Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 1, 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
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Refund of the amount of tax deposited by him on the cancelled (old) registration - inadvertent / bona fide error - The court concludes that the petitioner is entitled to the refund of tax mistakenly deposited under the cancelled registration number. It sets aside the orders rejecting the refund claim and directs the refund along with permissible interest within a specified timeframe.
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Condonation of delay in filing appeal before the appellate authority - Delay of 73 days - The High court dismissed the writ petition, finding it devoid of merit. It affirmed the exclusivity of the limitation provisions outlined in Section 107 of the GST Act and emphasized the importance of adhering to statutory timelines in tax-related matters.
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Classification of service - provision of service including supply of material amounting to transfer of property in goods - The Authority determined that the specific services provided do not fit within the more narrowly defined categories of SAC 998621 ('Support Services') or SAC 9983, as claimed by the Appellant. - The Appellate Authority (AAAR) upheld the AAR's classification to the extent mentioned and modified the ruling concerning the applicable tax rate. The appeal was disposed of accordingly, affirming the classification under SAC 9954 and applying an 18% GST rate to the services provided under the EPC contract.
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Scope of Advance Ruling application - classification of product Keer Kokil - The AAR had classified "Keer Kokil" as 'unmanufactured tobacco' under CTH 24012090, attracting GST @ 28% and Compensation Cess @71%. - The AAAR found that the appeal filed by CGST, Udaipur against the letter dated 11.07.2023 issued by AAR, Rajasthan was not maintainable as it was filed against a decision under Section 104 of the CGST Act, 2017, which is outside the purview of AAAR's domain.
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Scope of Advance Ruling - The appellant sought clarification on the classification of the service recipient, Jaipur Vidyut Vitran Nigam Limited (JVVNL), as a "Government Entity" and the applicability of tax exemption provisions. However, the appellate authority (AAAR) upheld the decision of the Authority for Advance Ruling, Rajasthan, which declined to give a ruling based on the completion of the supply and timing of the application.
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Classification and rate of GST - parts of fuel injection pumps - Application of General Rules for Interpretation (GRI), along with the Customs Tariff Act and HSN explanatory notes - The AAR ruled that all the mentioned parts of fuel injection pumps are classifiable under HSN 84139190. - The AAR determined that the parts of fuel injection pumps are not specifically covered under any entry prescribing a 28% GST rate. Therefore, they fall under the residuary entry SI. No. 453 of Schedule III of the IGST Goods Rate Notification, attracting an 18% GST rate.
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Availment of ITC of differential IGST paid post on-site audit by Customs authorities - To be treated as voluntary paid or not - The AAR ruled that the differential IGST paid by the applicant does not qualify for ITC under Section 17(5) of the CGST/TNGST Act, 2017. The authority found that the case involved willful misstatement by the applicant to evade tax, discovered during an audit. It was determined that since the differential IGST paid was in connection with an audit finding of willful misstatement or suppression of facts, it fell under the restrictions of Section 17(5), which denies ITC in cases where tax has been paid in accordance with the provisions of sections 74, 129, and 130.
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Appropriate classification of the product ‘Clear Bloat Glass’, which is imported and traded by the Applicant - The AAR emphasized that the tin layer in float glass was incidental to the manufacturing process and did not serve the intended purpose of providing an additional layer with specific properties. - Chapter notes are crucial for understanding the scope and classification criteria for different types of glass products - the AAR ruled that the appropriate classification for 'Clear Float Glass' is under the tariff sub-heading 7005 29 as 'Others.' Furthermore, it specified that at the eight-digit level, tinted variations would be classifiable under CTH 7005 2910, and non-tinted variations under CTH 7005 2990 of the Customs Tariff Act, 1975.
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Classification of the services - bio-mining and waste remediation services - The AAR ruled that the services were classified under SAC 9994, which encompasses sewage and waste collection, treatment, disposal, and other environmental protection services, attracting a GST rate of 18%. - The services provided were considered "pure services" to a local authority (Tumakuru City Corporation) related to functions entrusted to a Municipality under Article 243W of the Constitution. Therefore, these services were exempt from GST.
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Classification of supply - supply of service or not - activity of supply of food by the Applicant - Tariff/Service code - restaurant service or Outdoor Catering Service? - The AAR ruled that the proposed activity of supply of food by the Applicant falls under 'other contract food service' under SAC 996337, attracting 18% GST, as per Notification No. 11/2017-CT(Rate) dated 28.06.2017 amended by Notification No. 20/2019-CT(Rate) dated 30.09.2019.
Income Tax
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Application u/s 197 for issuance of a Lower Deduction of Tax Certificate - The High Court observed that, a plain reading of Rule 28-AA makes it clear that the 'satisfaction' needs to be recorded/determined by A.O. after taking into consideration the four factors mentioned in sub-rule (2) of Rule 28-AA. Thus, it is not the subjective satisfaction of A.O., but an objective satisfaction which must be based on Clauses (i), (ii), (iii) and (iv) of sub-rule (2) of Rule 28-AA. - Since impugned orders are passed in clear violation of Rule 28-AA, the High Court held that decision making process adopted by the respondents runs contrary to the requirement of law, i.e. Rule 28-AA. - Matter restored back for readjudication.
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Validity of reassessment order - Notice sent on wrong (old) E-mail ID - The petitioner company had two email addresses, one used until 2019 and another operational since then. - The notice under Section 148A (b) was sent to the old email address, despite the petitioner's consistent use of the new email address since 2020. - The High Court held that the notice issued under Section 148A(b) to the incorrect email address was invalid, thereby rendering subsequent proceedings void. The court quashed the order passed by the Assessing Authority and the consequential notices for reassessment.
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Bad Debts - Loans advanced to the Group Company utilized for purchase of properties and shares - The High court holds that it's not necessary for the assessee to establish that the debt went bad during the relevant previous year. If the assessee can demonstrate a bona fide belief that the debt had become bad and is written off accordingly, the claim should be allowed. - The High court concurs with the ITAT's finding that the nature and quality of the transaction, not just how it's recorded in the books, are crucial in determining its character. The fact that the transaction was recorded as a loan in the books does not negate its potential qualification as a bad debt.
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TDS u/s 194I or 194C - storage charges paid by assessee - TDS @ 20% - The ITAT concluded that assessee is liable to deduct Tax at Source u/s 194C - The High court determined that the storage tanks in question did not qualify as land or building under Section 194I of the Act. It concluded that the payments made by the assessee were not subject to tax deduction at source under Section 194I. - The court upheld the decision of the ITAT, disposing of the appeals in favor of the assessee.
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Addition u/s 68 - unexplained cash credit - Onus to prove - The High court noted that the assessee had provided sufficient evidence, including bank statements, cash-flow statements, and other relevant documents, to support their claim regarding the source of cash deposits and capital introduced in the partnership firm. - It was observed that the Assessing Officer did not provide any adverse findings or reasoning to rebut the evidence submitted by the assessee. The court emphasized that evidence cannot be disregarded based on mere surmise and conjecture. - The court allowed the appeal of the assessee and ordered the deletion of the addition.
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Unexplained cash credits u/s 68 - Interest expenditure debited as interest on securities - allegation of involvement in multi crore securities transactions scam of nineties infamously known as Harshad Mehta Scam, Assessee got labelled as party under the Special Court's (TORTS) Act, 1992 - The ITAT examined each addition separately, considering the evidence and explanations provided by the assessee. It concluded that the additions were not justified due to satisfactory explanations and evidence presented by the assessee. - The High Court dismissed the appeal, finding no merit in the revenue's contentions.
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Non following Procedure laid down u/s 144C - Action of the AO/NeAC not proposing all the variation in the Draft Assessment Order - The Tribunal agrees with the appellant's argument that the AO/NeAC's actions were procedurally flawed, as they proposed additions in the final order without including them in the Draft Assessment Order, thus denying the appellant the opportunity to file objections before the Dispute Resolution Panel. - The ITAT allows the appeal of the assessee, highlighting the procedural irregularities and jurisdictional flaws in the assessment process.
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TP Adjustment - interest charged on foreign currency loan - The Tribunal ruled in favor of the Assessee, finding that the interest charged on the loan to its Associated Enterprise was at an arm's length rate. As a result, the appeal of the Assessee was allowed, and the addition sustained by the CIT(A) was directed to be deleted.
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Addition based on entries appearing in a diary seized from the assessee - Penalty proceedings u/s. 269SS, 269T and 271AAB - The CIT(A) held that the AO's findings were not sustainable as they lacked material evidence and reasoning. The CIT(A) noted that the transactions in the seized diary were related to the partnership firms' projects, and the assessee was maintaining accounts for the partners of these firms. The CIT(A) also considered the disclosure made by the partnership firms while deciding the penalty. - The ITAT dismissed the appeal filed by the Revenue, affirming the CIT(A)'s order.
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Revision u/s 263 - The ITAT observed that there was no evidence of lack of enquiry by the Assessing Officer regarding the claim of deduction under Section 57. The case was opened for limited scrutiny, and the assessee had responded to queries during assessment proceedings. - The tribunal held that the PCIT erred in holding the assessment order as erroneous and prejudicial to the interest of the revenue. Revision order quashed.
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Scope of Limited Scrutiny - Accrual of income - Addition towards advance fees and deposits from old students - AO attempt to convert limited scrutiny into complete scrutiny - ITAT found that CIT(A) had elaborately dealt with the issues in dispute and had granted relief to the assessee both on legal issue as well as on merits. As per the scheme of the Act, AO if he desires to convert limited scrutiny into complete scrutiny, he has to obtain prior permission from the competent authority to do so and only then could assume jurisdiction to examine other issues. - Consequently, revenue appeal dismissed.
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Addition u/s 68 - unexplained cash credit - capital contribution in cash by the partners - While deleting the additions, the Tribunal held that, if the Ld. AO was not convinced with the source of amounts deposited by the partners, then such addition could have been made in the hands of such partners by invoking the relevant provisions of law but no addition was called for in the case of assessee firm, who have discharged its primary onus u/s 68 by providing the details of the partners from whom such funds were received.
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Condonation of delay in filing the appeal - delay of 326 days - sufficient cause - After considering the arguments and perusing the materials, the Tribunal found that the delay was attributable to the actions of the former Tax Consultant and accepted the reasons provided by the assessee as sufficient cause for the delay. The Tribunal cited precedents emphasizing the need to decide appeals on merits rather than dismissing them on technical grounds unless there is gross negligence or mala fide intention.
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Non-prosecution of appeal by assessee - Undisclosed investment - as alleged assessee could not prove identity, genuineness of the transaction and creditworthiness of the parties - The appeals filed by the assessee were dismissed by the tribunal due to non-appearance, lack of cooperation, and failure to provide necessary documentation.
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Addition on the account of Section 24 v/s business head u/s 37 - interest paid on housing loan - The ITAT upheld the CIT(A)'s decision, stating that if the interest is paid on capital borrowed for the purpose of business, it should be allowed as a deduction under the business head, and not under income from house property.
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Addition u/s 69 - repayments of loan/creditor - The ITAT held that the loans were duly recorded in the books of accounts and repayments were made through banking channels. The transactions were reflected in the books and thus, the addition under Section 69 was deleted.
Customs
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Grant of Advance Authorisation - export of goods - Fulfilment of Export Obligation or not - The High court examined the redemption letter dated 18.11.2020, which unequivocally states that the export obligations were met in full value and quantity by the petitioner. This evidence is crucial in determining the petitioner's compliance with the scheme requirements. - The court quashed the impugned order and remanded the matter to the 1st respondent for reconsideration
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Recovery of Duty drawback - period for realization of export proceeds - The High court acknowledges the prima facie evidence provided by the petitioner, indicating realization of export proceeds. - Despite the delay in filing the writ petition, the court deems it appropriate to provide an opportunity for reconsideration based on the presented evidence. - The court quashes the impugned order and remands the matter for re-consideration, allowing the petitioner to submit relevant documents regarding the realization of export proceeds.
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Seeking pre-arrest bail -The court dismissed the application for anticipatory bail, emphasizing that the summons issued under Section 108 of the Customs Act were for recording the petitioner's statement in the inquiry. The court clarified that compliance with such summons does not equate to a well-founded apprehension of arrest, as per precedents set by the Supreme Court. The court underscored the principle that the issuance of summons for inquiry under the Customs Act does not necessarily indicate an imminent arrest, thus, not qualifying for anticipatory bail under Section 438 of the CrPC.
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Levy of Social Welfare Surcharge (SWS) on Goods Imported under MEIS Scheme - Benefit of Exemption Notification No. 32/2005-Cus. - benefit of Zero duty SWS - The Tribunal held that since BCD was 'zero' due to exemption, the SWS calculated at 10% of such 'zero' BCD should also be 'zero'. The Tribunal relied on Section 110(3) of the Finance Act, 2018 and Circular No. 3/2022-Customs dated 01.02.2022, clarifying that SWS is 'Nil' where the aggregate of customs duties is zero. The appeals were allowed in favor of the appellants.
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Denial the benefit of the exemption notification no. 45/2017-Cus and 46/2017-Cus - Re-importation of the goods - The appellant exported goods to Thailand but faced rejection due to quality issues - switch over to the benefit of another Notification No. 158/95-Cus - The Tribunal directed the matter to be reconsidered, allowing the possibility of applying alternative beneficial notifications if applicable. While acknowledging the breach of Notification 158/95-Cus and the consequent liability for duties and penalties, the CESTAT emphasized that if another beneficial notification was available and applicable to the appellant, they could legitimately claim its benefits.
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Liability of Custodian to pay demand duty - Goods lost from the custody of the custodian, CONCOR - CONCOR, as the custodian, was held liable for the duty on the pilfered goods, reinforcing the doctrine that the custodian is responsible for the safekeeping of goods until cleared and that liability for duty on pilfered goods lies with the custodian.
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Classification of imported goods - rods or wires - Polycab-wires - Extended Period of limitation - Levy of penalty - The tribunal held that there was no suppression of any kind and in these circumstances, the invocation of a longer period of limitation cannot be justified. The notice is clearly barred by limitation.
Indian Laws
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Dishonour of Cheque - non-application of mind - The High Court highlighted the presumption in favor of the complainant under Section 139 of the N.I. Act and affirmed the accused's right to contest the matter by presenting a plausible defense - It concluded that the magistrate erred in rejecting the application solely on the grounds of vagueness, as the disclosed defenses were sufficient to warrant cross-examination. The Court emphasized the magistrate's duty to ascertain whether the defense presented by the accused is probable and not merely a "moonshine defense."
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Wrongful representation of poor landless slum dwellers - The High court found that these petitioners, by virtue of their economic status, property ownership, and commercial activities, do not qualify as slum dwellers under the legal or common-sense definition of the term. They illegally occupied government land for commercial gain, which does not entitle them to protections designed for actual slum residents facing poverty and substandard living conditions.
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Dishonour of Cheque - Liability of a Director - principles of vicarious liability - petitioner had already resigned on 15.03.2014 as Director of the Company and was neither signatory of the cheques, nor Managing Director of the Company - Section 141 of NI Act - The court scrutinized the timing and validity of a clarificatory certificate issued by a Chartered Accountant regarding the petitioner's status as a non-executive director, highlighting its submission subsequent to the initiation of legal proceedings. Ultimately, the court dismissed the petitions, imposing costs on the petitioner.
IBC
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Condonation of delay in filing the Appeal - The Tribunal observed that their jurisdiction to condone the delay was limited to 15 days after the expiry of the limitation under Section 61(2) proviso. As the certified copy was applied for on 23rd November, 2023, well beyond the permissible period, the Tribunal concluded that no benefit under Section 12 of the Limitation Act could be allowed. Therefore, the delay condonation application was dismissed, and the Memo of Appeal was rejected.
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Initiation of CIRP - time limitation - personal guarantors - It is submitted that Adjudicating Authority cannot be used as a Forum to recover a time barred debt - The Tribunal determined that the issue of limitation should be considered at the stage of Section 100 of the IBC, not at the appointment stage of the RP under Section 97. - The Tribunal found that the RP, in recommending for approval or rejection of the application, is not precluded from giving a recommendation based on the materials on record, including on the question of whether the debt is time-barred. - The Tribunal dismissed the appeals, holding that there was no error in the NCLT's order appointing the RP for the insolvency resolution process against the personal guarantors.
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Initiation of CIRP - liability of Guarantor of loan - acknowledgment of debt by the Principal Borrower shall be binding on the Guarantor or not - The Tribunal found no merit in the argument that the petition was barred by limitation, given the continuous acknowledgment of the debt by the Principal Borrower and the Corporate Guarantor. - The Tribunal concluded that the liability of the Guarantor is co-extensive with that of the Principal Borrower, and acknowledgments of debt by the Principal Borrower extended the limitation period for actions against the Corporate Guarantor as well.
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Improper handling of Resolution Plan - Respondent No.1 alleges that the Resolution Professional (RP) violated the process by opening a sealed cover containing the plan without the presence of the Committee of Creditors (CoC) and Principal Resolution Applicants (PRAs). - The RP admitted to opening the cover due to the unavailability of the password provided by the Respondent No.1, which the Authority found unsatisfactory and constituting a breach of due process. - the Appellant submits that the application which was filed by the Respondent No.1 was allowed without issuing any notice to any of the Resolution Applicants and only Resolution Professional was heard. - The NCLAT directed the RP to call for fresh bids from all PRAs, emphasizing the need for compliance with legal procedures in handling Resolution Plans.
Service Tax
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Classification of service - development of a market at Biocholim and Ponda for the Goa State Urban Development Agency - works contract service or not - The CESTAT noted the absence of any finding by the Commissioner that the construction was primarily for commerce or industry, leading to the conclusion that the demand under section 65(105)(zzzza) of the Finance Act cannot be sustained.
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Recovery of service tax with interest and penalty - entitlement to the benefit of the VCES Scheme -Despite directions from the Commissioner (Appeals) to produce necessary documents, the appellant failed to comply, which undermined their case. - The tribunal observed that the burden of proof is on the appellant to substantiate their claims, particularly regarding VCES compliance, exemption under the threshold limit, and classification of services. - Despite the appellant's non-compliance, the court, in the interest of justice, grants another opportunity for the appellant to produce relevant documents in support of their submissions.
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The Tribunal examines whether the services provided by the OLSPs to the Appellant fall under the category of "Business Auxiliary Service" as defined in the Finance Act, 1994. It concludes that since the OLSPs are not acting as agents of the Appellant, the services provided by them cannot be taxed under the specified category. - The CESTAT finds that the Show Cause Notice lacks specificity regarding the sub-clause of Section 65(19) under which the demand is raised. It rules that such a defect in the notice cannot be rectified by observations made by the adjudicating authority.
Central Excise
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CENVAT Credit - duty paying documents - The Tribunal concludes that the Assessee's claim for CENVAT Credit is not valid, as the inputs claimed to have been purchased were found to be fraudulent, and upholds the Commissioner's order confirming the demand against the Assessee.
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CENVAT Credit - input services - The CESTAT finds that the refilling activity does constitute manufacturing, as affirmed by the Original Authority. - The Tribunal also finds that the input services availed, particularly inward and outward transportation, are essential for the manufacturing process, as established in a recent case precedent. - Credit allowed.
VAT
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Rectification of mistake - Refusal to exercise the jurisdiction under Section 31 of the U.P. V.A.T. Act, 2008 - Section 31 of the U.P. V.A.T. Act, 2008, does not impose any restrictions on the Tribunal's power to rectify mistakes, and it empowers various entities to rectify mistakes apparent on the face of the record. - The High Court finds that the Tribunal erred in law by rejecting the application solely based on the absence of an ex-parte order, as no such restriction exists in Section 31 of the Act.
Case Laws:
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GST
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2024 (2) TMI 1369
Maintainability of petition - High Court held that Since the petitioner has a forum of appeal available before the CESTAT, the present writ petition is rejected, reserving the right of the petitioner to avail the remedy of appeal - HELD THAT:- There are no reason to interfere with the impugned judgment passed by the High Court. Hence, the Special Leave Petition is dismissed.
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2024 (2) TMI 1368
Maintainability of appeal - time limitation - Since the Tribunal under Section 112 of the CGST Act, before whom an Appeal would lie against the said Order, has not been constituted, the Petitioner has filed the present Petition - HELD THAT:- The contents of the letter dated 9th September 2022 clearly show that the Petitioner had not received the Order dated 31st March 2022 on 4th April 2022 or on any other date prior to 9th September 2022. By the said letter dated 9th September 2022, the Petitioner has clearly recorded that, despite the earlier Order dated 14th March 2022 of this Court directing the Respondents to decide the issue of cancellation of CGST registration of the Petitioner within four weeks from the date of appearance, and despite the Petitioner appearing on 22nd March 2022, even after a lapse of more than five months, the directions of this Court had not been obeyed and an Order had not been passed - the contents of this letter clearly show that the Petitioner had not received the said Order dated 31st March 2022 by e-mail on 4th April 2022, as contended by the Respondents. It is an admitted position that the Petitioner had filed the Appeal on 20th December 2022. Since, the Petitioner had filed the Appeal within a period of three months from the date of communication of the said Order on 20th September 2022, by virtue of the provisions of Section 107(1) of the CGST Act, the Appeal filed by the Petitioner is within limitation. The impugned Order dated 25th October 2023, which holds that the Appeal of the Petitioner is barred by limitation, will have to be set aside, and Respondent No. 2 will have to be directed to decide the Appeal of the Petitioner on merits - Petitioner s Appeal is restored.
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2024 (2) TMI 1367
Seizure of cash by respondent no. 2 from the residential premises and office of the petitioner - HELD THAT:- Reference may be had to the judgment of this Court in M/S K.M. FOOD INFRASTRUCTURE PVT LTD THROUGH ITS DIRECTOR MUKESH KAPOOR AND MUKESH KAPOOR AND OTHERS VERSUS THE DIRECTOR GENERAL DGGI HEADQUARTERS, NEW DELHI ANR. [ 2024 (2) TMI 762 - DELHI HIGH COURT] wherein in similar circumstances this Court while interpreting provision of Section 67 of the Central Goods and Services Tax Act 2017 has held that cash is clearly excluded from the definition of the term goods and would fall with the definition of money as defined in Section 2 (75) of the Act. This Court has further held that since cash is not goods, it could not have been seized under the provision of the Act, as seizure is limited to the goods liable for confiscation. The ratio of the said judgment squarely applied to the facts of the present case. Accordingly, there is no justification for resumption of cash and its continued retention by the respondents. Accordingly, the petition is allowed and respondents are directed to forfeit/remit the said cash seized from the premises of the petitioner to the petitioner along with interest.
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2024 (2) TMI 1366
Validity of summons, intimation or SCN - GST liability under applicable GST laws either in respect of only seigniorage fee or both seigniorage fee and mining lease amounts paid by the respective petitioner to the Government - HELD THAT:- The Division Bench Judgment in a batch of cases where the lead case is TVL. A. VENKATACHALAM VERSUS THE ASSISTANT COMMISSIONER (ST) [ 2024 (2) TMI 488 - MADRAS HIGH COURT] where it was held that Upon receipt of the objections / representations from the writ petitioners, the authority concerned shall proceed with the adjudication, on merits and in accordance with law, after affording reasonable opportunity of being heard to the petitioners. However, the orders of adjudication shall be kept in abeyance until the Nine Judge Constitution Bench decides the issue as to the nature of royalty. In view of the said judgment, these petitions are liable to be disposed of on the same terms insofar as it relates to either the issue of seigniorage fee or mining lease. Consequently, in all these cases, the respective petitioner is permitted to submit his reply to the intimation, summons or show cause notice, as the case may be, within a maximum period of four weeks from the date of receipt of a copy of this order.
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2024 (2) TMI 1365
Levy of penalty u/s 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - expired e-way bill - HELD THAT:- This Court is unable to agree with the findings of the authorities, and accordingly, the impugned orders dated December 11, 2017 and December 22, 2018 are quashed and set aside. 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 - writ petition allowed.
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2024 (2) TMI 1364
Cancellation of GST registration of the petitioner with retrospective effect - no material on record to show as to why the registration is sought to be cancelled retrospectively - violation of principles of natural justice - HELD THAT:- In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. It is clear that both the petitioner and the respondent want the GST registration to be cancelled, though for different reasons. The order of cancellation is modified to the extent that the same shall operate with effect from 11.03.2022, i.e., the date of the application for cancellation of registration - Petition disposed off.
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2024 (2) TMI 1363
Cancellation of GST registration of the petitioner with retrospective effect - SCN does not give any reasons for cancellation of the registration - HELD THAT:- In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. The order of cancellation is modified to the extent that the same shall operate with effect from 26.11.2020, i.e., the date of the application for cancellation of registration - Petition disposed off.
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2024 (2) TMI 1362
Cancellation of GST registration of the petitioner with retrospective effect - notice does not specify any cogent reason - violation of principles of natural justice - HELD THAT:- In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period - the SCN and the impugned order are also bereft of any details and further there is no reasoning in the said show cause notice and in the impugned order as to why the cancellation has been done retrospectively. The impugned show cause notice dated 07.09.2022, order of cancellation dated 01.05.2023 are accordingly set aside - Petition allowed.
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2024 (2) TMI 1361
Refund of the amount of tax deposited by him on the cancelled (old) registration - inadvertent / bona fide error on the part of the Petitioner s Chartered Accountant in filing the returns and depositing tax under a cancelled registration number - HELD THAT:- It was required to be considered by the authorities below that an assessee cannot be expected to file his return and deposit any tax under an invalid cancelled registration number. Further, a legitimate and proper return was filed by the Petitioner under the second (new) registration which was a valid registration. Thus, insofar as the tax deposited under the first (cancelled) registration is concerned, the said registration itself being non-existent, the tax return filed thereunder and any tax deposited under such return, could not have been retained by the respondents as it was not a deposit as per law, it also cannot be a deposit received or any collection of tax under authority of law. Insofar as the second registration return is concerned, the same was appropriately filed and similar amount of Rs. 1,22,220/- was deposited. In these circumstances, it was not correct for the original authority to furnish the reasons, as noted, so as to deny the refund claim of the Petitioner. Further, the appellate authority on a purely technical reason that the Petitioner s appeal was barred by limitation under Sections 107 (1) and (4) rejected the Petitioner s appeal. It is observed that, in such circumstances, any deficiency in filing the appeal / application like failure to file physical documents, cannot make the appeal, which was registered on the online portal within the prescribed period of limitation, to be labelled and/or held to be barred by limitation. Once the appeal was filed (albeit under the Online method) within the prescribed limitation, any deficiency in the appeal certainly could be removed later on, as the law does not provide, that the proceeding be strictly filed sans deficiency, and only then, the proceedings would be held to be validly filed. If such proposition is to be recognized as the correct position, it would not only tantamount to a patent absurdity, but also would result in a gross injustice, prejudicially affecting the legitimate rights of persons to a legal remedy (access to justice). Impugned order dated 8th June 2022, as confirmed by the order dated 27th February 2023 passed by the Assistant Commissioner, CGST and Central Excise, Division-I, Navi Mumbai, Commissionerate are quashed and set aside - Petitioner is entitled to refund of the amounts which was deposited by him under the erroneous return filed under the cancelled registration No. 27AQEPM6029PIZA being an amount of Rs. 1,22,220/- - petition allowed.
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2024 (2) TMI 1360
Violation of principles of natural justice - no opportunity of personal hearing was granted to the petitioner - case of petitioner is that in spite of seeking the Special Investigation Branch Report (SIB report), no SIB report was provided to the petitioner - HELD THAT:- The impugned orders are liable to be quashed and set aside. This Court issues a writ of certiorari quashing the orders dated December 16, 2021 and November 8, 2023 with a direction upon the officer concerned to provide a copy of the SIB report to the petitioner within three weeks from date and subsequent to providing the SIB report, opportunity of hearing must be afforded to the petitioner before passing final order under Section 74 of the Act - the writ petition is allowed.
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2024 (2) TMI 1359
Condonation of delay in filing appeal - appeal dismissed on the ground of limitation, as the same was filed approximately 73 days beyond the date of limitation - HELD THAT:- Section 107 of the GST Act prescribes a specific limitation period within which appeals against certain decisions must be filed. This limitation period is integral to the functioning of the appellate mechanism under the GST Act and reflects the legislative intent to expedite the resolution of tax disputes. By imposing a time limit on the filling of appeals, Section 107 aims to prevent undue delayed in the adjudication process and promote the efficient administration of the GST regime. On the other hand, Section 5 of the Limitation Act provides for the extension of prescribed periods in certain exceptional circumstances, such as when sufficient cause is shown for the delay. In analyzing the conflicting interpretations concerning the exclusion of Section 5 of the Limitation Act as far as Section 107 of the GST Act is concerned, it is essential to consider the rationale behind the exclusion of the Limitation Act in certain special statues, particularly in the context of taxation. Tax laws are often characterized by strict procedural requirements and time-bound deadlines, reflecting the need for expeditious resolution of tax disputes to ensure revenue certainty and fiscal stability. The judgment rendered by the Calcutta High Court in the matter of S.K. Chakraborty Sons [ 2023 (12) TMI 290 - CALCUTTA HIGH COURT ] fails to adequately consider the authoritative pronouncements of the Supreme Court in the cases of Singh Enterprises [ 2007 (12) TMI 11 - SUPREME COURT ] and Hongo India [ 2009 (3) TMI 31 - SUPREME COURT ] and hence the said judgment is of no precedented value, and accordingly, the view expressed therein is not accepted by this Court. Taxing statutes like the GST Act embody a comprehensive framework with specific limitation provisions tailored to expedite the resolution of tax-related matters. Section 107 of the GST Act, operates as a complete code in itself, explicitly delineating limitation periods for filing appeals and implicitly excluding the application of general limitation provisions such as Section 5 of the Limitation Act. The present writ petition is without any merit and is dismissed.
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2024 (2) TMI 1358
Maintainability of appeal - time limitation - whether the appeal has been filed within stipulated period (i.e. thirty days from the date on which the Ruling sought to be appealed against is communicated to the Appellant) prescribed under Section 100 (2) of CGST Act, 2017 or not? - HELD THAT:- The date of communication of the Order of AAR, Rajasthan to the Appellant was 21.09.2021 and the appeal was filed on the portal on 19.10.2021 - the Appellant have filed the appeal within statutory period of 30 days of date of communication of the Order of AAR. Classification of service - provision of service including supply of material amounting to transfer of property in goods - whether the activities undertaken are/were classifiable either under SAC Heading No. 9986 eligible for rate of tax prescribed vide entry serial number 24(ii) or alternatively under SAC Heading No. 9983 eligible for rate of tax prescribed vide entry serial number 21(ia) of Notification No. 11/2017-CT(R), dated 28.06.2017? - HELD THAT:- The Appellant have not denied the fact that supply of service under the EPC Contract in question also involves transfer of property in goods. The only contention by the Appellant in this regard is that the scope of SAC Heading No. 9986 does not exclude Works Contract Service. As can be seen from the appeal as also from the EPC Contract, the Appellant have been assigned the work related to establishment of infrastructure for the proposed expansion in the production and processing capacity. As mentioned in Para-D1-8 titled General Design Guidance, the new surface facilities shall be designed for design life of 25 years and new well pads are to be connected with an independent fiber optic cable upto existing RGT terminal. The Appellant are obliged by the contract for satisfactory handover of complete RDG Gas Processing Terminal including Non Process Buildings, receiving end substation at RDG Terminal including roads and drains within RDG Terminal, Intra-field Pipeline, irrigation water pipeline and approach roads between well pads to the Company M/s Vedanta Limited, complete with applicable hook-up tie-in with the existing proposed facilities. This provision of the contract makes it amply clear that the Appellant have been assigned the work of establishment of new facilities for natural gas extraction alongside the already existing facilities at the RDG. Since, the Appellant have been tasked with establishment of infrastructure facilities for oil and gas extraction, the activities undertaken by the Appellant in pursuance of the EPC Contract cannot, by any stretch of imagination, be said to be support services to oil and gas extraction. The distinction between the activities undertaken by the Appellant in terms of the EPC contract and the activities included in the definition of SAC Heading No. 998621 is strikingly clear. Therefore, the activities undertaken by the Appellant in pursuance of the EPC Contract cannot be classified under SAC Heading No. 998621 as these are not in the nature of support services to oil and gas extraction. So far as SAC Heading No. 998343 is concerned, the same has a very narrow scope/limited coverage of mineral exploration and evaluation information which is certainly not the activity proposed to be undertaken by the Appellant in pursuance of the instant EPC Contract - SAC Heading No. 998341 covers a wide range of activities which include provision of advice, guidance and operational assistance concerning the location of oil and gas fields including feasibility studies - the Appellant have not proposed to undertake any such activity rather the Appellant have proposed to undertake establishment/ creation/ construction of infrastructure facilities for oil and gas extraction which are quite different and distinct from the advice concerning location of gas fields. SAC Heading No. 9954 of the Scheme of Classification covers the overall construction services with SAC Heading No. 995425 the general construction services of mines and industrial plants. The explanatory notes clarify that the said service code includes construction services for mining and related facilities associated with mining operations. Since, oil and gas exploration is also a form of mining; therefore, the construction services proposed to be supplied by the Appellant for creating gas extraction facility enhancing the existing production capacity are appropriately classifiable under the SAC Heading No. 9954. Entry SI. No. 3(ii) of Notification No. 11/2017-CT (R), dated 28.06.2017 was omitted with effect from 01.04.2019 and, therefore, the supplies proposed to be undertaken by the Appellant could not have been eligible for the rate prescribed therein. However, we observe that up to Notification No. 3/2019-CT (R), dated 29.03.2019, major changes have been made in the said entry under SI. No. 3 of the basic Notification No. 11/2017-CT (R), dated 28.06.2017 to provide for different rates of tax for supplies under the categories of supply of construction services or supply of works contract services - the item (xii) of entry at SI. No. 3 of Notification No. 11/2017- CT (R), dated 28.06.2017, as amended up to Notification No. 3/2019-CT (R), dated 29.03.2019 prescribes Central Tax @ 9% on the supplies proposed to be undertaken in terms of the EPC Contract and therefore, the supplies proposed to be undertaken by the Appellant attract tax at the rate of 18%. The Ruling pronounced by the AAR, therefore, needs to be modified up to that extent. The appeal is disposed of.
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2024 (2) TMI 1357
Scope of Advance Ruling application - classification of product Keer Kokil - tobacco premixed with lime to be classified as unmanufactured tobacco without lime tube falling under Chapter 2401 or not - HELD THAT:- In the instant case, this Authority finds that this appeal has been filed against the decision of the AAR. Rajasthan under Section 104 of the CGST Act, 2017. It is noted that no remedy lies before this authority against this decision. The revenue have also raised contentions against AAR, Rajasthan Ruling dated 01.06.2022. It is noted that no appeal was filed against the AAR Order dated 01.06.2022. The instant petition cannot be treated as an appeal by default; that will be time-barred too. It is noted that the instant appeal is not an appeal under Section 100 against the order passed under Section 98(4) or 98(5) of the CGST Act. 2017. Thus, it is outside the purview of the domain of this Authority. As a statutory authority with a specified statutory role, this authority cannot venture into any other area beyond what is prescribed in law . The instant appeal filed by CGST, Udaipur before AAAR against the letter dated 11.07.2023 issued by AAR - Rajasthan is not maintainable.
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2024 (2) TMI 1356
Scope of Advance Ruling - Service recipient is Government Entity or not - services provided by the Appellant in respect of work order No. TN-483 for Operation and Maintenance of identified 33/11 KV Grid Sub-Stations to Jaipur Vidyut Vitran Nigam Limited - exempt vide serial number 3 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 or not - HELD THAT:- The law covers two kinds of supplies under the purview of the AR mechanism : (i) Supplies being undertaken - meaning thereby supplies which have begun, but not concluded. Once the supply has been concluded, it will cease to be covered by the term being undertaken''; (ii) Proposed to be undertaken - in the instant ease the supplies have already been concluded. Thus, as the name implies, the pronouncement with respect to them shall no longer be in the nature of Advance . As such, these supplies cannot be covered by the Advance Ruling Mechanism. The Authority for Advance Ruling, Rajasthan is right on not pronouncing the Ruling on Merits. Further, the Appellant has contended that they are engaged in such work/supply regularly and wanted to know the taxability of the transaction for future references. In this context, it is found that the impugned Ruling has been sought only for the specific Work Order No TN-483 for Operation and Maintenance of identified 33/11 KV Grid Sub-Stations awarded by Jaipur Vidyut Vitran Nigam Limited to the appellant. Supplies under the work order have been undertaken during the period from 01.11.2019 to 30.04.2021. It is not in dispute that the supply has already been completed. Thus, the question of entertaining any application subsequent to the period for which supply has already been completed, does not arise. The Ruling pronounced by the Authority for Advance Ruling. Rajasthan vide Order dated 01.06.2021 is right and needs no interference at this forum and the same is upheld.
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2024 (2) TMI 1355
Classification and rate of GST - parts of fuel injection pumps supplied by the Applicant - Assy Head Rotor - X Roller Shoe Kit - TP Blade/ Spring Kit (Set of 4 Nos) - TP Liner - Kit Excess Piston - Hyd head Assy for Tata Ace - to be classified under Tariff Heading 84139190? - SI. 117 of Schedule II of IGST Goods Rate Notification on supply of said parts. Whether the said 6 parts of fuel injection pumps fall under the CTH 84139190? - HELD THAT:- These items cannot be placed under CTH 84139110(Parts of pumps - of reciprocating pumps) or CTH 84 139130(Parts of pumps - of other rotary pumps) as they are specific entries and the same could be done only if the Fuel Injection pumps were classified under CTH 841350 (other reciprocating positive displacement pumps) or CTH 841360(other rotary positive displacement pumps). Whereas, it is not the case so and the Fuel Injection pumps for diesel engines are classified correctly under CTH 84133010 and thereby, the said 6 parts of Fuel Injection pumps are correctly classifiable under the residual entry for Tarts of pumps - others - CTH 84139190. Rate of GST to be levied on the said 6 parts of fuel injection pumps - HELD THAT:- Fuel injection pumps for diesel engines are classified under the CTH 84133010. These are covered under Schedule IV of the rate notification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017 attracting a tax of 28% - in the description of goods, the entry covers only the pumps [8413 11 and 8413 30] and not their parts. It is found that this necessitates to place the parts of pumps under correct entry of the rate notification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017. The 'Parts of pumps- others' which remain classified under Heading 8413 9190 will fall under the residuary rate entry i.e., SI. No. 453 of Schedule III (extracted above) which attracts 18% IGST, for the reason that they are not classifiable elsewhere.
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2024 (2) TMI 1354
Availment of ITC of differential IGST paid - Whether the provisions prescribed under the Goods and Services Tax ( GST ) law imposes any restriction on availment of ITC of the differential IGST paid post on-site audit by Customs authorities? - To be treated as voluntary paid or not - HELD THAT:- It could be seen that in respect of both the Sections 73 and 74 meant for demand and recovery, sub-sections (5) and (6) provides the taxpayer with a window for avoidance of show cause notice, provided the taxpayer comes forward to discharge the tax liability cither on the basis of his own ascertainment, or on being ascertained by the proper officer. However, the crucial difference lies in the fact that while Section 73 stipulates payment of tax along with applicable interest, Section 74 on the other hand stipulates that the tax along with applicable interest and a penalty equivalent to fifteen percent of such tax, should be paid, for such avoidance of show cause notice. Further, it could be seen that under the demanding provisions of CGST/TNGST Acts, 2017, except for the provisions of Section 74(5), penalty under fifteen percent could not be found elsewhere under the said legal provisions. In the instant case, the fact that a penalty at 15% has been paid on the tax amount determined by the audit officers, goes to prove that the differential tax has been determined under the provisions of 74(5) of the CGST/TNGST Act, 2017, which in turn involves determination of tax by reason of wifful-misstatement or suppression of facts. That the subject goods have been mis-classified by the applicant initially, points to the fact that the applicant has resorted to willful -misstatement to evade tax, which came to light only when the transaction of the applicant s unit was taken up for audit - it becomes clear that the instant case has to be construed as a case of determination of tax by reason of willful-misstatement to evade tax, in spite of the fact that no show cause notice was issued, or no order was passed in the instant case. Under these circumstances, the differential IGST paid by the applicant docs not become eligible for availment of ITC as laid down under Section 17(5) of the CGST/TNGST Act, 2017. Once the basic issue involving the availment of ITC on the differential tax paid is found to be inadmissible in the instant case, it is opined that the remaining two queries, relating to the time limit prescribed and the documents evidencing payment to be considered as a valid duty paying document, are rendered redundant, as both the queries are in relation to the differential tax paid in the instant case - the law imposes restriction on the availment of ITC under Section 17(5) of the CGST/TNGST Act, 2017, in respect of any tax not paid / short paid in accordance with the provisions of section 74, irrespective of the fact as to whether the proceedings are initiated on the basis of audit or on the basis of an anti-evasion operation, and irrespective of the fact whether a show cause notice is issued in the instant case or not.
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2024 (2) TMI 1353
Appropriate classification of the product Clear Bloat Glass , which is imported and traded by the Applicant - whether the said product is classified under CTH 70052990 or to be classified under the CTH 7005 1090?. Whether the subject goods Float Glass is wired or not wired glass? - HELD THAT:- It is found that no wire mesh is reinforced in the glass during the manufacturing process. Hence the subject goods is Non-wired Glass . Coming to the next part of the description of the chapter heading 7005 10 i.e. absorbent, reflecting or non-reflecting layer, from the above chapter notes, in specific, under 2(c), it is found that what is intended to be classified under the hearing 7005 10 is glass coated with an absorbent, reflecting or non-reflecting layer, ft is made clear, in this notes that the absorbent layer is a microscopically thin coating of metal or metal oxide which has to be applied during the manufacturing process itself to the glass before the process of annealing, so as to not regard the glass as worked upon, as stated in notes 2(a). Whether the layer of tin present in the float glass will satisfy the requirement as an absorbent layer, reflecting or non-reflecting? - HELD THAT:- Beyond the regular process of manufacture of float glass, no additional coating of any layer, as mentioned in the explanatory notes above, which would serve as an absorbent, reflecting or non-reflecting layer is carried out. The argument of the Applicant that tin layer is the absorbent layer, cannot be accepted as tin is not used in float glass process with the specific objective of providing any absorbent, reflecting or non-reflecting layer. It is evident that the presence of tin is by default and on account of manufacturing process and not by design or intended to add a layer with any of the properties such as absorption or reflection or non-reflection. Thus the tin layer is incidental to the manufacturing process of float glass and is not done specifically for an intended purpose/use. The float glass has not undergone any coating process for presence of an absorbent, reflecting or non-reflecting layer and hence cannot be classified under sub-heading 7005 10. Further, as it is also not coloured throughout the mass (body tinted), opacified, flashed or merely surface ground, the item would not be covered under the sub-heading 7005 21. Hence the appropriate classification for clear float glass would be under the tariff sub heading 7005 29 as Others . At the eight digit level, if the item is tinted , it would be classifiable under the CTH 7005 2910 and if the item is non-tinted , it would be classifiable under CTH 7005 2990 of the Customs Tariff Act, 1975. The Applicant is an importer as well as a trader - As a trader, for trading the same goods imported in that particular consignment, the Applicant has to follow the classification approved and assessed by the Customs Authorities for that consignment, for which duty was paid by them agreeing to/accepting the assessment. The question of following a different CTH for trading purposes, for the same goods imported and assessed, does not arise. The appropriate classification for clear float glass is under the tariff sub-heading 7005 29 as Others and at the eight digit level, if the item is tinted , it is be classifiable under the CTH 7005 2910 and if the item is non-tinted , it is be classifiable under CTH 7005 2990 of the Customs Tariff Act, 1975.
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2024 (2) TMI 1352
Classification of the services provided by the applicant - bio-mining and waste remediation services - applicant who are into Solid Waste Management services, has been assigned with the task of Remediation of open dump and reclamation of open dump and reclamation of space at Ajjagondanahalli, Tumakuru - services provided by the applicant are exempted under SI. No. 3 of Notification No. 12/2017 dated 28.07.2017 as amended or not - service recipient i.e., M/s. Tumkur Smart City Corporation is a Governmental Authority as per the definition of Notification No. 12/2017-CT dated 28.06.2017 or not. Classification of the services provided by the applicant - HELD THAT:- 'Site remediation' in the instant case gets covered under Group 99944, and more specifically under SAC 999441, as the applicant is assigned with the task of Remediation of open dump and reclamation of open dump and reclamation of space at Ajjagondanahalli, Tumakuru . However, the objective of the project is not just land reclamation but also bio mining of waste, which involves processing of waste and disposal of the same as well. Therefore, this part of the operation gets covered under Group 99943, and more specifically under SAC 999433, which relates to 'Non-hazardous waste treatment and disposal services'. Accordingly, we are of the opinion that broadly, the entire operation undertaken by the applicant in this case gets covered under SAC heading 9994, attracting 18% GST. Whether services provided by the applicant are exempted under SI. No. 3 of Notification No. 12/2017 dated 28.07.2017 as amended? - HELD THAT:- The service 'Site remediation and bio mining of waste', docs not fall under the category of cither Works Contract', or 'Composite supplies'. Further, as no supply of any goods is involved in the instant case, and as said operation gets carried out by deployment of manpower/labour, it is clear that the service rendered by the applicant qualifies as 'pure services' - By virtue of Government Notification No. HUD 474 MLR 95, dated 10.10.1995, Tumkur was specified as City Municipal Council Area , and vide Notification No. UDD 154 MLR 2013, Bangalore, Dated 20.12.2013, Tumkur was specified as a Larger Urban Area and Tumkur Corporation was established. Accordingly, we find that the city of Tumkur, (now Tumakuru) was already a Municipality which later attained the status as a Municipal Corporation. Tumakuru has also been identified as one among the 100 cities in India to be covered under the 'Smart Cities Mission' launched by the Government of India. Therefore, the Tumakuru City Corporation qualifies as a Local Authority . Whether the activity is a function entrusted to the Municipality under Twelfth Schedule to Article 243W of the Constitution? - HELD THAT:- The services rendered by the applicant in the instant case happens to be 'Pure Services' provided to Tumakuru City Corporation which is a 'Local Authority', by way of any activity in relation to any function entrusted to a Municipality under article 243W of the Constitution. Accordingly, we conclude that the services provided by the applicant to the Tumakuru City Corporation is exempted under SI. No. 3 of Notification 12/2017 dated 28.07.2017, as amended. Whether the service recipient i.e., M/s. Tumkur Smart City Corporation is a Governmental Authority as per the definition of Notification No. 12/2017-CT dated 28.06.2017? - HELD THAT:- In view of the fact that M/s. Tumkur Smart City Limited is neither the service provider, nor the service receiver in the instant case, and that the same is only a special purpose vehicle to facilitate the Parties (the applicant, and M/s. Tumakuru City Corporation) for seamless execution of the project - The question is not covered under Section 97(2) of the CGST/TNGST Act, 2017, in respect of which an applicant can seek advance ruling and hence this authority refrains from giving any ruling in this regard.
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2024 (2) TMI 1351
Classification of supply - supply of service or not - activity of supply of food by the Applicant - Tariff/Service code - restaurant service or Outdoor Catering Service? - HELD THAT:- The activity to be undertaken by the Applicant viz. supply of food and beverages for a consideration is 'supply of service' - the service rendered by the Applicant falls under the Tariff/Service code 996337. Whether the service will not fall under 'Outdoor Catering Service'? - HELD THAT:- The activity undertaken by the Applicant will not fit into the explanation given for 'Outdoor catering'. The restaurant service covers only services provided by restaurant, mess or canteen, thereby, the activity to be undertaken by the Applicant, that providing catering service under a contract to Industries would not be covered under 'restaurant service'. The said activity of the Applicant would not be covered under 'outdoor catering service' as it is not an event based or an occasional service. It will not be covered under 'hotel accommodation' and also not a 'specified premises'. Thus the service to be undertaken by the Applicant does not fall under 7(i) to 7(v) of the description given in the said Notification. Therefore, the catering services of the Applicant under a contract would be falling under entry No. 7(vi), being the residual entry and thereby attract 9% CGST and 9% SGST as per Notification No. 11/2017-State Tax (Rate) dated 30.06.2017.
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Income Tax
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2024 (2) TMI 1370
Application u/s 197 for issuance of a Lower Deduction of Tax Certificate - bone of contention of petitioner is that the petitioner intended to submit an online document dated 1st April, 2023 and said document was not loaded because message was too large - Criticism is founded upon Rule 28-AA of the Income Tax Rules - HELD THAT:- Delhi High Court in the case of Cloudtail India Private Limited [ 2021 (8) TMI 1408 - DELHI HIGH COURT] opined that Rule 28AA is a statutory and mandatory provision. The revenue is under a statutory obligation to act in accordance with the mandate of Rule 28-AA. Even otherwise, this is trite that if a statute prescribes a thing to be done in a particular manner, it has to be done in the same manner and other methods are forbidden. [See : Baru Ram v. Prasanni [ 1958 (9) TMI 85 - SUPREME COURT] , Dhanajaya Reddy v. State of Karnataka [ 2001 (3) TMI 1020 - SUPREME COURT] and judgment of this Court [ 2011 (2) TMI 1628 - MADHYA PRADESH HIGH COURT] Satyanjay Tripathi v. Banarsi Devi]. A plain reading of Rule 28-AA makes it clear that the 'satisfaction' needs to be recorded/determined by A.O. after taking into consideration the four factors mentioned in sub-rule (2) of Rule 28-AA. Thus, it is not the subjective satisfaction of A.O., but an objective satisfaction which must be based on Clauses (i), (ii), (iii) and (iv) of sub-rule (2) of Rule 28-AA. If impugned order Annexure P-5 and more particularly Annexure P-7 is examined, it shows that all those four factors have not been taken into account. Pertinently, the factum of receiving Annexure P-3 and P-8 is not in dispute in the instant case. Since impugned orders are passed in clear violation of Rule 28-AA, we are constrained to hold that decision making process adopted by the respondents runs contrary to the requirement of law, i.e. Rule 28-AA. The scope of judicial review in a writ petition is limited. Ordinarily, the Court is not obliged to examine the correctness of the decision. Instead, the Court is obliged to examine the correctness of the decision making process. At the cost of repetition, in our opinion, the decision making process is faulty and impugned order Annexure P-5 and P-7 are passed without considering the relevant factors ingrained in Clause (i), (ii), (iii) and (iv) of sub-rule (2) of Rule 28-AA. Resultantly, both the impugned orders Annexure P-5 and P-7 are set aside. The matter is remitted back to respondent No. 2, who shall consider the claim of petitioner in accordance with law and pass a fresh detailed/speaking order thereupon within 30 days from the date of communication of this order.
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2024 (2) TMI 1350
Condonation of delay - rejecting the Appellant's appeal for non-removal of office objections - seeking condonation of delay of 286 days in seeking to set aside the self-operating order passed by the Prothonotary Senior Master - As decided by HC [ 2018 (3) TMI 1820 - BOMBAY HIGH COURT] We find that at the time of passing of the order by the Prothonotary Senior Master, the appellants were represented. The affidavits-in-support of the Notices of Motion are bereft of any particulars, in as much as, the basic date of when the Assessing Officer came to know of the dismissal of the Appeals for non-removal of office objections is even not mentioned therein. The Affidavits-in-support is most casual and there is no explanation even attempted to be offered for the delay. 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.
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2024 (2) TMI 1349
Application made u/s 197 - HELD THAT:- In view of the fact that Certificates under Section 197 have already been given, as stated in the Counter Affidavit, we see no reason to interfere with the impugned judgment and order passed by the High Court. However, question of law is kept open. Accordingly, the Special Leave Petitions are dismissed.
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2024 (2) TMI 1348
Validity of Revision u/s 263 - order of the AO is erroneous on the ground of not being in accordance with law - absence of actual business activity - As decided by HC [ 2017 (1) TMI 252 - BOMBAY HIGH COURT] AO has not taken into account the relevant consideration of absence of actual business activity of the appellant for the purpose of treating the expenditure claimed as an allowable expenditure and loss to the revenue on account of the error in the assessment order is directly attributable to the error in the assessment order. HELD THAT:- As submitted at the Bar that pursuant to the exercise of jurisdiction u/s 263 of the Income Tax Act, 1961, fresh assessment order has been passed and the same is also under challenge before the Appellate Tribunal (ITAT). In that view of the matter, we are not inclined to interfere in this case. The special leave petition is, hence, dismissed.
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2024 (2) TMI 1347
TP Adjustment - substantial questions of law raised before the High Court u/s 260-A or not? - substantial quantum of international trade and transactions depends upon the fair and quick judicial dispensation in such cases - Tribunal held that extra credit allowed can be considered as an independent international transaction and the same be compared with the internal CUP being average cost of the total funds available to the assessee, directed the TPO to find out the cost of the total funds available to the assessee and same should be adopted as internal CUP for benchmarking of this independent international transaction i.e. allowing extra credit in addition the agreed credit period of 30 days - As decided by HC [ 2018 (8) TMI 2094 - KARNATAKA HIGH COURT] that in these type of cases, unless an ex-facie perversity in the findings of the learned Income Tax Appellate Tribunal is established by the appellants, the appeal at the instance of an assessee or the Revenue u/s 260-A of the Act is not maintainable HELD THAT:- As stated by Revenue 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 Special Leave Petition is therefore dismissed. However, question of law is kept open. Pending applications, if any, shall stand disposed of.
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2024 (2) TMI 1346
Reopening of assessment u/s 147 - transactions in question were in the nature of partners capital withdrawal - subjective satisfaction and reasons to believe that the income had escaped the assessment - as decided by HC [ 2022 (12) TMI 1281 - GUJARAT HIGH COURT] communication whereby the reasons recorded were supplied, no satisfaction was recorded by the assessing officer that the income chargeable to tax has escaped assessment. Not only the said requirement was not satisfied, but there was no actual escapment of income as well - HELD THAT:- We are not inclined to interfere with the impugned judgment passed by the High Court. Hence, the Special Leave Petition is dismissed.
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2024 (2) TMI 1345
Action on the complaint of the petitioner sent through speed post - Request for necessary investigation may be done against private respondents - Writ of Mandamus - as decided by HC [ 2020 (2) TMI 842 - ALLAHABAD HIGH COURT] present writ petition is liable to be dismissed on the ground of concealment of facts in respect of the filing of the earlier writ petitions - HELD THAT:- The special leave petition stood dismissed owing to the defects not being cured within the permitted time, in terms of the order [ 2023 (7) TMI 1376 - SC ORDER] - The defects having been cured thereafter, the subject applications have been filed seeking condonation of the delay of 36 days in filing a restoration petition and to restore the case. Both the applications are ordered, condoning the delay of 36 days and permitting the restoration of the case. In consequence, SLP shall stand restored to the file. Miscellaneous application shall stand disposed of accordingly.
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2024 (2) TMI 1344
Notice of reassessment proceedings issued on a wrong E-mail ID - primary and secondary email ID - there exists two email ID of the petitioner-Company - what is the registered e-mail address of the petitioner as on 07.03.2023 i.e the date of issuance of notice under Section 148A (b) of the Act, 1961? - HELD THAT:- If the registered email address of the assessee cannot be determined from (a) e-filing account of the addressee registered in designated portal or (b) from the last income tax return furnished, or (c) from the permanent Account number data base relating to the addressee or (d) from the official website of the Ministry of corporate affairs, etc. then only the authority may resort to any e-mail address made available by the assessee. Further, the word available is of significance as it records a positive action on the part of the assessee in making available the e-mail ID, so that the same may be construed as the registered email ID of the assessee. As far as the present case is concerned, it has been the consistent stand by the petitioner that he has used or made available the e-mail ID: [email protected] for e-filing of his income-tax return even since the Assessment Year 2020-21 and the same has been used by him even for filing of the latest income-tax return for the Assessment Year 2022-23. Further, the said email ID has been also mentioned by him in the income-tax return and the same is relatable to PAN data base and also mentioned in the master data of the petitioner s Company as available from the official website of the Ministry of Corporate Affairs at the relevant time. Therefore, taking a holistic view of the matter, it has to be held that the e-mail ID: [email protected] is the registered e-mail address of the petitioner company and it is the e-mail ID, which has been made available to the Authority by the assessee. Recently, the Delhi High Court in the case of Jyoti Narang Vs Income tax Officer [ 2023 (7) TMI 1377 - DELHI HIGH COURT] has also set aside the penalty and demand notice on the ground that the show cause notice was issued on a wrong E-mail ID. In the present case, the notice under Section 148A(b) of the Act, 1961 has not been issued on the registered email address of the petitioner s company. Thus the order passed by the Assessing Authority under Section 148-A (d) and the consequential notice issued under Section 148 as also the consequential proceedings are quashed.
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2024 (2) TMI 1343
Reopening of assessment u/s 147 - reason to believe - Reliance on audit objection - assessee had debited an amount under the head Employee benefit expenses on account of reimbursement of proportionate expenses paid to the ultimate holding company, for ESOP granted to the assessee s employees and break-up of income from arbitrage business shown under the head Other Operating Revenues on account of delivery based purchase and sale of shares - HELD THAT:- In the reason to believe itself, it has been admitted that Assessee had filed a copy of audited Profit and Loss Account and Balance-sheet along with return of income where information/ material was disclosed. Reason to believe does not, however, disclose the fact that these two items mentioned in the reason to believe, i.e., the debit under the head Employee Benefit Expenses and the break-up of income from arbitrage business shown under the head Other Operating Revenues on account of delivery based purchase and sale of shares were subject of consideration during the assessment proceedings. Petitioner had received a communication dated 11th January 2016 calling upon Petitioner to produce the accounts and/or documents specified in the annexure to said notice. As regards, the employee benefit expenses on account of Employee Stock Option ( ESOP ), there is no discussion in the assessment order. As held by this Court in Aroni Commercials Limited [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] once a query is raised during the assessment proceedings and Assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. The Court held that only requirement is that AO ought to have considered the objections now raised in the grounds for issuing notice under Section 148 of the Act during the original assessment proceedings. If that has been done, it would follow that the reopening of assessment by impugned notice will merely be on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings and that change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Since both the issues raised in the reason to believe for reopening the assessment have been subject matter of consideration during the assessment proceedings, it can be based only on change of opinion which is not permissible. Reopening as based on audit objections - It is settled law as laid down in Indian Eastern Newspaper Society [ 1979 (8) TMI 1 - SUPREME COURT] that in every case, the Income Tax Officer must determine for himself what is the effect and consequence of the law mentioned in the audit note and whether in consequence of the law which has come to his notice, he can reasonably believe that income has escaped assessment - the true evaluation of the law in its bearing on the assessment must be made directly and solely by the Income Tax Officer. Therefore, the AO cannot reopen the assessment relying on audit objections. Moreover, there is nothing on record to indicate that the AO had applied his mind afresh without being influenced by the audit objections. The reason to believe should be of the AO and he cannot be acting on the dictates of other parties. Decided in favour of assessee.
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2024 (2) TMI 1342
Bad Debts - Loans advanced to the Group Company utilized for purchase of properties and shares - whether it can be termed as proper debt for the purpose of claim as bad debt u/s. 36(1)(vii) r.w.s. 36(2)? - HELD THAT:- As position before the amendment was that assessee could claim deduction in respect of the bad debt or part thereof which is established to have become bad in the previous year relevant to the assessment year in which the claim is made, whereas the position after the amendment is that assessee is entitled to deduction in respect of the amount of bad debt or part thereof which is written off as irrecoverable in the account of assessee in the previous year. In our view, it is not necessary that assessee should establish that the debt has gone bad during the previous year relevant to the assessment year in question. If assessee could show that it bona fidely believed that the debt had gone bad and the claim could be made, it is to be allowed for the year in which it is written off in the books of accounts. One of the reasons the AO has disallowed the claim of assessee is that assessee is not a money lender and hence, it could not be said that the amount advanced had become bad. We agree with the ITAT that it is not necessary that every businessman should register himself under Money Lending Act and make the claim in relation to any advance made by it only in the capacity of carrying on money lending business. As per the balance sheet of assessee, the said M/s. Ganges Soaps Pvt. Ltd. was assessee s debtor because assessee had given advance loan to it. ITAT has come to a factual finding that the money was advanced during the course of business. As relying on a judgment of Bazpur Co-op. Sugar Factory Ltd. [ 1988 (5) TMI 4 - SUPREME COURT ] the ITAT has given a finding that entries in the books of accounts were not determinative of the character of a transaction but it is the nature and the quality of receipt/transaction and not the head under which it is entered in the account books that will prove decisive. In the grounds of appeal this view taken by the ITAT has also not been disputed. Decided in favour of assessee.
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2024 (2) TMI 1341
TDS u/s 194I or 194C - storage charges paid by assessee - TDS @ 20% or 2% - HELD THAT:- The storage tanks in question do not qualify either as land or as building within the meaning of Section 194I of the Act. In terms of Section 194I of the Act, there has to be a lease, sub-lease or tenancy or any other agreement involving land or any building excluding factory building. It is not the case of the Revenue that the storage tank was taken on lease or sub-lease or tenancy. Assessee s case would fall under the part or any other agreement involving land or any building, together with furniture, fittings and the land appurtenant thereto . It is nobody s case that assessee has taken any land or building together with furniture, fittings and the land appurtenant thereto. Thus we hold that the payments in question are liable for deduction of tax at source under the provisions of Section 194I - Decided in favour of assessee.
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2024 (2) TMI 1340
Unexplained cash credits u/s 68 - allegation of involvement in multi crore securities transactions scam of nineties infamously known as Harshad Mehta Scam, Assessee got labelled as party under the Special Court's (TORTS) Act, 1992 - assessee had failed to meet all the three criteria i.e. identity, creditworthiness and genuineness of the transaction - ITAT deleted addition - HELD THAT:- ITAT has very elaborately dealt with each of the additions. For the first addition relating to Rita Chopra, ITAT came to a finding that there is no reason to suspect the credit obtained from this party. ITAT, therefore, directed the AO to delete this addition. Cash credit in the name of Ronak Patel, though assessee did not obtain any confirmation letter, he produced evidence on repayment of Rs. 93,000/- made on 10th May 1991 to Ronak Patel. Assessee also showed evidence of having paid interest of Rs. 11,890/- to Ronak Patel during the year under consideration and, therefore, the Tribunal considered that for a sum of Rs. 12,000/- there was satisfactory explanation given by assessee. ITAT, therefore, modified the additions and reduced it from Rs. 40,000/- to Rs. 28,000/-. Cash credit received from Saurin Patel, the ITAT has accepted the explanation and evidence from assessee that he paid an interest of Rs. 12,600/- in February and August 1986. It has also noted that assessee has obtained fresh credit of Rs. 12,000/- on 3rd December 1986. ITAT, therefore, expressed a view that the interest payment of Rs. 12,600/- was sufficient to explain the sources for the fresh credit of Rs. 12,000/-. As regards cash credit received from Vikram Patel, opening balance of Rs. 1,00,000/- available in this account and interest payment made to the creditor, the ITAT did not find any reason to sustain the addition of Rs. 10,000/-. Interest expenditure debited as interest on securities - ITAT deleted addition by holding that the AO did not show any reason to the conclusion that the expenditure is excessive in nature - The admitted position is that payments have been made by cheques to bank accounts. AO should have considered the vouchers submitted by assessee and examined the genuineness of the expenditure with reference to the underlying invoices, bills of payment details, party details etc., and not straightaway come to the conclusion that the expenditure accounted through journal vouchers are bogus without verifying the factors and evidence that necessitated the passing of journal entries. ITAT, therefore, rightly concluded that passing of entries through journal vouchers are part and parcel of accounting proceedings in any type of business and any expenditure accounted through journal vouchers cannot be doubted on the only reason that they have been accounted through journal vouchers. Nothing prevented the AO to examine the entries with the underlying evidence. AO has also expressed the view that expenditure incurred was excessive in nature but has not given any reason for coming to this conclusion. ITAT noted that the AO cannot arrive at the conclusion on certain presumptions and by making general observations. ITAT has also correctly observed that CIT(A) has simply confirmed the order of the AO without critically examining the same. Therefore, even here no substantial question of law arise. Addition on account of negative balance of securities - ITAT deleted addition - AO has made observation, which has been confirmed by CIT(A) on the basis of stock summary prepared by the AO himself without furnishing the basis for arriving at alleged negative stock. The addition has been made without providing relevant materials and the ITAT has accepted that the relevant materials have not been submitted. The revenue was not been able to furnish materials on the basis of which the stock statement was prepared. ITAT has correctly concluded that the revenue has failed to appreciate that there is no difference in the quantity of units of UTI because the debit and credit of face value of units of UTI are the same. There is no difference in the quantity of units of UTI alleged to have been purchased or sold. AO has arrived at a presumed figure simply by looking at the cost price of the units and the sale price of the same. We would agree with the findings of the ITAT. No substantial question of law arise.
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2024 (2) TMI 1339
Addition u/s 68 - unexplained cash credit - Onus to prove - HELD THAT:- We note that assessee has sufficient evidence and document to prove the claim and for that assessee also submitted bank statement and cash-flow statement, which clearly shows the availability of cash balance. Assessee has submitted relevant documents and evidence to prove his claim and Assessing Officer has not made any adverse finding in any of these documents even though all the details were furnished by the assessee before Assessing Officer. AO ought to have examined all these documents and rebutted them with a cogent adverse findings and discernable line of reasoning in order to arrive at conclusion and to make addition on account of unexplained cash credit. We also find merit in the submission of the assessee that since assessee is not maintaining books of accounts, therefore addition made by the AO u/s 68 of the Act, is not tenable. Therefore, we note that AO has just brushed aside the documents and evidences submitted by the assessee, without even a word on why they are not acceptable. It is a well settled law that when assessee has all plausible evidence in support of his claim, they cannot be brushed aside on surmise and conjecture. Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence, this ground of assessee is allowed.
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2024 (2) TMI 1338
Non following Procedure laid down u/s 144C - Action of the AO/NeAC not proposing all the variation in the Draft Assessment Order - HELD THAT:- AO did not complete the assessment in conformity with the directions of DRP which did not contained any variations on account of addition of PF ESI, Fees paid for Authorised Capital increase and Profit on sale of fixed assets. Action of the AO/NeAC not proposing all the variation in the Draft Assessment Order has denied the assessee of its legal right of filing objections before the DRP In the draft Assessment Order passed by the Assessing Officer has only proposed adjustment on account of the Transfer Pricing Order to the total loss as per ITR. DRP deleted the addition proposed on account of Transfer Pricing determining adjustment on account of ALP at NIL. Then the AO passed an order making addition on account of PF ESI, ROC Fess and profit on sale of fixed assets. These three items were either two were not part of the draft Assessment Order. Hence, in view of the provisions of Section 144C(13)- [Upon receipt of the directions issued under sub-section(5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 [or section 153B], the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.], the AO was not empowered to make any other addition which was not proposed in the draft Assessment Order an hence the order of the cannot be sustained. Appeal of the assessee is allowed
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2024 (2) TMI 1337
Bogus LTCG - unexplained cash credit u/s 68 - accommodation entry of bogus exempted long term capital gain - onus of proof - scrip named Lifeline Drugs Pharma Ltd was having no financial strength as well as no substantial business activities in the company during the period of purchase of shares to period of sales by the assessee - HELD THAT:- Hon`ble Jurisdictional High Court of Gujarat in the case of Jagat Pravinbhai Sarabhai, [ 2023 (1) TMI 44 - GUJARAT HIGH COURT] held that where AO noted that assessee had indulged in scrip of shell company and had claimed long term capital gain on sale of shares and made addition u/s 68 holding that entire transaction was bogus and in the nature of penny stock, however, since genuineness of investment in shares by assessee was substantiated by him by producing copy of transaction statement for period from 1-6- 2001 to 1-10-2010 and shares were retained for more than ten years and were sold after such long time, hence investment was not bogus therefore it cannot be treated that investment was made in penny stock. It is well settled position of law that, an assessee receiving a credit has to testify its case through the 'triple marker test' of identity, Creditworthiness and Genuineness of Transactions. It is imperative, therefore, that the case be analysed in light of these three well- settled canons of adjudication, as embedded in the statute, as also promulgated by various judicial pronouncements. The onus of proof requires the assessee to furnish the proof of identity, creditworthiness and genuineness of the transaction. We note that in assessee`s case under consideration, the assessee has submitted the copy of Contract note. The said contract notes show the quantity, rate, time, stamp, value, taxes and charges viz. STT, brokerage, SEBI and exchange turnover charges, service tax and stamp duty incurred on all the transactions done on stock exchange platform. These documents have been accepted by the assessing officer. The transactions are done through proper banking channel and the sale is done at prevailing price quoted on the Stock Exchange. Hence, by submitting these documents, the assessee has proved identity, creditworthiness and genuineness of the transactions. AO having failed to bring on record any material to prove that the transaction of the assessee was a collusive transaction could not have rejected the evidences submitted by the assessee. In fact, in this case nothing has been found against the assessee with aid of any direct evidences or material against the assessee, under these circumstances nothing can be implicated against the assessee. One is bound to consider and rely on the evidence produced by the assessee in support of its claim and base decision on such evidence and not on suspicion or preponderance of probabilities, no material was brought on record by the AO to controvert the evidence furnished by the assessee. The evidence filed by the assessee is accepted and the claim that the income in question is a bona fide Long Term Capital Gain arising from the sale of shares is allowed and hence exempt from income tax. Based on the above factual position, we deleted the addition - Decided in favour of assessee. Addition u/s 69C on account of commission paid @ 3% of bogus long term capital gain - Since, we have deleted the alleged addition u/s 68 hence addition made by Assessing Officer does not have leg to stand, therefore it is hereby deleted, and hence ground No.3 raised by the assessee is allowed.
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2024 (2) TMI 1336
TP Adjustment - interest charged on foreign currency loan - HELD THAT:- As comprehensible that interest has been earned by assessee at arm s length rate and accordingly, no adjustment on account of arm s length rate is required to be carried out. Therefore the addition sustained is hereby directed to be deleted. Decided in favour of assessee.
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2024 (2) TMI 1335
Excess grant of interest contrary to the practice followed by the Department - recomputation of interest u/s 244A - As alleged CIT A directing the AO to adjust the refund granted first towards interest amount refundable and thereafter consider the balance amount of tax amount refundable - HELD THAT:- CIT A by directing the AO to verify the details of tax payment submitted by the assessee and the amount of tax paid on period of tax payment to recompute the amount of interest u/s 244A of the act till date of granting of refund. He has further held that in view of the observation of the honourable Supreme Court in [ 2006 (1) TMI 55 - SUPREME COURT] and the provisions of section 244A should be considered. Nothing was shown to us that how the learned AO is aggrieved when he is directed to recompute the interest by following the decision of the honourable Supreme Court and considering the provisions of the act. Further, coordinate bench decision has also been referred to. Section 244A of the Income Tax Act pertains to the payment of interest on refunds. It states that if the taxpayer is entitled to a refund, they shall be paid an additional interest amount as determined by the Act. According to assessee from the tax refund, nothing is to be reduced and tax and refund already determined should be reduced from interest refund, so that tax on which interest is eligible u/s 244A is always higher than the amount determined by the dl AO because tax amount eligible for interest would always be higher, resulting into higher interest out go. Therefore, we do not find any merit in the appeal of learned AO as ld. AO is directed to verify the claim of assessee in accordance with law - ground of appeal raised is that if the order of the learned CIT A is followed it will lead to excess grant of interest which is contrary to the practice followed by the Department and the intention of the legislation. We find that the practice followed by the Department should be in consonance with the provisions of the income tax act - Appeal of AO dismissed.
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2024 (2) TMI 1334
Addition based on entries appearing in a diary seized from the assessee - addition as unexplained income of the assessee and also initiated Penalty proceedings u/s. 269SS, 269T and 271AAB - money transaction received for various housing projects - CIT(A) deleted addition - HELD THAT:- CIT(A) has already held that the AO did not disprove that the entries in the diary seized are relating to the money transaction received for various housing projects of the Partnership Firms and the assessee was maintaining the accounts of the Partners of the various Firms. AO nowhere in the assessment order rebutted the claim of the assessee with any material evidence. Further the Assessing officer did not give any basis for working out the figure of Rs. 2,53,04,000/- as unexplained cash in the hands of the assessee, as against the workings of Rs. 5,79,61,200/- found in the seized diary. Whereas the assessee produced before us the Return of Income filed by the partnership firm M/s. Yash Buildcon and M/s. Dev Corporation relating to the AY2014-15 and Ld. CIT(A) order in the case of M/s. Yash Buildcon wherein the undisclosed income declared by the assessee. Therefore the ground raised by the Revenue is devoid of merits and the same is liable to be dismissed.
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2024 (2) TMI 1333
Revision u/s 263 - Validity of limited scrutiny proceedings - as per CIT AO has passed assessment order without proper verification and interest expenses claimed as deduction u/s 57 were required to be disallowed - assessee submitted that the assessment proceedings were selected for limited scrutiny with the specific purpose of enquiry into claim of interest expenses u/s 57. HELD THAT:- On going through the contents of the 263 order and the assessment records, we observe that firstly there was no evidence lack of enquiry on part of the AO on the aspect of allowability of claim of deduction u/s 57 of the Act. We observe that the case of the assessee was opened under limited scrutiny to examine whether the deduction against interest income from other sources has been correctly shown in the return of income and also to examine whether deduction claimed on account of interest expenses is deductible. The assessee had also filed replies to the query raised by the Assessing Officer during the course of assessment proceedings. Even before PCIT, the assessee had filed written submissions giving the basis for claim of deduction of interest expenses u/s 57 by stating that the aforesaid interest income had been incurred exclusively for the purpose of earning interest income and accordingly the order passed by the AO was not erroneous and prejudicial to the interest of the Revenue. Assessee had filed detailed written submission before Ld. PCIT explaining that the notice issued u/s 263 was on an incorrect understanding / appreciation of the facts of the assessee s case and the assessee had submitted that the interest expenditure had been incurred wholly for the purpose of earning interest income. Assessee had also submitted that only that part of interest expenditure had been claimed by way of deduction u/s 57 which had been incurred for earning interest income and the proportionate part of the interest expenditure which was not utilized for earning interest income had not been claimed by the assessee as deduction under Section 57 of the Act. As PCIT did not give any specific finding to controvert the written submissions filed by the assessee during the course of 263 proceedings and proceeded to hold that the assessment order passed by the AO is erroneous and prejudicial to the interest of the Revenue. Accordingly, PCIT has erred in facts and law in holding that the assessment order passed by the Assessing Officer in the instant case is erroneous and prejudicial to the interest of the Revenue. Appeal of the assessee is allowed.
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2024 (2) TMI 1332
Scope of Limited Scrutiny - Accrual of income - Addition towards advance fees and deposits from old students - AO attempt to convert limited scrutiny into complete scrutiny - HELD THAT:- AR before us made a statement from the Bar that similar accounting treatment of advance fees and deposits from old students done by the assessee was duly accepted by the revenue in the earlier years even in scrutiny assessment proceedings and that there was no change in factual matrix during the year when compared to earlier years. Even in AY 2015-16, the treatment of the same in the books of accounts was accepted by the ld. AO u/s 143(3) proceedings dated 18.12.2017. In any event, he also stated that the entire issue is revenue neutral as assessee has been consistently following the practice of offering the earlier advance fees to income and whatever fee that is received for the period beyond the financial year is treated as advance fees, which would become income in the succeeding year. DR could not bring any contrary material to this argument. We find that CIT(A) had elaborately dealt with the issues in dispute and had granted relief to the assessee both on legal issue as well as on merits. As per the scheme of the Act, AO if he desires to convert limited scrutiny into complete scrutiny, he has to obtain prior permission from the competent authority to do so and only then could assume jurisdiction to examine other issues. In the instant case, the same was admittedly not done by the AO. CIT(A) was duly justified in quashing the additions made by the ld. AO on this ground. CIT(A) had elaborately given a categorical finding that the income had been properly accounted and offered by the assessee in accordance with the provisions of the Act and there is no scope for making any addition even on merits. Appeal of the revenue is dismissed.
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2024 (2) TMI 1331
Addition u/s 68 - unexplained cash credit - capital contribution in cash by the partners - Addition in the hands of firm v/s partners - As per AO Assessee has not furnished any supporting document like bank statement of the partners from where the cash amount have been withdrawn or any corroborative evidence to explain the source and nature of the cash so deposited - HELD THAT:- Since the partners have substantial returned income to the tune of Rs. 24.45 Lac and Rs. 24.00 lac, who have made the capital contribution of Rs. 14.50 lac and 10 lacs, thus, the identity and creditworthiness of such partners cannot be doubted. If the Ld. AO was not convinced with the source of amounts deposited by the partners, then such addition could have been made in the hands of such partners by invoking the relevant provisions of law but no addition was called for in the case of assessee firm , who have discharged its primary onus u/s 68 by providing the details of the partners from whom such funds were received. Thus the addition made by the Ld. AO and affirmed by the Ld. CIT(A) w.r.t. capital contribution in cash by the partners cannot be sustained in the hands of assessee firm. Our decision is supported by various judgments relied upon by. Ground no. 1 of the present appeal is decided in favor of the assessee.
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2024 (2) TMI 1330
Condonation of delay in filing the appeal - delay of 326 days - sufficient cause - misguidance of the former Tax Consultant - HELD THAT:- It is always to be kept in mind that the condonation of delay is always a double edged sword, which has sharp edges on both sides and to be handled carefully by any party. - In our considered view, the assessee has demonstrated a reasonable cause for not filing the appeals within the statutory period of limitation, on the mis-representation of former Tax Consultant resulting in passing exparte orders and filing appeals with delay. - Delay condoned. Assessment u/s 153A - unexplained cash credits - incriminating material found in search or not? - Penalty levied u/s 271(1)(c) - HELD THAT:- When an assessment has to be made in relation to the search or requisition u/s 153A of the Act, namely, in relation to material disclosed during the course of search or requisition, if in relation to any particular assessment year, at the same time when there is no incriminating material found, no addition or disallowance can be made in relation to that assessment year in exercise of powers u/s 153A and the earlier assessment shall have to be reiterated. This legal preposition is now settled in the batch of cases namely PCIT, Central-3 -Vs- Abhisar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT ] holding that in respect of completed assessments/unabated assessments, no addition can be made by AO in the absence of any incriminating material found during the course of search u/s 132 or requisition made u/s 132A of the Act. We have no hesitation in deleting the additions made on account of unexplained cash credit made by the AO without any incriminating material found during the course of search from the premises of the assessee. Penalty u/s 271(1)(c) - Since the additions made on the quantum appeals for the above assessment years are already deleted vide paragraphs 10 and 11 of this order, consequently the present penalty appeals has no legs to stand and therefore the penalty levied is hereby deleted. Assessee appeal allowed.
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2024 (2) TMI 1329
Non-prosecution of appeal by assessee - Undisclosed investment - as alleged assessee could not prove identity, genuineness of the transaction and creditworthiness of the parties - HELD THAT:- As none appeared on behalf of the assessee in spite of service of notices, the assessee in its letter head sought for adjournment on 16.03.2021, whereby the appeals were adjourned to 15.04.2021. Again another adjournment was sought for 29.12.2022 and the appeals adjourned to 13.02.2023. It is thereafter, eleven occasions the above appeals were adjourned from time to time and finally on 01.02.2024, none appeared on behalf of the assessee, in spite of service of notices to the assessee. This clearly shows that the assessee is not interested in pursuing the appeal. Further the assessee failed to file any documents in support of its Grounds of appeal. Also noticed there is delay of 790 days in filing this appeal, but the assessee has not filed any Affidavit explaining the delay. In the absence of condonation petition explaining the delay, the present appeal is not maintainable and liable to be dismissed in limine. Appeal filed by the assessee is hereby dismissed. Where the appellant in spite of notice is persistently absent and the Tribunal on facts of the case is of the view that the appellant is not interested in prosecuting the appeal, it can in exercise its inherent power to dismiss the appeal for non- prosecution. In the case of CIT Vs. B. N. Bhattacharya [ 1979 (5) TMI 4 - SUPREME COURT] , it was held that appeal does not mean merely filing of appeal but effectively pursuing it. Appeal filed by the Assessee is dismissed in limine.
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2024 (2) TMI 1328
Addition u/s 69 - repayments of loan/creditor - CIT(A) deleted the addition as observed that only those investments that are found to have been not recorded in the books qualify for addition under the said section, if assessee fails to offer proper/satisfactory explanation. HELD THAT:- In the instant case the transactions made by the assessee that are subjected to addition under this section are all reflected in the books of account maintained by him. Nowhere did the assessing officer state that these repayments were made from undisclosed sources. AO perused 3CD report and found that that repayments have been disclosed in clause 31(c) of the Tax Audit Report. CIT(A) as observed that repayments of loan/creditor cannot be regarded as 'investments' for the reason that investments are assets of the investor which are likely to yield returns and investment as such can be redeemed to obtain the principal. So, the repayment of loan disclosed in the books of account would not come under the purview of Section 69 . We also note that repayment of amount was made through banking channel and also duly recorded, in the books of accounts. As gone through the party-wise, unsecured loan, findings given by the ld CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A). Hence, we dismiss ground No.1 raised by the Revenue. Addition on the account of Section 24 v/s business head u/s 37 - interest paid on housing loan - CIT(A) deleted addition as per Section 36(1)(iii) which is the relevant provision regarding Interest on borrowed capital, according to which the amount of interest paid in respect of capital borrowed for the purpose of Business and Profession of assessee shall be allowed - HELD THAT:- The provisions of Section 37 is a general in nature allowing deduction of an expenditure laid out or expended wholly and exclusively for the purposes of the business. Since, AO in the assessment order had given a categorical finding that the assessee had availed a loan by mortgaging a business asset and that the loan is utilised for the purposes of business, then the deduction claimed by the assessee towards interest paid on such loan utilised for the purpose of business is an allowable deduction under the head income from business and not under the head income from house property . CIT(A) correctly observed that section 36(1)(iii) of the Act, which is the relevant provision regarding Interest on borrowed capital, according to which, the amount of interest paid in respect of capital borrowed for the purpose of Business Profession of assessee shall be allowed subject to the section 43B - CIT(A) observed that when the capital is borrowed for acquisition of a capital asset, then interest liability pertaining to the period till the date such asset is put to use shall not be allowed as deduction. Going by the fact noted by AO, in the assessment order and the relevant provisions of the IT Act, it is held by ld CIT(A) that the disallowance of interest claim to made by AO is not in accordance with the provisions of the statute and therefore, ld CIT(A) deleted the same correctly - Decided against revenue. Addition of cash deposit u/s 68 - during the demonetization period, the assessee has deposited cash in three banks - CIT(A) deleted addition - HELD THAT:- CIT(A) noted from the assessee`s balance sheet that the bank accounts in question in which the cash deposits were made by the assessee during the demonetization period formed part of its books of account. Considering the aforesaid facts, when the bank accounts in question, are all duly been accounted for by the assessee in its books of account for the year under consideration, therefore, AO by not rejecting the said books of account had clearly accepted that the cash deposited by the assessee firm during the year under consideration in the said bank accounts was out of its disclosed sources. Based on this factual position, the ld CIT(A) deleted the addition. We note that ld CIT(A) has passed a reasoned and speaking order. The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us - Thus dismiss the ground raised by the Revenue. Admission of additional evidenced by CIT(A) - allegation of violation of Rule 46A of the Income Tax Rules - HELD THAT:- We note that ld CIT(A), during the appellate proceedings, vide its letter dated 07.12.2022, the additional evidences submitted by the assessee before ld CIT(A), were forwarded to Assessing Officer for his examination and remand report thereon. The additional evidences were resent to Assessing Officer also, however, Assessing Officer failed to submit the remand report. Hence, we note that there was no violation of provisions of Rule 46A of the I.T. Rules, therefore, we dismiss both the grounds raised by the Revenue.
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2024 (2) TMI 1327
Accrual of income in India - Fixed place Permanent Establishment ( PE ) for business in India, to carry on the business of sale of software products - HELD THAT:- The issues involved have been squarely covered by the order of the coordinate bench [ 2023 (4) TMI 1303 - ITAT DELHI] wherein as find merit into the contention of the assessee that the Assessing Authority was not justified in making addition in the hands of the assessee when in the case of alleged PE of the assessee, the transactions have been treated to be arm s length price. Furthermore, the assessee has pointed out that while making addition, the AO has also included the transaction related to hardware whereas allegation of PE is related to software. In the light of the binding precedents, we are of the considered view that the authorities below erred in making the impugned additions. We therefore, direct the AO to delete the same. Decided in favour of assessee.
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Customs
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2024 (2) TMI 1326
Grant of Advance Authorisation - export of goods - Fulfilment of Export Obligation or not - whether discretionary jurisdiction should be exercised in light of the redemption letter - HELD THAT:- On record redemption letter, It is evident that the export obligation was met in full by the petitioner both with regard to value and quantity. This letter was issued after the order impugned herein was issued. At the end of the day, an exporter was required to fulfil export obligations as a condition for the grant of advance authorisation. The documents on record include the redemption letter, and such redemption letter shows that the export obligation was fulfilled in entirety. In those circumstances, the petitioner must be provided an opportunity to place relevant documents before the 1st respondent. Therefore, the impugned order calls for interference. Hence, the impugned order is quashed and the matter is remanded to the 1st respondent for reconsideration. The petitioner is permitted to place all relevant documents before the 1st respondent. Upon consideration thereof, the 1st respondent is directed to issue a fresh order within a period of three months from the date of receipt of a copy of this order after providing a reasonable opportunity to the petitioner. The writ petition is disposed of on the above terms.
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2024 (2) TMI 1325
Refund of the Antidumping duty - monetary limit prescribed for filing an appeal before the High Court has been enhanced to Rs. 1 Crore by notification - HELD THAT:- Since the subject appeal involves a duty which is the below the monetary limit prescribed and is not covered by the exceptions stipulated in the subject notification, this appeal is dismissed on the ground of Low Tax Effect.
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2024 (2) TMI 1324
Recovery of Duty drawback - period for realization of export proceeds - Shipping bills relating to the export of goods described as ''cotton power-loom made up articles'' - HELD THAT:- The documents on record include the communication dated 06.04.2013 and the annexure thereto. Also on record are several BRCs, which appear to correspond to the 33 shipping bills, which form the subject matter of the impugned order. Thus, there is prima facie evidence that the export proceeds were realized. In order to provide an opportunity to the petitioner to place these documents before the respondent for consideration, interference with the impugned order is warranted. Therefore, the impugned order is quashed and the matter is remanded for re-consideration. The petitioner is permitted to place all the relevant documents relating to realization of export proceeds before the respondent within a maximum period of 15 days from the date of receipt of a copy of this order. W.P. is disposed of on the above terms.
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2024 (2) TMI 1323
Jurisdiction - Power of designated officer of DRI to issue SCN - Challenging the legality of Show Cause Notice issued - HELD THAT:- We are of the opinion that the Petitioner needs to canvass such legal position as asserted in the present proceedings before the adjudicating officer, who, as fairly pointed out on behalf of the Respondents, would certainly take into consideration all such contentions, including the issues on the law laid down by the Supreme Court in the case of Canon India Pvt. Ltd.[ 2021 (3) TMI 384 - SUPREME COURT] and pass appropriate orders on the show cause notice. The Petition is accordingly disposed of directing the Respondents to adjudicate Show Cause Notice dated 6th February 2020 as expeditiously as possible, and, in any event, within a period of 6 months from today. As the Show Cause Notice is issued about 4 years back, there cannot be any further delay in the adjudication of the same. All contentions of the Petitioners are expressly kept open for agitation in the adjudication of the Show Cause Notice - Petition is disposed of in the aforesaid terms.
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2024 (2) TMI 1322
Application filed u/s 438 of the Code - seeking pre-arrest bail - found carrying areca or beetle nuts, instead of grinding wheels, as was declared in IGM and bill of lading by its importer - confiscation of goods - Offence punishable u/s 135 of the Customs Act - HELD THAT:- Following the decision of the Apex Court in the case of filing of an FIR is not a condition precedent to exercise the powers/jurisdiction u/s 438 of the Code. However, the concerned accused has to show/demonstrate that he has a reasonable apprehension or belief that he may be arrested in connection with a cognizable offence. The Apex Court has further observed that the use of the expression, Reason to Believe in Section 438(1) of the Code shows that the belief, that the applicant may be so arrested, must be founded on reasonable grounds only if there is something tangible to go by, on the basis of which, it can be said that the applicant s apprehension that he may be arrested, is genuine. The present petitioner fails to show or display any well-founded reason to believe/apprehend that he will be arrested. As held by the Hon ble Apex Court in Shri Gurubaksh Singh Sibbia and Others [ 1980 (4) TMI 295 - SUPREME COURT] which was subsequently followed in the case of Sushila Aggarwal and others Vs. State (NCT of Delhi) and another , [ 2020 (1) TMI 1193 - SUPREME COURT] , no blanket orders can be passed to the effect that Not to Arrest the petitioner. In view of the fact that Respondent No. 1-DRI has powers to call the petitioner, by issuing summons u/s 108 of the Customs Act, the petitioner is bound to comply with the same and therefore, none of the decisions/authorities relied on by the learned Senior Advocate for the petitioner in given background of facts shall not help the petitioner s case. There are several vexed questions, viz. Whether, the present petitioner is Aakash or Abbas Gulamhusen Hariyani and as to whether, Aakash is using the identity of the petitioner or the petitioner is using the name of Aakash, and the answers to the same are needed to be found out by the prosecuting agency and therefore also, the petitioner has to comply with the summons issued u/s 108 of the Customs Act. Resultantly, this petition fails and is DISMISSED, accordingly. Interim relief, if any, stands vacated.
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2024 (2) TMI 1321
Levy of Social Welfare Surcharge (SWS) on Goods Imported under MEIS Scheme - Benefit of Exemption Notification No. 32/2005-Cus. - benefit of Zero duty SWS - HELD THAT:- In the present case, it is not in dispute that the licensing authority has raised any objection with regard to non-observance or non-fulfillment of the conditions mentioned in the notification dated 08.04.2015. Thus, it would not be proper on the part of the Customs authorities to say that debit of customs duty in the MEIS scrip would disentitle the imported goods from the claim of the benefit of Zero rate SWS. Since, the effective rate of the customs duty is NIL or Zero , by virtue of the notification dated 08.04.2015, the rate of SWS when calculated in terms of Section 110 ibid would automatically become zero , inasmuch as SWS is to be calculated not on the value of the goods, but on the duty of customs levied on the imported goods, which is evident from sub-section (3) of Section 110 of the Finance Act, 2018. The said statue has mandated that SWS levied under Sub-section (1) of Section 110, shall be calculated at the rate of 10% on the customs duty levied and collected by the Central Government. In the present case, since no customs duty is leviable in terms of notification dated 08.04.2015, there is no question of payment of SWS. Since there was ambiguity in context with the subject issue, the Tax Research Unit in the Department of Revenue, Ministry of Finance vide Circular No.3/202-Customs dated 01.02.2022 had clarified that calculation of SWS is dependent on amount of the customs duty that is actually payable and not otherwise. It has been in explained in specific terms that legal provisions does not require calculation of SWS on notional value of customs duty calculated, as in the present case, the BCD is calculated for purpose of accounting by debit entry in the MEIS scrip and the payment of BCD is exempt under Section 25 ibid. Thus, we find that the clarification issued by the Ministry of Finance amply makes it clear that SWS is NIL , when the aggregate of customs duties for calculation of SWS is Zero . Learned AR also made a submission that the Revenue has filed Review Petitions against the judgement of the Hon ble Bombay High Court it the case of La Tim Sourcing (India) and La Tim Metal Industries Ltd. [ 2019 (10) TMI 506 - BOMBAY HIGH COURT] , and the same is pending. In this regard, we find that the Hon ble High Court of Bombay had taken note of the judgements cited by the Revenue as decided by Hon ble Madras High Court and after proper examination of the issues in hand had decided the case by holding the view that SWS shall be computed as Nil when BCD is Nil . Inasmuch as the Hon ble Supreme Court had already upheld the decision of the Hon ble Gujarat High Court in the case of Pasupathi Acrylon Ltd.[ 2014 (1) TMI 169 - GUJARAT HIGH COURT] wherein it was held that no cess is payable when BCD is Nil , judicial discipline would not permit to take a different view than the one decided by the Hon ble Apex Court. In view of the above and since, the said judgements of Hon ble High Court of Bombay are in operation, this Tribunal is bound to follow the ratio decided therein. Thus, we do not find any merits in the impugned orders passed by the learned Commissioner of Customs (Appeals). Therefore, by setting aside the impugned orders, the appeals are allowed in favour of the appellants, with consequential relief, if any.
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2024 (2) TMI 1320
Denial the benefit of the exemption notification no. 45/2017-Cus and 46/2017-Cus - Re-importation of the goods - The appellant exported goods to Thailand but faced rejection due to quality issues - switch over to the benefit of another Notification No. 158/95-Cus - more than one Notifications are applicable for the goods - demand of duty - penalty - conditions required to be fulfilled of the same notification - HELD THAT:- It is settled law that where more than one Notifications are applicable for the goods, or to the concerned transactions, attracting levy of any duty or tax, it is the choice and the option of the citizen/assessee to claim benefit of a Notification that suits him; and it is also permissible to the citizen/assessee to claim benefit of any Notification at a later stage notwithstanding the fact that the citizen/assessee claimed benefit of another Notification at the initial stage. It is evident that to be eligible for the benefit under Notification No. 158/95, the importation should take place within three years from the date of original exportation, goods are re-exported within a maximum of twelve months from the date of re importation and when such re-exportation is not effected as per the conditions of the notification, the differential duty liability on account of availment of Notification No 158/95- Cus. at re-importation is liable to paid up by the importer. There is no ambiguity, whatsoever, in the Notification issued by the Central Government. The Notification stipulates to export the goods after repairs or reconditioning within the period as stipulated and pay, on demand, in the event of his failure to comply with any of the aforesaid conditions, an amount equal to the difference between the duty levied at the time of re-import and the duty leviable on such goods at the time of importation but for the exemption contained therein. We have considered the contours of the decision of M/s. Indian Rayon and Industries [ 2008 (7) TMI 401 - SUPREME COURT] which while dealing with the Notification No. 158/95-Cus held that once the benefit of Notification No. 158/95-Cus is taken the conditions are required to be fulfilled of the same notification. However, it is also noted that Notification No. 158/95-Cus was the only notification available at the time of re-import for most of the period. We, therefore, direct the learned Commissioner may consider the benefit of Notification No. 45/2017-Cus and 46/2017-Cus, for the period, when they were available, and if otherwise applicable. We also find that breach of notification 158/95-Cus under which re-import was done, was committed. The interest and penal consequences therefore have to follow. However, if another beneficial notification to the appellant was available and they are eligible for the same, then as far as duty is concerned, they can legitimately take the benefit of the same. Any other beneficial notification can be claimed at any stage by the party. With these directions, we remand the matter for re-consideration by the adjudicating authority in terms of above principles.
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2024 (2) TMI 1319
Liability of Custodian to pay demand duty - Goods lost from the custody of the custodian, CONCOR - customs seal missing and replaced by a red colour private seal with no number - Inland Container Depot [ICD] declaring the imported goods as glass beads with holes - mis-declaring the nature of goods - Imported goods were glass chatons - confiscation - imposition of penalty - violation of section 45 - HELD THAT:- It is true that after finding the discrepancies in the declaration on 24.11.2014 the officer of customs took time and seized them only by seizure memo dated 23.02.2015 u/s 110. He also sealed the container with container customs seal numbers 227393 and 227394. He handed over the goods along with sealed container to CONCOR on 24.02.2015. There is nothing on record to show that the customs officers had taken the goods out of the customs area. There is also nothing on record to show that anybody else was permitted to and had taken the goods from customs area. With reference to a letter dated 24.02.2015 the custodian found on 28.2.2015 that the container seal was broken and there was a private seal in red colour without any seal number. On opening, they found the goods were lost. Clearly, there is no scope of any interpretation in this chain of events except that the goods were pilfered while they were in the custody of the custodian CONCOR. Therefore, we find that in terms of section 45 (3), the CONCOR had to pay customs duty. Since part of the duty was already paid by the importer only the differential duty was demanded from CONCOR in the impugned order. We, therefore, find infirmity in the impugned order in so far as the confirmation of demand of duty u/s 45 (iii) on CONCOR is concerned. Imposition of penalty u/s 117 - Clearly, there is violation of section 45 by the CONCOR inasmuch as it had not taken proper care of the goods in its custody and as a result they were pilfered. The value of the goods which were pilfered is Rs. 5,93,25,481/-. Considering this amount, we find that penalty of Rs. 1 Lakh imposed on CONCOR u/s 117 is fair and reasonable and calls for no interference. Penalty imposed u/s 112(a) and 114 AA - confiscation - In this case, the importer is not in the business of importing the glass beads or glass chatons and was indeed a regular importer of radiators for tractors. This consignment was different and the importer had provided samples of the goods to be imported to Shri Bhatt who was the Manager of Shri B S Mann. In turn, Shri Bhatt had shown those samples to Shri Mann. In this factual matrix we find no reason to believe that Shri Mann had innocently filed the Bill of Entry with a wrong declaration. Both Shri Mann and his Manager were fully aware of actual goods being imported and had filed Bills of Entry with the wrong description. Therefore, the goods were correctly held to be liable for confiscation u/s 111 (l)and (n) of the Customs Act. However, before the goods could be confiscated they were pilfered after their seizure while in the custody of the CONCOR. The Commissioner had, therefore, not imposed any redemption fine. Penalty u/s 112 (a) can be imposed on any person who, in relation to a goods, does or omits to do any act which act or omission would render such goods liable to confiscation u/s 111, or abets the doing or omission of such an act. In this case, the glass chatons were imported and having seen the samples even after the import Shri B S Mann and through his employees filed a Bill of Entry for glass beads. In fact, 90% of the goods were glass chatons. We, therefore, find that Shri B S Mann was correctly held liable to penalty u/s 112(a). The value of the goods in this case was Rs. 5,92,25,481/-. Shri B S Mann, through his employees, filed the Bill of Entry mis-declaring the nature of goods having first obtained samples of the goods even before filing the Bill of Entry. As is clear from the cross-examination by Shri B S Mann, Manager of Shri Bhatt that not only he but also Shri B S Mann, himself had seen the samples before filing the Bill of Entry. We, therefore, have no hesitation in finding that the Bill of Entry filed knowingly mis-declaring the nature of goods. Thus, we find that the penalty u/s 114 AA imposed on Shri B S Mann needs to be sustained. Hence, we uphold the impugned order in so far as it pertains Shri B S Mann and reject his appeal. All the three appeals are dismissed and the impugned order is upheld.
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2024 (2) TMI 1318
Classification of imported goods - rods or wires - Polycab-wires - Extended Period of limitation - Levy of penalty - HELD THAT:- It is apparent that the appellants have declared in their documents the fact that the goods were imported in the shape of coils. It has been recorded in the Order-In-Original as well reproduced in Counsel's arguments. The only reason for change of classification is the chapter note (d) and (f) of Chapter 74 of Custom Tariff. Thus, it is clear that there was no suppression of any kind and in these circumstances, the invocation of a longer period of limitation cannot be justified. The notice is clearly barred by limitation - The appeal is consequently allowed.
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Insolvency & Bankruptcy
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2024 (2) TMI 1317
Condonation of delay in filing the Appeal - Appellant submits that since certified copy which was sought has not been given, the Appellant could not file the appeal in time and delay in filing the Appeal need to be condoned - HELD THAT:- Jurisdiction to condone the delay is limited to only 15 days after expiry of the limitation under Section 61(2) proviso. Even from the own case of the Appellant, it is clear that for the first time the certified copy was applied on 23rd November, 2023 physically. The email was sent on 18th November, 2023 prayer of which we have quoted above cannot be treated to be an application for certified copy, according to own case of the Appellant, application for certified copy was made on 23.11.2023 after 30 days of passing of the order dated 19.10.2023 - no benefit under Section 12 of the limitation act can be allowed to the Appellant whereas admittedly according to the Appellant, the certified copy was not given. The Appeal having been filed on 23rd January, 2024 which is well beyond time and well beyond period of 15 days which is permissible to be condoned under Section 61(2) proviso, the delay cannot be condoned in filing the Appeal - Delay Condonation Application is dismissed.
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2024 (2) TMI 1316
Initiation of CIRP - Personal Guarantors - Maintainability of Applications filed under Section 95 sub-section (1) of IBC - time limitation - It is submitted that Adjudicating Authority cannot be used as a Forum to recover a time barred debt - HELD THAT:- In view of the judgment of the Hon ble Supreme Court in DILIP B JIWRAJKA VERSUS UNION OF INDIA ORS. [ 2024 (1) TMI 33 - SUPREME COURT] , it is settled now that question of adjudication of issues between the parties arises only at the stage of Section 100 and the RP has only role of facilitator. The RP has to submit a Report, after examining the Application under Section 95 and after giving opportunity to Personal Guarantor. The role of RP has been elaborately examined by the Hon ble Supreme Court in the aforesaid case and it is held that RP does not perform any adjudicatory function, nor even can take an administrative decision. The role of RP has been held to be only facilitator. The judgment relied by learned Senior Counsel for the Appellant in SHANKARLAL AGGARWALA VERSUS SHANKARLAL PODDAR [ 1963 (1) TMI 40 - SUPREME COURT] has no application in the facts of the present case. Insofar as the submission of the Appellant(s) that Adjudicating Authority failed to take into consideration that authorization was not filed by the RP, it is always open for the Appellant to take such or other pleas as permissible at the time of adjudication of issue, including any defect in the Application under Section 95 and the said question also does not require any consideration at the stage when RP is appointed. Of course, if there is any invalidity or shortcomings while appointing the RP, Section 98 is there for the debtor or creditor, which provides for replacement of the RP. There is no error in the impugned order passed by the Adjudicating Authority appointing the RP - There is no merit in these Appeal(s) - The Appeal(s) are dismissed.
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2024 (2) TMI 1315
Initiation of CIRP - Admission of main company petition - liability of Guarantor of loan - acknowledgment of debt by the Principal Borrower shall be binding on the Guarantor or not - plea of the Appellant is that the action as far as the Corporate Guarantor is concerned, the same is barred by Limitation and that Article 137 of Limitation Act 1963 applies - HELD THAT:- As per the decision of Hon ble Supreme Court in Laxmi Pat Surana s case [ 2021 (3) TMI 1179 - SUPREME COURT ], the liability of the Guarantor being co-extensive with the Principal Borrower under Section 128 of the Indian Contract Act, 1872 it triggers the moment the Principal Borrower commits default in paying the acknowledge debt and this being a legal fiction and such a liability of the guarantor will flow from the Guarantee Deed and Memorandum of Mortgage created therein . On a careful consideration of respective contentions, this Tribunal , taking note of the facts and circumstances of the instant case in an encircling manner, and ongoing through the impugned order passed by the Adjudicating Authority/NCLT Kochi Bench, comes to a resultant conclusion that the conclusion arrived at by the Adjudicating Authority/Tribunal in admitting main petition holding that the debt has not been paid by the Corporate Guarantor is free from any legal flaws. Application dismissed.
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2024 (2) TMI 1314
Improper handling of Resolution Plan - Respondent No.1 alleges that the Resolution Professional (RP) violated the process by opening a sealed cover containing the plan without the presence of the Committee of Creditors (CoC) and Principal Resolution Applicants (PRAs). - HELD THAT:- Regulation 39 of the CIRP Regulations, 2016 also requires the Resolution Professional to look into the Resolution Plan submitted by the Applicants and to place the plan before CoC which is in compliance with Section 30(2). The opening of Resolution Plan by Resolution Professional is essential for further process in the CIRP. The Resolution Professional without opening the plan cannot come to any opinion whether the plan is complaint to Section 30(2) or not. There is no regulation or law which provide that the Resolution Professional should open the plan in presence of CoC and PRAs. Learned counsel for the Respondent No.1 has been unable to show any provision of law which require that the Resolution Professional shall open the plan in presence of CoC and PRAs. The order passed by the Adjudicating Authority is unsustainable - In result, Appeal is allowed.
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Service Tax
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2024 (2) TMI 1313
Maintainability of petition - availability of alternative remedy - petitioners are willing to avail of the said remedy - HELD THAT:- These special leave petitions disposed off reserving liberty to the petitioners herein to file the statutory appeal within a period of one month from today. If such an appeal is filed within the aforesaid time frame, the Tribunal shall not raise the issue of limitation in filing the said appeal.
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2024 (2) TMI 1312
Circular issued by the Central Board of Indirect Taxes and Customs not considered by Respondent No.3 in passing the impugned order - HELD THAT:- Stand over to 20th February 2024 to enable Respondents to place on record reply affidavit. Let a copy of the reply affidavit be served on the learned Advocate for the Petitioner well in advance. Till the next date of hearing, impugned order shall remain stayed.
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2024 (2) TMI 1311
Levy of equivalent penalty imposed under Section 78 of the Finance Act, 1994 invocation of Section 80 of FA - Classification of service - Erection, Commissioning and Installation or not - providing services of fabrication and erection work of cement plant, sugar plant, coal mill, equipment, etc. - period from 10th September 2004 to 31st December 2008 - HELD THAT:- The appellant failed to justify any reasonable cause for non-payment of Service Tax during the relevant period supported by evidences. Ignorance of law or belief of non-applicability of Service Tax to the services rendered for a long duration of five years cannot be considered as a reasonable cause nor difficulty in arranging working capital be considered as sufficient reason for non-payment of Service Tax during the relevant period. Cumulatively, it is not a fit case to invoke Section 80 of the Finance Act; hence, the penalty imposed by the learned Commissioner cannot be interfered with. The impugned order is upheld and the appeal is dismissed.
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2024 (2) TMI 1310
Recovery of service tax with interest and penalty - entitlement to the benefit of the VCES Scheme - onus to prove - no corroborative evidences - appellant did not appear for personal hearing despite several opportunities granted and the duty demand was affirmed ex-parte - HELD THAT:- The appellant had not been actively participating in the proceedings. Before issuing the show cause notice, the Deputy Commissioner, CGST vide letter dated 13.04.2018, had requested the appellant to submit the documents, i.e., IRRs, Balance Sheets, Form 26AS and ST3 returns for the period 2012 13 to 2014 15 for examination of service tax liability on the services provided by them, however, the appellant never responded thereto nor submitted the requisite documents. Even after issuance of the show cause notice, the appellant did not submit any reply and though several opportunities were granted by the adjudicating authority the appellant did not appear and accordingly proceedings were concluded ex-parte. On appeal, the Commissioner (Appeals) remanded the matter to the adjudicating authority with directions to pass a speaking order after considering the submissions of the appellant in true spirit by following the principles of natural justice and the appellant was directed to produce all related documents to the adjudicating authority. Normally, the present appeal needs to be rejected considering the conduct of the appellant in not submitting the required documents at any stage, however with all fairness and in the interest of justice, it is felt that an opportunity to produce all the relevant documents in support of the submissions made, needs to be granted to the appellant. The appellant is once again directed to produce the VCES-2 and VCES-3 as the burden of proof is on the appellant. The appellant may also produce the documents in support of his submissions that he is exempted under the threshold limit of exemption for small scale service providers and that the services rendered by them are classifiable as works contract services where discharge of 50% of service tax liability under reverse charge by JVVNL is in consonance with the notification. The adjudicating authority is at liberty to consider all the submissions in the light of the documents to be placed by the appellant and pass a speaking order. The impugned order, is therefore set aside - the appeal is allowed by way of remand.
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2024 (2) TMI 1309
Classification of services - construction/development works in four ventures/ projects - to be classified under works contract service or Construction of Residential Complex Service? - HELD THAT:- Post judgment in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] , CRCS would not be the appropriate classification as this was in the nature of indivisible composite contract and therefore, would be more in the nature of WCS, and since there was no appropriate head i.e., WCS, available prior to 01.06.2007, the demand for this period would fall on this ground itself. In fact, the Board has also clarified vide Circular No. 151/2/2012-ST dt.10.02.2012, that for the period prior to 01.07.2010, construction service provided by the builder/developer will not be taxable in terms of earlier Board Circular No. 108/02/2009-ST dt.29.01.2009. In other words, there would be no liability. When SCN has proposed demand under WCS post 01.06.2007, whether that demand will still sustain or otherwise? - HELD THAT:- In this case, the SCN has proposed CRCS for the period up to 01.06.2007 but for the same activity, the services have been considered as WCS for the period post 01.06.2007. The rationality is that while services of CRCS continue to be specified service even beyond 01.06.2007, in view of the clear definition of WCS, it will be more appropriately classified under WCS as compared to CRCS, having recourse to Sec 65A. It is obvious that prior to 01.06.2007, there was no scope for deciding the classification, in view of the fact that CRCS was appropriately covering the activity in terms of its definition and in fact, in terms of Notification, there was a provision for exclusion of value of material involved in providing that service, so that only the service portion is charged to service tax. However, post 01.06.2007, the situation has changed where two different services heads are now available in respect of indivisible composite contract, which is not being denied by either side. For the period post 01.06.2007, it is obvious that the definition of WCS covers it more specifically as compared to the CRCS and therefore, by applying principle of classification under Sec 65A, the most specific entry for the nature of service would have been WCS and not CRCS, which existed post 2007 also. Thus, to that extent the Commissioner has not appreciated the true nature of transaction and the scope of Sec 65A and there is no bar in changing classification, especially, in cases where there is scope for classifying it more appropriately under a different classification, post introduction of the levy. Sec 65A, cannot be applied only at the threshold but it can also be applied in the event of any change in classification due to change in definition of existing service or introduction of new services, unless otherwise barred by the Act itself. Therefore, once the service is rightly covered under WCS post 01.06.2007, the next question is whether they will be entitled for exemption under Circular No.151/2/2012-ST dt.10.02.2012. Learned AR has vehemently opposed that Board Circular clarifying that no taxability on construction service for the period prior to 01.07.2010, would only be applicable in respect of construction services falling under clauses (zzq) (zzzh) of Sec 65(105) and not in respect of WCS. Therefore, there is no exemption from service tax for WCS, which is the appropriate classification. This issue has been decided by this Tribunal in favour of the Assessee in the precedent orders in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES [ 2014 (3) TMI 694 - CESTAT AHMEDABAD] , holding that though classifiable under WCS, no tax is payable for the period prior to 01.07.2010. There being no merit in the Appeal of Revenue - Appeal dismissed.
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2024 (2) TMI 1308
Eligibility for exemption under Notification No.25/2012-ST - Works Contract Services (WCS) provided to Andhra Pradesh Education Welfare Infrastructure Development Corporation Ltd (APEWIDC), Andhra Pradesh Medical Services Infrastructure Development Corporation Ltd (APMSIDC), Andhra Pradesh State Police Housing Corporation Ltd (APSPHCL) - exemption for construction of IT tower building by way of Works Contract provided to SEZ Authority - HELD THAT:- The three entities/institutions viz., (i) APEWIDC, (ii) APMSIDC (iii) APSPHCL have been set up by the State Government and are fully controlled by the State Government for furthering the statutory functions of the State Government like providing health, medical and education and housing facilities. It is further the function of the State Government to provide housing for its staff including the Police staff. It is found from the copy of the Andhra Pradesh Reorganisation Act, 2014 published in the Gazette of India Extraordinary Part II dated 01.03.2014, wherein Sec 68(1) of the said Act provides that the companies and corporations specified in the Ninth Schedule constituted for the existing State of Andhra Pradesh shall, on and from the appointed day, continue to function in those areas in respect of which they were functioning immediately before that day, subject to the provisions of this section - the aforementioned three entities are carrying out the activities as mentioned in Article 243W read with Twelfth Schedule of the Constitution of India and thus, the Appellant is entitled to exemption under Notification No.25/2012-ST with respect to services provided to these three entities, being WCS. Services provided through the main contractor by the Appellant to APEWIDC - HELD THAT:- It is found from the documents produced in the course of Hearing corroborate that the Appellant has rendered WCS being construction of school buildings, which is exempt under Notification No.25/2012-ST, S.No.12(a) (c) and thus, the Appellant is also entitled to exemption as subcontractor under S.No.29(h) of the said notification. The demand of Rs.16,91,682/- and Rs.3,80,518/- being services provided to governmental authorities set aside - the demand of Rs.6,26,762/- on WCS provided to APIIC, Kakinada (SEZ), it is held that the same is exempt under the provisions of the SEZ Act (Sec 7 read with Sec 51), which has got overriding effect on the provisions of Service Tax Act, and accordingly, this demand is also set aside. The demands as well as penalties imposed are set aside - this appeal is allowed.
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2024 (2) TMI 1307
Levy of Service Tax - Business Auxiliary Service - contract with its clients to render services in relation to import of goods from abroad - activities undertaken by the appellant are covered within the ambit of Clause (vi) of Section 65(19) of the Finance Act, 1994 or not - scope of SCN - demand in the instant case is sustainable when the Show Cause Notice fails to specify under which sub-clause of Section 65(19) the demand has been raised - HELD THAT:- The services provided by the OLSPs will be taxable under clause (vi) of Section 65(19) mentioned above, only if the services are provided on behalf of the Appellant to the customers of the Appellant. In the present case, the OLSPs are not acting as 'agents' of the Appellant while handling the cargo of the customers of the Appellant. The OLSPs books space on various shipping lines/airlines for the purpose of transportation of the goods from abroad to India. The contract is with the shipping line/airline and OLSPs. The shipping line/airline issues invoice in the name of the OLSPs. In case of defect, the shipping line/airline can sue only OLSPs. OLSPs in turn enter into contract with Appellant. OLSPs charge agreed fixed charges from Appellant. There is no contract between OLSPs and the customers of the Appellant. Accordingly, the OLSPs cannot be taxed under clause (vi) of the business of auxiliary service as there is no contract between the OLSPs and customers of the Appellant. The expression on behalf of the client in clause (vi) presupposes existence of three parties. The services should be provided as an agent of the principal to the customers of the principal. If the services are provided by the agent to the principal, that will be not covered in the scope of clause (vi). In the case of SAI COMPUTER CONSULTANCY VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [ 2011 (8) TMI 788 - CESTAT, NEW DELHI ] it has been held that When the client of the appellant was UP Power Corporation Ltd., it cannot be held that the appellant served clients of that Corporation on its behalf. Therefore, the appellant goes out of the ambit of sub-clause (vi) of the term business auxiliary service defined by law prevailing at the relevant time. Thus, the services rendered by the OLSPs cannot be categorized under the category of 'Business Auxiliary Services'. Hence, the demand of service tax under the Category of 'Business Auxiliary Services' in the impugned order is not sustainable. Scope of SCN - SCN has not specified any specific sub-clause of Section 65(19) under which the activities under taken by the OLSPs would fall - HELD THAT:- In the impugned order, the Ld. Adjudicating authority only classified the activities undertaken by the OLSPs under the category of business auxiliary service under Section 65(19)(vi) and (vii) read with Section 65(105) (zzb) read with Section 66A of the Finance Act, 1994. Such a categorization is not available in the notice while demanding service tax under the category of 'Business Auxiliary Service'. It is a settled law that the defect in the notice cannot be cured by the observations of the adjudicating authority. Accordingly, the demand of service tax along with interest and penalty confirmed in the impugned order is not sustainable as the Show Cause Notice fails to specify under which sub-clause of Section 65(19) the demand has been raised. The demand of service tax confirmed along with interest and penalty confirmed in the impugned order under the category of 'Business Auxiliary Service' is not sustainable and accordingly, the same is set aside - Accordingly, the appeal filed by the appellant is allowed.
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2024 (2) TMI 1306
SVLDR Scheme - whether the Appellant has discharged the amounts specified under SVLDRS-3? - whether SVLDRS-4 Certificate was issued by the Department or not? - HELD THAT:- The Department has not issued the SVLDRS-4 Certificate since Rule 7 of SVLDRS Rules, 2019 very clearly states that the amount arrived at under SVLDRS-3 should be paid within 30 days from the date of its issue - there is no provision to extend this time limit and no powers have been conferred to any authority to do so. Therefore, the Appellant is not eligible to get the benefit of SVLDR Scheme. The Appellant was issued Show Cause Notice based on the Income Tax Returns filed by them. By taking into account the TDS deducted by the clients under Form 26AS, Show Cause Notice has been issued to the Appellant. The Appellant has been maintaining that they have undertaken the services falling under Works Contract Service wherein they have provided the materials and also provided the services towards construction services - From the Show Cause Notice, it is seen that the quantification of demand has been made without considering the fact that the Appellant is providing the Works Contract Service. The Service Tax has been demanded @ 10% of the consideration received by them. Admittedly, the evidence provided by the Appellant shows that they were carrying Works Contract Service only. Matter remanded to the Adjudicating Authority with the following directions:- (i) The demand should be quantified by taking the Service Tax rate as per the Composition rate applicable for Works Contract, during the period under dispute. (ii) The Appellant should be granted opportunity to present all their documentary evidence towards their submission along with details of payments made by them. (iii) The Pre-deposit amounts paid and the amount paid in terms of SVLDRS-3 Certificate should be taken as part of the Service Tax payment against the quantified demand. (iv) In respect of the balance quantified demand, if any, the Appellant should be directed to pay the same. (v) For all the payments done, the interest is to be paid by the Appellant as per the applicable provisions. The penalties imposed under Section 77 78 of the Finance Act, 1994 set aside. The Fine imposed under Rule 7(C) of the Service Tax Rules, 1994 is upheld and is required to be paid by the Appellant - appeal disposed off.
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2024 (2) TMI 1305
Recovery of Service tax with interest and penalty - non-inclusion of certain expenses like inspection charges, property evaluation fees, postage charges etc. in the transaction value - period April 2010 to March 2016 - HELD THAT:- In the Review Order, only the statutory principle of law has been reiterated and no evidence has been adduced to negate the specific findings of the adjudicating authority holding that the service tax on all these expenses, by including the same in the gross transaction value has been discharged by the respondent. In the result, the impugned order is upheld and the Revenue s appeal being devoid of merit, accordingly dismissed.
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2024 (2) TMI 1304
Classification of service - development of a market at Biocholim and Ponda for the Goa State Urban Development Agency - works contract service or not - HELD THAT:- In the instant case, though it was the contention of the appellant that a new building had been constructed and renovation or restoration was not carried out, but this aspect has not been considered by the Commissioner in the impugned order and the Commissioner proceeded to examine the issue by considering the activity as one of restoration or renovation. Even if it is assumed that the appellant had carried out renovation or restoration work, then too clause (d) of Explanation clearly provides that the activity should in relation to (b) and (c) . Thus, such activity has to be primarily for the purpose of commerce or industry. According to the Commissioner, the words primarily for commerce or industry figuring in clause (b) of the Explanation would not mean that if the construction is not meant for commerce or industry , it would not fall within the scope renovation or restoration work mentioned in clause (d) of the Explanation. In the absence of any finding recorded by the Commissioner that the construction was primarily for the purpose of commerce or industry , it is not possible to sustain the demand under section 65(105)(zzzza) of the Finance Act. For this reason alone, the order dated 18.03.2015 passed by the Commissioner deserves to be set aside. The order dated 18. 03. 2015 passed by the Commissioner is, accordingly, set aside - appeal is allowed.
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Central Excise
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2024 (2) TMI 1303
SSI Exemption - classification of goods - manufacturing articles of rubber - goods conforming to description corresponding to tariff item 4008 1110 of Schedule to Central Excise Tariff Act, 1985 was sought to be re-classified against tariff item 4008 1190 of Schedule to Central Excise Tariff Act, 1985 - HELD THAT:- Taking up the issue of classification as it is contingent upon resolution thereto that the discarding of claim for exemption available to small scale industry (SSI) will become relevant. At the outset, particular emphasis laid on the rigours of classification, within the framework of General Rules for Interpretation of the Schedule appended to Central Excise Tariff Act, 1985 and judicial determination, which forecloses admission in statements from having anything but peripheral influence on the exercise. In the absence of any exposition of description corresponding to the proposed classification, it is well nigh impossible to approve the manner in which the adjudicating authority has proceeded. Though there is elaborate discussion on the purported evidence, such as formulation found in private records, admission in statements that these reflected reality and samples sent for testing, the key to the findings are the reports of tests from Deputy Chief Chemist, Vadodara on the composition of the end product as being polyethylene. This, along with the conclusion that the product is not rubber , led to the re-classification insofar as the appellant-assessees are concerned. While the presence of polyethylene does fulfill the requirements of note 1 in chapter 39 of Schedule to Central Excise Tariff Act, 1985 and has not been controverted, there is abundantly less certainty on the conclusion in the test report of no rubber especially when concatenated with the findings in the impugned order that rubber was consumed in the production process. The grounds of appeal preferred in the challenge mounted by Revenue to the impugned order confirms the need for re-determination. On the outcome of fresh determination also rests the appropriateness of penalty imposed on the individual-appellant. For those purposes, the impugned order is set aside and notice restored to the original authority for fresh decision on claim of appellant-assessees. Matter remanded on issue insofar as appellant - assessee is concerned, the appropriate disposal of this appeal of Revenue too is re-determination of the dispute by the original authority - the appeals allowed by way of remand.
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2024 (2) TMI 1302
CENVAT Credit - duty paying documents - fraudulent transactions - eligibility of the credits availed by the Appellant on the basis of invoices issued towards purchase of sandalwood oil - HELD THAT:- Receipt of inputs as such by the Appellant and duty paying documents in conformity to Section 9 of the CENVAT Credit Rules are material for the purpose of determination of its eligibility to avail the credits. The inputs were supposed to be sandalwood oil but what was being transported/supplied were actually nothing but plain water , as noted by learned Commissioner in para 2.4 of his order describing content of search report for the 1475 kg of crude sandalwood oil, which were found in sealed condition and bound in wooden crates with airport security seal intact but when broke open and verified was found to be plain water only. The sandalwood oil imported by him were of pure variety and there is nothing in trade known as crude sandalwood oil but for the purpose of certain rectification, method of distillation is applied so also in the case of Patchuli Oil. M/s J.G. Spices Ltd. was one of his customer to whom he supplied imported sandalwood oil and Patchuli oils in containers in the same sealed condition without any further processing. Being confronted with the fact that during search and seizure made by DGCEI of the stock of raw materials and finished group available at M/s J.G. Spices Ltd. premises representative sample were drawn from each container and Directorate of Forensic Science report was called for vide letter dated 29.09.2010 and it conformed the material content was nothing but water to which the Appellant s reply was that they used to open the container, upon receipt and even Customs Officer do so before clearance but the cap of the drums were only put back without re-sealing. There are no hesitation to come to the conclusion that goods were imported in sealed condition, taken to M/s. J.G. Spices Ltd., Meghalaya and kept therein also in sealed conditions and again returned back to different traders including the Appellant in sealed conditions affixing transit permit, railway freight invoices and in the process additional Excise Duty which was VAT component of State s tax collected by Union and Central Excise duty both were realized at both the points by the supplier and purchasers respectively causing loss to the State exchequer. The Appellant had not purchased sandalwood oil from M/s J.G. Spices Ltd. through those invoices and the goods transportation documents would not absolve the Appellant from its liability that the inputs against which credits availed were in fact not valid inputs namely sandalwood oil - Appeal dismissed.
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2024 (2) TMI 1301
CENVAT Credit - clearance of inputs as such - recovery of credit alongwith interest and penalty - sub-rule (5) of Rule 3 of Cenvat Credit Rules, 2004 - HELD THAT:- On going through decision of this Tribunal in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] . In the said case, cenvat credit was availed and after processing of inputs, the same was utilized towards payment of duty and subsequently it was held that the process which was undertaken did not amount to manufacture and, therefore, the said clearances did not attract central excise duty. Under those circumstances, it was held that since the duty payment was accepted by Revenue, the availed cenvat credit cannot be reversed. Such circumstances are not available in the present case. Therefore, the ruling in the said case is not applicable in the present case. Insofar as the impugned order is concerned in respect of the allowance of cenvat credit of Rs.5,63,66,047/- is concerned, there are no infirmity with the same - that part of the impugned order through which cenvat credit of Rs.5,63,66,047/- was disallowed is not interfered and is ordered to be recovered along with interest and equal penalty. Demand of Rs.1,18,45,107/- - HELD THAT:- The appellant was eligible to debit proportionate cenvat credit attributable to trading activity and we also find that such debited amount of Rs.3,44,773/- was appropriated by the original authority - the impugned order in respect of demand of Rs.1,18,45,107/-, interest and penalty is set aside. The penalty imposed on Shri Vijay S. Nair, Managing Director is set aside, and there are no omission or commission on his part in causing any loss to the exchequer. Appeal allowed in part.
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2024 (2) TMI 1300
CENVAT Credit - input services - refilling of gases from bulk containers to retail containers and conversion from liquid state to gaseous state amounts to manufacture or not - credit availed on input services has been denied alleging that the appellant has not been able to establish nexus of the input services with the manufacturing activity - HELD THAT:- When the services qualify as input services, the credit ought to be allowed unless there is discrepancy in the payment of Service Tax or in regard to the documents. There is no such dispute in this case. In the present case, the services availed are in the nature of inward and outward transportation of the goods. This is essential services for the manufacturing activity. Further, there is no requirement for an assessee to furnish one-to-one co-relation of the input services and the credit availed. There are no merits in the view taken by the Adjudicating Authority in denying the credit availed on input services. Recently, the Larger Bench in the case of M/s. Ramco Cements Limited Vs. Commissioner of Central Excise, Puducherry [ 2020 (6) TMI 794 - CESTAT CHENNAI ] had held that the credit availed on outward transportation services is eligible when the freight charges are included in the taxable value. The disallowance of credit on input services and the confirmation of the demand in this regard without basis are requires to be set aside - Appeal allowed.
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CST, VAT & Sales Tax
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2024 (2) TMI 1299
Sales tax demand for use of invalid ST-1 Forms, by the selling dealer - it was held by High Court that The rejection of the Forms in the present case and claiming deduction on the basis thereof for the sale of PVC resins at ₹ 9,25,52,964/- was contrary to law. The findings of the Sales Tax Tribunal and the Authorities below are accordingly reversed - HELD THAT:- Leave granted. Hearing be expedited.
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2024 (2) TMI 1298
Rectification of mistake - Refusal to exercise the jurisdiction under Section 31 of the U.P. V.A.T. Act, 2008 - miscarriage of justice or not - failure to exercise a jurisdiction duly vested by the authority of law - HELD THAT:- Perusal of Section 31 of the U.P. V.A.T. Act, 2008 would indicate that there is no such restriction in the learned Tribunal exercising its power of rectifying the mistake in as much as Section 31 of the U.P. V.A.T. Act, 2008 does not provide that such power can only be exercised by learned Tribunal in exparte orders rather Section 31 of the Act 2008 goes to the extent of empowering any officer, authority, learned Tribunal or this Court on its own motion or on the application of the dealer or any other interested person to rectify any mistake apparent on the face of record in any order passed under the provisions of the Act, 2008. Once no such restriction is contained under the provisions of the Section 31 of the Act 2008 as such it is apparent that learned Tribunal has patently erred in law in rejecting the said application vide the order dated 16.04.2018. The matter is remitted to learned Tribunal to decide the application of the petitioner filed under Section 31 of the Act, 2008 in accordance with law - the revision is partly allowed.
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Indian Laws
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2024 (2) TMI 1297
Wrongful representation of poor landless slum dwellers - illegal and unauthorised constructions on the government land - U.P. Slum Areas (Improvement and Clearance) Act, 1962 - HELD THAT:- Admittedly, all these showrooms/workshops, engaged in furniture and related businesses, exist on main road or are immediately adjacent to it. They are getting all benefits of any regular area of the city. They have widest road possible in the city. The main road is not filthy or lacks in any possible municipal facility. Their huge showrooms/workshops cannot be called filthy, run-down or unfit for humans. It is only that their address is shown as Akbar Nagar. The actual slum, covered by aforesaid definitions, begins behind these showrooms. Thus, petitioners are not suffering any of the challenges faced by the actual slum dwellers of the said slum. In the given circumstances, it is not possible for this court to accept that the showrooms/workshops of petitioners can be called as existing in a slum area. The documents were called for and considered to ascertain the status of Kukrail river/water channel next to the slum area and impact of slum on the said water channel. Once it is held that neither the petitioners are slum dwellers nor their establishments fall within the slum area, the said documents do not in any manner have any impact on the rights of the petitioners. Both before the prescribed authority as well as appellate authority petitioners represented themselves to be slum dwellers and did not place correct facts. Both the authorities have held proceedings and passed orders against petitioners on the basis of the said incorrect presumption. Looking into the entirety of the matter this Court finds no reason to exercise its discretionary jurisdiction in favour of petitioners - Petition dismissed.
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2024 (2) TMI 1296
Dishonour of Cheque - non-application of mind - denial of an opportunity to cross-examine the Complainant by disclosing specific defence in the Application - Preponderance of probabilities - violation of principles of natural justice - HELD THAT:- The Petitioner is an Accused in a complaint filed under Section 138 of the N.I. Act by the Respondent-Finance Company, in which, the Magistrate has issued a summons on satisfaction that a case is made out for summary trial. The Accused appeared before the learned Magistrate and after explaining the substance of accusation as provided under Section 251 of Cr.P.C., wherein the Petitioner/Accused pleaded not guilty and claimed to be tried, filed an Application under Section 145(2) of the N.I. Act for permission to cross-examine the Complainant. The impugned order shows that the learned Magistrate after considering the objections raised by the Complainant observed in paragraph 5 that such an Application is filed in the most casual manner and without disclosing any valid defence. The vague statements cannot be considered a valid defence to grant leave to the Accused to cross-examine the Complainant. The grounds mentioned in the Application have no substance as there is no denial about the loan transaction and hence, there is no question of cross-examining the witness - The ground regarding misuse of the cheque is again not explained in the Application and thus, Application was rejected. The proceedings under Section 138 of the N.I. Act are special proceedings wherein the Complainant is equipped with a presumption in his favour under Section 139 of the N.I. Act when the signature on the cheque is not denied by the Accused. In such a situation, the reverse burden is on the Accused to disprove such presumption though on preponderance of probabilities. It is also well settled by a catena of decisions that in order to dispel the presumption which arises out of Section 139 of the N.I. Act, the Accused either do so by pointing out the defects, discrepancies and inconsistencies in the case of the Complainant by way of cross-examination of the Complainant and his witnesses - the Accused is entitled to rebut such presumption either by showing that the cheque is not issued for legally recoverable debt through the cross-examination of the Complainant or by leading evidence. The learned Magistrate committed an error in observing that the defence raised by the Accused/ Petitioner is vague and does not disclose the details and the same is found to be incorrect. There are grounds raised in the Application which only after permitting cross-examination of the Complainant could be ascertained as a specific defence. Such defence raised in the Application could be considered as sufficient to bring the case of the Petitioner in terms of setting up a specific defence as held by the Apex Court in the case of Meters and Instruments Pvt. Ltd. [ 2017 (10) TMI 218 - SUPREME COURT ] as at that stage, nothing more is expected from the Petitioner/Accused. Admittedly, the Petitioner/Accused is entitled to have a fair trial which includes cross-examination of the Complainant and his witnesses. The impugned order therefore suffers from improper exercise of jurisdiction. Hence, needs to be quashed and set aside - Application filed by the Petitioner under Section 145(2) of the N.I. Act is accordingly allowed.
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2024 (2) TMI 1295
Dishonour of Cheque - Liability of a Director - principles of vicarious liability - petitioner had already resigned on 15.03.2014 as Director of the Company and was neither signatory of the cheques, nor Managing Director of the Company - Section 141 of NI Act - HELD THAT:- This Court is of the considered view that present petitions under Section 482 Cr.P.C. are not maintainable since the earlier petitions were withdrawn with liberty to urge all the pleas before the learned Trial Court at an appropriate stage and there has been no change of circumstances thereafter. However, in the interest of justice, present petitions have also been considered on merits since the clarificatory certificate issued by Chartered Accountant dated 07.08.2018 that petitioner was a Non-Executive Director is stated to have been filed with the concerned office on the date of withdrawal of earlier CRL.M.Cs. (i.e. 07.08.2018). The scope of proceedings under Section 141 of NI Act has been considered by the Hon ble Apex Court in SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [ 2005 (9) TMI 304 - SUPREME COURT ], wherein, it was observed that persons, who are sought to be made criminally liable under Section 141 of NI Act, should at the time of commission of offence be incharge of and responsible to the Company for the conduct of the business of the Company. Consequently, a Director, merely by holding a designation or office in a Company, would not be liable unless he was in-charge of and responsible for the conduct of the business of the Company. Thus, the liability depends upon role in the conduct of the affairs of the Company and not merely by the designation or status except in the case of Managing Director and Joint Managing Director. The existence of special circumstances or change of circumstances which is specific to the knowledge of accused needs to be established during the course of trial, if the same is not apparent from the record. Since the object of enactment of Section 138 and 141 of NI Act is to prevent bouncing of cheques and sustain credibility of commercial transactions, the proceedings can be quashed only if the ingredients of the offence are altogether lacking despite the foundational facts laid by the complainant. The principle of law, as referred in Siby Thomas v. Somany Ceramics Ltd., [ 2023 (10) TMI 487 - SUPREME COURT] , is not disputed, but it may be noticed that in the aforesaid case, the appellant submitted that he had retired from the partnership firm on 28.05.2013, while the cheque in question was issued on 21.08.2015. It was further noticed that the complaint was devoid of mandatory averments required to be made in terms of sub-Section 1 of Section 141 of NI Act. All the petitions are dismissed with composite cost of Rs. 25,000/- to be paid to respondent No. 1. Pending applications in respective petitions, if any, also stand dismissed.
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