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Home e-Newsletters Index Year 2025 March Day 15 - Saturday

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TMI Tax Updates - e-Newsletter
March 15, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws



Articles

1. OFFENCES UNDER GST LAW (PART-1)

   By: Dr. Sanjiv Agarwal

Summary: The article discusses the concept of offences under GST law, focusing on Section 133, which holds officers and certain other individuals liable for violations. Offences are defined as illegal acts or breaches of law, with penalties prescribed by law. The distinction between an offence and its prosecution is highlighted, where the former is part of substantive law and the latter procedural law. Under the CGST Act, 2017, specific offences include willful disclosure of information not in execution of duties, by central officers or service providers on the common portal, which can lead to prosecution.

2. GST Composition Scheme: Simplified Taxation or a Hidden Revenue Generator?

   By: Aratrik Banerjee

Summary: The Goods and Services Tax (GST) Composition Scheme in India aims to simplify tax compliance for small businesses by allowing them to pay a fixed percentage of their turnover instead of standard GST rates. However, this scheme has significant drawbacks, such as the denial of Input Tax Credit (ITC), restrictions on interstate trade, and taxation based on turnover rather than profit. These limitations can hinder small businesses' competitiveness and growth. While the scheme reduces compliance burdens, it often appears more focused on securing tax revenue than genuinely supporting small enterprises, prompting calls for policy adjustments to enhance its benefits.

3. Demand notice issued and signed without valid order or without order is void. Officers must be careful and taxpayers need to be vigilant to find out existence of valid order.

   By: DEVKUMAR KOTHARI and CA UMA KOTHARI

Summary: A demand notice issued without a valid order is considered void, emphasizing the necessity for careful issuance by officers and vigilance by taxpayers. Tax laws require a demand notice to be based on a valid order determining the payable amount, which can arise from various types of assessments or adjustments. Recent court cases highlight that if the underlying order is invalid, any subsequent demand notice is also invalid. The article advises ensuring that digital signatures on such documents are used responsibly and personally by the authorized officer to maintain their validity and enforceability.

4. THE MORATORIUM UNDER SECTION 96 OF THE INSOLVENCY AND BANKRUPTCY CODE DOES NOT EXTEND TO REGULATORY PENALTIES FOR NON-COMPLIANCE

   By: DR.MARIAPPAN GOVINDARAJAN

Summary: The Supreme Court ruled that the moratorium under Section 96 of the Insolvency and Bankruptcy Code (IBC) does not extend to regulatory penalties imposed for non-compliance with consumer protection laws. In a case involving a real estate developer facing penalties from the National Consumer Disputes Redressal Commission (NCDRC) for service deficiencies, the Court distinguished between civil and criminal proceedings. It held that while civil proceedings are generally stayed under the IBC, regulatory penalties are not considered debts under the Code. Thus, the penalties imposed by NCDRC remain enforceable despite ongoing insolvency proceedings. The appeal was dismissed, and the appellant was directed to pay the penalties.

5. Empowering Women in Global Trade

   By: YAGAY andSUN

Summary: Empowering women in global trade is essential for economic growth, gender equality, and inclusive development. Despite increasing involvement, women remain underrepresented due to barriers like limited access to finance, legal and cultural restrictions, gender bias, skills gaps, and non-gender-sensitive trade regulations. Strategies to empower women include providing financial access, enhancing education, breaking cultural barriers, promoting women entrepreneurs, and supporting women in non-traditional sectors. Successful initiatives like Women's World Banking and ITC's SheTrades demonstrate the benefits of empowering women. By addressing these challenges, global trade can become more inclusive and innovative, unlocking significant economic potential.

6. key differences between Anti-Dumping Duty, Safeguard Duty, and Countervailing Duty

   By: YAGAY andSUN

Summary: Anti-Dumping Duty, Safeguard Duty, and Countervailing Duty are trade measures used to protect domestic industries. Anti-Dumping Duty addresses unfair pricing by foreign exporters selling goods below normal value. Safeguard Duty responds to a sudden surge in imports that harm local industries. Countervailing Duty counteracts subsidies provided by foreign governments to their exporters, creating unfair competition. Each duty is calculated based on specific criteria: dumping margin, import quantity impact, and subsidy margin, respectively. These measures are governed by WTO agreements and are typically imposed for up to five years, subject to review, to ensure fair trade practices.

7. Anti-Dumping Duty: An Introduction

   By: YAGAY andSUN

Summary: Anti-dumping duty is a tariff imposed on foreign imports sold below fair market value to protect domestic industries from unfair competition. The process involves filing a complaint, investigating, and determining if dumping causes material injury to local industries. If confirmed, duties are applied equal to the dumping margin. These duties, typically lasting five years, aim to restore fair competition but can lead to higher consumer prices and potential trade disputes. The World Trade Organization provides a framework ensuring transparency and fairness in applying these measures, balancing protection of local industries with the promotion of free trade.

8. Safeguard Duty: How It Works – A Complete Analysis

   By: YAGAY andSUN

Summary: Safeguard duties are temporary tariffs or import restrictions imposed to protect domestic industries from a sudden surge in imports that threaten local producers. Unlike anti-dumping duties, which address unfair pricing, safeguard measures focus on the volume of imports. These duties are non-discriminatory and apply to all imports of a specific product. They are intended to provide temporary relief, allowing domestic industries to adjust to increased competition. While they offer protection and time for industry adjustment, safeguard duties can lead to higher consumer prices and risk protectionism. The World Trade Organization regulates their application to ensure fairness and transparency.

9. Countervailing Duty on Saccharin Imports from China PR Dated: Notification No. 01/2025-Customs (CVD) 25th February 2025

   By: YAGAY andSUN

Summary: The Government of India has imposed a 20% countervailing duty on imports of Saccharin from China, effective from February 25, 2025, as per Notification No. 01/2025-Customs (CVD). This measure aims to counteract subsidies provided by the Chinese government, which are deemed to distort trade and harm Indian manufacturers. The duty applies to all forms of Saccharin under tariff item 2925 11 00. This action is intended to protect domestic producers from unfair competition, though it may increase import costs and affect trade relations between India and China.

10. Finance for MSME Exporters: Understanding Guidelines and Processes

   By: YAGAY andSUN

Summary: Micro, Small, and Medium Enterprises (MSMEs) are vital to India's export sector, but they often face financial challenges that hinder their growth and international market penetration. This guide details financing options for MSME exporters, including export credit, trade finance, and government incentives like the Merchandise Exports from India Scheme and Export Promotion Capital Goods Scheme. It also outlines the process for accessing finance, emphasizing the importance of documentation, creditworthiness, and choosing the right financial products. Challenges such as accessing affordable credit, complex documentation, and currency risks are highlighted, alongside best practices for financial management and leveraging government support.

11. Opportunities in International Trade

   By: YAGAY andSUN

Summary: International trade presents vast opportunities for businesses to expand globally, driven by emerging markets, e-commerce, and sustainability trends. Key growth areas include exporting to rapidly developing regions such as Africa, Southeast Asia, and Latin America. The rise of digital trade allows small enterprises to reach global consumers, while the demand for sustainable products like renewable energy and organic goods is increasing. The healthcare and technology sectors offer significant export potential, especially in AI, IoT, and cybersecurity. Additionally, sectors like agriculture, infrastructure, tourism, financial services, and logistics are poised for growth, providing businesses with numerous avenues to enhance profitability and reduce domestic market reliance.

12. Letter of Credit – Legal and Regulatory Frame Work in Indian Context.

   By: YAGAY andSUN

Summary: In India, the Letter of Credit (LC) system is governed by a blend of international standards and domestic regulations. Key frameworks include the Uniform Customs and Practice for Documentary Credits (UCP 600), the Indian Contract Act, Reserve Bank of India (RBI) regulations, and the Banking Regulation Act. The RBI oversees foreign exchange transactions under the Foreign Exchange Management Act (FEMA), ensuring compliance with Indian policies. The Indian Banks' Association provides additional guidelines for banks handling LCs. Compliance with customs, taxation regulations, and dispute resolution mechanisms is crucial for smooth international trade. Understanding these legal frameworks helps businesses navigate the LC process effectively.

13. Best Practices for Letter of Credit - (i.e. what exactly needs to be done and taken care of).

   By: YAGAY andSUN

Summary: In international trade, best practices for handling Letters of Credit (LC) are essential to ensure smooth transactions and mitigate risks. Key practices include establishing clear and detailed agreements between buyers and sellers, selecting the appropriate LC type, and ensuring accurate and complete documentation. Effective communication with banks, monitoring shipment timelines, and being vigilant against fraud are crucial. It's important to review LC terms before shipment, adhere to deadlines, and have contingency plans for discrepancies. By adhering to these guidelines, parties can reduce risks and facilitate efficient transactions in international trade.

14. Letter of Credit (LOC): An Overview

   By: YAGAY andSUN

Summary: A Letter of Credit (LOC) is a crucial financial instrument in international trade, providing a bank's guarantee on behalf of a buyer to ensure payment to the seller upon meeting specific conditions. Key parties involved include the applicant (buyer), beneficiary (seller), issuing bank, advising bank, confirming bank, and paying/negotiating bank. LOCs can be revocable, irrevocable, confirmed, unconfirmed, sight, usance, standby, or revolving, each with distinct features. While LOCs offer security and risk reduction for both sellers and buyers, they also involve complexities, costs, and potential delays. Proper understanding and adherence to terms are essential for successful transactions.


News

1. Karnataka CM Siddaramaiah defends budget, promises revenue surplus in 2026

Summary: Karnataka's Chief Minister defended the 2025-26 budget, promising a revenue surplus by 2026. He highlighted fiscal discipline, noting a reduced revenue deficit from Rs 27,354 crore to Rs 19,262 crore. The fiscal deficit is at 2.91%, and borrowings are 24.95% of the GSDP, aligning with the Fiscal Responsibility Act. Criticizing the opposition for focusing on state borrowings, he pointed to the central government's higher borrowing rates. The opposition accused the government of increasing borrowings without focusing on development, with the budget labeled as "short-sighted" and lacking focus on asset creation.

2. NEP showdown: Hindi vs Tamil; Stalin govt changes Rupee symbol with Tamil letter in budget logo

Summary: The Tamil Nadu government replaced the Devanagari rupee symbol with a Tamil letter in its 2025-26 budget logo, intensifying a language dispute with the Indian central government. This move opposes the National Education Policy's three-language formula, which the state perceives as a push to impose Hindi. The ruling party, DMK, argues for using the Tamil language, while the BJP criticizes the change as divisive and politically motivated. The controversy highlights ongoing tensions over language policies in India, with the DMK maintaining its stance against the perceived imposition of Hindi and advocating for Tamil and English in education.

3. Punjab Budget Session from Mar 21-28; budget to be presented on Mar 26

Summary: The Punjab Budget for the financial year 2025-26 will be presented on March 26 during the Budget Session of the 16th Punjab Vidhan Sabha, scheduled from March 21 to March 28. The state Cabinet, led by the Chief Minister, approved the session's summoning, with the Governor's address set for March 25. Additionally, the Cabinet sanctioned the establishment of 40 'Hunar Sikhiya' schools to provide technical training in various trades at a cost of Rs 32 crore. An MoU with the British Council for enhancing English communication skills was exempted from a procurement act section, benefiting approximately 5,000 students annually.

4. Chhattisgarh Budget looks to give 'GATI' to development

Summary: Chhattisgarh's 2025-26 budget, totaling Rs 1.65 lakh crore, aims to drive economic revival and infrastructure development under the theme "GATI," focusing on governance, infrastructure, technology, and industrial growth. The budget emphasizes empowering women, farmers, and rural communities through initiatives like free electricity for agriculture and housing programs. It avoids new taxes, aiming for self-sustaining growth through enhanced allocations for infrastructure and industrial development. The state has fulfilled most pre-poll promises, investing significantly in women empowerment, housing, and agricultural support. Additionally, it promotes tribal eco-tourism and food processing, allocating funds for public infrastructure and rural development.

5. TN govt replaces Rupee symbol in budget logo with Tamil letter, draws BJP's ire

Summary: The Tamil Nadu government, led by the DMK, replaced the Indian Rupee symbol with a Tamil letter in its 2025-26 budget logo, sparking criticism from the state BJP. The logo features 'ru', the first letter of 'Rubaai', the Tamil word for currency, and includes the caption "everything for all," reflecting the DMK's inclusive governance model. The BJP criticized the move, highlighting that the original Rupee symbol was designed by a Tamilian. This controversy arises amidst ongoing tensions between the Tamil Nadu government and the central government over language policies.

6. South Africa plans to spend more on health, defence after US cuts aid

Summary: South Africa plans to increase spending on health and defense following cuts to US aid, particularly affecting HIV programs. The 2025 budget earmarks an additional 28.9 billion rand for healthcare to support salaries for medical personnel and doctors. This increase is crucial as the country manages the world's largest HIV population, with many dependent on antiretroviral drugs. To fund this, the government will raise VAT by 0.5%, impacting the cost of living. Additionally, 5 billion rand is allocated to strengthen military forces amid regional conflicts. The budget awaits parliamentary approval, with potential political consequences if rejected.

7. Goa CM to present state budget on Mar 26

Summary: The Goa Chief Minister is set to present the state budget for 2025-26 on March 26, the final day of the legislative assembly's budget session. The Business Advisory Committee (BAC) meeting, chaired by the assembly speaker, determined the date amid dissatisfaction from opposition parties over the BAC's functioning. The budget will not be passed during this session, with only a vote on account being approved. Opposition leaders criticized the limited session duration, urging for fair opportunities to raise issues. Concerns were also raised about the rejection of a Public Undertaking Committee report, highlighting issues of transparency and accountability within the government.

8. Arunachal Assembly passes 2025-26 Budget by voice vote

Summary: The Arunachal Pradesh Assembly approved the 2025-26 Budget by voice vote after extensive discussions. The Deputy Chief Minister, responsible for Finance, Planning, and Investment, presented a budget of Rs 39,842 crore, focusing on social and economic empowerment. The budget aims to uplift the poor, youth, farmers, and women, emphasizing resource allocation and timely implementation of schemes. Efforts to develop border areas have encouraged reverse migration. The budget prioritizes investing in people, infrastructure, economy, and innovation, aligning with the Union Budget's vision for a developed Arunachal. The assembly members commended the budget, which was passed unanimously.

9. No sitting of Himachal assembly on Mar 15, budget to presented on Mar 17 at 2 pm: Speaker

Summary: The Himachal Vidhan Sabha will not convene on March 15, with the budget for 2025-26 scheduled to be presented by the chief minister on March 17 at 11:00 am instead of the initially planned 2:00 pm. This adjustment was proposed by the Parliamentary Affairs Minister and agreed upon by the opposition, following recommendations from the Business Advisory Committee. Additionally, the Governor has expressed dissatisfaction with certain newspaper reports of his address, leading to notices being issued to three newspapers requesting their response within three days.

10. Budget will give new direction to development of MP, says Union minister Chouhan

Summary: Union minister praised the Madhya Pradesh government's budget, which aims to advance the state's development and align with the vision of a developed India. The budget, presented by the Chief Minister and Deputy Chief Minister, emphasizes infrastructure and agriculture, aiming to boost investment and development across sectors such as rural and urban development. It includes significant provisions for women's welfare through various schemes and is expected to benefit farmers, youth, and the poor. The budget for 2025-26 amounts to Rs 4.21 lakh crore, marking a 15% increase from the previous year, with no new taxes and new initiatives for religious site development.

11. Assam aims to utilise 90 pc of budget estimates in FY'26

Summary: Assam's government, led by the Finance Minister, aims to utilize 90% of the budget estimates for the 2025-26 fiscal year, adhering to RBI regulations on fiscal management, including the debt-GDP ratio. The budget projects a receipt of Rs 1,55,428.75 crore, with current fiscal utilization at 85% of Rs 1,43,891 crore. The debt-GSDP ratio stands at 24.3% for 2023-24. The budget, presented ahead of state elections, includes cash incentives for youths and tea garden workers, tax exemptions for salaried individuals, and a tax holiday extension for green tea leaves, with no new taxes introduced.

12. Congress calls MP budget full of ‘empty promises’, silent on raising ‘Ladli Behna’ aid

Summary: The opposition Congress criticized the state budget as being filled with "empty promises," accusing the ruling BJP of failing to address key election commitments, particularly the increase in aid under the Ladli Behna scheme. The budget, presented by the finance minister, did not introduce new taxes and focused on developing religious sites, but lacked measures for farmers and job creation. Congress leaders highlighted unfulfilled promises such as the Ladli Behna aid increase and minimum support prices for crops. They also condemned the government's rising debt and alleged corruption, while noting the budget's insufficient support for higher education and tribal villages.

13. Himachal growth improves to 6.7pc in 2024-25, per capita income rises by 9.6 pc: Survey

Summary: Himachal Pradesh's economic growth rate improved to 6.7% in 2024-25, with the per capita income rising by 9.6%, according to the Economic Survey. The state's Gross State Domestic Product at constant prices was estimated at Rs 1,46,553 crore. The tertiary sector contributed 45.3% to Gross Value Addition, followed by the secondary and primary sectors. The agriculture sector showed a 3.07% growth, reversing a previous decline. The industrial sector grew by 8.1%, surpassing the national average. Tourism rebounded to near pre-pandemic levels, while inflation decreased in both rural and urban areas.

14. Progressive social policies, robust infra, placed TN on economic growth trajectory: Economic Survey

Summary: Tamil Nadu's economic growth has been driven by progressive social policies, strong infrastructure, and a skilled workforce, contributing 9.21% to India's GDP in 2023-24. The state's Gross State Domestic Product reached Rs 27.22 lakh crore, with a nominal growth rate of 13.71% and a real growth rate of 8.33%. Despite global challenges, Tamil Nadu maintained robust growth, with its per capita income at Rs 2.78 lakh, surpassing the national average. The services sector contributed significantly to the economy, while the state also excelled in manufacturing, ranking first in motor vehicle production. Tamil Nadu's poverty rate dropped significantly, and its Credit-Deposit Ratio reflected high economic activity.


Highlights / Catch Notes

    GST

  • GST Demand Quashed: Authorities Wrongly Combined Turnover of Two Firms Under Same PAN Number

    Case-Laws - HC : HC quashed the show cause notice and demand raised against the petitioner (Jindal Communication) due to an erroneous assessment based on GST turnover discrepancies. The Court determined that the respondent authorities could not dispute the petitioner's explanation that the alleged turnover difference resulted from two separate firms (Jindal Communication and Jindal Marketing Company) being registered under the same PAN number. The authorities had incorrectly attributed the combined turnover to a single entity, leading to an unsustainable demand. The petition was accordingly allowed, invalidating both the notice and subsequent assessment order.

  • Assessment Orders Nullified After Tax Officer Denied Requested Personal Hearing, Violating Natural Justice Principles

    Case-Laws - HC : The HC set aside assessment orders due to violation of principles of natural justice, as the Assessing Officer failed to grant personal hearing despite the petitioner's request in their reply notice. The Court held that when an assessee opts for personal hearing in their reply, the Assessing Officer must grant it, even if "no" was marked in the form. Following precedent from Assistant Commissioner of State Tax v. Commercial Steel Limited, the Court determined that writ petitions are maintainable against assessment orders when principles of natural justice are violated. The matter was remitted back to the Assessing Officer with specific direction to verify the bank realization certificate uploaded in the GST portal.

  • 60-Day Limitation Under GST Act Section 62(2) Is Directory, Not Mandatory for Filing Returns

    Case-Laws - HC : The HC held that the 60-day limitation period under Section 62(2) of the GST Act is directory rather than mandatory. Where a registered person fails to file returns within the prescribed timeframe, resulting in best judgment assessment orders, the right to file returns cannot be denied merely because the 60-day period has elapsed. If the taxpayer demonstrates valid reasons beyond their control for the delay, such delay can be condoned upon application. The petitioner was directed to file a delay condonation application within 15 days, which the second respondent must consider on merits before permitting revised returns. The petition was accordingly disposed of.

  • Improper GST Notice Service Through Portal Only Violates Natural Justice Under Section 161 of GST Act

    Case-Laws - HC : The HC set aside orders passed under Section 161 of the Tamil Nadu/Central Goods and Service Tax Act, 2017 due to violation of natural justice principles. The Department failed to serve notices through physical means, instead making them available only in the GST Portal under "View of additional notices and orders" column, which petitioner was unaware of. The Court determined the impugned orders were passed ex parte without affording the petitioner opportunity of hearing. The matters were remanded to the first respondent for fresh consideration with direction to provide proper notice and hearing opportunity to the petitioner.

  • GST Appeal Rejection Overturned: Small Business Owner Gets Second Chance Despite Form Error and 19-Day Delay

    Case-Laws - HC : The HC quashed the order rejecting the petitioner's GST appeal due to time limitation. Despite the petitioner erroneously writing "NA" in the delay explanation section of GST APL-04 form, the Court found no lack of bona fide, noting the petitioner had made the required pre-deposit of Rs. 10,900/- when filing the appeal. Considering the petitioner's status as a small businessman, the 19-day delay, and that no advantage was gained by filing a belated appeal, the Court directed the appellate authority to allow the petitioner to file a condonation of delay application, thereby providing an opportunity for the appeal to be heard on merits.

  • GST Registrations Restored After Cancellation Orders Set Aside for Procedural Violations Under Section 29(2)

    Case-Laws - HC : The HC set aside orders cancelling GST registrations under CGST/SGST Acts 2017, finding procedural violations by the Proper Officer. The court determined that cancellation under Section 29(2) requires proper notice and meaningful opportunity for hearing per Rule 22, not mere formality. Despite petitioners' failure to respond to show cause notices, the impugned orders erroneously referenced non-existent replies, rendering the proceedings defective. While revocation applications were time-barred (exceeding 270 days under Rule 23), the court intervened due to jurisdictional errors. The registrations were restored with conditions, including extended deadlines for filing annual returns except for 2024-2025, which remains governed by Section 44 requirements.

  • Customs Order Set Aside: Authority Failed to Consider Reply to Show Cause Notices, Violating Natural Justice Principles

    Case-Laws - HC : The HC set aside the impugned Order-in-Original due to procedural irregularities that violated principles of natural justice. The order had incorrectly proceeded on the premise that the petitioner had not filed any reply to the Show Cause Notices, when in fact a response had been submitted. This factual error constituted a fundamental breach of procedural fairness, as the adjudicating authority failed to consider the petitioner's submissions before reaching its determination. The writ petition was accordingly allowed, invalidating the original order.

  • Income Tax

  • Asset Reconstruction Cost Qualifies as Present Obligation Under AS 29, Not Contingent Liability; Section 36(1)(iii) Interest Deduction Clarified

    Case-Laws - HC : The HC ruled in favor of the assessee regarding Asset Reconstruction Cost (ARC) provisioning, holding it qualified as a present obligation under AS 29 rather than a contingent liability. The Court determined the contractual obligation to repair and restore premises constituted an ascertainable liability that was properly provisioned for. The HC rejected the tax authorities' view that only ascertained liabilities could be provisioned. Regarding interest deduction under Section 36(1)(iii), the Court clarified that the provision's proviso merely disallows interest during the period between borrowing and when an asset is put to use for business extension. The matter was remanded to the AO to examine whether cell sites were actually put to use and whether funds came from a common pool.

  • Reassessment Notice Under Section 148 Quashed Due to Improper Sanction by PCIT After Three-Year Limitation Period

    Case-Laws - HC : The HC quashed reassessment proceedings for AY 2016-17 initiated via notice u/s 148 issued on July 29, 2022. The Court found that since the reassessment action commenced more than three years after the end of the relevant assessment year, sanction should have been accorded by the Principal Chief Commissioner rather than the Principal Commissioner of Income Tax (PCIT). This jurisdictional defect rendered the reassessment proceedings invalid, as the PCIT lacked competent authority to sanction the action after the three-year limitation period had elapsed. The Court allowed the writ petition on this procedural ground alone.

  • Refund Delays Under Vivad se Vishwas Act Require Interest Payment Despite No Express Provision

    Case-Laws - HC : The HC affirmed that despite no express provision in the Direct Tax Vivad se Vishwas Act, 2020, the Revenue is obligated to refund excess amounts within reasonable time following acceptance of declaration. In this case, the ACIT unreasonably delayed refund action from December 2021 until November 2023. The court determined it has authority to grant interest under Section 3 of the Interest Act, 1978, notwithstanding provisions in the Income Tax Act or the Vivad se Vishwas Act, when delay is solely attributable to Revenue's fault. Concurring with precedent that the State must compensate for wrongfully retaining and using funds, the HC upheld the Single Judge's decision ordering interest payment on the delayed refund amount.

  • Unexplained Investment Addition Under Section 69 Overturned Where Funds Came From Disclosed Bank Accounts and Presumptive Taxation Applied

    Case-Laws - AT : ITAT overturned an addition made under Section 69 for unexplained investment. The AO had computed an 8% shortfall of profit based on bank deposits and total turnover under Section 44AD. The Tribunal found that the assessee had properly filed returns on presumptive basis, disclosed all bank statements from three banks, and reported business receipts of 39,48,887/- as the source of investment. Since payments were made from disclosed bank accounts that were available to the AO during assessment, no addition under Section 69 was sustainable. The AO also failed to invoke Section 56(2)(vii). The assessee's appeal was allowed.

  • Capital Gains Tax Relief: Improvement Costs Allowed Despite Documentation Gaps When Payment Evidence Is Genuine

    Case-Laws - AT : In a LTCG computation case, the ITAT allowed the assessee's appeal regarding disallowance of improvement costs on a property transfer. The tribunal held that payments made to the original seller, the developer (Jayabheri Properties), and contractor (Nagabasi Reddy) should be included in cost of acquisition/improvement. The AO and DRP had rejected these claims because some payments weren't mentioned in the sale deed and the contractor's bill lacked VAT registration. The ITAT reasoned that cheque payments with confirmation from recipients established the genuineness of transactions, ruling that proper evidence had been furnished to prove these payments were legitimate property costs for LTCG calculation purposes.

  • Assessment Orders Invalidated Under Section 153A Due to Mechanical Approval Without Proper Examination of Records

    Case-Laws - AT : The ITAT allowed the assessee's appeals, invalidating assessments under section 153A due to improper prior approval under section 153D. Following precedents from Orissa HC in ACIT v. Serajuddin & Co. and Delhi HC in PCIT v. Anuj Bansal, the Tribunal determined that the approval was granted mechanically without proper examination of assessment records or search materials. The approval merely contained a perfunctory statement without demonstrating application of mind by the Additional Commissioner. As the approval was procedurally defective and granted without substantive review, the resulting assessment orders were deemed legally vitiated and invalid.

  • Reassessment Under Section 147 Quashed: Reopening Based on Change of Opinion Without New Material Invalid

    Case-Laws - AT : The ITAT quashed reassessment proceedings initiated under s.147 for five assessment years, finding the AO's reopening was based on mere change of opinion rather than new tangible material. The Tribunal noted that information regarding profits from sales made on behalf of UBL had been disclosed in Notes to Accounts during regular assessment proceedings. The reopening was primarily influenced by audit objections and the Chamundi Winery case, demonstrating the AO lacked independent judgment. On merits, the ITAT concurred with the CIT(A)'s determination that the appellant functioned solely as a contract manufacturer for UBL, entitled only to reimbursement of expenses and bottling charges, with UBL being the de facto earner of income from manufacture and sale of liquor.

  • Block Assessment Under Section 158BD Quashed Due to Defective Satisfaction Note Despite Timely Recording

    Case-Laws - AT : The ITAT allowed the assessee's appeal, setting aside the block assessment order due to improper assumption of jurisdiction under section 158BD. The Tribunal found that although the satisfaction was recorded within a reasonable timeframe after completion of the searched person's assessment (within 1 month and 10 days), the AO failed to demonstrate proper mental application in the satisfaction note. The satisfaction merely contained casual references to seized documents without revealing the requisite dispassionate thought process. Consequently, the notice issued under section 158BC read with 158BD and the subsequent assessment order were held legally unsustainable due to the jurisdictional defect in the satisfaction recorded by the AO.

  • Penalties Under Black Money Act Deleted: Technical Breach Not Sufficient for Sections 42 & 43 Penalties

    Case-Laws - AT : The ITAT deleted penalties imposed under Sections 42 and 43 of the Black Money Act. Regarding Section 43 penalty for non-disclosure of foreign investments, the Tribunal relied on SC's ruling in Hindustan Steel that penalties should not be imposed unless there was deliberate defiance, dishonesty, or conscious disregard of obligations. The Tribunal emphasized that penalty imposition requires judicious exercise of discretion considering all relevant circumstances. For Section 42 penalty for late filing, the ITAT found it was merely a technical breach as the assessee had disclosed foreign assets in the belated return, which, though treated as non-est, was considered during assessment. The Tribunal also noted that the return filed under Section 153C would substitute the regular return, making the penalty unwarranted.

  • Interest on PFC Loans Disallowed Under Section 43B While Bonus Payment and Capital Grants Write-backs Upheld

    Case-Laws - AT : The ITAT partially allowed the assessee's appeal against revision under section 263. Regarding bonus payment of Rs. 2.02 crores, the Tribunal found that the AO had properly examined this issue during assessment proceedings, and the assessee had demonstrated payment before the return filing due date in compliance with section 43B. However, concerning interest expenses on PFC loans amounting to Rs. 17.91 crores, the Tribunal upheld the PCIT's finding that the AO erred in allowing unpaid interest without proper examination, violating section 43B requirements. On the third issue of Capital Grants & Subsidies and Consumer Contribution write-backs, the Tribunal rejected the PCIT's contention of shortfall, accepting the assessee's demonstration that the correct amounts were properly accounted for.

  • The Impact of Notional Costs on PLI Calculation in Transfer Pricing and Interest Rate Benchmarking for AE Receivables

    Case-Laws - AT : The ITAT ruled against treating notional costs of services provided by the associated enterprise as part of operating expenses when calculating the assessee's PLI. The Tribunal noted that Rule 10TA (which includes share-based compensation as operating expenses) applies prospectively from April 1, 2017, and only when safe harbor rules are opted for, which was not the case here. The ITAT also applied the principle of consistency since no such adjustments were made in previous assessment years under similar circumstances. Regarding comparable selection, the matter was remanded to the TPO for fresh adjudication. For overdue receivables from AE, the Tribunal held that LIBOR+200 points should apply rather than PLR rates. The ITAT allowed interest expenses on CCDs but upheld disallowance of delayed PF contributions following the Supreme Court's Checkmate Services judgment.

  • Customs

  • Commissioner's Review Order Dismissed as Time-Barred Under Section 129D(3) of Customs Act for Exceeding 90-Day Limitation Period

    Case-Laws - AT : CESTAT upheld the Commissioner of Customs (Appeals)'s decision dismissing the Revenue's appeal as time-barred. The review order was passed 20 days beyond the 90-day limitation period prescribed under Section 129D(3) of the Customs Act, 1962. The Revenue failed to demonstrate that sufficient cause was shown to the Board to obtain the mandated extension of 30 days under the proviso to Section 129D(3), nor did it file any application for condonation of delay before the Commissioner (Appeals). The Tribunal ruled that non-compliance with statutory time limitations cannot be mechanically condoned without adherence to legal mandates, particularly when no justifiable reasons were presented.

  • Synthetic Casting Tapes Classified Under CTH 30059040 Following Johnson & Johnson Precedent, Not Eligible for CTH 9021

    Case-Laws - AT : CESTAT held that synthetic casting tapes are properly classifiable under CTH 30059040 rather than CTH 9021. The Tribunal relied on precedent from Johnson & Johnson case which established that Deltalite Casting Tapes fall under sub-heading 3005.10. The Tribunal determined that the goods were not devices/instruments/appliances that would warrant classification under Heading 90.21. Regarding limitation period, CESTAT upheld the invocation of extended period under Section 28(4) of Customs Act, finding that appellant could not claim ignorance of relevant precedential orders from 1999-2000 when filing Bills of Entry. The appeal was dismissed for lack of merit.

  • Customs Tribunal Upholds Confiscation of Undeclared Imports, Rejects Value Enhancement and Limits Penalties Under Section 114A

    Case-Laws - AT : CESTAT upheld confiscation of undeclared and excess imported goods while setting aside confiscation of properly declared items. The tribunal rejected Revenue's enhancement of transaction value, finding no evidence supporting contemporaneous import values or allegations of extra payments. The appellant-company was held liable for penalty under Section 114A equal to the duty on mis-declared quantity only, while penalties under Section 114AA were deemed inapplicable as documents were genuine. Penalties against the company's Director under both Sections 114A and 114AA were set aside. The matter was remanded for recalculation of duty on excess/undeclared goods and determination of appropriate redemption fine, with previous deposit of Rs.7,20,695 to be adjusted against confirmed duty.

  • Customs penalty enhancement for missing E-Waste EPR certificate reversed due to lack of show cause notice under Section 128A(3).

    Case-Laws - AT : The CESTAT set aside the Commissioner (Appeals)'s enhancement of redemption fine and penalty imposed on the appellant for failing to produce an EPR certificate when importing toner for multifunction printers under E-Waste Management Rules 2016. The Tribunal noted that while the appellant imported goods in 2017 shortly after the rules were implemented in 2016, they were likely unaware of the requirement. More significantly, the Commissioner (Appeals) violated principles of natural justice by enhancing penalties without issuing a show cause notice as mandated under the First Proviso to Section 128A(3) of the Customs Act, depriving the appellant of the opportunity to present a defense. Appeal allowed.

  • DGFT

  • DGFT Proposes Amendments to SCOMET Export Authorization Rules for "Stock and Sale" Under Para 10.10

    Circulars : The DGFT has issued draft amendments to Para 10.10 of the Handbook of Procedures 2023 regarding export authorization for "Stock and Sale" of SCOMET items. The revised policy expands eligibility for bulk exports to stockists abroad, now including subsidiaries, parent companies, affiliates, OEMs, and contract manufacturers. The amendments establish a two-tier approval system: initial authorization for export to stockist with in-principle approval for specified countries, followed by post-reporting requirements for transfers within approved jurisdictions. For countries not pre-approved, separate authorization is required. The policy mandates annual inventory reporting and requires transfers to final end-users within the validity period of the authorization. Stakeholders have 10 days to submit feedback on these proposed changes.

  • Corporate Law

  • Amalgamation of Non-Insurance Companies with Insurance Companies Doesn't Require Prior Approval Under Section 35(1) of Insurance Act

    Case-Laws - AT : The NCLAT upheld the amalgamation of non-insurance transferor companies with insurance transferee companies, ruling that prior approval under Section 35(1) of the Insurance Act was not required. The Tribunal noted that post-merger, shareholders would maintain identical ownership percentages in the insurance companies, thus not triggering Section 6A requirements. The amalgamation process strictly followed Sections 230-232 of the Companies Act, with proper notices issued to authorities inviting objections. Finding no statutory prohibition in the Insurance Act mandating prior compliance with Section 35 before amalgamation under the Companies Act, the NCLAT determined the merger orders contained no legal errors warranting appellate intervention under Section 421. Appeal dismissed.

  • Interim Injunction Upheld: Shareholders Barred from Transferring Shares During Arbitration Under Section 37(2) of A&C Act

    Case-Laws - HC : The HC upheld an interim injunction restraining appellants from alienating their shareholding in a company pending arbitration. The court emphasized its limited role in appeals under Section 37(2) of the A&C Act, particularly for discretionary interlocutory orders, following the principle of least intervention. While appellants argued the Share Purchase Agreement was a contingent contract incapable of enforcement, the court found this argument meritless as appellants themselves alleged breach by respondent to terminate the agreement. The AT's injunction was justified as respondent demonstrated readiness to perform the agreement, and the order was necessary to preserve the subject matter (shares) pending arbitration. Appeal dismissed as the AT's discretion was exercised properly.

  • IBC

  • Director Who Resigned After Filing Petition Cannot Maintain Appeal Under IBC; Shareholder Cannot Be Substituted

    Case-Laws - AT : The NCLAT dismissed a recall application, confirming that the Appellate Tribunal's power of recall is limited to exceptional circumstances as established in Union Bank of India case. The Tribunal held that a director who resigned after filing a petition on behalf of the corporate debtor cannot maintain the appeal, as their resignation nullified their capacity to represent the corporate debtor. Furthermore, a shareholder cannot be substituted in place of the suspended director due to their statutorily distinct status. The Tribunal emphasized that recall applications under Section 151 of CPC are not universally maintainable before Appellate Tribunals. Consequently, the recall application was deemed misconceived and dismissed, with the original order of 14.10.2024 confirmed.

  • Resolution Plan Approval Extinguishes All Claims Under IBC Section 31(1), Court Rejects Challenge to Protect Corporate Revival Process

    Case-Laws - Tri : The Tribunal dismissed the application challenging extinguishment of claims under an approved resolution plan. The Tri emphasized that IBC's primary objective is revival of the Corporate Debtor through time-bound restructuring, not liquidation. Once a resolution plan is approved by the CoC based on their commercial wisdom regarding feasibility and viability, the Adjudicating Authority cannot direct changes contingent on future arbitration proceedings. Under Section 31(1), an approved resolution plan freezes all claims and binds all stakeholders including the Corporate Debtor, creditors, governments, and guarantors. Consequently, the Applicant's prayer that their claim should not be extinguished was deemed legally untenable and rejected.

  • SEBI

  • Rights Issue Framework Streamlined: 23-Day Completion, 7-Day Subscription Period, and Automated Validation System Effective April 2025

    Circulars : SEBI has introduced a new framework for Rights Issues, effective April 7, 2025, requiring completion within 23 working days from board approval. The circular establishes expedited timelines for various stages of the Rights Issue process, reduces minimum subscription period to seven days, and introduces flexibility for allotment to specific investors. Stock Exchanges and Depositories must develop an automated validation system for applications within six months. The framework includes detailed timelines for pre-issue activities (Board approval to issue closure) and post-issue activities (closure to listing and trading). Consequential amendments to the Master Circular on ICDR Regulations have been made to align with this streamlined process.

  • Service Tax

  • Mutuality Doctrine Shields Club from Service Tax; Pure Agent Status and Threshold Exemption Also Apply

    Case-Laws - AT : CESTAT held that service tax demands against the appellant were unsustainable on multiple grounds. The doctrine of mutuality applies to club/association services, eliminating service provider-recipient relationship between an association and its members, following precedent in Ranchi Club Ltd. and Supreme Court's decision in State of West Bengal v. Calcutta Club Limited. The Business Auxiliary Services demand failed as authorities neither controverted appellant's "pure agent" claim nor specified which limb of the BAS definition applied. Regarding renting of immovable property, the taxable value (Rs.1,45,875/- for 2013-2014) fell below the threshold limit specified in Notification No.33/2012. Appeal allowed in toto.

  • Commissioner Cannot Confirm Tax Demand on New Grounds After Finding Against Original Issue in Show Cause Notice

    Case-Laws - AT : CESTAT ruled that the Commissioner erred in confirming service tax demand on grounds not specified in the show cause notice after finding against the Department on the original issue. The Tribunal held that reimbursements received by the appellant from licensees for electricity, telephone, and maintenance charges do not constitute "consideration" for renting of immovable property services and are therefore not includable in the assessable value for service tax purposes. These amounts represented pure reimbursements rather than expenditures incurred by the appellant while providing services. Consequently, the service tax demand, along with associated interest and penalties, was set aside and the appeal was allowed.

  • Central Excise

  • Eco Bath Towelette Classified as "Other Bath Preparation" Under 3307 3090, Not 3402 9091 as Claimed

    Case-Laws - AT : The CESTAT determined that Eco Bath Towelette should be classified under Chapter Heading 3307 3090 (Other Bath Preparations) rather than Chapter Heading 3402 9091 as claimed by the appellant. The Central Revenue Control Laboratory report conclusively established that the product failed to satisfy Chapter Note 3 of Chapter 34, making classification under Chapter 34 untenable. However, the Tribunal found that extended period of limitation under Section 11A and penalties under Section 11AC were unjustified, as the appellant had disclosed all relevant information in packaging and marketing materials, and had relied on legal opinion. The reclassification resulted from technical test results rather than willful misstatement or suppression of facts. The appeal was partially allowed, limiting the demand to the normal period of limitation.


Case Laws:

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  • Indian Laws

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