TMI Tax Updates - e-Newsletter
February 6, 2024

Case Laws in this Newsletter:

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

Articles

1. ANTI-PROFITEERING MECHANISM IN GST – RECENT DELHI HIGH COURT ORDER

   By: Dr. Sanjiv Agarwal

2. High Court directs the DGGI to transfer entire investigation to State tax authority as proceedings were already initiated by them

   By: Bimal jain

3. Penalty should not be imposed for mentioning wrong vehicle number with a difference of three digits in E-Way Bill

   By: Bimal jain

News

1. Extension of last date for submission of feedback on Harmonization of GST Rate Schedule on Services and the Classification of Services adopted for GST

2. Annual Survey of Industries (ASI) Results for 2020-21 and 2021-22

3. RESIDUAL ACCOUNTS AND ITS CONNECTION WITH THE SUSTAINABLE DEVELOPMENT GOALS

4. E-SAKSHI MOBILE APPLICATION

5. DGGI detects 1,700 fraudulent ITC cases involving Rs. 18,000 crore with 98 arrests in Financial Year 2023-24 (up to December 2023)

6. Union Minister of Commerce and Industry Shri Piyush Goyal encourages constructive feedback and collaborative engagement to shape policies and effectiveness of PLI Scheme

Circulars / Instructions / Orders

GST - States

1. GST-20/2023 - dated 2-2-2024

Clarifications regarding applicability of GST on certain services

2. GST-19/2023 - dated 2-2-2024

Clarification regarding GST rate on imitation zari thread or yarn based on the recommendation of the GST Council in its 52nd meeting held on 7th October, 2023

3. GST-16/2023 - dated 2-2-2024

Clarification relating to export of services - sub-clause (iv) of the Section 2 (6) of the IGST Act 2017

Customs

4. Public Notice No. 04 / 2024 - dated 29-1-2024

Issuance of online clearance through AQCS-ICS for imported consignments with effect from 22.01.2024 — reg.

Highlights / Catch Notes

GST

• Detention Order Overturned: Buyer Not Liable for Supplier's GST Compliance; Supplier Cleared Before Notice Issued.

  Case-Laws - HC : Validity of detention order - The petitioner argued that being a buyer from a GST-registered supplier, they had no means or obligation to verify the supplier's compliance with GST regulations. - The High court noted that the supplier company had cleared its tax dues on 30.12.2023, before the issuance of the show cause notice, which diminished the claim of intent to evade tax. Furthermore, the court observed that if there were any deficiencies in the supplier’s documentation, the registration should not have been granted. Therefore, once the supplier was registered and had paid the tax, allegations against them didn't hold. - Considering these points, the high court held that the petitioner, being unrelated to the supplier's alleged discrepancies, should not be penalized.
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• Violation of Natural Justice: Failure to Offer Personal Hearing in Tax Decision Breaches Legal Requirement.

  Case-Laws - HC : Violation of principles of natural justice - no opportunity of personal hearing granted - High court highlighted the provision u/s 75(4) of the CGST/MGST Act, which mandates an opportunity for a hearing to be granted either upon request from the person chargeable with tax or penalty or in cases where an adverse decision is contemplated against such a person. The court found that even though the petitioner did not request a personal hearing, the authority was obligated to offer one before making an adverse decision.
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• Court Orders IGST Refund Minus Higher Duty Drawback, Case Referred Back to GST Authority for Further Processing.

  Case-Laws - HC : Refund of IGST - Claiming benefit of higher duty drawback also - High Court has observed that, as now the petitioner has fairly stated that the petitioner is ready and willing for adjustment of the higher duty drawback as availed by the petitioner and the balance amount being IGST minus higher duty drawback be refunded to the petitioner, matter restored back before the GST authority.
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• High Court Upholds Show-Cause Notice Validity u/s 74, Dismisses Petitioner's Challenge on Technical Grounds.

  Case-Laws - HC : Validity of SCN - vague SCN issued u/s 74 - The High court noted that the issuance of a show-cause notice u/s 74 requires specific conditions, such as 'fraud' or 'wilful misstatement,' to be met. However, HC finds even if it be taken that the ‘suppression’ is not mentioned, to meet the requirement of Section 74 to issue the notice. It is not the submission of the learned counsel for the petitioner that it does not meet the requirements of Section 73. - The HC dismissed the petition, allowing the petitioner to respond to the notice and raise objections.
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• Court Rules Buyers Not Liable for ITC Refunds Without Seller Action on IGST Non-Payment with 'NIL' Returns.

  Case-Laws - HC : Input Tax Credit - Reversal / refunding of ITC - the Integrated Goods and Service Tax (IGST) was not paid and ‘NIL’ return had been filed by the seller but the petitioners had availed of input tax credit - The High court noted discrepancies in the handling of the case by the authorities, particularly the failure to proceed against the seller before reversing the petitioners' input tax credit. HC emphasized the established legal principle that the buyer cannot be burdened with refunding the input tax credit without the authorities first taking action against the seller, except under exceptional circumstances.
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• Medicines and consumables for in-patients exempt from GST, but training fees for nurses and psychologists are not exempt.

  Case-Laws - AAR : Exemption from GST - Composite supply - health care services - The AAR concluded that the supply of medicines, drugs, consumables, and food to in-patients constitutes a composite supply of healthcare services, exempt from GST. However, GST is not exempt on fees collected for practical training imparted to nurses and psychologists, as this does not qualify as healthcare services under the GST laws. - AAR
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Income Tax

• Capitalization Allowed: Evidence Required Beyond Assessee's Statement, High Court Supports ITAT Decision.

  Case-Laws - HC : Bogus purchasers capitalized - ITAT has held that capitalization cannot be denied to the assessee merely on a statement given by him, without adducing evidence of other necessary parties - The High Court upheld the ITAT's decision, allowing the capitalization of the contested expenses and rejecting the appeal by the Revenue
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• High court affirms bidding expenses and interest on share application money as deductible business costs u/s 37(1).

  Case-Laws - HC : Bidding expenditure u/s 37 (1) - whether expenditure as incurred for setting up a new line of business? - Deduction towards Interest on the share application money forwarded to the subsidiary company - The high court agreed with the findings of the ITAT that the expenditures in question were incurred as part of the assessee's business operations and thus were deductible.
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• High Court rules assessment orders invalid; Interim Board to handle pending settlement applications for 2013-2020.

  Case-Laws - HC : Application for settlement of cases - High Court has observed that, the assessment order for A.Ys. 2013-14 to 2019-20 could not have been passed as the application filed by the petitioner for settlement is considered to be pending and the Interim Board is required to exercise all the powers of the Settlement Commission with regard to pending application and accordingly, as per provision of section 245F(2) of the Act, the Interim Board is vested with the powers of the Settlement Commission and jurisdiction and Income Tax authority could not have proceeded further with the assessment proceedings in view of the pendency of the settlement application before the Interim Board.
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• Tribunal Rules PCIT Cannot Use Revisionary Powers Without Error in Assessing Officer's Order Affecting Revenue.

  Case-Laws - AT : Revision u/s 263 - Tribunal has noted that, when the ld. PCIT himself was satisfied that there was no error in the order of the Assessing Officer vis-à-vis irregularities noted by him initially, there can be no case for exercising any revisionary power u/s 263 of the Act. The provisions of the section are very clear. The concerned authorities can exercise revisionary powers only on fulfillment of the essential conditions of finding error in the order sought to be revised and the error being such as causing prejudice to the Revenue. - It is held that, Merely because the AO had not examined these issues during assessment proceedings does not make the assessment order erroneous particularly.
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• Tribunal Rules Unjustified Presumptions on Chairman's Salary Can't Invoke Income Tax Act Sections.

  Case-Laws - AT : Assessment of trust - Addition on account of excessive salary to Chairman of the society within the meaning of section 13(3) and in violation of section 13(2)(c) - principle of consistency - Tribunal held that, since the reasonableness of salary to specified person has not been challenged by the revenue in the ensuing assessment years, no negative inference can be drawn in the relevant assessment year without any reasonable basis. - Such presumptions adopted by the Ld. AO are not permissible to invoke the provisions of section 13(3) r.w.s. 13(2C).
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• Tribunal Rules Penalty u/s 271D Invalid for Lack of Jurisdiction, Citing Supreme Court Precedent.

  Case-Laws - AT : Penalty u/s. 271D - Failure to record any satisfaction for initiating the said penalty proceedings by the A.O - Tribunal held that, the issue before us is no more resintegra in light of the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills Ambala City [2023 (10) TMI 707 - GUJARAT HIGH COURT], therefore, in the backdrop of our aforesaid deliberations, the penalty imposed by the Jt.CIT u/s. 271D of the Act cannot be sustained and is liable to be struck down for want of valid assumption of jurisdiction.
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• Interest from Cooperative Banks Qualifies for Section 80P Deduction, Tribunal Rules in Favor of Assessee's Claim.

  Case-Laws - AT : Deduction u/s 80P - interest has been received from Cooperative Bank - Tribunal while allowing the claim of the assessee, held that, though the interest has been received from Cooperative Bank, but basically it is a Cooperative Society, which has taken a banking license.
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Customs

• Tribunal Reduces Penalty for Customs Broker After Employee's Illegal Export Violation; Security Deposit Forfeiture Overturned.

  Case-Laws - AT : Levy of penalty on Customs Broker - Forfeiture of the security deposit - Role of the employee of the CB - illegal export of prohibited goods - Tribunal held that, considering the extent of violation that can be attributed to the appellant and the fact noted by the Commissioner that active role was played by Shri Kumod Kumar Choudhary, employee of the CB and role of CB has not come out anywhere in the investigation as also CB has taken immediate action against the employee, applying the doctrine of proportionality the forfeiture of security deposit is far beyond proportion and imposition of penalty of Rs. 50,000/- is sufficient.
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• Tribunal Overturns Penalty on Customs Broker Employee for Classification Advice; Responsibility Lies with Importer.

  Case-Laws - AT : Levy of penalty u/s 112(a) of the Customs Act, 1962 on an employee of the Customs Broker - classification of imported goods - The commissioner has recorded as finding that responsibility for proper declaration of the goods lies with the importer and having sought for examination of the goods before assessment, there was no element of mis-declaration on the part of customs broker and the employee (appellant) attracting imposition of penalty u/s 112(a) - However, commissioner levied penalty on the ground that, employee of CB did not advise the importer to classify the goods correctly - Tribunal deleted the penalty.
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• Tribunal Confirms Confiscation of Scrap Imports; Penalty Imposed Over Discrepancies in Input/Output Norms and Verification Ratios.

  Case-Laws - AT : Confiscation of imported goods - non-foundry scrap - In the input/ out put norms - The calculation in the appeal is made by adoption of a fix ratio 1.5 which is not ratio of prescribed in DGFT letter. It cannot be accepted as the real ratio verified by the authorities is less than 1.5 and as per DGFT letter the ratio is a map of 1.5 but limited to the actual verified by Central Excise. - Tribunal confirmed the demand with penalty by for the extended period of limitation.
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• Tribunal Confirms Goods Meet Project Import Criteria Under Notification No. 12/2012-Customs; Essentiality Certificate Accepted.

  Case-Laws - AT : Project Import - goods directly relatable to the project or not - Essentiality Certificate to be issued by the Secretary, Government of Tripura was infact issued only by the Deputy Secretary - The Tribunal held that, the goods in question satisfy this condition, which is not being disputed as can be seen from Para 8.1 of the Order-in-Appeal. Therefore, the Appellant has fulfilled the conditions specified under Notification No. 12/2012-Customs.
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• Penalty Overturned Due to Lack of Evidence on Gold Bar Origin Under Customs Act Smuggling Case.

  Case-Laws - AT : Levy of penalty u/s 112 (b) (ii) of the Customs Act, 1962 - smuggling of Gold Bars - Allegation that goods were bought from Myanmar without proper documents - The tribunal held that, in the instant case the inscriptions as embossed on the recovered gold bars clearly demonstrates that they have been manufactured in a foreign country”. The seizure Report and the SCN do not speak any such inscription. Therefore, this finding of the Adjudicating Authority is not backed by any documentary evidence whatsoever. - No Penalty.
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Indian Laws

• Court Rules Arrest Warrant Unenforceable Against Companies, But They Remain Liable for Trial and Punishment.

  Case-Laws - HC : Service of the notice / summons to the company - High Court held that, Company as a juridical person cannot be physical apprehended. - The natural consequence would be that an order of issuance of warrant of arrest may not be an executable order under law against the company, which is a juridical person. However, company as an accused person cannot be seized of the liability to face the trial and punished, if found guilty, in case the Court finds the summons to have been duly served upon it.
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• Court Rules on Cheque Dishonor: Directors and Non-Directors Held Liable Under Negotiable Instruments Act.

  Case-Laws - HC : Dishonour of Cheque - mentioning the petitioners in CRR 196 of 2016 as ‘non-directors’ and in CRR 197 of 2016 as ‘directors’ - High Court held that, at the relevant point of time, excepting the present petitioners, there were no other ‘directors’ or ‘nondirectors’, in the said company and also that the concerned cheques were issued by them. Considering the attending facts and circumstances as discussed above and the object and purpose of the statute itself as delineated above, this Court hardly finds any impropriety in the orders regarding taking cognizance of offence u/s 138 and 141 of the Negotiable Instruments Act.
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PMLA

• Supreme Court refuses to hear ED's appeal against CA accused of issuing fake certificates under PMLA; bail upheld.

  Case-Laws - SC : Maintainability of SLP - Action against the Chartered Accountant under PMLA for issuing bogus CA certificates - High Court had granted the of Bail - the respondent is regularly attending the Court - Supreme Court did not to entertain the petition of the ED
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Service Tax

• Excavator and JCB leases deemed tax-free as tribunal rules possession and control transferred, overturns service tax demand.

  Case-Laws - AT : Supply of Tangible Goods - appellant had provided the excavators & JCB machines without transferring right of possession & effective control - The tribunal found that the transactions in question, covered by both long-term and short-term charter agreements regarding tankers, qualified as a transfer of the right to use goods with possession and effective control being transferred to the lessee, thereby falling outside the scope of service tax liability. Consequently, the demand for service tax, along with interest and penalties imposed, set aside.
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• Tribunal Finds No Evidence of Service Tax Evasion in Transactions; 'Negative Debtors' Not Advance Payments.

  Case-Laws - AT : Levy of service tax - negative debtors - advance payment received from their clients (and accounted under the head ‘debtors’ indicating negative) - The tribunal held that, there is no evidence of any transactions of receiving advance payment which has escaped payment of tax. The accounting of amount under the head negative debtors is assumed by department as advance payments.
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• Tax Implications of Foreign Currency Convertible Bonds Under Reverse Charge Mechanism in India.

  Case-Laws - AT : Classification of services - reverse charge mechanism (RCM) - Banking and Financial Services - A negative test may also be of help in deciding the issue involved. If the launch offering and sale of the FCCB abroad fails on the very first day, it is the Appellant who will feel the direct pinch of any deficiency in service from Barclays UK or for any other reasons and not the investors or any third party. As per the agreement Barclays UK will still be eligible for their fee calculated as a percentage of the gross proceeds received in respect of the issue of the FCCB from the Appellant. Hence the services provided from outside India by Barclays UK is received by the Appellant in India with a reverse flow of consideration for the said activity and the service is exigible to tax under the Reverse Charge Mechanism as per section 66A(1) of FA 1994.
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Central Excise

• Denial of Cenvat Credit Unjustified for Recipients Under Area-Based Exemption; Input Credit Remains Valid.

  Case-Laws - AT : Denial of Cenvat Credit - Area Based Exemption - The rule carves out a special provision wherein, by Area based exemption notification, even if the duty paid by manufacturer is refunded, the Cenvat credit availed of duty paid on inputs and capital goods would be eligible. The appellant has rightly availed the Cenvat credit of the duty collected from them by the manufacturer who has availed area based exemption notification. The appellant does not have any say or control as to the method of valuation adopted by the manufacturer, who supplied the inputs to the appellant. Cenvat credit cannot be denied at the recipient’s end, without any legal basis. - AT
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Case Laws:

• GST

• 2024 (2) TMI 240
  Seeking cancellation of the impugned detention order - specific contention of the petitioner is that the petitioner was not supposed to know the antecedents of the supplier Company - HELD THAT:- As the supplier Company was a registered taxable person in the State of Assam, the petitioner did not have any information or did not have any mechanism to verify the details of the supplier Company - There is no allegation of tax evasion against the petitioner. In such a situation, it was absolutely improper for the respondent authority to direct payment of penalty by the petitioner. It appears that though there was an allegation of non existence of the supplier Company leading to non-deposit of the input tax credit but later on 30.12.2023, that is prior to issuing of the show cause notice on 31.12.2023 the supplier Company already deposited the input tax - Assuming there was an intention to evade tax on the part of the supplier, but later on by way of payment of tax, the allegation of intention to evade tax falls flat. The supplier Company appears to have been registered by the registered authority in Assam. Had there been any deficiency on the part of the supplier Company in production of relevant documents, registration ought not to have been issued. After registration has been issued and tax paid by the supplier Company, the allegation made against the supplier Company does not stand. The petitioner being no way connected with any of the allegations that has been levelled against the supplier Company, cannot be made liable to pay penalty as has been assessed. The order of detention and the subsequent order imposing penalty are liable to be set aside and quashed. The same are, accordingly, set aside and quashed - respondent no. 1 is directed to forthwith take steps to release the vehicle and the goods in favour of the petitioner at the earliest, but positively within a period of 48 hours from the date of production of the server copy of this order duly downloaded from the official website of the High Court - The writ petition stands disposed of.

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• 2024 (2) TMI 239
  Cancellation of GST registration of petitioner - failure to pay any amount of tax, interest or penalty to the account of the Central/State Government beyond a period of three months from the date on which such payment becomes due - HELD THAT:- It is noticed from several petitions that are filed before this Court that all orders and notices which bear digital signatures display the name of DS Goods and Services Tax Network 07 . Reference is also drawn by learned counsel for the petitioner to an order passed by the High Court of the Judicature at Bombay in DBS Tradelink and Advisors Pvt. Ltd. vs. The State of Maharashtra and Anr. [ 2022 (7) TMI 1229 - BOMBAY HIGH COURT] which refers to an order of Gujarat High Court dated 24.02.2022 [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] , pointing out to similar infirmities in the issuance of notices and orders. A direction was issued to the respondents to set their house in order. It appears that despite lapses of nearly two years, no remedial steps have been taken by the respondents. The Principal Commissioner, Goods and Services Tax/Special Commissioner, Goods and Services Tax as well as the Director of DS Goods and Services Limited is requested to be connected through video conference on the next date of hearing i.e. 22.02.2024 at 12:30 PM.

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• 2024 (2) TMI 238
  Condonation of delay in filing appeal - specific period provided in the statute, within which period a delayed appeal could be filed - HELD THAT:- An appeal against an order under Section 73 or 74 has to be filed on or before 31.01.2024, and any appeal filed which is pending before the authority could also be considered as properly filed, even if there is delay in such filing. However, the maintainability of the appeal is further regulated by paragraph no. 3 which require that the admitted tax, interest, fine, fee and penalty arising from the impugned order is paid up along with a sum equal to 12.5% of the remaining amount of tax in dispute arising from the said order subject to a maximum of twenty-five crore rupees; out of which 12.5%, 20% should have been paid by debiting from the Electronic Cash Ledger. The further conditions in paragraph no. 4 to 6 also shall be applicable. In the present case, the appeal was filed and was dismissed by the first Appellate Authority. In such circumstances, it is only proper that the appeal be restored to the files of the Authority subject to the conditions under paragraph no. 3 being satisfied. The impugned order dated 18.05.2023 at Annexure-P/6 is set aside on condition of the assessee satisfying the aforesaid conditions before the time stipulated in Notification; i.e. 31.01.2024, in which event, the appeal would be taken up and considered on merits. And if the conditions are not satisfied, then necessarily the impugned order would stand restored. Petition allowed.

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• 2024 (2) TMI 237
  Violation of principles of natural justice - no opportunity of personal hearing granted to the Petitioner - Petitioner had not paid or short paid CGST/MGST - HELD THAT:- From a plain reading of Section 75(4), it is absolutely clear that, even in a case where the person chargeable with tax or penalty has not requested for a personal hearing, the Department is bound to give a personal hearing when an adverse decision is contemplated against such a person. In the present case, by the said Order dated 8th September 2022, a decision adverse to the Petitioner has been passed. In these circumstances, Respondent No. 3 was bound to give a personal hearing to the Petitioner before passing the said Order dated 8th September 2022. This would be irrespective of the fact as to whether the Petitioner had asked for such a personal hearing or not. In the present case, since the said Order dated 8th September 2022, has been passed without giving any personal hearing to the Petitioner, the same is in violation of the principles of natural justice and ex-facie contrary to the provisions of Section 75(4) of the CGST/MGST Act. The Impugned Order dated 8th September 2022 passed by Respondent No. 3 is hereby quashed and set aside - Petition allowed.

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• 2024 (2) TMI 236
  Refund of IGST - Claiming benefit of higher duty drawback also - Goods exported by the petitioner which are stated to be zero rated supply - Period 31 July 2017 to 16 August 2017 - HELD THAT:- As now the petitioner has fairly stated that the petitioner is ready and willing for adjustment of the higher duty drawback as availed by the petitioner and the balance amount being IGST minus higher duty drawback be refunded to the petitioner, it would be appropriate that the respondents consider such request of the petitioner as also fairly stated that the IGST amounts can be refunded to the petitioner after adjustment of the higher duty drawback as availed by the petitioner. Petition disposed off.

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• 2024 (2) TMI 235
  Validity of SCN - vague SCN - notice has been issued under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act), though the ingredients for initiation of the proceedings i.e. suppression is not made out - Violation of principles of natural justice - HELD THAT:- In the present case, in view of the submissions advanced as also the admitted position that the limitation period for notice under Section 73 did not expire on the date the impugned notice was issued, the question of extended period of limitation for issuance of notice under Section 74 is not involved. Had it been, the contention of the learned counsel for the petitioner that the period of limitation for issuance of notice under Section 73 had expired but any such notice was not issued and consequently to overcome the bar of limitation, the notice was issued under Section 74 even without satisfying the requirements of Section 74 the consideration might have been different. In Vijaya Venkata Durga Oil Traders v. Commercial Tax Officer [ 2014 (12) TMI 910 - ANDHRA PRADESH HIGH COURT] , the Division Bench of High Court of Judicature at Hyderabad considered the judgment in M/S. UNIWORTH TEXTILES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE. RAIPUR [ 2013 (1) TMI 616 - SUPREME COURT] . It was held that if the allegations in the show cause notice accepted as true show that the dealer had committed willful evasion of tax and the finding recorded in the assessment order establish that the assessee had willfully evaded tax, it would suffice to extended period of limitation in terms of Section 21(5) of APVAT Act, 2005 notwithstanding that the show-cause notice did not refer to Section 21(5) and did not specifically use the words wilful evasion of tax . It was further held that it was, therefore, necessary to refer to the contents of show cause notice. In the present case it is found that the show cause notice mentioned the grounds for its issuance. Even if it be taken that the suppression is not mentioned, to meet the requirement of Section 74 to issue the notice. It is not the submission of the learned counsel for the petitioner that it does not meet the requirements of Section 73. Further the submission is that the notice should be under Section 73 but it mentions under Section 74 - mere mention of a provision would not be determinative of the notice under that section. It dependents upon the contents. Petition dismissed.

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• 2024 (2) TMI 234
  Input Tax Credit - the Integrated Goods and Service Tax (IGST) was not paid and NIL return had been filed by the seller but the petitioners had availed of input tax credit - suppression of facts or not - HELD THAT:- In this case, it appears that there are invoices which indicate that the IGST was paid to the seller. However, there is nothing on record to show that the seller had either wilfully suppressed such payment made by the petitioners or that the petitioners had actually paid the amount to the seller as raised in the invoices. The facts which have been mentioned hereinabove and the documents which have been relied upon by the petitioners were not produced before the authorities. Rather, the petitioners, in the online mode, had made a request for reconsideration of the interest amount which gives rise to a presumption that the petitioners were willing to pay the other amounts, as claimed, with some reduction in the interest component. In the absence of any detailed letter of admission of the liability, it is difficult for this Court to understand the actual contentions of the petitioners before the authority. Prima facie, it appears that the press release has been violated by the respondents. The law has been settled by the Hon ble Division Bench in Suncraft Energy Private Limited [ 2023 (8) TMI 174 - CALCUTTA HIGH COURT] . Before the authority proceeds against the buyer, the authority should first proceed against the seller and only if exceptional circumstances, as clarified in the press release issued by the Central Board of Indirect Taxes and Customs, can be made out in a particular case, the buyer can be proceeded against. This Court is of the view that the petitioners should be given a chance to approach the authority with all documents and contentions in respect of the demand raised - The order impugned dated August 21, 2023 which was passed on the assumption that no explanation had been offered by the petitioners, is set aside on the ground that the petitioners were not able to produce any explanation and documents at the hearing, which are now being relied upon by them. The writ petition disposed off.

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• 2024 (2) TMI 233
  Withdrawal of bail application - new circumstance of charge-sheet having been filed is available to petitioner, which according to petitioner indicates that default in regard to GST has been brought down to Rs. 5.6 crores from Rs. 11 crores - HELD THAT:- This Court has no manner of doubt that while considering repeat bail application filed by petitioner, Learned Trial Judge shall consider the same in accordance with law on the said new circumstance without being influenced by earlier order of rejection. Application disposed off.

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• 2024 (2) TMI 232
  Non-admission of appeal preferred by the petitioner - 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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• 2024 (2) TMI 231
  Non-admission of appeal preferred by the petitioner - 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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• 2024 (2) TMI 230
  Scope of Advance Ruling - Levy of GST - revenue sharing scenarios between joint bidders/partners - privity of contract between TMC and M/s Vistar AEC Consultants LLP - HELD THAT:- It is observed from the agreement of Contract for Services between M/s Grant Thornton Bharat LLP and M/s Vistar AEC Consultants LLP, that the overall project fee awarded is shared between GTBL and VACL in the ratio 34.38:65.62. However, VACL has raised tax invoice to GTBL for providing services to them. Thus, the question of revenue sharing does not arise when tax invoice is raised. Hence, Advance ruling cannot be given on assumed scenarios in the absence of relevant documents.

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• 2024 (2) TMI 229
  Exemption from GST - Composite supply - health care services - supply of medicines, drugs and consumables used in the course of providing health care services to in-patients during the course of diagnosis and treatment during the patients admission in hospital - GST on Retention Money - exemption from GST on Fees collected from nurses and psychologists for imparting practical training - applicability of N/N. 12/2017-Central Tax (Rate) dated: 28-06-2017 read with Section 8(a) of GST - HELD THAT:- The Applicant is running a hospital and providing treatment to in-patients suffering from psychic disorder, substance use disorder, Neurology etc. The Applicant is a hospital hence, the same is covered under clinical establishment as per the definition mentioned supra and since the hospital is providing treatment to inpatients suffering from psychic disorder, substance use disorder, Neurology etc the same is covered under health care services as per the definition mentioned supra. In view of the above, it can be said that the Applicant is providing health care services subjected to the condition that room charges are not exceeding Rs. 5000 per day to a person receiving health care services. The medicines, consumables and foods supplied in the course of providing treatment to the patients admitted in the hospital is an integral part of the health care service extended to the patients - Hence the room charges, medicines, consumables and food supplied in the course of providing treatment to the patients admitted in the hospital(in-patient) are undoubtedly naturally bundled in the ordinary course of business and the principal supply is health care service which is the predominant element of the composite supply - the food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Whether GST is applicable on money retained by the applicant? - HELD THAT:- From Para 5(2) of Circular No. 32/06/2018-GST dated: 12-02-20218, it is clear that the entire amount charged by the hospital from the patients including the retention money and the fee/payments made to the doctors etc. is towards the healthcare services provided by the hospitals to the patients and is exempt. Whether GST is exempt on fees collected from nurses and psychologists for imparting practical training? - HELD THAT:- From the definition of healthcare services it is understood that to become a health care service, it should be a service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy. But here the Applicant is providing practical training to nursing students and psychologists and hence the same is not covered under healthcare services.

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• Income Tax

• 2024 (2) TMI 228
  Accrual of income in India - sale of software product - royalty receipts - India USA DTAA - HELD THAT:- Having regard to Order [ 2024 (2) TMI 137 - SC ORDER] this special leave petition is also dismissed wherein held as Having regard to the judgment of this Court in the case of Engineering Analysis Centre of Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT] held that amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India.

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• 2024 (2) TMI 227
  Bogus purchasers capitalized - ITAT has held that capitalization cannot be denied to the assessee merely on a statement given by him, without adducing evidence of other necessary parties - HELD THAT:- There is no enunciated legal position which needs reconsideration, alteration, modification or clarification or any need to resolve an apparent conflict between a difference in viewpoints being that of the AO and the CIT(A) as against that of the ITAT. The entire order of AO is based merely on the statement of the Director of assessee without summoning or adducing additional/supplementary evidence of any other person corroborating the allegation of the department regarding bogus payments made by assessee. We thus, have no hesitation in holding that there is no infirmity in the order passed by the Tribunal, least of all existence of any substantial question of law in the matter.

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• 2024 (2) TMI 226
  Bidding expenditure u/s 37 (1) - whether expenditure as incurred for setting up a new line of business? - ITAT allowing the bidding expenditure in the course of carrying of its business activities in furtherance of its business activities - HELD THAT:- ITAT correctly concluded that the expenses having been incurred by Assessee in the course of carrying on its business, because objects of the company included carrying on business in infrastructure development , the same has to be allowed as deduction. On facts, the ITAT came to a conclusion that this expenditure has been incurred in furtherance of the business activities of Assessee. The [ 2008 (10) TMI 649 - BOMBAY HIGH COURT] on which reliance has been placed by the Tribunal, one of the questions of law was whether the Tribunal was justified in holding that the preliminary expenses incurred by Assessee prior to the commencement of its business activity could be a revenue expenditure. The Court was pleased to uphold the findings of the Tribunal that it would amount to a revenue expenditure even if Assessee was not successful in obtaining the bid. No error in the conclusions arrived at by the ITAT. Interest on the share application money forwarded to the subsidiary company - whether it is allowable on the account of commercial expediency? - as per revenue intention of investment in the subsidiary company was to retain/increase the controlling interest therein, which is the capital investment and, therefore, the corresponding interest expense on it is not allowable - Tribunal, agreed with the finding arrived at by the CIT(A) that the amount given by Assessee to its subsidiary was for the purpose of business of Assessee - HELD THAT:- Tribunal has accepted the factual finding of the CIT(A) that Assessee being engaged in the business of infrastructure development management and finance in addition to its amusement park and water park , has set up the subsidiary to which these funds were provided to take up the infrastructure project on behalf of Assessee. A factual finding has been arrived at that the finance provided to the wholly owned subsidiary was for its business of infrastructure and is used for that purpose. It has accepted that the nexus between the advance of funds and the business of Appellant/Assessee carried out through the subsidiary stood established and hence, no disallowance under Section 36(1)(iii) of the Act was warranted. Therefore, since its a factual finding, we see no reason to interfere. Addition u/s 14A r.w.r. 8D - HELD THAT:- We find that it was not even argued before the Tribunal. Moreover, ITAT had only noted that the provisions of Rule 8D shall be applicable from AY 2008-2009 as held in the case of Godrej and Boyce Manufacturing Company Limited [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] of this Court. There is nothing to indicate that the Bombay High Court did not give this finding. In fact Ms. Gokhale says that the Court in Godrej and Boyce (supra) has actually held that provisions of Rule 8D shall be applicable from AY 2008-2009 only. No substantial questions of law arise.

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• 2024 (2) TMI 225
  Application for settlement of cases - powers of the Settlement Commission with regard to pending application - pendency of the settlement application before the Interim Board - as stated in Rule 9 report that the application filed by the petitioner is not eligible to be considered as the assessment orders have already been passed during the interregnum period in the month of July 2021 - HELD THAT:- As referring to section 245A(da) on Interim Board , section 245C on Application for settlement of cases, section 245F on Powers and procedure of Settlement Commission, section 245H on Power of Settlement Commission to grant immunity from prosecution and penalty and circular dated 28.09.2021 issued by the CBDT the application filed by the petitioner under section 245C of the Act would be an eligible application though filed after 31.01.2021 and the same is required to be considered as pending application for adjudication on merits. The assessment order passed by the respondent No. 3 on 27.07.2021 for A.Ys. 2013-14 to 2019-20 could not have been passed as the application filed by the petitioner for settlement is considered to be pending and the Interim Board is required to exercise all the powers of the Settlement Commission with regard to pending application and accordingly, as per provision of section 245F(2) of the Act, the Interim Board is vested with the powers of the Settlement Commission and jurisdiction and Income Tax authority could not have proceeded further with the assessment proceedings in view of the pendency of the settlement application before the Interim Board. The Interim board therefore would have exclusive jurisdiction over the case and the respondent No. 3 had no jurisdiction to pass any assessment order during the pendency of the application before the Settlement Commission/Interim Board. It appears that the respondent No. 3 has passed assessment orders in July 2021 when there was no clarity with regard to settlement applications filed after 31.01.2021. In view of the clear legal position prevailing even after 01.02.2021, the assessment orders passed by the respondent No. 3 are non-est and would not survive as the same could not have been passed as per provision of section 245F(2) of the Act. The impugned assessment orders are hereby ordered to be quashed and set aside and in view of quashing of the setting aside of the assessment order dated 27.07.2021 passed by the respondent No. 3, the very basis of rejecting the application by the Interim Board also ceases and accordingly, impugned order passed by the Interim Board is also quashed and set aside and the matter is remanded back to the Interim Board to decide the settlement application treating the same as pending application as per the Circular dated 28.09.2021 to be adjudicated on merits and to pass the order under section 245D(4) of the Act, after giving opportunity of hearing to both the sides.

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• 2024 (2) TMI 224
  Revision u/s 263 - Incorrect allowance of additional depreciation and Wrong claim of Bad Debts - HELD THAT:- With respect to the issue of allowance of additional depreciation, assessee has fairly conceded that he has no case since an identical issue of incorrect allowance on additional depreciation in identical set of facts, and on which revisionary jurisdiction was exercised u/s 263 of the Act, was upheld by the ITAT in the case of Dakshin Gujarat Vij Co. Ltd [ 2022 (4) TMI 98 - ITAT AHMEDABAD ] Therefore, we have no hesitation in holding that with respect to the finding of error by the Ld. PCIT in the assessment order on account of incorrect allowance of claim of additional depreciation, the same is confirmed. Claim of bad debts allegedly wrongly allowed by the AO - PCIT reveals that the assessee submitted explanation to him during revisionary proceedings , and noted the claim of the assessee to be in order, but still went on to hold the assessment order erroneous since the AO had not examined the case. PCIT goes on to hold the assessment order erroneous merely for the reason that these explanations and documents were not filed to the Assessing Officer during assessment proceedings and therefore, the Assessing Officer did not make proper inquiries on this issue. It is clearly evident from the findings of the Ld. PCIT, as noted above by us, that in very clear terms he stated to be satisfied with the explanation of the assessee regarding the irregularities noted by him in the assessment order and for which purpose he assumed jurisdiction u/s 263 of the Act for revision of the assessment order. It is but obvious that as per ld. PCIT himself there was no error in the assessment order in allowing the above claims to the assessee. PCIT was satisfied that these claims had been rightly allowed to the assessee on the basis of the assessee s explanation and the documents filed before him. When the ld. PCIT himself was satisfied that there was no error in the order of the Assessing Officer vis- -vis irregularities noted by him initially, there can be no case for exercising any revisionary power u/s 263 of the Act. The provisions of the section are very clear. The concerned authorities can exercise revisionary powers only on fulfillment of the essential conditions of finding error in the order sought to be revised and the error being such as causing prejudice to the Revenue. Merely because the AO had not examined these issues during assessment proceedings does not make the assessment order erroneous particularly when the ld. PCIT finds, on the basis of explanation and documents furnished to him, that the assessee s claim was eligible as per law . We have no hesitation in holding that the order passed by the ld. PCIT u/s 263 of the Act is not sustainable in law in the absence of any error noted by him in the assessment order passed the issue of allowance of claim of bad debts. Decided partly in favour of assessee.

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• 2024 (2) TMI 223
  TP Adjustment - amount advanced to it s Associated Enterprises - whether Advances being quasi capital in nature, thus no transfer pricing adjustment is called for? - HELD THAT:- In our considered view, in the light of the assessee s facts, the Ld. CIT(A) has erred in facts and in law in coming to the conclusion that the nature of advances given by the assessee to it s subsidiaries / Associated Enterprises as quasi capital in nature. The nature of advances, whether it is quasi capital in nature or not, has to be seen at the time of granting of advance / loan to the subsidiary. In the instant facts there was nothing to suggest that at a time of advancement of such loan to the Associated Enterprises the nature of such advances was quasi capital in nature and fact that in the subsequent year, such amounts have been converted into equity (at the option of the assessee) would not alter such advance as being in the nature of quasi capital. Commercial Expediency/ availability of interest free funds - As noted earlier, if the argument of commercial expediency were to be accepted as a guiding tool for non-applicability of transfer pricing adjustments to international transactions, then no transfer pricing adjustment can be made in respect to almost all international transactions between Associated Enterprises, since mostly such transactions are based on the principles of commercial expediency. Further, transfer pricing provisions are special provisions have been introduced specifically to ensure that there is no tax base erosion at the India level and profits are not shifted outside of India by way of certain pre-arranged transactions between associated enterprises. Therefore, the arguments that the advances were given out of one interest-free funds or that the transactions between the associated enterprises were guided by commercial principles, in our considered view, are irrelevant considerations for the purpose of computing arms length Price between associated enterprises, since transfer pricing provisions are special provisions introduced with an aim of checking tax base erosion. CIT(A) has not commented upon the correct amount of interest to be charged by the assessee from it s AEs - We are in agreement with the contention of the Counsel for the assessee that the Ld. CIT(A) should have given a precise finding with respect to the correct amount of interest to be charged by the assessee from it s AEs. We agree with the alternate contention taken by the counsel for the assessee and the matter is referred to the Ld. CIT(A) to give a specific finding on the correct amount of interest to be charged by the assessee from it s AEs. The assessee is at liberty to furnish it s submissions / supporting documents to assist the Ld. CIT(A) in this regard. Disallowance of expenses incurred by the assessee on behalf of it s firm - Disallowance has been worked out by the AO being the difference of the net profit rate of 49.05% shown by the partnership firm and the estimated net profit rate taken by the Assessing Officer at 25% - CIT(A) restricted the additions to Rs. 12,12,20,245/- by working out the revised net profit rate of the partnership firm @18.64% and the difference of the revised net profit rate of the partnership firm and the net profit rate of the assessee company (11.15%) was confirmed in the hands of the assessee - HELD THAT:- As in the instant case, there is no concrete materials / evidence to come to the conclusion that there has been diversion of profits from the partnership firm to the assessee company. Admittedly, the Department has not challenged the sale price at which products have been sold by the partnership firm to the assessee company. Further, the Ld. CIT(A) has also made a specific observation that the products of the assessee company involved substantial innovation, whereas the products of the partnership firm are generic in nature and do not require substantial innovation. Further, there is no mistake in the books of accounts of the assessee much has been pointed out by the Assessing Officer. Accordingly, looking into the instant facts, we are of the considered view that the Ld. AO has erred in facts and in law in coming to the conclusion that there has been diversion of profits from the partnership firms, claiming exemption under Section 80IE(i) and 80IC(3)(ii) of the Act and thereby diverting expenses to the assessee company. Deduction u/s 35 (2AB) - disallowance of expenditure on non-clinical trials on the ground that the DSIR (Department of Scientific and Industrial Research) in the report in Form 3CL has granted approval for a lesser amount as against the claim made by the assessee - AO observed that the DSIR had granted a short approval in respect of clinical trials and accordingly, no weighted deduction thereupon @ 50% was liable to be granted - HELD THAT:- As per the observations made by ITAT in assessee s own case for preceding assessment years [ 2015 (8) TMI 763 - ITAT AHMEDABAD] and the observations made by the Jurisdictional High Court in the case of Cadila Healthcare Ltd. [ 2013 (3) TMI 539 - GUJARAT HIGH COURT] as held held that Explanation to Section 35(2AB)(1) does not require that expenses included in said Explanation are essentially to be incurred inside an approved in-house research facility. - we are of the considered view that Ld. CIT(A) has not erred in facts and in law in making any disallowance with respect to the aforesaid issue. Claim of deduction u/s 35(2AB) towards weighted deduction relating to expenditure on accepted batches, building maintenance and patent filing fees - HELD THAT:- As relying on SUN PHARMACEUTICAL INDUSTRIES LTD. [ 2017 (6) TMI 1323 - ITAT AHMEDABAD] appeal of the assessee is partly allowed to the extent of weighted deduction with respect to foreign patent filing expenses under capital expenditure amounting to Rs. 0.19 lakhs. However, with respect to the balance amount, we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. TP Adjustment - Upward adjustment towards guarantee fees / commission - HELD THAT:- It is well settled law that the transaction of furnishing corporate guarantee to overseas Associated Enterprises constitutes an international transaction and would be subject to Transfer Pricing regulations. Further, we observe that the assessee during the course of assessment proceedings has himself accepted to charge guarantee fee @ 0.8% as observed by Ld. CIT(A) in the appellate order. Accordingly, in view of the judicial precedents on the subject and the assessee s own acceptance placed on record before the AO / TPO, we find no infirmity in the order of CIT(A) so as to call for any interference. We are also of the considered view that charging of corporate guarantee fee @ 0.8% is justified by the assessee in view of various judicial precedents on this issue and accordingly no further upward adjustment is called for as prayed by the Department. Accordingly, we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. Nature of expenses - Expenses towards issue of debentures - whether Ld. CIT(A) erred in disallowing expenses towards issue of debenture as revenue expenses instead of treating the expenses as capital expenditure? - HELD THAT:- We observe that we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. The Ld. CIT(A) has given a specific finding that the funds received on issue of debentures were used by the assessee company in the course of business, these funds have not been deployed in any new projects and that the debentures are purely in the nature of loans which have been raised to fulfill the working capital requirements of the company and accordingly, the aforesaid expenses are allowable under Section 37(1) of the Act. Disallowance u/s 14A - Investments in subsidiary companies - CIT(A) deleted the additions made by AO on the ground that the assessee had made investments in subsidiary companies and the assessee did not derive any dividend income from these companies - HELD THAT:- We observe that Ld. CIT(A) has given a categorical finding that firstly, with respect to investment in partnership firm, the assessee s own interest free funds were far in excess of the investments made in the partnership, yielding exempt income and accordingly, no disallowance is called for. Further, in respect of the other three companies, the Ld. CIT(A) observed that since no exempt income was earned by the assessee during the impugned year under consideration, there is no question of disallowance under Section 14A of the Act. Accordingly, in view of the instant facts and the judicial precedents on the subject and the observations made by the Ld. CIT(A), we find no infirmity in the order of Ld. CIT(A), so as to call for any interference. Disallowance in respect of increase in authorized share capital - AO made disallowance of expenses towards ROC fees paid for increasing the authorized share capital for the reason that these expenses were capital in nature - HELD THAT:- In our considered view, after going through the facts of the instant case, Ld. CIT(A) has duly considered and distinguished the facts of the instant case from the case of Brooke Bond India Ltd. ( 1997 (2) TMI 11 - SUPREME COURT ) and has taken a view that this is not a case of increase in share capital simplicitor and hence the facts and issues for consideration in the instant case are different from the facts before the Hon ble Supreme Court in the case of Brooke Bond India Ltd. (supra). Accordingly, in light of the facts of the case, the observations made by Ld. CIT(A) we find no infirmity in the order Ld. CIT(A) so as to call for any interference. Disallowance u/s 36(1)(iii) - disallowance of interest on proportionate basis on the Capital Work-In-Progress on the average CWIP - AO held that interest on borrowed funds to the extent of advances utilized for the purpose of CWIP was to be capitalized and hence is disallowable under Section 36(1)(iii) - CIT(A) deleting the additions - HELD THAT:- We are of the considered view that the issue is directly covered in favour of the assessee by the decision of CIT vs. Raghuvir Synthetics Ltd. [ 2013 (7) TMI 806 - GUJARAT HIGH COURT] wherein the Courts have held that where huge funds were available without any interest liability with assessee and there was no evidence to hold that borrowed money was utilized for purpose of advance to sister concerns, no disallowance of interest was warranted. We observe that Ld. CIT(A) has, after a detailed discussion on the facts of the case and judicial precedents as the subject decided this issue in favour of the assessee. Accordingly, we find no infirmity in the order of Ld. CIT(A), so as to call for any interference. Disallowance under Section 40A(2)(b) - Addition in respect of purchases made and payment of services to related parties - HELD THAT:- CIT(A) has correctly observed that the A.O. was not justifying in adopting a lumpsum rate of 2.5% of such expenses as being excessive and there was no basis or rationale for arriving at such ad-hoc percentage for making disallowance under Section 40A(2)(b) of the Act. Further, we are also of the considered view that Ld. CIT(A) has correctly observed that the Assessing Officer has also not given any specific comparable instances to show that payment made to these parties was not reasonable or not as per prevalent Fair Market Value. Accordingly, we find no infirmity in the order of the Ld. CIT(A) so as to call for any interference. Disallowance u/s 35(1)(vi) relating to expenditure incurred on intangibles - HELD THAT:- On going through the instant facts and the decision cited by the assessee, we are of the considered view that in the interest of justice, the matter may be referred to the file of A.O. for consideration of the claim made by the assessee for deduction under Section 35(1)(i). TDS u/s 195 - disallowance u/s 40(a)(ia) towards commission paid outside India to non-resident agents - HELD THAT:- Before us, assessee submitted that the assessee has a good case on merits on the issue of non-deduction of TDS with respect to sales commission paid to non-resident commission agents and accordingly, in the interest of justice, the matter may be restored to the file of A.O. for de-novo consideration. Thus, in the interest of justice, the issue is restored to the file of A.O. for de-novo consideration, after giving due opportunity of hearing to the assessee.

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• 2024 (2) TMI 222
  Assessment u/s 153A - Addition u/s 68 on unexplained cash credit - incriminating material found in search or not? - upon perusal of the documents found during the course of the search, the AO noted that the assessee is not following the rules and regulations of KYC and other guidelines as stipulated by the Reserve Bank of India - HELD THAT:- In the present case, it is worth noting that the assessee received the money in the normal course of its business as a co-operative credit society, i.e. through repayment of loans by its members or deposits by its members, etc. Further, it is not disputed that the assessee has duly recorded in its books of account the transactions of collections of money as well as deposits made into its bank account. The violation of provisions of Rule 114B by the depositors in certain cases and Rule 114E by the assessee also cannot lead to the conclusion that the money deposited in the members account belongs to the assessee. Further, in the post-search enquiry also no material or evidence was found which could lead to the conclusion that the money deposited belongs to the assessee. In the present case, it is not the plea of the Revenue that the credit in books of account or bank accounts of the assessee came to its knowledge pursuant to the material/documents found during the course of the search. For discrepancies in maintaining KYC documentation, account opening form, and violation of society byelaws, action can be taken against the assessee under the relevant statute or by the concerned authority, such as RBI, however, the same cannot lead to an addition in the hands of the assessee under the Act. Therefore, we are of the considered view that the material/documents found during the course of the search are not of such a nature which incriminates or militates against the assessee - material/documents found during the course of search also do not raise any doubt or suspicion against the assessee, and if at all the material/documents may only incriminate against the members in whose account the money was deposited. We find that in certain cases proceedings under the Act were initiated against the members on the basis of material/documents found during the course of the search and survey at assessee s premises. Thus, from the above, it is established that the material/documents found during the course of search are not incriminating in nature. Therefore, the AO could not have made any addition under section 153A of the Act in respect of concluded/unabated assessments for the assessment years 2012-13 to 2015-16. Accordingly, the additions made by the AO are deleted. Decided in favour of assessee.

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• 2024 (2) TMI 221
  LTCG - Deduction u/s 54B - claim denied as Banakhat (Agreement of Sale) was unregistered and the Banakhat was meant only for 12 months period, therefore the assessee does not get right over the property - sale consideration received by the assessee through registered Sale Deed as Confirming Party cannot be treated as a transfer and not a capital asset in the hands of the assessee as assessee does not get right over the property by merely entering into an agreement (Banakhat) HELD THAT:- From reading of clause 4 of the Banakhat makes it clear that the seller is to obtain title clearance certificate and non-agricultural permission in respect of the land to the seller namely the assessee herein, failure of the same, the tenure of the Banakhat shall deem to have extended automatically. Thus it is clear that the Civil disputes over the land was cleared between the parties in Civil Suit by Principal Sr. Civil Judge withdrawing the suit unconditionally and N.A. permission in respect of the land was obtained from the Collector. The above details are very much reflecting in the registered Sale Deed executed on 05.01.2013 registered as Document No. 174 of 2013 with the Office of the Sub Registrar, Ahmedabad-2, Wadaj. It is in the above registered Sale Deed, the respondents/assessees herein are shown as the Confirming Parties and received the consideration through various payment from the buyer/developer. Thus the allegations and averments made by the AO does not stand good in the eye of law namely Banakhat is unregistered and the Banakhat after 12 months period is invalid in law are not properly understood by the Ld. A.O. in legal prospective. Therefore the grounds are liable to the dismissed. No infirmity in the order passed by the Ld. CIT(A) who held that rights held by the assessee as a Confirming Party in the Sale Deed as a capital asset within the meaning of Section 2(14) of the Act and liable for LTCG and the assessee is also eligible to claim deduction u/s. 54B of the Act. Decided against revenue.

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• 2024 (2) TMI 220
  Assessment of trust - Addition on account of excessive salary to Chairman of the society within the meaning of section 13(3) and in violation of section 13(2)(c) - principle of consistency - main source of the income of the assessee society is the fee received from the students - HELD THAT:- Since as contended by the Ld. AR, the salary paid to Chairman of the society in the subsequent assessment years i.e. from AY 2017-18 to 2023-24 has been considered by the department as reasonable for the services rendered which is equal to the salary in the relevant year i.e., AY 2016-17, therefore, the addition made by Ld. AO cannot be sustained for the relevant year. Observation of the Ld. AO considering the salary paid Chairman of the society in excess of the reasonable remuneration based on comparison with an employee, who is not performing the duties which can be compared with or are commensurate with the qualifications and services rendered by Mr. Patnaik. Such presumptions adopted by the Ld. AO are not permissible to invoke the provisions of section 13(3) r.w.s. 13(2C). Also, following the principle of consistency, since the reasonableness of salary to specified person has not been challenged by the revenue in the ensuing assessment years, no negative inference can be drawn in the relevant assessment year without any reasonable basis. Addition made by Ld. AO on account of payments in excess of reasonable salary u/s 13(2)(c), deserves to be struck down, and we do so. In the result, ground of the assessee is allowed. Exemption u/s 11 and 12 - denial of exemption on the ground that the assessee society has violated the provisions of section 13(1)(c) and 13 (2)(c) of the Income Tax Act - HELD THAT:- As in ground no. 2 of the present appeal, wherein we have observed that the addition made by invoking provisions of section 13(c) r.w.s. 13(2C) is not sustainable and thus, have been vacated subject to certain verifications. We, therefore, are of the view that once the primary addition of u/s 13(3) r.w.s. 13(2b) have been vacated therefore, there is no basis remains for denying the exemption u/s 11 and 12 of the Act. Accordingly, ground no. 3 of the present appeal is disposed-off in favour of the assessee. Disallowance on violation of provision of section 13 to the extent excess payment instead of denying the entire exemption u/s 11 - HELD THAT:- We draw inference from the decisions of coordinate bench of ITAT, Delhi in the case of IILM Foundation [ 2021 (2) TMI 528 - ITAT DELHI] wherein the analogy laid down in the case of CIT vs. Working Women s Forum ( 2014 (8) TMI 681 - MADRAS HIGH COURT] and CIT Vs. Fr Mullers Charitable Institutions ( 2014 (2) TMI 1033 - KARNATAKA HIGH COURT ) have been relied upon and have observed that in the event of any violation of provision of section 13, the entire exemption under section 11 cannot be denied and would be restricted only to this extent of income misused by the Trust. Thus we are also of the view that in case of violation of provisions of section 13, the exemption u/s 11 cannot be entirely refused but the same can be restricted to the amount of unreasonable payment of to the extent of income of the trust diverted and misused to the benefit of specified person. Consequently, we find force and concur with the alternate contention raised by the assessee th at even in case of violation of provisions of sections 13, denial of total exemption u/s 11 is not justified and it has to be limited to the extent of excess payment only.

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• 2024 (2) TMI 219
  Levy of penalty u/s 271(1)(c) - rejecting the claim of the assessee u/s 54B - HELD THAT:- As decision of the ITAT in the assessee s own case for the relevant A.Y. [ 2018 (10) TMI 2018 - ITAT RAIPUR] regarding quantum of addition by rejecting the claim of the assessee u/s 54B, which was deleted by the ITAT in the said order. As discernible from the orders of the authorities below, the penalty u/s 271(1)(c) was imposed on the assessee keeping in mind the orders of AO and confirmation of the disallowance by the Ld. CIT(A). However, it is an admitted fact that, as per the decision of ITAT on the same issue, the addition of quantum, which was the basis for imposing the penalty, has been vacated by setting aside the orders of Ld. CIT(A). Under such facts and circumstances where the quantum addition itself has been deleted, the penalty imposed on the basis of such quantum addition cannot survive. Accordingly, we direct to delete the penalty-initiated u/s 271(1)(c) in the present case. Appeal of assessee allowed.

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• 2024 (2) TMI 218
  Penalty u/s. 271D - sustainability of the penalty imposed u/s. 271D in absence of any satisfaction for initiating the said penalty proceedings by the A.O in the body of the assessment order - allegation of violating the provision of sec.269SS by accepting cash deposit for more than Rs.20,000/- from the parties - whether or not penalty imposed by the JCIT u/s. 271D de-hors recording of satisfaction by the A.O for initiating the said penalty proceedings in the body of the assessment order passed u/s. 143(3) is sustainable in the eyes of law? - HELD THAT:- A.O in the fresh assessment order had not recorded his satisfaction regarding penalty u/s. 271D of the Act, therefore, de-hors recording of requisite satisfaction the penalty imposed u/s. 271D of the Act could not be sustained and was liable to be quashed. See Jai Laxmi Rice Mills Ambala City [ 2015 (11) TMI 1453 - SUPREME COURT ] A similar view had been taken by the Hon ble High Court of Gujarat in the case of Pr. CIT Vs. Parivar Television, Tax [ 2023 (10) TMI 707 - GUJARAT HIGH COURT ] , wherein the Hon ble High Court had approved the view taken by the Tribunal and observed that as no satisfaction regarding initiation of penalty proceedings u/s. 271E of the Act was recorded in the assessment order, therefore, no penalty under the said statutory provision could be levied. Considering the fact that the issue before us is no more resintegra in light of the judgment of the Hon ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills Ambala City (supra), therefore, in the backdrop of our aforesaid deliberations, the penalty imposed by the Jt.CIT u/s. 271D of the Act cannot be sustained and is liable to be struck down for want of valid assumption of jurisdiction. Appeal of assessee allowed.

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• 2024 (2) TMI 217
  Disallowance u/s 14A - second round of appeal - AO in second round who held that the assessee company was liable for disallowance u/s 14A r.w. Rule 8D for the reason mainly that the assessee has made investments in shares and investment in foreign subsidiary company - In the first round, the Tribunal decided the appeal of the Revenue against it. On appeal by the Revenue before the Hon ble Delhi High Court, the matter has been remitted back to the Tribunal for hearing and disposal afresh in the light of the directions of the Hon ble Delhi High Court. This is how, the matter is before the Tribunal once again - HELD THAT:- It is an admitted position that the assessee has not incurred any interest expenditure, directly or indirectly for the earning of exempt income. The finding of the Ld. AO that for investing in mutual funds, the assessee must have incurred some expenditure is not based on facts. It is nothing but conjecture and surmise. No actual expenditure could be identified by the Ld. AO. Hon ble Supreme Court in Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT ] has held that the expression expenditure incurred in section 14A means actual expenditure and not to some imagined expenditure . If no expenditure is incurred in relation to the exempt income, no disallowance can be made. The decision (supra) of the Hon ble Supreme Court squarely applies to the facts of the assessee s case. In our humble opinion, the order of the Ld. CIT(A) is still maintainable de-hors his finding on strategic investment. We, therefore, hold that on the facts and in law as set out above, the Ld. CIT(A) was perfectly justified in deleting the impugned disallowance under section 14A r.w. Rule 8D. The remanded matter is disposed of accordingly. Decided against revenue.

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• 2024 (2) TMI 216
  Addition u/s 68 - Bogus share transaction - as per AO identity, creditworthiness and genuineness of the transaction has been established - CIT(A) deleted addition - HELD THAT:- We observe that the assessee discharged its initial burden by filing various evidences in the form of confirmations, bank statements, share application forms, addresses, PAN numbers to prove the identity, genuineness and creditworthiness of the share holders. CIT (A) considering all the evidences on record and the remand report and the rejoinder concluded that the share holders are genuine and assessee has proved the identity, genuineness and creditworthiness of the share holders and accordingly the addition made u/s 68 of the Act has been deleted. We further observe that the entire expenses which were debited to profit and loss account and was disallowed by AO were deleted by the ld. CIT (Appeals) on appreciation of evidences furnished before him and it is the finding of the CIT (A) that majority of expenses are towards salary paid and they were through banking channels. As observed that the expenses on advertisement, electricity, telephone, computer repair and maintenance, bank charges etc. were all paid through ICICI Bank and IndusInd Bank. All the above findings of the ld. CIT (A) have not been rebutted by the Revenue. We see no infirmity in the order passed by the ld. CIT (A) in deleting the above additions/disallowances. Appeal of the Revenue is dismissed.

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• 2024 (2) TMI 215
  Best judgement assessment u/s 144 - Unexplained income - Addition on account of cash deposit into bank - CIT(Appeals) in denying the benefit of opening balance of cash - CIT (Appeals) partly sustained the addition observing that the benefit of opening cash cannot be given to the assessee - HELD THAT:- On going through the observations of the ld. CIT (A) we do not see any good reason to interfere with the findings of the of CIT (A) especially in the absence of any evidences produced before us to rebut the findings of the ld. CIT (A) by the assessee. Thus, we sustain the order of the ld. CIT (A) and reject the grounds raised by the assessee. Appeal of the assessee is dismissed.

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• 2024 (2) TMI 214
  Excess stock u/s 69A - GP estimation - basis of calculating G.P. - difference in closing stock as per the trading account and stock statement taken from SAP Software - survey team had taken G.P of previous year - CIT(A) allowing the appeal of the assessee stating that basis of calculating G.P. was not mentioned by the survey team - HELD THAT:- Now without making any efforts to verify the stock in physical form by making any inventory or other mode and without finding any incriminating evidences showing that the stock reflected was manipulated and not accounted in due course of business, the Survey Team on the basis of applying gross profit of 25.74% recomputed the trading account and arrived at a closing stock figure. Learned CIT(A) has duly appreciated this arbitrary manner of valuing the stock. CIT(A) has duly appreciated that at one hand the G.P. rate of 24.16% has been accepted as per the return of income and without any reasonable basis for the purpose of revaluation of stock trading account, the G.P. of 25.74% has been adopted. Thus, there is no error in the finding of learned CIT(A). Even otherwise, the addition was made by learned AO u/s 69A of the Act, which is a deeming income provision, for which there should be specific evidence of ownership of something in the nature of money, bullion and jewellery or other valuable article. Certainly, the AO intended to make addition covering the excess stock under the phrase other valuable article and for which without any physical verification and identification of the stock in physical form, apart from the business of the assessee and attributing ownership of the same to the assessee, recourse to section 69A could not have been taken. To make such an addition u/s 69A, for such excess stock, if any, same should be separately identifiable and there should be specific allegation and evidence that this stock has no nexus with the stock otherwise found at the assessee s business. Same is not the case here. The appeal of the Revenue is dismissed.

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• 2024 (2) TMI 213
  Addition as long term capital gains and addition as agricultural income - eligibility of exemption u/s 54 - co-ownership in land - HELD THAT:- What we understand is that the family sold the impugned land. Being the daughter of the family, the assessee also received 1/5th share, but out of sheer love and affection, she gave her share to her brother The fact of payment to Brother has also been mentioned by the AO in the assessment order. Rs. 47 lakhs was given to Anshu. The lady says that her brother has since deceased and, therefore, she has no evidence with her, as her sister-in-law does not allow her to enter the house. Although the Assessing Officer has mentioned the names of all the co-owners and has computed the capital gains on the total land holding and attributed 1/5th share to the assessee, but nowhere he has mentioned the status of assessment in the hands of the co-owners. The appellant lady before us stated that her brother has purchased some agricultural land out of the consideration given by her but showed her inability to furnish documents as the same are available with her sister-in-law who does not allow her to enter into the house. On such peculiar facts of the case, bank account of the assessee has been freezed by the officers, making her life more miserable. We do not want the illiterate lady to suffer in the hands of the revenue but at the same time we also feel helpless as we cannot do anything for this illiterate lady. In the interest of justice and humanity, we restore the issue to the file of AO to verify the status of the assessment/appeal of the co-owners as mentioned by him in his assessment order. AO is also directed to verify from the sister in law [wife of the deceased brother of the assessee] whether the deceased had purchased agricultural land out of consideration received from the assessee. AO must exercise all his powers to get information from that lady and if he finds that the brother had purchased agricultural land from the sale consideration given by the assessee, then allow claim of exemption u/s 54.

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• 2024 (2) TMI 212
  Addition u/s 68 - share capital and share premium - addition in hands of promoter or assessee company - CIT(A) deleted addition as assessee has discharged the onus of establishing identity and creditworthiness of the creditor and genuineness of transaction - HELD THAT:- It is not in dispute that the assessee company was incorporated and started his broadcasting business during the year. It was the assessee company s first year of business. In such a fact scenario, in our humble opinion, if addition at all was to be made, it should have been made in the hands of the promoter; it cannot be made in the hands of the assessee company. Coming to the merits of the impugned addition, during the course of appellate proceedings the assessee gave a list of 8 documents in support of his explanation as to the nature and source of credit entries appearing in the books of the assessee company. It was asserted that all the payments from Sh. Vinod Kumar Sharma came through banking channels into the bank account of the assessee company; that the creditor is Income Tax payee and has adequate financial resources and that his identity and creditworthiness has been fully established. Perusal of the CIT s order shows that he has dealt with all the points raised by the Ld. A.O in support of the impugned addition negating them all. We do not find any legal substance in the arguments of the Ld. Sr. DR. The appeal of the Revenue is bereft of any merit. Decided against revenue.

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• 2024 (2) TMI 190
  Deduction u/s 80P - interest has been received from Cooperative Bank - HELD THAT:- As going through the provisions of Section 80P(2)(d) of the Act, we find that the assessee is eligible for deduction u/s 80P(1) in respect of the income derived by way of interest or dividend from its investment with any cooperative bank society. In the instant case, though the interest has been received from Cooperative Bank, but basically it is a Cooperative Society, which has taken a banking license. Recently in the case of Amore Commercial Premises Co- Op. Society Limited vs. Central Processing Centre [ 2023 (1) TMI 826 - ITAT MUMBAI] has dealt with the similar issue and after placing reliance on the judgement of Pr. CIT and Others vs. Totgars Co-operative Society Limited, [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and State Bank of India vs. CIT, [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] has held that interest income earned by Cooperative Society on its investment held with Cooperative Bank would be eligible for claim of deduction u/s 80P(2)(d). Thus we are inclined to hold that the assessee is eligible for deduction u/s 80P(2)(d) in respect of FDR interest received from Cooperative Bank. Decided in favour of assessee.

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• Customs

• 2024 (2) TMI 211
  Scope of the Advance Ruling - Whether the matter (case) was pending - Rejection of representations made by DRI for treating the CAAR s order dated 05.10.2021 as void ab initio - It was held by High Court that The possibility that a question would arise for consideration of a customs officer, appellate tribunal or court, is not a ground contemplated under Clause (a) of the proviso to Section 28-I(2) of the Customs Act. Clearly, a distinction must be made between that question pending consideration and a possibility of a question arising consideration. HELD THAT:- There are no merit in the special leave petition - SLP dismissed.

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• 2024 (2) TMI 210
  Levy of penalty on Customs Broker - Forfeiture of the security deposit - Role of the employee of the CB - illegal export of prohibited goods - allegations pertaining to Regulation 10(a), 10(e) and 10(n) of CBLR, 2018 - Doctrine of proportionality - HELD THAT:- There appears to be no doubt that fraud has been committed by manipulating the documents to enable the illegal export of prohibited goods but there is no evidence to say that the appellant connived or was aware of the modus-operandi. However, it cannot be ignore that by virtue of a license granted under the Regulations, a customs broker is eligible and entitle to carry on the work of clearance of goods for import and export. As laid down in various decisions, CHA occupies a very important position in the Customs House. He is supposed to safeguard the interests of both the importers and the Customs and therefore a lot of trust is kept in CHA by the importers or exporters as well as by the NOBLE AGENCY VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [ 2002 (2) TMI 171 - CEGAT, MUMBAI ]. Therefore, the appellant when he admits that he did not verify the address of the exporting company as they were in Amritsar and also did not raise any query for non production of the authorization from the exporter company had violated the obligations cast on a customs broker under the Regulations. Considering the extent of violation that can be attributed to the appellant and the fact noted by the Commissioner that active role was played by Shri Kumod Kumar Choudhary, employee of the CB and role of CB has not come out anywhere in the investigation as also CB has taken immediate action against the employee, applying the doctrine of proportionality the forfeiture of security deposit is far beyond proportion and imposition of penalty of Rs. 50,000/- is sufficient. The impugned order is modified to the extent that forfeiture of the security deposit needs to be set aside and only the order whereby the penalty has been imposed is affirmed - appeal allowed in part. Revocation of Customs Broker License - Revenue appeal for not revoking the License - Held that:- We do not find that the appellant had any knowledge that illegal exports were attempted or there was any active or passive facilitation on the part of the appellant. There was no finding of any mala fide on the part of CHA such that trust operating between CHA and customs authorities was violated or irritably lost for future operation of the license. - Revenue appeal dismissed.

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• 2024 (2) TMI 209
  Levy of penalty u/s 112(a) of the Customs Act, 1962 on an employee of the Customs Broker - classification of imported goods - cut tobacco classifiable under Customs Tariff Item 2403 9970 or Roll Your Own Tobacco packed in retail pouches of 50 grams each? - necessary declaration in terms of Legal Metrology Act and the Rules made thereunder have not been mentioned in the packages - HELD THAT:- From the plain reading of Section 46 of Customs Act, it transpires that in order to determine the appropriate duties of customs payable on any imported goods, an importer is required to file a Bill of Entry (B/E) giving all required particulars of such imported goods for assessment to duty. It is also to be noted that in terms of definition of the term assessment provided under Section 2(2) ibid, determination of duty liability of imported goods has to be determined in accordance with the tariff classification of such goods in terms of Customs Tariff Act, 1975. Thus mentioning of the description in detail and tariff classification of the imported goods is one of the important requirement in the declaration to be made under section 46 ibid. From the facts of the case, and the findings recorded by the learned Commissioner of Customs in paragraph 31.5 of impugned order, it clearly emerges that Shri Aakash Thakkar, had stated that the customs tariff heading declared in the bill of entry was decided by the importer and he followed the importers instructions. Further, in the impugned B/E, the CB and importer had sought for examination of the goods on First Check basis , which indicates that the goods are required to be firstly examined by customs authorities before assessment of the customs duty and for compliance with other requirements applicable thereon - responsibility for proper declaration of the goods lies with the importer and having sought for examination of the goods before assessment, there was no element of mis-declaration on the part of customs broker and the employee Shri Aakash Thakkar attracting imposition of penalty under Section 112(a) ibid. Further, it is found that there is apparent contradiction in the stand taken by the learned Commissioner of Customs at paragraphs 32.1.1 and 31.4 of the impugned order. In para 32.1.1 he stated that the importer did not disclose the end-use of the imported goods at the time of its importation and cleared the goods under CTH 2403 9970 attracting lower rate of GST compensation cess, which proved that the importer wilfully mis-declared the classification of goods as well as suppressed the facts from the Department with an intent to evade payment of legitimate customs duty. There are no merits in the impugned order passed by the learned Commissioner of Customs (Imports), ACC, Mumbai in imposition of penalty under Section 112(a) ibid on Shri Aakash Thakkar, employee of CB, and the findings in the impugned order to this extent is contrary to the facts on record. The impugned order is set aside - appeal allowed.

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• 2024 (2) TMI 208
  Reduction in the quantum of redemption fine and penalty - import of old and used worn clothing, completely fumigated - HELD THAT:- This Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [ 2018 (11) TMI 625 - CESTAT MUMBAI] , wherein this Tribunal has observed In the light of the admitted failure to comply with the licensing requirements, we uphold the confiscation of the goods under Section 111(d) of Customs Act, 1962. However, it is our opinion that the ends of justice would be served by reducing the redemption fine to 10% of the ascertained value and penalty to 5%. Thus, the redemption fine and penalty imposed on the respondent to the tune of 10% 5% respectively on the assessed value is sufficient - there are no infirmity in the impugned order and the same is upheld - The appeals filed by the Revenue are dismissed.

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• 2024 (2) TMI 207
  Enhancement of penalty - non-submission of documents by the appellant in time for final assessment of the Bills of Entry - HELD THAT:- On similar set of facts, the said issue has been considered by this Tribunal in the case of M/S. SHYAM STEEL INDUSTRIES LIMITED VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) , BHUBANESWAR [ 2024 (1) TMI 473 - CESTAT KOLKATA] , wherein this Tribunal has held The appellant has already submitted the documents necessary for finalization of the provisional assessment while submitting their reply to the show cause notice. Thus, I find that the penalty of Rs.5,000/-(Rupees Five Thousand only) imposed by the Assistant Commissioner would be sufficient to meet the ends of justice. As the said issue has already been settled by this Tribunal, therefore, following the precedent decision of this Tribunal, it is held that the order of the ld.Commissioner ( Appeals ) is not sustainable on the eyes of law. Accordingly, the same is set aside. Appeal allowed.

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• 2024 (2) TMI 206
  Confiscation of imported goods - non-foundry scrap - demand of Custom Duty, interest, imposition of penalty - appellant has utilized raw material in excess of that prescribed in the input/ out put norms - to be classified under heading No. 7404 0022 of Custom Tariff Act 1975 or not - time limitation - HELD THAT:- It is seen that the Additional Commissioner in the order-In-original has given the benefit of actual amount recovered on account of segregation. The calculation in the appeal is made by adoption of a fix ratio 1.5 which is not ratio of prescribed in DGFT letter. It cannot be accepted as the real ratio verified by the authorities is less than 1.5 and as per DGFT letter the ratio is a map of 1.5 but limited to the actual verified by Central Excise. The second point raised by the appellant in their calculation relates to the loss on account of slag - HELD THAT:- From the letter DGFT dated 04.05.2011, it is apparent that the wastage norm for the stage of manufacturing brass items from segregated process mix brass scraped is 1.26 and is obviously inclusive of all kind of losses including slag. Thus, the calculation given by the appellant in their appeal cannot be adopted for the purpose of calculating unexplained consumption of scrap. Time Limitation - HELD THAT:- It is seen that the demand has been raised not only invoking provisions of Section 28 but also Section 72 of the Customs Act. In terms B17 bond executed by the in terms of Notification 52/2003-Customs dated 31.03.2003. Therefore, since the demand has been raised invoking the condition of the bond the period of limitation would not be applicable to the instant case. There are no merit in appeals filed by the appellant the same are dismissed.

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• 2024 (2) TMI 205
  Project Import - goods directly relatable to the project or not - Essentiality Certificate to be issued by the Secretary, Government of Tripura was infact issued only by the Deputy Secretary - HELD THAT:- The Hon ble Supreme Court in the case of COMMR. OF CUS. (IMPORTS), MUMBAI VERSUS TULLOW INDIA OPERATIONS LTD. [ 2005 (10) TMI 502 - SUPREME COURT] has held that The essentiality certificate, thus, must be treated to be a proof of the fact that the importers have fulfilled the conditions enabling them to obtain the benefit under the exemption notification. [Emphasis supplied] The Appellants have imported all the goods for the Power Project and there is not dispute on this count by the Revenue. When the Project imports are made, several of the goods have to be imported, keeping in view the future Repairs and Maintenance activity. Therefore, we do not agree with the findings of the Adjudicating Authority that the goods in question were not part of the Project Imports. The very fact that Essentiality Certificate for these goods have been issued by the Deputy Secretary initially and was subsequently ratified by the Secretary, Government of Tripura shows that these goods are required for the Project only. Before the OIO was passed, the appellant has procured the Essentiality Certificate duly signed by the Secretary, Government of Tripura which ratifies the earlier Certificate issued by the Deputy Secretary. It is also noted from Serial No. 507 of this Notification that the goods required for setting up of any Mega Power Project would be eligible for the exemption. The goods in question satisfy this condition, which is not being disputed as can be seen from Para 8.1 of the Order-in-Appeal. Therefore, the Appellant has fulfilled the conditions specified under Notification No. 12/2012- Cus dated 17/03/2012. The impugned order is set aside - appeal allowed.

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• 2024 (2) TMI 204
  Levy of penalty u/s 112 (b) (ii) of the Customs Act, 1962 - smuggling of Gold Bars - goods were bought from Myanmar without proper documents - no reliable evidence has been produced to prove beyond reasonable doubt that the gold bars were imported or legally procured - Violation of principles of natural justice - HELD THAT:- The Department has not stated as to what kind of foreign markings were found on the seized gold bars. Even in the list of Inventory of Goods seized dated 26/6/2014, nothing on this count is being shown. Though this document speaks of 5 Gram gold being drawn as samples, the Department has not come out with any Certificate about the purity of these gold bars. Though the Appellants in their reply to Show Cause Notice before the Adjudicating Authority have submitted that no reliable evidence has been produced to prove beyond reasonable doubt that the gold bars were imported or legally procured, the Adjudicating Authority has not addressed this issue properly. In the instant case the inscriptions as embossed on the recovered gold bars clearly demonstrates that they have been manufactured in a foreign country . The seizure Report and the SCN do not speak any such inscription. Therefore, this finding of the Adjudicating Authority is not backed by any documentary evidence whatsoever. Thus, no proper case has been made out against any of these three Appellants so as to impose the penalty under Section 112 (b) (ii) of the Customs Act, 1962 - appeal allowed.

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• Insolvency & Bankruptcy

• 2024 (2) TMI 203
  Seeking refund of money paid in excess inadvertently to the Corporate Debtor - related parties - HELD THAT:- By the Impugned Order applications have not been finally decided and direction has been issued to list it before the Regular Bench. The Appellant who claims not to be promoter/key managerial personnel submits that they are not affected by the earlier directions as referred to in the Impugned Order. The said issue is to be considered by the Adjudicating Authority before passing a final order on the said application. Thus, no purpose shall be served in keeping these Appeals pending here. Both the appeals are disposed of directing the Adjudicating Authority to dispose of I.A. No. 4951 of 2023 and I.A. No. 3234 of 2023 in accordance with law.

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• 2024 (2) TMI 202
  Admission of application u/s 7 of IBC - Period of limitation - Date of default - Suspension of initiation of corporate insolvency resolution process - barred under Section 10A of IBC - HELD THAT:- There is clear acknowledgement by the Corporate Debtor that Rs.64,04,90,697/- is amount due as on 19.02.2020, i.e., the prior to commencement of 10A period. Section 10A period begun on 25.03.2020 and when default has been committed by the Corporate Debtor prior to 10A period, the submission of the Appellant that Application is barred by 10A period cannot be accepted. There being clear acknowledgement of default of Rs.64,04,90,697/-, which is prior to commencement of 10A period, as accepted in the Agreement dated 26.02.2020, it is not open for the Appellant to contend that default occurred only on 25.08.2020, hence, the Application is barred by Section 10A. It is well settled that when default by Corporate Debtor has occurred prior to 10A period, Application shall not be barred. The fact that letter dated 13.01.2022 has not been brought on the record in the Appeal by the Corporate Debtor also supports the submission of the Financial Creditor that letter dated 13.01.2022, records the state of affairs as it existed at the relevant time - the Adjudicating Authority did not commit any error in accepting the date of default as 15.12.2021 as pleaded in Section 7 Application. The Adjudicating Authority has returned a finding that Agreement dated 15.02.2016 was not a joint venture Agreement and further the amount of Rs.34.55 Crores was disbursed. The Corporate Debtor as noted above, on one hand is pleading that Agreement dated 15.02.2016 was entered and on other hand submits that the said Agreement was not to be implemented or acted upon - The endeavour of the Corporate Debtor is to somehow relieve itself from the liabilities, which could not be discharged in pursuance of the Loan Agreement dated 15.02.2016. The Application filed by the Financial Creditor, cannot be thrown on the ground of Section 10A. The Adjudicating Authority has rightly admitted Section 7 Application. There is no merit in the Appeal - Appeal dismissed.

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• PMLA

• 2024 (2) TMI 201
  Maintainability of SLP - Action against the Chartered Accountant under PMLA for issuing bogus CA certificates - High Court had granted the of Bail - the respondent is regularly attending the Court - HELD THAT:- Taking into consideration this aspect of the matter and considering the fact that the petitioner is a Chartered Accountant and further that the impugned order has been passed two years three months before, we are not inclined to entertain the present petition. The special leave petition is, accordingly, dismissed.

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• Service Tax

• 2024 (2) TMI 200
  Levy of service tax - Auctioneer s Service - Business Support Services - GTA services - levy of penalties. Services rendered by the Appellant and other agricultural producers co-operative marketing societies with regard to Auctioneer s Service - HELD THAT:- It is to be observed that numerous judicial decisions have already gone into the differences between the process of Auction and Tender. Likewise, the taxability of Business Support Service for giving jewel loans and also GTA Service for transport of PDS goods for Tamil Nadu Government various decisions by the Tribunal have held in favor of the appellant. All these issues are no more res-integra and the facts in this appeal are identical to the decision of the Tribunal in the case of M/S. NAMAKKAL AGRICULTURAL PRODUCERS CO-OPERATIVE MARKETING SOCIETY VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM [ 2023 (4) TMI 1077 - CESTAT CHENNAI] , wherein this Bench has observed The marketing and other services rendered by the appellant to their farmer members in selling their agricultural produce through tender process would not be coming under Auctioneer s Service under Section 65 (105)(zzzr) of the Finance Act, 1994. The statement of demand raised in this case is a combined one for all the three services viz., Auctioneer s Service , Business Support Service and Goods and Transport Agency Service . The amount of Service Tax demanded in each category is not ascertainable from the records and documents available in this appeal. The same is not also ascertainable either from the Statement of Demand No. 8/2013 dated 05.04.2013 or from the Order-in-Original No. 26/2014 JC(ST) dated 30.04.2014. Mandatory penalty under Section 78 of the Finance Act, 1994 - HELD THAT:- Though period involved in this Statement of Demand covering normal period for the reason that the Appellant had failed to submit prescribed half-yearly ST-3 returns. It is opined that imposing penalty under Section 78 of the Finance Act, 1994 is not at all justified in the facts and circumstances of this case and so, the same is set aside. Payment of Service Tax on the GTA services - benefit of 75% abatement under Notification No. 32/2004-ST dated 03.12.2004 where the transporter has to certify as to non-availment of CENVAT benefit - benefit of Notification No. 34/2004-ST dated 03.12.2004 where freight paid on individual consignment upto Rs.750/- and multi-consignment freight upto Rs.1500/- - exemption for transport of food grains and pulses w.e.f. 29.02.2010 under Notification No. 33/2004-ST dated 03.12.2004 - HELD THAT:- The period of dispute involved in this case is 01.10.2011 to 30.06.2012. As such, it is required to re-compute the GTA Service Tax payable by the Appellant after extending the benefit of the Notification No. 32/2004-ST and Notification No. 34/2004-ST and also for carriage of food grains and pulses under Notification No. 33/2004-ST dated 03.12.2004 subject to fulfillment of conditions by the Appellant considering the facts obtaining in this appeal. Thus, the demand confirmed against the Appellant under Auctioneer s Service and Business Support Service is not justified - Regarding demand of Service Tax on GTA Service, the Lower Adjudicating Authority is directed to re-compute the tax payable giving the benefit of abatement under Notification No. 32/2004-ST dated 03.12.2004 and exemption benefit under Notification No. 34/2004-ST dated 03.12.2004. The appeal is partly allowed and partly remanded.

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• 2024 (2) TMI 199
  Recovery of Service tax alongwith interest and penalties - Supply of Tangible Goods - appellant had provided the excavators JCB machines without transferring right of possession effective control on the same, to their service recipients for which they received the monthly hiring charges - HELD THAT:- In case of PETRONET LNG LTD VERSUS COMMISSIONER OF SERVICE TAX [ 2013 (11) TMI 1011 - CESTAT NEW DELHI] , Delhi Bench held Since we have concluded that the transactions in issue, covered by the long-term charter agreements and the short-term charter agreement in respect of the tankers - Disha ; Raahi ; and Trinity Glory amount to transfer of the right of use with possession and effective control, by owners in favour of the assessee; that the transactions are therefore covered by the exclusionary clause of Section 65(105)(zzzzj); that the long-term charter agreements (in respect of - Disha ; and Raahi ) were entered into prior to 15-5-2008; and the tankers were also delivered to the assessee prior to introduction of the new taxable service STGU ; the taxable event of supply of tangible goods for uses has taken place prior to introduction of the taxable service; and that though hire charges for the actual use were remitted subsequently and periodically, no Service Tax is leviable. In the case of M/S. GIMMCO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, NAGPUR (VICE-VERSA) [ 2016 (12) TMI 394 - CESTAT MUMBAI] Mumbai bench has held the transaction involved was a transfer of right to use Transit Mixers and not transport service and the petitioners had transferred the right to use goods to Grasim. If we apply the ratio of the above decision to the facts of the present case, the transaction involved herein is transfer of right to use which is a deemed sale and not supply of tangible goods for use service. Allahabad bench has in the case of M/S EXPRESS ENGINEERS SPARES PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, GHAZIABAD AND SH. NARESH KUMAR GUPTA (DIRECTOR) VERSUS COMMISSIONER, CENTRAL TAX, GST CENTRAL EXCISE, MEERUT [ 2022 (1) TMI 564 - CESTAT ALLAHABAD] held he finding in the impugned order that since the appellant was responsible for the maintenance and repair of the diesel generator sets, the appellant has retained effective control, cannot also be sustained because once the control and possession of the diesel generator sets was transferred to the customers, mere maintenance or repair work will not change the nature of the transaction. Since it is found that the facts of the case in hand, as noted in the impugned order, are identical to the above referred decisions, the issue stands settled by these decisions in favour of the appellant. As the issue is decided on the merits of case itself in favour of the appellant, it is nor necessary to consider the issue on limitation. As the demand of service tax cannot be sustained so the demand of interest and penalties imposed also need to be set aside. Appeal allowed.

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• 2024 (2) TMI 198
  Levy of service tax - advance payment received from their clients (and accounted under the head debtors indicating negative) - invocation of extended period of limitation - suppression of facts or not - HELD THAT:- The appellant maintained a current account with the network firms and by issue of debit notes they were able to make adjustments of the amount to the paid and to be received by them in respect of network firms. It is seen that the network firms have raised invoices on the appellant collecting the Service Tax from the appellant. For the payments along with Service Tax made to network firms the appellant has availed credit of such Service Tax as input service and there is no dispute in this regard. The appellant has availed Cenvat Credit of the Service Tax collected from them by network firms. This means the net work firms have collected Service Tax from appellant and discharged their liability. The department has no dispute on the Cenvat Credit availed by appellant in this regard. So also there is no dispute that appellant has not discharged Service Tax on the payments received for providing services. The allegation is that they did not discharge Service Tax on advance payments. As already stated, there is no evidence of any transactions of receiving advance payment which has escaped payment of tax. The accounting of amount under the head negative debtors is assumed by department as advance payments. The department has not been able to correctly establish the basis of demand and has raised the demand on a suspicion of the accounting done under the head Debtors with negative marking - thus the demand cannot sustain. The issue on merit is answered in favour of appellant. Extended period of limitation - Suppression of facts or not - HELD THAT:- The department has failed to establish any positive act of suppression on the part of the appellant. The demand raised invoking the extended period is therefore not sustainable. The appellant succeeds on the issue of limitation also. The impugned order is set aside. The appeal is allowed.

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• 2024 (2) TMI 197
  Classification of services - reverse charge mechanism - providing offshore drilling services to oil majors - services of various service providers located outside India, to provide engineering consultancy, management consultancy, testing inspection and banking service - Jurisdiction of ADG DGCEI to issue SCN - Complexities of Administration and Shared Jurisdiction - Contracts / Agreements and the Best Evidence Rule - Consulting Engineering Services Vs. Manpower Recruitment Service - The Test Of Employer and Employee or Master and Servant relation - Management Consultancy Services Vs. Intellectual Property Service - Additional Evidence The Legal Issues Involved - Banking and Financial Services - Entire Activity Takes Place Outside India, Hence Not Taxable - Reimbursables Cannot Form a Part of the Value - Technical Inspection - Legal Consultancy Service - Judgments. Jurisdiction of ADG DGCEI to issue Show Cause Notice - HELD THAT:- Once a person is empowered under the Act there is no statutory bar on his exercising the powers given there under even if administrative instructions proscribe his activities. His actions will remain legally valid as there is no jurisdictional error even if there may have been the transgression of an administrative circular. The Hon ble Supreme Court in PAHWA CHEMICALS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI [ 2005 (2) TMI 136 - SUPREME COURT] examined a similar matter and held that the Board can only issue such direction as is necessary for the purpose of and in furtherance of the provisions of the Act - for the purposes of better administration of levy and collection of duty and for purpose of classification of goods the Board may issue directions allocating certain types of works to certain Officers or classes of Officers. These administrative directions cannot take away jurisdiction vested in a Central Excise Officer under the Act. At the highest all that can be said is Central Excise Officers, as a matter of propriety, must follow the directions and only deal with the work which has been allotted to them by virtue of these Circulars. But if an Officer still issues a notice or adjudicates contrary to the Circulars it would not be a ground for holding that he had no jurisdiction to issue the show cause notice or to set aside the adjudication. Complexities of Administration and Shared Jurisdiction - HELD THAT:- Certain changes in the designation of officers were made in Rule 3(2) on 30/06/2017 only to accommodate newly designated officers. In the light of Rule 3(3) any officer superior to the officer who is empowered to issue demand notice and adjudicate notice under Section 73 of Finance Act, 1994 can do the same if the officer designated is subordinate to him. Hence so long as the officer has the jurisdiction to issue a notice there is no infirmity in his action. Having issued a notice, as discussed above, it cannot be insisted that the same officer should also adjudicate the matter. There is no such legal necessity as seen from the Pahwa Chemicals judgment - Whether DGCEI officers are Central Excise Officers or not was examined by the Hon ble Madras High Court in M/S. REDINGTON (INDIA) LIMITED VERSUS PRINCIPAL ADDITIONAL DIRECTOR GENERAL, CHENNAI [ 2022 (7) TMI 231 - MADRAS HIGH COURT] . It was held that without doubt, the officers from the Directorate are Central Excise Officers as they have been vested with the powers Central Excise officers - the averments of the Appellant fails to convince of any jurisdictional error in the maintainability of the SCN. Contracts / Agreements and the Best Evidence Rule - HELD THAT:- Section 91 of the Indian Evidence Act, 1972 gives immense importance to documentary evidence over oral ones. Hence when written agreements and documents are available they are the best evidence to demonstrate a fact or to understand it. Further, as per section 106 of the Evidence Act, the fact within the knowledge of a person must be proved as the burden is cast upon him. Consulting Engineering Services Vs. Manpower Recruitment Service - HELD THAT:- The fact that the hired personnel are available at site on a continuous 28-day basis before taking a break (clause 4), could be due to administrative exigencies and convenience, necessitating such an arrangement. The Consultants are hired for the safe and sound operation of its Offshore Drilling Units which would by and large involve them advising the Appellant at the spot and not for operating the rigs, as would be expected of hired labour. Thus, the matrix of fact regarding the engagement of consultants and the intention of parties can prima facie be discerned by the term consultant being repeatedly used to denote the relationship of the hired team and its members with the appellant in the agreement. Moreover, the words in any manner emphasized in the definition extracted above i.e. consultancy or technical assistance in any manner to a client , is of the widest import and is equivalent to every manner . The term in any manner also appears in MRSAS, which pertains to a more general taxable service. A more generalised service must yield to the more specific one for classification. The Test Of Employer and Employee or Master and Servant - HELD THAT:- In the present matter the Appellant has failed to rebut the allegations in the SCN and findings in the impugned order satisfactorily and hence their pleading fails to disturb the findings in the impugned order. Management Consultancy Services Vs. Intellectual Property Service - HELD THAT:- Revenue has been able to show that the Agreement was governed by and construed in accordance with the laws of India. The approvals for the collaboration were issued by the Secretariat of Industrial Approval, (Foreign Collaboration Section of Department of Industrial Approval, Development) and Reserve Bank of India. Without the rigs being within designated areas in the Indian Territory the above laws could not have been made applicable to them. The Appellant is having its registered office in Chennai, Tamil Nadu. Having discharged the primary burden of proof to show that the services were taxable in India, it was for the Appellant to rebut the same. Information that was in the special knowledge of the Appellant, if any, should have been disclosed to the Department. Hence it was correctly pointed out in para 11.7 of the impugned order, that all activities were centered around India and the beneficiary was also the Appellant in India. Further Section 66A imposes two conditions which need to be satisfied for the levy of service tax on import of Services i.e. (i) Service must be received by a person (recipient) who has his place of business, fixed establishment, permanent address or usual place of residence, in India, such service shall, for the purposes of this section, be taxable service, and such taxable service shall be treated as if the recipient had himself provided the service in India (ii) Service is provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent address or usual place of residence, in a country other than India. The service provided by the service provider satisfy both the conditions and hence are exigible to tax as per the reverse charge mechanism. Hence this argument of the Appellant does not succeed. Additional Evidence The Legal Issues Involved - HELD THAT:- The learned Adjudicating Authority has admitted that demand made on accrued expenses as on 16/05/2008, if any, is not sustainable and is liable to be dropped in line with the judgment of the Tribunal in SIFY TECHNOLOGIES LTD. VERSUS LTU, CHENNAI [ 2012 (5) TMI 376 - CESTAT, CHENNAI] . However, he has lamented the lack of duty paid details for the period to tally the payments made. This should have been provided by the Appellant as it was in their knowledge and interest but was surprisingly not responded to nor sought to be placed before us. The doctrine of laches is commonly construed as the equitable doctrine by which a court denies relief to a claimant who has unreasonably delayed in asserting one s legal right or privilege. In this case by not providing verifiable details, the same is now hit by the doctrine of laches . Hence their unsubstantiated pleadings merit no relief - The prayer of the Appellant that service classified as Management Consultancy Services merits to be classified as Intellectual Property Service does not succeed. Banking and Financial Services - the entire activity takes place outside India hence the service is not taxable under FA 1994 - HELD THAT:- The person who is legally entitled to receive a service is the one obliged to pay the consideration as per the Agreement which in this case is the appellant only. Further, the question to be asked is did the parties have in mind or intend separate payments for separate activities demarcated in the agreement. If there was no such intention, then it is a composite agreement for a service which cannot be vivisected. Hence it is the Appellant who facilitates the foreign currency investors by offering them the opportunity to invest in their (Appellants) company through the bonds with the potential for equity conversion. In the absence of an agreement, it was deduced that all such activity which takes place outside the taxable territory in connection with the FCCB and involving investors, third parties etc. abroad are on account of the Appellant and are not to be counted as service rendered by Barclays UK to such investor or third party abroad - A negative test may also be of help in deciding the issue involved. If the launch offering and sale of the FCCB abroad fails on the very first day, it is the Appellant who will feel the direct pinch of any deficiency in service from Barclays UK or for any other reasons and not the investors or any third party. As per the agreement Barclays UK will still be eligible for their fee calculated as a percentage of the gross proceeds received in respect of the issue of the FCCB from the Appellant. Hence the services provided from outside India by Barclays UK is received by the Appellant in India with a reverse flow of consideration for the said activity and the service is exigible to tax under the Reverse Charge Mechanism as per section 66A(1) of FA 1994. The appellants averments on this count thus fails. Banking and Financial Services - Reimbursables Cannot Form a Part of the Value - HELD THAT:- It is noticed from the impugned order at para 11.8, 11.9, 13.2, 16.0 etc. that the Appellant has not been forthcoming with information even before the learned Adjudicating Authority although it is in their exclusive knowledge. The impugned order notes that details called for by DGCEI was submitted in a piece meal manner stretching over a period of two years. Even now we have not been able to discern what the reimbursable expenses sought to be claimed and due to a lack of descriptive information about the same. As stated by the Hon ble Supreme Court in A.C. ARULAPPAN VERSUS SMT. AHALYA NAIK [ 2001 (8) TMI 1428 - SUPREME COURT] law courts never tolerate an indolent litigant since delay defeats equity. We hence find no reason to differ with the impugned order on this matter. Technical Inspection - HELD THAT:- Paras 13 to 13.2 of the impugned order states that no documentary evidence was provided by the appellant to substantiate their claim and rebut the allegations contained in the SCN. Neither have they alluded to the availability of such information - there are no reason to differ from the findings in the impugned order on this issue. Legal Consultancy Services - HELD THAT:- The Appellant does not dispute the classification of the service but hold that that since the entire activity has taken place outside India the confirmation of demand under legal consultancy services is not tenable - Consultancy is a knowledge or technique-based service and is not linked to any identifiable immovable property. It is found that the consultancy with the service providers relate to advice and consultancy in legal matters. Consultancy was provided to the Appellant who is situated in India and hence satisfies the provisions pf Sec 66A to be exigible to Service Tax as discussed in connection with other consultancy services above. Limitation and Penalty - HELD THAT:- The alternative classification was done by the Appellant after investigation were started against them and these classifications were not found to be correct. Further the Appellants action cannot be said to be caused by a bonafide dispute, on technical grounds because the sections are clear and the appellant is also one who has been availing of legal and consultative advice in various matters and have not shown that they were in receipt of valid and cogent contrary advice not to pay tax. They have also not sought any clarification from the department for any of the impugned service. Hence the benefit of Section 80 of the Finance Act as amended is also not available to them as there is no reasonable cause for the failure to pay tax - there are no demerit in the impugned order covering the extended period of demand and imposition of penalty. Thus, the lower authority has taken a view which is reasonable, legal and proper and the same is agreed with. The impugned order is hence upheld. The appeals are disposed off accordingly.

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• 2024 (2) TMI 196
  Liability of service tax - Advertising Agency - Demand of service tax where they had not paid service tax but had paid only VAT and where they paid neither service tax nor VAT - credit of service tax taken by Ad-inn in respect of broadcasting of advertisement which are not their input services, is admissible under CCR or not - invocation of extended period of limitation. Nature of activities: i. Taxable services such as conducting events, road shows, promotional activities, designing and erection of hoarding, etc., ii. Exempted services, wall painting, etc., iii. sales related activity, i.e., printing of wall posters, bills, banners, making glow boards etc., iv. Releasing of advertisement in News Paper/TV/Radio channels on commission basis. Liability to pay tax - Advertising Agency - HELD THAT:- The assessee is indicating a value in the invoices which is inclusive of the Commission received on which service tax is duly paid. From the clarifications issued in the above circular, it is amply clear that the Appellant in this case is required to pay service tax on the commission received from the print media for publishing of advertisements and also for release of advertisements in TV and FM Radio - the Commission earned by the Appellant is taxable only to the extent charged and included in the gross value and not the entire gross amount indicated in the invoice. Since the Appellant has discharged VAT and Service Tax on the relevant portions of Sale or Service, as the case may be, demand of Service Tax in respect of sale transactions is not legal and so cannot be sustained. The lower adjudicating in Para 17 of the impugned order computed the differential value from the Appellant s financial statements without analysing in detail whether the Appellant was indulging in making and preparation of the advertisements involving conceptualization, visualization and designing. As such, inference drawn and findings are devoid of merits - The advertising materials like glow sign boards, flex printing, broachers, stickers, tags, posters, hand bills, signages, etc., which cater to the requirements of the specific customers, on which VAT is paid, is not leviable to Service Tax - Service Tax cannot be demanded in respect of cloth banners and wall painting transactions without first analyzing the nature of work undertaken by the appellant in detail. Recovery of CENVAT credit erroneously taken, alongwith interest and penalty - Advertising Service - for the periods 01.07.2006 to 31.07.2008, 01.04.2007 to 31.03.2011 and 01.04.2011 to 31.03.2012 - HELD THAT:- The Appellant, in the case of advertisement through FM/Visual media, at the behest of their clients were availing the services of FM and TV channels including satellite channels who charged service tax along with charges for broadcasting the advertisements. As it is a part of their advertisement work, it is an input service. The only condition for availing credit on inputs / input services is that the said services should be used directly or indirectly in providing the output service and in their case, the Appellant have directly utilised the services of broadcasting agencies and other advertising agencies to provide the output services and hence they are eligible to avail the service tax paid on the said service providers - The Appellant is an advertising agency and so they can avail the services of broadcasting agencies and hence the services of broadcasting are an input service. At no point of time, the appellant were acting as intermediaries and hence the Appellants are entitled to avail the credit of Service tax paid by them as input services. Invocation of extended period of limitation - HELD THAT:- The appellant was issued with a Show Cause Notice dated 12.10.2007 vide C.No. V/30/16/2007-STU by the Assistant Commissioner of Central Excise and Service Tax, Madurai involing the same issue of suppression of Service Tax values when ST-3 returns filed were compared against the relevant financial statements of the appellant for the period from 01.04.2002 to 30.06.2006. Again involving the same issue and by invoking extended period, these impugned Show Cause Notices No. 03/2011-ST dated 03.11.2011, No. 09/2012-ST dated 11.10.2012 and No. 06/2013-ST dated 12.07.2013 for periods from 01.07.2006 to 31.07.2008, 01.04.2007 to 31.03.2011 and 01.04.2011 to 31.03.2012 were issued against the appellant demanding Service Tax and proposing penalties which is blatantly against the provisions of law. The impugned orders are set aside - Appeal allowed.

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• Central Excise

• 2024 (2) TMI 195
  Seeking withdrawal of the appeals - Sabka Vishwas Scheme, 2019 - HELD THAT:- Learned Counsel for the respondent/Revenue has no objection in allowing the applications. In the circumstances, the Appeals are permitted to be withdrawn so as to enable the appellant to participate in the aforesaid Scheme. The applications are allowed in the aforesaid terms and the Civil Appeals stand withdrawn.

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• 2024 (2) TMI 194
  Scope of SCN - Extended period of limitation - paid excess duty for a few quarters - paid less amounts for a few quarters - no proposals in the show cause notice for recalculation - HELD THAT:- On regular basis the provisional assessments were finalized and the finalization of provisional assessments were adjudication orders passed by Assistant or Deputy Commissioner. If Revenue was aggrieved by the said orders, the course of action provided by law for Revenue was to prefer appeal against such finalization orders before learned Commissioner (Appeals). After the limitation period for filing of appeal before Commissioner (Appeals) is over, then such assessments orders become final in law and cannot be reopened. In the present case, learned original authority has reopened such assessment beyond the period of limitation and, therefore, the impugned order is not sustainable. Further, learned original authority in this case also did not have jurisdiction to reopen such assessments for the reasons that the proper authority to reopen assessment made by Assistant or Deputy Commissioner under Central Excise law is Commissioner (Appeals). Therefore, the impugned orders are not sustainable. The impugned orders are set aside - appeal allowed.

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• 2024 (2) TMI 193
  Denial of Cenvat Credit - Area Based Exemption - allegation that the supplier had wrongly availed North East exemption N/N. 20/2007-CE, by paying excess duty through the mode of adopting higher value as determined under Section 4A of Central Excise Act, 1994 instead of adopting the value as under Section 4 of Central Excise Act, 1994 r/w Rule 8 of CVR 2008 - whether the credit of duty paid on Mosquito Repellent Refills procured from GCPL, Guwahati are legal and proper? - HELD THAT:- Rule 12 of Cenvat Credit Rules, 2004 states that in the case of Area Based exemption notification, the credit on inputs and capital goods shall be admissible, as if no portion of the duty paid on such inputs or capital goods was exempted under the said notification. The rule carves out a special provision wherein, by Area based exemption notification, even if the duty paid by manufacturer is refunded, the Cenvat credit availed of duty paid on inputs and capital goods would be eligible. The appellant has rightly availed the Cenvat credit of the duty collected from them by the manufacturer who has availed area based exemption notification. The appellant does not have any say or control as to the method of valuation adopted by the manufacturer, who supplied the inputs to the appellant. Cenvat credit cannot be denied at the recipient s end, without any legal basis. The High Court of Madras, in the case of COMMISSIONER OF CENTRAL EXCISE, CHENNAI-I VERSUS CEGAT, CHENNAI [ 2005 (1) TMI 125 - HIGH COURT OF JUDICATURE AT MADRAS] High Court of Judicature at Madras, had occasion to analyse a similar situation wherein, the supplier of goods was unaware of an exemption notification and paid the duty on the final product which was passed on to the assesse. The department was of the view that as the supplier is eligible for exemption, the assesse is not eligible for credit. The High Court of Madras held that if the duty has been paid on the inputs, Cenvat credit cannot be denied. In the case of BALAKRISHNA INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., JAIPUR-I [ 2015 (1) TMI 938 - CESTAT NEW DELHI] , the issue under consideration was whether the goods supplied to the appellant without availing the benefit of Notification No.44/2001-CE (NT)/ 26.06.2001 and consequent credit passed on to assesse was eligible or not. The Tribunal followed the decision in the case of COMMISSIONER OF CENTRAL EXCISE CUSTOMS VERSUS MDS SWITCHGEAR LTD. [ 2008 (8) TMI 37 - SUPREME COURT] to hold that credit is eligible. The denial of credit is not justified. The demand, interest and penalties cannot sustain - Appeal allowed.

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• CST, VAT & Sales Tax

• 2024 (2) TMI 192
  Extension of time for payment under Section 8(1) of the Jammu Kashmir General Sales Tax Act, 1962 - Compliance with the requirements of proviso to Section 11 (1) of the Act - HELD THAT:- The scope and purport of Explanation to 3rd proviso to Sub Section (1) of Section 11 the Act would be that even if any appeal has been preferred challenging the correctness of the assessment of the tax and other demands made under Section 8 of the Act, in the meantime, if the applicant assessee seeks extension of time for making payment under Section 8 of the Act, the provisions of Sub-section (1) of Section 11 of the Act will not be applicable, inasmuch as, if the assesee decides to make the payment of the assessed amount by seeking extension of time, the question of filing appeal within 30 days from the date he is served with the notice of demand, or making any deposit as required under Clauses (a), (b) and (c) will not arise. The Explanation cannot be invoked to seek deferment of payment stipulated under Clauses (a), (b) and (c), which will be necessary for the appellant authority to entertain the appeal as the statute is very clear that no appeal shall be entertained unless the appellate authority is satisfied that the payments required under Clauses (a), (b) and (c) have been made. Nothing prevented the petitioner from filing the return with the claim of nil liability towards the taxes by taking the plea that he was not liable to pay any tax, as all taxes were to be paid by the Principal Contractor and not by the petitioner. Thus, the above assessment order dated 29.03.2021 clearly shows that the petitioner assessee was given an opportunity to appear and produce relevant documents, and though a representative of the assessee petitioner had appeared, he failed to produce any such document or explain his position which is sought to be explained. Similarly, the assessee also failed to file the return showing absence of any liability to pay tax as per the terms and conditions of the contract and the Letter of Intent. The petitioner himself has to be blamed for the situation he finds himself now. Though the statutory requirement for payment of the amount as stipulated under Clauses (a), (b) and (c) of the second proviso to the Section 11(1) of the Act may appear to be harsh against the petitioner, yet, this is a situation he could have avoided by presenting relevant documents before the Assessing Authority at the time of hearing and also by filing return showing a nil Tax liability. The petitioner will be liable to pay necessary amount as contemplated under Clauses (b) and (c) to the second proviso to Sub-Section (1) of Section 11 of the Act for the appeal to be entertained by the appellate authority, and no case has been made out to interfere with the impugned order dated 27.03.2023 passed by the respondent no. 2 - Petition dismissed.

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• Indian Laws

• 2024 (2) TMI 191
  Dishonour of Cheque - Funds insufficient - Offences by companies - vicarious liability - roles and responsibilities of directors and non-directors of a company - HELD THAT:- Apart from mentioning the petitioners in CRR 196 of 2016 as non-directors and in CRR 197 of 2016 as directors , the complainant has also described as to how the said accused persons by their oral representation depicted the property to be so lucrative that it led to the misunderstanding of the complainant about the potency of the property as well as the bone fide of the accused persons. The argument advanced on behalf of the petitioners in CRR 196 of 2016 and CRR 197 of 2016 cannot be accepted. Instead, a case has been made out sufficiently regarding their alleged involvement. Policy decisions being made by the petitioners for the accused company, their active involvement in executing those and accruing benefits therefrom, are apparent. Likewise, it is also apparent that at the relevant point of time, excepting the present petitioners, there were no other directors or nondirectors , in the said company and also that the concerned cheques were issued by them. Considering the attending facts and circumstances as discussed above and the object and purpose of the statute itself as delineated above, this Court hardly finds any impropriety in the orders passed by the Metropolitan Magistrate regarding taking cognizance of offence under section 138 and 141 of the Negotiable Instruments Act. Service of the notice / summons to the company - Held that:- From the reading of provisions under Section 65 and under Section 305 of the Cr.P.C, it appears firstly that affixing duplicate of summons at a conspicuous place of the company would satisfy requirement of good service thereof to a company. It shows also that no coercive action has, however, been provided by the statute in case of absence of a representative of an accused company, even after due service of summons to it. In case he appears, according to section 305(3) of the CrPC, statutory requirements of things to be done, read, stated or explained in presence of the accused, would be construed to be required to be so done in presence of the said representative. It has further been provided that the requirement of law of examination of the accused company would be construed to be as the requirement of examination of the said representative. However, in his absence, the statute has provided that provisions under section 305(3) of the CrPC, would not apply. Company as a juridical person cannot be physical apprehended. - The natural consequence would be that an order of issuance of warrant of arrest may not be an executable order under law against the company, which is a juridical person. However, company as an accused person cannot be seized of the liability to face the trial and punished, if found guilty, in case the Court finds the summons to have been duly served upon it. An appropriate punishment as prescribed under the law would be applicable in its case. This Court finds it proper to interfere into the impugned order dated December 11, 2015, of the Magistrate, to the extent as necessary. So far as the issuance of warrant of arrest and order of attachment against the company namely M/s. AKJ Mineral Ltd, i.e, petitioner in CRR 278 of 2016 is concerned, the same is found to have been passed in disobedience and derogation of the statutory provisions and thus is violative of the same. For this reason the same cannot be maintained and should be set aside. For the Magistrate a decision pursuant to an enquiry regarding due service of summons to the accused company, would suffice, to let it proceed with the trial of the case - so far as the accused company is concerned. The impugned order dated December 11, 2015, is modified to that extent. The case is allowed in part.

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