Ramkrishna Forgings Limited vs. Ravindra Loonkar, Resolution Professional of ACIL Ltd. Anr. [ 2023 (11) TMI 910 - SUPREME COURT ]. In the said case, after approval of the Resolution Plan question of valuation was sought to be raised and the Adjudicating Authority has directed for valuation, which order was set aside by the Hon ble Supreme Court. The said judgment fully supports the submission of learned counsel for the Respondent. Thus, no error has been committed by the Adjudicating Authority in rejecting application filed by the Appellant - Appeal is dismissed.
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2024 (2) TMI 973
Maintainability of appeal - time limitation - whether the Appeal is within condonable period or it is beyond condonable period? Submission of the Appellant is that when the Hon ble Supreme Court has observed that Appellant to avail remedy of Appeal before the NCLAT within time it meant that from the said date, within 30 days, Appeal should be filed and Appellant having filed within 30 days, it is within time. HELD THAT:- On looking into the order of the Hon ble Supreme Court passed in HIMANSHU BATTISH ANR VERSUS TODAY HOMES NOIDA PRIVATE LIMITED ANR. [ 2023 (7) TMI 1370 - SC ORDER] , last line of the order mentions the period from the date of filing of the special leave petitions till today would stand excluded for the purposes of filing of the appeals. Thus what was intended by the Hon ble Supreme Court is that period during which SLP was pending before the Supreme Court, should be excluded. Hon ble Supreme Court was not pronouncing on the limitation for filing the present appeal on that date since the Appeal was not even filed and when we read the above line of the Hon ble Supreme Court it is clear that what was permitted was exclusion of the period during which the said SLP was pending. Even after exclusion of the said period, the present Appeal is filed beyond 15 days after expiry of the limitation and further clarification application which was filed by the Appellant has also been dismissed on 01.12.2023 by the Hon ble Supreme Court. The delay in filing the Appeal cannot be condoned which is beyond condonable period as provided under Section 61(2) of the Code. The appeal has been filed beyond 15 days after expiry of limitation, the appeal cannot be entertained. The Appeal being barred by time is dismissed.
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2024 (2) TMI 972
Maintainability of section 9 application - initiation of CIRP - existence of pre-existing disputes between the parties prior to the issue of demand notice issued under Section 8 of the Code by the Respondent No. 1 to the Corporate Debtor on 16.08.2019 or not - arbitration case pending before the Hon ble High Court of Delhi has any impact on Section 9 application under the Code by the Respondent No. 1 which is subject matter of the present appeal before this Appellate Tribunal or not - work completion certificate dated 09.05.2019 was rightly relied upon by the Adjudicating Authority or not. Whether there were any pre-existing disputes between the parties prior to the issue of demand notice issued under Section 8 of the Code by the Respondent No. 1 to the Corporate Debtor on 16.08.2019? - HELD THAT:- It is noted that prior to issue of demand notice, no formal letter has been written by the Corporate Debtor to the Respondent No. 1 regarding raising any specific disputes on aspect of quality and quantity of work executed under the contracts. In this connection, reply dated 29.08.2019 filed by the Corporate Debtor to demand notice is noted. From the said reply, it seems that the Corporate Debtor has referred to various communications and Minutes of Meeting (in short MoM ), wherein the Corporate Debtor is stated to have raised the issues regarding slow progress of work, non-mobilisation of adequate manpower etc. In fact, the Corporate Debtor in demand notice 8 has referred to several e-mails and letters regarding their concerns about slow progress of work and thereby invoking clause 33 of GCC for termination of contract which, however was withdrawn and original contract was reinstated. From the letter dated 22.01.2016 written by the Corporate Debtor to the Respondent No. 1, it is seen that letter was written on mobilisation work w.r.t. progress of the work and nowhere any other aspect of disputes have been mentioned. In the response to the same, the Respondent No. 1 replied the Corporate Debtor vide e-mail dated 23.01.2016, refuting the content and indicating action taken to mobilise resources and further raised the issue regarding pending payments to be released by the Corporate Debtor to the Respondent No. 1. This was followed with the communication from the Corporate Debtor on 23.01.2016, giving outcome of discussion with the Respondent No. 1 relating to payment to be made by the Corporate Debtor and mobilisation of manpower and tools and plants to be made available by the Respondent No. 1. The content of the letter was confirmed by the Respondent No. 1 vide their letter dated 25.01.2016 and finally the Corporate Debtor withdrew the termination letter. The issue was regarding release of payment by the Corporate Debtor and in turn mobilisation of resources especially manpower and tools and plant by the Respondent No. 1 for which the termination letter was issued and subsequently withdrawn - No issue raised by the Corporate Debtor regarding quality or quantity of services resulting into pre-exiting disputes hence, on the contention of the Appellant that the work was terminated indicates pre-existing disputes, there are no much substance to this argument of the Appellant. In fact, the termination letter was withdrawal by the Corporate Debtor and original contract was restored. Thus, this Appellate Tribunal do not find any error in the finding of the Adjudicating Authority on the aspect of pre-existing dispute. Whether the arbitration case pending before the Hon ble High Court of Delhi has any impact on Section 9 application under the Code by the Respondent No. 1 which is subject matter of the present appeal before this Appellate Tribunal? - HELD THAT:- The Corporate Debtor raised issues regarding slow progress and less mobilisation of manpower, tools and plants whereas in reply to the Corporate Debtor, the Respondent No. 1 has been categorically stated that due payment in order to mobilise resources at site has not been paid by the Corporate Debtor. Hence, what is to be seen here whether delay was on account of only one party and whether such delay effected the project - It is also needed to factor into consideration if finally, project was completed to satisfaction of the Corporate Debtor and whether the same was accepted by the Corporate Debtor without any caveats and qualification. In the instant appeal it is noted carefully that the Corporate Debtor issued the completion certificate (already discussed in detailed by us earlier) without any reservation and to full satisfaction to the Corporate Debtor. In such background, the alleged delay during course of execution of contracts, cannot be treated as an issue which may adversely affect rights of the Operational Creditor under Section 9 of the Code - the position on delay/ slow progress during contract period clarified accordingly. Whether, the work completion certificate dated 09.05.2019 was rightly relied upon by the Adjudicating Authority? - HELD THAT:- The completion certificate was unqualified and without raising any issue regarding quality or quantity or progress of the work by the Respondent No. 1. Merely the fact that the certificate was issued at the request of the Corporate Debtor, the existence and validity and impact of the same cannot be denied at this stage by the Corporate Debtor. Thus, the work completion certificate was rightly taken into consideration by the Adjudicating Authority in their analysis and there are no error on the same. There are no error in the Impugned Order - appeal dismissed.
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Service Tax
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2024 (2) TMI 971
Levy of service tax - right to use radio frequency - declared service or not - It was held by the High Court that the assignment by the Government of the right to use radio frequency spectrum or its subsequent transfer does not constitute declared service under Clause (e) of Section 66E of the Act; it does so under Clause (j) of Section 66E of the Act - HELD THAT:- There is no scope for interference under Article 136 of the Constitution of India. No imprimatur given to the finding recorded by the High Court on interpretation of clause (e) of Section 66E of the Finance Act, 1994 - SLP dismissed.
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2024 (2) TMI 970
SVLDRS - Adjustments/set off of amount (of service tax) already paid under Service Tax Voluntary Compliance Encouragement Scheme, 2013 - whether 50% of the amount which was paid by the petitioner under the Provisions of the Service Tax Voluntary Compliance Encouragement Scheme, 2013 is to be set off against the amounts due as payable by the petitioner under the provisions of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. HELD THAT:- As per Sub section (2) to Section 124 of the Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019, the relief calculated under Sub section (1) shall be subject to the condition that any amount paid as pre deposit at any stage of appellate proceeding under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant. The petitioner has deposited a sum of Rs. 1,06,30,596/- [Rs.1,01,32,784 (before filing declaration) + Rs. 4,97,815 (after filing declaration)] over and above Rs. 13,15,41,380/- being 50% of the admitted tax liability under Service Tax Voluntary Compliance Encouragement Scheme, 2013.This is also admitted by the respondents. The petitioner has also deposited Rs. 12,77,911/- on various dates after filing of declaration which has not been taken into consideration in the impugned communication in Form SVLDRS-3 dated 29.02.2020 - in all the petitioner has deposited an amount of Rs. 14,34,49,887/- (Rs. 13,15,41,380.00 + Rs. 1,06,30,596 + Rs. 12,77,911/-) which is to be deducted under Section 124(2) of the Chapter-V of the Finance Act, 2019 of the Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019. Thus, the amount to be paid by the petitioner under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 after deduction under Section 124(2) of the Chapter-V of the Finance Act, 2019 of the Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 is only Rs. 1,43,99,769/- (Rs. 15,78,49,656 Rs. 14,34,49,887/-) and not Rs. 7,23,47,343/- as quantified vide impugned Communication in Form SVLDRS-3 dated 29.02.2020. The calculation of the tax relief of Rs. 4,85,63,458/- only by the respondent in Form SVLDRS-3 dated 29.02.2020 is not correct. Since, the petitioner is required to pay only a sum of Rs. 1,43,99,769/- under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and since the calculation in impugned Communication in Form SVLDRS-3 dated 29.02.2020 is erroneous, the Impugned Order is therefore liable to be set aside and the case is remitted back to the first respondent or such other officer designated who has been given the power to accept the declarations under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 after the expiry of the aforesaid scheme for issuing necessary forms to bring a closure - the petitioner is directed to pay a sum of Rs. 1,43,99,769/- together with interest at 12% on the aforesaid amount of Rs. 1,43,99,769/- calculated from 29.03.2020 within a period of six (6) weeks from the date of receipt of a copy of this order. Petition allowed.
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2024 (2) TMI 969
Levy of penalty under Section 78 when the service tax was paid along with interest before the issuance of show-cause notice - suppression of facts or not - Invocation of Extended period of limitation - HELD THAT:- Except for stating that the show-cause notice has been issued only after conduct of audit and that the appellants have suppressed the material facts, no evidence has been put forth in the show-cause notice or in the impugned order to show that there has been a positive act of suppression on the part of the appellants to evade payment of duty. It is found that Tribunal has been consistent in holding that extended period cannot be invoked unless a positive act on the part of the assessee is evidenced showing the intent to evade payment of duty. It is also found that Tribunal has been taking a consistent view that a mere non-payment of service tax and non-filing of Returns would not be a sufficient reason to extend the period of limitation. Hon ble Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS M/S ADECCO FLEXIONE WORKFORCE SOLUTIONS LTD [ 2011 (9) TMI 114 - KARNATAKA HIGH COURT] held that The assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act. Sub-Sec.(3) of Sec. 73 of the Finance Act, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under Sub-Sec.(1) in respect of the amount so paid. The impugned order is not sustainable under law and is liable to be set aside - appeal allowed.
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2024 (2) TMI 968
Nature of activity - activity amounting to manufacture of providing of services - Classification of services - Business Auxiliary Service, Business Support Service and Renting Services or not - appellants were engaged in providing the servies to their customers who have sent the said plates/ coils for cutting - Demand on handling charges and rent charged - HELD THAT:- The appellants are job-workers inasmuch as they are cutting the coils/ plates of their clients according to the specifications given to them; they are collecting job charges for the same; they are discharging service tax on the coils/ plates which are ultimately used in the manufacture of non-excisable goods by their clients; they have not discharged service tax on the goods which were ultimately used in the manufacture of excisable goods which are cleared on payment of duty by their clients. Learned Counsel for the appellants argues that the job-work undertaken by them amounts to manufacture in view of the decision of the Tribunal in the case of JINDAL STAINLESS STEELWAY LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD [ 2014 (9) TMI 658 - CESTAT MUMBAI] , where it was held that the activity of the appellant is amount to manufacture and appeal was allowed on the merit as well as on limitation. It is found that as the job-work undertaken by the appellant amounts to manufacture, service tax cannot be levied on them under both Heads Business Auxiliary Service and Business Support Service . Therefore, any discussion on other issues like cumduty price, extended period, small-scale exemption become redundant and therefore, other issues not taken up. Demand on handling charges and rent charged - HELD THAT:- It is found that they are incidental to the job-work and it cannot be alleged that they are providing separately these services. It is not the case of the Department that the appellants are providing these services separately to different clients. Moreover, even if it is construed that the appellant is providing a bundle of services, the main service i.e. job-work of cutting plates/ coils is to be considered for levy of service tax. In view of the aforesaid reasoning, the job-work undertaken by the appellants does not attract levy of any service tax. Thus, the job-work undertaken by the appellants does not attract levy of any service tax - appeal allowed.
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2024 (2) TMI 967
Classification of services - banking and other financial services or not - service of giving bank guarantee - Demand of service tax on delayed payment charges - Dropping of demands in respect of the assessee-appellants providing corporate guarantees to their subsidiary companies on the ground that it cannot be brought under the definition of banking and other financial services provided under Section 65 (12) ibid. Classification of services - banking and other financial services or not - service of giving bank guarantee - HELD THAT:- The department had accepted that the assessee-appellants had not charged any commission/fees to the overseas subsidiary companies as well as to the subsidiary companies situated in India for issuance of the corporate guarantee. However, the service tax demand was proposed on the basis of commissions usually charged by the commercial banks for providing bank guarantee. Further, it is also found that the assessee-appellants did not charge any consideration for providing the corporate guarantees as stated in the SCN and as noted by the learned Commissioner in the impugned order. Insofar as levy of service tax is concerned, the same should be on the amount of consideration received for provision of such service. Thus, prima facie it appears that there is no element of service inasmuch as there is no consideration involved in providing corporate guarantee by the assessee appellants. The Co-ordinate Bench of this Tribunal had examined the issue of levy of service tax on provision of corporate guarantees by a company to its subsidiaries, on the basis of notional value equivalent to commission charged by banks for providing bank guarantees, in the case of M/S ULTRATECH CEMENT LTD. VERSUS COMMISSIONER OF CGST CX, MUMBAI EAST [ 2023 (10) TMI 1363 - CESTAT MUMBAI] . In this case, the Tribunal had held that insofar as levy of service tax is concerned, the same should be on the amount of consideration received for provision of such service. In the present case, since there is no involvement of any commission amount in the form of consideration, the appellants cannot be saddled with the service tax liability as demanded in the impugned order. - Thus, above views on the issue have been duly supported by the decision of the Tribunal in the above order. Demand of service tax on delayed payment charges - HELD THAT:- From Circular dated 28.02.2023, it is clear that in the present case in the absence of any contractual obligation or flow of consideration for the specific act of tolerating an act etc., it cannot be said that such delayed charges in payment by a client in payment for purchase of shares could be said to be a service under the category of declared service for the purpose of levy of service tax, that is separate from the stock broking services. The issue of Delayed Payment Charges (DPC) arising in the context of purchase of shares have been addressed by the Co-ordinate Bench of this Tribunal in the case of Religare Securities Limited Vs. Commissioner of Service Tax, Delhi [ 2014 (4) TMI 588 - CESTAT NEW DELHI ] by holding that the same is not liable to service tax. Thus, there are no merits in the impugned order, insofar as it has confirmed the adjudged demand on the assessee-appellants in respect of delayed payment of charges paid by the clients for the actual delay, if any, in payment for the purchase of shares or other stocks, which are in no way can be considered as service of tolerating or refraining from an act, or to tolerate an act or a situation, or to do an act . Therefore, by setting aside the impugned order to this extent, the appeal is allowed in favour of the appellants. Dropping of demands in respect of the assessee-appellants providing corporate guarantees to their subsidiary companies on the ground that it cannot be brought under the definition of banking and other financial services provided under Section 65 (12) ibid - HELD THAT:- In respect of the period after 01.07.2012, even though the taxable service has been defined in clause 44 of Section 65B ibid, as an activity carried on by a person for another for consideration and includes a declared service, inasmuch as the show cause notice itself states that no consideration has been paid by any of the subsidiary companies to the assessee-appellants for providing corporate guarantees, by way of commission brokerage fees or any other form, the demand cannot be sustainable. Appeal disposed off.
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2024 (2) TMI 966
CENVAT Credit - input services used in the provision of exempted services - appellants have maintained separate accounts of the same in terms of the Cenvat Credit Rules, 2004 or not - incorrect availment and utilisation of CENVAT credit - reversal of credit claimed by the appellants would suffice in the facts and circumstances of the case or not - appellants are liable to pay the amounts demanded along with interest and penalty on above or not. CENVAT Credit - input services used in the provision of exempted services - appellants have maintained separate accounts of the same in terms of the Cenvat Credit Rules, 2004 or not - HELD THAT:- From the analysis of the legal provisions of Rule 6 ibid, as it stood during the relevant time of the disputed period (prior to the amendment brought w.e.f. 01.04.2016), we find that the appellants was allowed to maintain separate accounts for the receipt and use of input services, used (i) for the provision of exempt services and (ii) for the provision of output services excluding exempt services , and take credit of input services used in the provision of taxable output services other than the exempt services , which is independent of the optional provision under Sub-rule (3) of Rule 6 ibid. It is found from the records that the appellants have provided for various periods the list of projects/sites/contracts which are taxable services and exempt services besides the trading activity and the month-wise Cenvat credit involved in input services vide their letter 24.02.2014 addressed to the department in replying to the audit objections raised in this regard - it cannot be said that not even single piece of evidence was submitted by the appellants regarding the nature of projects and did not maintain separate accounts for the exempt services taxable services, as held by the original authority in the impugned orders. Inasmuch as the Cenvat credit amount relating to exempt services/projects, taxable services/projects and trading activity, having been separately accounted for in the books of accounts by the appellants, it can be concluded that the appellants have satisfied the requirement of maintaining separate accounts for receipt and use of input services in terms of the Cenvat Credit Rules, 2004. The views have been duly supported by the Coordinate Bench of this Tribunal who had examined the issue of the admissibility of Cenvat credit in similar cases where the inputs and/or input services are used in manufacture/provision of dutiable as well as exempted products/services. The Co-ordinate Bench in RESPONSIVE INDUSTRIES LTD. and AXIOM CORDAGES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, THANE-II [ 2022 (8) TMI 639 - CESTAT MUMBAI ] had examined the above issue in respect of the appellant who had reversed the Cenvat credit in respect of exempt services, by holding that inasmuch as the quantum or method adopted by the appellant was not questioned by the department, the demand of Cenvat credit cannot be sustained. Whether the appellants had incorrectly availed and utilised CENVAT credit? - HELD THAT:- It is not the department s case that the Cenvat credit taken in respect of taxable services/projects and those Cenvat credit not taken in respect of exempt projects are incorrect, in terms of any specific document or record. In fact, it is found that in respect of show cause notice proceedings initiated against the appellants subsequently on 28.10.2016 and 30.05.2017 by the department in confirmation of adjudged demands relating to Cenvat credit in respect of trading activity, the learned Commissioner (Appeals) vide Order-in- Appeal dated 23.08.2018 and 09.01.2019, by examining the compendium of 49 work orders related to taxable sites and exempt sites, and after considering the credit involved in common services that had been reversed proportionately on the basis of turnover ratio had dropped the demands confirmed by the original authorities. It has also been held in the said appellate orders that furnishing of such voluminous details can only be possible only when the records are maintained separately, and the finding of lower authority that the appellant did not maintain separate account of the taxable services as well as exempted services was also not sustained. The Hon ble Supreme Court in the case of Chandrapur Magnet Wires (P) Limited [ 1995 (12) TMI 72 - SUPREME COURT ] had held that in case where an assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final product that are exempted, and subsequently makes a debit entry in respect of exempt final product, then this debit entry would make such credit entry stand deleted in the accounts of the assessee, maintaining that in effect no Cenvat credit was taken in respect of exempt final products - Further, in view of the above judgement of the Hon ble Apex Court, it could be concluded that the reversal of Cenvat credit in respect of common input services by the appellants is sufficient for compliance with the Cenvat Credit Rules, 2004. There are no merits in the impugned orders passed by the learned Commissioner, Nagpur in confirmation of the adjudged demands in the impugned orders in terms of Cenvat Credit Rules, 2004 and accordingly the same is set aside - Since the confirmation of the demands cannot be sustained under Rule 6(3) ibid, the demand for interest and imposition of penalty in the impugned orders also need to be set aside. The impugned orders dated 24.02.2017 and 20.12.2017 cannot be sustained and are set aside - Appeal allowed.
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2024 (2) TMI 965
Reversal of Cenvat Credit - Dropping of demand proposed in SCN - utilization of excess of 20% of the credit in violation of Rule 6(3)(c) of Cenvat Credit Rules, 2004 - demand of service tax on providing taxable output services as well as generation/sale of electricity at Tamil Nadu and sale of raw slat - time limitation. Whether the dropping of the demand of Rs. 59,32,265/- which was proposed in the show cause notice alleging that the assessee has utilised in excess of 20% of the credit in violation of Rule 6(3)(c) of Cenvat Credit Rules, 2004 is legal and proper? - HELD THAT:- The very same issue was considered by the Tribunal in the case of DURAFLEX SERVICES CONSTRUCTION TECHNOLOGIES LTD VERSUS CCCE ST, VISAKHAPATNAM - I [ 2019 (3) TMI 246 - CESTAT HYDERABAD] . The Tribunal observed in the said case that an assessee during the said period was not barred for from taking credit but was only barred utilizing it. Further an assessee would be free to utilize remaining 80% in the subsequent financial year. Similar view was considered by the Tribunal in the case of M/s Tinna Oils and Chemicals Ltd. [ 2020 (2) TMI 1441 - CESTAT HYDERABAD] . It was observed that the Tribunal post 01.04.2008 the said provision restricting the utilization of credit was amended and the bar of utilizing credit was omitted. After such lapse of time it did not make any difference whether the asssessee had utilized the credit in excess of 20% prior to 01.04.2008 and therefore the demand was set aside. In the present case the SCN has been issued in this regard for the period 2007-08. After such lapse of time, the demand raised alleging that the assessee has utilized in excess of 20% prior to 01.04.2008 appears to be purposeless as the assessee would be eligible to utilize the entire credit in subsequent financial years - the order passed by the Original authority dropping the demand does not require any interference. This issue is found in favour of the assessee and against the Revenue. Consequently, the appeal filed by the department requires to be dismissed. Confirmation of the demand of Service tax to the tune Rs. 72,18,957/- - providing taxable output services as well as generation/sale of electricity at Tamil Nadu and sale of raw slat - HELD THAT:- With effect from 01.04.2011 trading is included in the definition of exempted services. The assessee in the present case, has availed the credit of service tax paid on input services in the nature of Telephone Services, Mobile Services, Courier Services, Travel Services etc. Such services cannot be said to have been used only for taxable output services when the activity of the assessee includes generation/sale of electricity as well as sale of raw slat. These expenses have been accounted in the common Profit and Loss account. It is the burden of the assessee to establish with documents that they have not used common input services for trading - the assessee has not been able to establish that common input services have not been used for trading activity also. The issue on merit is found against the assessee and in favour of the Revenue. Time limitation - HELD THAT:- The definition of exempted services was amended with effect from 01.04.2011 so as to include trading as exempted services. Prior to this date, there was much confusion as to whether credit can be availed in respect of trading. In the present case, the show cause notice for the period April-2007 to March 2012 has been issued on 18.10.2012, which is after the amendment dated 01.04.2011 bringing the activity of trading within the exempted services. As per the show cause notice itself it is seen that the demand has been raised after perusal of ST-3 returns, Cenvat account, balance sheet, profit and loss account of the assessee - In Para 7 of the show cause notice it is stated that as per the records of the assessee, the department has arrived at the excess utilization of credit for the period 2007-08. So also the demand on availment of common input services has been raised on the basis of account of the assessee. All these lead to the probable conclusion that the assessee has disclosed all the transactions in their accounts and has not willfully suppressed any facts with intent to evade payment of service tax/duty. There is no positive act of suppression established by the department against the assessee so as to invoke the extended period - the department has failed to establish the allegation of suppression of facts with intent to evade payment of duty against the assessee so as to invoke the extended period. The show cause notice issued beyond the normal period cannot sustain and requires to be set aside. The issue on limitation is answered in favour of assessee and against the department - The Tribunal in the case of M/s Musaddilal Projects LTD. [ 2017 (4) TMI 951 - CESTAT HYDERABAD] observed that when the assessee has filed returns regularly disclosing details of credit, the demand cannot be raised invoking the extended period alleging suppression of fact. The impugned order confirming the demand, interest and penalties on second issue for Rs. 72,18,1957/- is modified as above by limiting the demand and interest to the normal period. The appeal filed by the assessee is partly allowed.
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2024 (2) TMI 964
Declared Service u/s 66 E(e) of FA or not - Business Transfer Agreement (BTA) entered by the Appellant having a non-compete clause - HELD THAT:- The business transfer carried out by the Appellant is related to an ongoing concern and as per the mega exemption vide Notification No. 25/2012-Service tax dated 20/06/2012 Service by way of transfer of a going concern is fully exempted from all of the service tax leviable thereon. From the evidence on record, no finding can be made that substantial portion of the agreement refers to the conditions/obligations to be followed M/s Sicon like non-compete clauses, performance guarantee for two years etc., for which they have received consideration of Rs. 106,79,67,816/- as held by the Adjudicating authority. As observed by the Tribunal in the matter of M/s Universal Medicare [ 2019 (6) TMI 166 - CESTAT AHMEDABAD ], an agreement has to be interpreted as per the language and intention of the parties to such agreement. Once an ongoing concern is transferred along with assets and liabilities by paying huge amount, it is just obvious that if such noncompete clause is not present, the appellant could immediately start the same business. Hence such clause is normal in transfer of business and the condition of noncompete clause cannot be separated from the contract ended between the parties to bring the transaction under the ambit of service tax by denying the benefit of notification No. 25/2012-Service tax. Moreover, Ministry of Finance vide Circular No. 178/10/2022 dated 03.08.2022 clarified that under service tax, GST demand, unless payment has been made for an independent activity of tolerating an act under an independent arrangement entered into for such activity of tolerating an act, such payments will not constitute consideration and hence such activities do not constitute supply within the meaning of the Act. Since the entire service tax liability is set aside, interest and penalty imposed on Appellants are also set aside - Appeal allowed.
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2024 (2) TMI 963
Classification of services - Port services or manpower recruitment and supply agency service? - rendering the service to stevedores - Demand sought to be recovered under the category of manpower recruitment and supply agency service by invoking extended period of limitation. Classification of services - Port services or manpower recruitment and supply agency service? - rendering the service to stevedores - HELD THAT:- The appellant is rendering the service to stevedores during the impugned period and the Revenue seeks demand of service tax under the category of Port Servie which has been extended w.e.f. 01.07.2010, whereas the period pertains to prior to that, in that circumstances, in the light of the decision of the Konkan Marine Agencies [ 2023 (2) TMI 991 - SC ORDER ], it is held that the activity undertaken by the appellant does not fall under the category of Port Service , therefore, whole of the demand confirmed for the said period, is not liable to be taxed under Port Service . Accordingly, no demand can be raised for the short payment of tax under Port Service during the impugned period - Appeal allowed. Demand sought to be recovered under the category of manpower recruitment and supply agency service by invoking extended period of limitation - HELD THAT:- In this case, the Revenue has travelled into two boats, one to demand the service tax under Port Service and another to demand under the category of manpower recruitment and supply agency service , therefore, extended period of limitation is not invokable. In that circumstances, the demand pertains to the extended period is not sustainable, accordingly, the same is set aside. Period of demand within limitation - HELD THAT:- In the facts and circumstances of the case, the appropriate classification of service is Port Service , whereas the demand has been sought to be recovered by issuance of show-cause notice under the category of manpower recruitment and supply agency service , therefore, the demand under the category of manpower recruitment and supply agency service , is not sustainable. Period October, 2002 to October, 2006 - HELD THAT:- The appellant has collected the service tax from the service recipient and the same has paid to the Revenue, therefore, if the appellant is held to entitle the refund claim, but by giving refund to the appellant, the appellant shall be enriched unjust. Therefore, whole of the amount of service tax collected from the service recipient during the impugned period, shall go to the Consumer Welfare Fund, although the activity does not fall under the category of Port Service - the said appeal for granting refund to the appellant is dismissed.
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2024 (2) TMI 962
Classification of services - management and business consultant service - credit card, debit card, charge card or other payment card services - negative listed services or not - exempted under Notification No.25/2012-ST Serial No.29 (g) dated 20.06.2012 or not - HELD THAT:- It is not found that the appellants are engaged in any activity or any advice, consultancy or technical assistance in relation to financial management, human resources, marketing management/logistics management, procurement and management and management of information technology resources or other similar areas of management services - the activity of disbursal of wages to the unskilled rural labours as a measure of employment generation under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), does not cover under Management and Business Consultant Services. Therefore, for the period prior to 01.07.2012, the appellants are not liable to pay service tax. The adjudicating authority has held that as there was an agreement and in terms of the agreement, the service tax was inclusive which is to be borne to the appellants. Therefore, all the services provided by the appellants are inclusive of service tax, therefore, they are liable to pay service tax - as the services provided by the appellants are exempted from payment of service tax, therefore, they are not required to pay any service tax as the appellant has not collected any service tax. Further, the service rendered is inclusive of service tax, it does not mean that if the service itself is exempted, the assessee is liable to pay service tax. The impugned order is set aside - appeal allowed.
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Central Excise
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2024 (2) TMI 961
Permission to withdraw the petition - Maintainability of petition - availability of alternative remedy - HELD THAT:- Learned counsel for petitioner seeks leave to withdraw the petition, reserving the right of the petitioner to avail of appropriate remedies in law. Petition is dismissed as withdrawn.
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2024 (2) TMI 960
Demand of unutilized carried forward Cenvat balance invoking the Rule 11(3) (ii) of the Cenvat Credit Rules, 2004 - denial of carrying forward of balance credit on the ground that the same shall stand lapsed as the appellant have opted for simultaneous benefits under notification no. 29/2004 30/2004-CE - HELD THAT:- As submitted the Appellant has maintained separate records, however the adjudicating authority without verifying the said fact demanded the Cenvat of unutilsed balance while opting for exemption notification No. 30/2004-CE by invoking the Rule 11(3)(ii) of Cenvat Credit Rules, 2004. From the careful reading of the Rule 11(3), it makes clear that the sub Rule (3)(i) covers the goods that are exempt conditionally whereas sub Rule (3)(ii) would apply to those goods to which exemption under Section 5A of the Central Excise Act, 1944 is granted absolutely. The said rule provides that in any case, the Cenvat credit on stock of input lying in stock, in process and contained in finished goods needs to be reversed however, as regard the balance Cenvat credit after such reversal shall lapse only in a case where the exemption notification is absolute. In the present case, notification no. 30/2004-CE is not an absolute notification - Since the above condition contained in the notification No.30/04-CE, in such case in terms of clause (ii) of Rule 11(3) of Cenvat Credit Rules, 2004, the provision of lapsing of balance Cenvat credit will not be applicable. This issue has been considered in a catena of judgments which are cited by the appellant. However it is observed that the lower authority confirmed the demand of unutilized carried forward Cenvat balance only invoking the Rule 11(3) (ii) of the Cenvat Credit Rules, 2004 but not properly verified the factual aspects such as whether appellant have reversed the credit in respect of stocks as provided under Rule 11(3)(i) of the Rules, 2004, the claim of the appellant maintaining separate records and not availing the Cenvat credit on the input used in the goods cleared under Notification No. 30/2004-CE, etc. therefore we are of the view that the matter needs to be reconsidered. The impugned order is set aside. Appeals are allowed by way of remand to the adjudicating authority.
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2024 (2) TMI 959
Interest on refund of Education Cess - interest denied on the ground that the refund claimed was on account of pre-deposit whereas the principal amount was reversed by the appellant - HELD THAT: This Bench has considered the impugned issue in the case of M/S CADILA PHARMACEUTICALS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, JAMMU [ 2024 (2) TMI 668 - CESTAT CHANDIGARH] where the Bench observed If the Department is barred from raising demands for the refunds already granted, the appellants also cannot seek interest on the refunds already granted. Hon ble Apex Court in the case of COMMISSIONER OF CGST AND CENTRAL EXCISE (J AND K) VERSUS M/S. SARASWATI AGRO CHEMICALS PVT. LTD. [ 2023 (7) TMI 542 - SC ORDER] observed that the subsequent decision of this Court overruling M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI [ 2017 (11) TMI 655 - SUPREME COURT] in the case of M/S. UNICORN INDUSTRIES VERSUS UNION OF INDIA OTHERS [ 2019 (12) TMI 286 - SUPREME COURT] cannot have a bearing on past decisions which had attained finality although they had followed SRD Nutrients (P) Limited, which was subsequently overruled in M/s Unicorn Industries. Otherwise, a pandora s box would be opened and there would be no end to litigation, which is against public policy. The appellants have not made out any case for grant of refund - Appeal dismissed.
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2024 (2) TMI 958
Recovery of of erroneously availed refund under Section 11A of the Central Excise Act, 1944 along with interest under Section 11AB of the Act and also imposed equivalent penalty under Section 11AC of the Act - failure to comply with the substantive condition of N/N. 56/2002-CE dated 14.11.2002 requiring utilization of available credit before payment of duty from the PLA - appellant have received certain inputs by virtue of which Cenvat Credit was available to them, was never disclosed to the department till its detection by the department - suppression of facts with intent to avail exemption by way of irregular refund - time limitation. Whether the ground on which the refund has been denied is legally sustainable or not? - HELD THAT:- The appellant have in fact complied with the conditions of the Notification No. 56/2002-CE dated 14.11.2002 and in terms of conditions of the Notification, the appellant had utilized the entire amount of Cenvat Credit lying in their Cenvat Credit account and thereafter, balance amount was paid through PLA and accordingly, claimed the refund of such amount of the duty. Further, it is seen that the appellant have not availed the Cenvat Credit on furnace oil under bonafide belief that the same is not available, but the learned Commissioner has drawn the conclusion that the Cenvat Credit was not availed with intention to claim excess refund. The learned Commissioner failed to appreciate that had there been the balance in their Cenvat Credit account, the appellant could not have paid the duty through PLA. The learned Commissioner has also wrongly interpreted the meaning of the expression Cenvat Credit available to the appellant on the last day of month used in the Notification No. 56/2002-CE. In this regard, it is to be noted that when the manufacturer receive the inputs/capital goods, subject to fulfillment of other conditions, the Cenvat Credit pertain to the said inputs/capital goods would accrue to them but would not automatically be available in the Cenvat Register, but when the manufacturer took the Cenvat Credit in the Cenvat Register, at that time it can be said that the credit is available to the appellant. It is pertinent to mention that para 1A of the said Notification provides the utilization of Cenvat Credit which comes into existence only after making entry in the Cenvat Credit account and till that time, it is not a Cenvat Credit. Further, the refund sanctioning authority also examined the Cenvat Credit account before sanctioning the refund and the refund will only be sanctioned of the duty paid in cash/through PLA after utilization of Cenvat Credit for the relevant month as per the condition of the Notification. It is the common practice that self credit /refund claimed on duty paid in cash/through PLA, is allowed after considering the balance of Cenvat Credit available/lying in the Cenvat Register on the last day of the month. It is further found that in the present case, it is not the stand of the Department that it has sanctioned/approved, refund of duty which was not paid by the appellant, but this is the case, in which the Department has sanctioned refund equal to the amount which was paid by the appellant in cash or through PLA, therefore, it cannot be said that this is a case of excess availment of refund by not complying with the condition of the said Notification. Time Limitation - Suppression of facts or not - HELD THAT:- It cannot be understood that how in the facts of the present case, suppression can be alleged. If the appellant could have availed Cenvat Credit on inputs i.e. furnace oil, then, they would not have paid more duty in cash and would have claimed refund of lesser amount, whereas, in fact in this case, the appellant have paid the duty in cash/through PLA and thereafter claimed refund and hence, entire transaction is revenue neutral and therefore, extended period is not invokable in the present case. Accordingly, the demand is barred by limitation. The impugned order is not sustainable in law and same is set aside - appeal allowed.
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2024 (2) TMI 957
CENVAT Credit - manufacturer of dutiable goods and conditionally/partially exempted goods - failure to properly bifurcate the input services, they have taken the Cenvat Credit towards the entire input services received - reversal of proportionate Cenvat Credit in respect of the input service used in the manufacture of partially exempted goods - demand of differential duty in respect of the partially exempted goods, i.e. normal rate of duty less 1% or 2% Excise Duty already paid by the Appellant - HELD THAT:- The issue is squarely covered by the case law of HELLO MINERALS WATER (P) LTD. VERSUS UNION OF INDIA [ 2004 (7) TMI 98 - ALLAHABAD HIGH COURT] , wherein it has been held reversal of Modvat credit amounts to non-taking of credit on the inputs. Hence the benefit has to be given of the notification granting exemption/rate of duty on the final product since the reversal of the credit on the input was done at the Tribunal s stage. Prior to this, the Hon ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT] has held we see no reason why the assessee cannot make a debit entry in the credit account before removal of the exempted final product. If this debit entry is permissible to be made, credit entry for the duties paid on the inputs utilised in manufacture of the final exempted product will stand deleted in the accounts of the assessee. In such a situation, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final exempted product under Rule 57A. Thus, the demand on the above is set aside. Cenvat Credit taken towards GTA Services backed up by proper documents - HELD THAT:- Matter remanded to the Adjudicating Authority. The Appellant is directed to submit all the documentary evidence. The Adjudicating Authority should follow the principle of natural justice and decide the issue within four months from the date of communication of this order - All the penalties on the Appellants and on the co-noticee, Mr. Satish Agarwal are set aside - Appellant is required to pay the confirmed demand, if any, on account of Cenvat taken on GTA Services, along with interest. However, the penalty on the same is set aside - appeal allowed in part and part matter on remand.
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2024 (2) TMI 956
Clandestine manufacture and removal - allegation proceeds on the assumption that the differential consumption between ER-4 and ER-6 Returns has resulted in manufacturer of 1,48,942 MT of consumable steel, which has not been accounted for by the Appellant - time limitation - HELD THAT:- No corroborative evidence whatsoever has been produced by the Revenue to fortify the allegation. On going through the OIO, it is seen that the Adjudicating Authority has held Considering the practical difficulties, in estimating the actual stock and in view of the submissions made by the appellants, we find that the demand of duty made by the adjudicating authority cannot be sustained - there are no reason to interfere with such detailed findings. Accordingly, we dismiss the Appeal filed by the Revenue on merits. Time Limitation - HELD THAT:- Coming to the issue of limitation raised by the Respondent, it is found that neither have they filed any appeal against the impugned OIO on this specific issue nor have they filed any Cross Objection against the Appeal filed by the Revenue on the issue of time bar. Therefore, this issue need no further discussion. The Revenue s Appeal is dismissed on merits.
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2024 (2) TMI 955
Contravention of provisions of Rule 8(3A) of the Central Excise Rules, 2002 - liability of penalty under Rule 25 of the said Rules read with Section 11AC of the Central Excise Act, 1944 - assessee has continued to clear excisable goods availing the facility of duty payment on installment basis not resorting to consignment-wise payment of duty from Account Current - HELD THAT:- The question involved in the matter, is no more res integra and has been decided by this tribunal in the case of PRINCIPAL COMMISSIONER OF C. EX., DELHI-I VERSUS SPACE TELELINK LTD. [ 2017 (3) TMI 1599 - DELHI HIGH COURT] , M/S. SUPERMAX PERSONAL CARE PVT. LTD. VERSUS COMMISSIONER OF CE ST, LTU, MUMBAI [ 2022 (7) TMI 920 - CESTAT MUMBAI] and ANDHRA CYLINDERS PVT LTD, NALIN KHARA, MANAGING DIRECTOR VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD I [ 2020 (1) TMI 189 - CESTAT HYDERABAD] where it was held that Undisputedly appellants have paid the defaulted duty for the month of January 2013, by making a debit entry in the CENVAT Account on 26.03.2013. Even if this debit was to be considered as not a valid payment of duty, then also the Appellant could not have been proceeded against for the clearances made after 26.03.2013, in terms of Rule 8 (3A). The Hon ble Calcutta High Court in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS [ 2017 (8) TMI 1515 - CALCUTTA HIGH COURT] , categorically held that when Rule 8(3A) is declared ultra vires by the different High Courts then the Revenue cannot take a different stand contrary to the said judgements. The Hon ble Court further declared Rule 8(3A) as invalid. This order of the Hon ble High Court has not been stayed by the Hon ble Supreme Court. As the Appellants have made good the shortfall in duty along with interest and there is no outstanding liability on account of shortfall in duty payments, the fact that various High Courts including the Calcutta High Court have held Rule 8(3A) of the Central Excise Rules as ultra vires, there are no merit in the Department s plea of subjecting the appellant to any penal consequences - the impugned order imposing penalty under Rule 25 of the Central Excise Rules read with Section 11AC cannot be thus sustained and the Appeal therefore is required to be allowed. Appeal allowed.
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2024 (2) TMI 954
Availment of cenvat credit - Ferro Manganese Slag and Silico Manganese Slag received by the appellant from the supplier upon payment of duty - whether the said goods are exempt goods or not - HELD THAT:- It is observed that the impugned issue came up before the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE CUSTOMS VERSUS MDS SWITCHGEAR LTD. [ 2008 (8) TMI 37 - SUPREME COURT ], wherein the Hon ble Apex Court has held The rules entitled the receipt manufacturer to avail of the benefit of the duty paid by the supplier manufacturer. A quantum of duty already determined by the jurisdictional officers of the supplier unit cannot be contested or challenged by the officers in charge of recipient unit - The issue is settled in favour of the appellant and is no more res-integra. The appeal filed by the appellant is hereby allowed and the orders of the lower authorities are set aside.
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CST, VAT & Sales Tax
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2024 (2) TMI 953
Validity of two Notices dated 13.01.2020 issued by the first respondent for the assessment year 2012-2013 and 2013-2014 - notices are within Jurisdiction or not - no certificate was issued to the petitioner in Form S to claim exemption under proviso to Sub Clause (c) to Section 13(1) of the TNVAT Act, 2006 read with Rule 9 of the TNVAT Rules, 2007 - HELD THAT:- Whether the petitioner was liable to pay tax under Section 5 or 6 of the TNVAT Act, 2006 is not clearly forthcoming from the documents filed before this Court. It is quite possible that the petitioner had opted to pay tax under Section 5 of the TNVAT Act, 2006 and therefore had obtained Form S Certificate of no tax liability under proviso to Section 13(1) of the TNVAT Act, 2006 read with TNVAT Rules, 2007 but had failed to pay the tax. This would require a fresh determination. However, it remains unexplained, as to why, by the CMRL having opted to pay tax at compounded rate under Section 6 of the TNVAT Act, 2006, the petitioner would procure Form S from the Commercial Tax Department under proviso to Section 13(1) of the TNVAT Act, 2006 read with 9(2) of the TNVAT Rules, 2007. This require a proper explanation by the petitioner. Therefore, if CMRL had failed to deduct the amounts under Section 13(1) of the TNVAT Act, 2006, machinery under Section 13(8) of the TNVAT Act, 2006, is to be directed only against CMRL. Therefore, to that extent the Impugned Notices are without jurisdiction. The 2% demand proposed in the Impugned Notices is to be directed only against CMRL and not on the petitioner. Therefore the proposed demand in the Impugned Notices are quashed. However, liberty is given to the Commercial Tax Department to complete the assessment if the petitioner was liable to pay tax under Sections 5 and Section 6 of the TNVAT Act, 2006. Petition allowed.
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2024 (2) TMI 952
Validity of assessment order - challenge on the ground of time limitation - last date for reopening the assessment under Section 27 TNVAT, 2006 would have expired or not - no deemed assessment - HELD THAT:- There is no justification in the challenge to the impugned assessment order on the ground of limitation under section 27 of the Tamil Nadu Value Added Tax Act, 2006 - The limitation under section 27 of the Tamil Nadu Value Added Tax Act, 2006 will apply only in case where there is an escaped assessment after an assessment order was passed earlier where there is a deemed assessment under Section 22 of the Tamil Nadu Value Added Tax Act, 2006. Whether the returns filed were incomplete or incorrect can be determined only by the Assessing Officer. Therefore, there cannot be a determination of the disputed facts in a summary proceedings before this Court under Article 226 of the Constitution of India. The limitation under section 27 of the Tamil Nadu Value Added Tax Act, 2006 will apply only where there is a deemed assessment strictly in accordance with section 22 (2) of the Tamil Nadu Value Added Tax Act, 2006. There is no merits in these present writ petitions. They are therefore liable to be dismissed. Accordingly, these writ petitions are dismissed.
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2024 (2) TMI 951
Rectification of mistake - exercise of Revisional Jurisdiction - Power of review - seeking rectification of assessment order on the ground that the Assessing Authority had wrongly taxed the sale of wheat flour at the rate of 3% instead of 2%, as provided under the Act by virtue of Notification dated 28.09.1989 - HELD THAT:- A perusal of Section 33 of HGST Act, 1973 would reveal that the same provides for rectification of clerical mistakes and errors. The Assessing Authority or any such authority, as may be prescribed, may rectify any clerical or arithmetical mistake apparent from the record, at any time, within two years from the date of any order, passed by him and subject to such conditions, as may be prescribed. Further, Section 40 of HGST Act, 1973, empowers the Commissioner to call on his own motion for the record of any case pending before, or disposed of, by any officer appointed under sub-section (1) of Section 3 of HGST Act, 1973 to assist him or any Assessing Authority or Appellate Authority, for the purposes of satisfying himself as to the legality or to propriety of any proceedings or of any order made therein and may pass such order in relation thereto, as he may think fit. As far as rectification of an order is concerned, the same can be done by the concerned authority within a period of two years from the date of the order. As regards the initiation of revisional proceedings is concerned, the said power is circumscribed by the first proviso as well as third proviso to Section 40 (1) of HGST Act, 1973, in as much as that the order, which is sought to be revised, cannot be revised after the expiry of five years from the date of the order and in terms of third proviso to Section 40 (1) of HGST Act, 1973, the assessee or any other person shall have no right to invoke revisional power under this sub-section. As regards the scope and ambit of exercise of revisional jurisdiction under Section 40 of HGST Act, 1973 is concerned, same is no more res integra as the same was considered by a Division Bench of this Court in MAHABIR TECHNO LIMITED VERSUS THE STATE OF HARYANA AND ANOTHER [ 2016 (8) TMI 298 - PUNJAB AND HARYANA HIGH COURT] wherein it was held that The proceedings initiated for revision of the orders of assessment having not concluded within the period of five years from the date of order sought to be revised, as envisaged under Section 40 of the Act, the Revisional Authority now does not have any jurisdiction to pass the order. In view of aforesaid judgment rendered in the case of Mahabir Techno Limited, it is manifest that in case the revisional proceedings are initiated by the Revisional Authority under Section 40 (1) of HGST Act, 1973, the same are required to be concluded within a period of five years from the date of the order sought to be revised and after the expiry of the said period of five years, the Revisional Authority does not have any jurisdiction to pass any order. Apparently, in the instant case, the Revisional Authority had initiated the revisional proceedings in respect of assessment order dated 17.07.1992 with regard to Assessment Year 1991-92, however, since revisional proceedings were not concluded within a period of five years i.e. upto 17.07.1997, the same were rightly dropped by the Revisional Authority, vide its order dated 20.03.2001. The power to review was available with the Tribunal below in terms of Section 41 of HGST Act, 1973 and the errors apparent on the record have been culled out by the Tribunal below in its order dated 28.08.2017 - The Tribunal below has correctly appreciated the facts as well as law on the issue and the Tribunal below was fully justified in exercising its review jurisdiction in passing the order dated 28.08.2017 - there are no illegality or perversity in the order dated 28.08.2017 (Annexure A-13), passed by the Tribunal below, which has been rendered after correctly appreciating the facts and as well as the law. There is no merit in this appeal and the same is accordingly dismissed.
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2024 (2) TMI 950
Applicability of doctrine of finality and res-judicata - Levy of entry tax on craft paper purchased by the applicant from outside the local area - craft paper purchased by the applicant has been used in manufacturing of coated abrasive sheet (Regmar paper), and is not meant for writing, printing and packing as provided by notification no.104 dated 15.1.09 - non-consideration of identical issue been decided in favour of the applicant by this Hon'ble Court for the assessment year 2010-11 in THE COMMISSIONER COMMERCIAL TAX LKO. VERSUS S/S JOHN OKAY AND MOHAN LTD. [ 2015 (12) TMI 1898 - ALLAHABAD HIGH COURT] - HELD THAT:- The principles of res-judicata do not apply squarely for one assessment year to the other. However, keeping in mind the doctrine of finality, unless there is a marked change from one assessment year to the other, the department cannot be allowed to take a different stand. The above principle has been upheld by the Supreme Court in a catena of judgments including BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [ 2006 (3) TMI 1 - SUPREME COURT ], wherein the Supreme Court has held Where facts and in a subsequent assessment year are the same, no authority whether qushi-judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision or where the earlier decision in per-incuriam. However, these are fetters only on a coordinate bench which, failing the possibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter a Bench of superior strength or in some cases to a Bench of superior jurisdiction. In the light of the above, it is clear that as no new facts have emerged in the present case, the questions of law have to be decided in favour of the assessee - Accordingly, the revision petition is allowed.
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2024 (2) TMI 949
Jurisdiction - violation of principles of natural justice - whether the authority did not have jurisdiction to make a demand in the teeth of the assessment order by which the assessment for the financial year was already made? - reassessment made without a show cause notice or an opportunity of a hearing being granted to the petitioner - HELD THAT:- There is much substance in the contentions as urged on behalf of the petitioner, namely that at the hands of the Deputy Commissioner (VAT) / respondents, an assessment order was passed on 1 September 2018 whereby taking into consideration the declaration of forms namely C, F H forms and the amounts as involved, the Tax liability was calculated at Rs. 1252/- for non-submission of C F forms. The said amount was admittedly paid. Once such assessment stood finalised in terms of the order dated 1 September 2018, the only course of action available to the department was to reopen such assessment as the law would mandate. Also the department could have taken recourse to the provisions of Regulation 58(4) of the 2005 Regulation which pertains to reassessment . It is quite clear that such procedure as the law would recognize was not followed by the Deputy Commissioner in issuing the impugned communication. Thus, an incongruous position is reflected by the record of the department namely, on one hand an assessment order which is not set aside or invalidated in any manner known to law has remained to operate and on the other hand, in the course of processing of the refund application the impugned demand has been raised without any re-assessment of the assessment order and/or invalidating the returns filed by the petitioner as per the procedure the law would mandate the department to follow. This apart, the basic requirement in law of the department following the principles of natural justice, has also been overlooked in issuing the impugned communication. Admittedly, the impugned order is an ex-parte order. There is nothing on record to justify that the petitioner was issued any show cause notice or the petitioner was heard, before the deputy commissioner could come to a conclusion that the demands as set out in the impugned order are required to be made against the petitioner. The impugned orders/communications dated 2 September 2020 Exhibit-A Exhibit-B are quashed and set aside - The respondents is at liberty to follow the due procedure in law, in the event, the department is not accepting the assessment order dated 1 September 2018 passed by the Deputy Commissioner and/or to raise a demand against the petitioner for the financial year 1 April 2015 to 31 March 2016, on any ground as the law may permit. All contentions of the parties in respect of any proposed proceedings are expressly kept open. Petition allowed.
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Indian Laws
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2024 (2) TMI 948
Validity of Look Out Circular dated 22.01.2020 opened against the Petitioner - evasion in disclosure of a large amount of undisclosed foreign assets/income to the tune of Rs. 1400 crores in offshore jurisdictions - use of NRI status in creating a structure of institutions/trusts in offshore jurisdictions for the benefit of the larger family and his sister - diversion of unaccounted assets/income with the purpose of circumventing the jurisdiction of Indian revenue authorities - HELD THAT:- Initially LOCs were issued against such individuals who were suspected of committing serious crimes and were indulged in anti national activities, terrorist activities, etc. However, after amendment, LOCs are now also opened at the instance of investigating agencies and banks against persons who have committed economic offences which involve offences under the Black Money Act and Prevention of Money Laundering Act including the act of siphoning off and misappropriation of funds which have been advanced to them by various banks. The scope and ambit of the term economic interests of India has been a subject matter of a number of judgments and most of the Courts, in unison, have held that the magnitude of the offence must be such that it has affected the economic interest of the country and larger public interest is involved. The last summon was issued to the Petitioner in March 2022, i.e. about two years back, and the Petitioner has not been summoned by the authorities since then. An LOC cannot be permitted to continue for such a long period without there being any cogent and valid reason. The Petitioner has not been called for investigation since March 2022 and the counter affidavit filed by the Respondents does not indicate as to how the Petitioner has not cooperated with the investigation. In fact, material on record discloses that the petitioner has complied with the summons and has cooperated with the ongoing investigations against him by the IT Department. Right to travel abroad has been held to be a fundamental right under Article 21 of the Constitution of India which cannot be taken away in an arbitrary and illegal manner. In view of the fact that LOC against Ms. Jyotsana Suri has been quashed and also in view of the fact that the Petitioner has not been called for investigation by the Investigating Agency for the past two years and in the absence of any material which indicates that the Petitioner is likely to be called for investigation in the near future, this Court is inclined to quash the LOC opened against the Petitioner. Mere fact that information sought through the Foreign Tax and Tax Research from other jurisdictions such as the UAE is still awaited does not persuade this Court to keep the LOC against the Petitioner pending to curtail his fundamental rights. Considering the fact that the Petitioner is an NRI citizen who stays in Dubai and in order to ensure Petitioner s presence in India this Court is inclined to impose the conditions on the Petitioner before quashing the LOC - the LOC against the Petitioner is hereby quashed subject to conditions imposed - petition disposed off.
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2024 (2) TMI 947
Rejection of technical bid submitted by petitioner - bid rejected only on the ground that the bidder has submitted unaudited balance sheet and profit loss account for financial year 2017-18 - HELD THAT:- The undisputed fact is that the petitioner had participated in the NIT without any objection and only after his bid was declared disqualified, petitioner has filed this petition thereby directly / indirectly challenging the mandatory criteria of enclosing balance sheet and profit loss account of last five completed financial years duly audited by the Chartered Accountant. Whether petitioner after having failed in the NIT can challenge the conditions of NIT? - HELD THAT:- This Court is of considered opinion that by participating in NIT and having failed to succeed, petitioner cannot take a somersault by challenging the condition of NIT - Under these circumstances, it is held that the petitioner is estopped from challenging the conditions of NIT. So far as the judgment relied upon by petitioner passed by Rajasthan High Court in the case of M/S RAM KHILADI GURJAR VERSUS RAJASTHAN STATE COOPERATIVE MARKETING FEDERATION LTD. (RAJFED) , REGISTRAR COOPERATIVE SOCIETIES, COOPERATIVE DEPARTMENT, SAHKAR BHAWAN, JAIPUR. [ 2018 (11) TMI 1954 - RAJASTHAN HIGH COURT] is concerned, this Court with all humility at its command is not inclined to rely on the same - In the case of M/s Ram Khiladi Gurjar, doctrine of estoppel, jurisdiction of Court under Article 226 of Constitution of India in respect of contractual matter and the jurisdiction of this Court to modify the condition of NIT has not been taken into consideration at all. Whether the respondent/ Department is entitled to incorporate the condition in NIT as per their requirement or not and what is the scope of interference under Article 226 of Constitution of India? - HELD THAT:- It is well established principle of law that a writ petition for enforcement of contract is not maintainable. The Supreme Court in the case of Surjeet Singh Sahni Vs. State of U.P. and Ors. [ 2022 (3) TMI 317 - SUPREME COURT] has held No writ under Article 226 of the Constitution of India shall be maintainable and/or entertainable for specific performance of the contract. This Court is of considered opinion that disqualification of bid of the petitioner does not require any interference - Petition dismissed.
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