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TMI Tax Updates - e-Newsletter
March 14, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Demand of GST - Discrepancy between the GSTR-3B returns and the auto populated GSTR-2A returns - The court observed that the tax demand solely pertained to the disparity between the Input Tax Credit (ITC) claimed in the GSTR-3B return and that reflected in the auto-populated GSTR-2A returns. It noted that the transaction's genuineness was not in question. - Acknowledging the contention regarding non-adherence to applicable circulars, the court deemed it appropriate to provide the petitioner an opportunity to contest the tax demand. - The court quashed the impugned assessment order with the condition that the petitioner remits 10% of the disputed tax demand within two weeks.
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Validity of the assessment orders passed - Tax (GST) demand - The court acknowledges that while the petitioner failed to respond on merits to the show cause notices, the assessment orders were issued without giving them a proper hearing and without considering their objections. Therefore, the court quashes the impugned assessment orders and remands the matters for reconsideration.
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Validity of demand of GST - For assessment year 2017-2018 - Notice in Form ASMT-10 issued for discrepancies found in returns - proceedings initiated pursuant to notice in Form ASMT-10, dropped by issuing an order in Form ASMT-12 - demand towards IGST, SGST and CGST - whether the same demand was resurrected - The court finds that the impugned assessment order confirms demands for the same assessment period and amounts, with the addition of interest and penalty. Given the previous conclusion that no further action was required, the continuation of proceedings leading to the impugned assessment order is deemed unsustainable.
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Validity of show cause notice issued threatening cancellation of GSTIN registration for non filing of returns - The case revolves around the timely filing of an appeal against the cancellation of GSTIN registration. The petitioner, a registered person under GST laws, challenged the cancellation order issued on 06.04.2023, which was rejected on the grounds of being filed belatedly. However, the petitioner contended that returns were promptly filed upon receiving the show cause notice, and the subsequent cancellation order was based on procedural grounds despite having no outstanding tax dues. The court, finding merit in the petitioner's submissions, quashed the impugned order and directed the appellate authority to reconsider the matter on its merits within a specified time frame.
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Cancellation Of GST registration retrospectively - The High court observed that the Show Cause Notice and the impugned order lacked necessary details and reasoning for retrospective cancellation, rendering them unsustainable. - Section 29(2) of the Central Goods and Services Tax Act, 2017 was referenced, emphasizing that cancellation with retrospective effect should be based on objective criteria and not merely due to non-filing of returns. - Consequently, the impugned order dated 29.02.2024 was set aside, and the petitioner's GST registration was restored, with a directive to comply with necessary regulations.
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Cancellation Of GST registration retrospectively - Show Cause Notice issued without giving reasons of cancellation - The High court observed that the Show Cause Notice lacked clarity regarding the reason for cancellation and did not provide the petitioner with an opportunity to object to the retrospective cancellation. - The impugned order did not give reasons for cancellation and contained contradictory statements regarding the submission of replies. - Considering that the petitioner no longer seeks to continue business, the court modified the impugned order to cancel the registration from the date of the Show Cause Notice.
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Determining the tax and penalty - Vehicle transporting consignment without Original Tax Invoice - The High court analyzed the relevant provisions of the SGST Act and CGST Act. While Rule 138-A and Section 68 were cited by the respondents, the court noted that neither of these provisions explicitly requires the transporter to carry the Original Tax Invoice. Instead, the court emphasized Rule 48 of the CGST Act, which specifies the preparation of the invoice in triplicate. The original copy is meant for the recipient/purchaser, while the duplicate copy is for the transporter. The High court concluded that the transporter is not obligated to carry the Original Tax Invoice, as claimed by the respondents. - As a result, the court allowed the writ petition, quashed the orders imposing tax and penalty. Excess amount paid directed to be refunded.
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Levy of Penalty u/s 73 - non willful mis-statement - discrepancies found on the returns - Validity of notice uploaded in the common portal and not communicated physically - The High court acknowledged the petitioner's assertion that they possess the necessary documents to refute the alleged discrepancies and are willing to submit them. - The court allowed the writ petition, setting aside the impugned order. The matter was remanded back to the respondent for fresh consideration. The petitioner was directed to appear before the respondent with the required documents on a specified date, and the respondent was instructed to reconsider the issue promptly.
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Liability on the head of IGST and interest with a penalty - The major contention arises from the treatment of sundry creditors' liability. The petitioner asserts that the liability was wrongly assessed without considering the tax component and argues for the deduction of the Input Tax Credit (ITC) tax element from the total sundry credit amount. - The learned Additional Government Pleader suggests that the petitioner has the option to file an application u/s161 of the GST Act within 90 days to rectify any errors in the assessment order. - The High court disposed of the writ petition with the liberty granted to the petitioner to file an application u/s 161 of the GST Act, along with necessary documents.
Income Tax
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Validity of Reassessment proceedings - notice u/s. 148A(b) issued in the name of a dead assessee - The High court acknowledges that the petitioner failed to inform the department about the death of the original assessee and did not produce the death certificate. It notes that the assessment proceedings have concluded, and the final assessment order has been passed. - The court emphasizes that when a statutory remedy is available, a writ petition cannot be entertained except in exceptional circumstances. It holds that since the proceedings under Section 148 have attained finality, it is inappropriate to entertain the writ petition at this stage. - The court dismisses the petition with liberty to the petitioner to take recourse to the statutory remedy of appeal.
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Reopening of assessment u/s 147 - The Tribunal found the reassessment proceedings to be invalid due to the non-application of mind by the AO and lack of valid approval as mandated by law. Specifically, the court noted that objections filed by the assessee were not disposed of in accordance with legal requirements, and the sanction under section 151 of the Act did not bear the signature of the PCIT, rendering the initiation of reassessment proceedings invalid.
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Correct head of income - compensation received for vacating the flat - While the assessee argued for capital gain treatment, the Revenue contended it should be classified as income from other sources. However, the ITAT ruled that the compensation constituted a capital receipt in the hands of the assessee, as it was received from the company out of its own income. The ITAT concluded that the amount was neither capital gain nor income from other sources but rather an application of income by the company. Therefore, the addition made by the assessing officer was deleted, and the appeal of the assessee was allowed.
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Assessment proceedings initiated against a person who had died - Unexplained cash credit u/s 68 r.w.s. 115BBE - assessee has failed to prove the genuineness of amount deposited in bank accounts in OHD was from the sale of petrol and oil made during the demonetization period - The court found that the assessment order was invalid due to being issued against a deceased person, and therefore, quashed it. Consequently, as the assessment order was quashed, all other issues regarding additions made by the Assessing Officer became academic and were rendered infructuous.
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Credit of TDS - consideration received for offshore supply of rolling stock, when no corresponding income has been offered for taxation by the assessee - The ITAT cited precedent to assert that TDS credit should be granted regardless of whether the income was directly offered for taxation, as long as TDS was deducted and deposited with the government. - The Tribunal upheld the assessee's entitlement to TDS credit and subsequent refunds, in alignment with previous rulings and provisions of the Income Tax Act.
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Rectification u/s 154 - refund of taxes paid in foreign country - The High court noted that the Hon'ble Apex Court had expressly overruled the AAR order in a previous case involving the petitioner, which entitled the petitioner to seek rectification and refund of taxes paid under protest. - The court emphasized the importance of the circular dated 17.11.1971, which allows rectification of returns based on the interpretation of law by the Hon'ble Apex Court. - Consequently, the court allowed the petition, set aside the impugned order, and directed the concerned respondents to refund the taxes paid by the petitioner along with applicable interest.
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Rectification u/s 154 - non deduction of TDS u/s 194I - The Tribunal examined the rectification proceedings and found that the Assessing Officer's actions were not sustainable in law. Despite previous rectifications in favor of the assessee, the AO pursued further rectification, incorrectly asserting TDS liabilities. The Tribunal held that such rectification, involving detailed inquiries, was not permissible under legal precedent. Therefore, the lower authorities erred in treating the assessee as the assessee-in-default under section 201, and the rectification was deemed not sustainable.
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Taxability of cash deposits as unexplained u/s 69A r.w.s. u/s. 115BBE - The Tribunal found that the cash deposits made by the appellant during the demonetization period were unexplained. - Held that the deposits constitute turnover of the appellant's business and taxed them at a rate of 3.5%. - Directed the Assessing Officer to tax the turnover under normal rates instead of under section 115BBE of the Act.
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Taxability of salary income earned by non-residents from Indian companies. In this Judgement, it was determined that under Section 9(1)(ii) of the Income Tax Act, salary income is taxable in India if earned in India. However, it was clarified that if the services are rendered outside India, the salary income cannot be taxed in India. - The Tribunal analyzed the definition of salary under Section 15 of the Income Tax Act, which includes salary due from an employer or paid/allowed to the employee. Considering the scope of total income under Section 5, the ITAT concluded that no taxability arises on salary/allowances received by the assessee as they were earned outside India.
Customs
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Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - The CESTAT held that the appellant was responsible for the actions of their employee, as per Regulation 13(12) of the Customs Broker Licensing Regulations, 2018. Despite the appellant's claim of ignorance, the CESTAT found that they failed to exercise proper supervision over their employees and were therefore liable for the violations. - The Tribunal found that the appellant had violated several regulations, including failing to advise the client to comply with regulations, exercising due diligence, and verifying the correctness of import-export codes. The court upheld the decision of the Commissioner to revoke the appellant's license and impose penalties.
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Valuation of imported goods - rejection of declared value - enhancement of value - The CESTAT held that since the appellant had voluntarily waived the right to a show cause notice and a personal hearing, and had accepted the enhanced value, the customs authorities were not required to follow the sequential procedure for valuation under the 2007 Valuation Rules. - The Tribunal did not accept the argument that the duty on the enhanced value was paid under duress, noting that the appellant had voluntarily accepted the enhanced value.
IBC
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Constitutional validity - Disciplinary proceedings against insolvency professional agencies - suspension of authorization for assignment - Regulation 23A is liable to be struck down or not - violation of principles of natural justice - Section 204 of IBC is violative of Article 20(2) of the Constitution of India or not - The court dismissed the petitioner's contentions regarding the arbitrary nature of Regulation 23A, its conferral of excessive power on IPAs, and its violation of natural justice principles. - The court upheld the validity of Section 204 of the Insolvency and Bankruptcy Code, rejecting the petitioner's argument. The petitioner is virtually assailing correctness of the findings before the self same Court and pleading for re-consideration of the issue, which is nothing but an appeal in disguise, which cannot be entertained by this Court.
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Admission of Section 7 petition - time barred debt or not - The appellant, a suspended director of the corporate debtor, challenges the admission of the petition, arguing that the debt claimed is time-barred. The respondent financial creditor contends that the debt acknowledgment was made by the corporate debtor in its financial statements. The NCLAT found that the appellant was not given a fair opportunity to contest the submissions made by the respondent and consequently set aside the impugned order, remanding the matter back for reconsideration with proper adherence to principles of natural justice.
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Rejection of Section 9 application - Initiation of CIRP - pre-existing dispute - The tribunal meticulously analyzed the arguments from both sides and relevant legal provisions under the IBC. It focused on whether there was a plausible pre-existing dispute between the parties concerning the operational debt. - The NCLAT found that there indeed was a pre-existing dispute regarding the operational debt, primarily based on the appellant's breach of the Agency Agreement, leading to its termination by the respondent. The tribunal noted that the appellant's illegal activities and the subsequent termination of the agreement formed the basis of the dispute. - The tribunal concluded that the Adjudicating Authority (AA) did not err in dismissing the Section 9 application, as the operational debt was disputed.
PMLA
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Provisional attachment order - The appellant challenged not only the confirmation of provisional attachment but also the rejection of their application for documents. The Court found merit in the appellant's argument, set aside the confirmation order, and reinstated the application for document supply. The matter is remitted to the Appellate Tribunal for further consideration.
Central Excise
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Clandestine removal - evasion of duty - clearance of branded Khaini - burden to prove on Revenue - Ultimately, the High court concurred with the majority view of the CESTAT, which had found the evidence against the respondents unreliable and insufficient to establish the charge of clandestine removal. The appeals filed by the Revenue were dismissed on the grounds that the allegations could not be substantiated beyond reasonable doubt, underscoring the need for tangible evidence to support claims of tax evasion and clandestine operations.
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Levy of penalty u/s 11AC of Central Excise Act, 1944 - duty liability from January 2009 onwards was being discharged on lower values by applying appropriate rate of duty to value derived from CAS 4 of 2008 - mistake/ inadvertence - While penalties were imposed under section 11AC of the Central Excise Act, 1944, the CESTAT notes that this provision does not autonomously empower imposition; instead, it is controlled by section 11A, and considering the circumstances, the penalties are set aside.
Case Laws:
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GST
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2024 (3) TMI 580
Demand of GST - Discrepancy between the GSTR-3B returns and the auto populated GSTR-2A returns - No opportunity to contest the tax demand - Breach of principles of natural justice - Not adhered the circulars - Petitioner unable to respond Show cause notice issued - Not aware of the same since the petitioner was entirely dependent on his accountant -business of supply of base metals - HELD THAT:- From the impugned assessment order, it is evident that the entire tax demand pertains to the disparity between the ITC claimed in the GSTR-3B return and that reflected in the auto populated GSTR-2A returns. The impugned assessment order does not indicate that the transaction was not genuine. Learned counsel for the petitioner also contended that applicable circulars were not adhered to in this regard. Thus, albeit by putting the petitioner on terms, I am of the view that the petitioner should be provided an opportunity to contest the tax demand. Therefore, the impugned assessment order is quashed subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a maximum period of two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to file a reply to the show cause notice within the aforesaid period. Writ Petition is disposed of on the above terms.
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2024 (3) TMI 579
Validity of the assessment orders passed - Tax (GST) demand - No opportunity of personal hearing on request - civil contractor - registered person under applicable GST - HELD THAT:- The documents on record include the petitioner's reply in July 2023. By such reply, the petitioner requested for time to respond to the show cause notice and also expressly requested for a personal hearing. Although the respondent cannot be faulted because the petitioner failed to reply on merits to the show cause notices, the assessment orders were admittedly issued without hearing the petitioner and without considering the objections or explanation of the petitioner. The entire tax demand across the relevant assessment years was recovered in this manner. Thus, at this juncture, revenue interest stands fully secured. Thus, to interfere with the impugned assessment orders so as to provide an opportunity to the petitioner to contest the tax claims. Therefore, the impugned assessment orders are quashed and these matters are remanded for re-consideration. Writ Petitions are disposed of.
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2024 (3) TMI 578
Cash logistics business - For assessment year 2017-2018 - Notice in Form ASMT-10 issued for discrepancies found in returns - proceedings initiated pursuant to notice in Form ASMT-10, dropped by issuing an order in Form ASMT-12 - demand towards IGST, SGST and CGST - whether the same demand was resurrected - HELD THAT:- On examining the impugned assessment order, I find that the confirmation of demand relates to the same assessment period and the same amounts towards SGST, CGST and IGST. The only difference is that interest and penalty has been imposed thereon to arrive at the aggregate sum indicated therein. Upon issuance of an order in Form ASMT-12 recording that no further action is required, the continuation of proceedings culminating in the impugned assessment order is undoubtedly unsustainable. Thus, the impugned assessment order is quashed. W.P.No.2981 is allowed and connected miscellaneous petitions are closed.
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2024 (3) TMI 577
Power to condone delay u/s 107 of the GST Act - show cause notice issued threatening cancellation of GSTIN registration for non filing of returns - returns filled - Withdrawal from suspension of registration - fresh order of cancellation issued - failed to file GSTR-3B returns for a continuous period of six months - HELD THAT:- The petitioner has placed on record the order dated 02.03.2023, which indicates that the petitioner filed pending tax returns. The said order also indicates that the suspension of registration was revoked with effect from 02.03.2023. The subsequent order dated 06.04.2023 was issued on the basis that the petitioner failed to file GSTR-3B returns for a continuous period of six months. The said order also discloses that there are no tax dues as on the date of issuance thereof. Thus, it appears prima facie that the petitioner has a good case on merits. The impugned appellate order sets out the relevant dates. If the appeal had been filed on or before 05.08.2023, the appellate authority had power to condone delay u/s 107 of the GST Act. The appeal was filed on 01.09.2023 and the delay is less than 30 days. Hence, it is an appropriate case to direct the appellate authority to receive and dispose of the appeal on merits. Thus, the order impugned herein is quashed and the matter is remanded to the appellate authority.
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2024 (3) TMI 551
Cancellation Of GST registration retrospectively - Defective Show Cause Notice - SCN does not put the petitioner to notice that the registration is liable to be cancelled retrospectively - trading of ferrous and non-ferrous metals - HELD THAT:- We notice that the Show Cause Notice and the impugned order are bereft of any details accordingly the same cannot be sustained. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. 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. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. Thus, Order dated 29.02.2024 cannot be sustained and is accordingly set aside. The GST registration of the petitioner is restored - The petition is accordingly disposed of in the above terms.
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2024 (3) TMI 550
Cancellation Of GST registration retrospectively - Show Cause Notice issued without giving reasons of cancellation - HELD THAT:- We notice that the Show Cause Notice and the impugned order are bereft of any details accordingly the same cannot be sustained and neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent s contention is 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 may be further noted that both the Petitioner and the department want cancellation of the GST registration of the Petitioner, though for different reasons. In view of the fact that Petitioner does not seek to carry on business or continue the registration, the impugned order dated 15.12.2022 is modified to the limited extent that registration shall now be treated as cancelled with effect from 02.12.2021 i.e., the date when the Show Cause Notice was issued. Petition is accordingly disposed of in the above terms.
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2024 (3) TMI 549
Determining the tax and penalty - Vehicle transporting consignment without Original Tax Invoice - manner of issuing the Invoice - HELD THAT:- Rule 48 of the CGST, deals with the manner of issuing the Invoice. Accordingly, to which the Invoice shall be prepared in triplicate in case of supply of goods. The original copy marked as such is meant for recipient or the purchaser and therefore, same will not be carried by transporter. As per Section 48(1)(b) of the CGST, it is only the duplicate copy is meant for transporter and the triplicate copy is for the supplier as per clause-C. Therefore, it is clear that the transporter is not required to carry Original Tax Invoice but law mandates him to carry the duplicate copy. Thus, the contention taken by the respondents that the petitioner is liable for tax and penalty as the transporter had not carried Original Tax Invoice cannot be accepted. It is stated that the petitioner is levied with double tax as he has already paid the tax as required to be paid and once again he paid the tax with penalty and therefore, same is liable to be refunded. The writ petition is allowed.
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2024 (3) TMI 548
Levy of Penalty u/s 73 - non willful mis-statement - discrepancies found on the returns - Validity of notice uploaded in the common portal and not communicated physically - Works contractor registered with the GST Act, 2017 - HELD THAT:- The petitioner's contention is that he is having all the required documents to substantiate that there is no discrepancy and he is ready to submit the same. The learned counsel has relied on the order of the Division Bench of the Gujrat High Court, wherein, it was held that show-case notice and other related orders in physical form shall be dispatched to the dealers by RPAD, till the technical glitches are cured. Since the petitioner is ready to produce all the necessary documents, the respondent is also inclined to provide one more opportunity to the petitioner. Thus, this writ petition is allowed. The order impugned in this writ petition is set aside and the issue is remanded back to the respondent for fresh consideration.
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2024 (3) TMI 547
Liability on the head of IGST and interest with a penalty - issued show cause notice pointing out defects - Sundry Credit - Dealer of plywood registered under the GST Act - application u/s 161 of GST Act - HELD THAT:- Petitioner claims that he has paid the tax amount and he has also enclosed the Bank Statement. However, the respondent has passed an order treating the entire purchase value of sundry credit as tax liability, instead of deducting the ITC Tax element involved on the sundry creditors. According to him, the total sundry credit as per the IT returns is Rs.3,14,65,707/- and the tax component for this purchase value is 18%. However, the assessing authority, without considering the same, has considered the entire value of purchase as a tax amount as ITC and wrongly reversed the entire purchase credit value to the tune of Rs.3,14,65,707/-. Additional Government Pleader, who takes notice for the respondent, submits that the petitioner is having a right of filing an application u/s 161 of GST Act to correct the error before the concerned authority within a period of 90 days. If the petitioner is having any grievance as against the amount arrived in the assessment order, he can very well file an application u/s 161 of GST Act, within a period of 90 days. Thus, this writ petition is disposed of with a liberty to the petitioner to file an application u/s 161 of GST Act along with the required documents.
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Income Tax
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2024 (3) TMI 581
Accrual of income in India - Royalty receipts - income earned from licensing/sale of software and subscription received against cloud services offered by assessee - scope of Indo-USA DTAA - HELD THAT:- Tribunal has ruled that neither income earned from licensing of software products nor subscription fee earned for providing cloud services, could be construed as royalty. Revenue, says that the proposed questions are covered by the judgment of the Supreme Court rendered in Engineering Analysis Centre of Excellence (P.) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] - We are also informed by Appellant that a review petition has been filed which is pending consideration. Accordingly, the appeal is closed as no substantial question of law arises for our consideration, albeit, with the caveat that in case the appellant/revenue were to succeed in the review petition, the parties will abide by the decision rendered therein.
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2024 (3) TMI 576
Exemption u/s 10(38) claimed in revised return - bogus LTCG on shares - revised return was filed by the Assessee claiming the above exemption which was denied - denial of an opportunity to cross examine the entry providers - HC held that [ 2023 (2) TMI 1277 - ORISSA HIGH COURT] ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO - 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 (3) TMI 575
Validity of Reassessment proceedings - notice u/s. 148A(b) issued in the name of a dead assessee - Petitioner contended that respondents could not have issued notice u/s. 148A(b) since Late assessee who had died in the year 2017 itself and said factum of death was very well known to the respondents, therefore, the notice u/s. 148 of the Act of 1961 has been issued in the name of legal heirs - HELD THAT:- It is not in dispute that the stage of show cause notice u/s. 148 is already over. Thereafter, much water has flowed as assessment proceedings have taken place and final assessment order has been passed. Admittedly, the petitioner did not inform regarding death of the original assessee alongwith death certificate to the department. When a statutory forum is created for redressal of grievance, normally writ petition cannot be entertained ignoring such statutory dispensation. In exceptional circumstances, there are deviation to the aforesaid rule, but in this case, the proceedings u/s. 148 had attained finality. Now, at this stage, petitioner has an efficacious statutory alternative remedy to challenge the same u/s. 246 of the Act of 1961. Therefore, it is inappropriate for this Court to take indulgence in the matter by-passing the statutory remedy available. Accordingly, the present petition is disposed off with liberty to the petitioner to take recourse to statutory remedy of appeal available for challenging the assessment order.
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2024 (3) TMI 574
Reopening of assessment u/s 147 - unexplained credit u/s. 68 - discharge of initial onus or not? - Mandation to dispose off the assessee objections by AO - HELD THAT:- As per order dated 07.11.2016, the copy of reasons recorded were supplied to the authorized representative of the assessee on 04.11.2016 and objections were filed on 03.11.2016. Thus, what the A.O. is disposing as per order dated 07.11.2016 cannot be the objections raised in letter dated 03.11.2016 as the copy of the reasons, according to own admissions of the A.O. was provided to the assessee only on 04.11.2016. It can be seen from the reply dated 31.10.2016 of the assessee, it did not submit any objection with regard to reassessment proceedings initiated as per notice dated 29.03.2016 as by that time copy of reasons recorded in pursuance to notice dated 29.03.2016 were not supplied to the assessee. On these facts the disposal of objections for initiating reassessment proceedings by an order dated 07.11.2016 is a non-judicious attempt of the AO to dispose the proceedings in a manner not known in law. Therefore, the reassessment proceedings are bad in law as the AO did not follow the mandatory procedure laid down in the case of GKN Driveshaft v. ITO [ 2002 (11) TMI 7 - SUPREME COURT] Valid sanction u/s. 151 or not? - It can be seen that the sanction has been granted only as per letter dated 24.03.2016 which does not bear the signature of PCIT and it is only a letter wherein ACIT is informing the AO that he is directed to communicate the approval given by the PCIT. The Performa attached with the same also does not bear the signature of PCIT. Thus, it is a case where no approval has been granted by PCIT u/s. 151 of the Act as approval should be given only after application of mind by the approving authority. It can be seen from the wording of letter the so called approval has been given subject to recording of reasons. The reasons are recorded after approval letter dated 24.03.2016. The reasons recorded and provided to the assessee also not bearing any date and there is only typed date in Performa which is 17.03.2016. No proper approval has been given by the approving authority, which would render the initiation of reassessment proceedings as invalid in the eyes of law. Thus we hold that the reopening of assessment is bad in law.
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2024 (3) TMI 573
Correct head of income - compensation received for vacating the flat - income from other sources or capital gain - denying the assessee s claim for deduction u/s. 54F - AO held that the amount is taxable in the hands of the assessee as income from other sources as reason being that assessee has received this amount not on account of surrender of transfer of tenancy rights as assessee was never the sub-tenant of the said flat by virtue of any legal agreement or by payment of any rent to the tenant HELD THAT:- It is not in dispute that the company OIPL was a tenant in the residential flat pursuance of leave and license agreement dated 01/05/1965 and thereafter, the company continued to have the possession of the flat. For vacating the flat, a suit filed by the landlord against OIPL. The Court ruled against the Landlord and it was held that OIPL is a deemed tenant of the residential flat. Thereafter, various suits were filed by the landlord for eviction. Finally, consent terms were agreed into and out of Court settlement was made between landlord and OIPL for vacating the flat an in lieu thereof, a sum of Rs. 2,01,00,000/- was paid to OIPL by the Landlord for vacating the flat. Assessee is contending that, since assessee and his family members (directors in the OIPL) and were staying in the said flat rented by OIPL for more than 40 years and they had to vacate flat to find an alternative accommodation, therefore, the company had paid an amount of Rs. 75,00,000/- to each of the Director. Thus, the compensation received from the company for vacating the flat is for the occupancy rights, that is, they will not evoke any possessory or occupancy rights in respect of the said flat and therefore, surrender of said rights amounts to capital asset - We are unable to agree with the contention raised by the assessee, because, as rightly held by the ld. AO, assessee was neither a sub-tenant nor there was any kind of sub-licensing of the property by the company to the assessee from his family members. Though assessee might have resided in the property taken on rent by the company but it does not translate into any right in the property in the name of the assessee. Assessee was occupying the property on behalf of the company which company had allowed them to stay. There is also nothing on record that a separate consent between assessee and the landlord had also been agreed upon or assessee was part of the legal suit filed by the landlord. It is also not on record the directors had paid any rent to the company nor did the company had shown any such perquisite given to its director. Thus, we agree, with the observation of the ld. AO to the extent that it is not chargeable to tax under the head capital gain in the hands of the assessee, because only company had a sole right in the tenancy in the property and company alone can show the entire compensation amount as its income from Capital Gain from surrender of tenancy right. There is nothing on record to suggest that assessee had any kind of right in the said property for which they were to be compensated separately by the Landlord. However, the amount of Rs. 75,00,000/- received by the assessee cannot be taxed in the hands of the assessee for the reason that: firstly, the amount has been received from the company out of its own income which was received in the form of compensation chargeable to tax under the head capital gains entirely in the hand of the company and any amount given to the assessee out of such taxable income amounts to application of income by the company. Secondly, the capital gains for the entire compensation received is taxable in the hands of the company OIPL and if any such amount paid to the assessee by the company is out of its income, which cannot be taxed as income from other sources in the hands of the assessee. The reason being, the amount has been received by the assessee from the company so that company can honour the consent term with the landlord for peaceful vacation of the flat and assessee had no role in the consent term. Thirdly, the amount to be taxed in the hands of the assessee has to be in the nature of income which assessee had earned from company carrying out any activity or surrendering any right or asset in favour of the company which can be assessable under any head. Here the money has been received by the assessee from the company so that company can discharge its obligations; it has nothing to with the assessee. In the hands of the assessee it is purely a capital receipt which he has received from the company so that company can give undertaking to vacate the premises in the favour of the landlord for which company was paid compensation. Lastly, If at all, the amount of entire compensation was taxable in the hands of the company which we find that it has offered as a capital gain in the return of income. However, it has claimed deduction for such payment made to the assessee. Such a claim is allowable or not the issue before us, because it is not a cost incurred on tenancy right albeit its application of income. Since, it is not the subject matter of issue before us therefore, we are refraining to go on this issue. Whether it is taxable in the hands of the assessee? - We hold that, the amount received from the company is neither chargeable under the head capital gains nor as income from other sources, albeit, it is a capital receipt in the hands of the assessee because the amount received from the company out of its own income, is an application of income by the company. The entire amount of compensation is capital gains in the hands of the company, which has been declared, albeit its computation and deduction is subject matter of examination there and since this not the issue before us so we refrain from any such adjudication. Thus on this ground, the addition made by the ld. AO is deleted.
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2024 (3) TMI 572
Assessment proceedings initiated against a person who had died - Unexplained cash credit u/s 68 r.w.s. 115BBE - assessee has failed to prove the genuineness of amount deposited in bank accounts in OHD was from the sale of petrol and oil made during the demonetization period - HELD THAT:- We note that during assessment stage, assessee s legal heirs have informed the Assessing Officer that assessee had died. We note that the assessee`s case was selected for scrutiny by issue of notice u/s 143(2) and after that legal heirs have informed the AO on 18.06.2019 that assessee had died. Despite of this fact on record, the AO framed the assessment order on 29.12.2019, which is against the settled position of law. Hence the assessment order framed by the AO should be quashed on this score only. In the assessee`s case under consideration, we note that during assessment stage, assessee s legal heirs have informed the Assessing Officer about the death of the assessee, inspite of this, AO framed the assessment order which is which is bad in law and should be quashed. Therefore, respectfully following the judgment in the case of Dharamraj [ 2022 (1) TMI 844 - DELHI HIGH COURT] we quash the assessment order framed u/s 143(3) of the Act - Assessee appeal allowed.
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2024 (3) TMI 571
Credit of TDS - consideration received for offshore supply of rolling stock, when no corresponding income has been offered for taxation by the assessee - AO held that credit of TDS is not allowable since the Assessee did not offer corresponding income to tax in its RoI - HELD THAT:- As per Section 199(1) of the Act, any deductions made in accordance with the foregoing provisions of this chapter and paid to the Central Government shall be treated as payment of tax on behalf of the person from whose income the deduction is made. Therefore, as per the provisions, once TDS was deducted, a credit of the same is to be given to the assessee. Considering the same, the claim of credit of withholding tax should be allowed to Assessee as per provisions of the Act. The Co-ordinate Bench of ITAT, in the case of Escorts Ltd. [ 2007 (5) TMI 362 - ITAT DELHI] held that once deduction of tax at source is made and the same is deposited with the Government then the assessee becomes entitled for credit of such TDS while computing the tax liability for the period irrespective of the fact that the assessee considered that he is not liable to tax in respect of the income and, therefore, does not disclose the amount of income in his return. The Income-tax Department cannot refuse to give credit merely by contending that the income has not been disclosed in the return filed by the assessee for the assessment year. Co-ordinate Bench of ITAT in the case of Supreme Renewable Energy Limited [ 2008 (8) TMI 432 - ITAT MADRAS-C] held that assessee is entitled to TDS even if the income has not directly been offered to tax as the same was not liable to tax. Thus we hold that the assessee is entitled to credit of TDS/Withholding tax and the consequent refunds thereof.
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2024 (3) TMI 546
Rectification u/s 154 - refund of taxes paid in foreign country - rectification of returns and refund of taxes as paid under protest by invoking Section 154 - HELD THAT:- As per circular dated 17.11.1971, an assessee is entitled to seek rectification pursuant to interpretation of law by the Hon'ble Apex Court. Further, as rightly contended by the learned Senior Counsel for the petitioner in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED [ 2021 (3) TMI 138 - SUPREME COURT ] as held determination of the AAR in Citrix Systems (AAR) [ 2012 (2) TMI 258 - AUTHORITY FOR ADVANCE RULINGS ] does not state the law correctly and is thus set aside and any ruling on the more expansive language contained in the explanations to Section 9(1)(vi) of the Income Tax Act would have to be ignored if it is wider and less beneficial to the assessee than the definition contained in the DTAA, as per section 90(2) of the Income Tax Act read with explanation 4 thereof, and Article 3(2) of the DTAA. Further, the expression copyright has to be understood in the context of the statute which deals with it, it being accepted that municipal laws which apply in the Contracting States must be applied unless there is any repugnancy to the terms of the DTAA . Thus held taxes paid by the petitioner under protest deserves to be refunded by rectifying the income tax returns filed by the petitioner pursuant to the order of Advance Rulings Authority. Respondent no. 1 clearly fell in error in passing the impugned order rejecting the applications filed by the petitioner and consequently, the impugned order deserves to be set-aside and the rectification applications deserves to be allowed by directing refund of taxes paid by the petitioner. Rectification application allowed.
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2024 (3) TMI 545
Rectification u/s 154 - non deduction of TDS u/s 194I - treating assessee-in-default u/sec. 201 r.w.s. 201(1A) for the purpose of recovering the corresponding TDS, involving varying sums, in all these assessment years - HELD THAT:- TDS recoveries pertain to assessee s payments of licence-fee of various CT and X-ray machines which have been treated as rental in nature attracting sec. 194I - AO had duly passed his sec. 201(1) r.w.s. 201(1A) order(s) on 28.01.2016 not holding the assessee as the assessee-in-default in the lead assessment year 2009- 2010. This followed former round of sec. 154 rectification which stood concluded in assessee s favour on 28.03.2018. AO thereafter took-up yet another sec. 154 rectification in the impugned second round dated 29.11.2019 that the assessee s foregoing payments duly attracted TDS deduction u/sec. 194I of the Act whose non-compliance would liable it to be treated as the assessee-in-default. We are of the view in this clinching factual backdrop that such a course of rectification of the issue involving detailed enquiries would hardly be available to the AO since as per hon ble apex court s landmark decision in TS Balram, ITO vs. Volkart Bros. [ 1971 (8) TMI 3 - SUPREME COURT] . We thus conclude that the learned lower authorities have erred in law and on facts in treating the assessee as the assessee-in-default in sec. 201 r.w.s. 201(1A), by way of sec. 154 rectification in question. The same is held as not sustainable in law in all these assessment years since involving identical facts.
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2024 (3) TMI 544
Taxability of cash deposits as unexplained u/s 69A r.w.s. u/s. 115BBE - cash deposited in the bank accounts have not been shown as recorded or explained in the books of account of the assessee and the assessee has failed to satisfactorily explain the source of cash deposits - HELD THAT:- Assessee under consideration is running the same business, as he was running in the assessment year 2013-14, there is no change in the facts of the assessee's case. No merit in the arguments of Revenue to the effect that assessee`s facts are different in assessment year 2017-18. CIT(A) in assessment year 2013-14, held that considering the facts of the case and history of the appellant s case, the unexplained cash deposits are taken as turnover and profit at the rate of 3.5% is estimate on such turnover. Thus, we note that the Department/Revenue has accepted the claim of the assessee and taxed the turnover @ 3%. Thus, at the cost of repetition we state that there is no change in assessee s facts and circumstances of the present case and assessee s business remain same and facts also remain same, therefore we note that unexplained cash deposit may suffer the tax @ 3.5% on estimated basis. Therefore, we direct the AO to treat amount deposited in the bank account, as a part of assessee`s business turnover, and to be taxed @ 3.5% - Since, the turnover is out of assessee`s own business hence no question arises to tax the same u/s. 115BBE of the Act, therefore we direct the AO to tax the assessee`s estimated addition under normal rate of tax. Credit of TDS deducted on the interest on Fixed Deposit - HELD THAT:- We have heard both the parties and note that if the assessee is entitled to take credit of TDS deducted on the interest on Fixed Deposit the same should be allowed to the assessee. Therefore, we direct the Assessing Officer to allow credit of TDS deducted on the interest on Fixed Deposit in accordance with law. In the result, ground raised by the assessee is allowed for statistical purposes.
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2024 (3) TMI 543
Income deemed to accrue or arise in India - income earned under head Salaries - computation of total income under the head salary and chargeability - assessee is a NRI and received salary for services rendered outside India - HELD THAT:- As per the provision of Section 9 (1)(ii), the income earned under head Salaries is taxable in India if it is earned in India. The explanation issued for removal of doubts declares that salaries if it is earned meets services rendered in India. In the instant case the assessee neither had any rest period nor leave period which is preceded and succeeded by the services rendered outside India. Since, the assessee has rendered services outside India, the salary cannot be taxable in India. As per the definition the salary paid or the advances received are to be included in the total income of the person when the salary becomes due. From the concurrent reading of Section 5 dealing with scope of total income, Section 15 dealing with computation of total income under the head salary and chargeability thereof and Section 9 dealing with income arising or accruing in India with reference to the salaries and the services rendered in India, we hold that no taxability arises on the salary/allowances received by the assessee since the assessee is a non-resident and has rendered services outside India. Appeals of the assessee are allowed.
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Customs
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2024 (3) TMI 570
Scope and validity of the evidence collected from the emails - rejection of declared value on Bill of Entry - re-determination of transaction value - cross-examination of witnesses - demand of differential duty alongwith interest and penalty - It was held by CESTAT that duty demand confirmed against the appellant M/s. Plastic Cottage Trading Co. and penalties imposed upon it is not sustainable - HELD THAT:- It is not required to entertain the present Civil Appeals, the same are accordingly dismissed.
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2024 (3) TMI 569
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - responsibility of the appellant with regard to the acts of his employee (vicarious liability) - allegation is that the appellant i.e. the CHA firm had not verified the facts/KYC/Goods of the exporter before filing the Shipping Bills - violation of regulations 10(d), 10(e), 10(m) and 10(n) of Customs Broker Licensing Regulations, 2018. HELD THAT:- The appellant is responsible for all the acts of omission of his employees. He is responsible for the acts of his employee also, who has misrepresented before the Customs Authorities. Therefore, the appellant cannot absolve himself of all the responsibilities under the CBLR, 2018. The CB is expected to exercise due diligence to satisfy about the bonafide of the importer/exporter, as the case may be, and the documents submitted by him. In the instant case, the appellant CB has claimed that Shri Ajay Sharma, Senior Manager had been appointed to conduct all business in Delhi. This fact has been confirmed by Shri Vikas Joshi, senior associate of the appellant in his statement dated 10.12.2020 as well by Shri Ashwini Handa, Director of the appellant in his statement dated 07.09.2021. It has been categorically stated that Shri Ajay Sharma was the sole incharge of NITCO Air Express, Delhi office and responsible for marketing, payment, recovery, selecting clients after due diligence, managing filing of the documents such as, Shipping Bills etc. It has also been explicitly made clear by Shri Ajay Sharma that they did not take the KYC documents of M/s Hiba Enterprises. This is clear violation of the Regulation 10(e) and 10(n) of CBLR, 2018. In the impugned order, the Adjudicating Authority has relied on the Inquiry Report wherein it has been clearly stated that entries in the books of accounts of the appellant reflect bogus details, which could not have escaped the management s scrutiny. No evidence has been brought on record before us to enable us to differ from these findings. Mere assertion that the employee had carried out these activities in his personal capacity does not get washed, in the face of such statements/evidence. Regulation 13(12) categorically makes the Appellant responsible for any act or omission of employee, and the mere act of removing its employee after an incident does not extinguish this vicarious liability. It is noted that under the doctrine of Respondent Superior, employers are liable for their employees' tortuous acts committed within the scope of the employment relationship. In the instant case, there is statement of Shri Ajay Sharma that the MD Shri Vijay Kochhar had directed him to obey the directions of Ms. Sayana Gupta and Shri Gaurav Gupta. The acts of misusing the IEC is very much a part of the job profile of Shri Sharma and falls within the four corners of employment relationship - As regards the violations of Regulation 10 of the CBLR, 2018, it is observed that the findings in the impugned order are detailed and no evidence has been brought to negate the impugned order. There are no reason to interfere with the impugned order - appeal dismissed.
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2024 (3) TMI 568
Valuation of imported goods - rejection of declared value - enhancement of value - redetermination of value - goods were of better quality and the assessable value of the goods was higher than that declared by the appellant on comparison of the value with that of similar goods from the e-commerce sites - HELD THAT:- In the present case, it is clear from the order passed by the Joint Commissioner that the appellant had in writing submitted that the matter may be adjudicated without issuance of show cause notice and the appellant did not desire to be heard in person. The appellant had also submitted a written statement dated August 23, 2019. Though the said statement dated August 23, 2019 has not been filed by the appellant, but from the order passed by the Joint Commissioner it clearly transpires that the appellant had in the said statement accepted the actual assessable value of each of the five types of jackets that were imported and this fact has been recorded in paragraph 20 of the order. The very fact that the appellant had agreed for enhancement of the declared value in the statement submitted to the assessing authority, itself implies that the appellant had not accepted the value declared by it in the Bill of Entry. The value declared in the Bill of Entry, therefore, automatically stood rejected. Further, once the appellant had accepted the enhanced value, it was really not necessary for the assessing authority to undertake the exercise of determining the value of the declared goods under the provisions of rules 4 to 9 of the 2007 Valuation Rules. This is for the reason that it is only when the value of the imported goods cannot be determined under rule 3(1) for the reason that the declared value has been rejected under sub rule (2), that the value of the imported goods is required to be determined by proceeding sequentially through rules 4 to 9. As noticed above, the appellant had accepted the enhanced value. There was, therefore, no necessity for the assessing officer to determine the value in the manner provided for in rules 4 to 9 of the 2007 Valuation Rules sequentially. The appellant had procured the goods from an overseas supplier based in Hongkong - The Adjudicating Officer had re-determined the value of the imported goods, not only because the appellant had accepted the value but also because of the contemporaneous data available on the e-commerce sites. When this price available on the sites was shown to the appellant, the appellant submitted a statement that the said price was acceptable to it - Adjudicating Officer has given detailed reasons for rejecting the transaction value under rule 12 and re-determining it under rule 5 of the 2007 of the Valuation Rules. It is also not possible to accept the contention of the learned counsel for the appellant that duty was paid under duress. This objection had not been raised earlier and even otherwise there is no merit in this objection. If it was under duress, the appellant would not have paid the duty voluntarily without raising an objection. It is not possible to accept the contention raised by learned counsel for the appellant. There is no merit in this appeal and it is dismissed.
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Insolvency & Bankruptcy
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2024 (3) TMI 567
Constitutional validity - Disciplinary proceedings against insolvency professional agencies - suspension of authorization for assignment - Seeking review of the common order - Error apparent on the face of record or not - sufficient cause for review or not - Regulation 23 A is liable to be struck down or not - violation of principles of natural justice - Section 204 of IBC is violative of Article 20(2) of the Constitution of India or not - HELD THAT:- The alleged error pointed out is nothing but recording the case of the petitioner that by an order dated 14.01.2020 the application was rejected. Assuming that the petitioner is correct in stating that as per the counter affidavit the same was communicated on 16.07.2020, even then, the same has no bearing whatsoever to the ultimate findings and conclusions arrived at. Even though the petitioner would term the grounds raised in the review application as error apparent on the face of the record , it could be seen that all his pleadings and arguments are nothing but pointing out that the conclusions reached by this Court are erroneous. The petitioner is virtually assailing correctness of the findings before the self same Court and pleading for re-consideration of the issue, which is nothing but an appeal in disguise, which cannot be entertained by this Court. No grounds on any materials which were not there for consideration is pleaded. The conclusions are not on the basis of any error apparent on the face of the record. No other sufficient cause which would be within the contours of review as contemplated under Order XXVII Rule 1 of CPC is made out. There are no merits in the review application - application dismissed.
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2024 (3) TMI 566
Admission of Section 7 petition - time barred debt or not - appellant were not given adequate opportunity to represent itself in respect of the financial statements which were placed by the CA before the Adjudicating Authority - violation of principles of natural justice (audi alterem partem) - HELD THAT:- There is force in the contention of the Appellant that it was neither aware regarding what was filed before the Adjudicating Authority by the CA nor was provided an opportunity to rebut and/or place reliance on the said balance sheets. The Appellant clearly did not get the chance to explain the notes of the said balance sheets which allegedly expressed caveats regarding the debt. It is well settled that adherence to principles of natural justice is the essence of fair adjudication and cannot be given a go-by by the Adjudicating Authority or this Tribunal in the discharge of their adjudicatory and appellate responsibilities. Opportunity to hear is a critical limb of this principle of natural justice. The Tribunal must appraise the party of the case he has to meet so as to enable him to make his representation. This opportunity must be real and effective. The right to make representation requires that the person/entity proceeded against must have opportunity to peruse all material relied upon against him - So also in the present matter, to meet the ends of justice, it was the duty of the Adjudicating Authority to have ensured that the balance sheets produced by the CA was shared with the Appellant party since these documents were to constitute the basis on which the impugned order was premised. Thus, justice should not only be done but should manifestly be seen to be done. In the absence of notice and such reasonable opportunity having been given to the Appellant, the impugned order passed has become vitiated. To meet the ends of justice, the Appellant deserves to be given appropriate and adequate opportunity to represent itself in respect of the financial statements which were placed by the CA before the Adjudicating Authority. The impugned order is set aside. The orders passed by the Adjudicating Authority initiating CIRP against the Corporate Debtor and appointing Interim Resolution Professional and all other orders pursuant to the impugned order are set aside - appeal allowed.
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2024 (3) TMI 565
Maintainability of Section 9 application - initiation of CIRP - pre-existing dispute - dispute came into the picture before the Demand Notice or not - It was contended that the grounds of pre-existing dispute raised by the Respondent were illusory and created only to wriggle out from clearing the outstanding liability - HELD THAT:- In the present case, it is an undisputed fact that the demand notice was issued by the Operational Creditor on 15.12.2017 and notice of dispute was raised by the Corporate Debtor on 26.12.2017. It is also an undisputed fact that in the present matter the Operational Creditor did not receive any further payment from the Corporate Debtor and therefore proceeded to file an application under Section 9 of IBC on 20.06.2018. From a plain reading of the notice of dispute, it is noticed that the Corporate Debtor clearly articulated how the Agency Agreement was breached by the Appellant leading to forfeiture of their payments. It is an undisputed fact that in March 2011, the CBI had arrested some officials of the Appellant for paying illegal gratification. It is therefore the case of the Corporate Debtor that in terms of Clause 7(2) of the Agency Agreement, this constituted a breach of the said Agreement. Hence, they claimed to have terminated the Agency Agreement and consequently payments related to SAD invoices were also withheld by them. The Notice of Dispute thus makes it clear that the Corporate Debtor had not only denied their liability to pay the SAD claims but also laid the edifice of the ongoing disputes between the two parties. The issue of denial of payment and termination of Agency Agreement by the Corporate Debtor had continued to fester the business relationship of the two parties is reinforced by another communication sent on 12.03.2015 by the Appellant in which they have sought review of the termination of their services by the Corporate Debtor. This letter has been placed on record at pages 140-141 of the APB. The said communication also reads like an admission of aberration committed on their part and failure to meet the exacting standards of compliance expected by the Corporate Debtor leading to the punitive action of termination of services. It is a well settled proposition that for a pre-existing dispute to be a ground to nullify an application under Section 9, the dispute raised must be truly existing at the time of filing a reply to notice of demand as contemplated by Section 8(2) of IBC or at the time of filing the Section 9 application - from the material available on record, the dispute over payment of operational debt which has been claimed by the Appellant is writ large and this dispute also clearly precedes the issue of Demand Notice. The Adjudicating Authority has made no mistake in taking cognizance of the fact that there clearly existed dispute between the two parties anterior to the date of demand notice and that there has been a consistent and clear denial on the part of the Corporate Debtor of their liability to discharge the obligations to pay. In the present factual matrix, there are no material which has been placed on record which substantiates that the defence raised by the Corporate Debtor was moonshine, spurious, hypothetical or illusory. It is well settled that in Section 9 proceeding, there is no need to enter into final adjudication with regard to existence of dispute between the parties regarding operational debt. Keeping in view that the present facts of the case indicates that the operational debt is disputed, the Adjudicating Authority has therefore correctly rejected the Section 9 application. There are no reasons to disagree with the findings of the Adjudicating Authority. Considering the overall facts and circumstance of the present case, and in view of the foregoing discussion, it is clear that the Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant. Appeal dismissed.
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PMLA
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2024 (3) TMI 582
Money Laundering - existence of a predicate/ scheduled offence - sine qua non for proceeding upon the offence of money laundering as defined under Section 3 of the Act - accused discharged or acquitted of the scheduled offences - HELD THAT:- The Apex Court in the case of Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ] has already settled the controversy that if a person is finally discharged or acquitted of the scheduled offences or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money laundering against him or any one claiming such property being the property linked to stated scheduled offence through him. The impugned order dated 10.06.2023 passed by the Special Judge, Prevention of Money Laundering Act, 2002 in Special Case No. 47/2015 is set-aside and the present petitioner be discharged from the charges framed under PMLA and all further proceedings emanating therefrom against the petitioner. Criminal revision allowed.
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2024 (3) TMI 564
Provisional attachment order - whether the appeal filed by the appellant only impugns the order confirming the provisional attachment and did not impugn the order rejecting the application filed before the Adjudicating Authority for non-supply of certain documents and non-supply of legible copies of certain Relied Upon Documents - HELD THAT:- Perusal of the prayer paragraph of the appeal shows that the appellant has not only impugned the order dated 14.12.2015 (Annexure A1 to the appeal before the Tribunal) whereby the provisional attachment order was confirmed, but has also impugned all proceedings prior thereto including the detailed order dated 24.11.2015 (Annexure A-11 to the appeal before the Tribunal). Clearly, the Tribunal has erred in not noticing that the appellant has not only impugned the order of confirmation of provisional attachment, but also the order whereby the application of the appellant seeking copies of the Relied Upon Documents was rejected. On that ground, we are of the view that the impugned order cannot be sustained and calls for a remit. The order dated 14.12.2023 is set aside. The application of the appellant for supply of documents is restored to its original number on the records of the Appellate Tribunal - appeal disposed off.
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Service Tax
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2024 (3) TMI 563
Levy of Service Tax - residential complex service - Failure to discharge service tax liability properly - failure to file ST-3 returns regularly - construction done by the Appellant for personal use of the customer - HELD THAT:- The issue herein is squarely covered in favour of the Appellant in GRANDEUR HOMES PVT. LTD., ALPINE ESTATES, PARAMOUNT BUILDERS, MODI MODI CONSTRUCTIONS, GREENWOOD ESTATES, SRI KRISHNA VENTURES PVT. LTD., KRISHNA DEVELOPERS VERSUS CCE, C ST, HYDERABAD II, HYDERABAD SERVICE TAX [ 2019 (2) TMI 772 - CESTAT HYDERABAD] , wherein it have been categorically held under similar facts and circumstances, no service tax is chargeable both for the period prior to 01.07.2010 and also for the period after 01.07.2010, being service provided to the individual buyer of the flat for personal use. Accordingly the Appellant is not liable to any service tax. The impugned order set aside - appeal allowed.
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2024 (3) TMI 562
Levy of service tax - deemed sale or rent a cab scheme operator service - activities of appellants in providing motor vehicles under operational lease basis under a Master Lease Agreement - invocation of Extended period of limitation - penalties under Sections 76, 77 and 78 of the Finance Act, 1994 - HELD THAT:- For the period relating to the pre-negative list regime i.e., prior to 01.07.2012, the taxability was determined in terms of coverage of an activity under the service tax net be defining taxable services under Section 65(105) ibid, which enumerated each of the specified services. For the period post-negative list regime, the category of services hitherto defined under the erstwhile regime were merged under a common phrase i.e., service as defined under Section 65B(44) ibid, which was brought into effect from 01.07.2012. There are no strong grounds to hold that the activities undertaken by the appellants in terms of Operation Lease agreement/Master Lease Agreement for providing motor vehicles to their customers, is covered under the scope of levy of service tax, inasmuch as such activity is squarely covered under the deemed sale as per Article 366 (29A) (d) of the Constitution of India, in terms of the judgement given by the Hon ble Supreme Court in the case of BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [ 2006 (3) TMI 1 - SUPREME COURT] . Consequently the demands of service tax and imposition of penalties confirmed in the impugned order is not legally sustainable. The adjudged demands confirmed on the appellants in the impugned order dated 04.11.2015 is liable to be set aside - Appeal allowed.
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2024 (3) TMI 561
Levy of service tax - Management Consultants Service - period from 2001-2002 to 2004-05 - royalty for use of their trade mark by various organisations - Business Auxiliary Service - period from 09.07.2004 to 31.03.2006 - Extended period of limitation. Whether the services rendered by the appellants are taxable under Business Auxiliary Service as held by the Commissioner? - HELD THAT:- The appellant besides allowing use of their trademark and logo, carried out a host of activities which indicate that they have rendered services which squarely fall under the category of Business Auxiliary Service particularly promotion or marketing or sale of goods to their clients - There are force in the contention of the learned Authorised Representative for the Revenue that the judgments of this Tribunal in both the cases viz., HERO HONDA MOTORS LTD VERSUS COMMISSIONER OF SERVICE TAX, NEW DELHI [ 2012 (4) TMI 198 - CESTAT, NEW DELHI] and TATA MOTORS LIMITED VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-II [ 2017 (5) TMI 462 - CESTAT MUMBAI] are inapplicable to the facts of the present case in as much as in those cases royalty fees was collected by the appellants therein which was considered by the Tribunal as Intellectual Property Service' which is not so in the case of present case where the service charges are clearly reflected in the relevant agreement as promotional fees in consideration of various promotional activities undertaken by the appellant. Whether the commission received from the foreign entities for sale of goods in domestic market is leviable to Service Tax? - HELD THAT:- It is covered by the judgment of the Larger Bench in the M/S. ARCELOR MITTAL STAINLESS (I) P. LTD (NOW KNOWN AS M/S. ARCELOR MITTAL DISTRIBUTION SOLUTIONS INDIA PRIVATE LIMITED) VERSUS COMMISSIONER SERVICE TAX MUMBAI-II [ 2023 (8) TMI 107 - CESTAT MUMBAI-LB] , hence the demand confirmed by the Commissioner cannot be sustained. Whether the demands issued to the appellant by Jamshedpur Commissionerate on the same set of facts is barred by limitation? - HELD THAT:- When the department is not sure about the category of taxable service under which activities undertaken by the appellant in providing services to the clients would fall, allegation of mis-statement, suppression of facts, cannot be sustained. Besides, it is found that the Commissioner by invoking Section 80 in setting aside the penalty categorically held that the issue involved in the present case is a matter of interpretation of law with regard to classification and taxability of the service and further observed that the very fact that the same activity of the assessee has been proposed to be classifiable under two different categories of taxable services as per show-cause notice issued by different formations, it provides reasonable cause for non-payment of Service Tax and penal proceedings dropped. Therefore, invoking larger period of limitation in confirming the demand cannot be sustained. The impugned order is modified and the demand is confirmed only for the normal period of limitation relating to Business Auxiliary Service. The matter is remanded to the adjudicating authority for computing demand for the normal period. Appeal allowed by way of remand.
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2024 (3) TMI 560
Liability of service receiver to pay under reverse charge mechanism - repair and maintenance service - HELD THAT:- The show cause notice was issued without scrutinizing the appellant s record related to documents of services received by the appellant. The show cause notice was issued on comparing the date in the financial statements and ST-3 returns. It was the responsibility of Revenue that wherever the data between financial statements and ST-3 returns did not tally, they should have called for more information, scrutinized the information and made out a prima facie case that service tax was payable by the appellant and then should have issued show cause notice. Since that process of issue of show cause notice was not adopted, the contention of the appellant that blasting and painting services were provided by corporate entity and the consultancy was in respect of consultancy other than legal consultancy are accepted. Since both the parties agree that repair and maintenance is not covered by reverse charge mechanism, the demand of Rs.96,589/- does not sustain along with interest and penalty. Since the appellant is not pressing for confirmation of demand of Rs.45,062/-, the balance demand confirmed along with interest and penalty is set aside. Appeal allowed in part.
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2024 (3) TMI 559
Taxability - services rendered by the appellant in relation to distribution of electricity to power distribution companies of Andhra Pradesh (APEPDCL, APSPDCL) - exempt under Notification No. 45/2010-ST dated 20.07.2010 or not - services rendered to Educational Institutions, CPWD and Railways are taxable under Commercial or Industrial Construction services or not - invocation of extended period of limitation - interest - penalties under Section 76, 77 (2) and 78 of Finance Act, 1994. Construction of sub-stations and other related works of distribution of electricity for APEPDCL/APSPDCL - Re-conductoring works to APEPDCL - Sub contract works erection works relating to 30/11 KV substations with connected lines for APEPDCL - Works relating to provision of Distribution of Electricity services to APEPDCL at APSEZ, Atchutapuram (Visakhapatnam) - HELD THAT:- There is no dispute with regard to provision of services in relation to distribution of electricity to the power distribution companies. That Notification No.45/2010-ST dated 20.07.2010 is service specific. Therefore, the denial of the exemption by the Original Authority has no legal sanctity. Accordingly, following the precedent judgements, the demand of tax amounting to Rs.1,09,26,745/- set aside. Construction works for educational institutions RGUKT, Basara and Vedic University Tirupati provided as subcontractors - Works for CPWD - Works of Railway - HELD THAT:- The demand was confirmed by the original authority, not on merit but due to non-production of agreements. These agreements, either produced along with the appeal or on the day of hearing, confirm that the services were provided to the non-commercial organisations. Therefore, the services are not intended for commerce or industry. These are also covered by CBEC Circular dated 17.09.2004. Accordingly, the demand amounting to Rs.10,04,292/- set aside on this count. Civil works - Private construction works - HELD THAT:- Rs.49,65,268/- out of the total demand of Rs.52,39,101/- was paid in the normal course. The differential amount of Rs.2,73,833/- was paid along with interest of Rs.5,93,032/- on 04.03.2024. Thus wherever the tax liability was there, the same was discharged along with interest by the appellant. Interest and penalty - HELD THAT:- The demand of interest under Section 75 and also imposition of penalty under Section 76 and 78 of the Finance Act, 1994 set aside. Appeal allowed in part.
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Central Excise
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2024 (3) TMI 558
Clandestine removal - evasion of duty - clearance of branded Khaini - recovery of central excise duty allegedly short paid - burden to prove on Revenue - Present appeal has been filed against the majority view of the Tribunal - substantial question of law was framed as follows: Whether the majority opinion is right in accepting the appeal and deleting the entire addition and whether the majority opinion is perverse? HELD THAT:- The charges of clandestine removal of goods connotes accusations of serious nature. If the charges are of serious nature, evidence should also be equally strong to substantiate the charges, and therefore, the evidence needs careful scrutiny and appreciation. There is no dispute that in adjudication proceedings to establish the charge of clandestine removal and undervaluation, Revenue is not required to prove the case with mathematical precision. Such charges are to be established on the basis of preponderance of probabilities. However, the conclusions to be arrived at are necessarily to be logical and not on the basis of presumptions and assumptions. Suspicion, howsoever grave, cannot replace the test of proof. It is a settled law that there cannot be clandestine removal of the goods unless the assessee manufactures the same clandestinely and for that purpose, procures raw material clandestinely and uses it without disclosing its utilization. Admittedly, there is no evidence of purchase of major raw material like supari, tobacco etc even in the loose sheets/Hisaba Books recovered in the search. Revenue has not produced any evidence about the procurement of raw material which may be regarded as sufficient for the manufacture of the final product, which is alleged to have been clandestinely removed. In the present case, there is no evidence to show that the basic raw material required for the manufacture of huge quantity of Gutkha and Khaini was procured by the respondents. Tribunal also found no tangible evidence of removal from the factory of unaccounted goods allegedly manufactured by loading from factory and transportation there from. Tribunal found no reliable evidence of the actual customer/recipient of the clandestinely removed goods with their confirmation of unauthorized payment towards unaccounted purchase of goods allegedly manufactured and removed in a clandestinely manner from the factory of the respondents. Tribunal also found no recovery of any unaccounted sale proceeds or substantial cash in the factory or office premises or anywhere else in control of the respondent company, backed by any confirmation, oral or written, from the person giving such cash against the goods removed in clandestine manner without payment of duty from the factory of the respondents. The burden of proving the clandestine removal was on the Revenue. The credibility of the documentary evidence i.e. seizure memos, the loose sheets, Hisaba Books for proving the involvement of respondents in the clandestine activities was required to be duly established - There is no proof that the contents of the documents are accurate. Further, the proper procedures for the seizure of the documents to ensure the authenticity and integrity of the seized material has also not been followed by the Revenue and this includes the proper sealing and protection from tampering. The charges of clandestine removal and under valuation against the respondents in this case cannot be sustained merely on the basis of assumptions and presumptions. The absence of direct, credible evidence linking the respondents to the alleged offences necessitate the dismissal of the charges. The decision is grounded on the principles of justice and the requirement for the burden of proof to be satisfactorily met by the party alleging the wrong doing. Thus, it is evident that learned President (Judicial) and Member (Judicial) conducted a meticulous exercise to examine and appreciate the evidence on record in the light of the settled principles and came to a categorical finding that in the absence of cogent evidence on record, charges of clandestine removal against the respondents cannot be said to have been proved. In the absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods from the factory premises of the respondents, in the facts and circumstances of this case, the impugned majority order of the CESTAT does not suffer from serious error and does not merit any interference. The appeal is therefore dismissed.
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2024 (3) TMI 557
Levy of penalty u/s 11AC of Central Excise Act, 1944 - mistake/ inadvertence - duty liability from January 2009 onwards was being discharged on lower values by applying appropriate rate of duty to value derived from CAS 4 of 2008 - HELD THAT:- The appellant was not unaware of requirement to adhere to cost construction in ascertainment of value of the impugned clearance with proceedings having been initiated in 2004 against them. They had paid differential duty, too, after CAS 4 certification for 2008 having been obtained. It is apparent that they were in possession of CAS 4 certification for subsequent years and these did indicate increased cost of production with corresponding duty implications from which it can be inferred that it was the burden of such enhanced liability that prompted resort to outdated certification. No justification for such overlooking has been brought on record and here exists only plea of oversight. That the onus of countering the ingredients for resort to such penalty does not devolve on the appellant from having been aware of propensity of theirs, from experience of the past, to indulge in such evasion is neither logically acceptable nor legally tenable. However, it is on record that the appellant had, upon being prompted and before issue of notice, made good the differential duty with interest. It is also on record that credit of such duty had been enabled by issue of supplementary invoices thereafter. It is not the case of Revenue that proceedings for recovery of such credit had been initiated or concluded from which it may be inferred that entitlement to credit was undeniable. It is of no less relevance to note that, though penalty has been imposed under section 11AC of Central Excise Act, 1944, this is not an autonomous provision empowering imposition. On the contrary, devolution and extent thereof are controlled by section 11A of Central Excise Act, 1944 and implicit therein is cause and effect as set out in the recovery provision. In these circumstances, with the discharge of differential duty liability along with interest, on their own determination, by the appellant, section 11(B) of Central Excise Act, 1944 for the period upto 7th April 2011 and section 11A(3) of Central Excise Act, 1944 will come into operation to dispense with notice owing to lack of any duty or interest liability beyond that appropriated in the impugned order. Appeal is allowed by setting aside the penalty under section 11AC of Central Excise Act, 1944.
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2024 (3) TMI 556
Price escalation clause - alteration through supplementary invoices - Propriety of resort to provisional assessment under rule 7 of Central Excise Rules, 2002 against the wishes of the assessee - HELD THAT:- It is on record that finalization was, indeed, deferred amid requests made to assessee for submission of pertinent documents which was not forthcoming. No justification has been offered for truncation of the value except that payment had not been received. That, however, is of no consequence to valuation for levy of duties of central excise. Even after elapse of over a decade, the dispute over the consideration does not appear to have attained finality. The appellant, doubtlessly, is holding fast to the stand that the revised value is the actual value. Assuming of a contrary stand to question the finalization of provisional assessment is not acceptable. Therefore, the claim of transaction value having been overlooked to insinuate provisional assessment that would have the outcome of charging duty on enhanced consideration, which included elements that did not form part of the price, does not appear to be tenable. There are no reason to interfere with the rejection of the appeal of M/s Crompton Greaves Ltd by the first appellate authority - appeal dismissed.
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2024 (3) TMI 555
Clandestine removal of mild steel (MS) bars - denial of cross examination of witnesses - admissibility of documents retrieved from computer without authentication - Demand confirmed based on certain records recovered from other parties and sought to be backed by statements of customers and transporters - violation of principles of natural justice - HELD THAT:- It is found from the records that the confirmation of demand on goods allegedly cleared clandestinely has been based on certain records recovered from other parties and sought to be backed by statements of customers and transporters. No evidence as forthcoming of any other material records of physical clearance or of any recovery of sale proceeds. The request for cross-examination had been declined without assigning any reasons or even considering the mandate of section 9D of Central Excise Act, 1944. The sole evidence is records of other parties and linking of the appellant with those has been attempted through statements that were not tested in cross-examination despite requests from the appellant. No corroborative evidence of any kind appears to have been brought forth either. With almost a decade having been elapsed after the proceedings, it would be impossible to establish relevancy of the documents in terms of section 9D of Central Excise Act, 1944 leaving the conclusions therefrom to be inadmissible. There is no merit in the conclusion of the adjudicating authority - the impugned order set aside - appeal allowed.
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2024 (3) TMI 554
Recovery of short paid duty alongwith interest and penalty - clearances effected on clearances of a category between July 2000 and March 2002 and between April 1999 and March 2002 - non-inclusion of royalty and administrative overheads in computation of cost of production computation - alleged misclassification enabling abatement in retail sale price under section 4A of Central Excise Act, 1944 - HELD THAT:- It is evident from the submissions of Learned Chartered Accountant that rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2002 is appropriate recourse for valuation of clearances in the impugned circumstances. It is no less apparent that CAS4 is to be the basis of computation for which purpose the insight afforded by the Guidance Notes is adequate justification. That this aspect was not considered by the adjudicating authority at all, insofar as the two additions supra are concerned, is amply evident and, for remedying that want in fresh proceedings, it is necessary that the impugned order be set aside. Appeal allowed by way of remand.
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2024 (3) TMI 553
Dropping of Extended period of limitation - restriction of demand of excise duty for the normal period - compliance with the conditions specified in the exemption N/N. 08/2014-CE dated 11.07.2014 so as to be entitle to the benefit of the concessional rate of duty prescribed therein. N/N. 08/2014-CE dated 11.07.2014 inserted Entry no.70A or not - Polyester Staple Fibre or Polyester Filament Yarn manufactured from Plastic Scrap or Plastic Waste including waste Polyethylene Terephthalate (PET) bottles - Time Limitation - Penalty - interest - HELD THAT:- As per the allegations made in the show cause notice and as admitted by Shri Suresh Kawar Jain, Managing Director of the appellant in his statement dated 14.12.2017, it is correct that the appellant had been using textile yarn waste to manufacture Popcorn , which is manufactured from different types of waste including yarn waste and is a recycled product. The notification specifically provides for plastic scrap or plastic waste including waste Polyethylene Terephthalate bottles and even the minimum quantity of textile yarn used by the appellant cannot be included in the specification under the notification. The Adjudicating Authority is right in observing that the moment any other waste or primary material is used which does not fall in the description of the plastic scrap/plastic waste/PET bottles, the assessee goes out of the purview of the said notification. Considering the principle of law that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession, the appellant has failed to substantiate the same. Also, if exemption is available on complying with certain conditions, the said conditions have to be complied with and as per the discussion above, it cannot be said that the appellant has complied with the mandatory conditions of the notification - the contention of the learned Counsel that the terms plastic waste in the notification is not specific but is of general nature is rejected. The wordings of the condition provided in the notification are absolutely clear and unambiguous and leaves no manner of doubt. Time Limitation - Penalty - HELD THAT:- The Adjudicating Authority had confirmed the demand only to the normal period as there was no suppression of facts or mis-statement on the part of the appellant and consequently, the mandatory penalty under Section 11 AC(1)(c) of the Act was held to be not leviable. Interest - HELD THAT:- The liability to pay interest under Section 11AA of the Act on the central excise duty amounting to Rs.1,67,20,988/- being mandatory and automatic by operation of law is upheld. There are no strong and compelling reasons to differ from the impugned order, which deserves to be upheld - appeal dismissed.
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2024 (3) TMI 552
CENVAT Credit - trading activity - exempted service - availing cenvat credit of service tax paid on certain input services which were utilized by them for manufacture as well as trading purposes (common input services) - non-maintenance of separate records - HELD THAT:- It is very clear that Hon ble Supreme Court in CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT] has laid down that once a debit entry is made in respect of a credit entry, then the result is as if that credit entry was never made. In other words, the entire cenvat credit availed on common input services being debited before adjudication and at the time of adjudication, it was as if such credit was never availed. Now on the question whether subsequent to the activity of trading, such debit can be effected. Hon ble Delhi High Court has held that since the rules have not provided as to how attributable cenvat credit is to be debited and in advance it would not be known as to how much quantum of trading will take place, it is logical that the attributable cenvat credit is debited after the trading activity is over, may be once in a quarter or once in six months - the appellant had debited the entire cenvat credit availed on common input services. Therefore, it is to be treated that they had never availed such credit. When credit on common input services is not availed, the question of payment of 5% or 6% of the value of exempted services will not arise. The confirmation of demand of Rs.2,44,54,675/- is set aside along with interest and equal penalty - Appeal allowed.
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