Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 8, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
GST - States
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G.O.Ms. No. 553 - dated
16-11-2023
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Andhra Pradesh SGST
The Andhra Pradesh Goods and Services Tax Act & Rules, 2017 - Amendments in G.O.Ms.No.567, Revenue (CT-II) Department, dated.24.11.2017
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G.O.Ms. No. 543 - dated
14-11-2023
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Andhra Pradesh SGST
Notified Supplies online gaming under section 15(5), Andhra Pradesh Goods and Services Tax Act
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G.O. Ms. No. 538 - dated
14-11-2023
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Andhra Pradesh SGST
The Andhra Pradesh Goods and Services Tax Rules, 2017- To notify the Provisions of the Andhra Pradesh Goods & Services Tax (Second Amendments)Act,2023
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G.O. Ms. No. 49/74 - dated
25-1-2024
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Puducherry SGST
Seeks to extend dates of specified compliances in exercise of powers under section 168A of Puducherry Goods and Services Tax Act, 2017
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01/2024-Puducherry GST (Rate) - dated
25-1-2024
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Puducherry SGST
Amendment in Notification G.O. Ms. No. 1/2017-Puducherry GST (Rate), dated 29th June, 2017
Income Tax
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20/2024 - dated
6-2-2024
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IT
Amendment in Notification No. 106/2022 dated 2nd September, 2022 - Control of income-tax authorities u/s 118 of IT ACT 1961 - subordinate positions to PCIT and CCIT.
Highlights / Catch Notes
GST
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Levy of penalty - at the time of detention was that one of the E-Way Bills had expired - The High court held that mens rea to evade tax is essential for imposing penalties. In this case, there was no indication of intent to evade tax. While a technical violation occurred, authorities failed to establish repeated use of the expired E-Way Bill or intent to evade tax. Therefore, the technical violation alone did not warrant a penalty u/s 129(3) of the Act. The court quashed the impugned orders.
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Levy of tax / penalty - error with regard to the address of the consignee in the E-Way Bill - The High court observes that in numerous judgments, it has been established that the presence of mens rea for tax evasion is essential for the imposition of a penalty. Mere technical errors, without any intent to evade taxes, do not warrant the imposition of a penalty. - Amount already deposited, directed to be refunded.
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Validity of demand of GST and denial of input tax credit (ITC) - The High Court held that, u/s 16 of the TNGST Act read with Rule 36 of the rules framed thereunder, the registered person is under an obligation to establish purchase, including receipt of goods or services, as the case may be - Ordinarily, the petitioner would be required to produce invoices, e-way bills, payment receipts, lorry receipts, delivery challans and the like to establish purchase and receipt of goods. Since the impugned order was issued primarily on the basis that such documents were not submitted by the petitioner, it is not appropriate to adjudicate this issue in exercise of discretionary jurisdiction when the petitioner has an alternative remedy.
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Reversal of refund earlier granted to the petitioner - not affording any opportunity of hearing - Violation of provisions of section 75(4) of GST - Considering the fair statement made by the Revenue's counsel, the High court refrains from imposing costs despite the conduct of the revenue authorities. - Accordingly, the writ petition is allowed, setting aside the order. The matter is remitted to the respondent to issue a fresh order after affording the petitioner an opportunity for a hearing.
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Violation of principles of natural justice - Matter of issues / delivering notice - The High Court observed that, at the same time, the Court cannot loose sight of the fact that although there is advancement in the technology and it is omnipresent everywhere and Section 169(1)(c) of the respective GST Enactments has statutorily recognized communication through e-mail, all men of commerce from the business community particularly small traders, small service provider and small manufacturers may not be ready to receive and respond. They may be technologically challenged which may impair them to respond autonomously to emails sent to them in the dash board of GST Web portal on their computer screen or Tab or smart phones. - There has to be a proper communication as otherwise exparte decisions are susceptible to be successfully challenged and declared as arbitrary for violation of principles of natural justice.
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Time Limitation - validity of orders passed by the 1st respondent u/s 73(9) of the Central Goods and Services Tax Act, 2017 - The High Court observed that, the proceedings were initiated by notice dated 29/9/2023 and order u/s 73(9) was passed on 3/11/2023. - It is apparent therefore that the thirty-day period that is envisaged from the date of the notice under Section 73(2) is for the purpose of enabling an assessee to pay tax along with interest payable under Section 50 so as to avoid the payment of penalty. This opportunity was not extended to the appellant herein and virtually amounted to non-compliance with the mandatory procedure envisaged under the Statute. - The HC held that, since the terminal for passing the order under Section 73(9) expired on 31/12/2023 the said defect cannot now be cured since any fresh order passed under Section 73(9) would be beyond 31/12/2023. - The order quashed.
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Valuation u/s 15(3) - Validity of GST on volume discount - Petitioner submited that, GST is levied and paid on the entire invoice amount, which includes volume discount. - Demand of GST on volume discount would be double taxation. - The High Court observed that, there is no scope for confusing the discount offered to the petitioner and the discounted price at which the petitioner effects further sale to its customers. They are two independent transactions and there is no scope for intermingling them for demanding tax from the petitioner. The discounted price at which the petitioner sells the goods is relevant only for determining the “transaction value” adopted by the petitioner. - Consequently, HC restored back the matter to AO for fresh adjudication.
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Maintainability of application for Advance Ruling - The AAR while dismissing the application held that, in the instant case, the questions, on which the applicant seeks advance ruling, are not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant, but in relation to a completed supply on which self-assessed tax is discharged by the applicant. Therefore, the instant application is beyond the jurisdiction of this authority and hence is liable for rejection.
Income Tax
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Validity of reassessment proceedings - non-affording the petitioner an opportunity of being heard as mandated u/s 148A(b) - The court dismissed the Revenue's appeal, affirming the judgment of the learned Single Judge. It held that the requirement of providing an opportunity of being heard includes the right to a personal hearing, as mandated by Section 148A of the Income Tax Act. - The HC has also taken note of the amendment to the provisions of Section 148A(b) through the Finance Act, 2022 with effect from 1.4.2022.
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Validity of assessment passed u/s 153A pursuant to search and seizure - The High Court has observed and held that, the assessee’s assessment for the relevant year stood completed as on 06.06.2003 long before the search and consequent proceeding initiated u/s 153A and there is no question arising of the relevant assessment to abate under the second proviso to Section 153A. - Tribunal was perfectly within the statutory framework, in making a remand directing the AO to carry out re-assessment of the assessment year 2002-03, which stood completed as on the date of initiation of Section 153A proceedings, if some incriminating material seized during the search is available.
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TDS on interest arising from Motor Accidents Claim - Validity of the order of the Motor Accidents Claims Tribunal issuing directions to refund by the Insurance Company of amounts deducted as TDS and already credited to the Income Tax Department - The High Court held that, there can be no spread over of the interest income in the years in which it accrued after death of the person, which resulted in the compensation being awarded. HC observed that, Section 194A(3)(ix) speaks of such exemption from deduction of tax, from the interest income, when the aggregate amount of such income credited or paid during the financial year exceeds Rs. 50,000/-. Hence, the income has to be found to have accrued only on the date of payment or credit. - While noting the subsequent amendment coming into force from 01.06.2015, no TDS can be deducted even on the interest component, the order of Tribunal reversed.
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Revision u/s 263 - Reopening of assessment - AO completed the assessment on declared income of the assessee - The Tribunal held that, the AO raised the issue, asked for the details and applied his mind while passing the assessment order. Even in the proceeding u/s. 263 the ld. PCIT did not bring anything on record that how the order of the ld. AO is erroneous and prejudicial to the interest of the revenue what material he relied. - The ITAT observed that, PCIT merely aims to make inquiry as per his will and wishes which could have been done at the time of assessment proceeding as per the supervisor power vested and for that again and again same exercise cannot be done on the assessee. - Revision order quashed.
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Revision u/s 263 - The tribunal held that, when the ld. PCIT himself was satisfied that there was no error in the order of the Assessing Officer vis-à-vis irregularities noted by him initially, there can be no case for exercising any revisionary power u/s 263 of the Act. The provisions of the section are very clear. The concerned authorities can exercise revisionary powers only on fulfillment of the essential conditions of finding error in the order sought to be revised and the error being such as causing prejudice to the Revenue.
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Penalty u/s 271D & 271E - allegation of cash loan having been taken/repaid - The ITAT underscored the principle that penalties under Sections 271D and 271E for violations of Sections 269SS and 269T are not applicable when the existence of the transactions (cash loans taken and repaid) is itself disputed. Furthermore, it highlighted the importance of adhering to principles of natural justice, including the right to cross-examine evidence used against the assessee.
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Penalty u/s 271D & 271E - default committed in violation of section 269SS & 269T - Reliance on search proceeding documents - Transactions being mere book entries - Following the judgement of Supreme Court, the Tribunal held that, the expression “money” means currency/cash. Therefore, very essential ingredient to constitute a default within the meaning of 269SS or 269T is that whether there is movement of money. Mere book entries alone, during the course of training, cannot entail a default of taking or repaying the loan in cash, unless it is established that Moneys moved from one person to another person, which is in the nature of loans or deposits” - CIT(A) rightly deleted the penalties.
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Addition u/s 56(2)(x) - sale of flats - difference between the value taken by the assessee and the fair market value (FMV) u/s 50C - The ITAT found that the value adopted by the assessee and the FMV of the flats under Section 50C were within the range of ±10%, thus the provisions of Section 56(2)(x) did not apply. - Following the earlier decisions, the Tribunal deleted the additions.
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Exemption u/s 11 - AO by invoking proviso to Section 2(15) and denying the exemption - Receipts from business activities exceeded the threshold of Rs. 10 lakhs and Rs. 20 lakhs - The ITAT directed the AO to assess whether the assessee's main activity, for which it was granted Section 12A registration, itself constituted trade, commerce, or business, or if the activities were intrinsically linked to the advancement of its charitable object.
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Jurisdiction of CIT (A) while passing an order in appeal u/s 250 - Validity of assessment framed without issue of notice u/s. 143(2) - whether CIT (A) has exceeded his jurisdiction by directing the Ld. AO to proceed in terms of section 150 of the Income Tax Act, 1961 and reframe assessment order as per law and after complying with the prescribed procedure? - The ITAT held that, the CIT(A) has set aside the assessment the power which he does not have, therefore, the order of the CIT(A) to this extent is bad in law as the CIT(A) has exceeded his jurisdiction.
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Addition u/s 69B r.w.s.115BBE - unexplained investment - higher rate of tax - amount offered during survey - The ITAT held that the assessee has submitted the details of outflow of funds, the onus is clearly on the Assessing officer to discharge this burden and record a specific finding in this regard and once the same is done, the onus can be shifted to the assessee to explain the nature and source of such investment. - The Tribunal further held that, the statement of the partner of the assessee firm recorded u/s 131 during the course of survey and subsequent affirmation thereof by the assessee by way of surrender letter on a standalone basis and without any corroborative evidence doesn’t fulfill the statutory mandate of deeming provisions. - The income has been rightly offered to tax by the assessee.
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Addition u/s. 68 being unsecured loans - onus to prove - The ITAT held that, primary onus can be discharged by establishing/furnishing the proof of the identity of the creditor, their creditworthiness and genuineness of transaction. Once the primary evidence in relation to the identity, genuineness and creditworthiness is furnished by the assessee, the burden shifts on the revenue to bring credible material before rejecting the primary document furnished by the assessee. - Since, revenue authorities failed to discharge the burden shifted on them, the tribunal deleted the additions.
Customs
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Rejection of the request for interest on the amount of duty drawback paid - Duty Exemption Scheme - The Supreme Court upheld the Karnataka High Court's decision, affirming that the respondent was entitled to interest on delayed duty drawback payments for civil construction works under the deemed export category of the Exim Policy 1992-1997.
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Recovery of dues - Petitioner’s (bank) right as a Financial Creditor is superior to the rights under the Customs Act, 1962 or not - The High court examines the provisions of Section 142A of the Customs Act and Section 35 of the SARFAESI Act to determine the legality of the letter from the DRI. It concludes that the actions initiated by the petitioner under the SARFAESI Act cannot be impeded by the letter from DRI.
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Refund claim - Period of limitation - Doctrine of merger - importer having registered a ‘Protest’ - The Tribunal held that, "the doctrine of merger" implies that the order passed by a lower authority would lose its finality and efficacy in favour of an order passed by a higher authority before whom correctness of such an order may have been assailed in appeal or revision. Hence once an order is passed in a matter where a protest is vacated by the issue of an order by the proper officer the second proviso to section 27(1) ceases to apply and section 27(1B)(b) takes over.
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Exemption from payment of whole of Customs duty - failure to re-export 39 containers within the period of six months prescribed in the said notification purportedly due to some fire on the port and damage to other containers - The tribunal held that, there was clearly a breach of condition of exemption notification and in the absence of any remission or waiver of duty having been granted by the competent authorities and the same not having been sought by the party for considerable length of time. - Thus while confirming the demand of duty, the CESTAT remanded back the matter on the ground of valuation with full transparency.
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Demand of customs duty based on mis-declaration of weight of imported rough A marble blocks - The Tribunal observed that, it is found that the department established a case of excess weight based on documents maintained by the Customs House Agent (CHA). However, the appellants argue that the difference in weight is due to trade practices and irregular shapes of blocks, resulting in greater waste content. - Consequently, considering the lack of evidence from the department demonstrating the disposal of the alleged excess goods, CESTAT held that the demand for customs duty cannot be sustained.
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Benefit of exemption from customs duty - Change of Notification in the bill of entry - alternate exemption Notification - The Tribunal held that, the only criteria to be seen that whether at the time of import the alternate exemption notification was legally available to the appellant - In the facts of the present case, there is no dispute about eligibility of the Notification 94/2006-Cus in respect of the import made by the appellant as the goods were meant for re-export. - Further, by following the decision of Supreme Court, wherein it was held that the beneficial notification can be claimed at a later stage also, if otherwise the same is eligible at the time of import of goods, the CESTAT allowed the claim of the Importer.
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Valuation of imported goods - The Tribunal held that, the lower authorities have re-determined the value of the impugned goods based on the values declared by other importers without providing any basis for this decision and relying on certain imports which are clearly not contemporaneous in as much as the Bills of Entry pertaining to those imports were filed during the period November 2010, whereas the impugned import is of the year February 2011 and there is no material produced by the department that amounts over and above the invoice value were paid with respect to transaction value in question. It has been consistently held by the Tribunal that NIDB data alone is not sufficient for re-determination of value.
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Revocation of the Customs Broker License - forfeiture of security deposit - By following the decision of High Court, the CESTAT held that, the fraud alleged here is of diverting the goods from the warehouse instead of re-exporting, which had occurred after the role of the appellant had come to an end as the goods had reached the customs bonded warehouse. Hence the appellant cannot be linked to the fraud and the same cannot be stretched to contravention of the provisions of the Regulations.
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Valuation - Enhancement of value of the imported RPO - CESTAT held that, in the present case neither any contemporaneous value was adopted nor any method as prescribed u/s 14 read with Custom Valuation Rules, 2007 was followed. Therefore, merely on the basis of statements of director valuation cannot be enhanced. - Further regarding the Mis-declaration of Country of Origin in the bills of entry, the Tribunal held that, if there is a mis-declaration of country of origin the appellant being not the party to make any incorrect declaration cannot be held responsible and no consequential penalty can be imposed on the appellant.
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Rejection of request of conversion of DFIA Shipping Bill to DBK - rejection on the ground of limitation as prescribed under Board Circular No. 36/2010-Cus dated 23.09.2010 - The Tribunal held that, the rejection of the appellant’s request for conversion of DFIA Scheme to DBK Scheme in shipping is absolutely illegal and incorrect.
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Levy of penalty u/s 114 of the Customs Act, 1962 on the owners of the seized goods - Allegation that, pulses (URAD ki Dal) in question were meant for illegal export from India to Nepal - Requirement to cross-examination of the witnesses. Genuineness of the Punchnama - panch witnesses are stated to be ‘daily wage laborers'. - The tribunal set aside the penalty in the absence of allowing cross-examination of witness.
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Classification of import goods - Main MIC Dust Protective Net - The Authority for Advance Ruled held that, as per Explanatory Notes, a few woven fabrics are excluded from the woven fabrics classified under Chapter 50 to 55 and the textile fabric for technical uses classified under heading 5911 are one of them. - The AAR further observed that in view of Chapter Notes of Chapter 59, the subject goods are not covered under any other heading of Section XI and meant for technical use, these goods merit classification under Chapter 59 of the Import Tariff.
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Classification of imported goods - Turbochargers which are suitable for use only in Off-highway equipment i.e., for generators, earth moving equipment etc. - The AAR observed that, the Notification No. 50/2017, dated 30-6-2017, as amended makes it clear that turbochargers are chargeable for 7.5% duty instead of 15% provided the same are not used in motor vehicles/cars/cycles - According the advance ruling authority held that, the turbochargers will get benefit of the notification only in case where they are suitable for use in goods other than motor vehicles/cars/cycles falling under Headings 8702, 8703, 8704 and 8711.
Indian Laws
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Forfeiture of the earnest money deposit by the appellant bank - The Supreme Court held that, the underlying principle envisaged u/s(s) 73 & 74 of the Indian Contract Act, 1872 which is a general law will have no application, when it comes to the SARFAESI Act more particularly the forfeiture of earnest-money deposit which has been statutorily provided under Rule 9(5) of the SARFAESI Rules as a consequence of the auction purchaser’s failure to deposit the balance amount. - The High Court erred in law by holding that forfeiture of the entire deposit under Rule 9 sub-rule (5) of the SARFAESI Rules by the appellant bank after having already recovered its dues from the subsequent sale amounts to unjust enrichment.
IBC
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Jurisdiction - power of NCLT to declare the VAT / Tax assessment order as void ab initio under Section 33(5) of IBC - In view the judgement of the Supreme Court, the High Court held that, U/s 238, the provisions of IBC have an overriding effect on any other law for the time being in force or any instrument having effect by virtue of any law. After declaring the moratorium, there is an embargo on enforcing the demand, but there is no embargo u/s 14, r.w.s 33(5) of the IBC, for determining the quantum of tax and other levies, if any, against the Corporate Debtor. The Order shows the lack of basic understanding of the law.
Service Tax
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Legal Services / Services of an Advocate - Recovery of Service Tax alongwith interest and penalty - The High Court observed that, as set out in the Notification, the taxable service in respect of services provided or to be provided by the individual advocate for a firm of advocates has been set out to be ‘Nil’. Similarly Notification No.25/2012 dated 20th June, 2012, also clearly provides that the service provided by an individual advocate, partnership firm of advocates, by way of legal services being exempted from levy of service tax. - Consequently, the order quashed and set aside.
Central Excise
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Reversal of proportionate CENVAT credit - generation of electricity - CENVAT credit of Counterveiling Duty (CVD) on import of Coal - quantum of power wheeled out to sister units - The High Court held that the appellant is entitled to CENVAT credit for the electricity generated, even if wheeled out to sister units, as long as it is used within the company and not sold for consideration.
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Scope of adjournment of matter beyond three times - Rule 20 of CESTAT Procedure Rules, 1982 - The Tribunal dismisses the appeal due to the appellant's non-prosecution, in accordance with Rule 20 of CESTAT Procedure Rules.
VAT
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Taxability of Latex in the Hands of Company - Exclusion of from the scope of "Agriculturist" - The High Court observed that, The only reason why the petitioner was called upon to pay tax on the sale of latex, despite being an agriculturalist in the general sense of the term, is because the definition of 'agriculturalist' and 'turnover' respectively under the KVAT Act excluded Companies. - Consequently, the demand for tax on the consideration received by the petitioner company was confirmed.
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Jurisdiction - power of Sales Tax Officer u/s 67 of the VAT Act to seize the books of accounts - The Calcutta High Court held that, since the Sales Tax Officer, who seized the books of accounts, does not lack power or jurisdiction to seize under Section 67 of the VAT Act, therefore, learned Single Judge has committed a manifest error or law to quash the seizure of books of accounts, etc. of the petitioner.
Case Laws:
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GST
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2024 (2) TMI 363
Detention of goods alongwith vehicle - levy of penalty - only discrepancy that was found at the time of detention was that one of the E-Way Bills had expired - petitioner could not explain the reason for not issuing a fresh E-Way Bill - HELD THAT:- The factual aspect in the present case did not indicate any intention whatsoever to evade tax. Furthermore, the documents that have been relied upon by the petitioner have not been considered by the authorities. The authorities have dealt with the issue with regard to the expiry of the E-Way Bill and held that no explanation was offerred by the petitioner with regard to the fresh generation of the E-Way Bill, as the same had expired ten days before the detention. However, it is to be noted that the goods in the vehicle were for two e-Invoices and two E-Way Bills and only one E-Way Bill had expired. There is no dispute with regard to the consignor and consignee nor any dispute with regard to the description of the goods in the vehicle. In relation to the e-Invoices and the E-Way Bills, the authorities have not been able indicate any intention whatsoever on behalf of the petitioner to evade tax. Indubitably, there is a technical violation that has been committed by the petitioner. However, the authorities have not been able to indicate in any manner that the E-Way Bill had been used repeatedly nor have they made out any case with regard to an intention to evade tax by the petitioner. Accordingly, this Court is of the view that such a technical violation by itself without any intention to evade tax cannot lead to imposition of penalty under Section 129(3) of the Act. This view is fortified by a catena of judgments. This Court directs the respondents to refund the amount of tax and penalty deposited by the petitioner within a period of four weeks from date - petition allowed.
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2024 (2) TMI 362
Levy of tax / Penalty - error with regard to the address of the consignee in the E-Way Bill - existence of mens rea on the part of the petitioner for evasion of tax or not - HELD THAT:- The imposition of tax is only on the basis of a technical error with regard to address of the consignee that was wrongly written the E-Way Bill. The authorities have not been able to indicate any mens rea on the part of the petitioner for evasion of tax. In a catena of judgments, this Court has held that presence of mens rea for evasion of tax is a sine qua non for imposition of penalty and mere technical error would not lead to imposition of penalty - Reliance can be placed in M/S MODERN TRADERS VERSUS STATE OF UP AND 2 OTHERS [ 2018 (5) TMI 1030 - ALLAHABAD HIGH COURT] , M/S GALAXY ENTERPRISES VERSUS STATE OF U.P. AND 2 OTHERS [ 2023 (11) TMI 359 - ALLAHABAD HIGH COURT] and M/S. HINDUSTAN HERBAL COSMETICS VERSUS STATE OF U.P. AND 2 OTHERS [ 2024 (1) TMI 282 - ALLAHABAD HIGH COURT] . Thus, the orders dated February 22, 2020 and September 8, 2019 are quashed and set aside. The amount deposited by the petitioner be refunded to it within a period of one month from date - petition allowed.
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2024 (2) TMI 361
Cancellation of GST registration of petitioner - non-filing of the return for six months - HELD THAT:- The petitioner is also entitled for the benefit of the order passed by this Court in (Chandra Sarin Vs. Union of India) [ 2022 (9) TMI 1047 - ALLAHABAD HIGH COURT] . In the said judgment, the Court has held that the impugned order does not assign any reason whatsoever for cancelling registration of the petitioner and is passed only on the ground that reply to the show cause notice is not given. The non-submission of reply to the show cause cannot be a ground for cancellation of the registration. The orders dated 17.03.2023 is set aside and the petitioner is permitted to appear before the respondent along with the reply to show cause notice and the certified copy of this order as well as the copy of the judgment passed in Chandra Sarin, within three weeks from today - petition allowed.
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2024 (2) TMI 360
Validity of summons issued - facing proceedings both at the instance of Central and State GST authorities - violation of principles of natural justice - HELD THAT:- The documents on record disclose that both an intimation and show cause notice were issued and admittedly received by the petitioner. The show cause notice clearly states that the petitioner was being provided an opportunity of personal hearing. Likewise, the reminder notice dated 02.09.2023 also indicates that a personal hearing was being provided to the petitioner on 05.09.2023. As contended by learned counsel for the petitioner, it is no doubt anomalous that such personal hearing was provided before the last date fixed for the submission of a reply. Even so, nothing prevented the petitioner from attending the personal hearing and thereafter submitting a reply to the show cause notice. Admittedly, this was not done - thus the principles of natural justice were not violated. Whether the impugned orders call for interference on any other grounds? - HELD THAT:- The contention of learned counsel for the petitioner that the impugned orders do not contain any findings on the conclusions of the Intelligence Wing is correct. However, under Section 16 of the TNGST Act read with Rule 36 of the rules framed thereunder, the registered person is under an obligation to establish purchase, including receipt of goods or services, as the case may be - Ordinarily, the petitioner would be required to produce invoices, e-way bills, payment receipts, lorry receipts, delivery challans and the like to establish purchase and receipt of goods. Since the impugned order was issued primarily on the basis that such documents were not submitted by the petitioner, it is not appropriate to adjudicate this issue in exercise of discretionary jurisdiction when the petitioner has an alternative remedy. The orders impugned herein do not call for interference under Article 226 of the Constitution of India - Accordingly, the writ petitions are disposed of by leaving it open to the petitioner to impugn the orders impugned herein by way of statutory appeals.
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2024 (2) TMI 359
Reversal of refund earlier granted to the petitioner - not affording any opportunity of hearing - violation of principles of natural justice and provisions of section 75(4) of GST - - maintainability of petition - availability of alternative remedy - HELD THAT:- Since the statutorily incorporated right of natural justice has been violated for no good reason, it is observed that alternate remedy that otherwise exists may not operate as a bar to entertain the present petition. Besides the fact that the petitioner has a right of hearing, rule of law also commends that obligation to provide such an opportunity be duly enforced on the revenue authorities as may not give rise to fruitless and wholly avoidable litigation as has arisen in the present petition. The matter is remitted to the respondent no. 3 to pass a fresh order after affording opportunity of hearing to the petitioner - petition allowed.
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2024 (2) TMI 358
Cancellation of GST Registration of the petitioner - short balance of Rs. 9,520/- for 194 days in the Credit Ledger of the petitioner - demand of interest of Rs. 911/- - HELD THAT:- The petitioner submits that the petitioner shall deposit the said amount within two days. On the petitioner depositing the said amount, respondents shall proceed further with the revocation application and revoke the cancellation of the GST Registration of the petitioner which shall then be restored in accordance with law. Petition disposed off.
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2024 (2) TMI 357
Violation of principles of natural justice - although the notice that preceded the impugned order was sent by the respondent on the common portal was received by the petitioner, the petitioner was unaware of the same - Recovery of input tax credit alongwith interest and penalty - HELD THAT:- Section 169 of the respective GST enactments is a progressive provision intended to integrate technology with the assessment proceedings under the provisions of the respective GST Enactments. Section 169 of the respective GST Enactment is a step to modernize the tax administration in the country by taking advantage of available technology. At the same time, the Court cannot loose sight of the fact that although there is advancement in the technology and it is omnipresent everywhere and Section 169(1)(c) of the respective GST Enactments has statutorily recognized communication through e-mail, all men of commerce from the business community particularly small traders, small service provider and small manufacturers may not be ready to receive and respond. They may be technologically challenged which may impair them to respond autonomously to emails sent to them in the dash board of GST Web portal on their computer screen or Tab or smart phones. As a matter of prudence, it is advisable for the department to serve notice on such assessees through other mode of communications prescribed when they fail to respond to the summons, orders, notices and other communications etc., sent to them through email under Section 169 (1) (c) of the respective GST Enactments - there has to be some amount of flexibility. Rigidity in the administration of tax in such matters may not serve the purpose and can be counter productive. There has to be a proper communication as otherwise exparte decisions are susceptible to be successfully challenged and declared as arbitrary for violation of principles of natural justice. The impugned order is set aside and the case is remitted back to the respondent to pass a fresh order on merits in accordance with law preferably within a period of 45 days from date of receipt of this order - Petition allowed.
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2024 (2) TMI 356
Seeking grant of Regular Bail - availing benefit of Input Tax Credit on the basis of forged and fictitious record to the tune of crores of rupees - HELD THAT:- The offence alleged against the present applicant is punishable with imprisonment for 5 years. The applicant is in custody since 12.10.2023. The trial of the offence is not likely to commence and conclude in the near future. In the facts and circumstances of the case and considering the nature of the allegations made against the applicant in the FIR, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. The present application is allowed.
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2024 (2) TMI 354
Seeking grant of Bail - GST violation to the tune of Rs.122 Crores - HELD THAT:- Considering the facts and circumstances of the case and also considering the fact that the petitioner has come forward to deposit a sum of Rs. 50,00,000/- to the respondent by way of demand draft, this court is inclined to grant bail to the petitioner with certain conditions. The petitioner is ordered to be released on bail on his executing a bond for a sum of Rs.10,000/- with two sureties, each for a like sum to the satisfaction of the learned Judicial Magistrate No.1, Trichy, and on further conditions imposed - bail application allowed.
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2024 (2) TMI 353
Time Limitation - validity of orders passed by the 1st respondent under Section 73(9) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- As per sub-section (2) of section 73, notice has to be issued three months prior to the limitation period prescribed under sub-section (10) of section 73. The proceedings were initiated by notice dated 29/9/2023. Ext. P5 order under Section 73(9) of the CGST Act was passed on 3/11/2023. It is apparent therefore that the thirty-day period that is envisaged from the date of the notice under Section 73(2) is for the purpose of enabling an assessee to pay tax along with interest payable under Section 50 so as to avoid the payment of penalty. This opportunity was not extended to the appellant herein and virtually amounted to non-compliance with the mandatory procedure envisaged under the Statute. Further, since the last date for passing the order under Section 73(9) expired on 31/12/2023, the finding of the learned Single Judge that virtually grants an opportunity to the respondents to overcome their lapses by extending the time limit for passing the order under Section 73(9) of the CGST Act, cannot be granted. Since the terminal for passing the order under Section 73(9) expired on 31/12/2023 and it was found that Ext. P5 order was passed on 3/11/2023 without complying with the mandatory procedure under Section 73(5) and (8) of the CGST Act, and further, the said defect cannot now be cured since any fresh order passed under Section 73(9) would be beyond 31/12/2023. Appeal allowed.
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2024 (2) TMI 352
Validity of provisions of Section 107(4) of the CGST/RGST Act, 2017 as well as notification dated 02.11.2023 issued under Section 148 of the Act - Restriction of right of the appellate authority to condone the delay in filing appeal by one month only - HELD THAT:- List the petition on 21.02.2024. In the meanwhile and till the next date, in case the petitioner deposits 12.5% of the amount of tax in dispute within a period of one week, the recovery of/action qua rest of the amount pursuant to the demand dated 21.07.2023 (Annex-2) shall remain stayed.
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2024 (2) TMI 351
Valuation u/s 15(3) - Validity of GST on volume discount - Petitioner submited that, GST is levied and paid on the entire invoice amount, which includes volume discount. - Demand of GST on volume discount would be double taxation. - HELD THAT:- Although the Court exercising its jurisdiction under Article 226 of the Constitution, Section 7 of the TNGST Act, 2017 would ordinarily refrain from entertaining a writ petition against an assessment order, where the petitioner has an effective and an alternate remedy, the Court is of the view that this is a fit case for entertaining this writ petition - This Court is of the view that the impugned orders are liable to be quashed and the cases deserve to be remitted back to pass a de-novo order in the light of the observation contained herein. Both the clarifications (clarification in Circular No.92/11/2019-GST dated 07.03.2015 and clarification issued vide circular No.92/11/2018-GST dated 07/03/2019) are not relevant to the facts of the present case either in support of the present writ petition or in favour of the respondent to dismiss the writ petition. They are not in any event binding on this Court in terms of the decision of the Collector of Central Excise Vs. Dhiren Chemical Industries [ 2002 (2) TMI 115 - SC ORDER] . The Hon'ble Supreme Court held that clarification of the Board are not binding on the Courts though they may bind the Assessing Officers and field formations - Under the scheme of the respective GST Enactments, 2017 each instance of supply of goods or services are chargeable to tax under Section 9. The expression supply has been defined in Section 7 if the respective GST Enactments, 2017. The discount offered to the petitioner can impact only the transaction value of the supplier of the petitioner. As far as the transaction value of the petitioner is concerned, it is the price which has been paid or actually payable for the supply of the goods - there is no scope for confusing the discount offered to the petitioner and the discounted price at which the petitioner effects further sale to its customers. They are two independent transactions and there is no scope for intermingling them for demanding tax from the petitioner. The discounted price at which the petitioner sells the goods is relevant only for determining the transaction value adopted by the petitioner - Unless, the discounted price itself was on account of the subsidy as a result of which while the supplier would have been compensated without including into the transaction value in the invoice, question of adding such value to the transaction value of the petitioner cannot be countenanced. The cases are remitted back to the respondent. The respondent is directed to pass order on merits in accordance with law, within a period of three (3) months from the date of receipt of copy of this order - Petition allowed.
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2024 (2) TMI 350
Classification of goods - Bio Pro-Enhac - Minwa and Minwa Plus which are Animal Feed Supplements and Feed Additives from drugs - exempt falling under HSN Code from 2309 or are covered by HSN 2936 and 2931 respectively? - HELD THAT:- The 1st respondent rejected the claim of the petitioner on the main ground that the taxpayer has not provided information about the content percentage of the elements used in bio pro-enhac (vitamins, enzymes, antibiotic and feed percentage). Accordingly, the 1st respondent held the product bio pro-enhac falls under HSN code 2936. It must be noted that though the impugned order shows that the petitioner placed reliance on the decision in Sun Export Corporation [ 1997 (7) TMI 117 - SUPREME COURT] and some other decisions to the effect that the supplements and additives of shrimp feed will also fall under the category of shrimp feed, the same was not discussed and analyzed by 1st respondent before recording his conclusion. Therefore, the impugned order is liable to be set aside to that extent and the matter requires remand for fresh consideration. The impugned order dated 07.02.2023 is set aside to the extent of the 1st respondent s finding on the product bio pro-enhac and the matter is remanded to 1st respondent to afford an opportunity of hearing to the petitioner regarding the nature of the product bio pro-enhac and its taxability and pass an appropriate order afresh on merits in accordance with the governing law and rules expeditiously - this writ petition is partly allowed.
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2024 (2) TMI 349
Maintainability of application for advance ruling - scope of Advance Ruling - Levy of GST - supply of services or not - statutory levies collected by the Petroleum Explosives Safety Organization (PESO), Ministry of Commerce Industry, GOI under the Explosives Act, 1884 read with the Gas Cylinder Rules, 2016 and Static Mobile Pressure Vessels (Unfired) Rules, 2016 for issuance of licence - statutory levies collected by the Department of Factories, Boilers, Industrial Safety and Health, Government of Karnataka in respect of storage of LNG in the factory under the Factories Act, 1948 and Karnataka Factories Rules, 1969 for issuance of licence - statutory levies collected by the Karnataka Fire Emergency Services Department, Government of Karnataka for issuance of a no objection certificate for a building plan approval - Registration fee or Stamp Duty collected by the Government of Karnataka in respect of registration of lease agreements for periods exceeding 11 months under Registration Act, 1908 - eligible for N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 Sl-47 and also Notification No. 9/ 2017-Integrated Tax (Rate) dated 28.6.2017 Sl-49 or not. HELD THAT:- The Applicant states that they have made payment of Rs. 2,49,660 towards GST under reverse charge mechanism on 18.11.2022 in respect of all the statutory levies charged by the Central Government/State Government/ Municipality/ Panchayat for providing licenses, approvals and no-objection certificates to the Applicant. But this Application was filed on 03.04.2023 to know about the applicability of GST on the statutory levies on which the Applicant has already discharged GST under RCM. Thus the maintainability of the Application needs to be examined. Section 95(a) of the CGST Act 2017, while defining the term advance ruling , stipulates that an applicant can seek advance ruling on the questions specified under Section 97(2) of the CGST Act 2017, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant - It is pertinent to mention here that the word being is the present participle of the verb be and used to form tenses in the progressive (or continuous) aspect. A present participle is a verb form (or verbal) made by adding to the base that often functions as an adjective. Use of present participle denotes present and continuing action. Thus the phrase being undertaken refers to an ongoing and continuous supply. In the instant case, the questions, on which the applicant seeks advance ruling, are not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant, but in relation to a completed supply on which self-assessed tax is discharged by the applicant. Therefore, the instant application is beyond the jurisdiction of this authority and hence is liable for rejection. The application filed by the Applicant for advance ruling is rejected, in terms of Section 98(2) of the CGST Act 2017.
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Income Tax
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2024 (2) TMI 348
Sanction for initiation of criminal proceedings - Prosecution - non filing of Wealth Tax return for the Assessment Year 1993-94 - as decided by HC [ 2011 (6) TMI 617 - MADRAS HIGH COURT] petitioner has clearly established a case for discharge and the court below has committed an error in rejecting the contention of the petitioner that she is entitled to discharge. Before parting with the case, this court wants to make it on record that, the implementation of the Tax Legislation should be tax payers friendly and at the same time the tax evaders should not be spared. Had the sanctioning authority approached the case, keeping the same in his mind, the sanctioning authority would not have granted sanction for prosecuting the petitioner under section 35-B of the Act. HELD THAT:- By the impugned order, the sole respondent has been discharged. Therefore, the criminal appeal stands abated and it is disposed of as such. Pending application(s), if any, shall also stand disposed of.
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2024 (2) TMI 347
Validity of Revision u/s 263 - SCN stated that information had been received from the DDIT that during a search and seizure operation carried out payment made to the Assessee was detected as non-genuine commission payment - As per HC [ 2017 (9) TMI 1238 - DELHI HIGH COURT] order of the CIT does not conform to the legal requirements of Section 263 of the Act. It was not enough for the CIT to reproduce the SCN, the reply thereto and give the conclusion. The impugned order of the CIT gives no reasons for the conclusion that the assessment order of the AO was erroneous and prejudicial to the interests of the Revenue - HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed. However, the question of law is left open.
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2024 (2) TMI 346
Denial of natural justice - not allowing the Assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order - Addition of on money received with respect to subject land of the assessee which was evidence by the document seized during search u/s 132 - as decided by HC [ 2017 (7) TMI 1164 - RAJASTHAN HIGH COURT] observation made by the Tribunal regarding not allowing cross-examination of person from whose documents the amount is alleged to have been taken in the interest of the assessee is just and proper and issues is answered in favour of the of the assessee against the department. HELD THAT:- As informed that similar petition being SLP as already been dismissed vide order [ 2018 (3) TMI 1610 - SC ORDER] . Hence, the Special Leave Petition is dismissed. Pending application(s), if any, shall stand disposed of.
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2024 (2) TMI 345
TDS u/s 194C - Disallowance u/s 40(a)(ia) - payment of transportation of goods - sub-contracting - scope of the term 'Work' - ITAT deleted addition - whether the provisions of Section 194C of the Act can be invoked only if any single payment exceeds ₹ 50,000/- or can be invoked if the aggregate of payment in an assessment year exceeds ₹ 50,000/-. As decided by HC [ 2015 (10) TMI 825 - KARNATAKA HIGH COURT] Tribunal has diverted itself from addressing the core issue, that is whether the assessee has paid any sums, the aggregate of which exceeds ₹ 50,000/- in the assessment year to any single entity. Tribunal has not addressed itself to any of the findings of fact rendered by the Assessing Authority - It does not render any reasoning to unsettle the finding of the original authority, that even the agreement can also be an oral and that the transactions with the lorry owners/transporters is within the purview of the provisions of the Act as it amounts to carriage of goods other than the railways and decided issue in favour of the revenue. HEKD THAT:- Leave granted.
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2024 (2) TMI 344
Reopening of assessment u/s 147 - Petitioner was served with the impugned notice u/s 148-A alleging therein about incurring huge expenses on marriage of his daughter, which escaped in the assessment within the meaning of Sec. 147 of the Act and called to submit explanation - Prior approval of the specified authority to be taken - Notice was issued to the Petitioner and further he was asked to submit his explanation. After going through the reply of Petitioner, the Respondent was not satisfied. Hence, a reasoned order was passed u/s 148 A(d) of the Act, after following the due procedure. Hence, prayed for dismissal of the petition. HELD THAT:- The issue involved in the present petition is no more res integra. In similar set of facts and circumstances, this Court delivered a Judgment in case of Satguru Sai Extrusions Pvt.Ltd., V/s. Union of India [ 2024 (2) TMI 50 - BOMBAY HIGH COURT] holding that as per the language of sub-clause (a), the Assessing Officer, before issuing any notice u/s 148-A, shall conduct an enquiry, if required, with the prior approval of the specified authority. The acts to be performed by the Assessing Officer would include conducting of any enquiry, if required. Under clause (b), an opportunity of being heard is to be provided to the assessee. Clause (c) requires that the reply of the assessee has to be taken into account and clause (d) requires an order to be passed for forming an opinion that notice u/s 148 has to be issued on the basis of the material available on record, which includes the reply of the assessee. It is further held that, the words if required have been set out in 148A(a) so as to leave it to the discretion of the Assessing Officer as to whether he desires to conduct an enquiry. If the Legislature had the intent and object of mandating an enquiry before issuing a show cause notice under clause (b), the Legislature would not have specifically used the words if required , following the words conduct an enquiry . In these circumstances, if a harmonious interpretation is to be arrived at without rendering the words if required meaningless, in our view, the word shall would mean may as Section 148A(a) grants discretion to the Assessing Officer to conduct an enquiry. In the case in hand it appears that the Petitioner has filed his returns for the assessment year 2019-2020 which was duly assessed on 23.08.2019. It is not in dispute that on 27th and 28th April, 2019, the marriage of the Petitioner s daughter was solemnized - Petitioner incurred entire expenditure of the said marriage. According to the Petitioner, he disclosed his entire income for the year 2018-2019 and all source of income to tax and filed ITR within prescribed period. Revenue Authority contended that as per investigation, the Petitioner found evading the Income Tax under High Risk Transaction CRIU/ VRU category during search and seizure undertaken u/s 132 of the Act, 1961 and during post search investigation, it was revealed that the Petitioner had booked Resort and Club for wedding event of his daughter and made payment by cheque and cash. Therefore, on 28.03.2023, the Petitioner was served with the notice under Section 148-A of the Act (Annexure P-1) claiming escapement of income chargeable to tax for the assessment year 2019-2020. Along with the notice the Petitioner was also supplied with information forming basis of notice under Section 148A(b). The Petitioner responded to said notice vide communication dated 1st April, 2023 and gave details of his income. So also, produced Statement of Bank Account. On 10th April, 2023, the Respondent No. 1 passed the impugned order holding that, prima facie, income chargeable escaped within the meaning of Sec. 147 of the Act and proposed to re-asses such income and called upon the Petitioner to furnish details/allowances or deduction for the Assessment Year 2019-2020 within 30 days from the service of notice, by order under sub-section (d) of the Sec. 148A of the Act. Therefore, we, however, hold that since Section 148 permits an assessee to raise all issues at the time of the hearing, in view of the pronouncement of the Hon ble Supreme Court in the case of Anshul Jain ( 2022 (6) TMI 1310 - PUNJAB AND HARYANA HIGH COURT] . The Respondents shall follow the due procedure laid down in law and ensure that the Petitioner is extended an adequate and reasonable opportunity to contest the notice u/s 148, as is permissible in Law.
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2024 (2) TMI 343
Reopening of assessment u/s 147 - invocation of machinery under Section 148A(b) as time barred - as submitted escapement of income as per Section 50C read with second proviso is more than 50 lakhs and that the AO was well within the ambit of law while he exercised the jurisdictional powers vested upon him u/s 148 149 before issuing the notice u/s 148 and hence prayed for dismissal of the writ petition. HELD THAT:- Although, elaborate submission was made by the petitioner on merits on the strength of proviso to Section 50(C) of the Income Tax Act, 1961, the fact remains that the petitioner had not filed the regular return u/s 139 of the Income Tax Act, 1961 for the assessment year 2016-17. Whether the petitioner is entitled to the relief based on the points raised before this Court is capable of being decided by the Assessing Officer, as admittedly no regular Returns of Income was filed by the petitioner. Even, if the petitioner may have a case for dropping of the proposed proceedings it is better for the petitioner to file a proper reply to the notice issued u/s 148 as there is no previous history of any proceeding under Income Tax Act, 1961. Therefore, this Writ Petition has to fail. AO is therefore directed to take into consideration of all the relevant facts before proceedings to conclude whether any income had escaped Assessment for the AY 2016-2017. It is expected that the AO shall pass appropriate orders, within a period of three months from the date of receipt of a copy of this order.
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2024 (2) TMI 342
Deduction u/s 80HHF - profits and gains from export or transfer of film software, etc. - relevancy of certification from Film Censor Board for allowing relief - HELD THAT:- We are of the opinion that the issue of certification from the Censor Board is wholly irrelevant for the purposes of examining the applicability of Section 80HHF of the Act. This is a digitally signed order. As contended by the appellant that on meeting two U.S. nationals, he entered into a transaction, pursuant to which he prepared Discs and was also paid in foreign exchange - As the dispute itself pertains to AY 2000-01 and the assessment of which went through several rounds of litigation. Suffice it to note that the ITAT an order [ 2011 (8) TMI 1376 - ITAT DELHI] had remanded the matter while partially allowing the appeal of the appellant and calling upon AO to consider the issue of deductions claimed under Section 80HHF - Pursuant to that order, a fresh assessment order came to be framed on 21 March 2013 and in which the AO held that the appellant had failed to fulfil the conditions laid down in the provision in question. It was this order which was assailed before the CIT (Appeals) which too came to be dismissed on 30 October 2014. As per Section 80HHF what the provision contemplates is the export of transfer of film software, television software, music software, television news software including telecast rights and other items mentioned therein. We note from the record that the appellant has woefully failed to establish before the authorities below that the Disks which were so exported would fall in the genre of any of the software s mentioned and noticed hereinabove. Appeal dismissed.
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2024 (2) TMI 341
Validity of reassessment proceedings - non-affording the petitioner an opportunity of being heard as mandated u/s 148A(b) - obligation on the Revenue to provide an opportunity of being heard to the assessee by serving upon the assessee a show cause notice specifying the time by which he should prefer a reply - HELD THAT:- A personal hearing would be required for an assessee to try and convince the Income Tax Officer of his point of view in regard to the issue flagged in the show cause notice. The merit of an oral hearing lies in that the assessee can discern on what aspects of the controversy more light is needed. Thus, if an oral hearing can complement and perfect the written submissions in a case that can be decided in a myriad ways depending on the perspective that the adjudicator chooses to adopt, then it should not be dispensed with. While deciding whether or not a statutory provision mandates the grant of a personal hearing, the approach of the court must be pragmatic rather than pedantic; realistic rather than doctrinaire, functional rather than formal and practical rather than precedential. [Per Mukharji, C.J. in Charan Lal Sahu v. Union of India [ 1989 (12) TMI 349 - SUPREME COURT ] Thus we are of the view that the decision in Union of India (UOI) and Ors. v. Jesus Sales Corporation [ 1996 (3) TMI 194 - SUPREME COURT ] that is relied upon by the appellant and which interpreted a statuary provision that did not provide for an opportunity of being heard to an applicant seeking the benefit of a duty exemption scheme, cannot come to the aid of the appellant herein in his attempt to show that the provisions of Section 148A should be interpreted in a like manner. As is apparent from a reading of that judgment, the court came to the conclusion that it did on finding that the statutory provision concerned did not provide for the grant of a personal hearing. It was under those circumstances that the court found that the statutory appellate authority in that case was not legally obliged to grant a personal hearing when the same was not envisaged in the statutory provision. As already noted above, the express provisions of Section 148A of the IT Act contemplate that the assessee should be granted an opportunity of being heard, and the question arising in this appeal is only whether that opportunity to be effective must include a right to a personal hearing as well. In our opinion, it should. We might also note that by an amendment to the provisions of Section 148A(b) through the Finance Act, 2022 with effect from 1.4.2022, the requirement of providing an opportunity of being heard to the assessee was made less rigorous by omitting the requirement of obtaining a prior approval of the specified authority before granting that opportunity. The deletion of the said pre-condition is a further indication that the relaxation of the statutory requirement of obtaining a prior approval of the specified authority was intended to simplify the procedure for granting an opportunity of being heard to the assessee. In our view, this statutory exercise fortifies our interpretation of the provision as requiring the providing of an opportunity of personal hearing as an integral component of the opportunity of being heard granted to the assessee. Decided against revenue.
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2024 (2) TMI 340
Validity of assessment passed u/s 153A pursuant to search and seizure - Assessment of completed assessment which was not abated - as argued no assessment proceedings were pending as on the date of initiation of proceedings u/s 153A - HELD THAT:- As the assessment referred to in Section 153A enables the AO to proceed for assessment, when any such assessment for the previous six years is pending, treating the proceedings to have abated. In so proceeding with the assessment, AO would be entitled to reckon both disclosed and undisclosed income of the assessee. Insofar as completed assessment, they do not abate and for the purpose of re-assessing, there should be some incriminating material disclosed in the search, which alone can lead to reopening of the proceedings on the basis of the seized material, which has some relevance or nexus to the allegation of undisclosed income. The assessee s assessment for the relevant year stood completed as on 06.06.2003 long before the search and consequent proceeding initiated u/s 153A and there is no question arising of the relevant assessment to abate under the second proviso to Section 153A. Tribunal was perfectly within the statutory framework, in making a remand directing the AO to carry out re-assessment of the assessment year 2002-03, which stood completed as on the date of initiation of Section 153A proceedings, if some incriminating material seized during the search is available. We bow to the proposition as declared by KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] and affirmed by the Hon ble Supreme Court of India in ABHISAR BUILDWELL P. LTD. [ 2023 (4) TMI 1056 - SUPREME COURT] and answer the question framed in favour of the assessee and against the Revenue.
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2024 (2) TMI 339
Validity of the notice u/s 142(1) - Shorter period [less than 7 days] to respond given - violation of principle of natural justice - HELD THAT:- A period of 15 days normally to be given as a response time, which could be reduced to seven days in cases of subsequent notices. In the present case, notice has been issued on March 10, 2022, with the date for response as March 14, 2022, which is even below seven days as mandated. It is further to be noticed that limitation for conclusion of the proceedings admittedly did not arise in the present case. There is substantial merit in the contentions raised by the learned counsel for the petitioner. The question of resort to best judgment assessment u/s144 may not have arisen, if the petitioner had made out its reply to annexure J1 and the same was considered and the valid points were present as asserted that would be put forth in the reply to annexure J1. If that were to be so, the subsequent show-cause notice under section 144 at annexure J2 and the orders passed are required to be consequentially set aside. It is also to be noticed that annexure J1 has not been sent to the e-mail ID updated as per annexure N1. Accordingly, on the sole ground of violation of principles of natural justice, the notice is set aside.
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2024 (2) TMI 338
TDS on interest arising from Motor Accidents Claim - Validity of the order of the Motor Accidents Claims Tribunal issuing directions to refund by the Insurance Company of amounts deducted as TDS and already credited to the Income Tax Department - directions to the Insurance Company to pay an amount being the TDS deducted with interest at the rate of 9% per annum from 29.01.2008 till payment - Insurance Company, before the Tribunal and before this Court, asserts that there can be no liability cast on the Insurance Company of a like nature - applicant is said to have died on 02.04.2015 and the order was passed on 09.02.2018, after the death - substitution petition has been filed by one Bhola Shah, aged about 41 years, son of Late Babulal Sah, the applicant before the Tribunal. HELD THAT:- As per Section 194A(1), any income by way of interest other than income by way of interest on securities shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, be liable for tax deduction at source. Hence, there can be no spread over of the interest income in the years in which it accrued after death of the person, which resulted in the compensation being awarded. We also have to notice subclause (ix) of sub-section(3) of Section 194A, which speaks of such exemption from deduction of tax, from the interest income, when the aggregate amount of such income credited or paid during the financial year exceeds Rs. 50,000/-. Hence, the income has to be found to have accrued only on the date of payment or credit. We have to caution the Tribunals, insofar as the proper procedure being the resort to refund, if at all the claimant does not have income in excess of the taxable limit under the Income Tax Act. On the above reasoning, we find that the application filed before the Tribunal was unsustainable. We, hence, set aside the order of the Tribunal and caution the Tribunals from issuing such orders directing refund for the periods prior to 01.06.2015. We specifically notice that Section 194A(3)(ix) has been substituted by the Act 20 of 2015 with effect from 01.06.2015, which reads as under:- (3)(ix)-To such income credited by way of interest on the compensation amount awarded by the MACT. On the above provision coming into force from 01.06.2015, no TDS can be deducted even on the interest component. The writ petition is allowed, leaving the parties to suffer their respective costs. Since, we have answered the question against the refund directed by the Tribunal, we are of the opinion that the application before the Tribunal need not be restored and the same shall stand closed as not maintainable.
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2024 (2) TMI 337
Disallowance u/s 14A r.w.r. 8D - AO while calculating the disallowance has taken the average value of all the investments including those investments which did not yield any tax exempt dividend income - HELD THAT:- As observed that earlier as per decisions of the various High Courts of the country, the proposition was laid down that where the assessee has not derived any tax exempt income from investments, then no disallowance is attracted u/s 14A of the Act. Disallowance of administration expenditure u/s 14A of the Act r.w.r 8D(2)(iii) of the Income Tax Rules, 1962, the Hon ble Delhi High Court in the case of Joint Investments Private Ltd. vs. CIT [ 2022 (7) TMI 1093 - DELHI HIGH COURT ] and further in the case of ACB India Limited [ 2015 (4) TMI 224 - DELHI HIGH COURT ] has held that for computing the disallowance u/s 14A of the Act r.w.r. 8D(2)(iii) of the Income Tax Rules, 1962, the average value of only the investments yielding non-taxable income have to be considered and not the entire investment. An Amendment has been brought to section 14A of the Act by Finance Act 2022, whereby, an Explanation to section 14A has been inserted, wherein, it has been clarified that notwithstanding anything to the contrary contained in the Act, the provisions to section 14A of the Act shall apply and shall be deemed to have always applied for the purpose of making disallowance in respect of expenditure incurred in relation to earning of tax exempt income irrespective of the fact that any tax exempt income has not actually accrued or received during the relevant year. A/R, has relied upon the recent decision in the case of PCIT Vs. Era Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT ] wherein, it has been held that the aforesaid explanation inserted to Section 14A of the Act is applicable prospectively. Assessing Officer is accordingly directed to consider only the investments yielding tax exempt income for computation of disallowance under Rule 8D(2)(iii) of the Income Tax Rules 1962. Appeal of the assessee stands partly allowed.
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2024 (2) TMI 336
Revision u/s 263 - Reopening of assessment - AO completed the assessment on declared income of the assessee - assessee argued that the action of the ld. PCIT is incorrect, once the case of the assessee was re-opened on the issue which of third party information and the ld. AO has completed the assessment after recording the reasons and again on the same very issue the invoking of the provision of 263 is not correct HELD THAT:- The fact that the assessee has on being asked clearly explained the nature and details of the transaction by submitting the necessary evidence and the content of the reply is also filed in the assessee s paper book and the revenue did not contradict the figure which the assessee has replied, and the figures referred in the notice of the PCIT. Thus, it is clear that the AO raised the issue, asked for the details and applied his mind while passing the assessment order. Even in the proceeding u/s. 263 the ld. PCIT did not bring anything on record that how the order of the ld. AO is erroneous and prejudicial to the interest of the revenue what material he relied - He relied on the same material on which the ld. AO has already applied his mind. In the proceeding before the ld. PCIT the assessee in his reply submitted the profit / loss derived by the assessee and the figures reported in the PCIT notice is same in the assessment order and in the reply to the assessee. On issue no. 1 the ld. PCIT noted that The AO accepted the version of the assessee without properly examining and verifying the ITS details with transactions in the ledger account maintained by the broker and from the bank statement. , and on issue no. 2 he observed that The AO is directed to verify the sales from the ledger account in the books of broker and from the BSE/NSE. As regards claim of the assessee in respect of transactions carried out by other parties by utilizing the PAN of the assessee, the AO is directed to carry out necessary verifications from such other parties and from BSE/NSE. Thus, the bench noted that on both the issue the ld. PCIT has not pointed that how the order is erroneous and prejudicial to the interest of the revenue. He merely aims to make inquiry as per his will and wishes which could have been done at the time of assessment proceeding as per the supervisor power vested and for that again and again same exercise cannot be done on the assessee. The law does not permit for change of opinion, when the ld. AO on both the issues raised the questions and considered the explanation of the assessee and assessment was completed. Therefore, we find force in the arguments of the assessee that on the same observation and issue the ld. PCIT cannot direct to make the enquiry what he deem fit. As decided in Aishwarya Rai Bachchan vs. PCIT [ 2022 (3) TMI 524 - ITAT MUMBAI] when the very basis of reasons recorded by the Id. AO was ultimately not added by the Id. AO in the re-assessment proceedings, then the primary reason to believe that income of the assessee had escaped assessment fails and such re-assessment cannot be treated as a valid order in the eyes of law. The same is to be declared as void ab initio. Reliance in this regard was rightly placed on the decision of Jet Airways [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] When an assessment framed by the Id. AO is unsustainable in the eyes of law, the said invalid and illegal order cannot be subject matter of section 263 proceedings. On this count also, the revision order passed by the Id. PCIT u/s.263 of the Act deserves to be quashed. Considering the above discussion we quash the order of the ld. PCIT as the same is not in accordance with the provision of section 263 of the Act. Decided in favour of assessee.
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2024 (2) TMI 335
Revision u/s 263 - CIT setting aside the assessment order and directing to frame fresh assessment order on the issues of Interest accrued but not paid to Power Finance Corporation (PFC), claim of Bad Debts and provision on account of leave encashment - HELD THAT:- As clearly evident from the findings of the Ld. PCIT, as noted above by us, that in very clear terms he stated to be satisfied with the explanation of the assessee regarding the irregularities noted by him in the assessment order and for which purpose he assumed jurisdiction u/s 263 of the Act for revision of the assessment order. It is but obvious that as per PCIT himself there was no error in the assessment order in allowing the above claims to the assessee - PCIT was satisfied that these claims had been rightly allowed to the assessee on the basis of the assessee s explanation and the documents filed before him. When the ld. PCIT himself was satisfied that there was no error in the order of the Assessing Officer vis- -vis irregularities noted by him initially, there can be no case for exercising any revisionary power u/s 263 of the Act. The provisions of the section are very clear. The concerned authorities can exercise revisionary powers only on fulfillment of the essential conditions of finding error in the order sought to be revised and the error being such as causing prejudice to the Revenue. In the absence of any of the two conditions the power of revision u/s 263 of the Act cannot be exercised. See Malabar Industrial Co. Ltd. Vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT] . In the present case, with the ld. PCIT s recording of satisfaction vis- -vis explanation of the assessee regarding the alleged errors noted by him in the assessment order, it can be safely said that as per the ld. PCIT, there was no error in the assessment order. And having found no error in the assessment order himself , there was possibly no scope of the issue being examined again by the AO, an officer junior in Rank to the Ld. PCIT . There was no case therefore, we hold, for the Ld. PCIT to exercise any revisionary power u/s 263 of the Act on the issue. Merely because the Assessing Officer had not examined these issues during assessment proceedings does not make the assessment order erroneous particularly when the ld. PCIT finds, on the basis of explanation and documents furnished to him, that the assessee s claim was eligible as per law - Appeal of the assessee is allowed.
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2024 (2) TMI 334
Penalty u/s 271D 271E - allegation of cash loan having been taken/repaid - A search u/s 132 of the Act was conducted in case of one PATH Group including assessee and the assessee was managing director of PATH and a key person of PATH Group - HELD THAT:- We find that both sides are ad idem to the point that the material on the basis of which the JCIT imposed penalties u/s 271D and 271E are same as in case of appeals of PATH . We further note that in the appeals of PATH , the first appellate authority as well as ITAT have concurrently disagreed and rejected the observations/inferences/ conclusions drawn by assessing authority. Since there is nothing new to be considered or analyed in present appeal, we adopt the same reasoning and same view as taken in PRAKASH ASPHALTINGS TOLL HIGHWAYS (INDIA) LTD. [ 2024 (2) TMI 241 - ITAT INDORE] and accordingly hold that the orders passed by CIT(A) in present appeals deleting the penalties are in order and do not require any interference from our side. Thus, the CIT(A) means to say that if the factum of taking or repaying loan is itself disputed, there cannot be any default as contemplated u/s 269SS or 269T. In simpler words, section 269SS or 269T has no application when the transactions itself are disputed, those sections can only apply to un- disputed transactions or the existence of the transactions attained finality. We also find merit in this observation/conclusion made by Ld. CIT(A). The above discussions and the reasoning mentioned therein brings us to conclude that the penalties imposed by AO in present cases are not sustainable. Consequently, we are deleting the same. The revenues grounds are dismissed.
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2024 (2) TMI 333
Deduction u/s 80P(2)(d) - interest received from Co-operative bank - HELD THAT:- As the issue is squarely covered in favour of the assessee by the decision of The Amroli Vibhag Vividh Karyakari Sahkari M. Ltd. [ 2024 (2) TMI 242 - ITAT SURAT] and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the judgment as held Section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society. This provision does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a co-operative society. It is immaterial whether any interest paid to the co- operative society exceeds the interest received from the bank on investments. The Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment as sought to be made out by learned counsel for the Revenue. The provision does not indicate any such adjustment in regard to interest derived from the co-operative society from its investment in any other cooperative society. Therefore, we direct the Assessing Officer to allow the deduction under section 80P(2) (d) of the Act in respect of interest received from Co-operative bank. Appeal of assessee allowed.
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2024 (2) TMI 332
Penalty u/s 271D 271E - default committed in violation of section 269SS 269T - Reliance on search proceeding documents - Transactions being mere book entries - assessing authority observed that the assessee has taken loans in cash and also made repayments in cash - During search, the authorities seized a laptop from premise of assessee and took Tally data from laptop and also seized loose papers from the premise of one employee of assessee as recorded u/s 132(4) wherein he stated that unsecured loans were taken from various people which were out of books HELD THAT:- Since there is nothing new to be considered or analyed in present appeals, we adopt the same reasoning and same view as taken by ITAT in [ 2024 (2) TMI 241 - ITAT INDORE] and [ 2023 (1) TMI 1342 - ITAT INDORE] held that tally account as dummy one created for training purpose incorporating the data from different sources including that of assessee and therefore, the Tally account found in the laptop as well as loose paper were held to be having no evidentiary value being dump documents and retraction of the statement by filing the affidavit and non-consideration of the same by the AO or examination of the said affidavit to ascertain the correct facts is a serious laps on the part of the AO while making addition. Also to bring into the effect of penalty provision us 271D or 271E, it has to be established with independent evidence and not merely corroborative evidence (i.e. book entries) that Assessee has actually committed the default contemplated in section 269SS or 269T i.e. it has taken loan in cash or it has repaid the loan in cash exceeding Rs. 20,000. The explanation below 269SS defines the Loans or deposits MEANS Loans or deposits of money. The use of word Means by legislature in the Explanation below Section 269SS or 269T is with a purpose and it is to restrict the meaning to only Loan of Money . The use of Word Means indicates that definition is hard and fast and no other meaning can be assigned to the expression that is put down in definition [P.Kasilingham vs. PSG College of Technology [ 1995 (3) TMI 466 - SUPREME COURT ]. The expression money means currency/cash. Therefore, very essential ingredient to constitute a default within the meaning of 269SS or 269T is that whether there is movement of money. Mere book entries alone, during the course of training, cannot entail a default of taking or repaying the loan in cash, unless it is established that Moneys moved from one person to another person, which is in the nature of loans or deposits Accordingly, we hold that the orders passed by CIT(A) in present appeals deleting the penalties are in order and do not require any interference from our side. Decided against revenue.
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2024 (2) TMI 331
Revision u/s 263 - deduction u/s 80P(2)(d) in respect of interest income earned from deposit in Co-operative Bank - CIT was of the view that interest income is required to be disallowed by the AO and added back to the total income of the assessee which was not done by the AO at the time of assessment - HELD THAT:- We note that in the recent decision this tribunal in case of Pr. CIT vs. Bhopal Dugdh Sangh Sahakari Maryadit [ 2024 (2) TMI 243 - ITAT INDORE] held that assessee society who has earned an amount from its investment of surplus fund with cooperative banks is entitled for deduction under section 80P(2)(d) of the Act. Resultantly, the Ld. CIT(A) has erred in upholding the denial of deduction by the AO to the assessee under section 80P(2)(d) - Assessee is eligible for deduction u/s 80P(2)(d) in respect of FDR interest received from Cooperative Bank. Thus we find that the Pr. CIT has no jurisdiction to invoke the provisions of section 263 when the AO has taken a possible view on this issue. Hence, the impugned order of the Pr. CIT passed u/s 263 is set aside. Appeal of the assesse is allowed.
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2024 (2) TMI 330
Addition u/s 56(2)(x) - sale of flats - difference between the value taken by the assessee and the fair market value (FMV) u/s 50C - HELD THAT:- We find that the value adopted by the assessee and FMV of the flats u/s 50C is within the range of 10% and, therefore, the provision of Section 56(2)(x) of the Act are not applicable which provides that where the market value of the property is more than the sale consideration received by the assessee then the difference between the two shall be considered. The case of the assessee finds support from the decisions of the coordinate benches in the Sandeep Patil [ 2020 (10) TMI 923 - ITAT BANGALORE] , John Flower India Ltd. [ 2017 (1) TMI 1682 - ITAT MUMBAI] and Dulari Devi Hetampuria [ 2020 (6) TMI 468 - ITAT KOLKATA] - Hence Ground of assessee allowed. Bogus Short term capital loss on sale of equity shares - assessee s claim u/s 10(38) rejected - CIT(A) concluded assessee has incurred bogus short term capital loss which was bogus and was rightly disallowed by the AO - HELD THAT:- As there is no adverse comment in the form of general and specific statement by Pr. Officer of the Stock Exchange or by the company whose shares were involved in the above said transactions. We note that the AO only referred to the report of the investigation wing which was based upon the statements of several persons who were wholly unrelated. The same is the position with regard to report of the SEBI. In the instant case also the name of the assessee was neither quoted by any of such persons nor any materials relating to the assessee was found at any place where investigation/searches were carried out by the Wing. Thus find the of decision in Raigarh Jute Textile Mills Pvt. Ltd. [ 2023 (6) TMI 1309 - ITAT KOLKATA] squarely applies to the instant case. Also decided in Dipansu Mohapatra ( 2023 (2) TMI 392 - ORISSA HIGH COURT] has held that tribunal was justified in allowing assessee s claim u/s 10(38) of the Act where the assessee has filed the details of purchase and sales of shares alongwith contract notes for purchase and sale, D-mat A/C and bank statement and furthermore no incriminating materials were found against the assessee in the survey conducted in the premises of the assessee and therefore the AO could not deny the claim u/s 10(38) of the Act merely by relying on the statements of accommodation entry providers which were recorded much before the date of survey. In the present case before us the facts of the assessee are on better footing even as there is no survey on the assessee s premises and AO relied on the statements of entry providers which were recorded long ago. Besides there was no incriminating materials against the assessee found even in the premises of entry operators/stock brokers. AO has failed to carry out any independent investigations/enquiries into the evidences filed by the assessee and has rejected the claim by the assessee qua loss from shares trading only on the basis of surmises and conjectures and relying on the statements of entry operators who never named the assessee and their statements were recorded long before. Therefore, we set aside the order of first appellate authority and direct the AO to delete the allow the loss - Decided in favour of asessee.
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2024 (2) TMI 329
Enhanced profit as eligible for deduction u/s 80P(2) - While the NFAC fully granted the deduction claimed u/s 80P(2)(a)(i) of the Act, it did not accord approval to the assessee s claims pertaining to provisions for interest, NPA, Employee Retirement benefits, and leave encashment - assessee contended that the said interest provision is in line with accounting policies as per the Karnataka Co-operative Societies Act and even assuming that the interest provision is to be added back to the profits of the assessee, such enhanced profits should be subjected to deduction u/s 80P(2)(a)(i) HELD THAT:- The issue is squarely covered in favour of the assessee in view of the decision of the coordinate Bench of this Tribunal in case of Sharavathi Pathina Sahakara Sangha Niyamitha [ 2022 (8) TMI 292 - ITAT BANGALORE] , wherein deduction u/s 80P(2)(a)i) of the Act on the income derived by the assessee from providing credit facilities to its members as enhanced by the sum disallowed u/s 40(a)(ia) of the Act was quashed and necessary relief to the assessee was directed. We do not find any reason to devoid from the stand taken by the Co-ordinate Bench on the identical issue itself and therefore, respectfully relaying upon the same, we allow this appeal preferred by the assessee by directing the ld. AO to grant relief on the enhanced profit as eligible for deduction u/s 80P(2) of the Act.
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2024 (2) TMI 328
Exemption u/s 11 - denial of exemption despite assessee being registered u/s. 12A - AO by invoking proviso to Section 2(15) and denying the exemption - reciepts exceeded the threshold of Rs. 10 lakhs and Rs. 20 lakhs - HELD THAT:- Assessee is a company registered u/s. 25 of the Companies Act and is primarily engaged in to conduct surveys / research into readership, viewership and listenership of various media and dissemination of research to various members and non-members who are basically industrial business entities. There are more than 165 members to whom assessee has sold subscription for IRS reports. These IRS reports are prepared from outside agencies which are research agencies to whom research are outsourced and then sold to members and in some cases to non-members at slightly higher prices. Case of the Revenue is that since assessee s receipts from its activity even though it is for general public utility has exceeded the threshold of Rs. 10 lakhs and Rs. 20 lakhs, therefore, it is not entitled for exemption u/s. 11 for these years - The activity of the trust for publishing advertising in the newspaper is intrinsically linked for newspaper activity falls within the ambit of sub-clause (i) of Subsection 2(15) and conditions imposed in sub-clause (ii) of the proviso has to be fulfilled. The moot question is, whether the receipts from such activity itself is in the nature of trade, commerce or business or any activity of ranging in services in relation to any trade, commerce or business has to be examined. If the assessee is generating revenue from the activities for which it has been granted status of charitable nature, then whether it falls within the main section 2(15) itself or its activities are hit by proviso has not been discussed by the authorities below, both by the AO and ld. CIT(A) who have simply stated that since receipts of the assessee had crossed the limit of Rs. 10 lakhs, therefore, benefit of Section 11 cannot be granted. Before deciding this issue, it is incumbent whether its activity for which it has been granted registration u/s. 12A itself per se falls in the category of carrying of any activity in the nature of trade, commerce or business. Only if it carries any other activity which falls in such nature, then only proviso to Section 2(15) would be applicable. Accordingly, we remit this issue to the file of the AO to decide this issue in line with judgment of Hon ble Supreme Court in the case of Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT] and the principles laid down therein, whether any activity carried out by the assessee falls in the nature of trade, commerce or business or service for which any fees or cess or consideration has been received. Activities from members alone should be treated as general public utility and only nominal revenue from non-members should be treated as activity in the nature of trade, commerce or business cannot be accepted. Because, even if it is with the members, what is to be seen is whether the activity per se is in the nature of trade, commerce or business or not. How a distinction can be made only for non-members and the subscription revenue from them alone has to be treated as in the nature of trade, commerce or business and for some activity and charging fees from the members, it is not. We are unable to appreciate such plea and is rejected. Principle of mutuality also prima facie, once the revenues are from the non-members, even if they are marginal, that does not mean the entire activities of the assessee falls within the ambit of principle of mutuality. However, since in the earlier years this issue has been remanded back to the AO by the Tribunal with specific direction therefore, we are not deciding or adjudicating this issue and matter is remanded back to deal and decide the issue in line with the order of the Tribunal in the earlier years. One of the contention raised that assessee is having a very nominal profit of margin for which chart has been submitted. However, the chart which has been submitted, the true picture of margin from main receipts from IRS subscription is not coming out. For example out of the gross receipts of Rs. 7,81,94,084/- in A.Y.2009-10, the income from subscription IRS itself approximately 1.77 Crores; In A.Y.2010-11, the gross receipts is Rs. 9,59,57,820/- and income is Rs. 1,40,05,627; in A.Y. 2011-12 gross is Rs. 11,07,27,673 and income is Rs. 1,79,31,763/-,. Similarly, in A.Y.2012-13 out of the gross receipts of Rs. 19.39 Crores, the income from subscription for IRS report is 10.30 Crores. In A.Y.2013-14 again it is Rs. 20,88,44,490/- and income is Rs. 11,28,60,307. Thus, it cannot be said that there is a nominal income from the main activity of the assessee. Hence, the calculation given before us at the threshold does not appear to be correct which needs to be verified by the AO. Thus, the working which has been given, we find that it does not give the correct picture of margins from the sale of reports and therefore, this plea also needs to be examined by the AO in line with the judgment of the Supreme Court. Accordingly, the entire issue is remanded back to the AO to examine, 1.Firstly, to be decided in accordance with the judgment of the Hon ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra); and application of criteria of the threshold and the issue discussed in paras 23 to 27 of this order. 2.Whether its main activities for which it has been granted the status of charitable entity u/s. 12A who is carrying out one activity which is the object of general public utility then on what basis it has been held that it is in the nature of trade, commerce or business; or whether any activity is being carried out by the assessee other than the main activity which falls in the nature of trade, commerce or business or any activity of rendering any services in relation to trade, commerce or business; or which threshold is to be examined. 3.To examine the plea of assessee that it has a very nominal profit or margin from the main activity of selling of IRS report to members and non-members. 4. And to decide the issue on principle of mutuality in light of the decision earlier year orders of the Tribunal. Appeals of assessee are allowed for statistical purposes.
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2024 (2) TMI 327
Jurisdiction of CIT (A) while passing an order in appeal u/s 250 - Validity of assessment framed without issue of notice u/s. 143(2) - whether CIT (A) has exceeded his jurisdiction by directing the Ld. AO to proceed in terms of section 150 of the Income Tax Act, 1961 and reframe assessment order as per law and after complying with the prescribed procedure? - In the first round of litigation the quarrel travelled upto the Hon ble High Court in Vishnu Packaging Private Limited Versus Income Tax Appellate Tribunal [ 2022 (3) TMI 1576 - DELHI HIGH COURT ]. wherein set aside the matter and remanded back to the ITAT to justify the matter afresh. HELD THAT:- The undisputed fact is that the assessment has been framed without issue of notice u/s. 143(2) of the Act which means that the assessment has been framed without assuming jurisdiction making the assessment order null and void. This fact has also been accepted by the first appellate authority. However, the following observations of the CIT(A) are not only unnecessary but also bad in law in view of the same the impugned assessment order is deleted and the AO is directed to proceed in terms of the provisions of section 150 of the Act and reframe the assessment order in the case of the assessee as per law and after complying with the prescribed procedure . This finding of the CIT(A) means that the CIT(A) has set aside the assessment the power which he does not have, therefore, the order of the CIT(A) to this extent is bad in law as the CIT(A) has exceeded his jurisdiction. The appeal of the assessee is allowed. The assessment order and the order of the CIT(A) are quashed.
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2024 (2) TMI 326
Addition u/s 69B r.w.s.115BBE - unexplained investment - amount offered during survey - primary condition for applicability of provisions of section 69B fulfilled or not? - As submitted when there is no other source of income identified during the course of survey or during the course of assessment proceedings, any income arising to the assessee shall be treated to be out of the normal business of the assessee only - Taxability at higher rate of tax u/s 115BBE - HELD THAT:- For the deeming provisions of Section 69B to be applied, firstly, there has to be a finding by the AO that the assessee has made investments during the financial year in the construction/purchase of the building. Thereafter, AO is also required to record a finding that the amount expended on making such investments in the building exceeds the amount recorded in this behalf in the books of account so maintained by the assessee for any source of income. Thereafter, the assessee has to be given an opportunity and his explanation has to be sought and in a scenario, where the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year. Therefore, we are unable to appreciate where the Assessing officer says that the condition for proving the source of such investment is the primary condition for applicability of provisions of section 69B of the Act which the assessee has not fulfilled. Onus to prove - There has to be some material/documentation in form of bills, invoices, payment receipts, etc which shows that there is outflow of funds from the assessee to certain third parties towards purchase or construction of the building or atleast an obligation on part of the assessee to pay certain sum to third parties towards purchase or construction of building. Therefore, the onus is clearly on the Assessing officer to discharge this burden and record a specific finding in this regard and once the same is done, the onus can be shifted to the assessee to explain the nature and source of such investment. We find that in the instant case, AO has clearly failed in discharging this initial onus and it is thus a clear case of mechanical application of provisions of section 69B without satisfying the essential condition contained therein. There is nothing on record, infact, there is no whisper in the entire survey proceedings, which has formed the basis for the compulsory scrutiny, and the subsequent assessment proceedings, that there is any material/documentation which even remotely demonstrate that the assessee has expended certain sum of money on construction of the building over and above the amount which has been recorded in the books of accounts. Whole case of the Revenue rests on the statement of one of the Partners of the assessee s firm recorded u/s 131 at the close of the survey proceedings conducted at the business premises of the assessee - It is a settled proposition of law that the statement recorded u/s 131 during the course of survey has no evidentiary value in absence of any corroborative evidence on record and in this regard, useful reference can be drawn to the decision of CIT vs Khader Khan Son [ 2007 (7) TMI 182 - MADRAS HIGH COURT] wherein it was held that statement recorded during the course of survey u/s 133A has no evidentiary value as the officer is not authorized to administer the oath and to take any sworn statement which alone has evidentiary value as contemplated under law and reference was drawn to provisions of section 132(4) which enables the authorized officer to examine person on oath and where any such statement so recorded can be used in evidence under the Act. Therefore, in our considered view, in the instant case, the statement of the partner of the assessee firm recorded u/s 131 during the course of survey and subsequent affirmation thereof by the assessee by way of surrender letter on a standalone basis and without any corroborative evidence doesn t fulfill the statutory mandate of deeming provisions which provides that it is for the Assessing officer to records a finding that the assessee has made investments during the financial year in the construction/purchase of the building and the amount expended on making such investments in the building exceeds the amount recorded in this behalf in the books of account so maintained by the assessee and for the purposes of recording such a finding, there has to be some tangible material in possession of the Assessing officer which demonstrate that certain amount has been actually expended by the assessee during the year towards the purchase or construction of the building which is clearly absent in the instant case. Therefore, the statement of the one of the partners of the assessee firm without any corroborative evidence cannot come to the aid of the Assessing officer for the purposes of invoking the deeming provisions of Section 69B of the Act. Even if we look at the statement so recorded of the partner of the assessee firm, we find that there is clear affirmation that the land and building was purchased in the year 2014 and the same has been duly reflected in the books of accounts. Further, in order to buy piece of mind and to avoid litigation, an amount of Rs 45 lacs has been offered on account of addition made to factory building and the source thereof has been stated to be out of business income. Therefore, even taking into consideration the said statement on a standalone basis, we find that the source of investment has been stated to be out of business income and the surrender has been duly honored by the assessee while filing the return of income wherein the amount has been offered to tax under the head business income and the deeming provisions therefore cannot be invoked in the instant case. Thus we are of the considered view that the income has been rightly offered to tax by the assessee under the head business income and provisions of section 69B r/w 115BBE cannot be invoked in the instant case. Appeal of the assessee is allowed.
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2024 (2) TMI 325
Addition u/s. 68 - Source of cash deposited in the bank - sales credited to profit and loss account and declared as income - HELD THAT:- Admittedly, the assessee deposited cash during the demonetization period for Rs. 50 lakhs in two different bank accounts. The sources of such deposit were explained by the assessee as sales proceeds of jewellery business in which he indulges during the month of October 2016. The assessee, in support of his explanation, furnished a business permission letter from AMC, VAT registration certificate, sales bills and VAT return etc. AO, without pointing any defect in the documentary evidence filed by the assessee held the cash deposit from unaccounted sources merely on reasoning that the assessee has not maintained stock register. Assessee has duly shown the cash receipt from the sale of gold/gold ornaments duly recorded in audited books of the account supported by sales bill and stock details. AO has not pointed out any defect in the books of accounts. Therefore, AO cannot treat the cash generated from sales duly recorded in books of account from unexplained/unaccounted sources unless books of account rejected based on valid reasons. Thus set aside the finding of the CIT(A) and direct the AO to delete the addition made by him Decided in favour of assessee. Addition u/s. 68 being unsecured loans - onus to prove - order of the AO was confirmed by the Ld. CIT(A) by observing that the credit of unsecured loan from the parties cannot be treated as explained merely by providing PAN and bank statement until the proof of identity and credit worthiness of the parties are established - HELD THAT:- The provision of section 68 cast primary onus on the assessee to explain the nature and source of the sum credited in the books of account. This primary onus can be discharged by establishing/furnishing the proof of the identity of the creditor, their creditworthiness and genuineness of transaction. Once the primary evidence in relation to the identity, genuineness and creditworthiness is furnished by the assessee, the burden shifts on the revenue to bring credible material before rejecting the primary document furnished by the assessee. Assessee has discharged the onus cast upon him by furnishing ledger confirmation from the creditor, their PAN, their copy of ITR, and their Bank statements. In our considered view, the identity of the creditor was duly established by furnishing their PAN, ITR and bank statement. Likewise, the genuineness of the transactions also got established by the fact that the transactions were carried out through banking channel which were duly reflecting in their respective bank statements and duly recorded in the books of account as loan which also confirmed by the creditor. Revenue authorities do not bring any material on record suggesting otherwise. AO does not point out any infirmity the in the primary documents nor conducted direct investigation from the creditors/ parties by issuing notice u/s 133(6)/131(1) - we are of the view that the genuineness of transaction cannot be doubted. Creditworthiness of the creditor who lent such sum to the assessee we note that the loan amount received by the assessee from different creditor varying between Rs. 50 thousand to Rs. 2 lacs which are not huge sum. In addition to that the assessee provided PAN details as well as copy of ITR-V of the creditor based on which the revenue authority should have access to financial detail of the creditor. The assessee also furnished copy of bank statement of the creditor showing the availability of fund before lending money to the assessee. The revenue authorities without pointing any infirmity in the documentary evidence furnished by the assessee as well as without bringing independent material on record suggesting that the creditor does not possess the creditworthiness to lend money. Thus revenue authorities failed to discharge the burden shifted on them. Therefore, sum credited in the books of the assessee cannot be treated as unexplained u/s 68. Decided in favour of assessee.
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2024 (2) TMI 290
TP Adjustment - Separate Benchmarking of Royalty - HELD THAT:- We note that this issue is covered by the decision of the coordinate Bench of this Tribunal in assessee own case for the for AY 2012-13 2014-15 [ 2023 (2) TMI 1106 - ITAT BANGALORE] thus we hold that no separate benchmarking of royalty payment is required and this issue is decided in favour of the assessee.
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Customs
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2024 (2) TMI 324
Rejection of the request for interest on the amount of duty drawback paid - Duty Exemption Scheme - supplies in civil construction work - eligibility for deemed export benefit was decided in favor of the class-I contractor specializing in the field of civil contract works especially funneling and hydro electric power projects. - HELD THAT:- It is noted that under the Duty Exemption Scheme, import of duty free raw materials, components, intermediates, consumables, parts, spares including mandatory spares and packing materials required for the purpose of export production could be permitted by the competent authority under five categories of licences mentioned in Chapter VII including special imprest licence. Section 56 provided that a special imprest licence was granted for the duty free import of raw materials, components, consumables, parts, spares including mandatory spares and packing materials to main/sub-contractors for the manufacture or supply of products when such supply were made to projects financed by multilateral or bilateral agencies, such as, the International Bank for Reconstruction and Development under international competitive bidding or under limited tender system. On a conjoint and careful reading of the relevant provisions of the Exim Policy, 1992-1997 in conjunction with the Central Excise Act and the Customs Act, it is evident that supply of goods to the project in question by the respondent was a case of deemed export and thus entitled to the benefit under the Duty Drawback Scheme. The language employed in the policy made this very clear and there was no ambiguity in respect of such entitlement - under sub-section (1) of Section 75A of the Customs Act, where duty drawback is not paid within a period of three months from the date of filing of claim, the claimant would be entitled to interest in addition to the amount of drawback. This section provides that the interest would be at the rate fixed under Section 27A from the date after expiry of the said period of three months till the payment of such drawback. On looking at Section 27A, the interest rate prescribed thereunder at the relevant point of time was not below ten percent and not exceeding thirty percent per annum. The Central Board of Excise and Customs vide its notification bearing No.32/1995 (NT) Customs dated 26.5.1995 had fixed the rate of interest at fifteen percent for the purpose of Section 27A of the Customs Act. The High Court while awarding interest at the rate of fifteen percent per annum, however, did not refer to such notification; rather, there was no discussion at all as to why the rate of interest on the delayed refund should be fifteen percent. Therefore, at the first glance, the rate of interest awarded by the High Court appeared to be on the higher side and without any reason. There are no hesitation in holding that the respondent was entitled to refund of duty drawback. Appellants had belatedly accepted the said claim and made the refund. Since there was belated refund of the duty drawback to the respondent, it was entitled to interest at the rate which was fixed by the Central Government at the relevant point of time being fifteen percent. There are no good reason to interfere with the judgment and order of the Division Bench of the High Court dated 22.8.2008. There is no merit in the appeal, which is accordingly dismissed.
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2024 (2) TMI 323
Seeking review/recall of order - Error apparent on the face of record or not - rate of duty as on the date of import - seeking quashing of the custom Notification dated 15.01.2003, whereby the respondent had sought to charge duty at the rate of 100 % of the value of the goods i.e. fresh garlic. As per the petitioner, the duty payable was only 30% - HELD THAT:- In view of the Office Memorandum dated 28.02.2011 read with Office Memorandum dated 02.02.2024, it is clear that the import made by the petitioner was deemed to be exempted from so much of custom duty as is excess of 30 % ad valorem. Accordingly, there is an error apparent on the face of the record. Consequently, the order dated 19.07.2018 is recalled. The writ petition is restored to its original number. Petition disposed off.
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2024 (2) TMI 322
Recovery of dues - Petitioner s right as a Financial Creditor is superior to the rights under the Customs Act, 1962 or not - sale of assets of Respondent No. 02 under the provisions of the SARFAESI Act 2002 - HELD THAT:- The only source of power for the respondents in purporting to address the impugned letter can be traced to Section 142A of the Customs Act, being a provision which recognizes the first charge in regard to any duty, penalty, interest or any other sum payable by an assessee or any other person under the Customs Act and such first charge is notwithstanding anything to the contrary contained in any Central Act or State Act, and thereafter, saving the provisions under the SARFAESI Act. On a cumulative reading of Section 142A of the Customs Act and Section 35 of the SARFAESI Act, it would be clear that the recovery as initiated by the petitioner under the SARFAESI Act cannot be impeded by the respondents by taking recourse to Section 142A of the Customs Act. The reason being that Section 142A itself is a provision which saves the provisions of the SARFAESI Act under which the action was resorted by the petitioner to recover its dues from respondent No. 2. In any event, it is well settled that unless there is a preference given to a Crown debt by a statute, the dues of a secured creditor like the petitioner would have preference over Crown debts. It may also be observe that in the present case the impugned letter has been addressed at the stage of investigation. It is averred in the reply affidavit that a final order-in-original is passed against respondent No. 2. It is informed by the learned Counsel for the petitioner that such order is subject matter of challenge in independent proceedings. Thus, the impugned communication in any event would pale into insignificance. The impugned communication dated 2 November 2015 is quashed and set aside - petitioner is permitted to proceed further in regard to the actions against respondent No. 2 and the secured assets, as initiated under the SARFAESI Act - petition allowed.
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2024 (2) TMI 321
Levy of penalty u/s 114(i) of the Customs Act, 1962 - smuggling of red sanders - prohibited goods or not - HELD THAT:- It is evident that nothing specific alleging a positive role played by the opponent in the attempted export of red sander wood is forthcoming from the order of the learned adjudicating authority least of all carrying out an act or omission to render the seized goods liable to confiscation. In fact in para 10.1 of his order reproduced supra, there is a certain reference to the wrong doings on part of the exporter, undoubtedly pinning the blame on the exporter and not the Customs Broker - It may also be pertinent that for imposition of penalty under Section 114(i), it is necessary to show contumacious action with regard to the subject goods, as the opening clause itself of the section as well as subclause (i) talks of and concerns the goods for which a violation or a contravention arises leading to the imposition of penalty therein. There is nothing to impute by way of a categorical assertion the conspiring of, or an express omission or commission, leading to the fraud on the part of the appellant. There is nothing in the findings of the learned Commissioner to assert a positive role or to impute abetment on the part of the appellant in the attempt to smuggle out Red Sander Wood. Thus, in view of anything specific on the part of the appellant being brought on record, it would be completely inappropriate to subject the appellant to penal provisions under Section 114(i) - in order to take penal action against the present appellant, a partner of the Customs Brokerage firm, it is necessary in law to show that the appellant had in any way connived in the substitution of the declared cargo, or was in the knowledge of the fact that the declared cargo loaded in the container was substituted with prohibited goods. There is no such finding by the adjudicating authority in the matter. It is on record that the bottle seals were intact when the goods were subjected to examination in the docks. Further, the container was factory sealed, where the Customs Broker had no role to play. It be noted that in terms of the obligations under the CHALR,- i.e. Violation of Regulation 11(n), no case remains any further in view of the said proceedings, having attained finality. It is expressly incumbent on the department to have pointed out the role played by the appellant herein for imposition of penalty on them under Section 114(i) of the Customs Act - there is no finding by the adjudicating authority to indicate any beneficial consideration having been passed on to the appellant by way of a monetary reward or otherwise for his assumed role for which the appellant has been penalised by the adjudicating authority. The order of the learned adjudicating authority cannot be sustained and needs to be set aside - Appeal allowed.
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2024 (2) TMI 320
Doctrine of merger - Refund claim - refund hit by the limitation of time in spite of the importer having registered a Protest at the time of paying a deposit towards duty prior to adjudication - Section 27 of the Customs Act 1962 - HELD THAT:- In Sai Exports [ 2022 (11) TMI 440 - CESTAT CHENNAI ] it was held that the second proviso of sub-section (1) of Section 27 states that the limitation of one year will not apply when duty is paid under protest. The question is whether sub-section (1B) of Section 27 which states that the limitation of one year has to be computed from the date of judgment, decree or order of court would come into application even if the duty is paid under protest. An assessee can be pay duty under protest by either filing a letter of protest as provided by the Rules or by filing an appeal against the order on the basis of which the duty has been deposited or by taking both the actions. Consequent to a letter of protest being filed the matter would come up for a decision before the appropriate forum and an order passed which automatically vacates the protest, whether the decision is in favour or against the assessee. If the order is in favour of the assessee he can file a refund claim within the statutory time period as per section 27 (1B) (b) of the Customs Act or if it goes against him he may file a further appeal against the said order as provided in law till the matter attains finality. The doctrine of merger which is a common law doctrine recognized by Courts on principles of propriety in the hierarchy of the justice delivery system protects the assessee s claim for refund as per section 27(1B)(b) ibid, once the protest is vacated. The doctrine implies that the order passed by a lower authority would lose its finality and efficacy in favour of an order passed by a higher authority before whom correctness of such an order may have been assailed in appeal or revision. Hence once an order is passed in a matter where a protest is vacated by the issue of an order by the proper officer the second proviso to section 27(1) ceases to apply and section 27(1B)(b) takes over. The lower authority has taken a view which is reasonable, legal and proper - the impugned order merits to be upheld - appeal disposed off.
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2024 (2) TMI 319
Exemption from payment of whole of Customs duty and whole of Additional duty leviable under the virtue of Notification No. 104/94-Customs dated 16.03.1994 - failure to follow the procedures as laid down in the said Notification - failure to re-export 39 containers within the period of six months prescribed in the said notification - not seeking extension of time limit for re-export from the proper officer - HELD THAT:- The appellant have availed benefit of Notification No. 104/94 which permits Duty Free Import of the container subjected to the condition that they are re-exported within six months. In the instance case, same could not be re-exported within six months purportedly due to some fire on the port and damage to other containers, out of 39 containers brought in at the port. Thus, there was clearly a breach of condition of exemption notification and in the absence of any remission or waiver of duty having been granted by the competent authorities and the same not having been sought by the party for considerable length of time. The valuation has not been done with full transparency and such valuation report has not been allowed to be commented upon by the appellants. The grievance thus appears genuine. While in principle, it is agreed that duty in absence of remission was payable, as import which is subject matter of levy can even take place when goods enter in territorial waters. And only in normal case, the collecting point is deferred till Bill of Entry is filed. However, if goods get destroyed on port, the remission provision comes into play, which in this case was not sought. The assessment of duty etc, however has to be done on proper valuation after following natural justice, therefore, it is held that containers though could be subjected to duty, but assessment has to be on proper valuation arrived as per provisions and by following of natural justice - Appeal is allowed by way of remand on this aspect. Penalty - HELD THAT:- Section 114(A) requires malicious intent cannot be sustained in the facts of this matter specifically considering the supervening fact of fire after imports. Same is therefore dispensed with. Appeal disposed off.
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2024 (2) TMI 318
100% EOU - mis-declaration of weight of imported rough A marble blocks - violation of policy circular No. 13(RE-08)/2004-2009 dated 30.06.2008 as excess quantity/weight is not covered by the procurement certificate issued in terms of Notification No. 52/2003-Cus. - demand of duty as excess quantity as per the record of CHA was found to have been sent to the EOU - imposition of penalty - HELD THAT:- On detail examination of such record department found certain blocks of marble had weight in excess than the weight declared and case was made out on the basis of record of such CHA over the quantity shown in the Bill of Entries. The CHA had maintained the record on the basis of weighment slips issued and received from Mundra CFS. The CHA also informed the Bill of Entries were filed on the basis of bill of lading, invoice, packing list etc has received. Further, it is found that no check of weighment at the premises of appellants, EOU was done nor any excess was found, to have been cleared or even documented as excess production or clearance of wastage. Department has not even charged them with excess production of clearance in the EOU from clearance of excess marble as such nor has it brought any evidence on record to this effect. It is clear that the practice as pointed out by the appellant is well established and case of excess weight made out cannot be sustained, as the same was based on ignorance of such trade practice and department has failed to establish that any excess goods or weight was cleared and not used in manufacture - appeal allowed.
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2024 (2) TMI 317
Benefit of exemption from customs duty - Change of Notification in the bill of entry - Rejection of appellant s request for claiming the alternate exemption Notification No. 94/2006 as against the Notification No. 158/95-CUS - HELD THAT:- The change of Notification in the bill of entry is permissible in terms of Section 149 of Customs Act, 1962. Therefore, in principle, the appellant is eligible for change of notification, for the reason in the present case that the appellant could not comply with the condition of re-export of goods within six months in terms of Notification 158/1995-CUS. The only criteria to be seen that whether at the time of import the alternate exemption notification was legally available to the appellant - In the facts of the present case, there is no dispute about eligibility of the Notification 94/2006-Cus in respect of the import made by the appellant as the goods were meant for re-export. Both the lower authorities have denied the change of the notification only on relying upon the Hon ble Supreme Court judgment in the case of COMMISSIONER OF CUSTOMS, CALCUTTA VERSUS INDIAN RAYON INDUSTRIES LTD. [ 2008 (7) TMI 401 - SUPREME COURT] . Now the facts of the case in Indian Rayon Industries Ltd. is examined - From the observation of the Hon ble Supreme Court, it can be seen that the claim of the appellant to the extent the benefit of notification 94/1996-CUS was declined for the reason that the bill of entries involved in that case were dated 12.08.1998 and 28.05.1998 whereas in the present cases the bills of entry are dated 29.01.2014. During the relevant period of filing the bill of entry in the present case, the Notification No. 94/1996-Cus was very much available to the appellant in terms of amendment Notification No. 135/99-Cus dated 27.12.1999 whereby an entry as Sr. No. 2A was inserted. Whereas in the case of Indian Rayon, the date of bill of entries being 12.08.1998 and 29.05.1998 i.e. prior to the amendment in the Notification dated 27.12.1999. The facts are totally different, hence the reliance on the judgment in the case of India Rayon Industries by both the lower authorities is misplaced. It is further found that the issue whether subsequent to import, appellant can claim alternate exemption notification is settled by the Hon ble Apex Court in the case of Share Medical Care [ 2007 (2) TMI 2 - SUPREME COURT] , wherein it was held that the beneficial notification can be claimed at a later stage also, if otherwise the same is eligible at the time of import of goods. Therefore, on both the count, the appellant are eligible for alternate exemption Notification No. 94/1996-Cus dated 16.12.1996. The impugned order is not legal and proper, hence the same is set aside - Appeal allowed.
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2024 (2) TMI 316
Valuation of imported goods - rejection of declared value - redetermination of value - enhancement of the transaction value on the basis of NIDB data - Violation of the port restriction - HELD THAT:- The goods imported by the appellant are, admittedly, not prohibited goods as per Rule 133 read with Rule 43-A of the Drugs and Cosmetics Rules, 1945 or any other law for the time being in force. It is also found that representative samples of the imported goods were drawn and the Assistant Drug Controller has issued No Objection for the release of the said goods. Further, the lower authorities have re-determined the value of the impugned goods based on the values declared by other importers without providing any basis for this decision and relying on certain imports which are clearly not contemporaneous in as much as the Bills of Entry pertaining to those imports were filed during the period November 2010, whereas the impugned import is of the year February 2011 and there is no material produced by the department that amounts over and above the invoice value were paid with respect to transaction value in question. It has been consistently held by the Tribunal that NIDB data alone is not sufficient for re-determination of value. The enhancing the transaction value on the basis of NIDB data is not sustainable in law and hence we set aside the enhancement. As far as the affixation of M.R.P and R.S.P price on the packages are concerned - It is found that this defect is curable one and would not amount to contravention of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 as held in the case of ABB LTD. VERSUS COMMISSIONER OF CUSTOMS, BANGALORE [ 2010 (12) TMI 1027 - CESTAT, BANGALORE] cited by the appellant. Violation of the port restriction - HELD THAT:- During the relevant time, the Tuticorin was not an authorized port for import of the impugned goods but subsequently, the said port has been authorized for import of the impugned goods. Therefore, there is a violation with regard to port restrictions. For that violation, it is found appropriate to impose a penalty on the appellant under Section 111 (d) of the Customs Act, 1962 amounting to Rs.1,00,000/- and all other penalties and fine imposed by the impugned order are dropped. Appeal disposed off.
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2024 (2) TMI 315
Revocation of the Customs Broker License - forfeiture of security deposit - Levy of penalty - evasion of customs duty by way of diverting the goods stored in customs bonded warehouse into the domestic market without payment of customs duty - documents were forged/fabricated to show re-export warehoused goods. The allegations levelled by the Revenue in nutshell are that the appellant knew that Sh. Sanjeev Maggu is the actual owner but he never informed this fact to the department and thus he connived with Shri Sanjeev Maggu in the fraud. HELD THAT:- The fraud alleged here is of diverting the goods from the warehouse instead of re-exporting, which had occurred after the role of the appellant had come to an end as the goods had reached the customs bonded warehouse. Hence the appellant cannot be linked to the fraud and the same cannot be stretched to contravention of the provisions of the Regulations. It is found from the records of the case that the appellant in order to verify the existence of the premises of the two importer firms had sent letters by speed post asking them to submit the requisite documents and in response thereto he received the KYC documents. It has been repeatedly held that it is not the legal requirement to physically verify the business premises or the residential premises of the importer, i.e., SETWIN SHIPPING AGENCY VERSUS COMMISSIONER OF CUS. (GENERAL) , MUMBAI [ 2009 (9) TMI 759 - CESTAT MUMBAI] , M/S. HIM LOGISTICS PVT. LTD. VERSUS CC, NEW DELHI [ 2016 (4) TMI 971 - CESTAT NEW DELHI] and COMMISSIONER OF CUSTOMS VERSUS YOGESH KUMAR [ 2017 (3) TMI 162 - DELHI HIGH COURT] . The fact that the appellant had sent the letter by speed post at the given address and M/s Spark Exports had responded and the KYC documents were submitted by both the importers shows that the appellant had fulfilled the obligation under the Regulations. The appellant verified the IEC number from the site of the DGFT and personally met Sh. Lalit Dogra and Sh. Samar Arora, proprietors of the two firms. As noted, the High Court in KUNAL TRAVELS (CARGO) VERSUS COMMISSIONER OF CUSTOMS (IMPORT GENERAL) NEW CUSTOMS HOUSE, IGI AIRPORT, NEW DELHI [ 2017 (3) TMI 1494 - DELHI HIGH COURT] held that grant of IEC Code presupposes a verification of facts etc. made in such application with respect to the concern or entity. Proportionality of imposing the punishment - HELD THAT:- Guidance taken by the decision of the Delhi High Court in D.S. CARGO AGENCY VERSUS COMMISSIONER OF CUSTOMS [ 2023 (9) TMI 1202 - DELHI HIGH COURT] where the Court took note of the fact that the revocation of the license came into effect on 4.2.2019 and more than 4 1/2 years had lapsed which itself is a severe punishment and will serve as a reprimand to the appellant to conduct its affairs with more alacrity, the same order needs to be maintained - In the present case also, the order of revocation came into effect on 4.2.2019 and almost more than five years have lapsed since the appellant has been out of work on that account and which is a sufficient punishment for him to be cautious in future. In the facts of the present case, the punishment by way of revocation of license and forfeiture of security deposit is too harsh. The decision of the High Court in D.S. Cargo clarifying that the illegal actions of the importer firms subsequent to the clearance of the cargo from the Customs Station do not attract the violation on the part of the Customs Broker is binding on us and we do not find any reason to differ from the same as the controversy had arisen in the same set of facts in both the cases. Hence the impugned order upholding the revocation of the license and also the forfeiture of the security amount is set aside, however the penalty imposed is upheld. Appeal allowed in part.
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2024 (2) TMI 314
Classification of imported goods - Rubber Processing Oil - classifiable under Chapter Heading No. 27101990 as classified by the Appellants or under Chapter Heading No. 27079900 as classified by the Revenue? - enhancement of value of the imported RPO based on the consent letters given by the directors of the Appellants at the time of release of the goods, without following the due process of law as contemplated under Section 14 of the Customs Act read with Customs (Determination of Value of imported value) Rules, 2017 - mis-declaration of Country of Origin in the Bills of entry - quantum of penalties and redemption fine imposed disproportionate to differential duty. HELD THAT:- It is settled that the test report can be applied only in respect of the samples tested. Since in the present case tests of all the goods were not carried out, the claim of the classification of the department is applicable only in respect of goods contained in the containers from which the samples were drawn and not for the other containers. Enhancement of the valuation - HELD THAT:- The enhancement was made merely on the consent letters given by the directors of the appellant. In our view on hear say from director valuation cannot be decided if there is any doubt on the valuation, the due process of law as contemplated under Section 14 of the Customs Act read with Customs (Determination of Value of imported value) Rules, 2017 must be complied with. However, in the present case neither any contemporaneous value was adopted nor any method as prescribed under Section 14 read with Custom Valuation Rules, 2007 was followed. Therefore, merely on the basis of statements of director valuation cannot be enhanced. Therefore, the enhancement of the value is not sustainable in the facts of the present case. This issue has been considered in the case of Guru Rajendra Metal Alloy wherein the tribunal held that only on the basis of the consent letters of the importer enhancement of valuation cannot be made - the enhancement of the value by the lower authorities is without any legal basis. Hence, the same will not sustain and accordingly, the enhancement of the value done by the Revenue is set aside. Mis-declaration of Country of Origin in the bills of entry filed by the appellant - HELD THAT:- Firstly the appellant have not been benefited by the incorrect declaration of country of origin, if any. Moreover, it is not the appellant who has wrongly mentioned the country of origin certificate. Therefore, if there is a mis-declaration of country of origin the appellant being not the party to make any incorrect declaration cannot be held responsible and no consequential penalty can be imposed on the appellant - in the case of Agarwal Industrial [ 2020 (2) TMI 235 - CESTAT BANGALORE ] it can be seen that in the identical circumstances, this Tribunal held that for incorrect mention of country of origin, the importer cannot be penalized. Accordingly, in the present case also considering overall facts and the fact of incorrect declaration, if any, regarding country of origin in the Country of Origin Certificate, the appellant is not liable for any penalty or fine. Since the impugned order against the main appellants is not sustainable, there is no reason to continue the personal penalty upon the individuals co-appellants. Appeal allowed.
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2024 (2) TMI 313
Rejection of request of conversion of DFIA Shipping Bill to DBK - rejection on the ground of limitation as prescribed under Board Circular No. 36/2010-Cus dated 23.09.2010 - HELD THAT:- It is found that except the limitation, there is no other dispute about conversion of DFIA Scheme to DBK Scheme. Though the appellant had applied for DFIA Licence but the same was not issued and the DGFT had issued a NOC. On that basis the appellant approached the department for conversion of DFIA shipping bill to DBK Shipping bill. In this position, there are no lapse on the part of the appellant. As regard the limitation, it is found that the limitation was provided by way of Circular. The Circular may be binding on the departmental officer but the same cannot be binding on the assessee. This issue has been considered by this Tribunal in the case of M/S. LYKIS LIMITED VERSUS C.C. -MUNDRA [ 2020 (2) TMI 202 - CESTAT AHMEDABAD] wherein this Tribunal held that It is settled law that the time limit prescribed by the Board Circular is not binding as same is not statutory provision in terms of section 149 of the Customs Act 1962. The aforesaid order has been challenged by the Revenue before the Hon ble Gujarat High Court in THE PRINCIPAL COMMISSIONER OF CUSTOMS, MUNDRA VERSUS M/S LYKIS LIMITED [ 2021 (2) TMI 261 - GUJARAT HIGH COURT] dealing with one of the specific issue of limitation of three months held that Section 149 is applicable at the relevant point of time. The rejection of the appellant s request for conversion of DFIA Scheme to DBK Scheme in shipping is absolutely illegal and incorrect - the impugned order set aside - appeal allowed.
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2024 (2) TMI 312
Levy of penalty u/s 114 of the Customs Act, 1962 on the owners of the seized goods - Allegation that, pulses (URAD ki Dal) in question were meant for illegal export from India to Nepal - requirement to cross-examination of the witnesses - violation of principles of natural justice - genuineness of the Punchnama - panch witnesses are stated to be daily wage laborers' - HELD THAT:- It is found that the Tribunal, while remanding, has referred to a number of decisions in Para-7 of the order by which it has been held that cross-examination in such a situation needs to be allowed. The impugned order which has been passed contrary to the directions recorded in the order remanding the matter for de novo consideration without any valid justification cannot be sustained. Further, as the prayer made in the appeal is only to the extent of setting aside the penalty of Rs. 14,00,000/- imposed under Section 114 of the Customs Act, 1962 on the present appellant, the same is set aside. Accordingly, as far as the present appellant is concerned, there are no merits in the impugned order and the same is set aside - the appeal of the appellant is allowed to the extent of prayer made in the appeal.
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2024 (2) TMI 311
Classification of import goods - Main MIC Dust Protective Net - to be classified under Tariff Item 59119090 or not - HELD THAT:- As per Note I of Chapter 39, throughout the nomenclature any reference to plastics does not apply to materials regarded as textile materials of Section Xl. Further as per Note 2(p) of Chapter 39, this chapter does not cover, goods of Section XI (textiles and textile articles). Moreover, PET is a plastic as per Explanatory Notes of Chapter 39 of the Harmonized Commodity Description and Coding System of World Customs Organization. And as per Chapter Notes of Chapter 54, polyester is one of the main synthetic fibres and PET is a type of polyester in terms of Explanatory Note to heading 3907. The goods in question are also not covered under Note 1 of Section XI regarding exclusions under the Section. The inference drawn by the concerned Commissionerate vide their comments against the application for advance rulings that fabric is made of PET having more than 95% component, so it seems to be correctly classifiable under CTH 3926, does not appear to be correct and may lead to wrong classification of the subject goods. Thus, on the basis of the said Section, Chapter Notes and the Explanatory Notes, it can be concluded that goods in question are not articles covered under Chapter 39 but the subject goods merit classification under Section XI. As per Explanatory Notes, a few woven fabrics are excluded from the woven fabrics classified under Chapter 50 to 55 and the textile fabric for technical uses classified under heading 5911 are one of them. Further, Note 1 of Chapter 59, provides that, except, where the context otherwise requires, for the purposes of this Chapter the expression textile fabrics applies only to the woven fabrics of Chapter 50 to 55 and heading 5803 and 5806 and Note 8 of Chapter 59 provides a list of goods to which heading 5911 applies but with the condition that such goods do not fall in any other heading of Section XI. Since, the subject goods are not covered under any other heading of Section XI and meant for technical use, these goods merit classification under Chapter 59 of the Import Tariff. The subject goods merit classification under Custom Tariff Sub-Heading 59119090 of the First Schedule of the Customs Tariff Act, 1975.
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2024 (2) TMI 310
Classification of imported goods - Turbochargers which are suitable for use only in Off-highway equipment i.e., for generators, earth moving equipment etc. - to be classified under Tariff Item 8414 80 30 of the Customs Tariff or not - eligibility for exemption benefit in terms of Sl. No. 448H of Notification No. 50/2017-Cus., dated 30-6-2017 as amended - HELD THAT:- The entry under Sr. No. 448H of exemption Notification No. 50/2017, dated 30-6-2017 as amended says that goods of CTH 8414 80 (except 8414 80 11) are eligible for exemption benefit under Sr. No. 448H provided they shall not be suitable for use in motor vehicles falling under Heading 8702 or 8704; motor cars falling under Heading 8703 or motor cycles falling under Heading 8711. The Off-Highway equipment is a broad term that is used to explain the machinery which spends most of its time off-road. The type of equipment can range from large trucks used in mining to small agricultural machines, and everything in between. Thus from the plain reading of above CTH 8418 of the tariff and Sr. No. 448H of the said notification it is evident that there is neither any mention of On-highway or Off-highway goods nor there is any such distinction of turbochargers classified under CTH 8414 80 30 in aforesaid categories as per its use. Therefore, as per the tariff, it is evident that the turbochargers, whether for On-highway or Off-highway use, are classifiable under CTH 8414 80 30. It is difficult to distinguish the turbochargers based on its use in On-highway or Off-highway vehicles category and it is required to examine if the use of the turbocharger specifically falls in any of the motor vehicles with Headings 8702, 8704, 8703 and 8711 to deny or provide the benefit of the notification. The imported turbochargers cannot be linked to use in On-highway or Off-highway category of the vehicles to get the benefit of the Sr. No. 448H of Notification No. 50/2017, dated 30-6-2017, as amended. As per the said notification, the turbochargers will get benefit of the notification only in case where they are suitable for use in goods other than motor vehicles/cars/cycles falling under Headings 8702, 8703, 8704 and 8711 - Application disposed off.
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Insolvency & Bankruptcy
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2024 (2) TMI 309
Jurisdiction - power of NCLT to declare the VAT / Tax assessment order as void ab initio under Section 33(5) of IBC - HELD THAT:- From the provisions of Section 14 of the IBC it is evident that Section 14 prescribes a moratorium on the initiation of CIRP proceedings and its effects. The Supreme Court, in its judgment in the case of SUNDARESH BHATT, LIQUIDATOR OF ABG SHIPYARD VERSUS CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS [ 2022 (8) TMI 1161 - SUPREME COURT ], after considering the February 2020 Report of the Insolvency Law Committee, held that one of the purposes of the moratorium is to keep the assets of the Corporate Debtor together during the insolvency resolution process and to facilitate orderly completion of the processes envisaged under the Statute. Moratorium under Section 14 is to ensure the curtailing of parallel proceedings and reduce the possibility of conflicting outcomes in the process. Section 14(1)(a), (b) and (c) of the IBC shields and protects against pecuniary attacks against the Corporate Debtor. This is to provide the Corporate Debtor with breathing space to allow it to continue as a going concern and rehabilitate itself. Under Section 238, the provisions of IBC have an overriding effect on any other law for the time being in force or any instrument having effect by virtue of any law - after declaring the moratorium, there is an embargo on enforcing the demand, but there is no embargo under Section 14, read with Section 33(5) of the IBC, for determining the quantum of tax and other levies, if any, against the Corporate Debtor. This Court finds the impugned order passed by the National Company Law Tribunal, Kochi Bench, as preposterous and untenable. The Company Law Tribunal has no power and authority under the IBC to declare an assessment order as void ab initio and non est in law. Such an order only reflects the competence of the persons who are manning such an important Tribunal - The Order shows the lack of basic understanding of the law. Instead of considering the application by the 2nd respondent for permission to file an appeal against the assessment order, the National Company Law Tribunal, Kochi Bench, has assumed the jurisdiction of the Constitutional Court to declare the assessment order as void ab initio. The matter is remitted back to the National Company Law Tribunal, Kochi Bench, to consider and pass an order on the application of the 2nd respondent - Petition allowed by way of remand.
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Service Tax
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2024 (2) TMI 355
Legal Services / Services of an Advocate - Recovery of Service Tax alongwith interest and penalty - several procedural illegalities, amounting to a breach of the principles of natural justice, in passing the order - HELD THAT:- It appears that the Petitioner was not granted an opportunity of an appropriate hearing before the impugned Order-in-Original was passed against the Petitioner. Hence, there is substance in the contention as urged on behalf of the Petitioner that in passing the impugned order, there is a breach of the principles of natural justice. To this effect the Petitioner had infact addressed a detailed letter to the Designated Officer dated 18th October, 2023, which was post the hearing, which had taken place on 17th October, 2023 when the Petitioner s representative/Chartered Account appeared before the Designated Officer, inter alia making such grievance, as also contending that the service tax is not leviable on an individual advocate, under the said notifications issued by the Central Government. As set out in the Notification, the taxable service in respect of services provided or to be provided by the individual advocate for a firm of advocates has been set out to be Nil . Similarly Notification No.25/2012 dated 20th June, 2012, also clearly provides that the service provided by an individual advocate, partnership firm of advocates, by way of legal services being exempted from levy of service tax. It is observed that the notifications which are now placed for consideration of the Court are absolutely clear, they were not the subject matter of consideration in the case of Isha Kiran Jain [ 2023 (10) TMI 821 - BOMBAY HIGH COURT] - no useful purpose would be achieved in present proceeding remanding to the Designated Officer. It is deemed fit in the interest of justice to quash and set aside the impugned order, for the reasons that the Designated Officer has acted without jurisdiction and as the impugned order is passed patently, contrary to the notifications dated 20th June 2012 - petition allowed.
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2024 (2) TMI 308
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - amount pre-deposited by the petitioner which was appropriated by the Assistant Commissioner is to be set off against the tax amount confirmed by the Assistant Commissioner and affirmed by the Commissioner of Appeals or not - HELD THAT:- The amount that was pre-deposited by the petitioner is available for being set off in terms of Section 124(2) of Sabka Vishwas - (Legacy Dispute Resolution) Scheme, 2019. The petitioner is entitled to deduct Rs. 15,35,735/- being the amount pre-deposited by the petitioner during the course of investigation in terms of Section 124(2) of Sabka Vishwas - (Legacy Dispute Resolution) Scheme, 2019 from the aforesaid sum of Rs. 18,99,158.40 Thus, the petitioner is required to pay only a sum of Rs. 3,63,419/- (Rs. 18,99,154.40 Rs. 15,35,735/-) and not Rs. 12,75,256/- - amounts quantified as payable both by the petitioner in Form SVLDRS-1 and by the respondent vide impugned Form SVLDRS- 3 dated 19.11.2019 are incorrect - Thus, the amount quantified by the petitioner should have been Rs. 3,63,419/- and not Rs. 3,53,803/- in Form SVLDRS-1. Therefore, Rs. 12,75,258/- quantified by the respondent in the impugned SVLDRS-3 is also incorrect. The petitioner shall pay a sum of Rs. 3,63,419/- as quantified above within 30 days of receipt of this order together with interest at 12% from the 30th day of expiry of Form SVLDRS-2 - In case, the petitioner has already paid an amount of Rs. 3,53,803/-, the petitioner shall pay only the differential amount of Rs. 9,616/- - Petition disposed off.
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2024 (2) TMI 307
Short payment of service tax - Construction of Residential Complex Services for the period prior to June 2007 - Works Contract Service for the period 01.06.2010 to 30.09.2011 - demand under the head GTA Services for the period 01.06.2007 to 30.09.2011 - reverse charge mechanism - demand under Section 73A - HELD THAT:- There is no illegality or impropriety in the impugned order. Learned Commissioner, in view of the observations of this Tribunal in its earlier Final Order dated 23.09.2014, has rightly held that the demand of Rs. 50,86,324/- does not survive being for the period prior to June, 2007. Further, it is found that the Learned Commissioner also rightly held that the head of service construction of residential complex cannot be changed to works contract service , as the same is hit by Section 65A of the Act. Once the change in the head of service is rejected in accordance with the law proposed for such classification when two equally applicable classification exist, the differential demand also does not survive amounting to Rs. 17,84,97,162/-. Demand of Rs. 3,98,08,809/- under Section 73A - HELD THAT:- The Learned Commissioner has rightly gone into details and after going through the reconciliation rightly held that there is no case made out for non-payment of tax collected but not paid under Section 73A. Thus, there is no error in dropping the said demand also. It is further found that the only demand confirmed in the Order-in-Original Rs. 21,029/- under GTA service, which was not an issue and has not been interfered with. The same stands confirmed and appropriated in accordance with the law. There are no merits in this appeal by Revenue, accordingly the same is dismissed.
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2024 (2) TMI 306
Classification of service - Business Auxiliary Service or not - Reimbursement of expenses - CENVAT Credit - Time limitation - penalty - Interest. Classification of service - Business Auxiliary Service or not - It is the submission of the appellant that the act of accepting the deposits is without any consideration and hence cannot be termed as service - HELD THAT:- The activity of accepting deposits is a service. From the perusal of the definition, it is found that the word used in clauses (iv), (v) (vi) and (vii) is service‟ and not taxable service. It is settled principle in law that the taxing statute need to be considered on the basis of the words used by the legislature and there is no room for intendment etc. reliance is placed on the decisions of the Hon'ble apex Court in the case of COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT] wherein it has been held When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue - thus, the services provided by the Appellant to M/s SIFCL were correctly classifiable under the taxable category of Business Auxiliary Service as defined by Section 65 (19) and amended from time to time during the relevant period. Reimbursement of expenses - HELD THAT:- The impugned order in no way disputes that reimbursable expenses need to be deducted from the gross amount for determining the taxable value. However have denied the same only for the reason that appellant has failed to provide the documents and evidence in respect of these expenses - the submissions made by the appellant needs to be accepted relying on the decision of Hon ble Delhi High Court in the case of INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. [ 2012 (12) TMI 150 - DELHI HIGH COURT] and affirmed by the Hon‟ble Apex Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] , subject to production of documents and evidences in this regard before the adjudicating authority for re-determination of the taxable value. Thus matter to this extent needs to be remanded to the adjudicating authority. CENVAT Credit - HELD THAT:- CENVAT Credit of input service and documentary evidences in respect of payment of Service tax on input service the compliance of Service tax Rules for availment of Cenvat Credit has not been done. The noticee is not entitled to benefit of CENVAT Credit at this stage of proceedings. Time limitation - penalty - HELD THAT:- There are no merits in the submissions of the appellant that an extended period should not have been invoked for making this demand. The issue of limitation has to be considered on the facts of case in hand and the conduct of the assessee/ appellant. There cannot be application of the decisions in determining the issue of limitation on the basis of the law laid down therein ignoring the facts of case in hand - With regards to the penalty imposed under Section 78 it is found that once the extended period of limitation has been invoked the penalty under this section is mandatory - the penalty imposed under this section cannot be faulted with. However the same needs to be modified to the extent of quantum of tax evaded to be determined in the remand proceedings. Interest - HELD THAT:- Issue in respect of interest is settled by the Bombay High Court in case of COMMISSIONER OF CENTRAL EXCISE CUSTOMS,, AURANGABAD. VERSUS M/S PADMASHRI VV PATIL SAHAKARI SAKHAR KARKHANA LTD. [ 2007 (7) TMI 6 - BOMBAY HIGH COURT ] wherein it has been held that we are unable to agree with the proposition that interest u/s. 11AB is also not chargeable in case the short duty or unpaid duty is deposited with the Government before issuance of show cause notice. Appeal is partly allowed - Commissioner should recompute the demand and penalties imposable on the appellant after allowing the appellant to produce their claim to reimbursable expenses and allowing the same if admissible.
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2024 (2) TMI 305
Condonation of delay in filing appeal - competence of Commissioner (Appeals) to condone the delay in filing the appeal beyond four months (3+1 months) - HELD THAT:- The review order if is required to be passed in terms of Section 84 the appeal before Commissioner (Appeals) has to be filed within three months from the date of receipt of the order or order of such adjudicating authority which is prayed to be set aside and appeal, if directed under said order has to be filed within one month of the communication of the said order. There is nothing mentioned is Section 84 about power of condonations with Commissioner (Appeals). It is proviso to Section 85 which empowers the Commissioner (Appeals) to condone a period of 30 days (one month) after the expiry of 90 days (3 months). The proviso makes it clear that the Commissioner has no competence to condone the delay beyond 30 days over 90 days. The Hon ble Supreme Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] held Plea that , because of lack of experience in business there was delay, is not a adequate reason. Thus, the Commissioner (Appeals) was not competent to condone the delay beyond 30 days over 90 days. In the present case the order-in-original is dated 14.02.2014. Review order is dated 20.05.2014. Thus the review order is not within 3 months as is required under Section 84 of the Act. The said order admittedly was received at Divisional office, Gwalior on 21.05.2014 but the appeal admittedly was filed on 07.07.2014 i.e. much beyond 30 days of receipt of review order and beyond 90+30 days of the order in original. It is already observed above that Commissioner (Appeals) has no statutory power to condone delay in filing appeal before him which is beyond 90+30 days of the communication of order in original. Appeal allowed.
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2024 (2) TMI 304
Taxability - scope of the term gross amount charged - Outstanding dues from Associated Enterprises as per Section 92A of the Income Tax Act, 1961 - HELD THAT:- The dispute herein is squarely covered in favour of Appellant/Assessee by the ruling of the Hon ble Delhi High Court in the case of THE PR. COMMISSIONER OF GST, DELHI -SOUTH COMMISSIONERATE VERSUS MCDONALDS INDIA PVT. LTD. [ 2017 (10) TMI 514 - DELHI HIGH COURT] where it was held that The Court is satisfied that no error has been committed by the CESTAT in answering the issue in favour of the Assessee, viz., that the aforementioned amendments to the FA 1994 as well as the ST Rules cannot be made retrospective. The Impugned Order is set aside - appeal allowed.
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Central Excise
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2024 (2) TMI 303
Maintainability of appeal - monetary amount limit involved in the appeal - Exemption from duty nder N/N. 6/2002-CE - CESTAT held that, it is not open for the Central Excise authority to overrule the certificate issued by a competent a public authority - HELD THAT:- This appeal has to be dismissed on the ground of low tax effect as being covered by the Circular No. 17 of 2019 dated 08.08.2019 issued by Department of Revenue, Ministry of Finance. This Civil Appeal is therefore dismissed.
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2024 (2) TMI 302
Reversal of proportionate CENVAT credit - generation of electricity - CENVAT credit of Counterveiling Duty (CVD) on import of Coal - quantum of power wheeled out to sister units - HELD THAT:- The narration of facts as captured in paragraphs 1 and 7 of the judgment in Maruti Suzuki [ 2009 (8) TMI 14 - SUPREME COURT] is to the effect that the supply of electricity in that case was to sister concerns, vendors and third parties, and at cost. Thus, the Court was concerned with the factual scenario where the power was sold to other units and whether, in such circumstances, such sale would qualify for the claim of CENVAT credit. In the present case, the electricity has not been sold but has been supplied though wheeling by TANGEDCO to sister units located elsewhere. All units are engaged in manufacture/grinding of cement and form part of the same group of companies. They admittedly hold separate licenses for manufacture and are independent assessees - the facts that the power in this case has not been sold for consideration and has only been shared with the sister units will be a relevant consideration. Importantly, a distinction has been envisaged between the goods used 'in the factory' by the 'manufacturer of the final product' and the goods used for 'generation of power'. While the former insists that the goods must be used 'in the factory' , there is no stipulation of place as regards the goods in clause (iii). Therefore, there are merit in the position that electricity captively generated is an input, wherever used by the assessee concerned. The use of the term captive is, in our view a qualification of the location where it is generated and not of the location where it is used. The appellant must succeed on the specific fact pattern as arising in this appeals. These appeals are allowed.
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2024 (2) TMI 301
Rejection of refund on the ground of time limitation - Constitutional Validity of Rule 5 of the Cenvat Credit Rules, 2004 - paragraph 3(b) of Notification No. 27/2012-CE(NT) dated 18.06.2012 enclosed as Annexure-B prescribing a time limit for claiming refund of cenvat credit - HELD THAT:- In the instant case, it is not in dispute that the returns filed by the assessee have been accepted - However, the question in this appeal is with regard to the rejection of refund claim on the ground of limitation. In MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT] , this Court has held that Section 11B is not applicable. The Commissioner (Appeals), as also the CESTAT have not returned any finding with regard to applicability of empowerment. Therefore, the matter requires reconsideration in the hands of the Original Authority. Petition allowed by way of remand.
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2024 (2) TMI 300
Violation of principles of natural justice - permission of cross-examination of witnesses whose statements are sought to be relied upon - HELD THAT:- The Counsel for the respective parties do not dispute that in context of the impugned order under challenge in this petition i.e. dated 4-9-2020, this Court in case of a co-noticee by an order in GYSCOAL ALLOYS LTD. ORS. VERSUS UNION OF INDIA ANR. [ 2023 (2) TMI 777 - GUJARAT HIGH COURT] has quashed and set aside the order and issued directions holding that The authority concerned is seeking to rely upon certain statements following the various decisions of this Court, the dialect of which is not necessary and the decision of the Apex Court is sufficient enough to bring to the fore the requirement of permitting the cross-examination of witnesses whose statements are sought to be relied upon by the authorities. Petition allowed.
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2024 (2) TMI 299
Extended Period of limitation - 100% EOU - Undervaluation of goods while clearing the goods to DTA and related person Triumph - suppression of facts or not - HELD THAT:- The view taken by the adjudicating authority is agreed that the appellant is not eligible for any adjustment of CVD paid by them (without availing exemption under Notification No. 30/2004-CE), it is to say that this indicates an inference that the appellant had no intention to evade payment of duty. Apart from making a vague allegation that appellant has suppressed facts with intention to evade payment of duty, there is no positive act brought out by the department to show that the appellant has suppressed facts with intent to evade payment of duty. The present Show Cause Notice is for the period 2/2008 to 5/2010. For the earlier period from 2/2005 to 5/2008, the audit team raised an objection as to undervaluation of goods - However, the said objection did not culminate in any proceeding to issue Show Cause Notice after the appellant filed a reply explaining the facts of their case. The department has failed to establish any grounds for invoking the extended period. The issue on limitation is answered in favour of the appellant and against the Revenue. The impugned order is set aside on the ground of limitation - Appeal allowed.
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2024 (2) TMI 298
Maintainability of appeal - non-prosecution of the case - adjournment of matter beyond three times - Rule 20 of CESTAT Procedure Rules, 1982 - HELD THAT:- In case of ISHWARLAL MALI RATHOD VERSUS GOPAL AND ORS. [ 2021 (9) TMI 1301 - SUPREME COURT ] condemning the practice of adjournments sought mechanically and allowed by the Courts/Tribunal s Hon ble Supreme Court has observed considering the fact that in the present case ten times adjournments were given between 2015 to 2019 and twice the orders were passed granting time for cross examination as a last chance and that too at one point of time even a cost was also imposed and even thereafter also when lastly the High Court passed an order with extending the time it was specifically mentioned that no further time shall be extended and/or granted still the petitioner defendant never availed of the liberty and the grace shown. There are no justification for adjourning the matter beyond three times which is the maximum number statutorily provided - The Appeal is dismissed for non prosecution in terms of Rule 20 of CESTAT Procedure Rules, 1982.
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CST, VAT & Sales Tax
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2024 (2) TMI 297
Rejection of Refund of unutilised Input Tax Credit (ITC) - HELD THAT:- The petitioner has made the refund claims in time and cannot be faulted for the delayed processing of such claims by the respondent. If such claims were not processed on account of Circular No.22, which was superseded by Circular No.12, at a minimum, the limitation period should be reckoned from the date of such Circular. For such reason, the impugned order is unsustainable. Notwithstanding the above conclusion, the refund claim has to be examined and determined based on documents pertaining to the availing of ITC as well as the export of products on zero rated basis. This factual determination cannot be undertaken by this Court. For such purpose, it becomes necessary to remand this matter. Petition disposed off by way of remand.
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2024 (2) TMI 296
Seeking grant of regular bail - availing input tax credit on bogus billings during the assessment period of 2011-2012 - fraudulently obtaining refund of Rs. 4,32,578/- by using false and fabricated documents which includes sale invoices of cigarettes regarding interstate sale to Rajasthan - HELD THAT:- It transpires that the petitioner is behind the bars since 28.06.2023. Investigating Agency has already completed the investigation and filed the final report under Section 173 and none out of the 18 prosecution witnesses have been examined so far. Culpability, if any, would be determined at the time of the trial and the similarly situated co-accused have already been granted the concession of regular bail by this Court vide Annexures P-3 and P-4 respectively. In view of the ratio of law laid down by Hon ble Supreme Court in Prabhakar Tiwari Vs. State of UP and Anr. [ 2020 (1) TMI 1528 - SUPREME COURT] and MAULANA MOHD. AMIR RASHADI VERSUS STATE OF U.P. AND ORS. [ 2012 (1) TMI 407 - SUPREME COURT ] , the involvement of accused in other criminal cases cannot be the sole ground to deny him the concession of bail. Thus, without commenting upon the merits of the case lest it may prejudice the outcome of the trial, the petitioner- Ashok Sukhija is ordered to be released on regular bail during trial on his furnishing bail bonds/surety bonds to the satisfaction of Illaqa Magistrate/Trial Court - Petition allowed.
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2024 (2) TMI 295
Attachment Order - recovery of sales tax dues - secured creditor or not - priority over the dues payable to the petitioner - Non-Performing Asset (NPA) - HELD THAT:- The full bench of this Court in Janta Jalgaon Sahakari Bank [ 2022 (9) TMI 163 - BOMBAY HIGH COURT] was considering an issue as to who between the secured creditor [as defined in section 2(1)(zd) of the SARFAESI Act and section 2(1) (la) of the RDDB Act], and the taxing/revenue departments of the Central/State Governments, can legally claim priority for liquidation of their respective dues qua the borrower/dealer upon enforcement of the security interest [as defined in section 2(1)(zf) of the SARFAESI Act] and consequent sale of the secured asset [as defined in section 2(1)(zc) of the SARFAESI Act], in view of the extant laws, was the broad question the Full Bench was tasked to decide - the Court held that dues of secured creditor (subject of course to CERSAI registration) and subject to the proceedings under the Insolvency and Bankruptcy Code would rank superior to the dues of the relevant department to the State Government. Thus in view of the clear position in law as laid down by the full Bench, the Sales Tax Department cannot claim priority over the dues payable to the petitioner who is the secured creditor as held by the Full Bench. Petition allowed.
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2024 (2) TMI 294
Taxability of Latex in the Hands of Company - Exclusion of from the scope of Agriculturist - income received by the revision petitioner from out of the rubber trees provided for slaughter tapping to third parties, is taxable or not - Ought not the learned tribunal have held that the receipts of the revision petitioner from out of the slaughter tapping agreements is only a licensee fee and there is no sales tax liability under the provisions of the KVAT Act? - HELD THAT:- For the purposes of the Kerala Value Added Tax Act, there is a transfer of the property in the latex that is extracted from the rubber trees from the petitioner to the third party. It is also relevant that the consideration that flowed from the third party to the petitioner was for the latex that was obtained by him and not merely for the right to collect the latex. The reliance placed by the learned counsel on the decision of the Karnataka High Court in MUNINAGAIAH VERSUS STATE OF KARNATAKA AND OTHERS [ 1996 (6) TMI 321 - KARNATAKA HIGH COURT] also cannot come to his aid since we find that, that was a case that concerned the grant of a right to collect tamarind from specified forest areas which was conferred on the forest contractor through a public auction as per the provisions of the Karnataka Forest Act, 1964. While the contractor in the said case was given a permission to collect, remove and dispose tamarind, the court found on a perusal of the agreement that it was not one for the sale of tamarind but more in the nature of the grant of a right of profit a prendre and hence there was no authority for the Karnataka State Government to levy sales tax on the said transaction. We find the agreement in the instant case to be wholly different in nature, more so when it is not in dispute that unlike a Government grant over forest land the right granted in these cases was to collect latex (goods) from rubber trees owned and cultivated by the petitioner Company. The only reason why the petitioner was called upon to pay tax on the sale of latex, despite being an agriculturalist in the general sense of the term, is because the definition of 'agriculturalist' and 'turnover' respectively under the KVAT Act excluded Companies. There are no reason to interfere with the well reasoned order of the assessing authority as affirmed by the 1st Appellate Authority and the Tribunal. These OT revisions are therefore disposed by answering the questions of law raised by the petitioner against the assessee and in favour of the revenue.
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2024 (2) TMI 293
Jurisdiction - power of Sales Tax Officer u/s 67 of the VAT Act to seize the books of accounts - HELD THAT:- Section 3 of the VAT Act confers powers upon the Commissioner. Sub-Section (4) of Section 3, subject to such restrictions and conditions as may be prescribed, empowers the Commissioner to delegate by an order in writing any of those powers under this Act, except those under sub-Section (13) of Section 93. In the present set of facts we are not concerned with the power confers by the VAT Act upon the Commissioner or delegation of any of the powers by the Commissioner. Therefore, Section 3 of the VAT Act has no relevance with respect to the controversy involved in the present appeal. Since the Sales Tax Officer, who seized the books of accounts, does not lack power or jurisdiction to seize under Section 67 of the VAT Act, therefore, learned Single Judge has committed a manifest error or law to quash the seizure of books of accounts, etc. of the petitioner. The judgement and order dated 17.02.2016 passed by the learned Single Judge in WP 641 (W) of 2016, cannot be sustained and is hereby set aside - Petition dismissed.
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2024 (2) TMI 292
Violation of principles of natural justice - prior to the passing of the impugned order, neither opportunity for filing the reply nor the opportunity of personal hearing was provided by the respondent to the petitioner - HELD THAT:- In the present case, it appears that the notices dated 24.12.2021, 24.03.2023 and 15.05.2023 and the assessment order dated 25.05.2023 have been uploaded in the web portal in the View Additional Notices and Orders column and the same were not at all physically served to the petitioner, due to which, the petitioner was unaware about the said notice. Hence, the reasons provided by the petitioner for being unaware of the notice, which was uploaded in the web portal, are appears to be genuine - Further, this Court is of the view that no order can be passed without providing sufficient opportunities to the petitioner. However, in the present case, no reply was filed by the petitioner and no opportunity of personal hearing was provided to the petitioner. Hence, the impugned order is liable to be set aside. The impugned order dated 25.05.2023 is set aside. While setting aside the impugned order, this Court remits the matter back to the respondents. The petitioner is directed to file the reply to the show cause notice dated 24.03.2023 within a period of 21 days from the date of receipt of copy of this order. Thereafter, the respondent is directed to dispose of the matter after providing sufficient opportunities to the petitioner. Petition disposed off.
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Indian Laws
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2024 (2) TMI 291
Forfeiture of the earnest money deposit by the appellant bank - Applicability of underlying principle of Section(s) 73 74 respectively of the Indian Contract Act, 1872 - principles of unjust enrichment - quantum of forfeiture under the SARFAESI Rule is limited to the extent of debt owed or not - case of exceptionable circumstances or not. Legislative History and Scheme of the SARFAESI Act - HELD THAT:- Section 13 of the SARFAESI Act contains the provisions relating to the enforcement of the security interest and the manner in which the same may be done by the secured creditor without the intervention of the court or ribunal in accordance with its provisions - This Court in M/S MADRAS PETROCHEM LTD. AND ANR. VERSUS BIFR ORS. [ 2016 (2) TMI 132 - SUPREME COURT ], recapitulated the object behind the enactment of the SARFAESI Act and in that context examined the purpose of Sections 13, 35 and 37 respectively of the SARFAESI Act and held that In conclusion, it is held that the interim order dated 17.1.2004 by the Delhi High Court would not have the effect of reviving the reference so as to thwart taking of any steps by the respondent creditors in this case under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. This is because the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 prevails over the Sick Industrial Companies (Special Provisions) Act, 1985 to the extent of inconsistency therewith. Section 15(1) proviso 3 covers all references pending before the BIFR, no matter whether such reference is at the inquiry stage, scheme stage, or winding up stage. The Orissa High Court is not correct in its conclusion on the interpretation of Section 15(1) proviso 3 of the Sick Industrial Companies (Special Provisions) Act, 1985. Applicability of Section(s) 73 74 of the 1872 Act to Forfeiture under the SARFAESI Rules - HELD THAT:- It appears that the High Court whilst passing the impugned order was of the view that the legislature had provided for forfeiture under the SARFAESI Rules as a relief to the secured creditor for the breach of obligation by the auction purchaser. Thus, it was of the view that Section 73 of the 1872 Act will be applicable to forfeiture under Rule 9(5) of the SARFAESI Rules and any forfeiture will only be allowed to the extent of the loss or damage suffered by the secured creditor - This Court in C. Natarajan [ 2023 (4) TMI 1232 - SUPREME COURT] whilst dealing with a similar issue pertaining to the applicability of Section(s) 73 and 74 of the 1872 Act on forfeiture under Rule 9(5) of the SARFAESI Rules, answered the same in a negative. Forfeiture under the SARFAESI Rules - HELD THAT:- In Madras Petrochem [ 2016 (2) TMI 132 - SUPREME COURT] this Court made a pertinent observation that Sections 35 and 37 respectively of the SARFAESI Act form a unique scheme of overriding provisions, however the scope and ambit of Section 37 is restricted only to the securities law. The SARFAESI Act is a special legislation with an overriding effect on the general law, and only those legislations which are either specifically mentioned in Section 37 or deal with securitization will apply in addition to the SARFAESI Act. Being so, the underlying principle envisaged under Section(s) 73 74 of the 1872 Act which is a general law will have no application, when it comes to the SARFAESI Act more particularly the forfeiture of earnest-money deposit which has been statutorily provided under Rule 9(5) of the SARFAESI Rules as a consequence of the auction purchaser s failure to deposit the balance amount. Concept of Earnest-Money Law on Forfeiture of Earnest-Money Deposit - HELD THAT:- A 5-Judge Bench of this Court in its decision in Fateh Chand v. Balkishan Dass [ 1963 (1) TMI 46 - SUPREME COURT] , held that a forfeiture clause in an ordinary contract would fall within the meaning of the words any other stipulation by way of penalty of Section 74 of the 1872 Act, and thus only a reasonable amount can be forfeited. This Court in Satish Batra [ 2012 (10) TMI 595 - SUPREME COURT] after taking note of the decisions in Delhi Development Authority v. Grihshapana Cooperative Group Housing Society Ltd. [ 1995 (2) TMI 457 - SUPREME COURT] , V. Lakshmanan v. B.R. Mangalagiri Ors. [ 1994 (12) TMI 322 - SUPREME COURT] and HUDA v. Kewal Krishnan Goel [ 1996 (5) TMI 439 - SUPREME COURT] concluded that only that deposit which has been given as an earnest-money for the due performance of the obligation is liable to be forfeited in the event of a breach. The difference between an earnest or deposit and an advance part payment of price is now well established in law. Earnest is something given by the Promisee to the Promisor to mark the conclusiveness of the contract. This is quite apart from the price. It may also avail as a part payment if the contract goes through. But even so it would not lose its character as earnest, if in fact and in truth it was intended as mere evidence of the bargain. An advance is a part to be adjusted at the time of the final payment. If the Promisee defaults to carry out the contract, he loses the earnest but may recover the part payment leaving untouched the Promisor s right to recover damages. Earnest need not be money but may be some gift or token given. It denotes a thing of value usually a coin of the realm given by the Promisor to indicate that the bargain is concluded between them and as tangible proof that he means business. The question whether the amount is a deposit (earnest) or a part payment cannot be determined by the presence or absence of a forfeiture clause. Whether the sum in question is a deposit to ensure due performance of the contract or not is not dependent on the phraseology adopted by the parties or by the presence or otherwise of a forfeiture clause. The proportion the amount bears to the total sale price, the need to take a deposit intended to act in terrorem, the nature of the contract and other circumstances which cannot be exhaustively listed have to be taken into account in ascertaining the true nature of the amount. In essence the question is one of proper interpretation of the terms of a contract. The forfeiture under Rule 9(5) of the SARFAESI Rules is also taking place pursuant to the terms conditions of a public auction, it is not needed to dwell any further on the decision of Kailash Nath [ 2015 (1) TMI 1377 - SUPREME COURT] and leave it at that. Suffice to say, in view of the above discussion, Section(s) 73 and 74 of the 1872 Act will have no application whatsoever, when it comes to forfeiture of the earnest-money deposit under Rule 9 sub-rule (5) of the SARFAESI Rules. Law on the principle of Reading-Down a provision - HELD THAT:- The principle of reading down a provision refers to a legal interpretation approach where a court, while examining the validity of a statute, attempts to give a narrowed or restricted meaning to a particular provision in order to uphold its constitutionality. This principle is rooted in the idea that courts should make every effort to preserve the validity of legislation and should only declare a law invalid as a last resort - When a court encounters a provision that, if interpreted according to its plain and literal meaning, might lead to constitutional or legal issues, the court may opt to read down the provision. Reading down involves construing the language of the provision in a manner that limits its scope or application, making it consistent with constitutional or legal principles. In B.R. Enterprises v. State of U.P. Ors. [ 1999 (5) TMI 498 - SUPREME COURT] , this Court observed that the principles such as Reading Down emerge from the concern of the courts towards salvaging a legislation to ensure that its intended objectives are achieved. Thus, the principle of Reading Down a provision emanates from a very well settled canon of law, that is, the courts while examining the validity of a particular statute should always endeavour towards upholding its validity, and striking down a legislation should always be the last resort. Reading Down a provision is one of the many methods, the court may turn to when it finds that a particular provision if for its plain meaning cannot be saved from invalidation and so by restricting or reading it down, the court makes it workable so as to salvage and save the provision from invalidation. Rule of Reading Down is only for the limited purpose of making a provision workable and its objective achievable - The High Court in its Impugned Order resorted to reading down Rule 9(5) of the SARFAESI Rules not because its plain meaning would result in the provision being rendered invalid or unworkable or the statute s objective being defeated, but because it would result in the same harsh consequence of forfeiture of the entire earnest-money deposit irrespective of the extent of default in payment of balance amount. Thus, the High Court committed an egregious error by proceeding to read down Rule 9(5) of the SARFAESI Rules in the absence of the said provision being otherwise invalid or unworkable in terms of its plain and ordinary meaning without appreciating the purpose and object of the said provision. Whether, the forfeiture of the entire earnest-money deposit amounts to Unjust Enrichment? - HELD THAT:- The concept of Unjust Enrichment is a by-product of the doctrine of equity and it is an equally well settled cannon of law that equity always follows the law. In other words, equity cannot supplant the law, equity has to follow the law if the law is clear and unambiguous - The consequence of forfeiture of 25% of the deposit under Rule 9(5) of the SARFAESI Rules is a legal consequence that has been statutorily provided in the event of default in payment of the balance amount. The consequence envisaged under Rule 9(5) follows irrespective of whether a subsequent sale takes place at a higher price or not, and this forfeiture is not subject to any recovery already made or to the extent of the debt owed. In such cases, no extent of equity can either substitute or dilute the statutory consequence of forfeiture of 25% of deposit under Rule 9(5) of the SARFAESI Rules. This Court in National Spot Exchange Ltd. v. Anil Kohli, Resolution Professional for Dunar Foods Ltd. [ 2021 (9) TMI 1156 - SUPREME COURT] after referring to a catena of its other judgments, had held that where the law is clear the consequence thereof must follow. The High Court has no option but to implement the law. Thus, the High Court erred in law by holding that forfeiture of the entire deposit under Rule 9 sub-rule (5) of the SARFAESI Rules by the appellant bank after having already recovered its dues from the subsequent sale amounts to unjust enrichment. Whether Any Exceptional Circumstances exist to set aside the forfeiture of the earnest money deposit? - HELD THAT:- This Court in its decision in ALISHA KHAN VERSUS INDIAN BANK (ALLAHABAD BANK) ORS [ 2021 (12) TMI 1483 - SUPREME COURT] had directed the refund of the earnest-money deposit after forfeiture to the successful auction purchaser who was unable to pay the balance amount on account of the Pandemic. In C. Natarajan [ 2023 (4) TMI 1232 - SUPREME COURT] , this Court while affirming the decision of Alisha Khan (supra) observed that after the earnest-money deposit is forfeited, the courts should ordinarily refrain from interfering unless the existence of very rare and exceptional circumstances are shown. In the case at hand, it is the respondent s case that he was unable to make the balance payment owing to the advent of the demonetisation. The same led to a delay in raising the necessary finance. It has been pleaded by the respondent that the appellant bank failed to provide certain documents to him in time as a result of which he was not able to secure a term loan - However, the aforesaid by no stretch can be said to be an exceptional circumstance warranting judicial interference. We say so because demonetization had occurred much before the e-auction was conducted by the appellant bank. As regards the requisition of documents, the sale was confirmed on 07.12.2016, and the respondent first requested for the documents only on 20.12.2016, and the said documents were provided to him by the appellant within a month s time i.e., on 21.01.2017. It may also not be out of place to mention that the respondent was granted an extension of 90-days time period to make the balance payment, and was specifically reminded that no further extension would be granted, in-spite of this the respondent failed to make the balance payment. Thus, the High Court committed an egregious error in passing the impugned judgment and order. There are no other option but to set aside the impugned judgment and order passed by the High Court. The appeals filed by the bank succeed and are hereby allowed.
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