TMI Tax Updates - e-Newsletter
February 6, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Law of Competition PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. NON-FILING OF GST RETURNS AMOUNT TO SUPPRESSION OF FACTS

   By: DR.MARIAPPAN GOVINDARAJAN

2. DGFT's Role in Quality Complaints and Trade Disputes

   By: YAGAY andSUN

3. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

4. Government Schemes Offering MSME Benefits in 2025

   By: Ishita Ramani

5. MOEFCC - Categorization of Industrial Sectors

   By: YAGAY andSUN

6. In-depth exploration of the Poison Act, 1919, and the associated Poison Rules, 1925

   By: YAGAY andSUN

7. Understanding the Patent Cooperation Treaty (PCT) and Its Impact on Indian Patent Laws.

   By: YAGAY andSUN

8. Green Chemistry and Its Impact on International Trade

   By: YAGAY andSUN

News

1. BMC budget gives 'hollow promises', neglects civic issues, alleges NCP (SP)

2. Tax Relief Wins Applause, But Will It Boost Consumption? Industry Leaders React

3. Union Budget 2025 Reactions: This is how industry leaders reacted to the Union Budget 2025

4. BMC to spend 10 pc of budget amount on health services; to redevelop its hospitals to add 3,515 beds

5. BMC allocates Rs 1,000 crore to transport body BEST in budget; focus on e-buses

6. BMC says cement concretisation of 1,335km roads completed; parking app in offing

7. BMC budget is people-centric; there is no hike in tax, says DyCM Shinde

8. Sensex drops 312 pts on selling in consumption stocks ahead of RBI policy

9. Sensex drops over 300 points ahead of RBI monetary policy decision

10. Bombay HC to hear Skoda Volkswagen's plea against USD 1.4 bn tax notice on Feb 17

11. Global gold demand flat at 4,974 tonnes in 2024 amid high prices, soft economic growth: WGC

12. CCI approves the proposed acquisition of certain shareholding in POSCO - India Pune Processing Center Private Limited by POSCO India Processing Center Private Limited

13. APEDA’s financial assistance schemes boosts 47.3% surge in India’s fruit and vegetable exports

14. BMC to levy property tax on commercial establishments in slums

Notifications

Customs

1. G.S.R. 111(E) - dated 4-2-2025 - Cus

Corrigendum - Notification No. 05/2025-Customs, dated the 1st February, 2025

IBC

2. IBBI/2024-25/GN/REG122 - dated 3-2-2025 - IBC

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025

Highlights / Catch Notes

GST

• Taxpayer's CGST Payments Made Under Duress and Threats of Arrest Invalid Under Section 74(5)

  Case-Laws - HC : HC determined that payments made under CGST Act were coerced, not voluntary self-ascertainment under Section 74(5). Evidence showed statements were recorded and deposits made under duress, with implicit threats of arrest. The timing of payments - one made after summons issuance and another during Bengaluru appearance - indicated coercion. Court rejected appellant's argument that respondent's affidavit challenging statements was belated, noting one-week gap was not fatal. Finding the recovery contrary to law, HC upheld single judge's order directing refund with interest. The cumulative facts demonstrated clear pattern of threat and coercion, invalidating both recorded statements and subsequent payments. Appeal dismissed.
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• Promoter Cannot Deduct GST Loss from Apartment Cancellation Refund Despite 10% Cancellation Charges in Agreement

  Case-Laws - HC : HC ruled against the promoter's attempt to deduct GST loss of Rs. 11,40,376/- from the refund amount following apartment cancellation. The court found no contractual provision in the Sale and Construction Agreements for GST deduction upon cancellation. The promoter's initial communication only mentioned 10% cancellation charges, revealing GST loss deduction only after the allottee refused to purchase an alternative apartment. The promoter failed to prove double GST payment for the same apartment. The court upheld the Appellate Tribunal's order allowing withdrawal of pre-deposit amount with accrued interest, directing the allottee to provide biweekly updates on refund application progress. Appeal dismissed.
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• Input Tax Credit Claims Under Section 73 Must Be Reviewed When GSTN Details Were Actually Present Despite Initial Rejection

  Case-Laws - HC : HC examined proceedings under Section 73 of UP GST Act regarding disputed input tax credit claims. The authority initially rejected certificates filed per Government Order dated 27.12.2022, claiming absence of GSTN details. Upon review, HC found GSTN numbers were clearly mentioned in submitted certificates. Given this material discrepancy in assessment, HC remanded the matter to original authority for fresh consideration. Authority directed to review all materials, conduct stakeholder hearings, and issue reasoned order within three months of certified order copy production. Petition allowed through remand, emphasizing need for comprehensive review of documentation and proper procedural compliance in input tax credit determination.
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• Company Wins Challenge Against Blacklisting After Trade Authority Failed to Consider Detailed Representation Before Taking Action

  Case-Laws - HC : HC ruled in favor of petitioner challenging placement on Denied Entity List by Director General of Foreign Trade. Court found authority's failure to consider petitioner's 11-page detailed representation dated 25.04.2016 before blacklisting was procedurally improper and legally untenable. Mandamus issued directing authorities to consider representation and remove petitioner from Denied Entity List. Court emphasized administrative obligation to evaluate substantive submissions before taking adverse action. Decision underscores principle of natural justice requiring fair consideration of representations before implementing prejudicial measures.
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• Non-woven Fabric and PPSB Bed Sheets Attract 12% GST Under HSN 75603 and 6304 Classifications

  Case-Laws - HC : HC ruled in favor of the appellant regarding classification and taxation of non-woven fabric and PPSB bed sheets under GST. The court confirmed non-woven fabric made from manmade filament is correctly classified under Chapter 56 (HSN 75603) attracting 12% GST instead of 18%. For PPSB bed sheets, the court rejected revenue's attempt to shift burden of proof to appellant and found classification under HSN 6304 appropriate. The court set aside the single bench's remand order, directed immediate processing of refund application with statutory interest, noting that fresh consideration was unnecessary given clear legal position favoring appellant. The original writ petition was allowed, providing definitive resolution on classification disputes.
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• GST Appeal Relief: Assessee Gets Stay on Recovery After 10% Pre-deposit Under Section 112(9) of CGST Act

  Case-Laws - HC : HC addressed maintainability of GST petition where appellant sought stay on tax recovery due to non-constitution of GST Tribunal. Following legislative amendment to Section 112 of CGST Act 2017, pre-deposit requirement was reduced from 20% to 10% for appeals. Despite Tribunal's non-existence, court granted interim relief based on precedent, allowing assessee to deposit 10% of disputed tax amount in addition to amount already deposited under Section 107(6). Court held that petitioner cannot be denied statutory benefit under Section 112(9) due to administrative delay in Tribunal formation. Recovery proceedings for balance amount stayed until Tribunal constitution and appeal filing. Petition disposed with direction to comply with modified deposit requirement.
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Income Tax

• Income Tax Department Authorizes DGIT Systems to Share Taxpayer Data for PMGKAY Beneficiary Verification Under Section 138(1)(a)

  Circulars : CBDT exercised authority under Sec 138(1)(a) of Income Tax Act to designate DGIT (Systems) as specified authority for sharing taxpayer information with DFPD to identify PMGKAY beneficiaries. The information sharing mechanism requires DFPD to provide Aadhaar/PAN details, whereupon DGIT Systems will respond with Yes/No/Not Available flags regarding income thresholds. For Aadhaar numbers not linked to PAN, unavailability will be indicated. The process necessitates an MoU between DGIT Systems and DFPD covering data transfer protocols, confidentiality measures, and preservation standards. The MoU must establish timelines and operational procedures while ensuring data security and appropriate disposal after use.
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• Tax Reassessment Notices Invalidated Due to Lack of Fresh Evidence Under Section 147, Original Return Had Full Disclosure

  Case-Laws - HC : HC quashed reassessment notices and order finding them invalid under Section 147 of Income Tax Act. Notices issued after four years were without fresh material indicating escaped income. Complete disclosure was made in original return and assessment under Section 143(3). AO's attempt to revisit Section 14A disallowance constituted mere change of opinion, not valid grounds for reopening. Court emphasized that determining Section 14A disallowance was AO's responsibility during original assessment, where assessee had provided all relevant documents. Reopening failed first proviso requirements of Section 147, particularly beyond four-year limitation period. Jurisdiction could not be assumed without failure by assessee to disclose material facts.
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• Recording Satisfaction Note Mandatory Under Section 153C Before Initiating Proceedings Against Other Persons

  Case-Laws - HC : HC affirmed that recording a satisfaction note is mandatory before initiating proceedings under Section 153C, even when the Assessing Officer for both searched and other persons is identical. The court relied on CBDT Circular No.24/2015, which mandates recording separate satisfaction notes following Apex Court guidelines. The absence of a distinct satisfaction note pertaining to the other person invalidates proceedings under Section 153C. HC upheld the ITAT's order, finding it consistent with established legal principles. The revenue's appeal was dismissed, confirming CIT(Appeals) and ITAT's previous rulings that emphasized the fundamental requirement of a properly documented satisfaction note as a jurisdictional prerequisite for Section 153C actions.
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• Cooperative Bank's Interest Income Eligible for Section 80P(2)(d) Deduction After Successful Appeal Under Section 154

  Case-Laws - AT : ITAT allowed appeal against CIT(A)'s dismissal of rectification petition under s.154 concerning deduction claim under s.80P(2)(d). CIT(A) erroneously held s.154 orders non-appealable, contradicting express provisions of s.246A(c) which permits such appeals. Assessee's interest income from cooperative banks remained undisputed by revenue authorities. Appeal rejection was purely on legal grounds rather than factual merits. Tribunal set aside impugned order, noting clear statutory right of appeal against rectification orders. Addition deleted based on established judicial precedents and interpretation of s.246A(c). Assessee's appeal sustained with favorable outcome on both procedural and substantive grounds.
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• Society's Educational Institution Exemption Claims Under 10(23C)(iiiad) and 10A/10AA Denied Due to Insufficient Evidence and Late Filing

  Case-Laws - AT : ITAT rejected assessee society's claim for exemption under sections 10A/10AA due to lack of documentary evidence supporting reduced gross total income. Additional ground claiming educational institution exemption under 10(23C)(iiiad) was dismissed on two grounds: insufficient facts to establish non-profit educational purpose, and belated filing of original return beyond stipulated time under section 139(4C)(c). Following Goetze (India) Ltd. precedent, ITAT upheld lower authorities' assessment of Rs. 14,32,822/- as gross income originally declared by assessee. Though Goetze allows claims before ITAT, assessee failed to substantiate eligibility for 10A/10AA exemption. Appeal dismissed against assessee.
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• Service Fees Not Taxable as FIS Under Article 12(4)(b) of India-USA DTAA, Following Previous Year's Treatment

  Case-Laws - AT : ITAT ruled that service fees received were not taxable as Fees for Included Services (FIS) under Article 12(4)(b) of India-USA DTAA, consistent with previous treatment of consultancy and training fees in AY 2020-21. DRP findings remained identical across both assessment years. Interest under sections 234A and 234B to be levied as per law. AO directed to verify and allow TDS credit claims according to legal provisions. Regarding incorrect adjustment of refund recovery, AO instructed to examine assessee's claim and modify tax computation in accordance with law. Grounds 4 to 11 were allowed in favor of assessee.
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• Penalty Under Section 271(1)(c) Deleted After Quantum Addition Removed in Prior Ruling on Manufacturing Income Classification

  Case-Laws - AT : ITAT set aside penalty under s271(1)(c) of Income Tax Act following deletion of quantum addition in earlier proceedings. The underlying dispute involved classification of supervision income as "Income from Other Sources" versus manufacturing income eligible for s80IB deduction. Tribunal found CIT(A)'s order arbitrary and perverse for failing to acknowledge prior ITAT ruling that eliminated the basis for penalty. Noting serious deficiencies in appellate adjudication, ITAT directed matter to Pr. CCIT Ahmedabad for administrative review. Following established principle that penalty cannot survive when its foundation ceases, penalty was deleted and appeal allowed.
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• Tax Penalty Canceled: Mine Reclamation Expense Claim Under Section 37(1) Found Genuine Despite Disallowance Under 271(1)(c)

  Case-Laws - AT : ITAT dismissed Revenue's appeal against CIT(A)'s order canceling penalty under s.271(1)(c). Assessee's claim for Mine Reclamation Expenses, though disallowed, was based on bonafide belief of allowability under s.37(1) per Mineral Conservation Rules. AO erroneously concluded absence of explanation despite documented submissions. Assessee disclosed primary facts and demonstrated reasonable cause under s.273B. Additionally, penalty notice under s.274 cited furnishing inaccurate particulars, while final order penalized for concealment of income, rendering penalty legally unsustainable due to charge inconsistency. ITAT upheld that no penalty was warranted given disclosed facts and reasonable cause defense.
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• Transfer Pricing: Corporate Guarantee Fees Reduced from 1.90% to 0.53%, Letters of Comfort Equated with Guarantees

  Case-Laws - AT : The ITAT addressed multiple transfer pricing issues regarding an assessee's international transactions. On the KPO versus software developer classification dispute, ITAT left the matter open for future determination due to insufficient reasoning from TPO/DRP. Regarding corporate guarantee fees, ITAT modified the TPO's assessment of 1.90% to 0.53%, aligning with the Hetero Labs Limited precedent. The tribunal directed computation based on actual guarantee periods rather than annualized basis. For letters of comfort, ITAT determined these were equivalent to corporate guarantees and required similar benchmarking at 0.53%, rejecting the TPO's higher rate of 1.90%. The decision established parity between ECB rates (1.67%) and corporate guarantee charges, mandating the latter be substantially lower.
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• Trust's Hospital Pharmacy and Related Income Deemed Exempt as Incidental Activities to Charitable Medical Services Under Section 11

  Case-Laws - AT : The ITAT ruled in favor of the assessee trust operating a hospital, holding that income from its pharmacy operations qualifies for exemption under Section 11. The Tribunal determined that selling medicines, though on commercial basis, was incidental to the trust's charitable purpose of providing medical relief. Additional revenue streams including interest from fixed deposits, PCO receipts, canteen operations, nursing course fees, and rental income from premises were deemed incidental to the trust's dominant charitable purpose. The ITAT emphasized that these activities did not require separate accounting under Section 11(4A) as they were integral to achieving the main objective of providing educational/medical relief. The ruling established that incidental profit generation does not negate charitable status when the predominant purpose remains charitable in nature.
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• Foreign Entity's Indian Subsidiary Acting as Communication Channel Not Constituting Permanent Establishment Under DTAA Article 5

  Case-Laws - AT : ITAT ruled against establishing a dependent agent Permanent Establishment (PE) of foreign entity (Japan) through its Indian subsidiary under India-Japan DTAA Article 5. Indian subsidiary functioned solely as a communication channel between Japanese parent and Indian customers, without authority to conclude contracts or maintain inventory. AO's application of Rule 10 with Section 44BB to estimate 10% deemed profits was rejected. ITAT found tax authorities' conclusions were based on assumptions without examining agency agreement or conducting independent inquiry. Despite trading business continuity, mere existence of business flow insufficient to establish principal-agent relationship. Clear factual evidence demonstrated absence of PE, negating need for further verification of contractual relationship between entities as directed in previous years.
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• Tax Deduction at Source Under Section 195 for License Fees to Non-Resident Entity Requires Fresh Examination

  Case-Laws - AT : ITAT set aside CIT(A)'s order regarding TDS obligations under s.195 for license fees paid to non-resident associated enterprise. The appellate authority failed to address crucial aspects: taxability of license fees under India-USA DTAA Article 12, and applicability of s.195 TDS requirements. CIT(A)'s decision was influenced by assessee's subsequent year tax compliance but lacked proper reasoning under s.250(6). Following established principle that statutory procedures must be strictly followed, ITAT found CIT(A)'s adjudication procedurally deficient. Both Revenue's appeal and assessee's cross-objection allowed for statistical purposes, with matter remanded for fresh consideration.
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Customs

• Importer's Plea Rejected: Failure to Act on Warehouse Transfer and Show Cause Notice Leads to Demurrage Under Section 49

  Case-Laws - HC : HC dismissed petition seeking release of imported goods without demurrage charges. Petitioner failed to follow up on moving goods to warehouse per their November 2021 communication and did not utilize court-granted liberty in September 2023. Despite CELEBI's application for securing demurrage payments, petitioner remained inactive. Petitioner also failed to participate in show cause notice proceedings. Court held that failure of Customs to issue timely show cause notice does not exempt petitioner from demurrage liability under Section 49 of Customs Act, 1962. Relief sought under Article 226 denied due to petitioner's inaction and non-compliance with regulatory requirements.
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• Protein-Based Mass Weight Gainer Classified Under CTH 21061000 as Specific Description Prevails Over General Category

  Case-Laws - AT : CESTAT allowed appeal regarding classification of imported Mass Weight Gainer under Customs Tariff Act. Product determined classifiable under CTH 21061000 (Protein Concentrates) rather than CTH 21069099 (residual category) based on GRI 3(a), which favors specific over general descriptions. Product primarily marketed as protein concentrate for muscle building, not medical recovery. Extended limitation period under Section 28(4) of Customs Act inapplicable as importer provided complete documentation at import, showing no suppression or misstatement of facts. Demand for differential duty set aside both on classification merits and limitation grounds.
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• Customs Notification Amendment Adding Integrated Tax on Re-Imported Goods Cannot Apply Retrospectively Under Section 25(4)

  Case-Laws - AT : CESTAT ruled that Notification No. 36/2021-Customs amending N/N. 45/2017-Customs cannot have retrospective effect. The amendment substituted "duty of customs" with "Said duty, tax or cess" for re-imported goods, creating new liability for integrated tax payment. While Explanation (d) claimed to clarify existing provisions, it effectively imposed additional tax obligations not present in the original notification. The Tribunal determined that since the amendment altered substantive tax liability rather than merely clarifying existing provisions, and lacked explicit retrospective application language under Section 25(4) of Customs Act, it could only apply prospectively from publication date. Prior CBIC circular suggesting retrospective application was deemed legally unsustainable.
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• Mobile Phone Importers' Refund Appeals Dismissed Due to Time-Bar Under Section 128(1) of Customs Act

  Case-Laws - AT : Appeals challenging refund rejection of additional customs duty on imported mobile phones were dismissed by CESTAT. Though appellant could benefit from time exclusion under Section 14 of Limitation Act (25.09.2015 to 18.09.2019), appeals remained time-barred under Section 128(1) of Customs Act. Original SCNs dated 26.09.2018 were adjudicated within valid timeframe considering COVID extensions and Chief Commissioner's extension until 30.06.2021. CESTAT upheld that department could validly issue Section 28 notices for erroneously granted refunds, rejecting appellant's contention that only appeal route was available. Commissioner (Appeals) correctly dismissed appeals as time-barred, even after accounting for excludable period, as they exceeded statutory 60-day filing window plus 30-day condonable delay period.
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DGFT

• Export of De-Oiled Rice Bran Prohibited Under Section 3 & 5 of FT Act Until September 2025

  Notifications : The DGFT has amended the export policy for De-Oiled Rice Bran under Chapter 23 of Schedule-II (Export Policy), ITC(HS) 2022. The notification modifies the previous policy by prohibiting the export of De-Oiled Rice Bran across multiple HS codes (2302 40 00, 2306 90 19, 2306 90 29) until September 30, 2025. This amendment affects various forms including bran, sharps, residues, oil-cake, and other solid residues derived from cereals or leguminous plants. The prohibition applies to both expeller variety and solvent extracted varieties. The policy change was implemented through powers conferred under Section 3 and Section 5 of the Foreign Trade (Development & Regulation) Act, 1992.
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Indian Laws

• Accused Successfully Rebuts Presumption Under Section 138 NI Act as Petitioner Fails to Prove Underlying Debt

  Case-Laws - HC : HC upheld acquittal in cheque dishonor case under Section 138 of NI Act. While respondents admitted signing cheques, they successfully rebutted statutory presumptions under Sections 118 and 139 through preponderance of probability. Petitioner's evidence, including unverified computer-generated account statements lacking company authentication, failed to establish the alleged debt of INR 1.10 Crores. The court found that without proving the principal liability, claims for returns or interest were untenable. Key factor was petitioner's inability to discharge shifted burden of proof regarding existence of investment/loan after respondents established probable defense. Trial court's acquittal order maintained as respondents effectively negated existence of legally enforceable debt.
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• Section 138 NI Act Conviction Quashed After Parties Reach Settlement Agreement; Court Orders Refund of Deposited Amount

  Case-Laws - HC : HC permitted compounding of offense under Section 138 of Negotiable Instruments Act post-conviction based on parties' subsequent compromise. While acknowledging that inherent powers must be exercised sparingly, HC held that Section 147 of NI Act, containing non-obstante clause, allows compromise settlements despite contrary provisions in CrPC. Given the amicable settlement between parties, HC annulled the conviction and sentence, directing acquittal of accused. Court ordered refund of Rs.35,000/- deposited by Revision Petitioner with accrued interest within four weeks. The ruling emphasizes that special law (NI Act) prevails over general law (CrPC) regarding compromise settlements, even at post-conviction stage.
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Law of Competition

• Homebuyers' compensation claims for EWS flat delays rejected as prior consent bars challenge under Competition Act

  Case-Laws - AT : NCLAT dismissed appeals seeking compensation for delayed possession and increased costs of EWS flats. Appellants claimed Rs. 42,42,000/- each, including rental damages, mental agony, interest on deposits, and litigation expenses. The tribunal held that compensation under Section 42A and 53N(1) of Competition Act is payable only for violation of CCI orders, which was not established. Despite CCI finding respondent's abuse of dominant position in the relevant geographic market, appellants' prior consent to cost enhancement barred their challenge. Claims for monthly rental of Rs. 10,000 and other damages were deemed unconvincing, particularly given the EWS qualification criteria of Rs. 25,000 annual income ceiling.
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PMLA

• Special Investigation Team Under CBI To Probe Multi-Jurisdictional Financial Fraud Through Shell Companies and Fictitious Invoices

  Case-Laws - HC : HC directed formation of Special Investigation Team (SIT) under CBI Zonal Director's supervision to investigate allegations of large-scale financial fraud, money laundering, and misappropriation of public funds. The case involved fraudulent activities through shell companies in tax havens, unsecured advances to subsidiaries, and creation of fictitious invoices spanning multiple jurisdictions including Mauritius, USA, Australia, and UAE. Given the magnitude of the alleged scam involving thousands of crores, multiple jurisdictions, nationalized banks, and international entities, the Court determined that neither EOW nor CBI alone could ensure fair investigation. The Court exercised its jurisdiction to order CBI investigation without State consent, citing national and international implications. Joint Director CBI (ACB) Mumbai to supervise the investigation.
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Central Excise

• Sale Within 100% EOU to Foreign Buyer Without Physical Movement Does Not Trigger Customs Duty Payment

  Case-Laws - AT : CESTAT ruled that sale of capital goods within a 100% EOU to an overseas buyer without physical removal does not constitute deemed debonding requiring customs duty payment. The Tribunal emphasized that ownership transfer alone doesn't trigger duty liability - physical removal is the taxable event for warehoused goods. Since no physical movement occurred outside the EOU premises and no explicit deeming provision exists for treating sale as removal, no duty was payable. Additionally, proper verification by Central Excise authorities during EOU scheme exit precluded invocation of extended limitation period or penalties. The Tribunal set aside the demand, holding that mere transfer of ownership without actual removal cannot attract customs duty liability under existing legal framework.
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• Mobile Handset Manufacturer Gets Duty Relief Under N/N 12/2012 for All Raw Materials Used in Manufacturing Process

  Case-Laws - AT : CESTAT dismissed revenue's appeal regarding customs duty recovery from 100% EOU for raw materials used in DTA clearances. The tribunal interpreted exemption notifications N/N. 12/2012-Cus and 12/2012-CE liberally, holding that the phrase "for the manufacture of" encompasses all items directly or indirectly consumed in manufacturing mobile handsets and accessories. Following SC precedent in Jawahar Mills, the tribunal ruled that the exemption covers all manufacturing inputs, not merely identifiable components. The classification of goods as components or accessories was deemed irrelevant for determining notification applicability. The benefit extends to all goods used in manufacturing mobile parts and battery chargers, regardless of their direct incorporation in final products.
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Case Laws:

• GST

• 2025 (2) TMI 175
  Challenge to investigation carried out u/s 67 of the Central Goods and Services Tax Act, 2017 - validity of the summons to the witness - challenge to declaration that the recoveries as being illegal - deposit made voluntarily or not - case of the appellants is that, on an analysis of the e-way bills, it is revealed that the vehicles have not moved as evidenced by the RFID/fastag data - HELD THAT:- The facts demonstrate the interference that the recording of statement was under the threat, that he shall be arrested. It is also a fact that, one deposit was made in the afternoon of 31.07.2021 and the same was after he was issued summons for appearance in Bengaluru on 02.08.2021 (appeared on 03.08.2021). So in that sense, there was likelihood that he may be arrested at Bengaluru if he does not deposit the money is writ large. Similarly, second payment was made on 03.08.2021 while the proprietor of the respondent was in Bengaluru. So it suggests, the statements were recorded and deposits were made under threat and coercion. The statements and the payments made cannot be separated nor it can be concluded that there is no allegation of threat and coercion for the purpose of payment/deposit of the amounts. Section 74 (1) of the CGST Act contemplates that the assessee has an opportunity under Section 74 (5) to make his own ascertainment of tax and deposit the same. The appellants case is that the respondent has deposited the amount upon self-ascertainment of tax, which stand is contested by the respondent by stating that the deposit was under threat and coercion, otherwise no amount is payable. So, the issue is whether any tax is payable at all? So, pending decision on the issue, can the amount remain deposited with the appellants? The answer has to be NO , more so when it is concluded by the learned Single Judge that the same was not voluntary, with which it is agreed upon. Insofar as the affidavit dated 10.08.2021 is concerned, the plea is that, such an affidavit was not given to the Authorities and it is for the first time filed along with the writ petition with an intention to resile out of the statements made to the appellants cannot be relied upon, is unsustainable. This is so because, the only stand of the appellants in the appeal/affidavit is, the same is belated. If that be so it is noted, the affidavit is dated 10.08.2024 i.e., one week after the statement dated 03.08.2024 was made. One week is not a large period to be considered as fatal/belated. The Court need to look into the facts in totality to come to a conclusion whether there was threat and coercion resulting in the statements recorded and also the deposits made. On a cumulative reading of the facts of this case, it is opined that the learned Single Judge is right in coming to a conclusion in paragraphs No.24 and 28 of the impugned order which we have reproduced above that the payments were recovery and were contrary to law. Conclusion - i) The payments made by the respondent were not voluntary and did not constitute self-ascertainment under Section 74(5) of the CGST Act. The recovery was deemed coercive and contrary to law, warranting a refund of the amounts with interest. ii) The appellants appeal dismissed, upholding the decision of the learned Single Judge to grant a refund to the respondent. Appeal dismissed.

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• 2025 (2) TMI 174
  Refund of amounts paid towards GST from the Promoter, when cancellation of apartment takes place after the cut-off date for issuance of a credit note under Section 34 of the Central Goods and Services Tax Act, 2017 - option of applying for refund of GST/issuance of credit note after the cut-off date mentioned in Section 34(2) of the Central Goods and Services Tax Act, 2017 - liability to apply for refund of GST is on the promoter or the allottee in case of cancellation of an apartment? - permission to withdraw the predeposit amount made by the Promoter before the Appellate Tribunal under the RERA Act, 2016 - penalty for non-registration of a sale agreement/ construction agreement - case of no evidence. HELD THAT:- Perusal of records would go to show that the father of the first respondent has initially booked the apartment under the appellant/Promoter s Project. Due to the sudden demise of his father, the first respondent has decided to call off the proposal and also informed the appellant/ promoter, explaining his situation through email. It was the appellant/ Promoter, who has evinced interest in convincing the first respondent by stating that instead of wasting 10% of the sale consideration towards cancellation charges, it would be an apt thought for the first respondent to invest in a smaller apartment that would cost Rs. 59,50,821/-. Since the first respondent has already paid Rs. 47,08,604/- towards the earlier booked apartment, if he cancels the same, then a cancellation charge of 10% which amounts to Rs. 10,37,427/- would be deducted from the total amount paid by the first respondent. Therefore, the appellant/ Promoter has advised the first respondent to invest the remaining amount i.e. Rs. 12,42,217/- that shall be paid in order to complete the sale consideration of the newly alloted apartment. In the present case on hand, the appellant / Promoter has been insisting the first respondent through email regarding the deduction of 10% cancellation charges only and did not spill the beans with regard to deduction of GST loss. It was only when the first respondent refused to purchase any other apartment under the appellant/ promoter s Project, the appellant/ Promoter has revealed about the further deduction of GST Loss which amounts to Rs. 11,40,376/-. On a perusal of the Sale and Construction Agreements entered into between the appellant/ Promoter and the first respondent, dated 10.02.2020, no where it has been specifically mentioned about the deduction of GST loss, in case of cancellation of purchase made by the first respondent - The Appellate Court, having been convinced by the said undertaking, permitted the first respondent to withdraw the pre-deposit amount of Rs. 11,40,376/- deposited by the Appellant / Promoter, together with accrued interest and also directed the first respondent to intimate the progress of the refund application to the appellant/ Promoter once in two weeks. Conclusion - i) The burden of proof lies on the appellant/promoter to demonstrate that GST was paid twice for the same apartment, which they failed to do. ii) The appellant/promoter s failure to disclose the GST deduction at the time of advising the respondent/allottee on apartment swapping was a critical factor in the decision. iv) The Appellate Tribunal s decision to allow the respondent/allottee to withdraw the pre-deposit amount upheld, as the appellant/promoter did not provide sufficient evidence to support their claims. Appeal dismissed.

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• 2025 (2) TMI 173
  Initiation of proceedings under Section 73 of UP GST Act - wrong availment of input tax credit - HELD THAT:- It is not in dispute that the certificates have been filed as per Government Order dated 27.12.2022 and copies of the same have been annexed along with the writ petition, which has not been denied. Once the certificate as per the Government Order was there, which has not been denied, the benefit of the same has been denied on the alleged ground that GSTN have not been mentioned in the certificates. However, on perusal of the certificates annexed along with the writ petition, it appears that GSTN have specifically been mentioned therein. In such circumstances, the matter requires reconsideration by the respondent authority. The matter is remanded to the original authority, who after considering all the materials filed by the petitioner as well as after hearing all the stake holders, shall pass reasoned and speaking order within a period of three months from the date of production of certified copy of this order. Petition allowed by way of remand.

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• 2025 (2) TMI 172
  Refund of deposit made - petitioner s placement on the Denied Entity List by the Director General of Foreign Trade - alleged non-consideration of a detailed representation submitted by the petitioner - grievance of the petitioner is that it has given a representation on 25.04.2016 and without considering the same, it has been placed in the Denied Entity List - HELD THAT:- The representation is furnished along with the Writ Petition and the same is marked as Annexure-J. A perusal of the same reflects that it s a detailed representation and it runs 11 pages. Without considering the said representation, the Director General of Foreign Trade placed the petitioner in the Denied Entity List. This is untenable. The action on the part of the respondents cannot be sustained. The authority concerned ought to have considered the representation that was submitted by the petitioner before taking any action against it. Hence, this Court deems it proper to direct respondents 2 and 3 to consider the representation submitted by the petitioner. A Mandamus is ordered directing respondents 2 and 3 to consider the representation dated 25.04.2016 submitted by the petitioner vide Annexure-J in accordance with the law. The third respondent is hereby directed to remove the petitioner s name from the Denied Entity List. Petition disposed off.

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• 2025 (2) TMI 171
  Classification and taxation under the West Bengal Goods and Services Act, 2017 - classification of Non-Woven Fabric - classification of the PPSB Bed Sheets. Whether Non- Woven Fabric which made from filament and how the said manmade filament are made from polypropylene granules? - HELD THAT:- This issue in appeal need not be examined as the Appellate Authority agreed with the assessee s submissions and finding was rendered in favour of the assessee holding that non-wovens, whether or not impregnated, coated, covered or laminated of manmade filament, is rightly classifiable in Chapter 56 under HSN and 75603 and GST should be charged at 12% instead of 18%. Classification of the PPSB Bed Sheets - HELD THAT:- The allegation against the appellant in the show-cause notice issued by the Central Customs authorities is that Chapter 3(b) of Chapter 56 of the Central Excise Tariff Act, 1985 states that non-woven which are completely embedded in plastic or label are entirely clubbed in such material are excluded from Chapter 56 and Second Note (h) of Section XI of the First Schedule to the Central Excise Tariff Act, which also states that this section does not cover Non-wovens, whether or not impregnated, coated, covered or laminated with plastics or articles thereof of Chapter 39. The adjudicating authority noted that the said allegation was raised only on the basis that the impugned product is manufactured completely from 100% polypropylene. The adjudicating authority also took note of the definition of the term Non-woven as defined in the handbook on glossary on textile terms issued by the Bureau of Indian Standards under SP: 45-1988 and after taking note of the said definition, the adjudicating authority held that the product is Non-woven since it is composed of polypropylene fibres and merits classification under Chapter heading no.5603 of the Central Excise Tariff Act, 1985. The revenue never disputed the classification of PPSB Bed Sheets, manufactured by the appellant under HSN 6304 - Unfortunately, in the case on hand, the revenue appears to have shifted the burden on the petitioner to prove the negative which is not sustainable in law - when the learned Single Bench found the legal position is wholly in favour of the appellant, the necessity to remand the matter for fresh consideration would not arise. Conclusion - i) The Appellate Authority s decision lacked evidentiary support and proper consideration of relevant legal principles. The necessity to remand the matter for fresh consideration was deemed unnecessary, given the established legal position favoring the appellant. ii) The Court set aside the order remanding the case to the appellate authority and directed the refund application to be allowed with statutory interest. The order passed by the learned Single Bench to the extent remanding the matter to the appellate authority to reassess the facts is set aside and, consequently, the writ petition is allowed.

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• 2025 (2) TMI 170
  Maintainability of petition - availability of alternative remedy of appeal - seeking stay of recovery of the disputed tax amount - non-constitution of the Tribunal - HELD THAT: - An amendment has been made to Section-112 of the Central Goods and Services Tax Act, 2017 substituting twenty per cent pre deposit to ten per cent for maintaining an appeal before the Goods and Services Tax Tribunal. The Tribunal has not yet been constituted and this Court had been granting orders based on the judgment in SAJ Food Products Pvt. Ltd. vs. The State of Bihar Others [ 2023 (3) TMI 1390 - PATNA HIGH COURT] , allowing the assessee to deposit twenty per cent of the disputed amount of tax, till the Tribunal is constituted and an appeal is filed also allowing stay of recovery. Subject to deposit of a sum equal to 10 percent of the amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non-constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed. Petition disposed off.

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• 2025 (2) TMI 169
  Challenge to N/N. 09/ 2023-Central Tax dated 31.03.2023, as well as Notification dated 56/ 2023-Central Tax dated 28.12.2023, issued by respondent no. 1 - it was held by High Court that Let counter affidavits be filed by all the respondents within six weeks. Rejoinder, if any, be filed within two weeks thereafter. HELD THAT:- List on 25.02.2025 along with WPMB No. 523 of 2024.

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• Income Tax

• 2025 (2) TMI 168
  Reopening of assessment - reason to believe - review v/s reopening - notice issued after four years - change of opinion - addition u/s 14A - HELD THAT:- As contrary to the first proviso of section 147 of the Income Tax Act, 1961, the said impugned notice of the 1st respondent dated 30.03.2021 (Impugned Notice-1), notice of the 3rd respondent dated 29.11.2021 (Impugned Notice-2) and the impugned order of the 3rd respondent dated 22.112.2021 were issued without there being any fresh information / material available on record and in the absence of any valid reasons / grounds to allege that certain income chargeable to tax has escaped from assessment, which came to the notice of the respondent department subsequently, for the purpose of reopening of reassessment proceedings by way of the impugned action which is not permissible under law. It is a case where the assessee disclosed the full details in the Return of Income as discussed above. AO has no power to review. Hence, the impugned action of the respondents is nothing but mere change of opinion on the assessment made already, which cannot be per se reason to reopen the earlier assessment order to reassess contrary to the law. There is no tangible material to come to the conclusion that there is escapement of income from the assessment. It is the AO who needs to assess any disallowance under section 14A based on the information provided by the petitioner. Onus to make an appropriate determination of amount of expenditure in terms of section 14A of the Act lies on the assessing officer and when there is no failure on the part of the assessee in making available all the relevant account books, materials and documents, the assessing officer cannot assume jurisdiction under section 147 of the Act and more specifically cannot do so in an attempt to reopen the assessment after expiry of 4 years from the relevant assessment year when original assessment was made under Section 143 (3) of the Act - Decided in favour of assessee.

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• 2025 (2) TMI 167
  Assessment u/s 153C - non verifying the Satisfaction Note recorded by the AO - HELD THAT:- Recording of satisfaction report is a sine qua non before initiating action under Section 153C of the Act. Based on the law settled by the Hon ble Apex Court in Manish Maheshwari [ 2007 (2) TMI 148 - SUPREME COURT] the CBDT itself issued a Circular, where they have made very clear by way of clarification that even if the Assessing Officer of the searched person and other person is one and the same, then also he is required to record his satisfaction as has been held by the Courts. It has further been stated in the CBDT Circular at para 5 that, the pending litigation with regard to recording of satisfaction note under Section 158BD/153C should be withdrawn / not pressed if it does not meet the guidelines laid down by the Apex Court. Therefore as per the CBDT Circular dated 31.12.2015 of Circular No.24/2015 in fact all these appeals should have been withdrawn by the Revenue as the circular issued by CBDT binding the Revenue. At no stretch of imagination, it can be stated that, even without a separate satisfaction note pertains to the other person by the Assessing Officer of the searched person such a proceedings under Section 153C can be invoked and completed. Hence, the view taken initially by CIT (Appeals) confirmed and concurred with the same by the ITAT in the order impugned are all in consonance with the settled legal proposition. Therefore no hesitation to hold that, absolutely there has been no infirmity attached with the orders passed by the ITAT which is impugned herein. Decided in favour of assessee.

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• 2025 (2) TMI 166
  Revision u/s 263 - interest and dividend income earned from bank was income from other sources, which was not eligible for deduction u/s 80P(2)(d) - HELD THAT:- There is no dispute that assessee is a Primary Agriculture Credit Society which is evident from the Certificate issued by District Registrar of Co-Operative Society, Navsari. Hence, assessee is not affected by Section 80P(4) of the Act. However, that itself, would not entitle assessee to claim benefit of deduction u/s 80P(2)(a)(i) of the Act on the interest income which is clearly assessable as Income from other sources u/s 56 of the Act. As per section 80P of the Act, where, in case of a co-operative society, gross total income includes income in sub-section(2) of Section 80P, there shall be deduction in accordance with provisions of sub-section(2) of Section 80P. Sub-section-(2) includes cooperative society engaged in (i) carrying on business of banking or providing credit facility to its members [clause (i)], (ii) the marketing of agricultural produce grown by its members [clause (iii)] etc. The deduction would be the whole of the amount of profits and gains of business attributable to anyone or more of such activities. Assessee would be entitled for the deduction on the profits and gains of business attributable to any one or more activities. We have already given the details of interest received and paid earlier. The assessee has received interest income from 22 different sources. It is not clear whether interests earned as mentioned in the table in para-6 are out of the profits and gains of the business attributable to any one or more activities mentioned in the subsection(2) of Section 80P of the Act. No clear nexus between interest income and interest paid has been established. Therefore, the direction given by the Ld.PCIT is modified accordingly. In other words, order of the Ld.PCIT to set aside the order is upheld but the AO should consider the nexus of interest paid with the interest income and if the interest income is part of the business profit attributable to one of the activities mentioned in clause-(i) to (vii) of Section 80P(2)(a), allow the interest paid in respect of such business profit. After excluding such interest paid, the remaining interest expenditure should be disallowed. This ground of assessee s appeal is partly allowed.

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• 2025 (2) TMI 165
  Denial of deduction u/s 80P(2)(d) - assessee filed a rectification petition u/s 154 as rejected - Whether order u/s 154 is not appealable u/s 246A? - HELD THAT:- The interest income received by the assessee from cooperative banks has not been disputed by the revenue. The appeal was rejected solely on legal grounds. The Ld. CIT(A) erred in dismissing the appeal, holding that an order under section 154 is not appealable, despite the clear provision under section 246A(c) of the Act allowing such an appeal. In view of the established judicial precedents and statutory provisions, we set aside the impugned appeal order and the addition is deleted. Appeal filed by the assessee is allowed.

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• 2025 (2) TMI 164
  Unexplained investment in property - HELD THAT:- Payments made by her towards purchase of property through cheques and admitted in her solemnised affidavit, cannot be treated as unexplained investment in the hands of assessee. Both sources of investment in property are sufficiently explained. Being so, we are inclined to delete the addition upheld by CIT(A). Decided in favour of assessee.

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• 2025 (2) TMI 163
  Disallowance u/s 14A - CIT(A) deleted addition - HELD THAT:- Assessee had invested this money in his own sister concerns and all the companies were private limited and no dividend income was received by the assessee. Addition on account of investment in properties from undisclosed sources and short-term capital gains - HELD THAT:- On perusal of the written submissions an records it is observed that the appellant has not shown the short-term capital gain on purchase sale of the property. AO has correctly made addition account of short-term capital gains which is the total consideration of the property under consideration. Thus, short-term capital gain is confirmed. Unexplained Cash Credits - assessee did not file any details/ evidence to prove the sources of the Credits in her account - HELD THAT:- CIT(A) correctly observed that it will meet the ends of the justice if the GP applied by the AO on the total turnover @1.5% is also applied on the total cash deposits of Rs. 82,84,580/-, being sale proceeds which comes at Rs. 1,24,269/-. Accordingly, the addition of Rs. 1,24,269 is deleted. Decided against revenue.

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• 2025 (2) TMI 162
  Rejection of registration u/s 80G - filing of application under wrong provisions of the Act - Whether wrong selection of clause while filing an application for grant of registration u/s 80G is a genuine clerical and inadvertent mistake? HELD THAT:- Taking an action against the assessee without confronting it about the reasons for such rejection place the present case in a category wherein the principle of natural justice have been violated, as the assessee was not afforded with reasonable opportunities of being heard to submit its contentions in defense to the basis of rejection of application before saddling it with the order of rejection. Considering such facts and circumstances of the instant case, in order to provide a fair opportunity of being heard and to represent its case in a judicious manner, the matter needs to be revisited by the Ld. CIT(E) after affording reasonable and adequate opportunity of being heard to the assessee. Order of CIT(E) passed u/s 80G is set aside and the matter is restored back to the file of Ld. CIT(E).

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• 2025 (2) TMI 161
  Exemption u/ss. 10A/10AA - assessee society by allegedly revising its return of income had scaled down its gross total income/receipts - AO taking cognizance of the fact that the assessee had not furnished any documentary evidence in support of its claim of reducing the gross total income and also, not furnished the details of its claim for exemption u/ss.10A/10AA - HELD THAT:- As in absence of any material having been placed on record by the assessee society to substantiate its claim of exemption u/ss. 10A/10AA find no infirmity in the view taken by the CIT(A), who had rightly approved the view taken by the AO and declined the said claim for exemption raised by the assessee society. Apropos the assessee s claim that as it is an educational institution, therefore, its income as per the mandate of Section 10(23C)(iiiad) of the Act is exempt, we are afraid that the same cannot be accepted for two fold reasons, viz. (i) that as the aforesaid claim of the assessee society would require to look into the facts beyond those available on record, i.e. as to whether or not the assessee society is existing solely for the educational purpose and not for the purpose of profit, therefore, as stated by the Ld. DR, and rightly so, the admission of the said additional ground is liable to be declined on the said count itself; (ii) alternatively, that for claiming exemption u/s. 10(23C)(iiiad) of the Act, the assessee society as per Section 139(4C)(c) of the Act was required to have filed its return of income for the subject year under sub-section (1) of Section 139 of the Act i.e. within the due date therein contemplated, which in the present case had not been done as the original return of income was belatedly filed on 10.02.2019 i.e. much beyond the stipulated time period contemplated under the said provision, therefore, for the said reason also its claim for exemption is even otherwise not admissible. Accordingly, the additional ground of appeal raised by the assessee society does not merit admission and, thus, rejected. As decided in Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT ] had observed, that the A.O cannot allow a deduction other than that claimed by the assessee, except for, where the same had been raised based on a revised return of income filed by the latter. As in the present case assessee society had voluntarily disclosed gross income of Rs. 14,32,822/- in its original return of income, therefore, no infirmity emerges from the orders of the lower authorities who had rightly assessed the assessee society on the said amount of income. Although we not oblivion of the fact that case of Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT ] had carved out an exception that the assessee can raise a claim before the Tribunal, but we afraid that nothing has been brought on record by the AR which would substantiate that the assessee society is entitled to raise a claim for exemption u/ss. 10A/10AA of the Act. Decided against assessee.

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• 2025 (2) TMI 160
  Payments received as Service Fees - nature of FIS under Article 12(4)(b) of the India USA DTAA - HELD THAT:- AO has not brought about any distinguishing facts about the nature of receipt being Service Fees received during the year as against the sum received as Consultancy and Training Fees received in AY 2020-21. As stated above, DRP has given identical finding for both the Assessment Years. Therefore, it is held that the amount is not taxable as the same is not in the nature of FIS under Article 12(4)(b) of the India-USA DTAA and therefore, the same is deleted. Hence, the ground nos. 4 to 11 are allowed. Levy of interest u/s 234A and 234B is consequential and the AO will levy interest as per law. Short granting of credit of tax deducted at source - AO is directed to verify the claim of the assessee and to allow TDS credit as per law. Incorrect adjustment on account of recovery of refund already issued to the Appellant in the computation sheet - AO is directed to verify the claim of the assessee and to modify the tax computation as per law.

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• 2025 (2) TMI 159
  Penalty u/s 271(1)(c) - addition by treating supervision income as Income from Other Sources instead of allowing it as manufacturing income eligible for deduction u/s 80IB - HELD THAT:- This Bench vide order ELECTRONIC INSTRUMENTATION CONTROL PRIVATE LIMITED [ 2019 (12) TMI 141 - ITAT AHMEDABAD ], had already deleted the quantum addition which formed the basis for the penalty u/s 271(1)(c). This order was placed on record before the CIT(A), yet it was not even acknowledged in the impugned appellate order. It is trite law that when the very foundation of the penalty ceases to exist, the penalty itself cannot survive. The manner in which the CIT(A) has handled this case raises serious concerns about the casual and mechanical approach adopted in discharging appellate functions. CIT(A) is expected to act as an independent quasi-judicial authority and is duty-bound to pass a reasoned and speaking order addressing the contentions of both parties. In the present case, he has failed in this fundamental duty. We take strong exception to such an approach and direct that a copy of this order be forwarded to the Pr. Chief Commissioner of Income Tax (Pr. CCIT), Ahmedabad, for appropriate administrative review of such deficient appellate adjudication. Since the quantum addition has been deleted by the ITAT, the penalty u/s 271(1)(c) does not survive. CIT(A) s order is set aside as being perverse, arbitrary, and passed without application of mind. Penalty is deleted. Appeal is allowed.

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• 2025 (2) TMI 158
  Penalty u/s 271(1)(c) - Assessee had made patently untenable claim in respect of Provisions for Mine Reclamation Expenses which could not have been allowed as a deduction under the mercantile system of accounting followed by the Assessee - HELD THAT:- AO had failed to appreciate that the amount included Mine Reclamation Expenses actually incurred during the relevant previous year. Further, there was no discussion on the explanation furnished by the Assessee. Similarly, while levying penalty u/s 271(1)(c) AO has concluded that the Assessee had failed to offer any explanation. We find that the aforesaid finding returned by the AO is factually incorrect. In our view, the Assessee had disclosed all the primary facts. Further, even if it is assumed that the Assessee had furnished inaccurate particulars of income, we are of the view that the Assessee had discharged the burden cast u/s 273B of the Act to prove that the Assessee had reasonable cause for the same. Assessee was of the bonafide belief that the liability to incur expenses in terms of Rule 34 of the Mineral Conservation and Development Rules, 1988 was an ascertained liability and provision created to meet the same was allowable as deduction under Section 37(1) of the Act. We find that explanation furnished by the Assessee is also supported by documents filed during the original assessment proceedings. Accordingly, we do not find any infirmity in the order passed by the CIT(A) holding that no penalty could have been levied in the facts and circumstances of the present case for furnishing inaccurate particulars of income. Defective notice u/s 274 - On a co-joint reading of Paragraph 11.13 and 13 of the Penalty Order it becomes clear that the Assessing Officer has finally levied penalty under Section 271(1)(c) of the Act (read with Explanation 1 thereto) for concealment of the particulars of income whereas the charge as per the Assessment Order passed under Section 143(3) r.w.s. 263 of the Act and Notice issued under Section 274 of the Act was that the Assessee has furnished inaccurate particulars of income. Therefore, on this count also penalty levied by the AO u/s 271(1)(c) of the Act was not sustainable. Revenue appeal dismissed.

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• 2025 (2) TMI 157
  Denying business loss suffered by the assessee from purchase and sale of Equity shares - HELD THAT:- It is not in dispute that Nikki Global Finance Limited is in the list of 84 companies which are alleged to be a penny stock company as per the list issued by SEBI and further investigations by the income-tax department. Nikki Global Finance Limited is also part of the 84 companies and the capital gain arising therefrom have been held to be bogus in other cases where the claim of long term capital gains have been done. In the instant case, there is no detail available on record which could prove that the assessee suffered alleged business loss in the regular course of its business activity and that it is a genuine loss and not a accommodation entry in nature. In absence of any evidence and submissions on behalf of the assessee, ratio laid down in the case of Swati Bajaj and Others [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] apply on the facts of the instant case also and that the assessee has taken accommodation entry in the form of business loss to evade its tax liability. Therefore, find no infirmity in the impugned order denying set off of the business loss. Therefore, no interference is called for in the order passed by CIT(A). Grounds of appeal raised by the assessee are dismissed.

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• 2025 (2) TMI 156
  Ex-parte orders - Unexplained cash credits u/s 68 r.w.s.115BBE - HELD THAT:-Assessee has been totally non-cooperative during both assessment as well as appellate proceedings. It is clear from the assessment order that the hearings were fixed on seven occasions, but apart from filing a reply on 17.12.2018, no other submission or details were given by the assessee. The appellant sought various adjournments before the CIT(A) and did not furnish any details in three years time between date of first and last hearing where the matter was pending before CIT(A). The Id. AR submitted that the noncompliance was neither deliberate nor intentional. He requested that another opportunity may be granted to the assessee to submit all the required explanations and details and plead his case on merit. Considering the fact that both orders were almost ex-parte, We are of the view that the principles of natural justice would call for giving another opportunity of hearing to the assessee. Accordingly, we hold that the interests of justice would be met in case the CIT(A) re-adjudicates the entire issue afresh subject to payment of cost. Appeal of the assessee is allowed for statistical purpose.

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• 2025 (2) TMI 155
  Reopening of assessment u/s 147 - Reason to believe - notice after four years from the end of relevant assessment year - HELD THAT:- The proceedings beyond the period of four years from the end of A.Y. 2009-10 without complying the requirements of proviso to section 147 of the Act, the learned AO has no jurisdiction to reopen the assessment proceedings, which were concluded on basis of assessment under section 143(3) of the Act. On this score alone, the impugned orders of learned AO and CIT(A) are liable to be quashed and are set aside. Decided in favour of assessee.

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• 2025 (2) TMI 154
  Characterization of Profile of assessee - Whether the assessee is KPO or software developer? - as submitted that the TPO has merely rejected the contention of the assessee that it is SDS and not KPO for that AO noted that the Arm s length price of the assessee was within the range and no adverse inference could be drawn in respect to the transaction HELD THAT:- Undoubtedly, TPO / DRP in the present case have not decided the issue about profile of assessee i.e. KPO or software developer, further both have not given any reasons as to why the services rendered by the assessee would fall under the category of KPO and not under software developer services. In the light of the non-availability of the reasons for treating the assessee as KPO by TPO / DRP, we are of the considered opinion that the finding given by the DRP/TPO will not be as binding and issue of whether the assessee is KPO or software developer is left open to be decided based on the facts and circumstances arising in the subsequent year. Therefore, Ground No. 2 is allowed for statistical purposes. Addition on account of corporate guarantee fee in respect of guarantee by the assessee in favour of AE - TPO confirming the rate of guarantee fee of 1.90% based on the rates charged by the banks to its customers as against 0.53% charged by the assessee to its AEs - HELD THAT:- Interest of corporate guarantee or the charges of corporate guarantee is required to computed on the basis of actual period, instead of one year, as the actual periods were available in the form of chart with the Ld. AO / TPO. Therefore, we are of the considered opinion that the TPO / DRP are required to restrict the charging of the corporate guarantee charges for the actual period as against one year. We issue the direction to TPO/AO to restrict the charging of the corporate guarantee only for the period for which it was issued. The TPO is directed to recompute the corporate guarantee charges for actual period only. Computation of rate the corporate guarantee charges - If we look into the document and the show-cause notice issued by the TPO then it is clear that the ALP of interest as applied for ECB loan was computed at 1.67%. Whether the ALP computed for external commercial borrowing @1.67% can be juxtapose or applied to the corporate guarantee @1.9% ? - In our view the answer is no, and this Tribunal while deciding the issue in the case of Hetero Labs Limited [ 2024 (5) TMI 1108 - ITAT HYDERABAD] as relied upon by the assessee, held that the rate of interest required to be applied is 0.53% and not 1.9% as relied upon another case of Mylon Laboratories Ltd [ 2015 (12) TMI 95 - ITAT HYDERABAD] and held that 0.5% is required to be applied. Thus we direct the TPO to compute the charges at 0.53% as corporate guarantee charges. Whether the credit rating of the AE of the assessee was substantially low and at what rate the interest would have been borrowed by it or at what rate the bank would issue the corporate guarantee in its favour ? - In our considered opinion that the ECB rate is already determined by the TPO at 1.67%, then in our considered opinion corporate guarantee cannot be 1.67% it is to be substantially less therefore we are of the considered opinion that the view taken in the case of Hetero Labs Limited [ 2024 (5) TMI 1108 - ITAT HYDERABAD] whereby the corporate guarantee charge has been restricted to 0.53% was appropriate and in accordance with law. Accordingly, we allow this ground raised by the assessee. Letter of comfort given by the assessee to its AE is international transaction or not? - International transaction is required to be benchmarked at the rate determined by the TPO @1.9% or at any other rate - HELD THAT:- If letter of comfort or the letter of support, is given as the security, as per loan agreement then letter of comfort / letter of support would partake the character of letter of security/guarantee and in other words it would amount to corporate guarantee. We are of the considered view that the letter of comfort given by the assessee to the lender, was a financial instrument, equivalent to letter of guarantee, and therefore required to be benchmarked accordingly. In the present case, the rate of interest payable on the borrowings i.e., ECB borrowing was @ 1.67% and the rate of interest of corporate guarantee held by us @0.53%. Therefore, in our considered opinion the same rate as held by us for corporate guarantee is required to be applied for benchmarking the letter of comfort. Accordingly, we direct TPO/AO to apply 0.53% for benchmarking letter of comfort . We are of the opinion that the order of the TPO is required to be modified and accordingly we held that the charges for letter of support / letter of comfort is required to be computed @0.53%.

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• 2025 (2) TMI 153
  TP Adjustment - receipts of corporate services from its AE and payments made by the assessee to the secondment employees - HELD THAT:- When the bench has asked about the documentary evidences in respect of the software/other tools received by assessee from its AE, utilized by assessee in its manufacturing unit. Assessee contended that assessee will file each and every document before the lower authorities. Therefore, we remit this issue to the file of AO for examining it afresh. So far as the argument of the assessee that the AE has paid taxes on the receipts received from Indian entity is concerned, we are of the view that it would be a guiding factor but not a sacrosanct factor to prove the rendition of services by the AE. Similarly, the contention of the assessee that when the adjustments are already done by applying the aggregation principle, then no further adjustment qua international transaction can be made is also supportive argument. When the basic fact as to whether any services has actually been received by the assessee from its AE, is not established, these arguments would have no applicability. These arguments do have force, provided the factum of rendition of services by the AE is proved by the assessee with documentary evidences. We are also of the firm opinion that so far as the application of Benefit test by the lower authorities is concerned, we are in agreement with the submissions made by the counsel for the assessee and hold that merely because the assessee has failed to prove any benefit from the services received the disallowances cannot be made. Therefore, the assessee is given one more opportunity to prove his case. Payments made to secondment employees - Again the finding of the fact as recorded by the lower authorities is that the assessee has failed to establish that documentary evidences of the assessee was actually the legal/economic owner of these employees. For this issue also we remit the matter to the file of ld AO for examining afresh in accordance with law. AO has granted lesser refund to the assessee - We direct the AO to compute the refund amount once again in accordance with law and give the credit to the assessee while finalizing the assessment. Appeal of the assessee is allowed for statistical purposes.

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• 2025 (2) TMI 152
  Exemption u/s 11 - charitable purpose u/s 2(15) - receipts from running of the chemist shop - various receipts incidental to the objects of the Assessee/trust or not? - HELD THAT:- Admittedly the Assessee is running an Hospital and also having in-house patient s facilities, therefore, the medicines are essentials for the treatment of in-house patients especially. The assessee is also giving treatment to out- patients, and therefore out-patients and even outsiders as well, are at their relatives have an option to purchase the medicines from the assessee s Pharmacy store, as there cannot be any restriction. The Assessee may be on commercial basis but in fact, directly-indirectly providing medical relief by selling medicines to the in-house patients and outpatients and outsiders as well and therefore protected by CBDT Circular (supra) as well. It is also not the case of the revenue that the assessee established Pharmacy store exclusively for outpatients/outsiders and has utilized surplus from the operation of the chemist shop, for other objects than the prescribed objects. Hence on the aforesaid analysis, we hold that receipts from renting of Pharmacy shop is incidental and ancillary to the dominant object and purpose to provide medical facility, and thus the assessee complies with first condition of section 11(4A) of the Act. In respect of the Interest earned by the assessee on FD, PCO receipts, Miscellaneous income, receipt from sale of scrap, canteen, lunch farm receipts, received from sale of machines, received from nursing course fee we note that even if test of income directly arising from property of Trust is applied, interest directly accrues on funds of the Trust. Interest income will fall under section 11(1)(a )in respect of the receipt from letting out of assessee s premises, belonging to the educational institutions of the assessee, it is a well-settled principle of law that the test to determine as to what would be a charitable purpose within the meaning of section 2(15), is to ascertained by its dominant object of the activity; whether it is to carry out a charitable purpose or to earn profit. If the pre-dominant object is to carry out a charitable purpose and not to earn profit, the purpose would not lose its charitable character merely because the some profit arises from the activity. The manner in which these receipts are earned it is also observed that they are not earned with any profit motive. We thus hold that, section 11(4A) which require separate account to be maintained would not be attracted in view of conclusion that the said amount are received by the assessee for the years under consideration have been received in the process of achieving the main object, providing educational/medical relief. In this context, we refer to the observations of Vile Parle Kelawani Mandal [ 2015 (5) TMI 220 - BOMBAY HIGH COURT ] as held educational institutions require funds. The income is generated from giving various halls and properties of the institution on rentals only on Saturdays and Sundays and on public holidays when they are not required for educational activities, then, this cannot be said to be a business which is not incidental to attain the objects of the trust. This being merely an incidental activity and the income derived from it is used for the educational institute and not for any particular person, separate books of account are also maintained, then, this income cannot be brought to tax. Thus addition made by the Ld.AO in respect of the receipts from various activities undertaken by the assessee deserves to be deleted. Decided in favour of assessee.

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• 2025 (2) TMI 151
  Income accrued in India or not? - existence of a Permanent Establishment (PE) in India - Whether Itochu India Private Limited constitutes a dependent agent PE of Itochu Japan in India under Article 5 of the India-Japan DTAA? HELD THAT:- We find that the role of ITOCHU India is limited to act as a communication channel. We have examined the email correspondences and there is nothing to show ITOCHU India is acting in its individual capacity to conclude the contract or even a part thereof. It is merely bridging the communication gap between ITOCHU Japan and the Indian customer. There is nothing in the form of evidence which show that Itochu India habitually exercises the authority to conclude contracts in India or maintains stocks in India for delivery to customers or secures orders in India. AO has rejected all the arguments of the assessee on the basis that the assessee has failed to produce India specific accounts for the trading operations and the profit earned thereon and, accordingly, held that as the profits earned by the assessee from Indian operations are not available guidance is drawn from Rule 10 r.w.s. 44BB of the Act wherein the deemed profits is estimated @ 10% of the revenue of price/consideration. We are of the considered view that when the financials of Itochu India and the assessee were there along with the agency agreement, then making such observations without an independent inquiry on its own is not justified. AO has laid burden on the assessee to establish the nature of agency. However, no attempt was made to examine the agreement. Only because the nature of business of trading is a continuous flow of the business process that cannot be a foundation to conclude a principal-agent relationship for the purpose of Article 5 of the DTAA. DRP at the same time discredited the case of the assessee only on the basis of assumptions and surmises, as to how, to his mind, the two entities may have been actually transacting their business. As before us for the present AY the factual aspects are crystal clear that there is no PE of assessee in the form of Itochu India. Thus there is no justification to follow the AY 2013-14 and 2015-16 orders of Co-ordinate bench to set aside the assessment to the files of AO for further verification of the facts about nature of contractual relationship between the assessee and Itochu India.

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• 2025 (2) TMI 150
  CIT(A) s Exercising the jurisdiction u/s 250 - validity of Order passed u/s 250 by the NFAC/CIT(A) - TDS u/s 195 - license fees payable to its AE - deductibility of TDS - addition u/s 40(a)(i) - whether software is a copyrighted article and therefore, the purchase of software license does not all within the definition of Royalty as per the India-USA Tax Treaty? - CIT(A) overturned the disallowance. HELD THAT:- We find no whisper in the impugned order about (a) as to whether impugned expense/payment i.e. License Fee shared by the assessee is taxable in India in the hands of non-resident AE in view of provisions of article 12 of double taxation avoidance agreement entered between India and USA r.w. u/s 9 of the Act? and (b) as to whether impugned expense/payment i.e. License Fee shared by the assessee to its non-resident AE can be subjected to the provisions of section 195 of the Act. In view of this uncontroverted facts, the impugned adjudication in our considered view is prejudiced by assessee s submission that in the subsequent year of payment of license fees to AE due taxes were deducted u/s 195 of the Act and deposited with the ex-chequer. The ground number 2 adjudicated also badly lacks the compliance in terms of section 250(6) of the Act. It is a trite law as laid down in case Chandra Kishore Jha Vs Mahavir Prasad [ 1999 (9) TMI 948 - SUPREME COURT ] that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner . In view hereof, we hold that, the impugned adjudication by the first appellate authority sidestepping the dictate is not in consonance with the provision of sub-section (6) of section 250 of the Act. We deem it fit to set-aside the impugned order. Appeal of the Revenue and cross objection of the assessee are allowed for statistical purposes.

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• Customs

• 2025 (2) TMI 149
  Maintainability of appeal - monetary limit involved in the appeal - HELD THAT:- Taking into consideration the averments made in the application for dismissal of appeal(s) filed by the respondent herein, it appears that the tax effect of the subject matter of the appeals is falling below the threshold contained in CBDT circular providing litigation policy of the Govt. of India i.e. Central Board of Indirect Taxes and Customs (Board), vide its instruction F.No.390/Misc/30/2023-JC dated 02.11.2023. Appeal dismissed.

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• 2025 (2) TMI 148
  Seeking release of the imported goods seized by the Principal Commissioner of Customs, Air Cargo Complex (Import), New Delhi without payment of demurrage charges in terms of Regulation 6 (1) (L) of the Handling of Cargo in Customs Areas Regulations, 2009 - grievance of the Petitioner is that despite repeated communications to the Department the imported goods were not released - HELD THAT:- In the present case, initially the Petitioner itself did not follow up with the customs for moving of the imported goods to the warehouse in terms of his own communication dated 07th November, 2021. Thereafter, even when liberty was granted by this Court on 04th September, 2023, the Petitioner has chosen not to avail of the same. In fact, an application was also moved by CELEBI - Respondent No. 3 for securing the payment of the demurrage charges despite this no step was taken. In addition, the Petitioner has also not participated in the proceedings qua the show cause notice itself. Obviously, when the order dated 31st January, 2023 was passed, the Petitioner would be aware that a show cause notice is likely to be issued by the Department which was in fact issued on 30th January, 2023, though it is recorded to the contrary in the said order possibly due to lack of instructions. This Court is of the opinion that the Petitioner is not entitled to the reliefs as sought under Article 226 of the Constitution of India. Conclusion - i) The Petitioner is not entitled to the release of goods without demurrage charges due to their failure to take necessary actions under Section 49 of the Customs Act, 1962. ii) The Customs Department s failure to issue a show cause notice within the stipulated period does not automatically absolve the Petitioner of liability for demurrage charges. Petition disposed off.

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• 2025 (2) TMI 147
  Entitlement to G card licence - respondent/Writ Petitioner had failed in the viva voce - HELD THAT:- Admittedly, when the notification had not prescribed the procedure beyond the educational qualification and the written examination, conducting viva for the selected persons in the written examination conducted by the appellant is per se illegal. Even as per Clause-VI of the 2018 Regulation, the mode of examination do not contemplate for conducting viva. The 2018 Regulation stated supra governs the entire country. The appellant cannot pick and choose on their own method of conducting viva after written examination. The appellant had specifically implanted such a procedure to pick and choose the people, to whom they wish to be selected for grant of G card licence. Clause 13 (5) and 13 (6) and 13 (7) of the 2018 Regulation clearly stated that the qualification for getting G card holder is pass in the examination alone. In the absence of any proviso in the regulation for conducting viva, the viva conducted by the appellant is without jurisdiction and without any power conferred under the Regulation. There are no reason to interfere with the order passed by the Writ Court and in the result, the Writ Appeal is dismissed.

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• 2025 (2) TMI 146
  Classification of imported goods - Mass Weight Gainer - classifiable under CTH 21061000 or under CTH 21069099 of the Customs Tariff Act, 1962? - demand of differentail duty - invocation of extended period of limitation as per proviso under Section 28 (4) of the Customs Act, 1962 - HELD THAT:- It can be seen that general Rule of interpretation 3 (a) provides that heading which provides most specific description shall be preferred to the heading providing a more general description. From the literature and photographs as mentioned above, it can be seen that the product is primarily sold in the commercial parlance and know as protein concentrate for weight gain and building muscles and since the customs tariff heading 21061000 have a specific mention of Protein Concentrates and textured Protein Substance and the entry under 210690 is generic entry covering the goods which are otherwise not a specifically mentioned under the sub heading 2106. Entry 21061000 covers two element, (1) Protein Concentrate and (2) Textured Protein and the word Substances covers both of these elements i.e. Protein Concentrate and Textured Protein. Since the import consignment are made of the protein concentrate along with other substances, it is opined that appropriate classification for the imported consignment will be CTH 21061000 not CTH 21069099 which is primarily for the goods not elsewhere specified and supplementary chapter note (6) provides as what kind of the goods will fall under chapter sub heading 21069099, we are opinion that this sub-headings certainly does not cover the food supplement containing protein concentrate. It can be seen that supplementary chapter note (6) provides that only products such as mithais, namkins, chabanas and such kind of the goods are classifiable under CTH 21069099. This Tribunal s decision in case of Glambia Performance Nutrition India Pvt Ltd vs. Commissioner of Customs, Mundra [ 2023 (9) TMI 419 - CESTAT AHMEDABAD ] where it was held that the impugned goods are rightly classifiable under Heading 2106, sub heading 2106 1000 of the Customs Tariff. Revenue has relied upon the case of Raptakos Brett Co Ltd vs Commissioner of C.Ex., Raigad [ 2014 (12) TMI 33 - CESTAT MUMBAI ] where it was held that The appellant s products are consumed as such by people who are recuperating from illness and, therefore, it is a ready to eat packaged product. Consequently, the product merit classification under CETH 2106 90 99 and the appellant is rightly entitled to the benefit of Notification 3/2006, dated 1-3-2006. - It can be seen from the reading of the above para that this Tribunal has allowed the classification of their product under 21069099 because the appellant in case of M/s. Raptakos could establish that the product manufacture by them was the products consumed under the category of the protein concentrate by the people who are recuperating from illness. It is found that the product under import in the impugned show cause notice are not meant for use by the people suffering from any illness they are primarily used as food supplement and for building muscles, it is therefore differentiated that following of this Tribunal in this case is not relevant to the matter of hand and other two decisions mentioned in the preceding para are not relevant to the imported consignment in this case. Therefore, the argument taken by the Learned AR not acceptable. Thus, import consignment namely Mass Gainer- Food Supplement are nothing but protein concentrates which are use as food supplements for building muscles and since there is specific entry to this effect under Chapter 21061000 and following the General Rules of Interpretation, it is held that correct classification of the product will be under chapter 21061000. Extended period of limitation - HELD THAT:- It can be seen that for invoking the provisions of sub section 4 of Section 28, the department needs to establish that the appellant has short paid the duty on account of collusion, any wilful mis-statement or suppression of facts with an intention to evade duty. The description given by the appellant is the same as mentioned on the product as well as on the import document such as invoice, purchase order and other documents accompanying the Bills of Entry. It is found from the show cause notice that the importer has submitted the literature/ brochure related to mass/ weight gainer- food supplement at the time of the import to the customs authorities. Since all the documents have been available before the customs authority at the time of the assessment, examination of the goods, the allegation of the suppression of the facts or mis-declaration with regard to description of the imported goods as required for invoking the provisions of Section 28(4) of the Customs Act, 1962 have not been established by the department. Conclusion - i) The import consignment namely Mass Gainer- Food Supplement are nothing but protein concentrates which are use as food supplements for building muscles and since there is specific entry to this effect under Chapter 21061000 and following the General Rules of Interpretation, it is held that correct classification of the product will be under chapter 21061000. ii) The extended time proviso under Section 28 (4) of the Customs Act, 1962, cannot be invoked without evidence of collusion, willful misstatement, or suppression of facts. Thus, on merit as well as on the period of limitation the impugned order-in-original is not legally sustainable, therefore, we set aside the same - appeal allowed.

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• Law of Competition

• 2025 (2) TMI 145
  Anti-competitive practices - abuse of dominant position - delaying the possession of flats and increasing the cost - violation of Section 4(2)(a)(i) read with Section 4(1) of the Competition Act, 2002 - entitlement to compensation under Section 42A and Section 53N(1) of the Competition Act - HELD THAT:- The compensation is payable in case of contravention of order of CCI. Section 42 A provides that any person may make an application to the Appellate Authority for an order of recovery of compensation from any enterprises for any loss or damage shown to have been suffered by such person as a result of said enterprise violating directions issued by CCI. It is noted that every Appellant has claimed the monthly rental @10,000 per month amounting to Rs. 10,20,000/- for the period from 01.01.2010 to 30.06.2018 which continue till payments. Similarly, the Appellants have claimed the damage for inconvenience, mental, physical loss, expectancy loss amounting to Rs. 25,50,000/- each. Another claim has been made regarding interest on payment deposited amounting to Rs. 1,70,000/- each and finally litigation and out of pocket expenses of Rs. 5,00,000/- each. Thus, the total compensation by each is Rs. 42,42,000/- which continues till payment is made by the Appellants - the eligibility criteria for the applicant to apply for EWS flats was annual earnings ceilings of Rs. 25,000 each. The claims, on face of it do not seems to be convincing. Be that as it may, it is already noted in earlier that that the compensation is due only if CCI orders have been violated by the Respondent No. 1 which is not the case here. As such, there are no merit in the appeal. It is observed that after giving consent for enhancement of cost of flats, it does not lie in the mount of the Appellants to challenge the same. This does not help the cause of the Appellants, despite CCI holding that Respondent No. 1 was involved in abusive conduct as dominant player in relevant geographic market. Conclusion - i) The compensation is due only if CCI orders have been violated by the Respondent No. 1, which is not the case here. ii) After giving consent for enhancement of cost of flats, it does not lie in the mount of the Appellants to challenge the same. Appeal dismissed.

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• PMLA

• 2025 (2) TMI 144
  Prayer for conducting preliminary investigation/inquiry into the fraudulent activities undertaken - misappropriation of public monies for personal enrichment - defrauding investors - round tripping of funds through shell companies based in tax havens - making unsecured advances to subsidiaries with the intention to launder public money - creation of dubious and fictitious invoices, all of which are predicate offences under the Indian Penal Code, 1860 and the Prevention of Money Laundering Act, 2002 - HELD THAT:- Admittedly, detailed statement of the petitioner came to be recorded by the EOW on 28th October, 2024. Looking to the enormity of the offences and the fact that it involves thousands of crores of rupees, spans multiple jurisdictions and implicate nationalized Banks as well as foreign entities based in Mauritius, USA, Australia and UAE involving substantial financial implications, at both, national and international levels, the D.C.P, EOW, Mumbai requested the aforesaid Authorities for taking appropriate action. Both the EOW as well as the CBI, for the reasons best known to these Agencies, are reluctant to inquire/investigate into the complaints made by the petitioner having such large scale alleged misappropriation of public funds as well as laundering, by Mr. Anand Jaikumar Jain, who is the Promoter and Director of Jai Corp Ltd along with its subsidiary companies and others. There are no words to demonstrate the conduct of the Investigating Agencies viz: EOW as well as CBI. There will be no fair and impartial investigation into the alleged crimes either by the EOW or by the Superintendent of Police, CBI, EOW and hence, a special team needs to be constituted by the Zonal Director CBI to ensure efficient investigation into the offences of such magnitude. The need to instill confidence in the investigations and consequently, in the administration of justice, is of utmost concern. The case in question, has national and international ramifications. No doubt, the EOW in its internal notings which were placed for perusal, observed, that considering the magnitude of the alleged scam which runs into thousands of crores of rupees, multiplicity of jurisdictions, the role of nationalized Banks (Union Bank, IDBI Bank, IDFC Bank) and Mauritius based private equity fund plus trans-border transactions with USA, Australia and UAE, it is in the best interests of investigation that the matter be handled by CBI, SFIO. This is the noting by the Joint Commissioner of Police EOW on 4th November, 2024. The reluctance to inquire/investigate was writ large during the hearing of the petition. Conclusion - The High Court has the jurisdiction to direct an investigation by the CBI without State consent when necessary to ensure a fair and impartial inquiry, particularly in cases with national and international implications. The Court directed the formation of a Special Investigation Team (SIT) under the supervision of the CBI s Zonal Director to investigate the allegations. Zonal Director, CBI, Mumbai shall form a Special Investigation Team comprising of officers as are required for conducting thorough investigation into the two complaints dated 22nd December, 2021 and 3rd April, 2023 of the petitioner - Joint Director of the Central Bureau of Investigation, Mumbai (Anti Corruption Bureau) shall supervise the investigation - Petition allowed.

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• Service Tax

• 2025 (2) TMI 143
  Exemption from service tax under N/N. 25/2012-ST dated 20.06.2012 - services provided by M/s. Shree Hindustan Fabricators to Surat Municipal Corporation (SMC) with regard to water supply - HELD THAT:- The matter is no longer res-integra as this Tribunal in case of C.C.E. S.T. -SURAT-I VERSUS SHREE HINDUSTAN FABRICATOR [ 2024 (12) TMI 1240 - CESTAT AHMEDABAD] (the appellant themselves), has decided the issue in the favour of the respondent/assessee. It was held in the said case that We are therefore of the view that provisions of the Notification No. 25/2012-ST dated 20.06.2012 under serial no. 12E and Serial No. 25A are fully applicable applicable towards activity undertaken by the respondent assessee and therefore fall under the category of the exempted services. Conclusion - The exemption for services provided to SMC under Notification No. 25/2012-ST upheld, emphasizing the non-commercial nature of the services. Appeal dismissed.

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• Central Excise

• 2025 (2) TMI 142
  Appropriation of amount deposited during investigation towards penalty, towards the amount of duty confirmed in the impugned order - levy of penalty u/r 26 of the Central Excise Rules, 2002, read with Section 174(2) of the CGST Act, 2017 - HELD THAT:- It is undisputed that the amount of Rs. 61,06,692/- was deposited by Balaji under the head other receipts as representing towards the penalty. Although no penalty was imposed on them, it was deposited apparently towards the anticipated penalty. Thereafter, once the impugned order was passed, the appellant adjusted this amount against the 25% penalty to be deposited within 30 days. Thus, it fulfilled the condition to avail the benefit of reduced penalty of 25%. If this amount is adjusted towards the deposit of duty, naturally it cannot also be accounted towards penalty and in which case the sum paid as penalty within 30 days would be only of Rs. 72,14,714/- which is much lower than the 25% of the confirmed duty. Conclusion - The impugned order is correct in not adjusting the amount deposited as penalty before the SCN was issued towards duty. This amount has already been adjusted by Balaji while paying the 25% penalty. Appeal dismissed.

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• 2025 (2) TMI 141
  Denial of Cenvat Credit on various input services - canteen services - hospitality charges - real estate agent commissions - construction services - levy of interest and penalty - Extended period of limitation. Denial of CENVAT Credit - HELD THAT:- It is found that definition of input services for the period until 01.04.2011 as provided under Rule 2(l) of the Cenvat Credit Rules, 2004 clearly provides that the input services include services used by the manufacturer, directly or indirectly, in the manufacturing process. The said definition has been widely interpreted by various courts to include all services used in relation to the manufacture of final products. It is found that each of the input services involved in the present case has been held to be input service by various decisions cited above, wherein it has been held that the services such as Outdoor Catering/Canteen Services, Hospitality Charges Commission Charges by Real Estate Agent, Construction Services used by the appellant for design installation of the factory premises are held as input services and the Cenvat Credit cannot be denied with regard to these services. Invocation of extended period of limitation - HELD THAT:- It is found that it was an interpretational issue and the appellant had a bona fide belief that they were entitled to Cenvat Credit on the input services which were used for the purpose of carrying the business for manufacturing. Further, the department has not established any of the ingredients such as fraud, collusion, wilful misstatement or suppression of facts or contravention of any of the provisions of the Act or Rules with intent to evade the payment of tax, which are required for the purpose of invocation of extended period. Further, it is found that only during the audit of the appellant, it was discovered the appellant has taken the Cenvat Credit on these impugned services, which also shows that there is no intention to evade payment of tax; therefore, the entire demand is also barred by time. Interest - penalty - HELD THAT:- The question of interest and penalty does not arise when the demand itself is not sustainable. The impugned order set aside - appeal allowed on merits as well as on limitation.

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• 2025 (2) TMI 140
  100% EOU - levy of Customs Duty on sale of capital goods by a 100% Export Oriented Unit (EOU) to an overseas buyer, without physical removal from the EOU premises - deemed debonding or removal of goods or not - import of moulds from M/s. Ampa Industries in the year 2007 without payment of customs duties based on exemption contained in N/N. 52/2003-Cus dated 31.3.2003 - Extended period of Limitation - penalty. Whether the sale of capital goods being used within an EOU to TVS Indonesia, without physical removal can be treated as deemed debonding / removal of the goods from the EOU on which duty has to be paid? - HELD THAT:- The ownership of the capital goods is not a criterion to avail duty exemption on imports on the said goods. If the appellant could have imported the capital goods on loan basis and still enjoyed the concession there is nothing in the Customs Act or subordinate provisions which require him to pay duty just because he sold the capital goods to the buyer of his products, without physically removing the goods from the Unit. Further sale would not amount to removal of goods / debonding unless such a provision is made in law. A deeming provision should be express and cannot be assumed. No such deeming provision has been alluded to by revenue in this case. In a normal situation it is the occurrence of the taxable event that creates or attracts the liability to tax. As held by the Hon ble Supreme court in the case of KIRAN SPINNING MILLS VERSUS COLLECTOR OF CUSTOMS [ 1999 (8) TMI 82 - SUPREME COURT] the taxable event with respect to warehoused goods occurs when the goods are physically removed from the warehouse. This shows that ownership of the goods is irrelevant for an EOU to undertake its authorized operations. In JK. COTTON SPINNING AND WEAVING MILLS LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 1987 (10) TMI 51 - SUPREME COURT] , the hon ble Apex Court held that, there can be no doubt that the word removal contemplated shifting of a thing from one place to another. In other words, it contemplates physical movement of goods from one place to another. In this case there is no shifting of the goods nor is there a deeming provision for sale or change of title to amount to removal, accordingly, sale of capital goods without physical removal from the EOU cannot be treated as deemed removal of the goods. The provision requires that goods imported duty free under the said Notification shall be removed from such bonded premises only after payment of duty. There has been no physical movement of goods outside he EOU and hence no removal / clearance of the impugned capital goods took place. This being so no duty was required to be paid. As per the legal position, no demand survives. Extended period of Limitation - penalty - HELD THAT:- The Central Excise authorities had duly verified and found correct the duty payable by the Appellant while exiting the EOU Scheme and a No Objection Certificate granted. Hence it is deemed that the department was aware of the transaction, unless they had shown otherwise by way of fraud etc, which is not the case here. Hence the extended period of limitation under Section 28(4) of Customs Act, 1962 could not have been invoked nor can the goods be held liable for confiscation. No penalty could be imposed on the Appellant. Conclusion - i) The ownership of the capital goods is not a criterion to avail duty exemption on imports, and sale would not amount to removal of goods / debonding unless such a provision is made in law. ii) There has been no physical movement of goods outside he EOU and hence no removal / clearance of the impugned capital goods took place. This being so no duty was required to be paid. As per the legal position, no demand survives. iii) The appellant had exited the 100% EOU Scheme with proper authorization and verification by the Central Excise authorities, negating any grounds for invoking the extended period of limitation or imposing penalties. The demand fails on merits and the impugned order is hence set aside - Appeal allowed.

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• 2025 (2) TMI 139
  100% EOU - recovery of Customs Duty with interest and penalty - duty foregone on raw materials and inputs used in the manufacture of goods cleared in the Domestic Tariff Area (DTA) at nil rate of duty - whether the benefit of N/N. 12/2012-Cus (S No 431) and 12/2012-CE (S No 272) can be extended to the respondent? HELD THAT:- From perusal of entry at S No 431, of the custom notification, ii is evident that exemption has been granted to all parts, components, accessories and sub parts of these, for the manufacture of mobile handsets, battery chargers, PC connectivity cables, Memory cards and hands-free headphones of mobile handsets. The phrase used in the said entry is for the manufacture of and not of . Thus anything which goes into the manufacture of these items would be eligible to exemption under the said entry of this notification. It is settled position in law that the exemption notification need to be construed strictly as per the words and phrase used in the notification. From the phrase used we are of the view that this phrase would cover all the items that are consumed directly or indirectly for the manufacture of these items. Similar expressions were used while defining the Capital Goods as per Rule 57 Q of the Central Excise Rules, 1994 and Hon ble Supreme Court has in the case of COMMISSIONER OF C. EX., COIMBATORE VERSUS JAWAHAR MILLS LTD. [ 2001 (7) TMI 118 - SUPREME COURT ] interpreted the said phrase to be very wide to cover all things used in the factory of production to be covered by the said definition. It was held by Supreme Court that The aforesaid definition of Capital goods is very wide. Capital goods can be machines, machinery, plant, equipment, apparatus, tools or appliances. Any of these goods if used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product would be Capital goods , and, therefore, qualify for availing Modvat credit. Per clause (b), the components, spare parts and accessories of the goods mentioned in clause (a) used for the purposes enumerated therein would also be Capital goods and qualify for Modvat credit entitlement. Clause (c) makes moulds and dies, generating sets and weigh bridges used in the factory of the manufacturers as capital goods and thus qualify for availing Modvat credit. It is found that the controversy sought to be raised in the present case as to whether these goods qualify as component part or accessory, etc., is totally irrelevant for determining the issue of admissibility of these notifications. The benefit of these notifications will be available in respect of all goods used for manufacture/ production of mobile parts and battery chargers. Conclusion - The exemption notifications should be interpreted liberally to include all items used in the manufacturing process, not just identifiable components and parts. The benefit of these notifications will be available in respect of all goods used for manufacture/production of mobile parts and battery chargers. Appeal of Revenue dismissed.

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• CST, VAT & Sales Tax

• 2025 (2) TMI 138
  Requirement to supply declaration in Form-F - transfer of promotional products such as Physician s Samples as well as Brand Reminders free of cost to depots or branches of the appellant located in other States or for supply of promotional products free of cost to the medical representatives of the appellant posted in other States, sales in the course of inter-State trade had not taken place - applicability of provisions of section 6A of the CST Act - HELD THAT:- Under article 246(1) of the Constitution, Parliament has the exclusive power to make laws with any of the matters enumerated in List 1 of the Seventh Schedule. Entry 92A of List 1 of the Seventh Schedule deals with taxes on the sale or purchase of goods, where such sale or purchase takes place in the course of inter-State trade or commerce. This entry was inserted by Constitution (Sixth Amendment) Act, 1956. The Central Sales Tax Act, 1956 was, accordingly, enacted. Section 6 of the CST Act is contained in Chapter III and deals with inter-State sales tax . Sub-section (1) of section 6, in particular, deals with liability to tax on inter-State sales . It provides that subject to the provisions contained in the Act, every dealer shall be liable to pay tax on all sales effected by him in the course of inter-State trade or commerce during any year. The contention of the appellant is that the transfer of promotional products are not capable of being sold and, in fact, have not been sold and, therefore, such a transfer would not amount to sale as defined in section 2 of the CST Act. Elaborating this submission, learned counsel pointed out that the taxable event for levy of central sales tax under the charging provisions of section 6 of the CST Act is that a sale has been effected by a dealer in the course of inter-State trade and as the jurisdictional condition constituting a sale is not fulfilled, central sales tax cannot be demanded from the appellant - In view of amendment made in sub-section (1) of section 6A of the CST Act w.e.f. 11.05.2002, the filing of Form-F no longer remains optional. Section 6A provides for the only manner in which a dealer can substantiate that transfer of goods was otherwise than by way of sale and that is by furnishing a declaration in Form-F. It is not a case of the appellant that movement of goods had not taken place from the State of Maharashtra to other States. The contention is that the movement of goods was not by reason of sale in the course of inter-State trade or commerce. It was, therefore, imperative for the appellant, in terms of section 6A of the CST Act, to have furnished the declaration in Form-F. The Bombay High Court in Johnson Matthey Chemicals India Pvt. Ltd. vs. The State of Maharashtra through the Government Pleader, High Court, Mumbai and others [ 2016 (2) TMI 543 - BOMBAY HIGH COURT ] examined the amended provisions of section 6A of the CST Act and held that for discharging the burden the dealer would have to produce and furnish to the assessing authority a declaration in Form-F and if the dealer fails to furnish the declaration, then the movement of goods shall be deemed for all purposes of the CST Act to have occasioned as a result of sale. In Ashok Leyland [ 2004 (1) TMI 365 - SUPREME COURT ], the Supreme Court also examined the provisions of the amended section 6A of the CST Act and held that whereas prior to the amendment in sub-section (1) of section 6A, a dealer had an option of filing a declaration in Form-F but after the amendment w.e.f. 11.05.2002 a dealer does not have any option and if the dealer fails to file such a declaration, the transaction would be deemed to be an inter-State sale. The Supreme Court emphasised on the use of the expression deemed and held that if this is interpreted differently, an incongruity would ensue. Thus, if a dealer intends to take up a case that transfer of goods was otherwise then by way of sale, he has to submit a declaration in Form-F, otherwise the deeming fiction contained in sub-section (1) of section 6A will come into play and the movement of goods shall be deemed for all purposes of the CST Act to have been occasioned by reason of sale in the course of inter-State trade or commerce. Conclusion - The appellant must produce Form-F declarations for transfers to depots or branches in other states. For transfers to medical representatives, where obtaining Form-F is impractical, the assessing authority is to consider the specific circumstances and make a determination based on the merits of each case. There is no infirmity in the order passed by the State Tribunal that may call for any interference in these appeals. The appeals are, accordingly, dismissed.

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• Indian Laws

• 2025 (2) TMI 137
  Dishonour of Cheque - seeking leave to appeal against separate orders of acquittal - discharge of legally enforceable debt or not - rebuttal of statutory presumption under Sections 118 and 139 of the Negotiable Instruments Act - HELD THAT:- Under Section 118 of the Act, once the signature on the cheque is admitted, the presumption is that the cheque was drawn for consideration. In tandem, Section 139 reinforces the presumption by holding that the holder of the cheque is deemed to have received it in discharge, whether wholly or partially, of a debt or liability. These provisions collectively create an inference of a legally enforceable liability, thereby shifting the evidentiary burden to the accused to rebut the presumption. However, as has been consistently held by the Supreme Court, the standard for such a probable defence is that it need only be established on a preponderance of probabilities, and it is not incumbent upon the accused to conclusively prove the non-existence of the debt or liability. In the present case, the Respondents have not denied signing the cheques in question, however, they have established a probable defence by demolishing the case of the Petitioner that there was a liability of INR 1.10 Crores payable by the Respondents. Accordingly, since no liability was established for the principal amount, any alleged obligation to pay profit or interest on the purported investment also stood negated. The Respondents have, by their own evidence and through the effective cross-examination of the Petitioner s witness, succeeded in rebutting the statutory presumptions under Sections 118 and 139 of the NI Act. The Court examined the statement of accounts purportedly furnished by the Respondents. During cross-examination, the sole witness (CW-1) conceded that this statement did not bear the name of the Respondents company, nor did it include the company s stamp or the signature of any of its directors. The Court, thus, rightly observed that these documents appeared to be mere, vague, and unsubstantiated computer-generated Excel sheets, falling short of the mandatory standards prescribed under Section 34 of the Indian Evidence Act, 1872 - the Trial Court rightly held that the statement of accounts and the other materials placed on record by the Petitioner failed to discharge the shifted burden of proof regarding the existence of the alleged investment or loan. Conclusion - i) The Respondents have rebutted the statutory presumption on the basis of preponderance of probability that the Petitioner does not have a legally enforceable debt due from the Respondents. The Trial Court rightly held that the burden of proof to establish such a liability shifts on the Petitioner, which burden they were not able to discharge. ii) Once it is established that no legally enforceable debt was payable by the Respondents to the Petitioner firm, any claim for returns or interest on such a debt becomes untenable. iii) This Court finds no reason to interfere with the impugned order of the Trial Court, acquitting the Respondents under Section 138 of the NI Act. Petition dismissed.

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• 2025 (2) TMI 136
  Maintainability of petition - availability of alternative remedy - Dishonour of Cheque - challenge to conviction of Revision Petitioner/accused under section 138 of Negotiable Instruments Act and sentence passed - compromise arrived at between the parties - compounding of offences - Whether the order passed by the Appellate Court confirming the conviction of the trial court under section 138 of Negotiable Instruments Act can be nullified by the High Court on the basis of compromise entered between the parties? - HELD THAT:- It is well settled that inherent power of the Court can be exercised only when no other remedy is available to the litigants and nor a specific remedy as provided by the statute. It is also well settled that if an effective, alternative remedy is available, the High Court will not exercise its inherent power, especially when the Revision Petitioner may not have availed of that remedy. The power can be exercised by the High Court to secure the ends of justice, prevent abuse of the process of any court and to make such orders as may be necessary to give effect to any order under this Code or Act, depending upon the facts of the given case - These powers are neither limited, nor curtailed by any other provision of the Code or Act. However, such inherent powers are to be exercised sparingly and with caution. In the instant case, the Revision Petitioner is invoking the inherent power of this court after dismissal of the appeal confirming his conviction and sentence. In these circumstances, it is required to examine as to whether for entertaining the aforesaid case, any special circumstances are made out or not, so it can be legitimately argued and inferred and held that in all cases where the Revision Petitioner is able to satisfy this Court that there are special circumstances which can be clearly spelt out subsequent proceeding invoking inherent power of this court can be modified and cannot be thrown away on that technical argument as to its sustainability once the contesting parties entered into subsequent compromise. In the case of Krishan Vs. Krishnaveni [ 1997 (1) TMI 529 - SUPREME COURT ], Hon ble the Apex Court has held that though the inherent power of the High Court is very wide, yet the same must be exercised sparingly and cautiously particularly in a case where the applicant is shown to have already invoked the revisional jurisdiction under section 397 of the Code. Only in cases where the High Court finds that there has been failure of justice or misuse of judicial mechanism or procedure, sentence or order was not correct, the High Court may in its discretion prevent the abuse of process or miscarriage of justice by exercising its power. In the case of S.W. Palankattkar others Vs. State of Bihar [ 2001 (10) TMI 1150 - SUPREME COURT ], it has been held by the Hon ble Apex Court that quashing of the criminal proceedings is an exception than a rule. The inherent powers of the High Court itself envisages three circumstances under which the inherent jurisdiction may be exercised:-(i) to give effect an order under the Code, (ii) to prevent abuse of the process of the court ; (iii) to otherwise secure the ends of justice. The power of High Court is very wide but should be exercised very cautiously to do real and substantial justice for which the court alone exists. Section 147 of NI Act begins with a non obstante clause and such clause is being used in a provision to communicate that the provision shall prevail despite anything to the contrary in any other or different legal provisions. So, in light of the compass provided, a dispute in the nature of complaint under section 138 of N.I. Act, can be settled by way of compromise irrespective of any other legislation including Cr.P.C. In general and section 320 (1)(2) or (6) of the Cr.P.C. in particular. The scheme of section 320 Cr.P.C. deals mainly with procedural aspects; but it simultaneously crystallizes certain enforceable rights and obligation. Hence, this provision has an element of substantive legislation and therefore, it can be said that the scheme of section 320 does not lay down only procedure; but still, the status of the scheme remains under a general law of procedure and as per the accepted proposition of law, the special law would prevail over general law. In the instant case, the problem herein is with the tendency of litigants to belatedly choose compounding as a means to resolve their dispute, furthermore, the arguments on behalf of the Govt. Advocate (crl.side) on the fact that unlike Section 320 Cr.P.C., Section 147 of the Negotiable Instruments Act provides no explicit guidance as to what stage compounding can or cannot be done and whether compounding can be done at the instance of the complainant or with the leave of the court. Conclusion - Taking into account the fact that the parties have settled the dispute amicably by way of compromise, this Court is of the view that the compounding of the offence as required to be permitted. The conviction and sentence imposed by the lower courts annulled, treating the revision petitioner as acquitted due to the compounding of the offense. The trial court is directed to refund Rs.35,000/- already deposited by the Revision Petitioner in C.C.No.315 of 2018 along with accrued interest, if any, within a period of four weeks from the date of receipt of a certified copy of this order along with appropriate application before the trial court - The Criminal Revision Case is disposed of.

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• 2025 (2) TMI 135
  Dishonour of Cheque - conviction of the petitioners for the offence under Section 138 of the Negotiable Instruments Act - discharge of the liability of the first accused Firm - compromise arrived between the parties - compounding of offences - HELD THAT:- The petitioners and respondent are present in person and confirm the compromise arrived at between them. In support of the same, today, both the learned counsel for petitioners as well as respondent had filed a Memorandum of Criminal Miscellaneous Petition under Section 147 of the Negotiable Instruments Act, 1881 for compounding the offence, as per the settlement entered between the petitioners and the respondent, which have been signed by the petitioners and the respondent and also by their respective counsel. Conclusion - In view of the compromise arrived at between the parties and considering the petition under Section 147 of the Negotiable Instruments Act, the offence under Section 138 of the Negotiable Instruments Act is compounded. The conviction and sentence imposed upon the petitioners confirming the judgment is set aside and the revision petitioners are acquitted of the offence under Section 138 of the Negotiable Instruments Act - Criminal Revision Case is allowed.

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