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TMI Tax Updates - e-Newsletter
March 19, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Dismissal of contempt petition - The appellant filed a contempt petition alleging non-compliance with the High Court's order. However, the contempt bench dismissed the petition, stating that there was no provision under the GST Act for deciding the representation. - The court, independent of the contempt bench's observation, found that no contempt was made out due to the resolution of the representation by the competent authority. As the appellant's remedy was to challenge the order, the contempt petition was dismissed with liberty for the appellant to pursue further legal recourse.
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Levy of penalty - Search and seizure operation at the petitioner's godown. - The Court held that invoking Section 129(3) in this instance was without jurisdiction. The provision, intended for regulating goods in transit, was misapplied to a stationary godown, a static location not covered under the said section's purview. This misapplication highlighted a significant procedural misstep, as the actions undertaken by the officers exceeded their jurisdictional boundaries set by the Act. - The Court criticized this deliberate mischaracterization, refraining from delving into the motives behind such conduct to avoid a lengthy process. However, it emphasized the accountability of the officers, recommending administrative review and appropriate disciplinary action.
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Penalty proceedings u/s 129(3) of UPGST Act - search and seizure is carried out at the godown - The High court, referring to a previous judgment, concluded that the penalty proceedings were initiated without proper jurisdiction and thus quashed the impugned orders.
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Doctrine of promissory estoppel - Benefit under incentive Scheme - Scenarios of new Acts replacing the VAT Act, ensuring entitlement despite the GST regime. - The High court found that the petitioner fulfilled conditions of the scheme and was entitled to benefits. Past disbursements under the scheme, including GST components, supported this entitlement. The respondent's refusal to disburse the rest of the amount was unjustified. - Clause 19.2 of the scheme was interpreted to cover scenarios where the VAT Act is replaced by any other Act, ensuring continued entitlement despite changes in taxation regimes. The court rejected the respondent's argument that the GST Act replaced multiple statutes, holding that only the VAT Act was specifically mentioned in Clause 19.2.
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Levy of interest u/s 50(3) - Wrong availment of Input of Tax Credit and reversal thereof - The court noted that the issue of levying interest under Section 50(3) of the Act for the wrongful availment and reversal of Input Tax Credit had been settled, as evidenced by the circular and various judgments cited. Additionally, the court considered the retrospective amendment in Section 50(3) of the Finance Act, 2022. - Matter remanded back to the adjudicating authority for fresh consideration in accordance with the law.
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Recovery notice - Validity of assessment orders - The High court observed that while personal hearings were offered to the petitioner, it was evident that the petitioner was not heard during the assessment process. Additionally, the assessing officer relied on internet-based information without affording the petitioner an opportunity to challenge or provide contrary evidence. Consequently, the court found the lack of proper opportunity for the petitioner to be heard as a procedural irregularity, warranting interference. - Matter restored back for fresh adjudication.
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Revocation of registration cancellation - The High court acknowledged the seriousness of cancellation consequences for the petitioner's business and considered a liberal approach necessary. Despite the expiration of the period prescribed under section 30 of the GST Act, the court granted permission to the petitioner to file an application for revocation, subject to payment of dues and penalties.
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The petitioner contested a demand raised against them u/s 74 of the GST Act for a substantial amount, claiming that the order was passed without affording them an opportunity of personal hearing, thus violating their rights under the principles of natural justice. - The High Court referred to previous judgments, including one stating that under Section 75(4) of the GST Act, it is mandatory to grant a personal hearing where any adverse decision is contemplated against the person chargeable with tax or penalty, even without a specific request for such hearing. The Court held that the authority must afford an opportunity of personal hearing before passing any adverse order, as clarified in previous judgments.
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Demand of GST - Validity of assessment orders - The petitioner contended that they provided all relevant documents, including those related to land transactions, during the assessment process. They argued that project details were submitted during rectification proceedings. - After examining the evidence and submissions, the court noted that the assessing officer had considered the petitioner's documents and entered findings based on such evidence. The court concluded that a reasonable opportunity was provided to the petitioner, and the assessment orders were not a result of non-application of mind. Therefore, the court found no grounds for interference in its discretionary jurisdiction.
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Rectification of errors in filing GST Returns - The case involved errors made by the petitioner in their GST returns for the period July 2017, initially by incorrectly reflecting the SGST tax component and subsequently by reversing ITC under IGST instead of SGST. The petitioner promptly notified the authorities about these errors and submitted a detailed reply to the show cause notice. The court, considering similar precedents and the challenges faced by taxpayers during the early stages of GST implementation, directed the authorities to permit the petitioner to rectify their GST returns, emphasizing the need for a flexible approach to address inadvertent errors.
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Condonation of delay in filing the appeal and non-payment of fee towards filing of appeal - delay of 920 days - The case revolved around an appeal filed against a ruling by the Authority for Advance Ruling regarding the exemption of a specific service under GST laws. However, the appeal was dismissed by the Appellate Authority primarily due to a significant delay in filing the appeal, which exceeded the statutory limit for condonation.
Income Tax
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Exemption u/s 11 - whether the objects of the trust were charitable? - The High court found that the issue of interpretation of Section 11 was covered by previous rulings and did not raise substantial questions of law. - As for the restriction of denial of benefit under Section 11, the court agreed with the respondent's argument, stating that only income used for the benefit of prohibited persons should be denied exemption. - Regarding the applicability of the Bharat Diamond Bourse case, the court clarified that it did not specify whether the denial of benefit under Section 11 should apply to the entire income or only to diverted funds. - The court admitted the question regarding the eligibility of expenditure incurred on new objects for exemption under Section 11 for further consideration.
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High court power / jurisdiction to condone the delay - delay in filing an application seeking special leave to appeal against an acquittal. - After thorough consideration, the High court concluded that there is indeed power to condone the delay in such cases. - The court emphasized the precedential authority of a Supreme Court judgment, stating that it is binding on all courts unless distinguished, overruled, or set aside. The argument that the Supreme Court decision was inadequately considered was rejected. - The court analyzed the provisions of the Criminal Procedure Code and the Limitation Act, particularly regarding their applicability in appeals against acquittal. It concluded that Section 5 of the Limitation Act can be availed in such appeals.
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Requirement of 20% Deposit of Disputed Demand for Considering Stay Application - The High court clarified that the OMs do not mandate a 20% deposit as a precondition for granting stay against demand recovery. It was held that such an interpretation is misconceived and that the discretion to require a deposit, either more or less than 20%, depends on the facts of each case. The court directed the respondents to consider the petitioner's application for stay under Section 220(6) without the presumption of a mandatory 20% deposit.
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Validity of Adjusting Disputed Tax Demand Against Refunds Without Considering Stay Application - The High court found this action arbitrary and unfair, emphasizing that the respondents erred by adjusting the demand without attending to the stay application. It was highlighted that such adjustments cannot proceed without proper consideration of the application for stay, and doing so is deemed arbitrary and in violation of the principles of fairness and legal procedure.
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Capital gain - Valuation of the property sold by the assessee - reference to DVO - ITAT noted that the reference made by the AO to the VO was not in accordance with the relevant provisions of the Act. - The Tribunal analyzed the provisions of section 55A of the Act, both before and after the amendment effective from 01-07-2012. It determined that the amendment was not applicable to the relevant assessment year and, therefore, the reference made by the AO to the VO was not valid.
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Disallowance of claim of interest expenses u/s. 57(iii) - The Assessing Officer (AO) had disallowed a portion of the interest expenses based on the difference between the interest charged by the appellant on loans given and the interest paid on loans taken. However, the ITAT found that since the appellant used interest-bearing funds to earn interest income, the disallowance of expenses exceeding the interest charged on loans given was not justified. - The Tribunal also criticized the AO's interpretation of the term "income," stating that as long as the expenses were incurred for the purpose of earning income, regardless of whether a profit was earned, they should be allowed as deductions under Section 57(iii) of the Act.
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Deduction u/s 80P - interest income - The tribunal noted that section 80P(2)(a)(i) allows deduction for cooperative societies engaged in banking or providing credit facilities to members. - The tribunal distinguished the facts of the present case from the decision of the Supreme Court in Totgars Co-operative Sale Society Ltd. The tribunal observed that the income in question was derived from activities eligible for deduction under section 80P. - Citing judgments of the Andhra Pradesh High Court and a coordinate Bench of the Tribunal, the tribunal held that interest income derived from activities listed in section 80P(2)(a) qualifies for deduction under section 80P.
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Accrual of income India - Service PE/ virtual service PE in India - computation of threshold date for constitution of service PE - The tribunal concluded that for AY 2020-21, the appellant did not constitute a Service PE in India, as the presence of employees in India did not exceed the 90-day threshold required for constituting a Service PE under the India-Singapore DTAA. For AY 2021-22, since no employees visited India, the appellant could not have constituted a Service PE. Furthermore, the tribunal found no basis for the constitution of a Virtual Service PE as claimed by the AO, given the absence of relevant provisions in the India-Singapore DTAA or substantial evidence to support such a claim.
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Assessment u/s 153A - completed assessments to be interfered with by the A.O. while making the assessment u/s 153A - The Tribunal upheld the decision of the Ld. CIT(A) in deleting the addition. - The ITAT reiterated the principle that completed assessments can only be interfered with by the AO under Section 153A based on incriminating material found during the search. Since the revenue failed to demonstrate that the additions were made on such basis, the court found no reason to interfere with the order of the Ld. CIT(A).
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Nature of land - capital gain on sale of land - exemption u/s 10(37) - assessee's agricultural land was compulsorily acquired by following entire procedure prescribed under Land Acquisition Act - character of acquisition - Revenue contested the CIT(A)'s acceptance of 1947 as the year of transfer instead of 19.05.2014 (date of final award). - The Tribunal held that the peculiar circumstances warranted consideration of the land's acquisition date as 1947 for the purpose of exemption under Section 10(37), emphasizing the continuous possession by the state and non-alteration in land's status due to delayed compensation. - The ITAT observed that the land's character and use as agricultural at the time of its original acquisition in 1947 were crucial, dismissing the relevance of its status immediately before the compensation award in 2014 for the purposes of Section 10(37).
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Assessment u/s 153A - addition u/s 68 - The assessee contended that the additions were not based on any incriminating material found during the search. The Tribunal held that no addition could be made under Section 153A in the absence of incriminating material for the years where no assessment was pending. The court accepted this contention and deleted the additions. - The ITAT examined several additions and disallowances made by the assessing officer, including those related to cash deposits, unsecured loans, and depreciation on vehicles. In each instance, the court meticulously evaluated the submissions, documentary evidence, and legal positions before rendering its decisions, often in favor of the assessee by deleting unjustified additions.
Customs
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ADD on Aluminium Road Wheels imported from China PR. - Notification No. 07/2024-Customs (ADD), issued by the Ministry of Finance, Department of Revenue on 15th March 2024, addresses the imposition of anti-dumping duties on imports of cast aluminium alloy wheels or alloy road wheels used in motor vehicles, originating from or exported by China PR. This measure, derived from a thorough review conducted by the designated authority, underscores the continued dumping of these goods into India at below-normal prices, causing injury to the domestic industry.
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Exemption from the Social Welfare Surcharge (SWS) - The amendment made by Notification No. 20/2024-Customs adds a new item to the list under Serial No. 57 in the table of the original notification. This addition is item "(v) column (3) sub-item (c) of item (2) of S. No. 526A," - This change implies that EVs imported under of the Ministry of Heavy Industries' Scheme to promote manufacturing of electric passenger cars in India now enjoys exemption from the Social Welfare Surcharge (SWS)
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Customs Duty concession to EVs imported under of the Ministry of Heavy Industries' Scheme - The introduction of a specific customs duty rate of 15% for EVs imported under the new scheme encourages the import and manufacturing of electric passenger cars in India. This aligns with India's goals for environmental sustainability and the promotion of cleaner, greener transportation alternatives. - The conditional exemption, bound by compliance with the 'Scheme to promote manufacturing of electric passenger cars in India', introduces a structured approach to support the domestic manufacturing of electric vehicles. By setting a deadline of 31st March 2031, it also indicates a transition period towards more sustainable transportation solutions.
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Agreement or Arrangement on Cooperation and Mutual Administrative Assistance (CMAA) in Customs Matter of India and with other Countries - The Ministry of Finance, through Notification No. 23/2024 - Customs (N.T.), has expanded the scope of cooperation in customs matters by incorporating the Agreement with the Republic of Armenia into the existing framework. This step underscores India's commitment to enhancing collaboration with international partners for effective customs administration and enforcement.
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Valuation of Goods - Contemporaneous Imports of camera stabilizer devices - identical/similar items with the same model numbers at higher and different unit prices - The Supreme Court observed that a comparative table of the imported goods showed them to be identical or similar to earlier imports, except for being labeled as an "unpopular brand." The Court noted the appellant's admission of minor differences in hardware and software but affirmed the finding that the goods were essentially the same. As such, the Court upheld the decision to discard the declared transaction value and impose penalties.
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Confiscation of seized truck u/s 115(2) of the Customs Act, 1962 - levy of penalty - The case involved the seizure and subsequent confiscation of a vehicle allegedly involved in smuggling activities. The appellant, the owner of the vehicle, claimed innocence, stating that the driver loaded the goods without his knowledge. Despite contesting the allegations and highlighting financial hardship, the Adjudicating Authority imposed a redemption fine and penalty. The appellant appealed, arguing lack of evidence and financial strain. The CESTAT, while acknowledging the appellant's limited involvement and financial condition, upheld partial accountability and reduced the penalties imposed.
DGFT
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Amendment in Import Policy Condition for Duck Meat - The newly revised policy introduces a more defined condition for the importation of premium duck meat. It now specifies that only 3-star and above operational hotels, as recognized by a notification issued by the Ministry of Tourism, Government of India, are eligible to import premium duck meat under the restricted category. The amendment aims to regulate the quality and control of premium duck meat entering the Indian market, presumably to ensure it meets specific standards and is utilized by establishments that can uphold these standards.
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Imposition of Minimum Import Price (MIP) - Temporary Measure - A Minimum Import Price of 3.5 US Dollars per Kilogram is set for the specified synthetic knitted fabric ITC(HS) Codes. This aims to regulate the import prices of these fabrics, potentially to protect the domestic industry from underpriced imports. - The changes are effective only until 15th September 2024, after which the policy reverts to its status prior to this notification, unless further amended.
Corporate Law
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Seeking waiving off the payment of Court fees - economic hardship or other significant reasons - Refiling the Compensation Application against the order of the Competition Commission of India - The NCLAT found no such hardship or reason was presented that justified waiving the fee, despite the appellant's claim of being misled by their previous representative. - The NCLAT distinguished these cases from the present situation, noting that in those cases, the legal representatives' absence or default led to the proceedings' outcomes. In contrast, in the current case, the representative was present and actively participated, even though he was not authorized to practice law. Thus, the rationale of not penalizing the party for the representative's fault did not apply here as the representative's actions were not mere defaults or absences but involved active, albeit unauthorized, participation.
Indian Laws
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Ex-parte ad-interim injunction against the appellants - Defamatory Article authored by Defendant Nos. 3-5 and published by Defendant Nos. 1 and 2 as stated in the present Suit are defamatory to the Plaintiff - The Court dismissed the appeal, finding the ex-parte ad-interim injunction justified based on prima facie evidence and the balance of convenience favoring the respondent. The Court noted the importance of procedural adherence in granting such injunctions, emphasizing that the initial order was not arbitrary and was within legal bounds. - The Court emphasized the distinction between freedom of speech and defamation, underscoring the necessity of responsible journalism. It concluded that the appellants had not provided sufficient justification to refute the claims of defamation and upheld the injunction.
Service Tax
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Refund of service tax paid as sub-contractor - Rejection on the ground that Section 102 exempts services rendered to a Government, a local Authority or a Government Authority and does not exempt services rendered to a private company which in this case is M/s NBCC - The Tribunal interpreted Section 102 of the Finance Act, 1994, and held that the exemption applied to services provided to government entities, including educational institutions, regardless of whether the services were rendered directly or through subcontractors. The court emphasized that the nature of the service and the ultimate beneficiary, i.e., the government entity, determined the applicability of the exemption. - The CESTAT ruled in favor of the subcontractor, holding that they were entitled to the refund.
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Reversal of CENVAT Credit - Exemption to SEZ Units - The Tribunal analyzed relevant legal provisions and found no restriction prohibiting the SEZ Unit from utilizing Cenvat credit of a non-SEZ Unit. It held that there was no statutory basis for denying such utilization. - The Tribunal noted that the sole basis for denying the Appellant the ability to utilize Cenvat credit was the view that the centralized registration appeared to be invalid due to differing invoicing series. However, it ruled that there was no statutory requirement for identical invoicing series under centralized registration. Thus, it found the basis for denial to be erroneous and without legal merit.
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Levy of service tax - Export of services or not - amount has been received in Indian Currency - The tribunal concluded that the service provided by the appellant qualified as an export of service. It emphasized that the appellant acted as an agent for the foreign exporter and that the contract between the parties clearly specified commission rates in US dollars. Despite receiving payment in Indian Rupees, the tribunal deemed the service to be an export as it fulfilled the conditions under Rule 3(2)(b) of the Export of Service Rules, 2005.
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Refund of service tax paid - entitlement for Cenvat credit of the service tax paid on the ocean freight on the reverse charge mechanism - rejection of refund on the ground that since the amount of service tax was paid on insistence of the audit party, there is suppression of fact - The Tribunal ruled that the allegation of suppression of fact was based on assumptions and presumptions, as there was no adjudication in a demand case. Therefore, it could not be conclusively established that there was suppression of fact in the payment of service tax on ocean freight.
Case Laws:
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GST
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2024 (3) TMI 788
Dismissal of contempt petition - appellant submits that the contempt bench has dismissed the contempt petition being not maintainable by observing that there is no provision under the G.S.T. Act for deciding the representation - HELD THAT:- After hearing learned counsel for the parties, independent of observation made by contempt bench that there is no provision under the Act, 2017 for deciding the representation, we find that the representation of the petitioner in terms of Writ Court's order dated 4.8.2023 stand decided by the competent authority by passing the order dated 21.9.2023 and, therefore, on the face of it, no contempt is made out as the remedy before the petitioner is to challenge the said order in accordance with law. Petition dismissed.
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2024 (3) TMI 787
Extension of time to file appeal under sub-section (1) of Section 107 of the Central Goods and Services Act, 2017 till January 31, 2024 - it is submitted that this notification only deals with the orders passed under Sections 73 and 74 of the Act and does not take into account the orders passed under Sections 129 and 130 of the Act - HELD THAT:- This Court is not in a position to issue a writ of mandamus directing the Central Government to include Sections 129 and 130 of the Act in the said notification. However, the Government can very well consider adding these two Sections in the said notification, so that the benefit that has been provided for the orders passed under Sections 73 and 74 of the Act can be extended to Sections 129 and 130 of the Act. The GST council and the Central Board of Indirect Taxes, Ministry of Finance, is directed to look into this aspect of the matter at the earliest. The matter is adjourned sine die with liberty granted to the counsel appearing on behalf of the petitioner to mention the same at the appropriate time.
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2024 (3) TMI 786
Maintainability of appeal - requirement to make pre-deposit of 10% of the disputed tax amount - Permission to petitioner to withdraw and/or to operate the Petitioner s bank account, so as to make pre-deposit for filing of such Appeal - HELD THAT:- The prayers as made in the Petition are required to be permitted, as such amount is to be utilized by the Petitioner for making the pre-deposit, hence, it would not fall under the description of the amount being used for any private purpose, but to deposit the same, with the Government for maintaining the Appeal. We have taken a similar view in other proceedings. The Petitioner is permitted to operate Bank Account No. 713915009 to withdraw the amount of Rs. 7,89,09,671/- to be deposited for the purpose of filing of the Appeal in assailing the impugned Order-in-Original - Petitioner is also permitted to avail of the facility of electronics (NEFT/ RTGS) transfer for making such deposit. To such extent and only in respect of the said amount, the provisional attachment of the Bank Account in question shall stand lifted, and for no other purpose. It should be a single transaction - Petition disposed off.
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2024 (3) TMI 785
Penalty proceedings u/s 129(3) of UPGST Act - search and seizure is carried out at the godown - subsequent to search and seizure carried out under Section 67 of the Act, penalty proceedings have been launched - HELD THAT:- There does not seem to be any controversy with regard to the facts as penned in the writ petition with regard to the imposition of the penalty under Section 129 (3) of the Act, in spite of there being search and seizure carried out under Section 67 of the Act. The entire proceedings that have been initiated have no feet to stand, and accordingly, the impugned orders dated June 15, 2018 and May 1, 2019 are quashed and set aside - Petition allowed.
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2024 (3) TMI 784
Violation of principles of natural justice - order under Section 74 of the Act was passed without granting any opportunity of hearing to the petitioner - HELD THAT:- Upon an examination of the material on record, it is found that this will be an exercise in futility to grant time for filing the counter affidavit, as the point involved in this writ petition is only a point of law. Firstly, as held by this Court in M/S SHREE SAI PALACE VERSUS STATE OF U.P. AND OTHERS [ 2024 (3) TMI 49 - ALLAHABAD HIGH COURT] this Court has held that if an adverse order is passed under Section 74 of the Act, it is mandatory that opportunity of hearing be granted under Section 75(4) of the Act. On this very basis, the impugned orders do not have any legs to stand and are liable to be quashed and set aside. Furthermore, the judgement relied upon by the learned counsel for the petitioner in M/S DAIMOND (DIAMOND) STEEL VERSUS STATE OF UP AND 3 OTHERS [ 2023 (4) TMI 497 - ALLAHABAD HIGH COURT] is also buttressing the arguments of the petitioner that the adjudication carried out by the authorities below was nothing but a best judgement assessment, and accordingly, is against the principles as established in law. The impugned orders dated February 22, 2023 and January 16, 2023 are quashed and set aside with a direction upon the authorities to carry out de novo assessment, after granting opportunity of hearing to the petitioner, within a period of three months from date - petition allowed.
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2024 (3) TMI 783
Doctrine of promissory estoppel - Benefit under incentive Scheme - Scenarios of new Acts replacing the VAT Act, ensuring entitlement despite the GST regime. - refusal to disburse the rest of the amount of the scheme on the plea that in the altered GST regime, the scheme cannot be continued, since the scheme did not contemplate of such tax - HELD THAT:- A close scrutiny of Clause 19.2 of the subsidy scheme indicates that the same specifically stipulates that in the event of the West Bengal Value Added Tax Act, 2003 being replaced by any other Act , the provision of the Scheme will apply mutatis mutandis even after the new Act comes into force - Thus, in the absence of any other Act being introduced apart from the GST Act, which has subsumed the VAT Act, the argument advanced by the respondents cannot be accepted. Admittedly and even as per such judgment as cited by the respondents, the said component is also envisaged within the GST scheme of things. Both the Centre and States have their respective shares in the GST taxes. Hence, it cannot be said that the respondents would be deprived of any component if the petitioners come within the purview of the GST scheme - In the present case, the petitioners were issued both RC-I and RC-II and the petitioners application under the subsidy scheme was duly sanctioned. The petitioners, in fact, have continued commercial production under the specific promise made by the State of giving the incentive/subsidy under the scheme-in question - the doctrine of promissory estoppel is squarely applicable in the present case. The sanction was granted to the petitioners under the said Scheme, thereby clearly admitting the fact and acquiescing to the position that the petitioners were entitled to the benefits of the scheme - the petitioners are squarely entitled to claim the benefits of the subsidy scheme-in-question even after coming into force of the GST Act, as per Clause 19. 2 of the Scheme. The respondent authorities have acted palpably de hors the scope of the scheme in passing the impugned order dated February 17, 2022 authored by the Managing Director, West Bengal Industrial Development Corporation Limited where it has been held that the petitioners are not eligible for disbursement/sanction for incentive under the Scheme. The said order is, thus, set aside - Petition allowed.
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2024 (3) TMI 782
Levy of interest u/s 50(3) of the West Bengal Goods and Service Tax Act 2017 - wrong availment of Input of Tax Credit and reversal thereof - respondents fairly states that there has been an amendment made in the Finance Act, 2022 in Section 50(3) with retrospective effect from 1st July, 2017 which entitles the petitioner not to pay the interest on the Input Tax Credit availed and reversed but the same has not been utilized - HELD THAT:- The present writ petition is allowed and the impugned order dated 15.10.2020 passed by the respondent no.2 and an order dated 11.01.2022 passed by respondent no.3 are hereby set aside and the petitioner is relegated back to the adjudicating authority for fresh consideration as per law.
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2024 (3) TMI 781
Recovery notice - Validity of assessment orders pertaining to four assessment years - notices were not served in accordance with Section 169 of applicable GST statutes - violation of principles of natural justice - HELD THAT:- On examining the show cause notice, it is evident that personal hearing was offered to the petitioner. In these circumstances, as a registered person, the explanation provided by the petitioner for not responding to these notices is not convincing. On examining the impugned assessment order, it is clear that the petitioner was not heard. It is also clear that the assessing officer relied on information available on a particular website on the internet to attribute values to materials used in construction. If the petitioner had been heard, the petitioner would have able to place relevant materials on record to endeavor to convince the assessing officer that the values estimated by him are incorrect. In these facts and circumstances, the impugned assessment orders warrant interference, albeit by putting the petitioner on terms. The impugned assessment orders are quashed subject to the condition that 10% of the disputed tax demand under each assessment order be adjusted against the credit available in the electronic credit ledger of the petitioner. The petitioner is also permitted to submit replies to the show cause notice within a maximum period of fifteen days from the date of receipt of a copy of this order. Petition disposed off.
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2024 (3) TMI 780
Dismissal of the petition under section 107 of the Central Goods and Services Tax Act, 2017 - Seeking to avail the option under section 30 of the GST Act for revocation of the cancellation of registration - appeal dismissed on the ground of time limitation - HELD THAT:- Section 39 of the GST Act provides that every registered person other than an input service distributor or a non-resident taxable person shall for every calendar month or part thereof furnish a return of inward and outward supply of goods and service. There are other requirements/ stipulations under section 39 which every registered person/Firm is required to comply. Section 45 provides a window to the registered person/Firm for restoration of the registration by allowing/furnishing of a final return within three months from the date of the cancellation or from the date of the order of cancellation whichever is later. Under section 30, any registered person whose registration is cancelled may apply for revocation of cancellation of registration in the prescribed manner. The primary object behind the GST Act is levy and collection of tax on intra State supply of goods or services and the matters connected therewith or incidental thereto. Now the cancellation of registration shall ensue serious civil consequences for the petitioner and his entire business shall come to a standstill. The provisions under sections 30, 45, 46, 47 etc. are intended at providing opportunity to the defaulter Firm so as the Firm continues its business. Therefore, a liberal approach is required to be taken in the matters like the present proceeding notwithstanding the period prescribed under section 30 of the GST Act having been lapsed - a permission to the petitioner to file an application under section 30 of GST Act can be granted subject to the petitioner making payment of dues and other statutory penalty/fine for moving the application under section 30 of the GST Act. The present writ petition succeeds to the extent that the petitioner may file an application under section 30 of the GST Act within a period of 30 days and the period of limitation shall be counted from the date of this order - Petition allowed.
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2024 (3) TMI 779
Violation of principles of natural justice - opportunity of hearing not provided - It is the case of the petitioner that the SCN itself reflects that the date of personal hearing, time of personal hearing and the venue of personal hearing has been left blank - HELD THAT:- From the perusal of Section 75(4) of the Act, it is evident that opportunity of hearing is to be granted by authorities under the Act wherein request is received from the person chargeable with tax or penalty or opportunity of hearing where any adverse decision is contemplated against such person. Thus, where an adverse decision is contemplated against a person, such a person even need not to request for opportunity of personal hearing and it is mandatory for the authority concerned to afford opportunity of personal hearing before passing an order adverse of such person, as has been held in MAT No. 205 of 2023. This Court finds that the appellate authority has violated the principle of natural justice by not affording an opportunity of hearing to the petitioner. The delay in filing of the appeal is condoned and the present writ petition is allowed by setting aside the impugned order dated 17.01.2024 - It is hereby directed that the appellate authority shall give personal hearing to the petitioner and his appeal shall be decided on merits. As the petitioner deposited pre-deposit amount 10% of the disputed tax amount, there shall be a stay of the recovery proceedings till disposal of the appeal case - the present writ petition is disposed off.
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2024 (3) TMI 778
Validity of assessment orders pertaining to specific assessment years - allegation is that petitioner had not produced project wise details of work done in every financial year - concrete evidence to prove the nature of business carried on by the petitioner or not - HELD THAT:- On examining the impugned assessment orders, it is noticeable that the reply submitted by the petitioner on several dates were referred to therein. All the documents submitted by the petitioner, such as purchase documents, Government approvals, copies of sale deeds to customers, documents relating to development fees paid to the Government and the statement relating to purchase of goods were taken into account. It is evident that the assessing officer engaged with the evidence placed on record by the petitioner and entered findings after appraising such evidence. It cannot be said that a reasonable opportunity was not provided to the petitioner and that the order is a consequence of non application of mind. In these circumstances, no case is made out to warrant interference in exercise of discretionary jurisdiction. The appropriate recourse for the petitioner would be to carry these assessment orders in appeal before the appellate authority. These writ petitions were filed in January 2024 after orders were issued on the rectification petitions on 05.01.2024. In these circumstances, if appeals are presented by the petitioner within a period of 15 days from the date of receipt of a copy of this order, the appellate authority is directed to consider and dispose of the same on merits without going into the question of limitation. Petition disposed off.
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2024 (3) TMI 777
Rectification of errors in filing GST Returns - Error on the part of the petitioner while submitting its GST returns for the period July, 2017 i.e., at the stage when GST law was at its primitive stage upon being implemented with effect from 01.07.2017 - HELD THAT:- HELD THAT:- Taking note of the fact that the impugned order being totally silent about the contentions and submissions made by the petitioner in its reply to the show cause notice; it is inclined to interdict the impugned order and setting aside the same further remitting the matter back to respondent No. 1 for reconsideration of the submissions of the petitioner that were raised in its reply to the show cause notice and to pass orders afresh. It is directed that respondent No. 1 may grant fresh personal hearing to the petitioner. In order to avoid further delay, the petitioner are directed to remain present before the authority concerned on 27.02.2024, for which there would not be any necessity of issuance of a fresh notice by the authority concerned. Petition allowed by way of remand.
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2024 (3) TMI 776
Condonation of delay in filing the appeal and non-payment of fee towards filing of appeal - delay of 920 days - Exemption from GST - service of cold storage of tamarind inner pulp without shell and seeds - comes within the purview of the definition of Agricultural produce vide Notification No. 11/2017 and 12/2013-CT(Rate) dated 28.06.2017 or not - HELD THAT:- The order was received by the Appellant on 03.04.2021 as per the RPAD acknowledgment card received and placed in the office records. Hence the last date for filing the appeal under Section 100(2) of the CGST Act, 2017, would be 02.05.2021. The last date for filing the appeal with a delay of 30 days with condonation petition (as per first proviso to Section 100(2) of the CGST Act, 2017) would be 01.06.2021, Whereas it is seen that the actual date of filing the appeal by the Appellant was on 07.11.2023. Clearly, there has been a delay of 920 days from the last date of filing the appeal under Section 100(2) of the CGST Act, 2017. As per the statute, the Appellate Authority can condone a delay of 30 days beyond the normal period of thirty days given for filing the appeal provided, sufficient cause is shown by the Appellant. In the present case, there is a delay of 920 days which is way beyond the power of the Appellate authority to condone, let alone examining as to whether sufficient cause was shown by the Appellant. The law of limitation in India identifies the need for limiting litigation by striking a balance between the interests of the state and the litigant - the filing of the appeal falls beyond the powers conferred under proviso to Section 100(2) of the COST Act, 2017. The ruling of the Hon ble Supreme Court in Singh Enterprises Vs CCE, Jamshedpur [ 2007 (12) TMI 11 - SUPREME COURT] is squarely applicable to the facts of the case. It is evident that this Appellate Authority being a creation of the statute is empowered to condone the delay of only a period of 30 days after the expiry of the initial period for filing appeal. As far as the language of section 100 of the CGST Act, 2017 is concerned, the crucial words are not exceeding thirty days used in the proviso to sub-section (2) - further, to hold that this Appellate Authority could entertain this appeal beyond the extended period under the proviso would render the phrase not exceeding thirty days wholly redundant. No principle of interpretation would justify such a result. Notwithstanding the above, the Appellate Authority is not a Court and hence the power to condone beyond the prescribed period does not lie with it. Since the appeal cannot be allowed to proceed on account of time limitation, the question of discussing the merits of the issue in this case in appeal does not arise. The delay cannot be condoned - appeal dismissed.
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Income Tax
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2024 (3) TMI 775
Exemption u/s 11 - whether the objects of the trust were charitable? - as submitted entire benefit u/s 11 will be disallowed and it cannot be restricted only to that income of the trust which was used/applied for the benefit of the prohibited persons - HELD THAT:- Having considered the judgment of the Apex Court in Bharat Bourse ( 2002 (12) TMI 8 - SUPREME COURT] , in our view, the issue primarily in that matter was whether assessee was a trust entitled to the benefit of Section 11 of the Act and secondly whether there was a breach of the provisions of Section 13 of the Act, where one Bharat Shah can be said to be a founder of the institution within the meaning of sub-clause (a) of sub-Section (cc) of Section 13(3) of the Act. The judgment does not say whether the entire benefit under Section 11 of the Act will be disallowed or disallowance will be only to the extent of income diverted. The basic dispute in Bharat Bourse (supra) was whether the objects of the trust were charitable and whether the person to whom the loan was given was a person covered by Section 13 of the Act. We also find support for this view in Audyogik Shikshan Mandal [ 2 018 (12) TMI 1344 - BOMBAY HIGH COURT ] held on a plain reading of Sections 11 and 13 of the Act, it is clear that the legislature did not contemplate the denial the benefit of Section 11 of the Act to the entire income of the Trust. If the interpretation sought to be advanced by the Revenue is accepted, it would lead to grave injustice as any mistake minor and/or misdemnour involving a small amount takes place by the Trust, the consequence would be denial of the benefit of exemption to the entire income otherwise admittedly used for charitable purposes. In our view, as regards proposed question nos. (A), (B) and (C) no substantial question of law arise. Appeal is admitted on the following question of law - Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is right in holding that expenditure incurred on new objects are eligible for exemption u/s 11 even if such new objects had not been intimated to the concerned CIT, without appreciating the fact that since the objects of the trust deed which were the basis of grant of registration u/s 12A of the Act have been altered after grant of such registration, the very foundation of registration having been removed by voluntary act of the assessee?
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2024 (3) TMI 774
High court power or jurisdiction to condone the delay - Condonation of delay in instituting an application for grant of leave to appeal against an acquittal or entertaining the appeal against acquittal - HELD THAT:- Upon due consideration, we are satisfied that Mohd. Abaad Ali [ 2024 (2) TMI 1012 - SUPREME COURT] considers and answers all the vital arguments raised in this reference and, therefore, this reference will have to be disposed of by adopting the binding reasoning therein and holding that this Court has the power or jurisdiction to condone the delay in filing an application seeking leave to appeal against an acquittal or in entertaining an appeal against acquittal under the Code of 1973. Thus we dispose of this reference by holding that the application for condonation of delay in seeking special leave to appeal against acquittal filed by the applicant Department is maintainable. The questions framed in the learned Single Judge's order [ 2021 (12) TMI 766 - BOMBAY HIGH COURT] stand answered by the decision of the Hon'ble Supreme Court in Mohd. Abaad Ali's case[ supra] and there is no point in us repeating those answers.
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2024 (3) TMI 773
Validity of Adjusting Disputed Tax Demand Against Refunds Without Considering Stay Application - Stay of demand - pre-deposit prescriptions - grant of stay pending appellate remedies - petitioner has prayed for the refund being processed after adjustment of 20% of the disputed demand for AY 2018-19 - HELD THAT:- In our considered opinion, the respondents have proceeded on a wholly incorrect and untenable premise that the assessee was obliged to tender or place evidence of having deposited 20% of the disputed demand before its application for stay under Section 220(6) of the Act could have been considered. The interpretation which is sought to be accorded to the aforesaid OM is clearly misconceived for the following reasons. It must at the outset be noted that the two OMs noticed above neither prescribe nor mandate 15% or 20% of the outstanding demand as the case may be, being deposited as a pre-condition for grant of stay. The OM dated 29 February 2016 specifically spoke of a discretion vesting in the AO to grant stay subject to a deposit at a rate higher or lower than 15% dependent upon the facts of a particular case. The subsequent OM merely amended the rate to be 20%. In fact, while the subsequent OM chose to describe the 20% deposit to be the standard rate , the same would clearly not sustain in light of the discussion which ensues. More recently in Indian National Congress vs Deputy Commissioner of Income Tax Central 19 Ors. [ 2024 (3) TMI 669 - DELHI HIGH COURT] we had an occasion to examine the scope of the power conferred by Section 220(6) wherein as held 20% which is spoken of in the OM cannot possibly be viewed as being an inviolate or inflexible condition. The extent of the deposit which an assessee may be called upon to make would have to be examined and answered bearing in mind factors such as prima facie case, undue hardship and likelihood of success. We note that while dealing with the question of the claim of stay as made by an assessee and the competing obligation to protect the interest of the Revenue, the Supreme Court in Benara Valves Ltd. Ors. Vs Commissioner of Central Excise Anr. [ 2006 (11) TMI 6 - SUPREME COURT] wherein held for a hardship to be 'undue' it must be shown that the particular burden to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it. The word undue adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant. Though some of the decisions noticed by us hereinabove pertained to pre-deposit prescriptions placed by a statute, the principles enunciated therein would clearly be of relevance while examining the extent of the power that stands placed in the hands of the AO in terms of Section 220(6) of the Act. In our considered opinion, the respondents have clearly erred in proceeding on the assumption that the application for consideration of outstanding demands being placed in abeyance could not have even been entertained without a 20% pre-deposit. The aforesaid stand as taken is thoroughly misconceived and wholly untenable in law. Undisputedly, and on the date when the impugned adjustments came to be made, the application moved by the petitioner referable to Section 220(6) of the Act had neither been considered nor disposed of. The respondents have thus in our considered opinion clearly acted arbitrarily in proceeding to adjust the demand for AY 2018-19 against available refunds without attending to that application. This action of the respondents is wholly arbitrary and unfair. The intimation of adjustments being proposed would hardly be of any relevance or consequence once it is found that the application for stay remained pending and the said fact is not an issue of contestation. WP allowed.
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2024 (3) TMI 772
Capital gain - Valuation of the property sold by the assessee - reference to DVO for the determination of the value of the cost of suggestion declared by assessee - Scope of amendment in section 55A(a) w.e.f. 01-07-2012 allowing reference for determination of fair market value of cost of land - HELD THAT:- Amendment brought w.e.f. 01-07-2012 would be applicable from Assessment Year 2013-14 and therefore the submission made by the ld. A.R. that such reference cannot be made u/s. 55A of the Act for the year under consideration i.e. Assessment Year 2012-13 is found to be acceptable. Therefore, argument advanced by the ld. senior counsel on the merit of the matter and the order passed by the Kolkata Bench, we do not hesitate to hold that the reference made by the ld. A.R. in the instant case u/s. 55A of the Act is not found to be sustainable in view of the amendment in section 55A(a) w.e.f. 01-07-2022 applicable from Assessment Year 2013-14 and not to the instant case for Assessment Year 2012-13. Thus we delete the addition made by the authorities below.
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2024 (3) TMI 771
Disallowance of claim of interest expenses u/s. 57(iii) - assessee has returned the loss under the head income from other sources - AO noted that while the assessee had charged interest @12%, the same had been advanced by charging lower rate of interest, i.e. ranging from 6% to 10% and the difference accordingly was worked out and was disallowed in terms of section 57(iii) - HELD THAT:- As is evident from the order of the AO reproduced above, he has disallowed that portion of the interest expense incurred on loans taken which was in excess of the interest charged on loans given by the assessee. Which means that in sum and substance he accepted the usage of interest bearing funds for earning interest income when he allowed that portion of interest expense which was in parity with the interest charged by the assessee on loans/advances given. Having accepted this fact therefore the AO was precluded from making any disallowance of interest u/s. 57(iii) since the only requirement to be fulfilled for claiming expenses under the said section is that they must have been incurred wholly and exclusively for the purpose of earning income from other sources. What is relevant therefore is only the nexus of expenditure for earning income and the quantum of expenditure incurred therefore is of no consequence. For allowability of expenses under the said section, the nexus of the expenditure with the earning of income is essential conditions to be fulfilled. Clearly the disallowance made u/s. 57(iii) is contrary to law as interpreted by the Revenue authorities themselves. Revenue authorities have also misinterpreted the provision of section 57(iii) of the Act by stating that expenses under the section can be allowed only if income is earned from the incurrence of the said expense, and the term income means profit earned. The Revenue authorities have made the disallowance in the present case noting that assessee had made losses and therefore as earned no income. This basis of the Assessing Officer is completely devoid of any merits, what the section requires is that expenses must have been incurred for the purpose of earning income to be eligible to claim the same against the said income. There is no question of interpreting the term income as profits . The moment expenditure has been incurred for earning income, the expenditure incurred for the same qualifies for deduction u/s. 54(iii) - In the present case, it is not disputed that the assessee has earned interest income - Therefore, the AO s finding that there is no income is factually incorrect and this basis of the AO is, therefore, for denying the assessee s claim of expenditure u/s. 57(iii) of the Act is liable to be quashed. We find that the AO has dismissed this contention of the assessee stating that there ought to be a clear nexus between the expenditure incurred and the income earned as observed in SETH R. DALMIA VERSUS COMMISSIONER OF INCOME-TAX, DELHI [ 1977 (9) TMI 1 - SUPREME COURT] . AO has not stated as to how in the light of the facts stated by the assessee, the nexus was not established, he has just summarily dismissed the contention of the assessee. In the absence of the AO pointing out as to how despite the assessee s explanation, there was no nexus between the interest bearing-funds and their utilization for making advances for earning interest income, no disallowance u/s. 57(iii) of the Act was tenable. Assessee appeal allowed.
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2024 (3) TMI 770
Deduction u/s 80P - interest earned on deposits parked with Krishna Co-operative Central Bank Limited - contention of the Ld. AO and the Ld. DR is that interest accrued on Reserve Fund Deposits is not eligible for deduction U/s 80P - HELD THAT:- Respectfully following the decision of Vavveru Cooperative Rural Bank Ltd [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] and Kakateeya Mutually Aided Thrift and Credit Co-op Society Limited [ 2023 (9) TMI 211 - ITAT VISAKHAPATNAM] wherein held interest income should be allowed as deduction u/s. 80P(2)(a)(i), thus we are inclined to quash the order passed by the Ld.CIT(A) and allow the appeal of the assessee.
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2024 (3) TMI 769
Accrual of income India - Service PE/ virtual service PE in India - computation of threshold date for constitution of service PE - attribution of the entire receipts to such alleged service PE/ virtual service PE of the assessee in India - AO held that the services were provided by the employees of the assessee to the clients in India for a period of more than 90 days, physical presence of employees is not relevant and accordingly constituted virtual service PE in India on account of the nexus rule provided in Article 5(6) of India-Singapore DTAA. HELD THAT:- The term fiscal year means the previous year as defined under section 3 of the Act which is the relevant AYs in the present case and the threshold of 90 days is to be applied since the services are rendered to independent Indian client by the assessee and not to its related enterprise. Applying the provisions of Article 5(6)(a) to the present case, in our considered view to constitute a service PE actual performance of service in India is essential and accordingly only when the services are rendered by the employees within India with their physical presence during the financial year relevant to the AYs under consideration shall be taken into account for computing threshold limit for creation of a service PE of the assessee in India. The Hon ble Supreme Court in the case of E-funds IT Solutions Inc. [ 2017 (10) TMI 1011 - SUPREME COURT] observed that requirement of service PE is that services must be furnished within India . As undisputed fact that the employees of the assessee were present in India for total number of 120 days in AY 2020-21 and none of the employees were present in India in AY 2021-22. Out of the total 120 days the vacation period amounted to 36 days which has been substantiated by the assessee by furnishing the relevant evidence thereof. To arrive at the threshold, the Ld. AO has considered business development days comprising of 35 days as well as common days comprising of 5 days which in our considered view should be excluded while computing the threshold of service PE as no services were provided to customers in India on the days spent on business development activities and the computation of threshold should not be based on man days by aggregating common days spent by more than one individual. In effect, the services have been furnished by the assessee only for 44 days in India after excluding vacation period, Business Development days and common days and accordingly the assessee does not constitute service PE in India as per India-Singapore DTAA during the AY 2020-21. So far as AY 2021-22 is concerned, as discussed above physical rendition of services in India beyond the threshold period is a prerequisite for creation of service PE and as none of the employees of the assessee were physically present in India during the AY 2021-22, in our view, the assessee does not constitute service PE even in AY 2021-22. Thus the arguments put forth by the parties and the judicial precedents relied upon by the Ld. AR, we hold that the assessee does not constitute service PE/virtual service PE in AY 2020-21 and 2021-22. The receipts by the assessee in AY 2020-21 and AY 2021-22 are in the nature of business profits of the assessee not taxable in India in the absence of the PE of the assessee in India in terms of Article 7 r.w. Article 5(6)(a) of the India- Singapore DTAA. Accordingly, ground Nos. 5 to 7.1 in AY 2020-21 and ground No. 6 to 8.1 in AY 2021-22 are allowed. Levy of interest u/s 234A on the ground that the income tax return was filed within the extended due date for filing the return - HELD THAT:- Interest under section 234A is levied only in cases where the assessee does not furnish its return of income or furnishes it after the due date prescribed under section 139 of the Act. The Ld. AR submitted that the assessee filed its return of income within the prescribed (extended) due date applicable to the relevant AYs under consideration which is supported by the copies of the ITRs filed before the lower authorities. Hence we deem it fit and proper to restore this issue to the file of the Ld. AO for verification as to the filing of date of return viz-a-viz the due date of filing of return for the AYs 2020-21 and 2021-22 and decide it afresh in accordance with law. Levy of interest u/s 234B - AR submitted that proviso inserted in section 209(1)(d) of the Act by the Finance Act, 2012 w.e.f. 01.04.2012 would apply only in a scenario where person responsible for deducting tax has paid or credited such income without deduction of tax - HELD THAT:- As relying on Amadeus IT Group SA levy [ 2023 (10) TMI 1138 - ITAT DELHI] interest under section 234B of the Act is not called for. Accordingly, interest levied under section 234B of the Act is hereby deleted. Addition of income received from ICICI Bank and addition of interest on income tax refund - Addition made on the ground that the same was appearing in Form 26AS for AY 2021-22 and that such amount was received by the assessee during the year under consideration which was not offered to tax while filing the return of income - HELD THAT:- Additions of income from ICICI Bank Ltd. and interest income on income tax refund solely on the basis of the fact that such amounts are appearing in Form 26AS is not sustainable in law and hence liable to be deleted. In support reliance is placed on the decision of Ravinder Pratap Thareja [ 2015 (10) TMI 1487 - ITAT JABALPUR] wherein it is held that merely because a payment is reflected in Form 26 and is shown to have been made to the assessee, it cannot be brought to tax in his hands when the said money is not received by the assessee. Support may also be drawn from the case of Dr. Swati Mahesh Vinchurkar [ 2021 (6) TMI 1123 - ITAT SURAT] wherein the Tribunal placing reliance on the decision of Ravinder Pratap Thareja s case (supra) held that once the assessee denied that she has not earned such income as reflected in her Form 26AS, the onus is shifted on the Revenue Authorities to prove that such income belongs to the assessee. The assessee has claimed that it has not received any payment from ICICI Bank and any refund and interest on refund from the Income Tax Department on which TDS has been deducted which is reflected in Form 26AS - thus considering matter and judicial precedents cited above we restore the matter to the file of the Ld. AO to verify the claim of the assessee - Decided in favour of assesse for statistical purposes.
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2024 (3) TMI 768
Assessment u/s 153A - completed assessments to be interfered with by the A.O. while making the assessment u/s 153A - incriminating material unearthed during the course of search or not? - HELD THAT:- Statement of Sh. Ashok Jain was recorded during the course of search on 22/04/2016 which was subsequently retracted. From a perusal of the statement, it is found that the statement was not corroborated by any incriminating material and therefore no credence can be given to the said statement, which has been subsequently retracted. In view of consideration of the judgement of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] it has been held that completed assessments can be interfered with by the A.O. while making the assessment u/s 153A only on the basis of some incriminating material unearthed during the course of search. Hon'ble Supreme Court in the case of Meeta Gutgutia [ 2018 (7) TMI 569 - SC ORDER ] upheld the decision of the Hon'ble High Court of Delhi [ 2017 (5) TMI 1224 - DELHI HIGH COURT ]. The aforesaid judgements have lucidly pronounced that the case of completed assessment can be interfered only on the basis of some incriminating material found during the course of search. The case of the assessee for the assessment years before us are completed assessments and there were no proceedings pending on the date of the search conducted i.e. 20.04.2017. In the case of the assessee, the AO has not referred to any incriminating document which was seized, during the course of search proceedings and the additions made in the Assessment Orders are not based upon any incriminating material or documents found during the course of search. Further, we also find that in the case of Pr. CIT Vs. Abhisar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] has affirmed the ratio of Kabul Chawla (supra). Since, the revenue has not brought anything on record to prove that the additions have been made on the basis of the material found and seized during the search conducted u/s. 132 of the Income Tax Act, 1961, we find no reason to interfere with the order of the ld. CIT(A). Decided against revenue.
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2024 (3) TMI 767
Condonation of delay filing appeal before tribunal - delay of 161 days involved in preferring the captioned appeal - Delay explained for reason that he was not well conversant with the technology and computer is devoid of any force - HELD THAT:- Assessee in his affidavit had deposed that the fact about disposal of the appeal by the CIT(Appeals) was intimated to him by his Chartered Accountant who had accessed his account in the Income Tax Portal. Backed by the aforesaid facts, it is clear beyond doubt that the account of the assessee in the income tax portal was accessible by his Chartered Accountant. I, thus, is of the firm conviction that the reason given by the assessee regarding the delay in filing the appeal is merely an eye wash. Thus it is clear that the delay involved in filing the present appeal is on account of the lackadaisical conduct of the assessee and/or his Chartered Accountant. In the present case, the inordinate delay of 161 days cannot be simply condoned based on the unsubstantiated claim of the assessee that the same had occasioned for the reason that as he was not well conversant with the technology and computer, therefore, he could not access the order passed by the CIT(Appeals), NFAC within the stipulated period. As observed by case of Ramlal, Motilal and Chotelal Vs. Rewa Coalfields Ltd. (1 1961 (5) TMI 54 - SUPREME COURT] that seeker of justice must come with clean hands, therefore, now when in the present appeal the assessee appellant had failed to come forth with any good and sufficient reason that would justify condonation of the delay involved in preferring of the captioned appeal, therefore, decline to condone the same and, thus, without adverting to the merits of the case dismiss the captioned appeal of the assessee as barred by limitation.
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2024 (3) TMI 766
Nature of land - capital gain on sale of land - exemption u/s 10(37) - assessee's agricultural land was compulsorily acquired by following entire procedure prescribed under Land Acquisition Act - character of acquisition - addition made agricultural land falls within the Municipal Corporation - date of transfer of the impugned land - Revenue contested the CIT(A)'s acceptance of 1947 as the year of transfer instead of 19.05.2014 (date of final award). - HELD THAT:- Admittedly AO charged capital gains merely because the impugned land was situated within municipal limits without rebuttal in the remand report to the contention raised by the appellant before the Ld. CIT(A) as regards to the claim of exemption under section 10(37) of the Act. The provisions of section 10(37) are meant specifically for the purpose of removing hardship to a land holder, whose lands are situated in an area specified in section 2(14)(iii)(a) (b). These lands which were originally used for agricultural purpose, if retained by the owner would continue to have been used for agricultural purpose. In our view, the AO was not right in coming to the conclusion that if a land falls within the discretion of capital asset under section 2(14)(iii)(a), then it would be a transfer of land which is not agricultural and therefore, one should not look at the provisions of section 10(37) at all. It is clear from reading of clauses (i), (ii) and (iii) of section 10(37) that the character of the land in the past has to be seen. In view of the facts enumerated above, the impugned order of the assessment passed by the AO u/s 143(3) of the Income tax Act, 1961 holding that the capital gain tax is chargeable on the compulsory acquisition of the urban land by resorting to the provisions of section 45(5) of the Income Tax Act, 1961 is unsustainable in view of the provisions of amended sub-section (37) of section 10 of the Income Tax Act, 1961. There is no dispute as far as this condition is concerned as the disbursing authority has disbursed the said amount vide Government order dated 19.05.2014 which is after 01/01/2014. A.O. on the basis of report of Tehsildar, agrees that the impugned land was agricultural land and this undisputed fact is also emanating from the order of State Govt. determining final award (order dated 08.01.2014) and the report of the Tehsildar obtained by this office u/s 133(6) of the Act. Before the acquisition, the land was being used for agricultural purposes only and there is no report to the contrary. In the present case where assessee's agricultural land was compulsorily acquired by following entire procedure prescribed under Land Acquisition Act, and at the time of acquisition in 1948, the said land was under agriculture cultivation merely because compensation amount was awarded vide order of State Govt. determining final award (order dated 08.01.2014) and disbursed the said amount vide Government order dated 19.05.2014 which was after 01/01/2014 cannot change the status as not falling beyond municipality limits at the time of acquisition and as such would not change character of acquisition from that of compulsory acquisition to voluntary sale so as to deny exemption under section 10(37) to assessee. Hon ble Apex Court in the case of Balakrishnan vs. Union of India , [ 2017 (3) TMI 745 - SUPREME COURT] observed that merely because the compensation amount is agreed upon would not change the character of acquisition from that of compulsory acquisition to the voluntary sale of capital asset. We find no merit and substance in the grounds of department on the issue of appellants claim of exemption of compensation received on account of compulsory acquisition of agricultural land by state Govt. under section 10(37) of the Act. Therefore, we find no infirmity or perversity in the order of the CIT(A) to the fact on record. Decided against revenue.
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2024 (3) TMI 765
Assessment u/s 153A - addition u/s 68 - incriminating material found during the search or not? - grievance of the Assessee is that the additions made by the Assessing Officer do not emanate from the search proceedings, as no incriminating material was found, pertaining to the year under consideration - HELD THAT:- Hon'ble Supreme Court, having found no merit therein. In PCIT vs. M/s Abhisar Buildwell P. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] has held, agreeing with Kabul Chawla ( 2015 (9) TMI 80 - DELHI HIGH COURT] that in case no incriminating material is unearthed during the search, the Assessing Officer cannot assess or re-assess taking into consideration the other material in respect of the completed assessment / unabated assessment; that meaning thereby, that in respect of completed / unabated assessment, no addition can be made by the Assessing Officer in the absence of any incriminating material found during the course of search u/s 132 - Further, as correctly contended on behalf of the Assessee, Ashisar Buildwell has been followed in the case of Pr. CIT v Sandeep Aggarwal (HUF) [ 2023 (10) TMI 569 - BOMBAY HIGH COURT] wherein, it has been held that the clarification issued by the Hon'ble supreme Court in the case of Abhisar Buildwell and U.K. Paints , has been issued in the context of re-assessment proceedings u/s 147 and 148 of the Act as well. The additions for the year under consideration have been made by the Assessing Officer only on the directions of the third party, without having in his possession any incriminating material unearthed during the search proceedings, for the year under consideration, which is indirect contravention of the afore discussed case laws. Moreover, the additions wrongly made represented all the credit entries in the bank account of the Assessee company. Regarding these credit entries, sufficient credible documentary information had been furnished by the Assessee, by way of evidence, during the assessment proceedings, including the source thereof, which cogent voluminous documentary evidence the Department was been not able to rebut. The Assessing Officer, rather, having not been satisfied therewith, had not deemed it necessary to undertaken any inquiry in this regard. Also, no material was brought on record to establish that the bank entries were unexplained entries. This being so, the provisions of section 68 of the Act were wrongly applied. Decided in favour of assessee. Addition of all credit entries in the assessee's bank account - HELD THAT:- The assessee company had clearly mentioned in its written submission the list of documents attached as annexure to substantiate its claim, if somehow, only the bank statement was available with the CIT(A) then the CIT(A) could have asked the assessee to furnish all other documents as mentioned in the written submission. No such inquiry was made by the CIT(A). Neither the CIT(A) nor AO asked the appellant submit any other documentary evidence with regard to the amount received or given back to Sh. SK Arora. CIT(A) wrongly confirmed the addition made by the AO on the plea that the company did not submit any documentary evidence other than the bank statement but on the other hand the CIT(A) himself is mentioning the list of documents submitted by the assessee, thereby contradicting his own statement. CIT(A) ought to have raised any query or issued any notice asking the assessee to submit the same. But no such query was raised nor any notice was issued to the assessee in this regard. Additionally, the CIT(A) confirmed the addition made by the AO for an absurd reason without giving any findings on the documents which was already submitted by the assessee company during the assessment proceeding and remand proceeding. AO found the documentary evidence furnished by the assessee company to be unsatisfactory while the CIT(A) observed that the assessee company failed to submit any documentary evidence other than bank statement, they could have initiated proceedings u/s 133(6) or 131 for further investigation. However, it is noteworthy that neither the AO nor the CIT(A) extended any such notice to the lender for additional inquiries. Instead, an addition of Rs. 10,00,000/- was made based on the directive of a third party.On the contrary the same AO has assessed the case of Shri SK Arora for the same assessment year wherein the returned income of Shri SK Arora has been accepted by the AO. Ground No. 6 is accepted and the addition of Rs. 10 lacs is deleted. Addition made purpose and utilization of funds which had not been explained by the assessee - HELD THAT:- Addition has been so confirmed without taking into consideration the documentary evidence filed by the assessee. It remains undisputed that these were squared up loans and advances, the company having given advance of Rs. 4 lacs to Shri Rakesh Kumar on 28.10.2013 and the same having been received back through banking channel, on 09.11.2013, in respect of which, the assessee has placed on record before the authorities below, the copy of account of Shri Rakesh Kumar in the books of the assessee company. Neither the AO nor the CIT(A) extended any such notice to the lender for additional inquiries. Instead, an addition was made based on the directive of a third party. Neither enquiry was made by CIT(A) / AO before confirming the addition nor any documentary evidence were sought from the assessee company, therefore the assessee company has now submitted copy of computation, ITR-V and bank account statement of Sh. Rakesh Kumar as additional evidence along with confirmation which was submitted before CIT(A) and AO. The submission of said documents are neither challenged nor disputed in the appeal by the department. Addition of all the credit entries in the bank holding that the purpose and utilization of the funds was not explained by the assessee - HELD THAT:- The taxing authorities, however, against all cannons of the principles of natural justice, have simply brushed aside these voluminous documentary evidence, without even referring to the same in their respective orders. It stands established on record that the amount was returned to the lender by the assessee. The cash book of the lender shows that the amount was deposited on 20.08.2013. The bank statement makes it clear that it was withdrawn on 06.08.2013. This has nowhere been put to challenge by the ld. CIT(A) and the observation that there was immediate deposit in cash of Rs. 3 lacs and that the source thereof had not been explained, is not borne out from anything on record in contrast to the evidence furnished by the assessee. Further, in case of doubt, the authorities ought to have raised queries from the assessee, which was not done. No enquiry was also carried out from the lender HUF. No proceedings were initiated either u/s 133(6) or 131 of the Act, for further investigation into the matter, if any such investigation was required. As such, both the authorities were, in fact, satisfied with the explanation of the assessee and as such, there was no reason for making the addition or for confirming the same at the hands of the ld. CIT(A). Addition of sum received by the assessee company from Shri Sahil Singla - AO while making the addition, has alleged that the purpose and utilization of the funds could not be explained by the assessee - HELD THAT:- CIT(A) neither rebutted the documentary evidence brought on record by the assessee, nor did he ask the assessee the submit any other documentary evidence concerning the amount received and given back by the assessee to Shri Sahil Singla and Smt. Kiran Singla. In fact, documents furnished by the assessee in the evidence were not even commented upon adversely by the ld. CIT(A). Rather, they were not at all commented upon, leading to the conclusion that these documents were not at all looked into by the ld. CIT(A). In the absence of any rebuttal to such documentary evidence, the ld. CIT(A) erred in confirming the addition. Whereas the ld. CIT(A) observed that the assessee company had failed to submit any documentary evidence other than the bank statements, no proceedings, either under Section 133(6), or Section 131 of the Act, were taken out, for making any further investigation into the matter. Addition on account of income deposited in cash - addition included cash deposit by the assessee company in its bank account, holding that the purpose and utilization of such funds had also not been explained by the assessee -HELD THAT:- Despite the assessee having discharged its burden of furnishing documentary evidence in support of the amount deposited, neither the AO, nor the CIT(A) on receipt of the documentary evidence put any question to the assessee, or initiated any enquiry, either u/s 133(6) of the Act, or u/s 131 thereof. It stands made out that the assessee had earned the income of Rs. 7 lacs from leasing out of vehicle of the company. The copy of account of hire charges, which had been furnished before both the taxing authorities, stands filed before us also. It formed part of the books of account submitted by the assessee company during the assessment proceedings, shown as income in the Profit Loss Account. Neither of the authorities below have rebutted this documentary evidence, rendering their respective orders to be orders passed as a result of misreading and non reading of material documents brought on record. Disallowance of loss - since the assessee company had not undergone any business activity during the year under consideration and the assessee company had failed to produce the bills/vouchers of the expenses claimed by it, the genuineness of the expenses claimed could not be proved - HELD THAT:- AO was incorrect in holding that the assessee had not produced its books of account, bills and vouchers for the assessment proceedings. Since the Department had taken the same on CD, the books of account, also comprised of the bills and vouchers were already in the possession of the Department. Assessee is also correct when it contends that the books of account were examined by the AO at the time of sending his Deviation Note to the Investigation Wing. Further still, even during the remand proceedings, the assessee had submitted the books of account before the AO, on 16.02.2022. On the basis of the above, we find the addition to be unsustainable Disallowance of depreciation on vehicle - HELD THAT:- It is seen that the documents furnished by the assessee in support of its claim have nowhere been rebutted by either of the authorities below. Particularly, the Registration Certificate alongwith the other documents filed has nowhere been rebutted. This being so, the very basis of the disallowance made is unsustainable in law and we hold so. Accordingly, the addition is deleted, found to be based on no material, whatsoever and in direct opposition to the documentary evidence furnished by the assessee. Unexplained cash credit u/s 68 - Assessing Officer had wrongly held the assessee company as shell company without any substance or cogent reason, and the ld. CIT(A) has rightly declared this company as a genuine company and not a shell company. The status of the company has already been decided by us in our order of the company for assessment year 2012-13 and 2013-14 on the same facts, wherein we have confirmed it as a genuine company and not as shell company. It is despite the above inability of the Department to repel the evidence based stand taken by the assessee, that the Department has raised the issue that the genuineness of the transactions had not been established. We, on the basis of the preceding discussion, find ourselves unable to subscribe to this view of the Department. Accordingly, finding no merit therein, all the grounds raised by the Department are rejected and the appeal filed by the Department is dismissed.
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Customs
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2024 (3) TMI 764
Valuation of Goods - Bar of limitation in the exercise of powers under sub-section (2) of Section 129A - Mis-declaration and undervaluation of goods - Imports goods as ''camera stabilizer devices'' - imports identical/similar items with the same model numbers at higher and different unit prices - Duty Demand - confiscation - penalties under Sections 112(a) and 114AA - HELD THAT:- On plain reading of Section 129A, we find that no specific time period has been prescribed for the Committee of Commissioners to exercise the power under sub-section (2) of Section 129A. Section 129D of the Customs Act deals with similar powers of the Committee of Commissioners when orders are passed by the Principal Commissioners of Customs as adjudicating authority. There is a similar power to direct the proper officer to apply to the Appellate Tribunal. However, sub-section (3) of Section 129D imposes a specific limitation of three months from the date of communication of the order of the adjudicating authority. Thus, there is no prescribed period of limitation for passing an order in exercise of the power under sub-section (2) of Section 129A In the present case, the relevant period of 10 months is covered by the COVID-19 pandemic. During the said period, in suo motu RE: COGNIZANCE FOR EXTENSION OF LIMITATION, this Court, on 23rd September 2021, while disposing of Miscellaneous Application No.665 of 2021, extended the period of limitation provided under the statutes. In the facts of the case, considering the period of the COVID-19 pandemic, it cannot be said that the Committee of Commissioners has taken an unreasonably long time to decide. Considering the extraordinary circumstances prevailing in those days due to COVID-19, the decision was taken within a reasonable time. The Committee took the decision on 2nd November 2021, which was received by the Deputy Commissioner (Review) on 11th November 2021, and the appeal was preferred on 17th November 2021. It is true that under Sub-Section (3) of Section 129A, a period of limitation of 3 months has been provided for preferring an appeal which commences on the day on which the order sought to be appealed against is communicated to the concerned Authority. But, even the said period stood extended in view of the orders this Court passed from time to time in suo motu proceedings. Issue of undervaluation has been discussed in detail in a decision of this Court in the case of Commissioner of Central Excise and Service Tax, Noida v. Sanjivani Non-ferrous Trading Pvt. Ltd.[ 2018 (12) TMI 738 - SUPREME COURT] . We may also make a note of the statement made by an officer of the appellant during the inquiry before the adjudicating authority. In paragraph 11, he stated that there is a little difference in the hardware and software functions in the disputed goods as compared to the earlier versions. In the order-in-original and in the impugned judgment of CESTAT on facts, it was found that Item nos. 1 and 3 were identical goods, and Item no. 2 was of similar goods. Detailed reasons have been recorded in the order-in-original as to why the transaction value of the imported goods has been discarded. Cogent reasons have been assigned to arrive at the assessable value. Hence, in view of the findings recorded by the CESTAT, we find no error in the view taken. No fault can be found with the imposition of penalties. Hence, there is no merit in the appeal and the same is dismissed with no order as to costs.
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2024 (3) TMI 763
Confiscation of seized truck u/s 115(2) of the Customs Act, 1962 - levy of penalty - owner of the consignment has not come forward to claim the ownership and to claim the goods - Department has not adduced any corroborative evidence to the effect that the owner of the vehicle (the present appellant) was directly or indirectly involved in the alleged smuggling activities - HELD THAT:- It is found that after the goods have been seized, the other noticees have not proceeded further against the confiscation, redemption fine and the penalty imposed on them. The Department has confiscated beatul Nut of Rs.8,80,000/-. From the records, it is not clear as to whether the same has been auctioned off and value has been realized since the noticee has not forward to redeem the same. In the present case it is seen that only the present appellant has proceeded with appeals. It is found that the Department has not come with any proper evidence to the effect that owner of the vehicle was in any way involved in the alleged smuggling activities. However, the appellant cannot completely plead ignorance when his vehicle was used for transportation of the smuggled goods without any document. Considering the factual details and the financial condition of the appellant, the redemption fine reduced to Rs. 50,000/- and penalty reduced to Rs.50,000/-. Appeal allowed in part.
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2024 (3) TMI 762
Refund of SAD - denial on the ground that certificate issued by the Chartered Accountant was not authentic - HELD THAT:- An identical issue came up before this Tribunal in the case of M/S. SKYLARK OFFICE MACHINES VERSUS COMMISSIONER OF CUSTOMS (PORT) , KOLKATA [ 2023 (11) TMI 877 - CESTAT KOLKATA] , wherein this Tribunal observed On perusal of records, we find that no ulterior motive of the appellant towards production of the earlier certificate has been proved. They have produced a fresh Chartered Accountant s Certificate dated 06.10.2023. Therefore, following the ratio of the cited case law, we remand the matter to the adjudicating authority. As on the identical facts, this Tribunal has remanded the matter back to the adjudicating authority, observing that no ulterior motive of the appellant towards production of the earlier certificate has been proved and they have produced a fresh Chartered Accountant s Certificate. Therefore, following the precedent decision on the identical issue, matter remanded back to the adjudicating authority with the direction to check the veracity of the certificate issued by the Chartered Accountant and other relevant documents. If the same are found to be in order, pass a necessary order allowing the refund claim filed by the appellant. If the refund is held as eligible, the present confirmed demand against the appellant along with interest and penalty would get set aside. Appeal disposed of by way of remand.
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Corporate Laws
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2024 (3) TMI 761
Seeking waiving off the payment of Court fees in refiling the Compensation Application against the order of the Competition Commission of India - Section 26(2) of the Competition Act, 2002 - HELD THAT:- Rule 4(3) of the Competition Appellate Tribunal Rules, 2009 provides for waiving the fee, taking into consideration the economic condition or indigent circumstances of the Appellant. Herein, it is claimed that the Advocate was not really an Advocate and he withdrew the Compensation Application without the instructions from the Appellant. Also relying upon the judgment of Hon ble Apex Court in RAFIQ AND ANOTHER VERSUS MUNSHILAL AND ANOTHER [ 1981 (4) TMI 255 - SUPREME COURT] and also of the High Court of Madhya Pradesh in SOHANLAL ARYA VERSUS THE STATE OF MADHYA PRADESH [ 2019 (11) TMI 1816 - MADHYA PRADESH HIGH COURT] it is claimed that his fee, may be waived for filing the Appeal. In the first judgment of Rafiq Anr. relied upon by the Appellant, it is noted that there was an ex-parte order of dismissal of Appeal, which was passed by the Hon ble High Court on non-appearance of Appellant s Learned Counsel on the date of Hearing and the application, was made by the Learned Counsel for Recalling the Order and for permission to participate in the hearing of the Appeal, rejected on ground of unexplained delay in presenting the Application to the Court. The Hon ble Apex Court held that rejection of the Application was not justified as a Party, should not suffer for the inaction, deliberate, omission or misdemeanour of his agent i.e. the Lawyer. The case relied upon is distinguished in the sense that the Lawyer, did not appear and defaulted, but, in the instant case, he was very much present in the Hearing, and the Appellant, was also fully aware of the proceedings. Even assuming that the Appellant, was not aware of the fact that Mr. Sumit Jain, was not an Advocate or Chartered Accountant, Company Secretary or Cost Accountant, and he withdrew the Compensation Application, without instructions of the Appellant, waiver of fee, in re-filing the Compensation Application, has to be justified, as per the Rule 4(3) of the Competition Appellate Tribunal Rules, 2009, which provides for waiver, after taking into consideration the economic condition or indigent circumstances of the Appellant. Having gone through the Appellant s submissions, this Tribunal, does not find any such economic condition or indigent circumstances, which justifies the waiver of the fee. Therefore, the Fee for Re-filing the Compensation Application, cannot be waived. Application dismissed.
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Insolvency & Bankruptcy
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2024 (3) TMI 760
Grant of permission to take on record the rejoinder subject to payment of cost of Rs.10,000/- - appellant contends that the said rejoinder was taken on record after conclusion of the hearing of the Financial Creditor - HELD THAT:- When the Adjudicating Authority found fit to take rejoinder on record subject to payment of cost of Rs.10,000/-, the discretion exercised by the Adjudicating Authority need not be interfered with by this Tribunal in exercise of its appellate jurisdiction. It is true that normally pleading are completed before commencement of hearing but in facts of the present case, the rejoinder affidavit was taken during course of the hearing. Thus, no rule preclude such a course by the Adjudicating Authority - the appeal need not be entertained - appeal dismissed.
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PMLA
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2024 (3) TMI 759
Money Laundering - Scheduled offence - Legal jugglery - framing of charges - Acquittal form predicate offence - it was held by High Court that The view as taken by the Trial Court in this matter had been a justified view of the matter and the High Court was not right in setting aside the discharge order despite the fact that the accused No. 1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence - HELD THAT:- There is no reason to interfere with the impugned order. In the event, the order of acquittal against the accused in the predicate offence is overturned, the petitioner-Directorate of Enforcement are permitted to apply for revival of these Special Leave Petitions. SLP dismissed.
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Service Tax
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2024 (3) TMI 758
Refund of service tax paid as sub-contractor - Rejection on the ground that Section 102 exempts services rendered to a Government, a local Authority or a Government Authority and does not exempt services rendered to a private company which in this case is M/s NBCC. Revenue states that the main contractor M/s NBCC could have applied for refund under Section 102 but have not done so. Because the main contractor had failed to apply for refund, it does not mean that the sub-contractor can claim refund of that amount. HELD THAT:- It is not in dispute that the ultimate client in this case is University of Lucknow which is an educational establishment. ONGC Centre of Advanced Studies of this educational establishment was being constructed by the main contractor M/s NBCC and a portion or that work has been sub-contracted to the Appellant. The exemption available to the services provided to University of Lucknow does not depend on whether such services are provided directly by the main contractor or by the main contractor using the services of a sub-contractor. In view of the above, it is found that on merits, the services rendered by the Appellant through the main contractor to University of Lucknow are exempted under Section 102 of the Finance Act, 1994. The application for refund has been filed within the time stipulated in the Section. As long as the service is rendered to a client, the taxability has to be decided accordingly regardless of whether the service was rendered directly by the main contractor or through a subcontractor or through a sub-sub-contractor. Accordingly, the Appellant is not liable to pay service tax as he has already paid the same and he is entitled to refund under Section 102 of the Finance Act, 1994. The impugned order set aside - appeal allowed.
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2024 (3) TMI 757
Exemption to SEZ Units from payment of Service Tax under N/N. 17/2011-S.T. dated 01.03.2011 - Reversal of CENVAT Credit utilized by the Appellant for discharging service tax liability which was allegedly not permissible under the Exemption Notification - Scope of SCN - HELD THAT:- The Exemption Notification which is applicable in the present case provides for refund of Service Tax paid by a SEZ Unit or a SEZ Developer, The Notification also does not provide for any conditions or restrictions on the discharge of the output liability of an SEZ Unit making sales or providing services in the DTA by utilising the Cenvat credit of a Non-SEZ Unit of the same assessee when both units are covered under the same centralized registration. It is well settled law that there is no bar on units registered under a centralized registration utilizing accumulated Cenvat Credit in discharge of liability, even if the said units were not entitled to avail Cenvat Credit on inputs/input services - Reliance can be placed in BE. BILLIMORIA CO. LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [ 2013 (4) TMI 272 - CESTAT MUMBAI] where it was held that As decided in Bharat Heavy Electricals Ltd. Vs. CCE [2012 (4) TMI 197 - CESTAT, MUMBAI] wherein held that the appellant are entitled to utilize centralized Cenvat credit for payment of service tax for the service availed under the category of Commercial or Industrial Service' and Construction of Complex Services'. The Ld. Commissioner (Appeals) ought to have considered that there is no statutory basis for holding that there was a requirement of having the same invoicing series for units having a centralized registration. It is submitted that the sole basis for confirmation of demands in the Order-in-Original was that different invoicing series were being used for the two Units of the Appellant under centralized registration. Holding that the appellant does not have a centralized registration as they do not maintain centralized billing or accounting system as appearing from different invoicing series of the SEZ and Non-SEZ unit of the appellant. Even the learned Commissioner (Appeals) further digressed from the SCN and held the SEZ unit cannot operate under a centralized billing system under Rule 19(7) of the SEZ Rules. Both the Adjudicating Authority and the learned Commissioner (Appeals) have travelled beyond the scope of SCN which is not permitted - support found the from the judgment of the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS M/S BALLARPUR INDUSTRIES LTD [ 2007 (8) TMI 10 - SUPREME COURT] that a show cause notice being the foundation of the matter, it was not permissible for the Commissioner to travel beyond it. The impugned order cannot be sustained and are accordingly set aside - Appeal allowed.
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2024 (3) TMI 756
Refund of service tax paid - entitlement for Cenvat credit of the service tax paid on the ocean freight on the reverse charge mechanism - rejection of refund on the ground that since the amount of service tax was paid on insistence of the audit party, there is suppression of fact and in terms of Rule 9 (1) (bb) of Cenvat Credit Rules, 2004, the appellant is neither entitled for the Cenvat credit nor for the refund of the said amount - HELD THAT:- It is found that the service tax on ocean freight was paid by the appellant only on insistence by the audit party whereas levy of service tax on the ocean freight was debatable and various litigation were going on and finally it was held that ocean freight is not liable to service tax, despite this the appellant have paid the service tax on the ocean freight alongwith interest. Moreover, the appellant was not issued any show cause notice invoking the extended period for demand of service tax, interest and equal amount of penalty, this itself shows that there is no suppression of fact on the part of the appellant in payment of service tax on the ocean freight - it is observed that unless until the issue of suppression of fact is adjudicated in a demand case, the allegation of suppression of fact is based on assumptions and presumptions only. Accordingly, it cannot be said that there is suppression of fact in payment of service tax on ocean freight in the present case. In view of the decision in PACIFIC HARISH INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, SURAT [ 2019 (10) TMI 626 - CESTAT AHMEDABAD] , it is settled law that under the identical circumstances, suppression of fact cannot be alleged. Accordingly, the appellant was entitled for the Cenvat credit and therefore, they were also entitled for the consequential refund of the service tax along with interest paid on ocean freight. The appellant is entitled for the Cenvat credit and refund thereof along with interest paid on such service tax. Since with the present litigation there is delay in giving refund, appellant is also etitled for interest on refund amount in terms of Section 11BB of Central Excise Act, 1944 from three months of filing refund claim till the date of sanction of refund - the impugned order set aside - appeal allowed.
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2024 (3) TMI 755
Levy of service tax - Export of services or not - The appellant argued that although the payment was made in Indian Rupees, the contract specified commission rates in US dollars, demonstrating that they received the amount in dollar terms. - Agency Commission Contract with the Appellant for the wagons procured by the Indian Railways - main ground taken by the Department was that the service cannot be treated as Export of Service because the amount has been received in Indian Currency and hence, Rule 3 (2)(b) of the Export of Service Rules, 2005 is not fulfilled - time limitation - HELD THAT:- Admittedly, there is no dispute that the service has been provided by the Appellant in the capacity of an agent for the overseas exporter. There is nothing to suggest that they have acted as purchase agent on behalf of the Indian Railways. As per the details given at Para 4(iv) of the OIO (Page No. 8), it is seen that the Indian Railways is required to pay the net amount of US $ 1167/1081 to the Chinese Company. Apart from that they are required to pay US $ 67/US$65 to the Appellant on account of Chinese Commission wherein the rate of exchange has been taken as US $ 1= Rs. 39.82. Based on this rate of exchange, Indian Railways has paid the commission amount to the Appellant in Indian Rupees. A harmonious reading of the Contract would clarify that when Chinese Company says it is exclusive of Agency commission, they have made it clear that they want net payment of US $ 1167/1081 from Indian Railways without any deductions. Apart from that they have directed Indian Railways to pay US $ 67/US $ 65 to the Appellant towards Agency Commission. This would show that the net cost for Indian Railways would be US $ 1167+US $ 67 and US $ 1081 +US $ 65 based on the type of wagon purchased by them. There is nothing to indicate that there was any contract between Indian Railways and the Appellant to make any payment as a Purchase Agent on behalf of Indian Railways. So long as the Indian Railways has not given any contract, they are not required to pay any amount to the Appellant. Obviously, in this case, they have paid the amount only on the specific instruction of the Chinese Company on their behalf. Coming to the decision of the Rajasthan High Court in COMMISSIONER OF CENTRAL EXCISE JAIPUR-1 VERSUS M/S NATIONAL ENGINEERING INDUSTRIES LTD. [ 2017 (10) TMI 1496 - RAJASTHAN HIGH COURT] where it was held that the assessee was a party to the services which was required to be rendered for earning the foreign exchange therefore a very narrow compass put by the department is considered then no citizen in India will be benefited from the exchange of foreign currency. Thus, appeal allowed on merits. Time Limitation - HELD THAT:- There are force in the Appellant s arguments that there has been no concealment on their part. All their commission receipts were reflected in their P L Account and in their Balance Sheet from where the data was collected by the Department to issue the Show Cause Notice. Therefore, SCN issued on 21/04/2012 for the period 2009- 10 is time barred. Therefore, Appeal allowed even on account of limitation. Appeal allowed.
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2024 (3) TMI 754
Levy of service tax - Business exhibition service - Demand on electricity charges - Mandap keeper service - penalty - HELD THAT:- The appellants are engaged in various activities and the department, based on their documents like ledgers, etc., considered certain services as falling under certain specific headings and therefore, liable to service tax. Business exhibition service - HELD THAT:- The Original Authority has not given substantive grounds to cover their activities and has not effectively rebutted their submissions. On the other hand, the judgment cited by the appellant in M/S. KARNATAKA EXHIBITION AUTHORITY VERSUS C.C.,C.E. S. T-MYSORE [ 2018 (7) TMI 1672 - CESTAT BANGALORE] , which covers almost identical activities clearly holds that such activities would not fall under business exhibition services . Therefore, demand in both the appeals under the category business exhibition service is not sustainable and accordingly, demand to that extent is set aside. Demand on electricity charges - HELD THAT:- It appears that they were being collected on actual basis and being submitted to the electricity department and therefore, the same cannot be liable to service tax and therefore, the demand to that extent is also set aside. Mandap keeper service - HELD THAT:- The demand on Mandap Keeper service amounting to Rs.9,727/- is upheld as he has already accepted the demand on services other than Business Exhibition service . Penalty - HELD THAT:- In view of the facts of the case and lack of substantive grounds to establish any deliberate attempt to evade service tax, the penalty under Sec. 76, 77 and Fine under Sec 70 are also set aside. Appeal allowed in part.
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Central Excise
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2024 (3) TMI 753
Jurisdiction - appropriate forum - Maintainability of the present appeal before the High Court - withdrawal of SSI exemption - applicability of bar as provided under Clause (1) of Section 35G of CEA - jurisdiction of High Court to entertain the appeal - HELD THAT:- An appeal would lie to the High Court, if the High Court is satisfied that the case involves a substantial question of law, however, appeal would not lie, if the same pertains to determination of any question having relation to the rate of duty of excise or to the value of goods for purposes of assessment. In Commissioner of Central Excise, Jaipur vs. Electro-Mechanical Engineering Corporation Ors. [ 2008 (7) TMI 77 - SUPREME COURT] , appeal was filed by the Commissioner of Central Excise, when the benefit of SSI Exemption was denied by the Revenue on the ground that respondent had floated two front units in order to fraudulently avail the SSI Exemption. The said appeal was filed before the Apex Court knowing pretty well that appeal is not maintainable before the High Court. In that case, appeal was entertained by the Apex Court. In the case in hand, SSI Exemption for payment of central excise duty has been granted to the respondent. If this exemption is withdrawn, excise duty would become leviable and consequently, it would be an order relating among other things to the determination of any question having a relation to the rate of duty of excise. Further, if the exemption is withdrawn, the goods will be valued for the purpose of assessment and thus, it would fall within the exception as provided under Clause (1) of Section 35G of the Act - There being a specific bar on entertaining of appeal, if the question pertains to rate of duty of excise or the value of goods for the purpose of assessment, the present appeal is not maintainable before the High Court. It is not required to entertain the present appeal on the ground of lack of jurisdiction - appeal dismissed.
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2024 (3) TMI 752
Reversal of Cenvat credit in terms of Rule 4(5)(a) of CCR, 2004 - appellant has not received back goods sent to the job worker within the stipulated period of 180 days in terms of Rule 4(5)(a) of CCR - HELD THAT:- The provisions of Rule 4(5)(a) of CCR are attracted only when raw material or partially processed raw material are sent to the job work or for further processing, etc. But where the manufacturer has manufactured finished goods/intermediate goods, which have been sent for job work, the provisions of Rule 4(5)(a) are not attracted, as in such case, at best, the rate of duty as per Central Excise Tariff will be applicable. The provisions of Rule 4(5)(a) are not attracted in the facts and circumstances of the present case. Accordingly, impugned order is set aside and appeal is allowed. Appellant shall be entitled to consequential benefits, in accordance with law. As appeal is allowed on merits, the ground of limitation is left open. Appeal allowed.
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2024 (3) TMI 751
CENVAT Credit - input service credit distributed by ISD under Rule 7 of the Cenvat Credit Rules, 2004 - denial of input service credit availed by the appellant on the strength of invoices issued by the input service distributor i.e. Head Office - HELD THAT:- Admittedly, in this case, the appellants are having different manufacturing unit and their Head Office is located in Pune and and is registered as the Input Service Distributors (ISD). The Head Office distributed the input service credit to their manufacturing unit in proportionate of their clearance during the particular period. It cannot be said that on which service, the appellant has entitled to take the cenvat credit as the same cannot be available with the appellants. As the Head Office of the appellant is registered as ISD and distributed the cenvat credit in proportionate to the appellant i.e. 54.51% is valid documents to avail the cenvat credit in terms of Rule 9 of the Cenvat Credit Rules, 2004. If the Revenue wants to deny the availament of cenvat credit i.e to be only to the Head Office, who is registered as ISD. As no investigation has done at the end of the ISD for distributing ineligible cenvat credit to the appellant, the cenvat credit cannot be recovered from the appellants. As it has not been questioned that ISD has taken inadmissible cenvat credit, in that circumstances, the cenvat credit cannot be recovered from the appellants holding that the appellant has availed inadmissible cenvat credit. In fact, the appellant has availed cenvat credit on the invoices issued by ISD under Rule 7 of the Cenvat Credit Rules, 2004, which is eligible to avail the cenvat credit under Rule 9 of the Cenvat Credit Rules, 2004. There are no merit in the impugned orders and the same are set aside - appeal allowed.
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Indian Laws
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2024 (3) TMI 750
Ex-parte ad-interim injunction against the appellants - Defamatory Article authored by Defendant Nos. 3-5 and published by Defendant Nos. 1 and 2 as stated in the present Suit are defamatory to the Plaintiff - Article titled as India Regulator Uncovers $241 Million Accounting Issue at Zee was published on the website about the status of the Zee-Sony merger as well as an ongoing investigation carried out by the the Securities and Exchange Board of India qua the Respondent. Appellants contend that appellant nos. 1 2 are companies incorporated under the Companies Act, 1956 and operate and function as a media publication under the name of Bloomberg . The appellant no. 3 is the Editor, South Asia and Middle East, of the appellant no. 1 company and the appellants no. 4 5 are journalists of the appellant no. 1 company. The respondent is a company incorporated under the Companies Act and is engaged inter alia in the business of media and entertainment. As submitted Article in question is not only ex-facie defamatory but also suffers from inherent contradictions. The headline of the said Article is deceptive which in no manner is in consonance with the contents mentioned in the body of the Article. The headline is an eyecatcher and the Article is against the spirit of journalistic conduct. SEBI has not released any so called finding, which bear any connection to the purported $ 241 million diversion of funds. The Article has not only implicated the respondents as being guilty of the diversion of illegal funds but has also taken the liberty to fix the quantum of such a fictitious amount. It was submitted that a malicious story has been cooked to intentionally tarnish the reputation public image of the respondent and there is 15% drop in the share price of the respondent. HELD THAT:- The position of law is well settled with respect to the scope of interference by an appellate Court in an interlocutory injunction granted by the Court of first instance while exercising its discretion and substituting its own discretion. It is settled law that unless there is a grave urgency shown as to entertain an appeal against an ex-parte ad-interim order, an appeal is not maintainable either under Order XLI Rule 1 of the Code of Civil Procedure or under Section 10 of the Delhi High Court Act against an ex-parte ad-interim order. Order XXXIX Rule 3 read with Order XLIII Rule 1 of the Code of Civil Procedure shows that in fact no appeal lies against an order passed under Order XXXIX Rule 3 of the Code of Civil Procedure. It is also settled law as laid down by the Hon ble Supreme Court in the case of Wander Ltd Anr vs Antox India Pvt. Ltd.[ 1990 (4) TMI 280 - SUPREME COURT ] that it will not be appropriate for the Appellate Court to substitute its own discretion differently from the discretion exercised by the Court of first jurisdiction. As would be evident from the impugned order, the learned ADJ has clearly taken into consideration relevant factors for the purpose of grant of ex-parte ad-interim injunction. Further, there is no final adjudication on the subject matter of the suit which is at the very threshold. The learned ADJ is yet to hear the Appellants and dispose of the interim application. Insofar as the other submissions of the Appellants on their defence and the documents placed with their written submissions are concerned, these issues were not placed before the learned ADJ. The appellants have rushed to this Court without exploring the option of filing their reply to the application under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure and/ or application under Order XXXIX Rule 4 of the Code of Civil Procedure for modification of the ex-parte ad-interim order. A reading of the impugned order suggests that the learned ADJ applied his mind to the facts of this case and satisfied himself that prima facie there was enough material to come to the conclusion for the purpose of granting an ex-parte ad-interim injunction, otherwise the entire purpose of filing the application would have been rendered infructuous. Being conscious of the provisions of Order XXXIX Rule 3A of the Code of Civil Procedure, the learned ADJ has fixed the next date of hearing as 26.03.2024 for deciding the application under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure. I, thus, do not find any ground to interfere with the order impugned herein. Consequently, the appeal along with pending applications, stands dismissed. However, in case of any kind of urgency, the parties are at liberty to approach the Court of learned ADJ for an early hearing. It is clarified that the appellants to comply with the directions of learned ADJ vide order dated 01.03.2024 within three days from today.
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2024 (3) TMI 749
Disqualification of qualified bidder - disqualified on the ground that false information regarding GST number was incorporated in the Tender submitted by the Petitioner - HELD THAT:- It is trite law that Tendering Authority has right to incorporate the conditions of Tender and also seek the compliance from the bidders. Pertinently, in present case condition no.11 mandates that Bidders must furnish GST numbers as well as the details of returns for financial year 2022-2023 certified by the Competent Authority. It is not the case of the Respondents that the petitioner has misrepresented or submitted false documents depicting that he is complaint of the condition no.11. The aforesaid fact was very well before the Tendering Authority since the Petitioner had not submitted the GST returns or the certificate of clearance. However, the Committee of 11 Class-1 officers, on scrutiny of the technical bids, declared the petitioner as qualified. Pertinently, one more bidder, who has not submitted GST returns, is also declared as qualified, although technical evaluation report takes special note of such non-compliance, disqualification was not ordered on that count. The condition no.11 under the tender was waived by the Tendering Authority. Pertinently, there is a reason for such waiver. As can be seen from the notification issued by the Ministry of Finance, Government of India, (Department of Revenue) Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union Territory or Local Authority or Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution has been exempted. It is, therefore, evident that waiver of condition no.11 by the Tendering Authority was based on rational. Such waiver is neither a mistake of fact or accidental omission. This appears to be thoughtful decision to waive unessential tender condition - the Tendering Authority/Respondent no.3 has chosen not to insist condition no.11 since it was of little or no significance or it was classified as non-essential condition of eligibility being ancillary or subsidiary with main object to be achieved by the condition. It is well settled that Tendering Authority may deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. Once it is concluded that there was deliberate/thoughtful waiver of the condition no.11 by the Tendering Authority, by which the petitioner was declared as qualified, although he was not holding GST registration or clearance certificate, it is difficult to justify the subsequent order disqualifying petitioner relying upon the same condition - when the petitioner objected to such an action of respondent no.3 through his representation and later-on by filing present petition, a show cause notice appears to have been issued to him quoting non-compliance of the condition no.11 and, consequently, second impugned order of disqualification of the petitioner has been passed. The Petitioner is qualified and entitled to participate in the further process of E-Tender floated under notice dated 13.7.2023 and entitled to be dealt with as the Lowest Bidder (L-1) - Petition allowed in part.
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