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TMI Tax Updates - e-Newsletter
March 21, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Validity of assessment order - mismatch between the GSTR 3B returns filed by the petitioner and the auto-populated GSTR 2A returns - The High court acknowledged the existence of difficulties arising from the mismatch between GSTR 3B and GSTR 2A returns, as evidenced by the issuance of Circular No.183. Despite the petitioner's non-participation in the assessment proceedings, the court considered the certificate from the Chartered Accountant provided by the petitioner and deemed it sufficient justification for interference with the impugned orders. - The court quashed the assessment orders and remanded the matters for reconsideration with the condition that the petitioner remits 10% of the disputed tax demand for each assessment period within 15 days.
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Validity of Assessment / Demand Order - The High court found that the assessment order was flawed due to non-application of mind by the assessing officer. - The petitioner claimed that their services were subject to GST under the reverse charge mechanism. However, the assessment order was found to be flawed due to inaccuracies and discrepancies in recording the submissions and documents provided by the petitioner. As a result, the court quashed the assessment order and remanded the matter for reconsideration, allowing the petitioner to resubmit relevant documents within a specified timeframe.
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Defective SCN - The High court observed that the show cause notice lacked clarity regarding the grounds of alleged violation and did not contain essential details such as the name, designation, or signature of the issuing authority. - It noted that although the notice mentioned attached supporting documents, none were actually attached. - The court further highlighted that the Form GST REG 31 produced by the respondents did not serve as a proper show cause notice for cancellation of registration. - The court set aside both the show cause notice and Form GST REG 31, emphasizing that the respondents could issue a proper notice in accordance with the law if necessary.
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Intent to evade tax or not - Challenged the physical inspection and verification report - Penalty - detention on the ground that address of the consigner not found during the inspection carried out at his place of business - The High court emphasized the necessity of proving an intent to evade tax for invoking proceedings under Section 129(3) of the CGST Act. - The court acknowledged that the respondent did not dispute the fact that taxes had been duly paid by the seller, strengthening the petitioner's argument against tax evasion. - The court allowed the writ petition, setting aside all impugned proceedings initiated by the respondent. It directed the refund of the penalty amount to the petitioner within four weeks.
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Validity of provisional attachment of the Petitioner’s bank account - Despite the petitioner's contentions, the High court determined that substantial material existed for the Commissioner to form an opinion in favor of the attachment. The court emphasized that the petitioner failed to confront the department with sufficient evidence against the action under Section 83 of the CGST Act. Furthermore, the court noted the issuance of a Show Cause Notice with abundant material supporting a tax demand against the petitioner. Considering these factors, the court rejected the petitioner's challenge to the provisional attachment.
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Breach of principles of natural justice and lack of jurisdiction - Excessive tax demand as a condition for remand - time lag of about two months between the show cause notice and the assessment order - Petitioner not participate in proceedings and contest the tax demand - The High court emphasized the importance of the petitioner's participation in proceedings. Consequently, the court quashed the assessment order but imposed conditions for remand, including remittance of 5% of the disputed tax demand and filing a reply to the show cause notice within two weeks.
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Attachment of Bank Account - Orders passed u/s 83(1) of the CGST Act - Period of limitation - The court acknowledges the statutory provision cited by the petitioner, confirming that orders under Section 83(1) of the CGST Act have a lifespan of one year and cease to operate thereafter. As the orders in question have expired, the court finds no basis for continuing the attachment. - While the respondents admit to issuing a fresh attachment order on 13.12.2023, the court does not delve into the validity of this specific order. Instead, it reserves the petitioner's right to challenge the fresh attachment order separately, leaving the question of its validity open for future adjudication.
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Rejection of appeal filled u/s 107 on the ground of delay - Cancellation of GST registration - The court noted that while the petitioner disputed the delay, the appellate authority determined it to be 73 days. The court acknowledged that the delay was beyond the condonable period. - The court considered the petitioner's ill health and medical condition as sufficient cause for the delay in filing the appeal. They found that the petitioner had provided evidence, including a doctor's certificate, to support their claim. - In the interest of justice and considering the appeal as a valuable statutory right, the court decided to condone the delay by imposing a cost of Rs. 20,000.
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Cancellation of registration certificates - Non-furnishing of GST returns due to COVID - The High Court interpreted Rule 22 of the CGST Rules, 2017, particularly the proviso to sub-rule (4), which allows for the dropping of proceedings and restoration of registration if pending returns are furnished, and tax dues are paid along with applicable interest and late fees. - Considering previous court orders in similar cases, the court decided to grant relief to the petitioner by setting aside the cancellation order and directing the petitioner to approach the authority for restoration of GST registration.
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Challenged the Ruling pronounced by AAR - Nature of activities as per the EPC Contract - The AAAR concluded that the services provided by the appellant, involving the construction of infrastructure essential for petroleum operations, do not fit within the scope of "Support services" as defined under SAC Heading 9986 nor under the "Other professional, technical and business services" of SAC Heading 9983, considering the broad scope of work encompassing construction, fabrication, and commissioning of immovable property. Consequently, the classification under SAC Heading 9954, applying an 18% GST rate, was deemed appropriate, notwithstanding the appellant's contention that their services are directly linked to and necessary for petroleum operations, which should qualify for a reduced rate under the amended entries.
Income Tax
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The corrigendum to earlier notification modifies clause E of the earlier notification, particularly regarding disclosures required in Form 3D under the Micro, Small and Medium Enterprises Development Act, 2006. It inserts additional language after the mention of the year 2006, specifying that any amount not allowable under clause (h) of section 43B of the Income-tax Act, 1961, must be disclosed. - Originally the notification proposes to modify the clause 26 of the Form 3CD. Now through corrigenda clause 22 is modified instead of 26
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The notification, issued by the Ministry of Finance, pertains to the modification of the Convention between the Government of India and the Kingdom of Spain for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital. It addresses the taxation of royalties and fees for technical services between the two countries. Specifically, it substitutes paragraph 2 of Article 13 of the Convention, limiting the taxation at source on royalties and fees for technical services to ten per cent of the gross amount, provided the recipient is the beneficial owner.
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Validity of reopening of assessment - Time limit for issuing notice - The High Court observed that the proviso to Section 149 was analyzed, concluding that it applied to assessment years before the amendment and incorporated the pre-amended Section 151. However, it did not incorporate the entire pre-amended Section 151 by reference. - Considering the impact of TOLA, the Court found that it extended time limits but was irrelevant to the challenge in the writ petitions. - As the orders and notices lacked approval from the specified authority under clause (ii) of Section 151, they were deemed invalid.
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Validity of Reopening of assessment - tangible materials - petitioner had failed to deduct withholding tax on the assumption that the AAR would issue a favourable ruling - The High court observed that the reassessment proceedings were initiated on a factual error regarding the scope of transactions covered by the AAR application. It held that if reassessment proceedings are initiated mechanically or on a wrong factual basis, they may warrant interference. - Regarding the approval for reassessment, the court found that the Chief Commissioner of Income Tax was not a specified authority u/s 151 for the relevant assessment years, rendering the reassessment proceedings invalid. - Consequently, the court quashed the impugned orders and notices, rendering the assessment orders null and void.
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Validity of Reopening of assessment - proceedings drawn u/s 148A commenced by the local jurisdictional officer - non adherence to procedure of faceless regime for the purposes of governing the assessment under the Income Tax Act - The High court examined the provisions of Section 144B of the Income Tax Act, which mandates faceless procedures for assessment, reassessment, or re-computation. It found that these procedures do not extend to the preliminary stages before assessment or reassessment. - Considering the absence of faceless procedures during the preliminary stages and the timing of the introduction of faceless assessment procedures, the court dismissed the petition, finding no illegality in the order passed under Section 148A(b) of the Income Tax Act.
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Allowable expenditure u/s 37(1) - addition relating to form fees which was deposited for obtaining the wine shop through government - non-accepting the theory of commercial expediency - assessee has made multiple applications for lottery to obtaining the wine shop licence and for that he has made 20 application of each 15,000/- the payment has been made by banking channel. - The Tribunal found that the expenses were incurred to increase the chances of obtaining the license through a lottery system and were non-refundable. Therefore, the expenses were deemed allowable deductions u/s 37(1) of the Act. - Additions directed to be deleted.
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Validity of Revision u/s 263 - The tribunal held that the exercise of the second revision jurisdiction by the PCIT on the same issue was not justified. It noted that the AO had made necessary inquiries as per the directions of the first PCIT and that the assessee had provided sufficient evidence to prove the identity, creditworthiness, and genuineness of the share subscribers.
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Addition u/s 68 - unexplained cash credit - The tribunal noted that the transactions were conducted through banking channels, and the assessee had provided all necessary documentation, including the identity and financial status of the investor company. The decision emphasized that suspicion, however strong, cannot substitute for proof and that the genuineness of the transactions was adequately established by the assessee.
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Penalty u/s. 271(1)(c) - deduction u/s. 80GGC denied - second round of appeal - the Tribunal ruled in favor of the assessee, holding that the claim for deduction was made in good faith. They emphasized that the claim was based on the opinion of the auditor and was supported by genuine belief. Despite the deduction being ultimately disallowed, the authorities found that there was no intention to provide inaccurate particulars of income. Therefore, the penalty under section 271(1)(c) was deemed unjustified and was deleted.
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Levy of penalties u/s 271D and 271E for the violation of sections 269SS and 269T, respectively - The Tribunal, after reviewing precedents from the Supreme Court and various High Courts, emphasized that recording satisfaction in the assessment order regarding the initiation of penalty proceedings is mandatory. It was found that the AO had not recorded such satisfaction, rendering the penalty proceedings under sections 271D and 271E invalid. - Regarding period of limitation, the Tribunal noted that the reference for initiating penalty proceedings made by the AO to the Additional Commissioner was beyond the statutory limitation period. Therefore, the penalties imposed were considered time-barred and legally unsustainable.
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Transfer Pricing Adjustments - downward adjustment made by the TPO and enhanced by the CIT(A) - adoption of the Transactional Net Margin Method (TNMM) over other methods - import of capital goods from AE - The tribunal overturned the TPO's and CIT(A)'s adjustments and methodologies, reinstating the appellant's method for benchmarking international transactions as compliant with the Income Tax Rules. It emphasized that the project cost approved by regulatory commissions and financed by specialized institutions validated the appellant's expenditure on imported capital goods.
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TP Adjustment - Interest on External Commercial Borrowing (ECB) - The Tribunal found that the term of the ECB loan was indeed five years, not four years as asserted by the Revenue authorities. Considering past acceptance of similar interest rates by the TPO, the Tribunal ruled in favor of the assessee, allowing the interest payment on ECBs at the claimed rate.
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Cancellation of registration granted u/s 12AB - Assessment of trust - The ITAT held that the PCIT's order to cancel the registration from the financial year 2020-21 and subsequent years under section 12AB(4)(ii) was beyond his jurisdiction, particularly for the assessment year 2021-22, as the provision was not applicable retrospectively. - The Tribunal clarified that the law applicable to an assessment year should be the law in force for that year unless specified otherwise.
Customs
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The recent Public Notice No. 04/2024, in line with Notification No.32/2023-Customs and Circular No. 11/2023-Customs, introduces an Amnesty Scheme for a one-time settlement of default in export obligation by Advance License and Export Promotion Capital Goods (EPCG) authorization holders. - By offering a one-time settlement option with capped interest, the scheme incentivizes regularization while maintaining accountability for fraudulent activities. However, strict adherence to the specified timelines and conditions is essential to benefit from the scheme's provisions and avoid potential consequences.
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The Customs Trade Notice No. 13/2024 addresses the issue of non-realization of export proceeds by certain entities listed as defaulters. These entities have been served with Demand cum Show Cause Notices (SCNs) for availing ineligible drawback, along with applicable interest and penalties. - By initiating adjudication proceedings and providing multiple opportunities for Personal Hearings, the authorities ensure due process and fair treatment for the accused entities.
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The recently issued Instruction No. 05/2024-Customs addresses the prohibition on the import of certain ferocious breeds of dogs. These breeds, identified as posing a danger to human life, are to be prohibited for import, breeding, selling as pet dogs, and other purposes. - The list includes a wide range of breeds, each recognized for their strength, size, and potential aggressiveness. By prohibiting their import, breeding, and sale as pet dogs, the government aims to mitigate the risk posed by these breeds to human life and well-being.
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The Trade Notice issued for waiver of charges for the late filing of Bill of Entry at Jawaharlal Nehru Custom House. It supersedes previous standing orders and public notices, providing updated guidelines on this matter. - The Trade Notice delineates two scenarios: In the first scenario, where charges are stipulated by law, the Assistant/Deputy Commissioner processes cases based on importer/customs broker requests uploaded in e-Sanchit. In the second scenario, the Joint/Additional Commissioner has the authority to waive charges if satisfied with the reasons for the delay, supported by evidence such as negative acknowledgment/proof of non-generation of Bill of Entry number. - To expedite clearance and facilitate trade, a streamlined procedure is prescribed for handling waiver requests.
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The recent Trade Notice No. 10/2024 addresses a crucial issue concerning the refund of Integrated Goods and Services Tax (IGST) on the export of certain tobacco products. - The notification acknowledges grievances from exporters who have faced difficulties in filing shipping bills with IGST claims for certain tobacco products. Specifically, it mentions challenges related to distinguishing between goods carrying a brand name and those without, as the latter are eligible for IGST refund while the former are not. - To address this issue, the notification introduces an exception allowing exporters to declare that their goods do not fall within the prohibited category for IGST refund. The system will then process shipping bills for IGST refund payment without validating the declaration.
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Misuse of Advance Authorisation for export of garments - Diversion of imported goods into open market without using the same in export goods - The Tribunal upheld the denial of benefit under Customs Notification No. 99/2009 due to overwhelming evidence of diversion of imported goods into the open market. The CESTAT noted the failure of the appellant to fulfill export obligations as required. - The Tribunal rejected the appellant's argument regarding the violation of principles of natural justice. It noted that the Department partly acceded to the request for cross-examination, and the appellant's lack of cooperation during investigations weakened their claim.
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Valuation of imported goods - Inclusion of lump sum and periodical patent and technology know how fee paid - The Tribunal analyzed the provisions of Rule 10 (1) (c) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and relevant case laws. It was concluded that the royalty and technical know-how fees were not a condition of the sale of the imported goods. Thus, these fees should not be included in the transaction value. The court emphasized the distinction between costs related to the import of goods and those pertaining to post-importation manufacturing activities.
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Refund including cash refund of DEPB/FPS scrips - principles of unjust enrichment - The Tribunal examined the facts surrounding the refund claims and acknowledged the respondent's reliance on the London Metal Exchange (LME) for pricing. They found that the price of the final products was determined based on LME prices, which were beyond the control of the respondent. - The CESTAT concluded that the principle of unjust enrichment did not apply in this case. They emphasized that the final product prices were based on LME prices, and there was no evidence of the duty burden being passed on to buyers.
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Anti-dumping duty - Re-assessment of imported goods - Classification of Import of 30 MT of PVC Resin SG 5 (Suspension Grade) - Verification of Manufacturer - The Tribunal examined the evidence provided by both parties, including invoices, packing lists, and certificates of origin. They concluded that the evidence overwhelmingly supported the Appellant's claim regarding the manufacturer of the goods. - Despite discrepancies in the markings on the bags, the court found that the documents provided by the Appellant were sufficient to establish the manufacturer's identity. - The CESTAT upheld the Appellant's classification of the goods and rejected the Customs Department's argument for a higher anti-dumping duty.
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Valuation of imported goods - stamping foils - rejection of declared value - The tribunal found that the department's reliance on proforma invoices for A-grade goods was misplaced, given the appellant's importation of B and C-grade goods. The tribunal also recognized the appellant's submission of contemporaneous import data supporting their declared values. - The tribunal concurred with the appellant that there was no evidence of extra payment to the foreign supplier beyond the invoice values. - Tribunal held that the appellant's declared values were justified, and the initial inculpatory statement could not be relied upon due to the coercive circumstances under which it was obtained.
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Valuation of imported goods - inclusion of royalty and the cost of advertisement incurred by the Appellant in India in assessable value - related party - The Tribunal allowed the appeals, stating that the royalty payments related to the licensed products could not be added to the transaction value of imported goods as they did not satisfy the conditions laid out in the Customs Valuation Rules, 2007. Similarly, it held that advertisement expenses were post-import activities and should not be included in the transaction value. The Tribunal emphasized the absence of a direct relationship between the appellant and suppliers under the related persons' definition, affecting the valuation of imported goods.
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Classification of the Imported Goods - fish protein - Misdeclaration for Availing Advance Authorization Scheme - The Tribunal concluded that the goods are correctly classifiable under Chapter Heading 0511 as processed/demineralized fish scales. This decision was based on the physical characteristics of the goods, technical literature, test reports, and the relevant chapter notes and headings of the Customs Tariff. - The Tribunal found that the appellant was aware that the imported goods were not ‘fish protein’ but rather ‘fish scales’, a restricted item requiring a sanitary permit, which was not obtained. Therefore, the benefits availed under the advance authorization scheme for certain consignments were deemed improperly claimed due to misdeclaration. - The Tribunal held that the imposition of a redemption fine or penalties was not warranted for the classification issue.
DGFT
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Changes in origin declaration for Self-Certification under UK Developing Countries Trading Scheme (DCTS) - Trade Notice No. 39/2023-24 highlights the transition from GSP to DCTS for determining the origin of goods exported to the UK. Indian exporters must adhere to the new origin declaration process under DCTS and self-certify compliance with RoO requirements to benefit from concessional import duty rates. The notice emphasizes the need for exporters to stay informed about regulatory changes and comply with the updated requirements within the specified timeline.
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The DGFT has issued Notification No. 79/2023, dated March 18, 2024. The principal amendment extends the import of Urea (agricultural grade) through Indian Potash Limited (IPL) until March 31, 2025, from the previous deadline of March 31, 2024. - The import of Urea remains permitted through Rashtriya Chemicals and Fertilizers (RCF) and National Fertilizers Limited (NFL), subject to Para 2.21 of the Foreign Trade Policy 2023. This aspect of the policy remains unchanged.
Indian Laws
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Prayer to direct the respondent- C.B.I. to furnish/ supply the copy of the post trap memo - seeking to know the reason of arrest - The case involved an application filed by the applicant under Section 482 of the Cr.P.C. against the Trial Court's order, seeking access to the post trap memo related to their arrest. The applicant argued that understanding the grounds of arrest was crucial for their defense. Despite the opposition from the C.B.I., the Court emphasized the importance of transparency and fairness in criminal trials. It ruled in favor of the applicant, directing the C.B.I. to provide the requested memo within a specified timeframe.
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Dishonour of Cheque - vicarious liability of Director of the Company - The petitioner, a former non-executive additional director of the accused company, contended that they had resigned before the offense and that the complaint lacked specific allegations regarding their involvement. The court found the petitioner's resignation supported by documentary evidence and observed deficiencies in the complaint's averments. Referring to legal precedents, it emphasized the need for specific allegations to establish liability. Consequently, the court quashed the complaint against the petitioner, citing it as an abuse of the legal process.
IBC
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Initiation of CIRP - Failure to make deposits the entire OTS amount - In the interests of justice, the Tribunal directed the appellants and the investor to deposit the agreed amounts within ten days before the National Company Law Tribunal (NCLT) by way of Fixed Deposit Receipts (FDRs) in favor of the NCLT Registrar. It clarified that the Adjudicating Authority would decide on the Section 7 application based on these deposits.
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Consideration of Resolution Plan from Non-Listed Applicants - Authority of CoC to Modify Invitation for Expression of Interest (EOI) - The NCLAT upheld Regulation 39(1)(b) which states that the CoC should not consider plans from applicants not listed as PRAs. It was noted that neither the mentioned applicant nor other similar applicants submitted an Expression of Interest (EOI) or were listed as PRAs. - The NCLAT affirmed that the CoC has the authority to modify the EOI and decide not to consider applications from non-listed applicants. It was emphasized that the CoC's decision was crucial in determining the direction of the Corporate Insolvency Resolution Process (CIRP).
PMLA
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Money Laundering - Validity of framing of charges - dealing in skin and organs of prohibited animals - proceeds of crime - scheduled offence - The High court emphasizes that at the stage of framing charges, only a prima facie case needs to be established. It notes the dispute over the valuation of seized goods but concludes that such disputes should be addressed during the trial. Similarly, doubts about income tax returns are deemed insufficient grounds for discharge. Ultimately, the court finds that the prosecution's case establishes a prima facie basis for proceeding with the trial, dismissing the applicants' application.
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Grant of bail - money laundering - proceeds of crime - The court noted substantial evidence indicating that Satyendar Kumar Jain conceptualized and orchestrated the accommodation entries, implicating him in money laundering activities. The court highlighted testimonies and documents that pointed to Jain's direct and indirect control over the involved companies - The Supreme Court dismissed all appeals, upholding the High Court's rejection of bail. The judgment reaffirms the stringent bail conditions under the PMLA and underscores the court's stance on tackling money laundering activities, especially those involving complex corporate structures and high-profile individuals.
SEBI
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The circular reflects SEBI's ongoing efforts to streamline KYC processes in the securities market by leveraging Aadhaar-based e-KYC authentication services. By allowing certain entities to utilize these services, SEBI aims to enhance efficiency, reduce paperwork, and ensure compliance with anti-money laundering regulations. - The inclusion of additional entities underscores the growing acceptance and utilization of Aadhaar authentication services in financial transactions. - However, adherence to data privacy and security standards remains critical to maintaining trust and confidence in the financial system.
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Attachment of Properties - The Custodian sought to recover significant sums from different individuals or entities, claiming they were indebted to the notified party. - The Special Court directed the appellant to pay a sum of Rs. 50 lakhs with Interest - diversion of funds from the banks/FIs to the individual accounts of certain brokers - The Supreme Court addressed several key issues arising from the appeals under the Act of 1992, including the notification of individuals, recovery of dues, and the burden of proof. It clarified that property attachment under the Act occurs from the date of notification forward, not retroactively. The SC found it insufficient to establish the appellants' liabilities. Moreover, it emphasized the Custodian's responsibility to prove the debts before shifting the burden onto the appellants. Consequently, the Court ruled in favor of the appellants, quashing the judgments and allowing the appeals.
Service Tax
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Levy of Service tax - Business auxiliary service - commission retained/earned towards the service rendered by them to the co-GSA/IATA - The Tribunal finds that the appellant's activities do not fall under "Business Auxiliary Services" as alleged by the revenue. It determines that the appellants act as principal-to-principal in their transactions and do not serve as commission agents for other GSA/IATA operators. - Further, the Tribunal agrees with the appellant's argument that it was issued beyond the prescribed period and finds no evidence of suppression or intent to evade tax.
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Taxable service or not - Intermediary services - Valuation - Inclusion of the cost / value of free supply - The Tribunal agreed with the appellant, finding that the services received from the European company were indeed intermediary services as per the criteria laid out in POPS and the CBIC’s Education Guide. Consequently, the place of provision of such services was outside India (Dubai), making them not liable for service tax. - Aligning with the judgment in Bhayana Builders Pvt. Ltd. and subsequent confirmation by the Supreme Court, the Tribunal held that the value of materials supplied free of cost to service providers in a works contract could not be included in the taxable value for the purpose of service tax.
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Manner of payment of Pre-deposit amount before filing of appeal against demand of service tax - Admissibility of payment of pre-deposit using DRC-03 - The appellant argued that they had deposited the pre-deposit using the input tax credit available in their DRC-03 under CGST regime. - Considering the absence of a specific provision allowing pre-deposit via DRC-03, the Tribunal rejected the appellant's argument and relied on various judicial precedents to affirm that such a method was not permissible under Section 35F.
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Nature of activity - manufacture or service - making of photo books/albums, calendars, brochures etc. to their different customers - The Tribunal concurred with the assessee's contention that their activity constitutes 'manufacture' rather than a taxable service. They noted that the process undertaken by the assessee involves significant transformation and results in the creation of new commercial products.
Central Excise
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Clandestine removal - it is alleged that respondents have shown excess manufacture in order to avail excess refund to the tune of Rs. 60 lakhs - burden of proof lies with the prosecution or not - The Tribunal acknowledges the serious nature of the charge but finds that the Revenue failed to establish tangible evidence beyond a single test run. They emphasize the necessity of thorough investigation and tangible evidence to prove such allegations conclusively. - The Tribunal notes the various factors affecting fuel consumption and production, concluding that a single test run cannot accurately represent overall production.
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Classification of Savory Oats - The Tribunal agreed with the appellant, stating that the classification should follow the earlier ruling (11041200) since the process does not alter the essential character of oats. It was determined that the mixing of oats with other ingredients does not result in a new, distinct product marketable on its own. - The addition of ingredients to a primary product without significantly altering its essential character does not constitute "manufacture." - Following the analysis and preceding legal framework, the Tribunal set aside the demand for Excise Duty, interest, and penalties imposed on the appellant.
Case Laws:
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GST
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2024 (3) TMI 903
Breach of principles of natural justice - Validity of assessment order - mismatch between the GSTR 3B returns filed by the petitioner and the auto-populated GSTR 2A returns - HELD THAT:- The documents on record disclose that the liability pertains to alleged mismatch between the GSTR 3B returns of the petitioner and the auto-populated GSTR 2A returns. In recognition of difficulties faced in this regard, Circular No.183 was issued. The petitioner has also placed on record a certificate from the Chartered Accountant with regard to the reason for disparity between the above mentioned returns. Although the petitioner did not respond to the notices and participate in the assessment proceedings, the above facts and circumstances justify interference with the impugned orders, albeit by putting the petitioner on terms. The impugned assessment orders are quashed and all these matters are remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand in respect of each assessment period within a period of 15 days from the date of receipt of a copy of this order - Petition disposed off.
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2024 (3) TMI 902
Validity of Assessment / Demand Order - tax liability with interest and penalty - turnover on Pan-India basis - Services of transportation of goods - Notification No.13/2017 - GST is leviable on the recipient of services on reverse charge basis - non application of mind - HELD THAT:- Although the petitioner had submitted the balance sheet and ITR details, it is evident from the records, assessing officer recorded findings contrary to the documents on record. It is also noticeable that in the penultimate paragraph at page 63, the assessing officer notices that the all India balance sheet discloses other income of Rs. 20,05,359/-. After noticing such other income, in the concluding table, tax liability with interest and penalty is imposed in respect of the turnover which, according to the petitioner, is taxable entirely on RCM basis. Thus, the impugned assessment order is quashed and the matter is remanded for re-consideration. The petitioner is permitted to re-submit all relevant documents to the assessing officer within fifteen days from the date of receipt of a copy of this order. W.P. is disposed of on the above terms.
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2024 (3) TMI 901
Violation of principles of natural justice - SCN does not give any reasons for cancellation - Appeal of the Petitioner seeking restoration of the GST registration has been dismissed solely on the ground that the same is barred by limitation - HELD THAT:- In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. The order dated 19.04.2022 cannot be sustained and is accordingly set aside. The GST registration of the petitioner is restored - petition disposed off.
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2024 (3) TMI 900
Violation of principles of natural justice - Defective SCN proposing to cancel the GST registration - SCN does not mention the name and designation of the concerned officer who has issued the same - SCN has not been signed by the proper officer but bears the digital signatures of Goods and Service Tax Network - HELD THAT:- A perusal of show cause notice dated 19.02.2024 shows that the same has been issued on the ground that registration has been obtained by means of fraud, willful misstatement or suppressing of facts. The notice is unclear as to which of the ground applies i.e. fraud, willful misstatement or suppressing of facts. The notice neither bears the name and designation nor the signatures of the issuing authority - As per the petitioner, notice was signed by the Goods and Services Tax Network. Further, we note that the notice states that the noticee is to refer to supporting documents attached to have case specific details, however, admittedly, no such documents were attached with the notice. Rule 21A of the Central Goods and Services Tax Act, 2017, requires that the person who is alleged to be in contravention shall be intimated in Form GST REG 31 electronically on the common portal or by sending the communication to the e-mail address provided at the time of registration or as amended from time to time - Form GST REG 31 admittedly has not been uploaded on the portal or sent electronically over e-mail to the petitioner but is stated to have been sent to the petitioner by physical mail, which cannot be a mode of service, as prescribed under Rule 21A. In any event, Form that has been produced in Court today, is not the show cause notice, which was sent to the petitioner. In view of the above impugned show cause notice dated 19.02.2024 as well as Form GST REG 31 also dated 19.02.2024 are set aside - Petition allowed.
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2024 (3) TMI 899
Demand - interest - lower Input Tax Credit (ITC) - Petitioner was unaware of proceedings commencing from the issuance of an intimation - show cause notice served on the petitioner by post and not merely uploaded on the GST portal - HELD THAT:- On perusal of the impugned assessment order, it is evident that the petitioner availed of a lower amount as ITC than the amount reflected in the auto-populated GSTR 2A return. In those circumstances, the conclusion that the petitioner wrongly availed of ITC indicates non application of mind. As regards the interest liability for belated filing of returns, the evidence on record reflects that the petitioner remitted sums of Rs. 3,97,353/- each towards CGST and SGST on 06.03.2024. In these circumstances, the impugned order calls for interference. Therefore, the impugned assessment order is quashed and the matter is remanded to the assessing officer for reconsideration. The petitioner is permitted to file a reply to the show cause notice dated 24.07.2023 within a period of two weeks from the date of receipt of a copy of this order. These writ petitions are disposed of on the above terms. There will be no order as to costs. Consequently, connected miscellaneous petitions are closed.
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2024 (3) TMI 898
Retrospective cancellation of GST registration of the petitioner - closure of business - SCN does not give any tenable reasons of cancellation - Violation of principles of natural justice - HELD THAT:- In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. In view of the fact that Petitioner does not seek to carry on business or continue the registration, the impugned order dated 03.07.2023 is modified to the limited extent that registration shall now be treated as cancelled with effect from 16.05.2023 i.e., the date when the Petitioner closed down his business activities. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017. Petition disposed off.`
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2024 (3) TMI 897
Seeking refund of the amount deposited as penalty - intent to evade tax or not - Challenged the physical inspection and verification report - Penalty - detention on the ground that address of the consigner not found during the inspection carried out at his place of business - HELD THAT:- It is well settled principle of law that in order to invoke proceedings u/s 129(3) of the Act, the intention to evade tax is mandatory. In this context, the judgment of the Hon ble Supreme Court in Assistant Commissioner (ST) Ors. v. M/s. Satyam Shivam Papers Pvt. Limited Anr. [ 2022 (1) TMI 954 - SC ORDER] is relevant. The same view has been taken by different High Courts. It is also noted that under Rule 138A of the CGST Act, 2017, the person in charge of the conveyance shall carry (a) the invoice or bill of supply or delivery challan and (b) a copy of the e-way bill or the e-way bill number. In this case, the petitioner was carrying all the requisite documents as required in law at the time of carrying the goods. It is the case of the petitioner that the seller has already made payments towards his tax liability. Hence, there is no question of any evasion of tax liability. This fact has not been disputed by learned counsel for the respondent. Hence, this Court is of the considered view that no special purpose will be served by delegating the present matter to the appellate authority. In view thereof, this Court deems it appropriate to allow the present writ petition and set aside the impugned physical inspection and verification report dated 21.12.2023, detention order dated 23.12.2023, penalty order dated 25.12.2023 and all other purported proceedings initiated therein. Thus, the writ petition is disposed of.
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2024 (3) TMI 896
Seeking revocation of provisional attachment of the Petitioner s bank account - only contention urged on behalf of the Petitioner is that there was no reason to believe nor was there any tangible material for the Commissioner to confirm the provisional attachment of the Petitioner s bank account in exercise of the powers under Section 83 of the the Central Goods and Service Tax Act, 2017 - HELD THAT:- There was substantial material for the Commissioner to form an opinion that the interest of the Revenue is required to be protected. Learned Counsel for the Petitioner has not contended that such material was not tangible material to form the opinion to attach the Petitioner s bank account nor such a case is made out in the application filed by the Petitioner for revocation of the provisional attachment. Thus, merely relying on the decision of the Supreme Court in M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. [ 2021 (4) TMI 837 - SUPREME COURT] , would not suffice, in the absence of material available for the Petitioner to confront the department against an action under Section 83 of the CGST Act. The Petitioner having failed to even make out a prima-facie case against the provisional attachment, it is difficult for us to be persuaded to take a different view in the matter. In any event, it is brought to notice by the learned Counsel for the Respondent that now a Show Cause Notice dated 29th February 2024, under the provisions of Sections 74(1) and 122 of the CGST Act, 2017 as also the Maharashtra GST Act, 2017 read with IGST Act, 2017 has been issued to the Petitioner - SCN has abundant material which has been gathered by the department in the investigation in making a tax demand of Rs. 3.63 crores against the Petitioner, along with the recovery of other amounts as set out in paragraph 40 of the Show Cause Notice. There are no merit in this Petition. It is accordingly rejected.
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2024 (3) TMI 895
Breach of principles of natural justice and lack of jurisdiction - Excessive tax demand as a condition for remand - time lag of about two months between the show cause notice and the assessment order - Petitioner not participate in proceedings and contest the tax demand - HELD THAT:- On examining the impugned assessment order, it is noticeable that the assessing officer has taken into consideration the closing balance of creditors on all India basis. Similarly, based on the profit and loss account of the petitioner, the total revenue and expenditure of the corporate entity were made the basis for imposing GST. These conclusions clearly reflect non-application of mind. At the same time, it should be recognized that an intimation and show cause notice preceded the assessment order. There is also a time lag of about two months between the show cause notice and the assessment order. Therefore, it follows that the petitioner was negligent in not responding to the show cause notice and participating in proceedings. Petitioner submits that the petitioner is ready and willing to remit a reasonable portion of the impugned tax demand as a condition for remand. However, he points out that 10% of the total disputed tax demand would be excessive in as much as this includes the all India turn over. Therefore, the impugned assessment order is quashed subject to the condition that the petitioner remits 5% of the disputed tax demand as a condition for remand - Petitioner is permitted to file a reply to the show cause notice within a maximum period of two weeks from the date of receipt of a copy of this order along with 5% of the disputed tax demand. Thus, petition is disposed of.
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2024 (3) TMI 894
Attachment of Bank Account - Orders passed u/s 83(1) of the CGST Act - Period of limitation - repeated issuance of provisionally attachment order - cash credit accounts - HELD THAT:- Learned counsel for the petitioners submits that repeated attachment of cash credit accounts in exercise of power u/s 83 of the CGST Act is in breach of the provisions of Section 83(2) and such exercise could not have been undertaken. He further submits that petitioners have not received copies of attachment order dated 13.12.2023. Admittedly, subject matter of these proceedings has ceased to operate, the petition is disposed of reserving the right of the petitioner to impugn the fresh attachment order dated 13.12.2023 in accordance with law. The question of validity of repeated issuance of attachment orders u/s 83 of the CGST Act is left open.
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2024 (3) TMI 893
Cancellation of GST registration - rejection of appeal filled u/s 107 - barred by limitation and beyond the condonable statutory period - Andhra Pradesh Goods and Services Tax Act, 2017 ( APGST Act ) - HELD THAT:- The impugned order in view of Section 107 of APGST Act does not suffer from any illegality, as the appellate authority cannot condone the delay beyond statutory condonable period but considering that there was sufficient cause for not preferring appeal in time, the interest of justice requires condonation of the delay and adjudication of the matter on merit by Appellate Authority. The appeal is a valuable statutory right. In exercise of the writ jurisdiction to do complete justice and provide opportunity of hearing on merits of the appeal, we condone the delay by imposing costs of Rs. 20,000/-. The appellate authority shall consider and decide the appeal on merits in accordance with law, expeditiously. The Writ Petition is partly allowed in the aforesaid terms.
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2024 (3) TMI 892
Cancellation of registration certificates - Show cause notice issued - Non-furnishing of returns in compliance of the provisions of Section 29[2][c] of the GST Act, 2017 - works contracts - seeking revocation of cancellation of restoration of his GST registration - HELD THAT:- Having regard to the fact that the GST registration of the petitioner has been cancelled u/s 29[2][c] of the CGST Act, 2017 for the reason that the petitioner did not submit returns for a period of 6 [six] months and more; the provisions contained in the proviso to sub-rule [4] of Rule 22 of the CGST Rules, 2017 and the orders passed by the coordinate benches of this Court as well as by this Court in similar matters whereby the matters have been disposed of with a direction to the respondent authority to revoke the cancellation of registration upon due payment of all statutory dues payable by the petitioners, this Court is of the considered view that no purpose will be served by keeping this writ petition pending and the present writ petition can be disposed of in similar terms, as had been passed in similar writ petitions Accordingly, the impugned order dated 15.12.2021 is hereby interfered with and set aside. The petitioner is directed to approach the concerned authority within a period of 1 [one] month from today, seeking revocation of cancellation of restoration of his GST registration. On such approach by the petitioner, the concerned authority will intimate the petitioner the total outstanding statutory dues, if any, standing in the name of the petitioner till the date of cancellation of registration and any other outstanding dues under the GST required to be paid by the petitioner. Upon such intimation, the same shall be deposited within the time limit mentioned by the concern authority and upon such payment of the statutory dues under the GST by the petitioner, the concerned authority will pass appropriate order and revoke the cancellation of registration, by restoring the GST registration of the petitioner. Thus, the writ petition is disposed of.
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2024 (3) TMI 891
Challenged the Ruling pronounced by AAR - Support Services in the State of Rajasthan - Classification of Services - under heading 9986 Or 9954 - Rate GST - EPC Contract entered with M/s Vedanta Limited - Nature of activities as per the EPC Contract - whether the appeal has been filed within stipulated period prescribed u/s 100 (2) of CGST Act, 2017 or not - Whether the alternate suggestion of the Appellant seeking classification of the proposed supplies in question under Heading 9983 is acceptable in view of the nature of supplies proposed to be made by them? HELD THAT:- We find that the Appellant have not filed the appeal within statutory period of 30 days of date of communication of the Order of the AAR. However, the Appellant vide letter dated 20.09.2023 submitted that the appeal has been filed within limitation period in pursuance of the Hon'ble Supreme Court Judgment dated 10.01.2022 in Suo Motu Writ Petition (C) No. 3 of 2020 [ 2022 (1) TMI 385 - SC ORDER] . Thus, the appellant were required to file the appeal within 30 days from 21.09.2021 in light of the judgment of Hon'ble Supreme Court [ 2022 (1) TMI 385 - SC ORDER] We note that the appellant has filed the appeal on 29.10.2021 that is within the prescribed time limit. We find that the appeal has been filed by the appellant within the prescribed time. Therefore, we proceed further to decide the appeal on merit. We observe that according to the EPC Contract, the Appellant have been assigned the work of construction and installation of the entire facility and the proposed infrastructure being installed is aimed at capacity expansion as has been mentioned by the Appellant in the appeal that the with a view to augment the production from existing well pads at Mangala, the Appellant have entered into EPC contract with Vedanta Limited in March 2018 for constructing additional network of customized Intra-field pipelines MIPA project. The contract obliges the Appellant to handover the complete system including Non Process Buildings, road, drains, Pipeline, after completing the construction, erection, installation and commissioning work. Thus, we observe that the supplies proposed to be undertaken by the Appellant relate to the new facilities being awarded by M/s Vedanta Limited for enhancement of capacity and production. Therefore, the existing production from the existing facilities cannot be taken to be related to the expansion being undertaken under the instant EPC Contract. As can be seen the contract in the instant case is an Engineering, Procurement and Construction (EPC) Contract awarded by Mls Vedanta Limited for provision of services for augmentation of pipelines along with Surface Facilities at MPT within RJ-ON-90/1 block and the Appellant have been assigned the responsibility to develop the infrastructure for surface facilities. The scope of the work described in details in the contract clearly established that the supplies relate to construction of new facilities/ infrastructure for oil gas extraction which are quite distinct from the support services to oil and gas extraction. What has been included in the support services under Heading 998621 by way of inclusion clause has to be viewed with reference to support services and cannot be so interpreted to relate it to construction services. In that view of the matter, whether it be derrick erection or repair and dismantling services, well casing, cementing pumping, plugging and abandoning of well, all these activities have to be understood in the nature of support services only and none of them relates to creation of infrastructure or facilities for oil and gas extraction by way of construction, erection and commissioning of the new facility. The Appellant have not been assigned activity of type mentioned in Heading 998621 rather the contract is for enhancement of new facility and infrastructure for extraction of oil and gas. Hence, we do not find force in the arguments advanced by the Appellant. Conclusion and findings: In view of these observations we hold that:- (i) Based on the analysis of activities, the Appellant are required to carry out in pursuance of the EPC Contract and keeping in view the true nature of supplies proposed to be undertaken by the Appellant, the proposed supplies are appropriately classifiable under SAC Heading No. 9954 answering to description Construction Services which are in the nature of composite supply defined as works contract. (ii) The proposed supplies are specifically covered by SAC Heading No. 9954 and the claim that Construction Services of SAC Heading No. 9954 is a general description of the supplies and support services of SAC Heading No. 998621 is more specific to describe the proposed supplies is not supported by the EPC Contract as discussed. (iii) The proposed supply is covered by the scope of Construction Services of SAC Heading No. 9954 and neither the inclusions given under SAC Heading No. 998621 for Support Services nor the description of Heading 9983 covers the scope of the proposed supply, Hence, the claim for classification under SAC Heading No. 998621 or alternatively under Heading 9983 is not sustainable. (iv) The proposed supplies, therefore, attract tax at the rate of 9% in terms of item (xii) of entry at SI. No. 3 of Notification No. 11/2017-CT (R), dated 28.06.2017 as amended and 9 % in terms of Notification issued under the RGST Act, 2017. Thus, we hold that the Ruling dated 15.09.2021 of the AAR for Rajasthan in respect of the Appellant needs no interference up to the extent mentioned in item (i) to (iii) above and the same are hereby modified to the extent mentioned in item (iv) above of Part K of this order. The appeal is disposed of accordingly.
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Income Tax
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2024 (3) TMI 890
Addition u/s 40A(3) - purchases made otherwise than by account payee cheque - As decided by HC [ 2023 (10) TMI 1285 - DELHI HIGH COURT] payments made by the assessee to the concerns violated Section 40A(3) as they were not made through an account payee cheque drawn on a bank, account payee bank draft or through the use of electronic clearing system through a bank account, and therefore, to fall within the ambit of the 1977 circular, the appellant/assessee was required to establish the genuineness of the transactions. The appellant/assessee having failed to do so, led to the deduction being rightly disallowed for the subject payments. HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed. Decided against assessee.
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2024 (3) TMI 889
Validity of reopening of assessment - as alleged Petitioner has availed of hawala/accommodation entries from the Group [provider of provides accommodation entries] - AO states that just because payments were made through banking channel does not sanctify the transaction and submission of purchase and sales bills cannot legitimize the transactions, as the same evidence points to the issuing of accommodation bills as a part of this modus operandi - HELD THAT:- The condition precedent of reason to believe that income chargeable to tax has escaped assessment on correct facts must be satisfied by the AO, who has to have jurisdiction to issue the reopening notice. Even when Assessee has pointed out that her relationship with Karnawat Impex P. Ltd. was only as the jeweller and a customer, payments have been made by cheque and the jewellery bought have been disclosed in the wealth tax returns filed, the AO instead of making a bald statement that payment through cheques does not sanctify, should have brought evidence or confronted Petitioner with evidence to the contrary. Therefore, it would be safe to conclude that the AO, not having done that, did not dispute the facts stated by Petitioner. Liquidated damages - Petitioner has in the computation of income, disclosed by way of a note that she has received a sum of Rs. 32.93 per share for 2,03,152 equity shares of Great Offshore Ltd. as liquidated damages, the amount has been reduced from the cost of the equity shares as per the provisions of Section 51 of the Act and the excess of liquidated damages received over the cost of the equity shares has been treated as capital receipt and not offered to tax. Even during the assessment proceedings, as could be evidenced by a letter dated 30th November 2011, query was raised regarding these liquidated damages and Petitioner has given detailed response. Subsequently, an assessment order dated 14th December 2011 has been passed u/s 143(3) of the Act accepting the returned income. Therefore, on the facts as found, there could be no reason for AO to believe that income chargeable to tax has escaped assessment. Assessee appeal allowed.
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2024 (3) TMI 888
Validity of reopening of assessment - Time limit for issuing notice - validity of sanction for issuing the orders under Section 148A(d) - HELD THAT:- As gleaned from the proviso to subsection (1) of Section 149: it applies to assessment years commencing prior to 01.04.2021, i.e. assessment years before the amendments came into effect; and the time limits under Section 149(1)(b), Section 153A or 153C, as the case may be, as it stood before the commencement of the Finance Act, 2021, apply to notices u/s 148 in respect of cases pertaining to assessment years beginning on or before 01.04.2021. Since the disputes pertain to assessment years 2016-2017 and 2017-2018, the proviso undoubtedly applies to these cases. What are the implications of the application of the proviso? - In our view, as a consequence of the proviso, the time limit specified in the pre-amended Section 149 (1)(b) becomes applicable and the time limit prescribed therein was four years and not more than six years. Whether the application of the proviso to Section 149 has the effect of incorporating by reference pre-amended Section 151? - In order to substantiate the contention that pre-amended Section 151 gets incorporated by reference, learned standing counsel relied on sub-section 2 to the pre-amended Section 149. It should be noticed that the proviso to sub-section (1) of the amended Section 149 does not even incorporate the whole of pre-amended Section 149. It merely makes the time limit prescribed therein applicable to the issuance of notices for reassessment in respect of any assessment year beginning before 01.04.2021. A fortiori the proviso certainly does not incorporate pre-amended Section 151 by reference and make it applicable. Impact of the TOLA - Undoubtedly, TOLA extended the time limits under specified enactments, including the I-T Act. As per clause (a)(ii) of sub-section(1) of Section 3 thereof, time limits for grant of sanction or approval were also extended. Since the petitioner does not challenge the sanction with respect to the time limit, clause(a) of sub-section(1) of Section 3 is immaterial. Indeed, TOLA, which extends the time limits for completion of specified tasks up to 31.03.2021, itself becomes irrelevant because of the nature of the challenge in these writ petitions. In Siemens Financial Services [ 2023 (9) TMI 552 - BOMBAY HIGH COURT] concluded, in substantially similar facts and circumstances, that the amended Section 151 and not the pre-amended Section 151 would apply. For reasons set out above, we concur with the conclusion in Siemens Financial Services and Ganesh Das Khanna [ 2023 (9) TMI 552 - BOMBAY HIGH COURT] as subsequently followed in Twylight Infrastructure [ 2024 (1) TMI 759 - DELHI HIGH COURT] . Consequently, the validity of sanction for issuing the orders under Section 148A(d) and the notices under Section 148 should be tested with reference to amended Section 151. If so tested, it is evident that sanction was not granted by an authority specified under clause (ii) of Section 151. Hence, the orders u/s 148A(d) and the notices under Section 148 are quashed. As a corollary, the draft assessment orders u/s 144B/144C cannot survive and are also quashed.
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2024 (3) TMI 887
Validity of Reopening of assessment - objective satisfaction of the officer on the basis of tangible materials - petitioner had failed to deduct withholding tax on the assumption that the AAR would issue a favourable ruling - petitioner had filed AAR before the Authority for Advance Ruling (Income tax) seeking a ruling on whether payments received by Fives France would be subject to withholding tax u/s 195. which was declined to be answered - HELD THAT:- As principles laid down in the judgment of Rajiv Agarwal [ 2016 (3) TMI 972 - DELHI HIGH COURT] are clearly applicable to this case wherein as concluded therein that the assessing officer had ignored the objections of the assessee and failed to apply his mind to the material presented by the assessee. Likewise, in Chhugamal Rajpal [ 1971 (1) TMI 9 - SUPREME COURT] the Supreme Court concluded that approval under Section 148 should be provided after examining the material on record and not in mechanical fashion. Both on account of the reasons for reopening being based on a grossly erroneous factual foundation and by also taking into account that the petitioner actually withheld and remitted taxes in respect of transactions with Fives France that formed the subject of the application before the AAR, the impugned order under Section 148A(d) of the I-T Act and the notice under Section 148 thereof are vitiated. All that remains is to briefly consider the other ground of challenge. Plea of limitation - By referring to the letter of approval with regard to AYs 2016- 2017 and 2017-2018 petitioner pointed out that such approval was granted by the Chief Commissioner of Income Tax. In clauses (i) and (ii) of Section 151 of the I-T Act, the specified authorities for purposes of issuing notice under Section 148 are prescribed. The rank of the specified authority changes depending on the amount of time which has elapsed from the end of the relevant assessment year. If less than 3 years have elapsed, clause (i) is applicable; otherwise, clause (ii) applies. As regards each Relevant AY, even the first notice under Section 148 was issued in June 2021. Thus, more than 3 years had lapsed. For AYs 2014-2015 and 2015-2016, the approval was granted by the Principal Chief Commissioner of Income Tax, who is a specified authority under clause (ii), but the approval for AYs 2016-2017 and 2017-2018 was granted by the Chief Commissioner of Income Tax, who was not a specified authority under clause (ii) of Section 151 at the relevant time unless there was no Principal Chief Commissioner or Principal Director General. The admitted position is that there was a Principal Chief Commissioner. Therefore, the reassessment proceedings in respect of AY 2016-2017 and 2017-2018 are vitiated on this count too. For reasons adverted to above, the impugned order under Section 148A(d) and the notice under Section 148 are quashed. Decided in favour of assessee.
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2024 (3) TMI 886
Validity of Reopening of assessment - proceedings drawn u/s 148A commenced by the local jurisdictional officer - non adherence to procedure of faceless regime for the purposes of governing the assessment under the Income Tax Act - HELD THAT:- As after introduction of the aforesaid two schemes, it is now mandatory for the Revenue to conduct / initiate proceedings pertaining to reassessment under Section 147, 148 148A of the Act in a faceless manner. In the present case, the proceedings under Section 148A of the IT Act, has been commenced by the local jurisdictional officer and not in the prescribed faceless manner. What is provided under sub-section (1) which has a non obstante clause is that the faceless procedure for assessment, re-assessment, re-computation and not the proceedings interior to the said assessment, re-assessment, re-computation . Further, sub-section (2) provides that the faceless procedure for assessment, re-assessment and re-computation shall be in respect of the persons, class of persons, class of cases, as may be, specified by the Central Board of Direct Taxes. The petitioner has not brought on record to submit that his case is covered by the notification issued by the CBIC. Even otherwise, the assessment year is of 2019-2020 and the faceless procedure has been introduced with effect from 01.04.2021. Thus we are of the considered view that even if the petitioner s case is covered to be completed under the faceless assessment procedure, the proceedings interior to the reassessment proceedings are not illegal as those are not completed under the faceless procedure as prescribed under Section 144B of the IT Act and the scheme framed by the CBIC. Hence find no substance in this writ petition which is hereby dismissed.
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2024 (3) TMI 885
Validity of reopening notice u/s 148 and draft assessment order issued u/s 144C - Shares transferred to foreign company[Mauritius] - HELD THAT:- On examining the notice u/s 148, and the subsequent notices u/s 142(1), it is evident that the AO decided to re-open the assessment on the basis of information gathered while undertaking assessment in respect of Info-Drive India Ltd. The annexure to notice discloses that share transfers took place during the financial year 2015-16 and eventually 10,000 shares were transferred to Infodrive Mauritius. The said document appears to indicate that 5000 shares were transferred by the petitioner to Mr.V.N.Sesharigi Rao and those shares were eventually acquired by Infodrive Mauritius. Since this transaction was not disclosed by the petitioner in his return of income, it is possible that the capital gains arising therefrom escaped assessment. Thus, there is some basis for re-opening the assessment. Petitioner has placed additional documents on record. These documents appear to indicate that the petitioner transferred the shares to Mr.V.N.Sesharigi Rao on 12.02.2015. If the said documents are found to be valid and genuine on verification, they indicate that the share transfer took place during the financial year 2014-15 and not 2015-16. This would have a material impact on the re-assessment proceedings initiated by the Assessing Officer. Consequently, the petitioner should be provided an opportunity to place these documents for consideration by the Assessing Officer before the Assessing Officer prepares the draft assessment order. In order to facilitate this process, the draft assessment order is liable to be set aside and the matter is required to be remanded to the AO. Accordingly, the draft assessment order is set aside and the matter is remanded to the Assessing Officer. The petitioner is permitted to file fresh objections and annex all relevant documents within a maximum period of two weeks from the date of receipt of a copy of this order
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2024 (3) TMI 884
Allowable expenditure u/s 37(1) - addition relating to form fees which was deposited for obtaining the wine shop through government - non-accepting the theory of commercial expediency - argued that the assessee has made multiple applications for lottery to obtaining the wine shop licence and for that he has made 20 application of each 15,000/- the payment has been made by banking channel. As the state government has not put any restriction on making number of application the genuine business expenditure being in accordance with the law cannot be denied u/s. 37(1) Whether the money paid for making 20 applications by the assessee by way of application fees paid for allotment of licence for liquor shop from his bank account as the same is allotted based on the lottery system and the fees paid is non-refundable? - HELD THAT:- Before us AO though ld. DR did not controvert the fact that the assessee has made 20 application and only one was accepted so the payment of application to increase the probability of the allotment is licence cannot be denied to the assessee when the assessee has demonstrated the payment from the bank statement, filed an affidavit confirming the fact and most important amongst all the allotment of licence is not disputed by the revenue. Thus, the money paid for making 20 applications for the allotment of liquor licence cannot be disallowed as the same is in respect of the business of the assessee and he has been allotted liquor licence shop in Jaipur as clearly confirmed by the ld. AO in the order. Considering these specific fact and confirmation of the assessee by way of an affidavit that even the amount paid for applying licence in 20 numbers for his business and therefore denial of claim of expenditure u/s 37(1) of the Act is not correct and therefore, the same is directed to be allowed and addition made by the ld. AO confirmed by the ld. CIT(A) is directed to be deleted. In terms of these observations, the appeal of the assessee is allowed.
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2024 (3) TMI 883
Validity of Revision u/s 263 - Exercise of revision jurisdiction for second time on the same issue - As per CIT AO had passed the order without making enquiries or a claim has been allowed without enquiring into the claim or that the same is not in accordance with any order or direction or instruction issued by CBDT, that shall be deemed to be erroneous in so far as its prejudicial to the interest of Revenue - HELD THAT:- Merely because in the assessment carried out pursuant to the revision order passed u/s 263 of the Act has resulted into acceptance of the claim of the assessee, that cannot be, in our view, a ground for exercise of revision jurisdiction for second time on the same issue. In this case, the earlier assessment order was set aside for de novo assessment which means that all the issues were open before the Assessing Officer. The assessee, under the circumstances, was entitled to furnish explanations and evidences on each of the issue that was open before the Assessing Officer and in relation to which the details were called upon by the Assessing Officer. There was neither any statutory power nor otherwise any other law requiring the Assessing Officer to only enhance or assess the same income which was earlier assessed. Such a proposition would be against the spirit of the law. Scope of deeming fiction created in section 263 by the amendment made by Finance Act, 2015 w.e.f. 01.06.15 - HELD THAT:- The said deeming provisions above in our view, are not applicable for the assessment year under consideration i.e., A.Y. 2012-13 Even otherwise, a perusal of the revision order passed by the PCIT shows that the ld. PCIT has not pointed out any error or discrepancy in the evidence furnished by the assessee and without examining such evidence and without counter questioning the assessee on the relevant points and even without considering the submission of the assessee furnished in reply to the show-cause notice, the ld. PCIT, in our view, was not justified in setting aside the order, simply stating that in his view more enquiries were needed to be carried out by the AO - As observed PCIT without examining the details of the share applicants and the evidence furnished by the assessee has passed a general order observing that in his view the order passed by the Assessing Officer was on an incorrect assumption of facts or incorrect application of law without mentioning as to what facts were incorrect what was the incorrect law, that was applied by the AO. Simply because the ld. PCIT felt that the Assessing Officer should have made further enquiries on the same issue or that the case was to be examined from some another angle, the same, in our view, cannot be a valid ground to set aside the assessment order. If such an action is allowed by the ld. PCIT in revision jurisdiction then, there would be no end to litigation and there would not be any finality to the assessment. The Explanation 2(c) to Section 263(1) of the Act does not give unbridled powers to the ld. PCIT to simply set aside the assessment order by saying that the AO was required to make further enquiries without pointing out as to what was lacking in the enquiries made by the Assessing Officer and why the ld. PCIT was not satisfied with the reply and evidence furnished by the assessee. Thus as relying on Amritrashi Infra Private Ltd. [ 2020 (8) TMI 407 - ITAT KOLKATA] , we do not find justification on the part of the ld. Pr. CIT in setting aside the impugned assessment order which was passed by the Assessing Officer on the directions of the ld. PCIT issued u/s 263 of the Act. Decided in favour of assessee.
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2024 (3) TMI 882
Accumulation of income u/s. 11(2) - Setting off of the earlier year excess utilization of funds - assessment of trust - set off of excess utilization of funds of earlier years against the surplus of the current year and accumulation of funds - HELD THAT:- As in assessee s own case for AY 2016-17 passed [ 2022 (4) TMI 635 - ITAT DELHI] in the case of a charitable trust, there was no provision for carry forward of the excess of expenditure of earlier years to be adjusted against income of the subsequent years. No merit in this argument of the Department. Income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied then adjustment of expenses incurred by the trust for charitable and religious purposes in the earlier years against the income earned by the trust in the subsequent year will have to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year in which adjustment has been made having regard to the benevolent provisions contained in the section 11 of the Act and that such adjustment will have to be excluded from the income of the trust u/s 11(1)(a) of the Act. Our view is also supported by the judgment of CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal [ 1993 (11) TMI 17 - GUJARAT HIGH COURT Thus we hereby direct the AO to allow the claim of the assessee regarding set off of the excess utilization of funds and accumulation of income. Assessee appeal allowed.
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2024 (3) TMI 881
Addition u/s 68 - unexplained cash credit - A.O concluded that as the assessee company had failed to substantiate the identity and creditworthiness of the share applicant/subscriber company - whether or not the dual set of conditions contemplated u/s. 68 of the Act had been satisfied by the assessee company? - Onus to prove - HELD THAT:- The assessee company in discharge of the primary onus that was cast upon it had placed on record with the A.O supporting documentary evidence substantiating the authenticity of its claim of having received share application money from the share applicant/subscriber company, viz. confirmation of the share applicant/subscriber company, bank statement, copies of the return of income, financial statements of the investor company, copy of share application forms, copy of PAN, copy of memorandum and articles of association, copy of board resolution and return of allotment in Form No.2. On a perusal of the confirmation of the share applicant/subscriber company, we find that the investor company had not merely confirmed the transaction of having invested Rs. 2.05 crore towards share application money with the assessee company but had categorically furnished the complete source from where the said investment was so made. There is no word of whisper by the A.O. as to why the aforesaid confirmation of the investor company was not to be accepted. We are unable to comprehend that now when the investor company had provided the complete details about the source of source of the investment made with the assessee company, then, on what basis the A.O without dislodging or disproving the correctness of the said explanation of the assessee company could have proceeded with and summarily drawn adverse inferences as regards the genuineness of the transaction under consideration. We are of the view that the assessee company had discharged the double facet onus that was cast upon it as regards proving the authenticity of its claim of having received genuine share application money from the aforementioned investor company, viz. M/s. Modakpriya Merchandise P. Ltd., viz. (i). by substantiating based on documentary evidence the nature and source of the amount so credited in its books of account, i.e. receipt of the share application money from the aforementioned investor company; and (ii). by coming forth with a duly substantiated explanation about the nature and source of the sum so credited in the name of the investor company, viz. M/s. Modakpriya Merchandise P. Ltd. as per the mandate of the 1st proviso to Section 68 - We find that the A.O had not uttered a word about the aforesaid documentary evidence which was filed by the assessee company in discharge of the primary onus that was cast upon it as regards proving the authenticity of its claim of having received genuine share application money from the aforementioned share applicant/subscriber company. Thus where the assessee had produced sufficient documents in the discharge of its initial onus of proving the identity and creditworthiness of the share applicant/subscriber company, then, it is incumbent on the part of the A.O to undertake some inquiry and investigation before concluding on the issue of creditworthiness, failing which, no addition could be made u/s. 68 of the Act. Decided in favour of assessee.
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2024 (3) TMI 880
Penalty u/s. 271(1)(c) - deduction u/s. 80GGC denied - second round of appeal - first round the disallowance made by the AO has been deleted by the ld. CIT (A) - quantum proceedings matter has been decided against assessee - assessee submitted invoices Rashtravadi which showed that money was paid for giving some advertisement in the news letter and cheque was drawn in the name of the editor - AO held that same is not allowable for deduction u/s. 80GGC which clearly states that deduction should be made to a political party registered u/s. 29A of The Representation of Peoples Act, 1951 or an electoral trust and newsletter Rashtravadi is neither a trust. HELD THAT:- Though the deduction is not allowable for the reasons given by the ld. AO however, for the purpose of charging assessee for furnishing of inaccurate particulars of income, what has to be seen is, whether at the time of making the claim for deduction, there was any bonafide belief and explanation for making such a claim in the return of income. From the records, it appears that the claim was made on the basis of auditor s note who had given the detailed reasoning for making such a claim that it is allowable u/s. 80GGC. CIT (A) in the first round too has held to be a bonafide claim of deduction. Though in the quantum proceedings finally the matter has been decided against assessee, but that alone is not sufficient for the penalty proceedings u/s 271(1)(c). For the purpose of penalty proceedings one has to see, whether assessee has furnished any inaccurate particulars by making a false claim or it is a claim which has not been found to be admissible by the ld. AO. Here the claim was made on the basis of an opinion of the auditor who has given his opinion which too has been found to be acceptable by the ld. CIT (A). Though such an order has been set aside subsequently and AO has made the disallowance after verification, but it cannot be held that the claim at the time of filing of return of income based on opinion of an auditor was not bonafide. Accordingly, following principles laid down in the case of Reliance Petro Products Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] it cannot be held that the claim of deduction by the assessee tantamount to furnishing of inaccurate particulars of income. Accordingly, the penalty levied by the ld. AO and confirmed by the ld. CIT (A) is deleted.Appeal of the assessee is allowed.
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2024 (3) TMI 879
Penalty levied u/s 271D as well as section 271E - mandation to record satisfaction before initiating penalty under section 271D - case of the assessee was selected for scrutiny and the assessment was completed after making addition towards unexplained interest paid/unexplained cash expenses for which AO initiated penalty proceedings u/s 271(1) - allegation of receipts of loan by way of cash and payment of interest in cash - violation of section 269SS and section 269T - As per AO assessee had not explained the bonafide or genuineness of the cash transactions HELD THAT:- In this case, the assessment order was passed on 30.12.2017 and reference was made by the Assessing Officer to the Addl. CIT on 14.03.2021 to initiate penalty proceedings. There is a time gap of more than three years In the assessment order dated 30.12.2017, the Assessing Officer has noted that penalty proceedings u/s 271(1)(c) of the Act has to be initiated separately. However, the AO has made a reference to the Addl. CIT to initiate the proceedings u/s 271D of the Act for violation of section 269SS of the Act. Once the AO decided to initiate penalty u/s 271(1)(c) of the Act, subsequently, reference was made to Addl. CIT to initiate penalty proceedings u/s 271D of the Act, the AO ought to have been recorded his satisfaction. However, Ld. AO has failed to do so. The same is in violation of CBDT Circular no. 09/DV/2016 dated 26.04.2016 advising Assessing Officer to make a reference to the Range Head regarding violation of provisions of Sec.269SS and 269T during the course of assessment proceedings itself. Thus, the action of Ld. AO was in gross violation of departmental circular. Thus as following case of CIT v. Jai Laxmi Rice Mills [ 2015 (11) TMI 1453 - SUPREME COURT ], Srinivasa Reddy Reddeppagari [ 2022 (12) TMI 1446 - TELANGANA HIGH COURT] , T. Shiju v. JCIT ( 2019 (6) TMI 603 - ITAT CHENNAI] , Smt. S.B. Patil [ 2016 (2) TMI 1206 - ITAT BANGALORE] and Anglican India Consultancy Pvt. Ltd. [ 2017 (12) TMI 1518 - ITAT DELHI] the ground raised by the Department is liable to be dismissed. Period of limitation - Penalty order has not been passed within the statutory time limit - CIT(A) has followed the judgement of Mahesh Wood Products P Ltd. [ 2017 (5) TMI 433 - DELHI HIGH COURT] and decided the additional legal ground in favour of the assessee. CIT(A) has correctly deleted the penalty levied under section 271D of the Act for both the assessment years 2015-16 and 2016-17. Since the Hon ble Supreme Court in the case of Jai Laxmi Rice Mills Ambala City (supra) wherein it was clarified that provisions of Section 271E are in pari materia with the provisions of Section 271D of the Act, no separate adjudication for levy of penalty under section 271E of the Act is warranted. Accordingly, all the appeals filed by the Revenue are dismissed.
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2024 (3) TMI 878
Disallowance of expenditure relatable to exempt income u/s. 14A of the Act r.w.r.8D - HELD THAT:- The assessee has not challenged the disallowance of other expenses @ 0.5% on average value of investment u/r.8D(iii) of the Income Tax Rules, 1962, amounting to Rs. 87,90,136/-, and thus, we are inclined to upheld the findings of the Ld.CIT(A). Disallowance of interest on borrowings u/r.8D(ii) - Assessee has filed necessary details to prove availability of sufficient own funds in excess of investments made in shares and securities and mutual funds which yielded exempt income - assessee is having sufficient own funds in excess of investments made in shares and securities, and thus, in our considered view, the case of the assessee is squarely covered by the decision South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT] wherein, as clearly held that if investments in securities is made out of common funds and the assessee has available non-interest bearing funds larger than the investment made in tax free securities, in such cases, disallowance u/s. 14A of the Act, cannot be made. AO directed to delete the additions made towards disallowance of expenditure u/s. 14A of the Act r.w.r.8D of the Income Tax Rules, 1962 on interest expenditure. Computation of book profit u/s. 115JB resorting to the computation as contemplated u/s. 14A of the Act r.w.r.8D - As decided Vireet Investment (P.) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] computation under Clause (f) to Section 115JB of the Act, is to be made without resorting to the computation as contemplated u/s. 14A of the Act r.w.r.8D of the Income Tax Rules, 1962. Thus CIT(A) is erred in upholding the reasons given by the AO to recompute book profit u/s. 115JB of the Act, by making additions towards disallowance of expenditure relatable to exempt income u/s. 14A of the Act, r.w.r.8D of the Income Tax Rules, 1962. Thus, direct the AO to delete additions made towards disallowance u/s. 14A of the Act r.w.r.8D of the Income Tax Rules, 1962, to book profit computed u/s. 115JB. Assessment of interest income during pre-commencement period under the head income from other sources' - HELD THAT:- As following the decision of Karnal Co-operative Sugar Mills Ltd. [ 1999 (4) TMI 7 - SC ORDER] we are of the considered view that the assessee has rightly reduced interest income from capital work-in-progress. CIT(A) without appreciating the relevant facts has upheld assessment of interest income under the head income from other sources . Thus, we set aside the order of the ld. CIT(A) on this issue, and also direct the AO to accept the method followed by the assessee for treatment of interest income in its books of accounts. TP adjustment - downward adjustment towards international transactions with its AE in respect of import of capital goods and enhancement by the CIT(A) towards downward adjustment in respect of import of capital goods from AE - HELD THAT:- Unless there is change in facts in subsequent year, settled position or accepted position cannot be changed. In the present case, the revenue having accepted other method followed by the assessee for benchmarking import of capital equipments from AE and further, accepted price paid by the assessee to be at ALP for Asst. years 2011-12 and 2012- 13, cannot dispute imports of capital equipment from AE and price paid by the assessee to AE under very same equipment supply agreement between the parties for the impugned assessment year. Therefore, we are of the considered view that, on this ground itself downward adjustment made by the ld. TPO and enhancement made by the ld. CIT(A) cannot be sustained. Whether adopting Other Method requires looking at the cost to the Appellant or costs or profits of AE ? - TPO is totally erred in rejecting other method as prescribed u/r.10AB of the IT Rules, 1962, by assigning improper and incorrect reasons. TPO also erred in adopting TNMM as most appropriate method, which is further fortified by the observation of the Ld.CIT(A), where the Ld.CIT(A) rightly rejected TNMM as most appropriate method for the detailed reasons given in their order and said findings of the Ld.CIT(A) is final and not challenged by the Revenue. Further, once it is accepted position in the given facts and circumstances of the case that only other method is suitable to bench mark import of capital goods from the AE, then the method followed by the assessee to compare per MW cost of power project with similar other power projects in India along with the valuation report from Chartered Engineer order of Central Electricity Regulation Commission and project appraisal report of project financiers, M/s Power Finance Corporation Limited and M/s Rural Electrification Corporation Limited and the balance loan from nationalised banks and financial institutions to be accepted as it is. If you go by logic adopted by the Ld.TPO and Ld.CIT(A) that the assessee has almost paid more than 50% excess consideration for import of capital equipment from AE, it appears that the project approved by the CERC and financed by various state Financial Institutions under power sector and their appraisal of project is flawed appears to be totally incorrect, absurd and illogical. Therefore, we are of the considered view that the method followed by the assessee to bench mark import of capital goods from AE under any other method is perfectly in accordance with prescribed method for bench marking this kind of transactions between an assessee and its AE. TPO is erred in making downward adjustment towards cost of equipment imported from AE, including enhancement of downward adjustment by the Ld.CIT(A). Hence, we approve the TP study conducted by the assessee including selection of other method as per Rule 10 AB and thus, we are of the considered view that the transactions of the assessee with its AE for import of capital equipment in terms of equipment supply agreement are at arm s length price and thus, no adjustment is required to the price paid for import of equipment to the AE. Thus, we set aside the order of the Ld.CIT(A) on this issue and direct the AO/TPO to delete downward adjustment made towards cost of capital equipment imported from AE and consequent reduction of downward adjustment to capital work in progress. Enhancement of assessment in respect of disallowance of interest u/s. 36(1)(iii) - CIT(A) assumed that said downward adjustment is diversion of interest bearing funds to AE for non-business purpose and disallowed interest expenditure u/s. 36(1)(iii) - HELD THAT:- Downward adjustment made by the TPO and upheld by the Ld.CIT(A) including enhancement has been deleted by us. Since, the downward adjustment towards price paid for cost of equipment imported from AE, has been deleted and further, the amount paid by the assessee towards cost of equipment imported from AE is held to be at arm s length price, in our considered view, additions made by the Ld.CIT(A) by way of enhancement towards interest disallowances u/s. 36(1)(iii) of the Act, cannot be sustained. Thus, we set aside the order of the Ld.CIT(A) on this issue and direct the Assessing Officer to delete additions towards disallowance of interest u/s. 36(1)(iii) from reduction of capital work in progress for the year ending 31.03.2014 relevant to AY 2014-15. Appeal filed by the assessee is partly allowed.
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2024 (3) TMI 877
TP Adjustment - working capital adjustment - HELD THAT:- Since the view taken in the cases of Parexel International Clinical Research (P.) Ltd. [ 2023 (3) TMI 1429 - ITAT BANGALORE] and also Parexel International (India) Private Limited [ 2023 (12) TMI 633 - ITAT HYDERABAD] is directly and substantially on the issue of allowability of working capital adjustment under identical circumstances, while respectfully following the same, we set aside the issue to the file of the learned Assessing Officer/learned TPO to decide the issue afresh, after considering the information furnished by the assessee. Benchmarking of the interest paid on ECBs - There is no denial of the fact that the term of the impugned ECB loan is not four years, but five years, and as observed by the learned DRP, such loan can have a spread of 300 bps. Also as perused the copies of the orders dated 29/01/2016 and 30/09/2016 under section 92CA(3) of the Act, evidencing the fact that the assessee paying interest on ECB loan at LIBOR+2.75% was accepted. We find that the payment of interest on ECB by the assessee at LIBOR+275 basis points need not be interfered with. Ground is accordingly allowed.
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2024 (3) TMI 876
Cancellation of registration granted u/s 12AB - Assessment of trust - during the course of search proceedings certain documents were seized which is suspected to contain details of the alleged cash collection for admissions of students to Yenepoya Dental College and Yenepoya Ayurveda Medical College - PCIT has cancelled the registration granted to the assessee u/s 12A/12AB of the Act w.e.f. previous year 2020-21 u/s 12A of the Act and for all subsequent previous years as per provision of section 12A(4) - as argued registration for the previous year 2020-21 relevant to assessment year 2021-22 was u/s 12A of the Act and not u/s 12AB (1), so the registration u/s 12A of the Act, which was granted to the assessee on 4.6.1992 cannot be cancelled u/s 12AB (4) HELD THAT:- Since the assessee has secured the registration u/s 12A of the Act dated 4.6.1992, which was effective till the date of 23.9.2021 and this registration granted u/s 12A cannot be cancelled u/s 12AB(4)(ii) of the Act for the previous year 2020-21 covering the assessment year 2021-22. On the other hand, he could cancel the registration from assessment year 2022-23 onwards u/s 12AB(4)(ii) of the Act. In our opinion, if there is any violation in the previous assessment year 2020-21 relating to the assessment year 2021-22, this cannot be reason to cancel the registration granted for the assessment year 2022-23 to 2026-27 as the assumption of jurisdiction u/s 12AB(4)(ii) of the Act is itself wrong on the reasons discussed herein above. The specific violation committed by the assessee in any of these assessment years is to be considered independently and not the violation committed in assessment year 2021-22 for cancelling the registration granted u/s 12AB of the Act for the assessment year 2022-23 to 2026-27. As such, we make it clear that the ld. PCIT at liberty to pass the fresh order of cancellation independently u/s 12AB(4)(ii) of the Act for these assessment years i.e. 2022-23 to 2026-27, if so advised. Accordingly, we allow this ground taken by the assessee. Even otherwise, we are of the opinion that this issue of cancellation of registration for the AY 2021-22 is covered by our earlier decision in the case of Amala Jyothi Vidya Kendra Trust [ 2024 (1) TMI 998 - ITAT BANGALORE] as held since the PCIT invoked the provisions of section 12AB(4)(ii) of the Act, which has been introduced by the Finance Act, 2022 w.e.f. 1.4.2022 so as to cancel the registration with retrospective effect from assessment year 2021-22, which is bad in law. Decided in favour of assessee.
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2024 (3) TMI 839
Application for final approval u/s 80G(5)(iii) - time limit prescribed for making an application for final approval u/s 80G - application of the assessee rejected as the assessee had already commenced its activities since long and since the time period for making application mentioned in Clause (iii) to First Proviso to section 80G(5) of the Act had already expired, therefore, the assessee could not be granted final registration u/s 80G(5) HELD THAT:- CBDT Circulars regarding the exemption of date for final applications for approval are applicable only for the institutions who stood already registered on the date of Amendment and have made application for renewal of the registration without any time break. However, the said last date which has been extended to 30.09.23 by CBDT Circular No.6 of 2023 is not applicable for the institutions who have filed application for fresh provisional registration under Clause (iv) to First Proviso to section 80G(5) of the Act and thereafter for making application under Clause (iii) to First Proviso to section 80G(5) of the Act. As observed above, for making application for final registration under Clause (iii) to First Proviso to section 80G(5) of the Act, the institution must have been provisionally registered either under Clause (i) or Clause (iv) to First Proviso to section 80G(5) of the Act. Therefore, after grant of provisional approval, the application cannot be rejected that the institution had already commenced its activities even prior to grant of provisional registration. Under such circumstances, the date of commencement of activity will be counted when an activity is undertaken after the grant of provisional registration either under Clause (i) or Clause (iv) to First Proviso to section 80G(5) of the Act. In the case in hand, the assessee admittedly has applied for final registration after grant of provisional registration under Clause (iv) to First Proviso to section 80G(5) of the Act and therefore, the application filed by the assessee is within limitation period. The issue is squarely covered by the decision of Vivekananda Mission Asram [ 2023 (12) TMI 1298 - ITAT KOLKATA] and in the case of West Bengal Welfare Society vs. CIT(Exemption) ( 2023 (9) TMI 1422 - ITAT KOLKATA] . Therefore, the impugned order of the CIT(Exemption) is set aside and the ld. CIT(Exemption) is directed to grant provisional approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. Appeal of the assessee stands allowed.
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Customs
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2024 (3) TMI 875
Misuse of Advance Authorisation for export of garments - Benefit of Customs Notification No. 99/2009 dated 11.09.2009 denied - confiscation of fabrics imported - imposition of penalties - denial of cross examination of all the witnesses - Diversion of imported goods into open market without using the same in export goods - HELD THAT:- The modus operandi adopted by the appellant, the active role of Shri Rakesh Goyal to defraud the Government have been brought out clearly by the statements of Shri Sunil Kumar, the broker and Shri Ajay Kumar Goyal, conoticee and other statements as discussed in the impugned order. Denial of cross examination of all the witnesses - HELD THAT:- The Department had partly acceded to the request for cross examination, and four witnesses were cross examined. However, the appellant has sought cross examination of a greater number of people, which is not justified. It is noted that neither the appellant nor the Director cooperated with the Department during investigations. They did not voluntarily come forward to assist the investigations to negate the allegations of the Department. It is brought on record that Shri Manish Suneja had actively connived with the appellant to divert the imported raw materials to the open market. We take note that the Revenue has investigated each consignment and has indicated as to how and where the said consignments were disposed off. This is corroborated by the statements recorded under section 108 of the Customs Act, 1962. Consequently, the findings in the impugned order that the impugned goods have not been delivered at the factory premises of the actual user as mentioned in the condition sheet of the Advance Authorization is upheld. The benefit of Notification 99/2009-Cus dt 11.09.2009 cannot be extended to the appellant in view of the overwhelming evidence of diversion of imported raw material to the open market - The contention of the appellant that the export obligation against the Advance authorisation was completed stands negated by the letter dt 30.6.2015 issued by DGFT wherein it was stated that for the advance authorization no. 3010093690 dated 07.05.2013, the show cause notice was issued to the party on 29.06.2015. In addition, vide their letter dated 13.08.2015, it was confirmed that demand notice dated 18.11.2014 had been issued. There are no reason to interfere with the impugned order. Accordingly, all the four appeals filed by the appellant are dismissed.
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2024 (3) TMI 874
Valuation of imported goods - rejection of declared value - Inclusion of lump sum and periodical patent and technology know how fee paid by appellant to the foreign company in the transaction value - order passed by Commissioner (Appeals) remanding the matter to the adjudicating authority to reconsider the rejection of transaction value is legal and proper or not. Whether the lump sum and periodical patent and technology know how fee paid by appellant to the foreign company has to be included in the transaction value is legal and proper? - HELD THAT:- As per Rule 10 (1) (c), the payment in the nature of royalty or technical know how must be a condition pre-requisite for the supply of imported goods by the foreign supplier. The royalty or technical know-how fee is to be included, if directly or indirectly it is a condition of the sale of imported machinery. The department therefore has not only to look whether there is payment of royalty or technical know how fee, but also have to examine the pricing arrangement agreed by the parties. Only if the royalty and technical know how fee is paid as a condition of sale of the machinery, it can be added to the transaction value. In the present case, there are nothing stipulated in the agreement that payment of royalty and technical know-how fee is a condition of sale of the imported machinery. The department has not been able to adduce any evidence in this regard. The Hon ble Apex Court in the case of COMMISSIONER OF CUS. (PORT), CHENNAI VERSUS TOYOTA KIRLOSKAR MOTOR P. LTD. [ 2007 (5) TMI 20 - SUPREME COURT ] had occasion to analyse the very same issue in regard to erstwhile Rule 9 (1) (c) of Customs Valuation (Determination of Price of Imported Goods), Rules, 1988. It was held that royalty and technical know how fee must be payable by the importer as a condition of import and that a distinction clearly exists between the amount payable as a condition of import and the amount payable in respect of the manufacturing activity. The royalty and technology know how fee being not a condition of sale, is not to be included in the transaction value. The issue is held in favour of the appellant. Whether the order passed by Commissioner (Appeals) remanding the matter to the adjudicating authority to reconsider the rejection of transaction value is legal and proper? - HELD THAT:- From the order passed by the adjudicating authority, it is found that in the operative portion of the order, it is stated that the transaction value is rejected . However, there is no discussion or re-determination of transaction value. The original authority has assumed that for loading the royalty and technology know how fees, the transaction value has to be rejected. The department has filed appeal before the Commissioner (Appeals) against this order of adjudicating authority contending that if the transaction value is rejected, the same ought to have been redetermined by the original authority which he has not done. The Commissioner (Appeals) in internal page 5 of the impugned order has discussed this issue and observed that once the transaction value has been set aside, it is for the adjudicating authority to redetermine the same. For this limited purpose, the matter has been remanded by him. The finding of the original authority rejecting the transaction value is patently erroneous. The department does not dispute the transaction value declared by importer and the only issue is as to whether the patent and technical know how fee is to be loaded to the transaction value. There is no requirement to remand the matter for this purpose so as to redetermine the transaction value as there is no grounds stated for rejecting the transaction value. The declared transaction value is upheld. The order for loading the royalty and technology know how fee to the transaction value is set aside. Appeal allowed.
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2024 (3) TMI 873
Refund including cash refund of DEPB/FPS scrips - denial on the ground that refund claims were hit by the principles of unjust enrichment - Determination of product prices based on the prevailing price for copper in the London Metal Exchange (LME). - HELD THAT:- In M/S. VEDANTA LTD. VERSUS CC, TUTICORIN (VICE-VERSA) [ 2018 (6) TMI 528 - CESTAT CHENNAI] , relied upon by the First Appellate Authority as well as the respondent, it is found that there is no change in the facts; admittedly, the price prevailing in LME was in no way under the control of the respondent and further, this Bench in the respondent s own case has categorically held that the final product price is based on the price prevailing in LME which has no relation to the cost of raw material including customs duty, for which reliance has been placed on the decision of the Hon'ble Supreme Court in the case of STATE OF RAJASTHAN ORS VERSUS HINDUSTAN COPPER LTD. [ 1997 (11) TMI 516 - SUPREME COURT] - This Bench has thus concluded that the stand of the Revenue insofar as unjust enrichment was concerned, had no merit. The Revenue has not been able to distinguish the above case nor is there any evidence placed on record to aver that there was any change in either facts or law, nor has the Revenue placed anything on record to state that the above final orders have been appealed to higher judicial forum and, if so, the status of the same. Hence the ratio of the above order squarely applies to the case on hand as well. The Revenue has not made out a case to disturb the finding of the First Appellate Authority in the impugned order. Consequently, Revenue s appeal lacks merit - the appeal filed by the Revenue is dismissed.
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2024 (3) TMI 872
Re-assessment of imported goods - 30 MT of PVC Resin SG 5 (Suspension Grade) - it appeared that the goods were liable to anti-dumping duty @ USD 147.96 PMT in terms of Sl. No. 2 of Notification No. 32/2 -Customs (ADD) dated 10.08.2019 instead of Sl. No. 1 of the said notification prescribed anti-dumping duty @ USD 61.14 PMT, as claimed by the appellant - HELD THAT:- The invoices and packing list, as well as Bill of Lading clearly indicate that the manufacture is M/s. Xinjiang Shengxiong Chlor-Alkali Co. Ltd. The certificate at page 41 also indicates that manufacturing is by M/s. Xinjiang Shengxiong Chlor-Alkali Co. Ltd. Company, a group company of M/s. Xinjiang Zhongtai Chemical Co. Ltd. It is thus clear from the evidence that the Alkali Company (XSCCL) was actually the manufacturer and M/s. Zhonglai Chemical Co. Ltd.(XZCCL) had only exported goods clearly mentioning that Alkali Company was the manufacturer and also that their company was exporter. Even the certificate of origin of Chinese authority mentions that exporter was M/s. Zhonglai Chemical Co. Ltd., and the name of manufacturer was M/s. Xinjiang Shengxiong Chlor-Alkali Co. Ltd and this has remained an unrebutted piece of evidence by an independent authority. Further learned advocate has provided para 33 of the final findings of Notification of Anti Dumping Authorities, which mentions Alkali Co., as producer and Chemical Co., as exporter. The Order-In-Appeal is not maintainable and the Bill of Entry was correctly filed in so far as claim of ADD at lower rate was concerned - appeal allowed in part.
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2024 (3) TMI 871
Valuation of imported goods - stamping foils - rejection of declared value - enhancement of value - statement relied upon by the department was recorded under duress or under coercion or undue influence - It is seen that the department s case is based primarily on the evidence of retrieval of data from the hard disk seized from the premises of the appellant firm - HELD THAT:- On consideration of overall circumstances in which the statement of director Shri. Ramesh K Gidwani was recorded and pattern of the same including the content of the initial statement which while indicating proforma invoice to be correct value did not mention the relevant grade of stamping foils also. The medical evidence about injuries and their treatments were mentioned while rebutting letters of the department in their retraction. It is also found that though the Hon ble High Court of Gujarat in KIRAN TEX FAB PVT LTD 1 VERSUS UNION OF INDIA THROUGH SECRETARY 6 [ 2011 (5) TMI 941 - GUJARAT HIGH COURT] has not specifically dealt with the fact of coercion while granting relief of presence of advocate. The series of statements recorded thereafter of the directors are exculpatory. It is thus clear that they were serious doubts on record as to the nature of initial statement and the onus clearly shifted on the department to indicate that the initial statement dated 13.10.2010 was voluntary and same should have been subjected to examination-in-chief by the adjudicating authority, at least in the factual background of the matter before placing reliance on the same. When statement was retracted, the investigating officer instead of pronouncing his own version as to why the statement was voluntarily, should have instead of left this job to be done by the adjudicating authority while adjudicating the matter. Another opportunity before higher officer can be an apt course of action to follow in such situation - it is found that initial statement dated 13.10.2010 could not have been relied upon without discharge of burden by the department of same being voluntary by examination of the entire statement of director by the adjudicating authority. Apart from above, it is also found that there is no evidence on record of any excess payment having been made of excess remittance, and admission of the same. Thus, it is clear that not only Customs Valuation Rules have to be sequentially followed but also that the electronic evidence can only be relied upon by the department as per provision of Section 138C which lays down various conditions in sub clause (2) about which there is no mention of the same having been followed. Thus, in the facts and circumstances of the matter enhancement of value as well as appreciation of evidence has been improperly done in the impugned order - the impugned order is therefore, set aside - appeal allowed.
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2024 (3) TMI 870
Valuation of imported goods - inclusion of royalty and the cost of advertisement incurred by the Appellant in India in assessable value - related party - Rule 10(1)(c) and Rule 10 (1)(e) of the Customs Valuation Rules 2007 - demand of differential duty alongwith interest, redemption fine and penalty - extended period of limitation - HELD THAT:- Rule 10(1)(e) 0f the Customs Valuation Rules 2007 provides for addition of all other payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller or by the buyer to a third party to satisfy and obligation of the seller, to the extent that such payments are not included in the price actually paid (transaction value). It is found that there is total absence of the prescribed condition present as the appellant is not obliged to incur any particular amount or percentage of invoice value towards sales promotion/ advertisement. Further, we find that the activity of advertisement and sales promotion is a post-import activity incurred by the appellant on its own account and not for discharge for any obligation of the seller under the terms of sale - As per the stipulation in the agreement, the appellant is obliged to be responsible for sales and distribution in its territory of distribution and further to make such expenditure in consultation with the seller, does not attract the provisions of Rule 10(1)(e) of CV Rules. The appellant and M/s. Speedo or M/s. Jockey International are no way related parties as their relationship is principal to principal basis and the fact they are sole distributor in no way makes them related parties as per the Customs Act or the Valuation Rules. Moreover, they have imported from unrelated suppliers who have nothing to do with Jockey International and the distributed products have nothing to do with the licensed products as far as royalty is concerned. The issue being one of interpretation of what should be the value there is nothing brought on record to prove any wilful suppression of facts and therefore invocation of extended period is not justified. The impugned order set aside - appeal allowed.
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2024 (3) TMI 869
Classification of imported goods - fish protein - to be classified under Customs Tariff Heading 3504 0099 or under chapter heading 0511 9190? - suppression of the correct description of the goods/ misdeclaration of goods - invocation of Extended period of limitation. Whether the imported item is fish protein as declared by the appellant or is it processed/demineralised fish scales at as per the test reports? - HELD THAT:- There is no dispute that the Fish Scales have undergone the process called Decalcification or demineralization. The resultant product essentially consists of protein and moisture, with traces of inorganic substances (i.e. crude ash) and other impurities. The decalcified Fish Scale contains various types of proteins of which Collagen Protein Type I is the major ingredient and the Proteins are made up of diverse amino acids, out of them the main amino acids that make collagen are Proline, Glycine and Hydroxy proline and this type of Protein is called as Collagen and Collagen Protein is the most abundant of the Protein in the Fish Scale are not at all in dispute. Demineralisation is considered as the primary procedure for preparation of the scale for the extraction of collagen. Based on the above it is very clear that the product imported by itself is not a protein but the protein is extracted only after further processing is being undertaken by the appellant - It is also admitted that after certain processes the protein is extracted and then exported. Therefore, the question arises whether the item is classifiable as demineralised fish scale under chapter heading 0511 or as protein under CTH 3504. Whether the product is to be classified under chapter heading 0511 9190 based on the description is demineralised fish scales allowed to be classified under chapter heading 3504 0099 as claimed by the appellant? - HELD THAT:- In the present case, the test reports and the technical literature clearly establish that the product imported is demineralised fish scale. As observed by the apex court in the above case the content of protein cannot establish the product as a protein instead it is only a source of protein. More over there is a specific entry for fish waste and it is a settled issued that specific entry will be preferred over other entries and the chapter notes, headings and the explanatory notes clearly establish the product is rightly classifiable under Chapter 5. In view of the above, the products imported by the appellant are rightly classifiable under Chapter Heading 0511 9090. As rightly stated by the Learned Senior Counsel for the Revenue in physical appearance and smell, the goods were nothing but fish scales, the only process that raw fish scales had undergone is removal of calcium from the outer layer of the fish scales, which was only a preparatory process for further extraction of protein called collagen. It is also an admitted fact that the item imported is not protein but a rich source of protein the processes undertaken by the appellant in their factory clearly bring out this aspect. Classification is based on the description at the time of import and not on the basis of its content as claimed by the appellant. Whether the appellant had mis-declared the description of the product in order to claim the benefit of advance authorization? - HELD THAT:- The question of disallowing the benefit of advance authorisation scheme during this period is not sustainable in as much as the goods were declared as fish protein and item was cleared as fish protein as per the advance authorisation scheme. Moreover, these imported goods were actually used in the manufacture of export goods and exported as per the notification 96/2009 is also not under dispute. The fact remains that all the conditions of the notification were satisfied and accordingly all the bills of entry serial number 1 to 42 are to be allowed as per the advance authorisation scheme since the above test reports holds good for all imports made during this period where no fresh samples were drawn or tested. The advance authorisation license obtained by them for fish protein is a misdeclaration and therefore the imports made by the appellants are not in accordance with the provisions of the Foreign Trade Policy. The import of these products shall be allowed only against a sanitary import permit to be issued by this department as per the procedure laid down in the first schedule annexed to this Notification. For the reasons discussed above the benefit of Advance authorisation is to be denied only prospectively for the consignments where samples were drawn and thereafter. Accordingly, the demand is upheld for 6 bills of entry from Sl.no 43 to 48. The other 9 bills of entry which are provisionally assessed are to be reassessed by reclassifying the same under Chapter Heading 0511. Whether the appellant had made any willful mis-declaration of the description of the goods which attracted invocation of extended period under the provisions of the Customs act 1962 which warranted imposition of various penalties? - HELD THAT:- Since it is a classification issue and the question of benefit of the scheme is allowed for 42 consignments and the other 9 consignments are under provisional assessments, the question of redemption fine or penalty does not arise. Appeal allowed in part.
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Securities / SEBI
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2024 (3) TMI 868
Attachment of Properties - Large-scale irregularities committed by some share brokers in collusion with the employees of Banks and Financial Institutions - diversion of funds from the banks/FIs to the individual accounts of certain brokers - Section 10 of the Special Court (Trial of Offences relating to transactions in Securities) Act, 1992 - HELD THAT:- The entire case of the Custodian regarding subsisting debts of the appellant towards respondent Nos. 6, 7 and 8 was based on a communication received from the Income Tax Department. The appropriate witness to prove such communication would be the official concerned from the Income Tax Department. However, as has been mentioned above, no witness from the Income Tax Department was examined in support of the recovery application. Even the communication forwarded by the Income Tax Department and relied upon by the Custodian was not proved by proper evidence. The appellants herein took a categoric stand in their depositions that they had returned the amounts borrowed from respondent Nos. 6, 7 and 8, but the books of accounts were not available because of lapse of time. The said plea of the appellants herein could not be treated as unnatural or an afterthought because once the transactions were completed and the loans were repaid, there was no reason for the appellants to have entertained a belief that after a period of about 13 years, they would be required to present the account books pertaining to transactions. It was neither a requirement in law nor could it be expected from the appellants herein to retain the books of accounts after more than a decade of the alleged suspicious transactions. Resultantly, the conclusions drawn and the findings recorded in the impugned judgments passed by the Special Court that the appellants herein failed to prove the fact that the amounts had been repaid to the benami companies of the notified person, namely, Pallav Sheth do not stand to scrutiny and cannot be sustained as being contrary to facts and law. Appeal allowed.
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Insolvency & Bankruptcy
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2024 (3) TMI 867
Condonation of delay in filing the Civil Appeals - Section 62 of the Insolvency and Bankruptcy Code 2016 - HELD THAT:- There is a delay of 216 days and 141 days respectively in filing the Civil Appeals. The delay is beyond the maximum period which can be condoned under Section 62 of the Insolvency and Bankruptcy Code 2016. The Civil Appeals are dismissed on the ground of limitation.
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2024 (3) TMI 866
Condonation of delay of 474 days in filing the Civil Appeals - HELD THAT:- Even before the Special Leave Petition was filed, the period of limitation under Section 62 of the IBC had come to an end - There is a delay of 474 days in filing the Civil Appeals, much beyond the period which can be condoned in terms of the provisions of Section 62 of the Insolvency and Bankruptcy Code 2016. There are no reason to entertain the Civil Appeals since they are barred by limitation - Since the appellants seek to withdraw the appeals, the appeals dismissed as withdrawn.
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2024 (3) TMI 865
Admission of section 9 application - Insurance Company has made payment to the Operational Creditor of its claim - third party liability - Liability of Corporate debtor to discharge its debt - preexisting dispute between the parties - it was held by NCLAT that Section 9 Application is fully maintainable and the fact that Insurance Company has made payment to the Operational Creditor of its claim, cannot be a ground to reject Section 9 Application - HELD THAT:- The order of the National Company Law Appellate Tribunal dated 13 December 2023 does not raise any substantial question of law so as to warrant interference in the appeal under Section 62 of the Insolvency and Bankruptcy Code 2016. However, the time which was granted by the NCLAT by its order dated 13 December 2023 for deposit shall stand extended, on the request of the counsel for the appellant, until 8 April 2024. In the event of default, the consequences as envisaged in the order of the NCLAT shall follow. Appeal dismissed.
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2024 (3) TMI 864
Initiation of CIRP - Failure to make deposits the entire OTS amount - section 7 still pending - It is submitted that the Appellant is ready to deposit the entire OTS amount which was earlier arrived along with 12% interest in the Court to show his bonafide - HELD THAT:- Admittedly, Section 7 application is still pending before the Adjudicating Authority. From the facts which have been brought on the record, it is clear that the deposit could not be made by the Appellant as per our order dated 29.02.2024 by 10.03.2024 since letter dated 29.02.2024 could not be responded before the 10.03.2024. Since Section 7 application is pending before the Adjudicating Authority, it is for the Adjudicating Authority to take a call on the submissions and offer made by the Appellant. The Appellant and the investors as submitted before the Court may deposit the amount of Rs.167 Crores along with 12% interest and Rs.87 Crores plus 12% interest before the NCLT within 10 days as prayed by way of FDR in favour of Registrar, NCLT. If the said deposit is made or not made, the Adjudicating Authority shall take appropriate decision on Section 7 application after hearing both the parties. There are no reason to keep the Appeals pending - Both the Appeals are disposed of accordingly.
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2024 (3) TMI 863
Approval of Resolution Plan - Consideration of Resolution Plan from Non-Listed Applicants - Authority of CoC to Modify Invitation for Expression of Interest (EOI) - Interpretation of Regulations 39(1)(b) and 36A of the CIRP Regulations, 2016 - HELD THAT:- The Regulation clearly provides that the committee shall not consider a resolution plan received from an application whose name does not appear in the list of PRAs. Admittedly, neither Patanjali nor other two applications have submitted any EOI nor their name was reflected in the List of PRAs - Regulation 36A which provide for Invitation for Expression of Interest also empowers the CoC to modify the invitation for Expression of Interest. It is always open for the CoC to take a decision to not proceed on the Applications, EOI received and take a decision for issuance of fresh Form G and permit other applicants to participate. When no fresh Form G has been issued, it is not open for any new applicant to submit application before the Adjudicating Authority for being permitted to participate in the CIRP and submit Resolution Plan. In any view of the matter, affidavit has been filed by the CoC where resolution has been brought on record that the CoC has now decided not to consider any additional new entrants and they will confine their consideration to Resolution Applicants whose names were reflected in the final list of Prospective Resolution Applicants dated 07.11.2023. The Committee of Creditors having taken resolution not to consider any additional new entrants, we are of the view that impugned order dated 12.02.2024 and 21.02.2024 cannot be sustained. Both the Appeals are allowed.
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PMLA
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2024 (3) TMI 862
Grant of bail - money laundering - proceeds of crime - scheduled/predicate offences - hatching the criminal conspiracy and conceptualizing the idea of accommodation entries against cash - whether the appellants have been able to satisfy the twin conditions laid down in Section 45 of the PMLA? - HELD THAT:- It is confined to deal with the bare minimum facts necessary for the purpose of deciding whether the appellants have been able to satisfy the twin conditions laid down in Section 45 of the PMLA, that is (i) there are reasonable grounds for believing that the persons accused of the offence under the PMLA is not guilty of such offence; and (ii) that he is not likely to commit any offence while on bail. In GAUTAM KUNDU VERSUS MANOJ KUMAR, ASSISTANT DIRECTOR, EASTERN REGION, DIRECTORATE OF ENFORCEMENT (PREVENTION OF MONEY LAUNDERING ACT) GOVT. OF INDIA [ 2015 (12) TMI 1133 - SUPREME COURT] , while holding that the conditions specified under Section 45 of PMLA are mandatory, it was observed the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 CrPC. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money-laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant. The offence of money laundering as contemplated in Section 3 of the PMLA has been elaborately dealt with by the three Judge Bench in VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. [ 2022 (7) TMI 1316 - SUPREME COURT] , in which it has been observed that Section 3 has a wider reach. The offence as defined captures every process and activity in dealing with the proceeds of crime, directly or indirectly, and is not limited to the happening of the final act of integration of tainted property in the formal economy to constitute an act of money laundering. Of course, the authority of the Authorised Officer under the Act to prosecute any person for the offence of money laundering gets triggered only if there exists proceeds of crime within the meaning of Section 2(1)(u) of the Act and further it is involved in any process or activity - The property must qualify the definition of Proceeds of Crime under Section 2(1)(u) of the Act. As observed, in all or whole of the crime property linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of Proceeds of Crime under Section 2(1)(u) will necessarily be the crime properties. In the instant case, it has been found during the course of investigation from the statements of witnesses recorded under Section 50 that the appellant Satyendar Jain and his family directly or indirectly were owning/controlling the companies - M/s. Akinchan Developers Pvt. Ltd., M/s. Paryas Infosolution Pvt. Ltd., M/s. Indo Metalimpex Pvt. Ltd. and M/s. Mangalayatan Projects Pvt. Ltd. He was the conceptualizer, initiator and supervisor of the accommodation entries totalling to Rs.4.81 Crores approximately, which were received from the Kolkata based entry operators in the Bank accounts of the said four companies - also, the witnesses had clearly stated that Satyendar Kumar Jain was the conceptualizer, initiator, fund provider and supervisor for the entire operation to procure the accommodation, share capital/premium entries. Though, the shareholding patterns of the said four companies are quite intricate, they do show that Mr. Satyendar Kumar Jain through his family was controlling the said companies directly or indirectly and that Mr. Satyendar Kumar Jain was the beneficial owner within the definition of Section 2(1) (fa) of PMLA. There remains no shadow of doubt that the appellant- Satyendar Kumar Jain had conceptualized idea of accommodation entries against cash and was responsible for the accommodation entries totalling to Rs. 4.81 crores (approx.) received through the Kolkata based entry operators in the bank accounts of the four companies i.e. M/s. Akinchan Developers Pvt. Ltd., M/s. Paryas Infosolution Pvt. Ltd., M/s. Indo Metalimpex Pvt. Ltd. and M/s. Mangalayatan Projects Pvt. Ltd., by paying cash and the said companies were controlled and owned by him and his family. Though it is true that a company is a separate legal entity from its shareholders and directors, the lifting of corporate veil is permissible when such corporate structures have been used for committing fraud or economic offences or have been used as a facade or a sham for carrying out illegal activities. The appellants have miserably failed to satisfy us that there are reasonable grounds for believing that they are not guilty of the alleged offences. On the contrary, there is sufficient material collected by the respondent-ED to show that they are prima facie guilty of the alleged offences - it is not possible to hold that appellants had complied with the twin mandatory conditions laid down in Section 45 of PMLA. The High Court also in the impugned judgment after discussing the material on record had prima facie found the appellants guilty of the alleged offences under the PMLA, which judgment does not suffer from any illegality or infirmity. Appeal dismissed.
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2024 (3) TMI 861
Money Laundering - Validity of framing of charges - dealing in skin and organs of prohibited animals - proceeds of crime - scheduled offence - It is submitted that the trial court has failed to consider that in fact no proceeds of crime has been generated from the goods allegedly seized from the premises of the applicants - HELD THAT:- The allegations against the applicants are to tune that they were indulged in dealing with the skin and organs of prohibited animals from before the year 2007 and the same is punishable under various provisions of the Wildlife Act and the Indian Forest Act. It is also alleged that applicants have parked proceeds of crime earned by them in the bank-account of their mother, which has been used by her in purchasing two properties. Sudden inflation in income tax returns of Smt. Zaibunnisha is also highlighted in order to substantiate the allegations of money laundering. It is also the case of the Enforcement Directorate that these properties were earned after enactment of PMLA. The whole case of the applicants rests on presumption that the valuation of the certain articles seized from the houses of applicants has not been properly done and as per the definition of property contained in section 2(y) of the PMLA, the offence, if is committed, pertaining to the value of more than 30 Lakh, the applicants only in that condition may be prosecuted under PMLA, and at the relevant time, the offence under Wildlife Act was falling under Chapter B of Schedule appended with PMLA. Much emphasis has been given on the fact that the valuation of the seized articles is based on a website run by an NGO. However, allegations are also to tune that apart from seized articles the proceeds of crime has also been used for purchase of some properties by mother of the applicants. Thus, it is not the seized articles alone whose valuation is to be seen. Moreover, when there is no known mode of assessing the value of seized articles as they could not be sold in open market legally, the value of these articles may be what these articles may fetch anywhere may be taken as the market value of the same and it is why the emphasis has been given in section 2(zb) on market value - The applicants have not declared in their application as to on what basis they are claiming the value of proceeds of crime less than 30 Lakh. Thus, what is the market value of the articles seized from the premises of the applicants is a disputed question of fact which could only be adjudicated by the trial court, during the course of trial. Similarly, if the income tax returns filed by the mother of the applicants has not been disputed, the same may not be the sole ground of the discharge of applicants. Law leans in favour of trial and an accused could only be discharged if there is no prima facie case available against him. At the stage of discharge or framing of charge the trial court was only required to sift the material sent with the complaint in order to assess whether there is a p rima facie case against the applicants and meticulous exercise of appreciating evidence or material, in order to assess the probative value of the evidence collected by the prosecution, was not required. This application moved by the applicants under section 482 CrPC is dismissed.
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Service Tax
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2024 (3) TMI 860
Levy of service tax - Business Auxiliary service or not - commission on sale of liquor - it was held by Appellate Tribunal that the transaction of purchase and sale of liquor by the Corporation will not fall within the ambit of BAS and would, therefore, not be taxable - HELD THAT:- Following the order dated 16.07.2018 passed by a coordinate Bench of this Court in respect of the very same assessee in THE COMMISSIONER OF CENTRAL EXCISE JAIPUR I VERSUS RAJASTHAN STATE BEVERAGES CORPORATION LTD. [ 2018 (7) TMI 1057 - SC ORDER ] and on the same questions which arise in the aforesaid cases, this appeal is also dismissed.
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2024 (3) TMI 859
Levy of Service tax - Business auxiliary service - commission retained/earned towards the service rendered by them to the co-GSA/IATA - extended period of limitation - HELD THAT:- On going through the explanation given under Section 65(19) commission agent means a person who acts on behalf of as a person and causes sale or purchase of goods, provision or receipt of services, for a consideration and includes any person who does some of the things, while acting on behalf of another person. It is alleged that the appellants are commission agents for their co-operators and are earning commission for the same and therefore they are rendering business auxiliary service to their co-operators. However, the practice of the trade, if observed closely, would indicate that the appellants are buying tickets on behalf of their customers/clients and not definitely on behalf of their co-operators. The entire surmise in the show cause notice is ill conceived. The relation between the appellant and the co-operators appears to be one of the principal-to-principal basis. If at all the appellants are presumed to be acting on behalf of somebody else for a commission, it is their customers/clients for whom they are buying tickets from other GSA/IATA operators. However, this is not the allegation in the show cause notice. Therefore, there are no principal and agent relationship between the other GSA/IATA operators and the appellants. Tribunal had an occasion to deliberate on the very same issue wherein Tribunal came to the conclusion that purchase and sale tickets for a commission between two agents operating under GSA/IATA does not amount to rendering any service exigible to service tax. Tribunal in the case of C.S.T., SERVICE TAX- AHMEDABAD VERSUS M/S OM AIR TRAVELS PVT. LTD. [ 2019 (6) TMI 1022 - CESTAT AHMEDABAD] held that In the fact that the appellant is purchasing the ticket on discounted price and selling the same at higher price to the customer, the difference, in our view, is a trade margin during the process of sale and purchase of the tickets. Therefore, we do agree with the contention given by the Ld. Commissioner (Appeals). Accordingly, the demand raised on trade margin of purchase and sale of the tickets shall not be taxable. Invocation of Extended period of Limitation - HELD THAT:- There is considerable force in the arguments of the Ld. counsel for the appellants; revenue did not bring about any evidence to allege suppression etc. with intent to evade payment of service tax; moreover, it is found that when regular audits were conducted, revenue having raised the issue in subsequent audits, cannot take recourse to invoke extended period. The inevitable conclusion one can draw is that the appellants are not rendering any Business Auxiliary Service to the other GSA/IATA operators and therefore the commission earned by them is not exigible to service tax as proposed in the show cause notice and confirmed in the impugned order. Therefore, the impugned order is not legally sustainable and is liable to be set aside - Appeal allowed.
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2024 (3) TMI 858
Exemption from service tax - rent-a-cab service - State Transport Undertaking - reverse charge mechanism - Extended period of limitation - HELD THAT:- The issue is no more res integra. In BANGALORE METROPOLITAN TRANSPORT CORPORATION VERSUS COMMISSIONER OF SERVICE TAX [ 2015 (2) TMI 100 - CESTAT BANGALORE] it has been held at the business undertaken by BMTC is to provide bus facility /transport facility to the citizens of Bangalore city and main activity is that running the buses in the city for convenience of the citizens and thus it cannot be called as a rent-a-cab service operation. The definition of cab under section 65 (20) of Finance Act, 1994 of maxicab under section 65 (70) of Finance Act read with Section 2 (22) of Motor Vehicle Act and of rent-a cab scheme operator defined under section 65 (91) along with the meaning of taxable service in relation to renting of cabs given under section 65 (105)(a) of the Finance Act, 1944 have been examined by the Tribunal in BMTC case. The Tribunal has held that definition itself excludes State Transport Undertakings (Bangalore s BMTC in said case) from the category of service providers. Though in the present case the appellant is alleged to be the recipient of rent-a- cab service and is held liable under reverse charge mechanism (RCM) it is observed that Notification No. 25/2012 dated 20.6.2012 exempts State Transport Undertaking from any tax liability. The decision of Maulana Azad is well applicable to present case - appellant is not liable to service tax for receiving buses and taxis on hire. The appellant cannot be made liable to tax not even under RCM for receiving legal consultancy services. Extended period of limitation - HELD THAT:- There is no evidence found on record proving such intent / mensrea with the appellant to evade payment of service tax. The appellant have already been held not liable to pay the amount confirmed. Resultantly, it is held that the department has wrongly invoked the extended period of limitation while issuing Show Cause Notice. There is no rational in confirming the impugned demand even under reverse charge mechanism - the demand on both the counts is wrongly being confirmed by the adjudicating authority below. Hence the order under challenge (Order-in-Original) is hereby set aside - appeal allowed.
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2024 (3) TMI 857
Failure to pay appropriate tax - Revenue from Programme and Advertising Service - quantum of service tax paid by them was not commensurate with the income accounted in the books of accounts - demand alongwith penalty - HELD THAT:- The dispute arose due to the lack of submission of data in a timely manner and a proper explanation of facts in correlation with the law, by the Appellant. Now that the Appellant is ready to present the data which as per their calculation leaves a very small amount of duty to be paid, it would serve the ends of justice if the same is verified and then examined in connection with the law and Boards Circulars referred to by the Appellant. The matter hence merits to be examined afresh. The impugned order set aside - matter remanded back to the original authority for de novo adjudication - appeal disposed off.
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2024 (3) TMI 856
Exemption for export promotion under N/N. 18/2009-ST dated 01.07.2009 - seeking relief of taxes paid on the services used in manufacture of export products - failure to submit the relevant documents showing the payment of commission to their foreign commission agents - HELD THAT:- The Hon ble Apex Court in a Constitution Bench judgment in S. AMARJIT SINGH KALRA (DEAD) BY L. RS. ORS. VERSUS PRAMOD GUPTA (DEAD) BY L. RS. ORS. [ 2002 (12) TMI 607 - SUPREME COURT] observed Laws of procedure are meant to regulate effectively, assist and aid the object of doing substantial and real justice and not to foreclose even an adjudication on merits of substantial rights of citizen under personal, property and other laws. Procedure has always been viewed as the handmaid of justice and not meant to hamper the cause of justice or sanctify miscarriage of justice. It is not disputed that there has been a delay in filing the EXP-2 Return the reason for which has been explained by the Appellant. This delay is not shown to cause any prejudicial consequence for Revenue. However, the Appellant had furnished material which shows a substantial compliance with the requirements of the exemption notification - While determining whether a provision is mandatory or directory, in addition to the language used in the notification, the context in which the provision is used and the purpose it seeks to achieve should also be examined. A beneficial legislation should not be viewed very rigidly. It is noted that there were no allegations of any blame worthy act by the Appellant. The claim should hence have been scrutinized and the Appellant allowed to satisfy whatever doubts that the Original Authority had. In the circumstances, the substantial rights of the appellant should not have been denied on procedural grounds. An order imposing a penalty involves an exercise of judicial discretion, which requires the decision to be fair, reasonable and objective. On the obverse side, anything arbitrary and whimsical would not satisfy the said requirement. This action of the Lower Authority has surprisingly found no comment in the impugned order and is defective to that extent. A simple act of claiming a tax benefit cannot be at the pain of being held liable for penalty. Such an order cannot be allowed to survive - there are no hesitation in not only quashing the penalty but also in setting aside the order. Matter remanded back to the Original Authority for de novo adjudication on merits of the Appellants claim for duty exemption as per Notification 18/2009 Service Tax, dated 07/07/2009 only - appeal disposed off.
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2024 (3) TMI 855
Taxable service or not - services received by appellants from M/s Hoshizaki Europe BV - post negative list regime, with effect from 01.07.2012 - services can be treated as Business Auxiliary Service as per the definition given in Section 65(19) of the Finance Act, 1994 during pre-negative list period or not - intermediary services for the purposes of Place of Provision of Services Rules, 2012 (POPS) - supply of bought out material as free supplies by the appellants to the service provider of construction of their factory building - extended period of limitation - penalty under Section 78 of the Finance Act, 1994 - period commencing from April, 2014 to September, 2015. HELD THAT:- It transpires that for the period relating to the pre-negative list regime i.e., prior to 01.07.2012, the taxability was determined in terms of coverage of an activity under the service tax net to be defined as taxable service under Section 65(105) ibid, which enumerated each of the specified services. For the period postnegative list regime, the category of services hitherto defined under the erstwhile regime were merged under a common phrase i.e., service as defined under Section 65B(44) ibid, which was brought into effect from 01.07.2012. In the present case, the disputed transactions have been undertaken during April, 2014 to September, 2015. Hence, there is no legal basis on which the services rendered in marketing and sales promotion could be examined with respect to definition of Business Auxiliary Services that existed in the past i.e., prior to 01.07.2012 - Further, 65B(55) ibid does not provide for the words and expressions used prior to 01.07.2012 to be made applicable in respect of Chapter V of the Finance Act, 1994 for the purpose of service tax. Hence, the findings at para 8 of the impugned order does not have any legal basis, and thus on this basis itself the demand of service tax on marketing and sales promotion service received by the appellants on RCM basis, is liable to be set aside. The nature and value of the services provided are known to both parties i.e., the service provider and a service receiver. We also find that the consideration charged by Hoshizaki Europe is independent of the consideration received by the appellants in respect of the goods supplied by them to overseas customers. Thus the principle of separation of value, is also fulfilled in the present case. The main transaction between the appellants and the customers situated abroad, is the sale of goods manufactured by the appellants; and this is distinct and is completely different from the services provided by Hoshizaki Europe BV. Thus, all the three criteria laid down by the CBIC s clarification is fulfilled in the present case to categorize the disputed services, as intermediary services . Thus, in terms of specific Rule of the POPS which would more appropriately apply in this case, it is found that Rule 9 of POPS is applicable to the intermediary service as it is the more appropriate rule for determination of place of provision of the service - the place of provision of service in the present case would be the location of the service provider i.e., Dubai. Hence, in respect of intermediary services provided by the service provider from Dubai to the appellants in India, would not be exigible to service tax under Section 66B ibid. Service tax levy on free supplies under the works contracts transaction - HELD THAT:- The Larger Bench of this Tribunal in case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] having similar set of facts of the case, had concluded that the value of goods and materials supplied free of cost by a service recipient to the provider of taxable construction service, would be outside the taxable value or the gross amount charged in terms of Section 67 ibid. Extended period of limitation - HELD THAT:- This Tribunal in the case of RELIANCE INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, LTU, MUMBAI [ 2016 (6) TMI 1108 - CESTAT MUMBAI] had decided the issue on the basis various judgements where it was held that In the instant case also if any tax was payable it could have been available immediately to the Appellant, thereby rendering the entire dispute being revenue neutral. This being the case the invocation of extended period of limitation is clearly not justified - the issue of invoking extended period of time for demand of service is answered in favour of the appellants. There are no strong grounds to hold that the services received by the appellants from Hoshizaki Europe BV from its Dubai office for marketing and sales promotion services are liable for payment of service tax. Further, the value of goods and materials supplied free of cost by the appellants to the service provider of taxable construction service, would be outside the taxable value or the gross amount charged in terms of Section 67 ibid. Consequently the demands of service tax and imposition of penalties confirmed in the impugned order is not legally sustainable. The adjudged demands confirmed on the appellants in the impugned order dated 14.02.2018 is liable to be set aside - Appeal allowed.
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2024 (3) TMI 854
Manner of payment of Pre-deposit amount before filing of appeal against demand of service tax - Admissibility of payment of pre-deposit using DRC-03 - The appellant argued that they had deposited the pre-deposit using the input tax credit available in their DRC-03 under CGST regime. - HELD THAT:- Hon ble High Court of Bombay in the writ petition filed in the case of SODEXO INDIA SERVICES PVT. LTD. VERSUS THE UNION OF INDIA AND ORS. [ 2022 (10) TMI 264 - BOMBAY HIGH COURT] has clearly pointed out that there is not proper provision to accept payment of pre-deposit under Section 35F of the Central Excise Act, 1944 through DRC-03. In the decision of Tribunal, in the case of M/S. SAPHIRE CABLES SERVICES PVT. LTD., M/S. TENORMAC ENTERPRISES PVT. LTD. AND M/S. NETIZEN ENGINEERING PVT. LTD. (FORMERLY KNOWN AS RELIANCE INFOCOMM ENGINEERING PVT. LTD.) VERSUS COMMISSIONER OF CGST CE, BELAPUR [ 2023 (7) TMI 544 - CESTAT MUMBAI] reliance on placed on the fact that the relief was granted by the Hon ble Bombay High Court in the case of Sodexo India Services Pvt. Ltd. The Hon ble High Court in the said case has clearly observed that there is no provision for using credit in DRC-03 for the purpose of pre-deposit. It is obvious that the relief was granted by the Hon ble High Court in exercise of writ jurisdiction. The Tribunal does not have that liberty. In this background, the decision of the Tribunal in the case of M/s Saphire Cables Services Pvt. Ltd. Ors. cannot be applied to the instant case. The applications seeking admission on the strength of pre-deposit made using through DRC-03 are rejected. M/s Army Welfare Housing Organization are at liberty to file appeal after paying pre-deposit in any permissible manner.
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2024 (3) TMI 853
Nature of activity - manufacture or service - making of photo books/albums, calendars, brochures etc. to their different customers - whether the activity of the assessee amounts to manufacture or whether it falls under photography service prior to 1.7.2012 and whether would fall under the definition of service for the period w.e.f 01.07.2012 to 30.07.2015? - HELD THAT:- The issue stands covered by the decision of the Tribunal in the case of M/S. VENUS ALBUMS CO. PVT. LTD. VERSUS CCE, CHANDIGARH/LUDHIANA/AMRITSAR [ 2018 (11) TMI 754 - CESTAT CHANDIGARH] . The Tribunal in the said case analyzed the issue relating to the very same activity and held that the activity would amount to manufacture and does not fall under service . The activity carried out by assessee amounts to manufacture . The demand of service tax cannot therefore sustain. The impugned order to the extent of confirming the demand, interest and imposing penalties is set aside. Appeal allowed.
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Central Excise
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2024 (3) TMI 852
Benefit of exemption on Nozzle and Nozzle Holders cleared for use in the manufacture of Injectors - it was held by CESTAT that The nozzle holder and nozzle are entitled for the benefit of Notification Nos. 217/85-C.E., dated 8-10-1985 and 75/86-C.E., dated 10-2-1986 - HELD THAT:- The Customs, Excise and Service Tax Appellate Tribunal, Bangalore has arrived at correct conclusion. The Civil Appeal is, therefore, dismissed.
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2024 (3) TMI 851
Confiscation of spirit - Section 43A of the Karnataka Excise Act, 1965 - HELD THAT:- When the appellant herein was not a party respondent before the High Court and since there is no dispute that the appellant herein, was not made as an accused in the FIR, the observations pertaining to it were totally uncalled for. As such, the words as well as the buyer expunged from paragraph 6 of the impugned order so also the observations made in paragraph 8 against the buyer. Appeal allowed.
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2024 (3) TMI 850
Classification of the product manufactured by the appellant during the periods from July 1996 to December, 1996 and July, 1998 to September, 2000 - steel tubes for telephone and telegraph poles which are known as Hamilton Tubes - it was held by CESTAT that The appeals are accordingly disposed of by holding that the product in question is classifiable under sub-heading 7306.90 as held by the Tribunal - HELD THAT:- Having considered various judgments relating to different enteries with respect to the product in issue, the Customs, Excise And Service Tax Appellate Tribunal (CESTAT) has correctly arrived at the right conclusion to dismiss the appeals. The appeals are dismissed.
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2024 (3) TMI 849
Exemption from duty - Fatty Acid, Wax and Gum falling under Ch.15220090 of the First Schedule to Central Excise Tariff Act, 1985 (Tariff Act) arsing in course of manufacture of refined vegetable oil, are to be treated as waste or not - eligibility for exemption under N/N. 89/1995-C.C. dated 18.05.1995 - Extended period of Limitation - HELD THAT:- The issue is covered by the decision in M/S RICELA HEALTH FOODS LTD., M/S J.V.L. AGRO INDUSTRIAL LTD., M/S KISSAN FATS LIMITED VERSUS CCE, CHANDIGARH, ALLAHABAD [ 2018 (2) TMI 1395 - CESTAT NEW DELHI] where Larger Bench held that Noting that the reference is to decide whether these are to be treated as waste for the purpose of exemption Notification No. 89/95-C.E. we note though the excisability of the product itself is seriously in dispute as per the opinion expressed by us, as above, these cannot be considered as anything other than waste and as such will be covered by the exemption Notification No. 89/95-C.E. Considering the aforesaid observations made by the Larger Bench, there are no reason to differ from the same and the impugned order confirming the demand in respect of the Fatty Acids treating them as bye-product set aside. Extended period of limitation - HELD THAT:- Since the issue on merits is answered in favour of the appellant/assessee, the issue of extended period of limitation is not required to be gone into. Appeal allowed.
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2024 (3) TMI 848
Clandestine removal - it is alleged that respondents have shown excess manufacture in order to avail excess refund to the tune of Rs. 60 lakhs - burden of proof lies with the prosecution or not - suppression of actual consumption of LDO required for manufacturing unit quantity of final product - Extended period of limitation - HELD THAT:- Revenue has missed out the fact that consumption of fuel depends on the atmospheric temperature, quality of raw material, condition of the furnace, initial temperature of furnace, per day frequency of the heats and the skill of the labourers. Revenue has not discussed this aspect at all. Moreover, the consumption of raw material i.e. copper scrap was not analyzed. Even the stock of fuel, raw material and final product was not taken at the time of audit so as to ascertain where the records maintained by the respondents were correct or otherwise. It is very surprising that the clearance of, allegedly excess produced, goods to different parties was not established; not even statement of a single buyer has been recorded; no verification at the transporter s to falsify the claim of the appellants that they have supplied the ingots manufactured by them to others. Without conducting any such investigation, department cannot establish claim of excess manufacture just by extrapolating the results of study of a single heat or a few heats. The charge levelled against the respondents is a serious charge. A charge of this nature cannot be summarily proved without conducting any commensurate investigation. It is now a settled principle that clandestine removal is a charge and has to be proved with all other concerned activities. The adjudicating authority has correctly analysed the facts of the case and has drawn legally sustainable conclusions - Appeal of Revenue dismissed.
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2024 (3) TMI 847
Process amounting to manufacture or not - classification of Savory Oats to be under 19042000 or not - period February 2015 to January 2016 - HELD THAT:- It is brought out that the very same issue was decided by the Tribunal in the appellant s own case for different periods wherein the Tribunal has set aside the demand of Excise Duty, interest and the penalties. Following the decision of the Tribunal in the assessee s own case in M/S. AMEYA FOODS VERSUS THE COMMISSIONER OF GST CENTRAL EXCISE, COIMBATORE AND MR. I.R. NARAYAN VERSUS THE COMMISSIONER OF GST CENTRAL EXCISE, COIMBATORE [ 2023 (8) TMI 1428 - CESTAT CHENNAI] which has been affirmed by the Hon ble Apex Court in THE COMMISSIONER OF GST AND CENTRAL EXCISE VERSUS M/S AMEYA FOODS [ 2024 (2) TMI 369 - SC ORDER] , the demand in the present case requires to be set aside - It was held by Tribunal that the product Savoury Oats / Silk Oats merit classification under CETH 1104 12 00 and not under 1904 20 00 as determined by the authorities below. The impugned order is set aside. The appeal is allowed.
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2024 (3) TMI 846
Refund of the amount deposited through DRC-3 - HELD THAT:- The pre-deposit in the present case may be made within four weeks. List on February 28, 2024.
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2024 (3) TMI 838
Prayer for some time to make the pre-deposit - applicant states that as the amount was deposited through DRC-3, the applicant will seek refund as has also been advised in the communication dated November 24, 2023 sent by the Central Board of Indirect Taxes and Customs - HELD THAT:- As prayed, the amount that has to be deposited in the present appeal shall be deposited within six weeks. List on March 11, 2024.
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2024 (3) TMI 837
Requirement to make pre-deposit - appellant intends to withdraw the amount already deposited - HELD THAT:- The predeposit amount that has to be deposited in the present appeal shall be deposited within four weeks. List on March 04, 2024
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CST, VAT & Sales Tax
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2024 (3) TMI 845
Maintainability of petition - availability of alternative remedy - Constitutionality of the certain provisions of the Odisha Entry Tax Act, 1999 - HELD THAT:- The pre-deposit made by the appellant during the pendency of the Writ Petition(s) shall continue till the disposal of the Writ Petition(s). Appeal disposed off.
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2024 (3) TMI 844
Jurisdiction Of Authorities - Imposition of entry tax on Indian Made Foreign Liquor ('IMFL') - not placed item in the schedule to the New Act - replacement of the New Act as earlier Act has been declared ultra virus by the High Court - liability non est in law - HELD THAT:- It is clear that the provisional assessment was done as per the earlier Act of 2000 while final assessment has been done under the New Act. The Appellate Authority while passing the order dated December 31, 2022 has not considered the arguments placed by the petitioner with regard to the absence of goods in question in the schedule. It is to be noted that if the goods in question are not in the schedule of the New Act, the authorities had no jurisdiction whatsoever to impose entry tax on the same. This question is going to the very root of the matter and the authority should have considered and answered the same. Thus, the orders passed are bereft of any reason with regard to imposition of entry tax on IMFL that is not even an item in the schedule to the New Act. Thus, impugned orders are unreasoned and have been passed in a non speaking manner. Accordingly, the impugned order dated December 31, 2022 is quashed and set aside. The instant writ petition is allowed.
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2024 (3) TMI 843
Direction to make pre-deposit under section 73(5) of the GVAT Act as a condition to proceed with the matters on merits filed under section 73 of the GVAT Act - HELD THAT:- In case of M/s. Aims Biotech, when the Tribunal was passing the order dated 05.04.2022 without reference to the order passed in M/s. Nirman Life Science, neither the appellant nor learned advocate for the respondents have drawn attention of the Tribunal with regard to the order passed in case of the appellant - Tribunal has also imposed the cost of Rs. 6000/- upon the appellant while passing aforesaid order. The impugned order passed by the Tribunal is also quashed and set aside and the matter is remanded back to the First Appellate Authority for fresh hearing to determine the pre-deposit as per section 73 of the GVAT Act. First Appellate Authority shall hear both the appeals of M/s. Aims Biotech as well as M/s. Nirman Life Science together within a period of two months from the date of receipt of copy of this order after deposit of the cost of Rs. 6000/- by the assessee in each case. The appeals are accordingly disposed of.
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Indian Laws
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2024 (3) TMI 842
Rejection of bid as petitioner had not submitted the IT return - Specific criteria for bids of the tenders - petitioner submits that no specific years for filing Income Tax Returns were mentioned in the Tender Notice. Further in terms of Section 44 AB(a) read with Explanation 2 of Section 139 of the Act, 1961, the due date for submitting the return of income for auditing the same was 31st day of October of the assessment year, as the petitioner s gross receipts was over Rs. 1 Crore for the year ending 31.03.2022. As such, there was no opportunity for the petitioner to have submitted the IT return for the year 2022-2023, in terms of the tender notice dated 06.08.2023 HELD THAT:- The clauses of the tender notice requiring the bidders to submit their IT Return for the last Assessment Year and the Financial Statement of last 3 years from the Chartered Accountant have been submitted by the petitioner. The only problem that has arisen is that the State respondents wanted the IT Return for the Assessment Year 2023-2024. This Court is well aware of the judgments of the Supreme Court, which is to the effect that the decision-making process of the employer or the owner of project in accepting or rejecting the bid of a tenderer should not be interfered with, unless the decisions are found to be arbitrary and irrational. A mere disagreement with the decision-making process or the decision of the Administrative Authority is no reason for a Writ Court to interfere in a tender proceeding, as the author of a tender document is the best person to understand and appreciate it s requirement and interpret it s documents. The problem that however arises in the present case is that the respondents have not stated clearly, the specific years of the Financial Statement that were required by the tenderers. In the present case, the petitioner whose gross receipts was over Rs. 1 crore, was required to have his Income Return audited, in terms of Section 44 AB(a) read with Explanation 2 of Section 139 of the Act, 1961. When the statutory law provides that the petitioner had until 31st October of the Assessment Year to have his return on income audited, there was no infirmity with the petitioner not submitting his Income Tax Return for the period prior to 2022-2023, as the period for submitting the same for auditing had not expired as per the Act, 1961. This is purely due to the fact that the State respondents in the tender notice have not clearly specified the years for which the IT Returns were required to be submitted by the tenderers. Thus this Court is of the view that in terms of the judgment of the Supreme Court in Dutta Associates Pvt. Ltd. [ 1996 (11) TMI 490 - SUPREME COURT] the respondents have not been transparent, fair and open, as the respondents should have made a clarification/specification in the tender notice. This Court is of the view that the petitioner s bid would have to be considered to be valid. In the alternative, the respondents should give an opportunity to the petitioner to submit the IT Return for the Assessment Year 2023-2024. The respondents shall thereafter consider the petitioner s bid along with all other valid bidders.
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2024 (3) TMI 841
Prayer to direct the respondent- C.B.I. to furnish/ supply the copy of the post trap memo - seeking to know the reason of arrest - HELD THAT:- hat is reflected from the record is that all the three persons against whom allegations were levelled by the complainant have been arrested. This Court is not in a position to appreciate the stand taken by the C.B.I. before the court below, which is evident from the reply filed by the C.B.I., before the Special Court, a copy of which has been placed at Page No.43 of the paper book, wherein it is stated that accused Punit Singh has not signed on post trap memorandum, hence, same is not falling in the category of recovery memo and also that the investigation of the case is at initial stage and vital witnesses are yet to be examined and documents are to be collected and thus, the copy of the post trap memo cannot be provided to the accused. The concept of fair trial may not be confined only to the prosecution and the same with equal force is applicable to the accused and if there is nothing extraordinary, in usual course, the copies of necessary documents must be provided to the accused persons of a crime, even at the stage of investigation and so much material should be provided by the investigating agency to the accused which may at least reflect the necessary evidence and material appearing against accused resulting in his arrest and confinement. This Court is of the considered view that the Central Bureau of Investigation should have provided a copy of post trap memo of date 31.1.2024 to the applicant - Application allowed.
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2024 (3) TMI 840
Dishonour of Cheque - petitioner has not responded to the legal notice - complaint lacks necessary averments - vicarious liability of Director - HELD THAT:- In the present case, the petitioner has placed on record unimpeachable and uncontroverted material in the form of DIR-11, which is also accompanied by receipt issued by the Ministry of Corporate Affairs of issuance of the said form. The said form indicates that the petitioner who even otherwise was only a non-executive additional director, had resigned from the said post much prior to the date on which the subject cheques came to be dishonoured. The Form DIR-11 as well as the other documents placed on record have not been disputed by learned counsel for the respondent during the course of arguments. Reference in this regard may be made to the decision of SUNITA PALITA OTHERS VERSUS M/S PANCHAMI STONE QUARRY [ 2022 (8) TMI 55 - SUPREME COURT] wherein it was observed when a complaint is filed against a Director of the company, who is not the signatory of the dishonoured cheque, specific averments have to be made in the pleadings to substantiate the contention in the complaint, that such Director was in charge of and responsible for conduct of the business of the Company or the Company, unless such Director is the designated Managing Director or Joint Managing Director who would obviously be responsible for the company and/or its business and affairs. The second issue whether a written guarantee or a letter of guarantee by an erstwhile Director would make him vicariously liable came up before the Supreme Court in POOJA RAVINDER DEVIDASANI VERSUS STATE OF MAHARASHTRA ANOTHER [ 2014 (12) TMI 1070 - SUPREME COURT ], wherein it was held that the same may amount to a civil liability but not vicarious liability under the NI Act. The Court even otherwise, is also convinced that the complaint is bereft of appropriate pleadings alleging that the petitioner was in charge of, and responsible for the conduct of the business of the accused company - In the totality of the facts and circumstances, the petitioner cannot be made responsible for the dishonour of cheque, and the continuation of the criminal complaint against him would be nothing but an abuse of the process of law. The petition is allowed.
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