TMI Tax Updates - e-Newsletter
March 24, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. APPLICATION FOR DISSOLUTION OF CORPORATE DEBTOR BY INTERIM RESOLUTION PROFESSIONAL - POSSIBLE?

   By: DR.MARIAPPAN GOVINDARAJAN

2. TNM Method not appropriate in determining ALP in capital goods purchase transaction.

   By: Vivek Jalan

3. Assessee cannot claim exemption of LTCG based on unregistered Banakhat agreement

   By: Bimal jain

4. Seeking return of money recovered / taken away during search It is contended by the petitioner that the concerned officers could have no reason to believe that any goods liable for confiscation were lying in the premises of the petitioners - whether cash can be seized by the officers under Section 67(2) of the GST Act ?

   By: Rajeev Jain

5. No TDS liability on income received on non-technical services outsourced to foreign company

   By: Bimal jain

News

1. APEDA participates in  International Food & Drink Exhibition, London

2. India participates in the Second Indo-Pacific Economic Framework (IPEF) Negotiating Round, Bali, Indonesia, 13-19 March 2023

Notifications

GST - States

1. 14/2022-State Tax (Rate) - dated 21-3-2023 - Delhi SGST

Amendment in Notification No. 4/2017- State Tax (Rate), dated 30-06-2017

2. 13/2022-State Tax (Rate) - dated 21-3-2023 - Delhi SGST

Amendment in Notification No. 2/2017-State Tax (Rate), dated 30-06-2017

3. 12/2022-State Tax (Rate) - dated 21-3-2023 - Delhi SGST

Amendment in Notification No. 1/2017-State Tax (Rate), dated 30-06-2017

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/IMD-PoD-2/P/CIR/2023/40 - dated 23-3-2023

E-wallet investments in Mutual Funds

DGFT

2. 62/2015-2020 - dated 23-3-2023

Amendment in conditions of the Standard Input Output Norms (SION) at E-136 for export of wheat flour

Central Excise

3. Order No. 02/2023 - dated 21-3-2023

Appointment of Common Adjudicating Authority in respect of M/s Lawson Tours and Travels (India) Pvt. Ltd.

Highlights / Catch Notes

GST

• Court Urges Prompt Action on Seized Goods if Petitioner Meets Legal Criteria for Release.

  Case-Laws - HC : Seeking release of seized goods - perishable good - during survey, certain goods were found in the premises beyond the goods which were already disclosed by the assessee - In the event petitioner complies with the requirement of law for release of perishable goods under the applicable provisions, such claim of the petitioner would be dealt with expeditiously and in accordance with law - HC
  Visit to Get Source

  ---

Income Tax

• CIT Revision u/s 263 on Derivative Loss Set-Off Against Business Income, Tribunal Ruling in Favor of Revenue.

  Case-Laws - HC : Revision u/s 263 by CIT - setting off of derivative loss against business income - the Tribunal has not given a specific finding as to how there is no bar under the Income Tax Act for setting off of derivative loss against business income in the facts and circumstances of the case. - Decided the appeal in favor of revenue, matter restored before PCIT - HC
  Visit to Get Source

  ---

• High Court Quashes Income Tax Assessment Reopening Due to Lack of Assessing Officer's Independent Judgment u/s 147.

  Case-Laws - HC : Reopening of assessment u/s 147 - reopening on the base of a factual error pointed out by the audit party - There is no material worth the name emerging that to indicate any independent application of mind could be noticed. On the contrary, there are glaring facts which have been pointed out that the Assessing Officer had no subjective satisfaction while issuing the notice of reopening. - Notice quashed and set aside - HC
  Visit to Get Source

  ---

• Tax Authorities Accept Assessee's Explanation for Marriage Expenses, Delete Additions u/s 69C.

  Case-Laws - AT : Unexplained expenditure u/s 69C - expenses incurred on marriage of daughter of assessee - Assessee has cash which was withdrawn on various dates from his bank account mentioned in the capacity of individual as well as jointly with his wife and after incorporating the opening cash available with assessee out of which a sum were utilized for marriage expenses. - the assessee was discharged his burden of explaining the expenditure incurred and the source thereof - Additions deleted - AT
  Visit to Get Source

  ---

• Dispute Over Stamp Duty Valuation for Land Transfer? Section 50C(2) Allows Reassessment by District Valuation Officer.

  Case-Laws - AT : Capital gain computation - stamp duty valuation adopted by authorities - Since the assessee is disputing the value adopted by government authorities for levy of stamp duty on transfer of land, Section 50C(2) shall come into play and the matter may be required to be referred to DVO as is provided u/s 50C(2). - AT
  Visit to Get Source

  ---

• Cash Deposits of Bharat Petroleum Dealer During Demonetization Exempted Under Income Tax Sections 69A & 115BBE.

  Case-Laws - AT : Cash deposited in the bank account during demonetization period - Additions u/s.69A r.w.s. 115BBE - Admittedly the assessee is an authorized dealer of Bharath Petroleum Company Ltd., which is an authorized Public Sector Oil Marketing Company. There is no illegality or the cash received is not unexplained because this is received on the basis of sale of petrol exempted vide the above notification which was further extended vide notification dated 24.11.2016. - Additions deleted - AT
  Visit to Get Source

  ---

• Parent Company Entitled to Refund for Excess Dividend Tax Payment, Contrary to Section 115O(1A) of Income Tax Act.

  Case-Laws - AT : Refund of excess dividend distribution tax - it is not in dispute that the wholly owned subsidiary company had duly remitted the dividend distribution tax on the interim dividend declared by it to the assessee company. - the action of the lower authorities in the instant case is clearly contrary to the provisions of Section 115O(1A) - we hold that assessee is entitled as per the Act to seek refund in respect of excess payment of dividend distribution tax. - AT
  Visit to Get Source

  ---

Customs

• Strict Interpretation of Exemption Notification: Avoid Unfair Advantage to Imported Goods Over Domestic Industry.

  Case-Laws - AT : Eligibility for exemption notification - If the exemption notification is read as per the appellant‟s submissions, it will put the domestic industry at a disadvantage and unduly favour the imported goods. To claim the benefit of the same exemption notification, the domestic industry will have to manufacture it out of duty paid inputs while the imported goods will get this benefit without paying duty on the inputs. Any exemption notification must be strictly interpreted as it is drafted and there cannot be any intendment while interpreting it. - AT
  Visit to Get Source

  ---

• Customs broker's license suspension upheld; Commissioner's evaluation of appellant's submissions deemed adequate. No pre-decision found.

  Case-Laws - AT : Suspension of the customs broker licence - When the appellant itself has made submissions on merits as defence, the Commissioner was bound to examine those and give his findings on them. - there are no force in the submission that the Commissioner has pre-decided the issues - There is no ground to revoke the suspension of the Customs Broker Licence of the appellant at this stage - AT
  Visit to Get Source

  ---

• Customs Broker License Revocation Contested Over System Flaw and Fake Customs Card Exploitation; Accountability Disputed.

  Case-Laws - AT : Revocation of Customs Broker License - it is found that if the system is not designed to send an alert to the Customs Broker if a Shipping Bill is filed in its name in the service centre at the Custom House and only sends an alert if it is filed online, it cannot be fathomed how the appellant can be faulted if this loophole in the system was exploited by another person after making a fake Customs card. - AT
  Visit to Get Source

  ---

Service Tax

• Court Rules SVLDRS Allows Declarations Even After Paying Principal Tax Amount; Includes Interest and Penalties Resolution.

  Case-Laws - HC : SVLDRS - Just because the Petitioner has paid the principal amount, it cannot be said that when a show cause notice has been issued for interest on the said amount, that the Petitioner is not entitled to make a declaration under SVLDRS. The interest relates to the service tax amount and the SVLDR Scheme covers not only tax but also interest, penalty - HC
  Visit to Get Source

  ---

• High Court overturns rejection of SVLDRS application due to software error in selecting Navi Mumbai Commissionerate.

  Case-Laws - HC : SVLDRS - Rejection of Petitioner’s application / declaration - what emerges to us is the Petitioner is a victim of the lacuna in the software governing the SVLDR scheme where the Petitioner could not have selected the option of Navi Mumbai Commissionerate which was earlier Commissionerate of the Petitioner. - The impugned rejection of the Petitioner’s declaration for SVLDRS-1 is set aside - HC
  Visit to Get Source

  ---

Central Excise

• Goods Sold to Institutional Buyer Not Subject to MRP; Section 4A of Central Excise Act Not Applicable.

  Case-Laws - SC : Valuation - Transaction value of MRP based value - institutional buyer - Section 4(A) of the Central Excise Act - since the impugned sale is not a retail sale as per the Act, there exists no mandate of law on the Respondent herein to affix an MRP on the goods sold, and hence the said impugned transaction cannot claim benefit under Section 4A of the Act. - SC
  Visit to Get Source

  ---

• Appellant's Incorrect CENVAT Credit Usage for June 2017 Excise Duty Upheld as Improper.

  Case-Laws - AT : CENVAT Credit - credit of service tax paid under reverse charge mechanism - the appellant’s availment of cenvat credit of service tax paid on 13.07.2017 and utilization thereof for payment of excise duty for the month of June, 2017 is not correct. Therefore, the demand of cenvat credit is sustained - AT
  Visit to Get Source

  ---

VAT

• Court Rules Mixing Base Paint with Colors Doesn't Create New Product for VAT and Sales Tax Purposes.

  Case-Laws - SC : Process amounting to manufacture or not - mixture of the base paint with different colours, results in a new product or not - The resultant article i.e., the paint of a different shade, did not result in a new commercial product. In common parlance, the new product was nothing else but ‘paint’, and not a different article. - SC
  Visit to Get Source

  ---

• Court Denies Sales Tax Exemption Extension for Company, Citing No Right Beyond Policy Period Despite Operational Hardships.

  Case-Laws - HC : Claim of exemption even after the expiry of exemption period as per the scheme - Revival of viable sick industrial units - The present demand appears to be for exemption of Sales Tax beyond the period of the policy which cannot be claimed as a matter of right. - Though a case has been tried to be projected of hardships to operate and run the Industry, including infrastructural and law and order problem, the petitioner company choose to set up the Industry in that location knowing fully well about the situation. - No relief - HC
  Visit to Get Source

  ---

• Court Allows ITC for Manufacturing Losses u/s 19(2)(ii) of TNVAT Act, Despite Section 19(9) Invocation.

  Case-Laws - HC : Reversal of Input Tax Credit (ITC) - manufacturing / invisible loss - The expressions ''use'' in manufacture on the one hand and “damaged” and “destroyed” are antithetical and irreconcilable with each other - Applying any of the above tests viz., test of indispensability, quantitative requirement, commercial expediency the irresistible conclusion is that manufacturing/invisible loss which is inevitable/unavoidable/inherent part of manufacturing process cannot be denied the benefit of Input Tax Credit in terms of Section 19(2)(ii) of the TNVAT Act invoking Section 19(9) of the TNVAT ACT. - HC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2023 (3) TMI 1001
  Revocation of cancellation of registration rejected - firm is not existing/ running from the registered place - contention of the Counsel for the petitioner is that the cancellation of the registration can be resorted to only when the conditions specified in sub-section 2 of Section 29 of the GST Act are attracted - HELD THAT:- From the perusal of the order passed in appeal as well as the order cancelling the registration, it is apparent that the respondents have committed error while deciding the issue on the ground that several firms were availing wrong ITC credit and were essentially bogus firms. This Court in the case of Apparent Marketing Private Limited [[ 2022 (3) TMI 493 - ALLAHABAD HIGH COURT] ] has already dealt with the said issue and has recorded that once registration is granted, the same could be cancelled only in terms of the conditions prescribed under Section 29(2) and allegedly being a bogus firm is not a ground enumerated under Section 29(2). Following the said judgment and coupled with the fact that the respondents themselves have initiated proceedings against the firm under Section 74, the order rejecting the application for revocation was a wrong exercise of power by the department. The appellate order is equally bad, inasmuch as, no such ground was mentioned before passing the order of cancellation and, thus the impugned orders 17.05.2021 and 14.09.2021 are set aside. Petition allowed.

  ---

• 2023 (3) TMI 1000
  Seeking issuance of writ of mandamus (order from a court to an inferior government official ordering the government official to properly fulfill their official duties) - Cancellation of GST registration of petitioner - petitioner firm did not submit returns for a continuous period of six (6) months - cancellation of registration, without providing an opportunity of hearing - violation of principles of natural justice (audi alterem partem). HELD THAT:- In similar circumstances, learned Division Bench of the High Court for the State of Telangana in M/S. CHENNA KRISHNAMA CHARYULU KARAMPUDI VERSUS THE ADDITIONAL COMMISSIONER APPEALS1 AND ANOTHER [ 2022 (7) TMI 82 - TELANGANA HIGH COURT] having considered the fact that GST Tribunal has not been constituted under Section 109 of the CGST Act and thereby the petitioner could not be left without any remedy, held that it would be just and proper if the entire matter was remitted back to the 2nd respondent therein to reconsider the case of the petitioner and pass appropriate order in accordance with law. Needles to emphasize that the above said decision applies with all its fours to the case on hand. The petitioner preferred appeal but it was rejected - In that view of the matter and as the GST Tribunal has not been constituted as per the provisions of the Act so as to enable the petitioner to pursue his further legal remedy, this writ petition is allowed and the matter is remitted back to the preliminary authority i.e., the 4th respondent to consider the case of the petitioner and after verifying the returns submitted by the petitioner and after affording an opportunity of personal hearing pass an appropriate order in accordance with governing law and rules expeditiously but not later than two weeks from the date of receipt of a copy of this order. Petition allowed by way of remand.

  ---

• 2023 (3) TMI 999
  Provisional attachment of bank accounts of the petitioner - Section 83 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The order dated 15.03.2023 is perused. At the end of a long narration, Commissioner has released the bank accounts of the petitioner from provisional attachment. Needless to say, observations made by the Commissioner of Ranga Reddy GST Commissionerate while passing the order dated 15.03.2023 was in the context of examining the objection raised by the petitioner to provisional attachment of bank accounts under Section 83 of the CGST Act and certainly those would not influence the assessment proceedings that may be initiated against the petitioner, which will be done in accordance with law. Petition disposed off.

  ---

• 2023 (3) TMI 998
  Seeking release of seized goods - Revenue contends that the deposit made by the petitioner is not sufficient for the release of seized goods as the commodity which has been seized by the department is a perishable good and by virtue of section 67 (8), and a different procedure for deposit of amount is contemplated than what is observed by the petitioner. Whether the goods seized by the department qualifies to be a perishable good or a non-perishable good? HELD THAT:- On facts, it is not in dispute that the goods seized by the department are included within the definition of tobacco and, therefore, there exists no doubt in coming to the conclusion that the seized goods would fall within the definition of perishable goods. While taking such a view, it may be observed that the notification issued by the department on 13th June, 2018 is otherwise not under challenge. Learned counsel for the State also submits that the deposit made by the petitioner under section 74 (5) of the GST Act cannot be of any help to the petitioner s cause for the purposes to release of goods in terms of section 67 (8) of the Act. The petitioner having not complied with the requirement of release of seized goods i.e. perishable goods, is not entitled to any direction by this court for release of such seized goods. At this stage, learned counsel for the petitioner submits that the petitioner shall deposit the requisite amount which may be warranted treating the goods to be perishable and in such circumstance the department be directed to release the goods, forthwith. In the event petitioner complies with the requirement of law for release of perishable goods under the applicable provisions, such claim of the petitioner would be dealt with expeditiously and in accordance with law - this petition is consigned to the record.

  ---

• 2023 (3) TMI 997
  Cancellation of GST registration of petitioner - non-speaking order - Non-constitution of Tribunal - HELD THAT:- The case of the petitioner is squarely covered by the judgment of this Court in the case of M/S CHANDRA SAIN, SHARDA NAGAR, LUCKNOW THRU. ITS PROPRIETOR MR. CHANDRA SAIN VERSUS U.O.I. THRU. SECY. MINISTRY OF FINANCE, NEW DELHI AND 5 OTHERS [ 2022 (9) TMI 1047 - ALLAHABAD HIGH COURT ] and the petition is to be allowed on that ground alone - it was held in the case that In view of the order being without any application of mind, the same does not satisfy the test of Article 14 of the Constitution of India, as such, the impugned order dated 13.02.2020 (Annexure 2) is set aside. However, this Court intends to record the manner in which the GST authorities have issued the show cause notice which from the bare perusal of the notice dated 28.08.2021 is reckless and as vague as it can be. Even the order dated 06.10.2021 is not only arbitrary but a reckless exercise of power which led to denial of the rights of freedom and business guaranteed under Article 19 of the Constitution of India, as such, the orders and the show cause notice can never pass the test of Article 14 of the Constitution of India. The impugned orders dated 16.07.2021, 06.10.2021 and 07.12.2021 are set aside - The writ petition stands allowed.

  ---

• 2023 (3) TMI 996
  Maintainability of petition - availability of statutory remedy of appeal - non-constitution of the Tribunal - benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112 could not be availed - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S.O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. This Court in the case of ANGEL ENGICON PRIVATE LIMITED VERSUS STATE OF BIHAR, ASSISTANT COMMISSIONER OF STATE TAX [ 2023 (3) TMI 879 - PATNA HIGH COURT] has disposed of the writ petition with certain observations and directions, allowing certain liberty to the petitioner. Writ petition disposed off.

  ---

• 2023 (3) TMI 995
  Maintainability of petition - availability of statutory remedy of appeal - non-constitution of the Tribunal - benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112 could not be availed - cancellation of GST registration of petitioner - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S.O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. This Court in the case of ANGEL ENGICON PRIVATE LIMITED VERSUS STATE OF BIHAR, ASSISTANT COMMISSIONER OF STATE TAX [ 2023 (3) TMI 879 - PATNA HIGH COURT] has disposed of the writ petition with certain observations and directions, allowing certain liberty to the petitioner. Writ petition disposed off.

  ---

• 2023 (3) TMI 994
  Maintainability of petition - availability of statutory remedy of appeal - non-constitution of the Tribunal - benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112 could not be availed - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S.O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. This Court in the case of ANGEL ENGICON PRIVATE LIMITED VERSUS STATE OF BIHAR, ASSISTANT COMMISSIONER OF STATE TAX [ 2023 (3) TMI 879 - PATNA HIGH COURT] has disposed of the writ petition with certain observations and directions, allowing certain liberty to the petitioner. Writ petition disposed off.

  ---

• 2023 (3) TMI 993
  Cancellation of GST registration of petitioner - Petitioner relies on the judgment of this Court inM/S. DURGA RAMAN PATNAIK VERSUS ADDITIONAL COMMISSIONER OF GST (APPEALS) (FIRST APPELLATE AUTHORITY) OTHERS [ 2022 (10) TMI 676 - ORISSA HIGH COURT] and submits that in the present case also the Petitioner will opt for filing an application for revocation of the cancellation by complying with all the other requirements of depositing all the tax, penalty and interest due as payable and other formalities as required by law. HELD THAT:- Notwithstanding the impugned order dated 6th June, 2022 of the CT GST Officer, Angul Circle, the Petitioner is permitted to file a petition seeking revocation of the cancellation of registration provided such application is filed not later than 3rd April 2023 - Provided that the Petitioner makes payment of the tax, interest, penalty, fine, fees, etc., as may be payable, the above application will be entertained and appropriate order will be passed thereon in accordance with law within a further period of thirty (30) days. The writ petition is disposed of

  ---

• 2023 (3) TMI 992
  Maintainability of appeal - petitioner is desirous of availing statutory remedy of appeal against the impugned order before the Appellate Tribunal (Tribunal) under Section 112 of the Bihar Goods and Services Tax Act - non-constitution of the Tribunal - levy of ax, penalty and interest, under Section 74 of the Bihar Act 2017 for the tax period April 2020 to April 2021. HELD THAT:- Due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act - The petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112. The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S.O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. This Court in the case of ANGEL ENGICON PRIVATE LIMITED VERSUS STATE OF BIHAR, ASSISTANT COMMISSIONER OF STATE TAX [ 2023 (3) TMI 879 - PATNA HIGH COURT] has disposed of the writ petition with certain observations and directions, allowing certain liberty to the petitioner, where it was held that the Court is of the opinion that since order is being passed due to non-constitution of the Tribunal by the respondent-Authorities, the petitioner would be required to present/file his appeal under Section 112 of the B.G.S.T. Act, once the Tribunal is constituted and made functional and the President or the State President may enter office. The instant writ petition is disposed of in the same terms, allowing the petitioner liberty as has been granted to the petitioner in above mentioned case.

  ---

• 2023 (3) TMI 991
  Maintainability of petition - availability of statutory remedy of appeal against the impugned order - non-constitution of the Tribunal - HELD THAT:- Due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act - Under the circumstances, the petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112. The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. This Court in the case of ANGEL ENGICON PRIVATE LIMITED VERSUS STATE OF BIHAR, ASSISTANT COMMISSIONER OF STATE TAX [ 2023 (3) TMI 879 - PATNA HIGH COURT] has disposed of the writ petition with certain observations and directions, allowing certain liberty to the petitioner - The instant writ petition is disposed of in the same terms, allowing the petitioner liberty as has been granted to the petitioner in above case. Petition allowed.

  ---

• Income Tax

• 2023 (3) TMI 1002
  Condonation of delay in the Tribunal appeal - assessee for filing this appeal late by 156 days - advise of tax consultant/advocate in another case while filing the appeal against the order passed u/s 153A r.w.s 143(3) - HELD THAT:- We are of the considered view that the advise of tax consultant/advocate in another case while filing the appeal against the order passed u/s 153A r.w.s 143(3) of the Act cannot be a basis for filing the appeal late by 156 days Onus is on the assessee to explain by way of sufficient and plausible cause the delay in filing the appeal. In our humble understanding, the said cause shown by the assessee of the application is not a sufficient and plausible cause for the delay of 156 days in filing the appeal before the Tribunal. We are not hearing appeal against order u/s 153A r.w.s. 143(3) of the Act and it is also not clear that said assessment order was related or pertained to which assessment year. Thus, we safely hold that the cause shown by the assessee is not only insufficient but also implausible cause based irrelevant facts. Therefore, we decline to condone the delay of 156 days in filing the appeal. Admission of new/additional ground of the assessee and restoring the same for adjudication to the file of the AO - The assessee is seeking admission of additional ground and restoration of the same to the file of the AO for examination, verification and adjudication. Therefore, as per the prayer of the assessee itself, these grounds cannot be adjudicated by the Tribunal on the basis of the material available on record as per the prayer of the assessee itself. Admission of additional grounds No.1 to 3 are concerned, neither from the assessment order framed u/s 143(3) of the Act nor from the first appellate order of ld. CIT(A) we are unable to see any action, addition, disallowance or enhancement by the authorities below so far to validly enable the assessee to raise the same before this Tribunal as additional grounds, seeking the restoration of the same to the file of the AO for adjudication. Assessee, by way of raising new/additional ground cannot be allowed to retract or revise its returned income without filing retraction application and revised return of income within prescribed time limit in the garb of irrelevant new/additional grounds, that too in a non-maintainable being time barred appeal, which has been declared by the assessee in the return of income for AY 2013-14 itself and accepted by the AO. Application of the assessee for condonation of delay of 156 days and admission of new/additional grounds No.1 to 4 are dismissed.

  ---

• 2023 (3) TMI 990
  Exemption u/s 11 - activity for charitable purpose in terms of Section 2(15) - Tribunal holding that assessee carried on activity for charitable purpose in terms of Section 2(15) and directing Commissioner of Income Tax to grant registration under Section 12-AA - HC held that expression charitable purpose charity is soul of the expression. Mere trade and commerce in education cannot be said to be a charitable purpose - HELD THAT:- Appellant states that the present appeal has rendered infructuous as the appellant-National Institute of Aeronautical Engineering Educational Society, was subsequently granted benefit under Section 10 (23C) of the Income Tax Act, 1961. Further, notices which were issued under Section 148 of the aforesaid Act for reopening were consequently dropped. In view of the statement made, the present appeal is dismissed as infructuous.

  ---

• 2023 (3) TMI 989
  Revision u/s 263 by CIT - setting off of derivative loss against business income - Tribunal has allowed the appeal filed by the assessee solely on the ground that certain records were placed before Tribunal which were examined by the Tribunal and in the opinion of the Tribunal that those documents clearly show that the issue was discussed by the AO and he was satisfied with the reply given by the assessee - HELD THAT:- Tribunal has come to the conclusion that there is no justification on the part of the PCIT to exercise his revisional jurisdiction u/s 263 of the Act. On perusal of the order passed by the PCIT it is seen that the assessee did not appear before the PCIT though they were granted opportunity of personal hearing on two occasions. Thus, the record which was examined by the learned Tribunal was not placed before the PCIT for consideration so as to take a decision on merits. We find that the Tribunal has not given a specific finding as to how there is no bar under the Income Tax Act for setting off of derivative loss against business income in the facts and circumstances of the case. Therefore, we are of the view that the matter has to be freshly decided by the PCIT and, therefore, we are inclined to remand the matter back to the PCIT for fresh consideration. Appeal filed by the revenue is allowed and the order passed by the Tribunal as well as the PCIT are set aside and the matter is remanded to the PCIT for fresh consideration, who shall take note of the documents. The assessee is directed to appear before the PCIT on the dates to be fixed for personal hearing and place the paper book which was placed before the learned Tribunal and after considering all the documents and hearing the assessee, a fresh decision shall be taken in accordance with law.

  ---

• 2023 (3) TMI 988
  Stay of demand - assessment order u/s 246A challenged - Reopening of assessment u/s 147 - income of the petitioner is re-assessed followed by the demand notice in Form No.7 under section 156 - HELD THAT:- This Court finds that the petitioner has preferred a Substantive Appeal u/s 246 of the Income Tax Act and same is pending adjudication before the appellate authority. The contentions advanced by petitioner, thereby assailing the legality and validity of the notice under Section 148 and consequential order of assessment are subject matter of pending appeal before competent Authority. In that view of the matter, it would not be appropriate for this court to deal with those contentions on merit in writ jurisdiction. As the petition is filed challenging the consent order by raising various legal issues which are subject matter of appeal filed under Section 246A of the Income-Tax Act. The discretion exercised by the authority while passing the impugned order thereby granting stay subject to deposit of 20% of the amount under demand with the facility of installments, cannot be said to be arbitrary, when order is invited by consent. No interference from this court is warranted under Article 226 of the Constitution of India in the facts and circumstances of this case. Resultantly, the writ petition fails and hence, dismissed.

  ---

• 2023 (3) TMI 987
  Reopening of assessment u/s 147 - reopening on the base of a factual error pointed out by the audit party - Independent application of mind by AO or not? - HELD THAT:- Whether the reopening is permissible after audit party expresses an opinion on a question of law was considered by a larger Bench of the Apex Court in the case of Lucas T.V.S.Ltd. ( 2000 (12) TMI 102 - SC ORDER] wherein, the Court held that the reopening of the case on the base of a factual error pointed out by the audit party is permissible under the law and there can be no dispute that the audit party is entitled to point out such factual error or omission in the assessment. Admittedly, audit party had expressed the opinion on a question of law. It had also pointed out to the Assessing Officer and that information which had been given was on question of law. Facts of the instant case clearly make out that when the audit party had pointed out to the Assessing Officer, it not only was disagreeing with the information given on the law point, it had completely disagreed after examining the objections raised by the audit party. AO without any conviction, when has issued the notice, this surely is not a case where the reopening of the case is on the basis of any factual error pointed out by the audit party so as to be covered by the decision of the P.V.S.Beedies (P) Ltd [ 1997 (10) TMI 5 - SUPREME COURT] . It is covered by those decisions which have been discussed in reopening on the part of the Assessing Officer essentially on the audit party opinion and not on the basis of his own conviction. There is no material worth the name emerging that to indicate any independent application of mind could be noticed. On the contrary, there are glaring facts which have been pointed out that the Assessing Officer had no subjective satisfaction while issuing the notice of reopening. It is a settled law that any notice of reopening issued by the Assessing Officer without any independent application of mind would laid the validity. Accordingly, this petition is allowed

  ---

• 2023 (3) TMI 986
  Validity of assessment u/s 144B - personal hearing was not granted to the petitioner s authorized representative - HELD THAT:- As noticed personal hearing was not granted, before framing the assessment order, though asked for on behalf of the petitioner. Given this position, the aforementioned impugned order and notices cannot be sustained. Accordingly, the impugned order and notices are set aside, with liberty to the AO to pass a fresh order after according personal hearing to the petitioner s authorized representative. AO will intimate to the petitioner date and time when hearing will be granted in the matter.

  ---

• 2023 (3) TMI 985
  Reopening of assessment u/s 147 - information of ITD data that assessee sold certain piece of land in Daman and has not shown Capital gain in his return of income - addition was confirmed by Ld. CIT(A) by taking view that assessee was provided reasonable opportunities but assessee failed to avail such opportunities - HELD THAT:- CIT(A) dismissed the appeal of assessee in ex parte proceedings. Therefore, keeping in view the principle of natural justice we are inclined to give one more opportunity to the assessee to contest his case on merit. Thus, the appeal is restored back to the file of Ld. CIT(A) to decide the issue afresh. The grounds of appeal by assessee are allowed for statistical purpose.

  ---

• 2023 (3) TMI 984
  Assessment u/s 144C - Mandation to consider assessee submissions - Unrealized foreign currency losses - AO disallowed claim as assessee company to furnish details of foreign currency losses along with vouchers and details of dealing - HELD THAT:- Observations of the ld DRP that the ld AO considered the submissions seems to be incorrect as the draft order does not reflect the same. DRP seems to have not shown interest in examining the material on record and give a conclusive finding on issue. The provisions of Section 144C of the Act with sub-section 7 provides that DRP before issuing any directions under sub-section 5 of Section 144C can make such inquiry as it feels or call for any inquiry to be made by any Income Tax Authority. It is a settled proposition of law that the process before the DRP is continuation of the assessment proceedings as only thereafter would a final appealable assessment order be passed. The proceeding before the DRP is not an appeal proceeding but a corrective mechanism in the nature of a second look at the proposed assessment order by high functionaries of the revenue keeping in mind the interest of the assessee. It is a continuation of the assessment proceeding till such time a final order of assessment which is appealable is passed by the AO DRP thus is an authority expected to exercise its power more extensively then actually available with First Appellate Authority, CIT(A). The Bench is of considered opinion that Ld. DRP has fallen in error in not exercising it s exhaustive powers within the scope of Section 144C and to give a finding on the merits of the objections of the assessee on the basis of record before it. Too much stress has been laid by Ld. DRP on the non-satisfaction of Ld. AO about the lack of information provided to the Ld. AO. As a quasi judicial authority, the Ld. AO and Ld DRP, both were supposed to examine the claim on merits on the basis of whatever matter was before it. Brushing aside all the submission without any marshaling of whatever evidence or submissions are available and stressing on a particular information, is not justified. On merits of the claim, the bench is of considered opinion that judgments relied by the Ld. AR in the case of CIT vs. M/s. Woodward Governor India P. Ltd. ( 2009 (4) TMI 4 - SUPREME COURT] and ONGC Ltd. vs. CIT ( 2010 (3) TMI 81 - SUPREME COURT] extensively deal with the question as to what factors should be taken into account in order to find out if an expenditure on account of fluctuation in the foreign currency rates, when the assessee is following mercantile system of accounting, is deductible. The issue requires to be remanded back to the Ld. AO with directions to take into consideration the submissions of assessee dated 22.03.2021 and 02.04.2021 along with its enclosures / annexures and to pass afresh draft assessment order. Needless to say that Ld. AO will be in it s right to call for any further information from the assessee. Appeal of assessee is allowed for statistical purposes.

  ---

• 2023 (3) TMI 983
  Unexplained cash credits u/s 68 - transaction between assessee company and Mr. Devi Singh Rawat. unexplained - Whether assessee has duly discharged the burden by establishing identity creditworthiness and genuineness of the transaction? - HELD THAT:- AO has not brought any evidence or materials to controvert the answers given by Mr. Devi Singh Rawat before the Assessing Officer, on oath. We are of the view that transaction amounting to Rs.15,00,000/- between Mr. Devi Singh Rawat and the assessee company regarding sale of property by the assessee is explained satisfactorily and Revenue has failed to make a case for the aforesaid addition of Rs.15,00,000/-. Revenue has also failed to bring any evidence or any materials on record to disprove the testimony of Mr. Devi Singh Rawat given before the Assessing Officer on oath. In view of the foregoing, we direct the Assessing Officer to delete the aforesaid addition of Rs.15,00,000/- in respect of transaction between assessee company and aforesaid Mr. Devi Singh Rawat.

  ---

• 2023 (3) TMI 982
  Condonation of delay - appeal filed by the assessee is late by 121 days - assessee company has alleged that inordinate delay in filing the appeal is attributable to its Chartered Accountant (CA) - HELD THAT:- As stated in the application, the concerned CA resigned from his firm long after appeal was filed, then why did he not sworn an affidavit admitting his fault by assigning reasons therefor. It is stated in the application that order of CIT(A) was received on 21.09.2017 and was handed over to the CA but no specific date of handing it over to the CA has been mentioned. It is therefore not convincing that delay was caused due to the reasons beyond the control of the assessee company as stated in the application. The facts on record clearly indicate that delay was due to negligence, lethargy or inaction on the part of the assessee company and therefore not worthy of condonation. Thus we decline to condone the inordinate delay of 121 days in filing appeal before the Tribunal. Appeal of the assessee is dismissed.

  ---

• 2023 (3) TMI 981
  Unexplained expenditure u/s 69C - expenses incurred on marriage of daughter of assessee - HELD THAT:- Neither the ld. AO nor ld. CIT(A) has doubted the availability of funds in the bank accounts nor doubted the withdrawals made therefrom however, without stating any single reason as why the withdrawals made after the marriage cannot consider as utilised for making payment of due expenses. Thus, the addition so made purely in arbitrary manner without considering the cash withdrawal made between the period from 18.03.2014 to 07.05.2014 for which source is explained. Assessee has cash which was withdrawn on various dates from his bank account mentioned in the capacity of individual as well as jointly with his wife and after incorporating the opening cash available with assessee out of which a sum were utilized for marriage expenses. To support his arguments that the assessee has furnished the documentary evidence of cash book as well as bank statement - the assessee was discharged his burden of explaining the expenditure incurred and the source thereof and we do not have any hesitation to delete the addition - Decided in favour of assessee.

  ---

• 2023 (3) TMI 980
  Revision u/s 263 by CIT - Allowability of Deduction u/s 80P - whether action of the assessing officer in allowing the claim of the assessee us/s. 80(P)(2)(d) is found faulted with, whether the assessee ought to have produced the appropriate evidence and whether non-recording of the reasons for accepting explanation will render the order erroneous and prejudicial to the interest of the revenue? - HELD THAT:- AO has examined that issue as it is evident from the finding recorded in the assessment order. As the case was for this limited purpose the same has been examined and verified by the ld. AO as it emerges from the findings of the AO. CIT evidently did not place on record any apparent error on the part of the AO to substantiate that order passed by the ld. AO is prejudicial to the interest of revenue. She only mentioned that the AO allowed deduction u/s. 80(P)(2)(d) on the interest income received from co-operative bank and thus AO erred in allowing the deduction u/s. 80(P)(2)(d) on such interest income. She has not pin pointed any of the enquiry which is required to be made is not made by the ld. AO the fact from where the ld. PCIT drawing interference is already on record and based on that information the ld. AO drawn a plausible view on the matter. There is no defect found from the enquiry that has been conducted by the ld. AO. He collected the information based on upon which he has allowed the claim to assessee and has verified the point raised in the limited scrutiny. PCIT did not find any specific error or default of AO and thus we see no reasons in interfering the view that has already been taken. Since, in this case ld. AO has clearly conducted the enquiry and revenue did not pin point the error on the part of the assessing officer the order passed after due application of mind cannot be subjected to proceeding u/s. 263 of the Act. A.O while framing the assessment had taken a plausible view of the matter of while allowing the claim of the assessee, and revenue did not demonstrate the error remain on the part of the ld. AO. The fact remains that the specific issue mentioned and has been examined and the contention of the assessee accepted by the Assessing Officer. Merely because the Assessing Officer did not write specific reasons for accepting the explanation of the assessee cannot be reason enough to invoke powers under section 263, and non-mentioning of these reasons do not render the assessment order erroneous and prejudicial to the interest of the revenue . Assessee appeal allowed.

  ---

• 2023 (3) TMI 979
  Capital gain computation - stamp duty valuation adopted by authorities - value adopted by government authorities for levy of stamp duty on transfer of land - AO made additions by invoking provisions of Section 50C - HELD THAT:- The assessee has filed two comparable of sale deeds which are claimed to be in vicinity and within the same time period when assessee sold his land, which requires verification by the authorities below . Since the assessee is disputing the value adopted by government authorities for levy of stamp duty on transfer of land, Section 50C(2) shall come into play and the matter may be required to be referred to DVO as is provided u/s 50C(2). The orders of the authorities below are set aside and the matter is restored to the file of the AO for framing denovo assessment on merit in accordance with law, after giving opportunity of being heard to the assessee. The appeal of the assessee is allowed for statistical purposes.

  ---

• 2023 (3) TMI 978
  Interest received u/s 28 of Land Acquisition Act , 1894 - addition u/s 56(2)(viii) r.w.s. 57(iv) and 145A of the Income Tax Act - interest in enhanced compensation of land - HELD THAT:- As the issue is already settled by the Hon ble Apex Court in the case of Ghanshyam HUF [ 2009 (7) TMI 12 - SUPREME COURT] wherein it was held that interest received under section 28 of the LAC Act would not fall within the ambit of the expression interest .Revenue s appeal stands dismissed.

  ---

• 2023 (3) TMI 977
  Validity of assessment order - non-complying the mandatory legal requirement of provisions of Sec. 142 - notice issued on the very same date return was filled - HELD THAT:- The first notice u/s 143(2) along with 142(1) was issued on 29.09.2015 requiring the assessee to file return of income. The second notice dated 26.10.2015 was issued u/s 143(2) when the return of income was submitted vide acknowledgement dated 26.10.2015. Thus, the AO has not applied the mind in issuing notice u/s 143(2) further assuming jurisdiction to frame assessment based on such notice is not tenable under law. As relying on the case of assessee s son Shri Santosh Mahalingam [ 2022 (8) TMI 1358 - ITAT DELHI] considering the fact that issuing notice u/s 143(2) on 26.10.2015 and without having original or copy of the return of income filed by the assessee for the AY 2014-15 will vitiate the entire assessment proceedings. Also see Society for Worldwide Inter Bank Finance Telecommunication [ 2010 (4) TMI 43 - DELHI HIGH COURT] thus impugned assessment order deserves to be held as invalid which was passed without complying the mandatory provisions of Sec. 143(2) - Decided in favour of assessee.

  ---

• 2023 (3) TMI 976
  Rejection of books of accounts - NP Estimation - addition @ 1% of total sales and purchase turnover on account of net profit - As per AO business should be considered as non-genuine and existing only on paper for the purpose of providing entries - CIT-A deleted the addition - HELD THAT:- The AO has wrongly rejected of books of account, when assessing officer in his remand report has accepted about first three creditors, as there is no transaction with these three creditors during this year. As no question about the genuineness is raised by the assessing officer about the purchases from these three creditors. CIT(A) held that the estimation of addition of Rs. 2.06 Crore is not justified. Before, us the revenue has failed to bring contrary fact or evidence that the assessee made any such transaction with the first three creditors, which is otherwise accepted by AO in his remand report. Further the books of accounts of the assessee was accepted by the assessing officer in preceding and subsequent years. When the assessing officer accepted books result prepared on similar accounting standard, without specifying the criteria prescribed under section 145(3) - AO without giving his finding that the assessee was really engaged or indulging in providing entry, or the transaction shown by the assessee are circular transaction, compared the assessee with entry provider company and estimated commissions income. AO not even examined the bank statement of the assessee. No finding about the expenses claimed, if any, was given. The assessing officer estimated income on the purchases as well as on sales, which is unjustified. No infirmity or illegality in the order passed by the ld. CIT(A) which we affirm. In the result, all the grounds of appeal which is in the form of narrative, is dismissed.

  ---

• 2023 (3) TMI 975
  Revision u/s 263 - As per CIT-E AO did not examine the claim of the assessee for an exemption u/s. 11 - HELD THAT:- It is not the right reason for exercising revisionary powers u/s. 263 of Act, for the reason that the assessee in response to AO s specific query has substantiated by submitting various documents that the main objects of the trust is relief of the poor, small and marginal farmers which it is covered by Circular No. 11/2008 and the AO based on the submissions made has taken a conscious decision to accept the claim of the assessee. In our view the error envisaged by Section 263 of the Act is not one that depends on possibility as a guess work, but it should be actually an error either of fact or of law. We are of the opinion that the PCIT in the present case has wrongly invoked the jurisdiction under section 263 and the controversy in the present case is fully covered by the judgment in the case of Gabriel India Ltd. [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] . Accordingly the impugned order of the PCIT with regard to the issue of setting aside the order of AO u/s.143(3) with regard to this issue is quashed. Appeal of assessee allowed.

  ---

• 2023 (3) TMI 974
  Charging of interest u/s.234E - assessee filed the TDS returns for the respective quarters belatedly -Liability of interest for periods prior to June 1, 2015 - HELD THAT:- Section 200A deals with processing of statements of tax deducted at source. Clause (c) of section 200A(1) was inserted by the Finance Act 2015 w.e.f. 01-06-2015 providing for the levy of fee u/s.234E of the Act. In that view of the matter, such fee u/s.234E can be levied only for the default committed after 01-06-2015 and not prior to that. In Olari Little Flower Kuries Pvt. Ltd. Vs. Union of India and others ( 2022 (2) TMI 1061 - KERALAHIGH COURT] has affirmed the non-imposition of fee for the period prior to 01-06-2015. Similar view has been taken in Jiji Varghese [ 2022 (3) TMI 1291 - KERALA HIGH COURT] holding that no interest u/s 234E can be imposed for the periods of the respective A.Ys. prior to June 1, 2015. Thus, it is seen that the issue raised in these appeals is covered in favour of the assessee.

  ---

• 2023 (3) TMI 973
  Set off of business loss u/s 71 - as per DR assessee had not filed return of income on time therefore, he was not eligible for set off of business loss - HELD THAT:- We find merit into the contention of the assessee that it was eligible for set off of business loss as per section 71 - As per this provision, income under any head of income, other than capital gains is loss and the assessee has no income under the head capital gain . He shall be entitled to have the amount of such loss set off against the income, if any, assessable for that assessment year under any other head. If the net result is still a loss, the assessee can set off the said loss u/s 71 of the Act. We set aside the orders of the authorities below and restore this issue to the file of AO to verify the claim of the assessee and allow set off of loss as per the provisions of law. Grounds raised by the assessee are allowed for statistical purposes.

  ---

• 2023 (3) TMI 972
  Addition of cash payments - undisclosed payment - A.O. has relied upon the statement of third person recorded during the course of search u/s 132(4) - HELD THAT:- It is well settled Law that unless the incriminating documents or statement used against the assessee are confronted to assessee and assessee have been allowed to cross-examine such statements, no such material or statement, could be read in evidence against the assessee. A.O. in the assessment order also did not mention, if any, material found during the course of search, was confronted to the assessee. Thus, assessee was justified in denying in making any cash payment at any stage. Tribunal in the case of Shri Manjit Singh Gahlot, Delhi ( 2022 (10) TMI 399 - ITAT DELHI] and Shri Naresh Pamnani vs. ITO ( 2019 (3) TMI 1787 - ITAT DELHI] no addition could be made against the assessee of the impugned amount.- Decided in favour of assessee. Penalty u/s 271(1)(c) - non compliance to notices issued by the assessee u/s 142(1) - HELD THAT:- As assessee firstly did not comply with the notices issued by the assessee u/s 142(1) of the Act and, secondly, he placed explanation which was self-contradictory as, on the one hand, the assessee is harping that notices were not served on the assessee and per contra, it has been alleged that the counsel of the assessee appeared before the AO. Therefore, the ld.CIT(A) rightly held that the assessee has failed to explain his non-compliance in response to the notices issued to him u/s 142(1) of the Act. Therefore, the penalty was rightly imposed by the AO and the ld.CIT(A) was also correct in upholding the same. Accordingly, the grounds of the assessee are dismissed and the penalty u/s 271(1)(b) of the Act is hereby confirmed.

  ---

• 2023 (3) TMI 971
  Unexplained cash deposit u/s.69A r.w.s. 115BBE - cash deposited in the bank account during demonetization period of Specified Bank Notes (SBNs) - HELD THAT:- Notification No.2774 SO 3544E dated 24.11.2016 exempted the purchase of petrol, diesel and gas at the stations operated under the authorization of Public Sector Oil Marketing Companies receiving cash in demonetization notes i.e.,SBNs upto 31.12.2016. AO has also not disputed this fact that the cash deposit is not out of sale of petrol or diesel. Admittedly the assessee is an authorized dealer of Bharath Petroleum Company Ltd., which is an authorized Public Sector Oil Marketing Company. There is no illegality or the cash received is not unexplained because this is received on the basis of sale of petrol exempted vide the above notification which was further extended vide notification dated 24.11.2016. Hence delete the addition and allow the appeal of assessee.

  ---

• 2023 (3) TMI 970
  Parallel proceedings under Income-tax Act, 1961 and IBC, 2016 - Proceedings against corporate debtor - financial creditor Application u/s 7 of Insolvency and Bankruptcy Code 2016 against the assessee before NCLT allowed - HELD THAT:- As per the provisions of section 14 of the Code institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority shall be prohibited during the moratorium period. The period of moratorium shall have the effect from the date of such order till the completion of the corporate insolvency resolution process. In the present case, the appeal filed by the Revenue is an institution of suit against the corporate debtor, which is prohibited under section 14 of the Code. Hon ble Supreme Court in the case of Pr. CIT v. Monnet Ispat Energy Ltd [ 2018 (8) TMI 1775 - SC ORDER] has upheld overriding nature and supremacy of the provisions of the Code over any other enactment in case of conflicting provisions, by virtue of a non obstante clause contained in section 238 of the Code. It is further pertinent to note that under section 178(6) of the Act, as amended w.e.f. 01.11.2016, the Code shall have overriding effect. As per section 31 of the Code, resolution plan as approved by the Adjudicating Authority shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. Thus, this will prevent State authorities, Regulatory bodies including Direct Indirect Tax Departments from questioning the resolution plan. Therefore, there is no reason to keep this appeal pending. We dismiss the appeal filed by the Revenue with the liberty to the Assessing Officer to file the appeal afresh after completion of moratorium period upon the revival of the Corporate Debtor as per Resolution Plan as approved by the Adjudicating Authority or upon appointment of the Liquidator, as the case may be. Appeal filed by the assessee also cannot be sustained as the assessee did not furnish any permission obtained from Hon ble NCLT as held in Mrs. Jai Rajkumar v. Stanbic Bank Ghana Ltd. [ 2019 (1) TMI 1254 - MADRAS HIGH COURT] . Further, no letter of authority issued by the Interim Resolution Professional in favour of the Authorised Signatory of the assessee, in respect of present appeal before us, has been filed. The appeal filed by the assessee is dismissed with the liberty to file the appeal afresh by the Interim Resolution Professional / Resolution Professional, as may be substituted by the Hon ble NCLT, on behalf of the Corporate Debtor with prior permission of the Hon ble NCLT; or after completion of moratorium period upon the revival of the Corporate Debtor as per Resolution Plan as approved by the Adjudicating Authority or upon appointment of the Liquidator.

  ---

• 2023 (3) TMI 969
  Estimation of income - Non-genuine purchases - HELD THAT:- As per the report of the Task Force for Diamond Sector constituted by the Ministry of Commerce and Industry after considering the BAP (Benign Assessment Procedure) scheme, the Task Force recommended that the net profit prevailing in the Diamond Industry engaged in the business of trading would be in the range of 1% - 3% and those engaged in the business of manufacturing would be in the range of 1.5% - 4.5%. In the present case, there is no dispute regarding the fact that the assessee is also in the business of trading in diamonds. Considering the same, we deem it appropriate to restrict the disallowance to 3% being the estimated gross profit of the bogus purchases. As the assessee claims that it has already offered to tax gross profit of 2.75% on the aforesaid transaction. Therefore, we direct the AO to verify the aforesaid submission and grant relief to the assessee to the extent the gross profit, on the non-genuine purchases, has already been offered to tax by the assessee.Appeal by the assessee is partly allowed.

  ---

• 2023 (3) TMI 968
  TP adjustment made in respect of purchase of capital goods from its AEs - ALP determination - MAM selection - assessee bench marked the above said transaction under TNM Method under its manufacturing segment - HELD THAT:- We are of the view that this issue requires fresh examination at the end of AO/TPO by selecting most appropriate method to bench mark the transactions of purchase of capital goods. As submitted by the assessee that the AE is purchasing capital goods and supplying them to non-AEs also in other Countries with the mark up ranging from 13% to 20%. Though Ld D.R contended that the non-AEs located in India alone should be considered for this purpose, yet we are of the view that the margin earned by AE from the transactions entered with non- AEs may be relevant, since the AE has been selected as Tested party. However, we leave this matter open to the wisdom of assessee and the TPO. Accordingly, we restore this issue to the file of TPO/AO for bench marking the purchase of capital goods afresh, in accordance with law. TP adjustment made in respect of purchase of finished goods - AR contended that internal CUP is the most appropriate method - HELD THAT:- When the assessee has purchased finished goods from both AEs and Non-AEs, there is merit in the contentions of Ld A.R that internal CUP may be most appropriate method. Accordingly, we are of the view that this issue also requires fresh examination at the end of TPO/AO. Accordingly, we set aside the order passed by AO on this issue and restore the same to the file of AO/TPO for determining ALP of purchase of finished goods by adopting most appropriate method. We also make it clear that the transfer pricing adjustment, if any, should be restricted to the purchases made from AE only. The assessee is also directed to furnish all the relevant details before the AO/TPO. Disallowance of claim of amortization amount premium paid on lease hold land - HELD THAT:- Having regard to the submissions made by Ld A.R and the Form No.8 filed by the assessee, we restore this issue to the file of AO with the direction to follow the decision that may be rendered by Hon ble Bombay High Court on an identical issue urged by the assessee before it in AY 2004-05. Disallowance of depreciation - HELD THAT:- Since the Tribunal has restored the matter relating to disallowance of depreciation made in AY 2006-07 to the file of AO for re-examination, it would be proper for us to restore this issue to the file of the assessing officer for examining it afresh in the light of decision taken by him in AY 2006-07 in the set aside proceedings. Accordingly, we restore this issue to the file of AO. Computation of book profit u/s 115JB - AO had added the amount of disallowance of amortization of premium and disallowance of depreciation to the net profit while computing book profit u/s 115JB - DRP directed the AO not to make these additions while computing book profit - HELD THAT:- As we direct the AO to comply with the directions given by Ld Dispute Resolution Panel on this issue.

  ---

• 2023 (3) TMI 967
  Condonation of delay - delay in filing of the appeal before the ld.CIT(A) - delay of 3047 Days - HELD THAT:- Assessee has made an afterthought to file the appeal before the CIT(A). The assessee society is not governed by an individual rather it has many members in its governing body and therefore, the alleged illness of the one of the directors of assessee society will not prevent the other office bearers of the assessee to file the appeal before the ld.CIT(A) against the order passed by the Assessing Officer. Therefore, in our considered view, for these vague reasons, such huge delay of 3047 days in filing of the appeal before the lower authority, cannot be condoned - assessee s reasons in the condonation petition do not come under .reasonable cause. as prescribed under the Act, for condonation of delay and the explanation given by the assessee for delay is not proper and casual in nature. The reasons given by the assessee are devoid of any merit and not sustainable in the eyes of law. The law requires the assessee to be vigilant and careful in prosecuting its rights under the Act - See MAJJI SANNEMMA @ SANYASIRAO VERSUS REDDY SRIDEVI ORS [ 2021 (12) TMI 1424 - SUPREME COURT] - Appeal of assessee dismissed.

  ---

• 2023 (3) TMI 966
  Disallowance of expenses - calculation on proportionate basis - Revenue contended that since the assessee has both income from licensing activities and business income , the assessee cannot claim deduction under both the heads - AR stated that the expenses pertaining to brokerage, security and telephone expenses are exclusively business expenses which are to be fully allowed and the other expenditure pertaining to repair and maintenance, etc. has been allocated by the assessee and only expenses related to the units owned by the assessee or leased out are claimed as expenses - A.O. had disallowed the total expenses by calculating the total area of the project from the leased area and by reducing the suo moto disallowance made by the assessee and had worked out the disallowance HELD THAT:- On a perusal of the profit and loss account of the assessee for the impugned year, it is evident that the assessee has not bifurcated the expenditure pertaining to the leased units and the units which are owned by the assessee. Even otherwise, the assessee has submitted that the assessee s business premises is situated at Olympia building which was exclusively for carrying out the assessee s business activity. By assuming that the rest of the properties were leased out by the assessee in which the assessee has received rental income inclusive of maintenance and the assessee has not shown any material evidence to prove that the assessee has not claimed double deduction u/s. 24 and section 57 of the Act. Neither the A.O. nor the ld. CIT(A) has looked into this aspect. The assessee has also not proved by any documentary evidence as how much maintenance the assessee is charging from the lessee for maintaining the area occupied by the lessee. In view of the same, we are of the considered opinion that the said appeal has to be remanded back to the A.O. for proper verification of the fact that the expenses claimed by the assessee pertain to the business activity of the assessee or relevant to the leased units. A.O. is directed to verify whether the maintenance expenses and other expenditures claimed by the assessee has not been claimed under income from house property as well as business income . A.O. is also directed to consider the claim of the assessee in view of the receipts to be filed by the assessee to substantiate its claim and to consider whether the impugned expenditure pertains to income from house property or expenditure for business activity . Revenue appeal is allowed for statistical purpose.

  ---

• 2023 (3) TMI 965
  Refund of excess dividend distribution tax - HELD THAT:- As assessee is entitled to pay dividend distribution tax on the dividends declared by it after reducing the dividends received from its subsidiary company during the financial year, provided such subsidiary company had duly remitted the dividend distribution tax on the dividends declared by it. In the instant case, it is not in dispute that the wholly owned subsidiary company had duly remitted the dividend distribution tax on the interim dividend declared by it to the assessee company. Hence, the action of the lower authorities in the instant case is clearly contrary to the provisions of Section 115O(1A) - we hold that assessee is entitled as per the Act to seek refund in respect of excess payment of dividend distribution tax. Interest u/s.244A - computational issue - HELD THAT:- As we have directed the ld. AO to grant refund of excess payment of dividend distribution tax the same would partake the character of any amount due u/s.244A of the Act, hence assessee would be entitled for interest on said amount also u/s.244A. This being a computational issue, we direct the ld. AO to relook the workings and grant interest u/s. 244A of the Act strictly in accordance with law. Accordingly, the ground No.2 raised by the assessee is allowed for statistical purposes. Interest levied u/s.234D - HELD THAT:- In response to the return filed by the assessee, the return was processed u/s.143(1) of the Act determining refund due to the assessee including interest u/s 244A of the Act. Later, the said refund was converted into demand in the scrutiny assessment framed u/s.143(3) of the Act wherein interest u/s.234D was charged by the AO on the refund including interest u/s.244A of the Act determined u/s. 143(1) of the Act, instead of calculating interest u/s.234D of the Act only on the refund of tax portion determined u/s.143(1) - This would be correct understanding of the provisions of Section 234D r.w.s. 244A of the Act. We direct the ld. AO to charge interest u/s.234D of the Act in view of the aforesaid provisions and recompute the same in accordance with law. Interest u/s.220(2) - This is purely consequential issue and a computational issue. Hence we direct the ld. AO to recompute the same, if any, chargeable, in accordance with law.

  ---

• 2023 (3) TMI 964
  Addition u/s 41(1) - liability due in assessee s books for the past 3 years to be ceased - AO in order to verify the genuineness of the trade payables and purchases sought information from the parties and issued notices u/s 133(6), but these notices were returned unserved - HELD THAT:- As evident from the record that the assessee could not produce any of the parties with which it had transactions of purchases and trade payables during the year and sought further time to comply with the said directions. However, since the time period of completing the assessment was getting expired, the AO proceed to complete the assessment on the basis of material available on record. As per the assessee, as the notices issued u/s 133(6) of the Act were returned unserved, therefore, it tried to file the details, as sought, before the AO. In this regard, reference was made to the letters filed before the AO. It is further evident that without considering the details/evidence filed by the assessee, the AO treated the liability due in assessee s books for the past 3 years to be ceased and made the addition u/s 41(1) - the purchase transaction and sundry creditors were treated as bogus by the AO, and the addition was made in hands of the assessee. As various details filed by the assessee, as noted above, were not examined by the AO and the learned CIT(A) deleted the addition, inter-alia, on the basis of such documents without calling for any remand report on the same from the AO, therefore, we deem it appropriate to remand the matter to the file of AO for de novo adjudication - Appeal by the Revenue is allowed for statistical purposes.

  ---

• 2023 (3) TMI 963
  Assessment u/s 153C - incriminating material unearthed during the course of search or not? - HELD THAT:- Addition made vide order passed u/s 153C r/w section 143(3) of the Act is not based on any incriminating material found during the course of the search, rather the same is apparently after going through the material i.e. return of income and computation of income, already available on record. There is no mention of any incriminating material found during the search and rather reliance is placed on CBDT guidelines to support the conclusion that the same is in the nature of business income. As regards the other comments from the appraisal report, which are mentioned in the remand report, we find that either the same do not pertain to the year under consideration or no addition has been made in the assessment order in the hands of the assessee. The existence of any incriminating material is also not evident from the perusal of the assessment order. As respectfully following the decision of Continental Warehousing Corporation (Nhava Sheva) Ltd. ( 2015 (5) TMI 656 - BOMBAY HIGH COURT] in absence of any incriminating material in the present case, we direct the AO to delete the addition made in the assessment order passed under section 153C r/w section 143(3) - Decided in favour of assessee.

  ---

• 2023 (3) TMI 962
  TP Adjustment - reference made to learned TPO under clause (i) to section 92BA - addition made in respect of the Specified domestic transaction and also in respect of international transaction - HELD THAT:- We noticed that the effect of omission of clause (i) in section 92BA relating to the specified domestic transaction was examined by the Coordinate Bench in the case of Edelweiss Rural Corporate Services Limited [ 2022 (6) TMI 1373 - ITAT MUMBAI ] and the Tribunal, by following the decision rendered in the case of Texport Overseas Pvt. Ltd. [ 2017 (12) TMI 1719 - ITAT BANGALORE] held that the reference made to learned TPO under clause (i) to section 92BA is not valid and consequently transfer pricing adjustment made in respect of the Specified domestic transaction is liable to be deleted. We direct the Assessing Officer to delete the transfer pricing adjustment made in respect of specified domestic transaction. Addition u/s 40A - As submitted by DR, the Specified Domestic transactions entered with the related parties are required to be examined afresh in terms of section 40A(2)(a) of the Act. Accordingly, we restore this issue to the file of the Assessing Officer with the direction to examine the same in terms of section 40A(2)(a) of the Act. TP adjustment in respect of international transactions entered with AE - Hon ble Bombay High Court in the case of CIT Vs. Thyssen Krupp Industries Pvt. Ltd [ 2015 (12) TMI 1076 - BOMBAY HIGH COURT] has held that the transfer pricing adjustment is mandated in respect of international transaction entered with the related parties, meaning thereby, there is no requirement of making any adjustment in respect of transactions entered with unrelated parties. Accordingly, we direct the Assessing Officer/TPO to restrict the transfer pricing adjustment on the international transactions entered with AEs only.

  ---

• 2023 (3) TMI 961
  Nature of expenditure - expenditure on workshop building - permanent structure or temporary structures -depreciation at the rate applicable to buildings allowed - HELD THAT:-The impugned issue has been considered by the larger Bench of jurisdictional High Court of Kerala in the case of Indus Motors Company Pvt. Ltd. [ 2016 (5) TMI 472 - KERALA HIGH COURT] wherein held whether an expenditure incurred by the assessee is a capital expenditure or revenue expenditure is to be decided on the facts of each case by applying the relevant tests - we are inclined to decide this issue in favour of the assessee and against the revenue.

  ---

• 2023 (3) TMI 960
  TP Adjustment - Comparable selection - HELD THAT:- Assessee is into providing Information Technology Enabled Services (ITES), thus companies functionally dissimilar with that of assessee need to be deselected from final list. Revenue challenging the direction issued by Ld. CIT(A) to TPO to recalculate the margins of comparables - Revenue contended that since Ld. TPO has no such power to set aside the order of the Ld. TPO u/s 251 of the Act the directions are not sustainable - HELD THAT:- CIT(A) issued the direction by noticing the patent irregularity committed by the Ld. TPO by not computing the correct margin. Moreover, when M/s. Jindal Intellicom Ltd. passes the export filter for F.Y. 2012-13 with export to sales ratio of 81.85%, the correct margin needs to be calculated. So we find no illegality in issuing directions by Ld. CIT(A) to the Ld. TPO to verify the facts after providing opportunity of being heard to the assessee. Hence, ground No.2 is also determined against the Revenue.

  ---

• Customs

• 2023 (3) TMI 959
  Valuation of imported goods - Enamelled Aluminum Wire - re-determination/enhancement of the transaction value based on the LME price - reliability of NIDB data - NIDB data comparison pertained to Braiding Wire of Aluminium Alloy - HELD THAT:- It is found that the impugned orders passed by the ld. Commissioner suffer from legal infirmity inasmuch as the comparison offered based on NIDB Data is with reference to an altogether different product viz. Braiding Wire of Aluminium Alloy and therefore, it certainly cannot be considered as identical or similar goods, viz. Enamelled Aluminum Wire. Also reliance placed by the Ld. ommissioner on NIDB Data relating to import of some Aluminium Magnesium Alloy Wire imported at Nhava Sheva can also not offer a realistic comparison of identical goods as they do not match in terms of the description and quantity. The manufacturers Certificate state that Enamelled Aluminum Wire under import was manufactured out of scrap. In view of the manufacturers certification provided at the time of import and with no claim to doubt the veracity of the said contention, the test results as offered by the CRCL and the Sriram Institute for Industrial Research, New Delhi, the Department s claim of disputing the description and valuation of the import goods is bereft of any merit. Also the comparisons offered of allegedly similar goods either by way of proforma invoice of NIDB data are also without any merits as they cannot stand legal scrutiny. The Department s contention of taking LME prices as the bench mark price is not on a sound footing in view of the certification from the manufacturers that the import goods were produced out of scrap. Therefore to contend the valuation of import goods based on the value of prime material holds no legal substance and is liable to be quashed as the said imported goods viz. Enamelled Aluminium Wire are not the products of virgin material but manufactured out of scrap. It would not be appropriate to allege mis-declaration on the part of importer either for the description of the goods or for their valuation as the comparison rendered by the Department cannot be upheld under the facts and circumstances herein. The price of the import product based on the price of prime virgin material does not withstand scrutiny in view of the explanation and contention offered by the manufacturers, which has not been disputed by the Department. This Tribunal in the case of M/S. B.B.M. IMPEX PVT. LTD., VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) , NEW DELHI [ 2020 (6) TMI 425 - CESTAT, NEW DELHI] has held that NIDB Data cannot be relied upon when it is relating to different quantity and quality of goods. The test report and the manufacturer s certificates have not been contested by the Department. The contemporaneous evidence cited in support by the Department, are not inconsonance with the description of the goods under import. Appeal allowed.

  ---

• 2023 (3) TMI 958
  Eligibility for exemption notification - Benefit subject to the condition of manufacture - Notification no 30/2004-CE dated 9.7.2004 as amended by N/N. 34/2015-CE dated 17.7.2015 - additional duty of Customs - case of the appellants is that they are entitled to the benefit of the exemption notification even after the amendment on 17.7.2015 and it is the case of the Revenue that the appellants are not entitled to this benefit after the amendment. Whether or not the appellants would be entitled to the benefit of the exemption notification 30/2004-CE dated 9.7.2004 as amended by Notification No. 34/2015-CE dated 17.7.2015 read with the explanation dated 21.7.2015? HELD THAT:- Before 17.7.2015, the only condition in the exemption notification was that no CENVAT credit should have been availed on the inputs used in manufacture of the goods. It is obvious that the CENVAT credit will not be available at all if the goods are manufactured outside India and therefore, it is impossible to have availed CENVAT credit on the goods manufactured outside India. Therefore, it is fair to assume that no CENVAT credit was availed on the inputs used in the manufactured of imported goods. Therefore, the condition that no CENVAT credit should have been availed is fulfilled with respect to imported goods. After 17.5.2015, a second condition has been added that Central Excise duty should have been paid on the inputs. Just as it is impossible for the manufacturer outside India to have availed CENVAT credit, it is equally impossible for Central Excise duty to have been paid on the inputs used in the manufacture of the goods. Therefore, it is reasonable to assume that this condition was not fulfilled with respect to imported goods just as it is reasonable to assume that no CENVAT credit has been availed. If the exemption notification is read as per the appellant s submissions, it will put the domestic industry at a disadvantage and unduly favour the imported goods. To claim the benefit of the same exemption notification, the domestic industry will have to manufacture it out of duty paid inputs while the imported goods will get this benefit without paying duty on the inputs. Any exemption notification must be strictly interpreted as it is drafted and there cannot be any intendment while interpreting it. The person claiming the benefit of the notification will have to fulfill all the conditions in the notification. If the conditions are not fulfilled, the benefit is not available. The benefit of the exemption notification 30/2004-CE dated 9.7.2004 as amended by Notification No. 34/2015-CE dated 17.7.2015 will not be available to the goods which are imported - Hon ble High Court of Madras in M/S HLG TRADING VERSUS UNION OF INDIA, JOINT SECRETARY, TRU CENTRAL BOARD OF EXCISE AND CUSTOMS, CHIEF COMMISSIONER OF CUSTOMS, COMMISSIONER OF CUSTOMS, M/S ADITYA INTERNATIONAL LTD AND OTHERS [ 2015 (11) TMI 313 - MADRAS HIGH COURT] and in THE COMMISSIONER OF CUSTOMS (EXPORTS) VERSUS M/S. PRASHRAY OVERSEAS PRIVATE LIMITED, CUSTOMS EXCISE SERVICE TAX APPELLATE TRIBUNAL [ 2016 (5) TMI 1106 - MADRAS HIGH COURT] held that the benefit of the exemption notification will not be available to the imported goods. In the facts of these cases, the matters pertained to the period after the amendment 34/2015-CE dated 17.7.2015 adding the new condition that central excise duty should have been paid on the inputs was introduced and further after the explanation was inserted by 37/2015-CE dated 21.07.2015. The undisputed position is that there are two conditions (1) no CENVAT credit should have been availed which is fulfilled and (2) that excise duty should have been paid on the inputs which has not been fulfilled. Respectfully following the judgment of the Madras High Court, it is held that the appellants were not entitled to the benefit of 30/2004-CE dated 9.7.2004 as amended by Notification No. 34/2015-CE dated 17.7.2015 for the CVD on the imported goods. There is no infirmity in the impugned orders - Appeal dismissed.

  ---

• 2023 (3) TMI 957
  Suspension of the customs broker licence - appellant did not verify the antecedents of the exporter by visit to his premises and also that there was difference in declared value of the export goods and value arrived at by Market survey - failure to ascertain the correct value of the export consignments - failure of the appellant to verify the antecedents. The appellant s first contention is that there was undue delay in issuing the impugned order considering that the alleged irregularity took place on 26.06.2021 and the suspension order was issued only on 14.10.2022 - HELD THAT:- Simply because a suspicion has arisen in a particular case it is not a sufficient ground to suspend the licence of the customs broker who handled such imports/exports. Only after necessary enquiry, and investigation if a prima facie case is found against the customs broker can its licence be suspended. In this case, the Commissioner, Air Cargo, New Delhi completed the investigation and issued a SCN on 14.09.2022 and it was received by the Commissioner, Jodhpur giving him sufficient grounds to examine if suspension of the licence was warranted. The licence was suspended soon after by order dated 14.10.2022. The post decisional hearing was given and the suspension was confirmed by the impugned order dated 07.11.2022 - there are no delay at all on the part of the Commissioner, Jodhpur or any error in issuing the suspension order or in issuing the order confirming the suspension. It is not found that the appellant confined his submission to the immediate need to suspend the licence. It is in this context that Commissioner examined the above submissions of the appellant and gave his findings. When the appellant itself has made submissions on merits as defence, the Commissioner was bound to examine those and give his findings on them. Therefore, there are no force in the submission of the learned counsel for the appellant that the Commissioner has pre-decided the issues - the Commissioner came to the conclusion that immediate action was necessary while suspending the licence on 14.10.2022 and promptly took subsequent steps for confirmation of the suspension. It is also found that after the impugned order, the Commissioner issued SCN dated 29.11.2022 proposing revocation of the licence. The appellant had, within a month, submitted its reply to the SCN dated 29.11.2022 on 26.12.2022. The enquiry officer submitted his report on 02.01.2023. All that is pending is the final decision by the Commissioner regarding revocation of licence. There is no ground to revoke the suspension of the Customs Broker Licence of the appellant at this stage - Appeal dismissed.

  ---

• 2023 (3) TMI 956
  Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - export of prohibited goods (red sanders logs), declaring it as VAT BLUE 20 - appellant s submission was that the Shipping Bill was not filed by it or with its knowledge or consent - HELD THAT:- It is undisputed that the appellant had not filed the Shipping Bill at all and the exporter in whose name the Shipping Bill was filed was not its client. Therefore, if the exporter violated laws and attempted to smuggle out red sanders, by no stretch of imagination can the appellant be faulted. To come to such a conclusion, it must be presumed firstly that the exporter was the appellant s client (which it was not) and that the appellant was aware that the Shipping Bill was filed (which it was not), that the appellant was aware that the exporter violated the laws (which it was impossible considering that the appellant was not even aware of the Shipping Bill) and ultimately that the appellant had not advised the exporter. Any Facility Notice by the Commissioner is to facilitate the processes and procedure in the Custom House and it does not take the shape of a statutory regulation. Therefore, even if there was a violation of any instructions in such notice, it does not automatically be concluded that the Regulations have been violated. The violation of the Regulation has to be established. At any rate, if the appellant mainly operates in Delhi, it has no reason to keep checking the system for Shipping Bills and Bills of Entry filed in various Custom Houses across the country and also checking what instructions were issued by the respective commissioners. So long as it follows the instructions in the Customs formations where it operates, the appellant cannot be faulted. Further, it is found that if the system is not designed to send an alert to the Customs Broker if a Shipping Bill is filed in its name in the service centre at the Custom House and only sends an alert if it is filed online, it cannot be fathomed how the appellant can be faulted if this loophole in the system was exploited by another person after making a fake Customs card. The impugned order cannot be sustained - Appeal allowed.

  ---

• 2023 (3) TMI 955
  Levy of penalty u/s 112(a) and 114AA of Customs Act - mis-declaration of imported goods - fire crackers, total valued at Rs. 44,47,200/- - prohibited goods - case of appellant is that he himself is the victim of fraud by his employer Hemant Gandhi and his associates who used his name, photograph and identity for obtaining unknown numbers without his knowledge - HELD THAT:- This appellant was mostly acting at the instructions of his employer Mr. Hemant Gandhi. Further it appears from the facts and circumstances and the evidence on record that this appellant was not aware that fire crackers (restricted goods) are being imported under the guise of E-glass of spec chopped strand mat (B-grade). However, it appears that this appellant had some inkling that Mr. Hemant Gandhi is resorting to dubious means or unethical practice, as he instructed the appellant to represent himself as Niting Chadda instead of Nitin Gandhi before the CHA. Further, Hemant Gandhi had promised to give Rs. 20,000/- per container to the person who will allow import in their name by using their IEC. Thereafter, this appellant contracted Mr. Roshan Singh and arrange for the use of his IEC in the name of Roshan Singh and Company, for which this appellant promise to give Rs. 10,000/- per container to Mr. Roshan Singh and thus was making Rs. 10,000/- per container out of the amount of 20,000/-. In this view of the matter, it is evident that this appellant was also receiving 10,000/- for making the arrangement for import through Mr. Roshan Singh. It is further found that this appellant have not resorted to use of any documents knowing it befalls or forged. The penalty under Section 114AA is set aside and the penalty under Section 112(a) is reduced to Rs. 1 lakh. Appeal allowed in part.

  ---

• Insolvency & Bankruptcy

• 2023 (3) TMI 954
  Liquidation of Corporate Debtor - non-execution of decrees - Section 33 of I B Code - HELD THAT:- Admittedly, the Appellant is an Association ventilating its grievance against appointment of the Respondent as Liquidator. The fact remains that the RP has not challenged the appointment of this Respondent as Liquidator and this Tribunal does not find any allegations against this Respondent. No one aggrieved against the appointment of this Respondent as Liquidator except the Appellant and no genuine cause or reason shown neither any illegality or irrational has been pointed out by the Appellant except mere appointment as Liquidator by the Adjudicating Authority. Moreover, the Appellant failed to explain that the Adjudicating Authority lacks jurisdiction in appointing the Respondent as Liquidator. Furthermore, the CoC it its 4 th meeting held on 07.08.2018 passed a Resolution and decided to appoint the Respondent as Liquidator. It is to be presumed that the CoC in its commercial wisdom has taken a decision and reposed its confidence in the Respondent to act as Liquidator. Further, this Tribunal in SANDEEP KUMAR GUPTA VERSUS STEWARTS AND LLOYDS OF INDIA LTD. AND ANR. [ 2018 (4) TMI 276 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, KOLKATA ] held that the observations made in the impugned order should not be construed to be misconduct on the part of the Appellant, but as we find that the Adjudicating Authority was not satisfied with the performance of the Resolution Professional , we hold that the Adjudicating Authority was well within its jurisdiction to engage another person as Resolution Professional or Liquidator . Without going into the other aspects of the case this Tribunal is of the view that the order under challenge was passed by the Adjudicating Authority on 01.09.2020 and till passing of this order, if the period is taken into consideration from the date on which the impugned order was passed i.e. 01.09.2020, much time has passed i.e. more than 2 years and it would be a futile exercise if the order is interfered with, keeping in view of the time bound proceedings of the IBC. This Tribunal comes to a resultant conclusion that the Appellant has not made out a prima-facie case to be interfered with the order passed by the Adjudicating Authority - appeal dismissed.

  ---

• Service Tax

• 2023 (3) TMI 953
  Rejection of application to settle its dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Renting of Immovable Property Service or not - It is Petitioner s case that it did not pay service tax to Service Tax Authority under the belief that mere letting out was not a service - primary reason for disagreement is that Section 122 does not refer to VCES 2013 enactment and therefore, the order passed by the authority with reference to VCES is beyond the scope of the SVLDR Scheme. Whether the amounts demanded against the Petitioner are dues under the Finance Act, 1994 or not? HELD THAT:- VCES is part and parcel of the Finance Act, 1994, a statute which finds mention in Section 122 of the said Act. As can be seen from the facts of the case at hand, the Petitioner had obtained its Service Tax Registration under the Finance Act, 1994, the liability to pay service tax arose under the Finance Act, 1994, the show cause notice dated 17 April 2017 demanding the interest amount of Rs.2,78,90,766/- was issued to Petitioner under Section 75 of the Finance Act, 1994, which clearly stated that Petitioner had failed to pay minimum 50% of the declared tax dues on or before 31 December 2013 as required under the provisions of Section 107(3) of the Finance Act, 1994. There is, therefore, no doubt that the liability of the Petitioner had arisen under the Finance Act, 1994 which enactment finds mention under Section 122 of the said Act. Therefore, the ground for rejection of Petitioner s second application that the VCES does not find mention as an enactment under Section 122 would therefore not survive. Coming to the observation of the Designated Authority that amount of duties having been paid, there is no duty pending recovery under the indirect tax enactments, we have already noted that in the facts of the case, the show cause notice demanding the interest amount was issued to Petitioner under Section 75 of the Finance Act, 1994 and which related to the service tax dues, which have admittedly been paid by Petitioner. Just because the Petitioner has paid the principal amount, it cannot be said that when a show cause notice has been issued for interest on the said amount, that the Petitioner is not entitled to make a declaration under SVLDRS. The interest relates to the service tax amount and the SVLDR Scheme covers not only tax but also interest, penalty - The Designated Authority ought to have considered the receipt of both these amounts while considering the application made by Petitioner. The order of the Designated Authority dated 6 February 2020 under SVLDR Scheme rejecting Petitioner s SVLDRS-1 application dated 27 December 2019 is hereby quashed and set aside - Respondent no.2 Designated Authority is directed to consider the Petitioner s SVLDRS-1 application dated 27 December 2019 afresh in the light of the above discussion within a period of four weeks from today and issue appropriate order / certificate. Petition allowed.

  ---

• 2023 (3) TMI 952
  Rejection of Petitioner s application / declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Territorial jurisdiction of Commissionerate - it is contended that when the Petitioner was filing declaration on the portal in SVLDRS-1, there was no option to change the Commissionerate as once the Petitioner had entered the registration number, it automatically showed the concerned Commissionerate as Thane Commissionerate and it was not possible for the Petitioner to change the option to Navi Mumbai. HELD THAT:- The scheme of 2019 which is brought into force by the Finance Act of 2019 is for settlement of legacy disputes and also gives opportunity to the tax payer to come forward to make payments and to resolve their pending disputes. It was also to help the Government to clear the amount locked in litigation to augment the revenue. In that context, the scheme of 2019 has to be construed. Section 125 of the Act, while it provides for declaration under the scheme, excludes categories of persons who are ineligible to make a declaration under the scheme. It is not the case of the Respondents, as conveyed to the Petitioner in the remark column, that Petitioner falls under in any of the exclusions. The form to be filled under Section 125 of the Act is specified in the SVLDR Scheme Rules 2019 and form of SVLDRS-1 is appended to the Rules. The first column contains the service tax registration number. Then the other details and there is Column 8 which states select a Commissionerate. Prima facie reading of Column 8 would indicate that a Commissionerate can be selected. If the Petitioner had selected a wrong Commissionerate and when it was pointed out, if it was possible for the Petitioner to correct the Commissionerate, then the argument of the Respondents that the Petitioner failed to do so in forty-one days would have relevance - there are no option but to proceed on the premise that once the Petitioner had entered registration number which was tied up with Thane Commissionerate, the option at Column 8 was automatically selected. Therefore, from the pleadings in the Petition, which have not been controverted in the reply affidavit, what emerges to us is the Petitioner is a victim of the lacuna in the software governing the SVLDR scheme where the Petitioner could not have selected the option of Navi Mumbai Commissionerate which was earlier Commissionerate of the Petitioner. This being the position, it is opined that the Petitioner is entitled to get his application / declaration SVLDRS-1 to be examined on merits as to whether the Petitioner is otherwise entitled to the benefit of the scheme. The impugned rejection of the Petitioner s declaration for SVLDRS-1 is set aside - Respondents will treat the application of the Petitioner for SVLDRS-1 as being properly instituted and decide the same on its own merit, as per law and as per the provisions of the scheme, within a period of eight weeks from today.

  ---

• Central Excise

• 2023 (3) TMI 951
  Valuation - Transaction value of MRP based value - institutional buyer - Section 4(A) of the Central Excise Act - retail sale of footwear under Rs. 500/- - whether the goods sold by the respondent are eligible to claim tax benefits within the purview of the abovementioned notification under Section 4(A) of the Central Excise Act? - HELD THAT:- In the case of JAYANTI FOOD PROCESSING (P) LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAJASTHAN [ 2007 (8) TMI 3 - SUPREME COURT] , this Court, while deciding on a similar issue, held that for goods to be included under the assessment of Section 4(A) of the Central excise Act, it must comply with five factors. A bare perusal of Section 4(A) of the Act and the abovementioned judgment would show that to attract a MRP based valuation of goods under the Central Excise Act, the goods should be notified under Section 4(A) of the Act and that such goods must come within the purview of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, which has now been repealed and replaced by the legal Metrology (Packaged Commodities) Rules, 2011 - In the present case at hand, the respondent entered into a sale with the paramilitary and military as per the terms of agreement signed. While the goods in the impugned sale were notified under Section 4(A) of the Act by way of an official notification in the gazette, what is most relevant to us is Rule 3(b) of the Legal Metrology (Packaged Commodities) Rules, 2011 which exempts the sale to institutional consumers from its purview. A consumer, as clarified by the Jayanti Foods Judgment, is the final consumer of the product, and not the intermediary. In the present case at hand however, the purchaser institutions, as discussed above are intermediaries, who after the purchase of the said goods, distribute it further to the final consumer - where the purchaser institution is deemed to not be a consumer, the sale also cannot be held to be a retail sale as per the Act. Further, since the impugned sale is not a retail sale as per the Act, there exists no mandate of law on the Respondent herein to affix an MRP on the goods sold, and hence the said impugned transaction cannot claim benefit under Section 4(A) of the Act. The CESTAT committed an error in law by passing the impugned order dated 09.01.2019 and the Respondent being under an obligation is directed to pay the differential amount to the relevant tax authority - Appeal allowed.

  ---

• 2023 (3) TMI 950
  Vires of Rule 8(3A) of the Central Excise Rules, 2002 - Default in payment of amount of central excise duty along with interest - amount stands deposited with a delay of few weeks - Department is of the view that as per the provisions of Rule 8(3A) of Central Excise Rules, 2002, the appellant should have paid the entire delayed payment of Rs. 1,41,36,316/- in cash rather than same being paid by utilizing Cenvat credits. HELD THAT:- The matter has been decided by this tribunal in the case of PRINCIPAL COMMISSIONER OF C. EX., DELHI-I VERSUS SPACE TELELINK LTD. [ 2017 (3) TMI 1599 - DELHI HIGH COURT] , M/S. SUPERMAX PERSONAL CARE PVT. LTD. VERSUS COMMISSIONER OF CE ST, LTU, MUMBAI [ 2022 (7) TMI 920 - CESTAT MUMBAI] and ANDHRA CYLINDERS PVT LTD, NALIN KHARA, MANAGING DIRECTOR VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD I [ 2020 (1) TMI 189 - CESTAT HYDERABAD] - It was held in M/s. ANDHRA CYLINDER that What needs to be decided in this factual matrix is where there are judgments by four different High Courts holding Rule 8(3A) as ultra vires and there is no judgment of any High Court upholding it and where the appeals against these judgments have been admitted and are under consideration of the Hon ble Apex Court, whether the ratio of these judgments bind this tribunal or otherwise. We find that the last in the series of judgments was passed by the Hon ble High Court of Bombay in the case of Nashik Forge Pvt Ltd on 17.09.2018 holding that the ratio of the judgment of the Hon ble High Court of Madras, Gujarat and Punjab Haryana apply. Since the given facts of the appeal are identical to the one which has been decided by the above mentioned order, appeal is allowed.

  ---

• 2023 (3) TMI 949
  Seeking recovery of the amount refunded - recovery sought on the ground that the exemption in terms of the said Notification is not available to excisable commodity which is not manufactured in such units - requirement to pay duty on waste and scrap in view of the Notification No.89/95-CE dated 18.05.95 - benefit of Notification No.33/99-CE (as amended) - HELD THAT:- There is no dispute in this case that the Appellant has manufactured cement as well as capital goods in the factory. During the course of manufacture of capital goods waste and scrap was also generated. Whether duty is payable on the waste and scrap is not a question here. However, it is found that the Appellant has chosen to pay duty on the waste and scrap by utilizing the CENVAT Credit. The payment of duty on the scrap has not been questioned by the Department. The Department has only questioned the payment of duty by utilizing the CENVAT Credit availed. It is found that the waste and scrap generated is also a product manufactured within the factory for which duty can be paid by utilizing the CENVAT Credit account. Hence, it is held that the payment of duty for the waste and scrap by utilizing the CENVAT Credit account was in order. For payment of duty for the cement, they have utilized the balance CENVAT Credit and the remaining duty through PLA. The refund claimed was only on the payment of duty through PLA for the cement, which is permissible as per Notification No.33/99-CE dated 08.07.1999. The payment of duty for the scrap has been correctly paid by utilizing the CENVAT Credit account and the refund of duty paid through PLA on the cement has been correctly claimed by the Appellant as per Notification No.33/99-CE dated 08.07.1999 - Appeal allowed.

  ---

• 2023 (3) TMI 948
  Denial of benefit of exemption Notification No. 4/2006-CE dated 1.3.2006 at Sl. No. 72 - classification of matches - matches classifiable under Chapter 3605.00.10 or 3605.00.90? - appellants are independent manufactures - appellant purchased machine dipped match splints and undertook box filling and packaging without the aid of power and then cleared at nil rate of duty - HELD THAT:- The issue as to whether the benefit of Notification No.4/2006-CE dated 1.3.2006 is available to the appellant has been decided by the decision of the Tribunal in the case of M/S SRI GANAPATHY PACKAGING VERSUS THE COMMISSIONER OF GST CENTRAL EXCISE [ 2020 (2) TMI 1114 - CESTAT CHENNAI ]. The said order was followed in the case of M/S. PUSHPA MATCH WORKS, M/S. AMSARANI MATCH WORKS, M/S. SELVI PACKAGING, M/S. ESTHAR MATCH WORKS, M/S. JOTHI MATCH WORKS, M/S. SREENIVASAN MATCH WORKS, M/S. SRI RAMAIYA MATCH INDUSTRIES, M/S. SRINIVASA MATCH WORKS, M/S. SOLAIAMMAL MATCH WORKS, M/S. NANDHINISHRI MATCH WORKS, M/S. BALAJI MATCH WORKS VERSUS COMMISSIONER OF GST CENTRAL EXCISE [ 2023 (3) TMI 827 - CESTAT CHENNAI] - It was held by the Tribunal that appellants are not eligible for the benefit of exemption notification No.4 ibid. The appellant is not eligible for the benefit of exemption of the Notification. The impugned order does not require any interference - Appeal dismissed.

  ---

• 2023 (3) TMI 947
  CENVAT Credit - reverse charge mechanism - case of the department is that since the appellant have paid the service tax on reverse charge mechanism on 13.07.2017, the same was not available as cenvat credit as on 30.06.2017 - levy of penalty - HELD THAT:- There is no dispute in the fact that the appellant have discharged the service tax under reverse charge mechanism in respect of the services received in the month of June, 2017 and payment of service tax was made in 13.07.2017. The appellant have filed the ST-3 return for the period ending on 30.06.2017 on 10.07.2017. The appellant have reflected the cenvat credit of service tax paid on 13.07.2017 of the said return on 30.06.2017. Since the service tax was paid on 13.07.2017 by no stretch of imagination the same could have been mentioned in the ST- 3 return filed on 10.07.2017. Moreover, even the circular issued in this regard is applicable to only those cases where the service tax was paid by 05th /06th of July , 2017 or at the most the same is paid before filing the return. In case of the service tax payment made after filing the return the assessee was supposed to file a revised return incorporating the cenvat credit paid of service tax on RCM which appellant has failed to do. The appellant cannot get the benefit of the Circular dated 28.09.2017. Accordingly, the payment of duty made by utilizing the cenvat credit in the facts of the present case is not legal and correct. The right course of action for the appellant was either to revise the return and show the adjustment or claim the refund of cenvat credit under section 142 (3) of CGST Act, 2017. Therefore the appellant s availment of cenvat credit of service tax paid on 13.07.2017 and utilization thereof for payment of excise duty for the month of June, 2017 is not correct. Therefore, the demand of cenvat credit is sustained - the appellant has liberty to opt for alternate i.e. filing a revised return or claiming refund under Section 142 (3) of CGST Act, 2017 if permissible as per law. Levy of penalty - HELD THAT:- Since there is no intention of the appellant to evade any duty as the appellant have discharged the service tax and utilized the same though incorrectly but it was a revenue neutral situation as the appellant is otherwise entitled for the refund of the same amount. Hence, in absence of any mala fide penalty under section 78 is not imposable. Therefore, the penalty imposed under section 78 is set aside. Appeal allowed in part.

  ---

• 2023 (3) TMI 946
  Disallowance of taken CENVAT Credit on clean energy cess levied on coal - seeking recovery along with interest under section 11AA and imposed penalty under Rule 15 (1) of Cenvat Credit Rules, 2004 read with section 11AC - HELD THAT:- The issue involved in this appeal is identical to the issue involved in respect of the same appellant in M/S ACC LIMITED VERSUS COMMISSIONER OF C.G.S.T. C.E. JABALPUR [ 2019 (6) TMI 1192 - CESTAT NEW DELHI] . It was held in the final order that the appellant was not entitled to Cenvat credit on the clean energy cess paid by it and accordingly the appeal was dismissed. There are no reason to take different view in this appeal - the appellant was not entitled to Cenvat credit of the clean energy cess paid - appeal dismissed.

  ---

• 2023 (3) TMI 945
  Demand of interest and penalty u/r 25 of Central Excise Rules, 2002 - Levy of Excise Duty as per Notification No.62/1995-CE dated 16.03.1995 - notification has been rescinded or not - HELD THAT:- Ld. Counsel has explained that the appellant is a Central Government undertaking and had omitted to pay the excise duty only because they were under the bonafide belief that the goods cleared by them (railway coaches) are exempted from excise duty as per notification. They have paid the duty on 31.01.2012. The appeal is filed against the demand of interest. There are no ground to set aside the demand of interest. As rightly argued by Ld. A.R in the decision of the Hon ble High Court of Bombay relied by Ld. Counsel for appellant in WATER RESOURCES DEVELOPMENT FORMERLY KNOWN AS IRRIGATION, VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2021 (12) TMI 427 - BOMBAY HIGH COURT ] the question is whether the demand under the SCN is barred by limitation or not - In the case on hand, the demand raised is within the normal period. Further, there is no penalty imposed under Section 11AC of the Central Excise Act, 1944. The Commissioner has considered all the facts and imposed penalty of Rs.10,000/- only. There are no grounds to interfere with the demand of interest and imposition of penalty - appeal dismissed.

  ---

• 2023 (3) TMI 944
  Refund claim - export of goods - input services - documentation charges and agency fees - draft survey charges - bunker survey charges - sampling and analysis charges for export of excisable goods i.e. Cement - applicability of N/N. 52/2011-ST dated 30.12.2011 - HELD THAT:- There is no dispute about the use of these services for export of goods. The only dispute raised by the appellant is that classification of services is not correct. Revenue cannot raise objection challenging the classification at the recipient end which is a settled law. On this ground refund cannot be denied. The same issue has been considered by this Tribunal in the order dated 12.02.2013 [ 2013 (4) TMI 461 - CESTAT AHMEDABAD ] wherein it was held that The entire exercise of the Revenue to reject the refund claim is non-starter in as much as it is settled law that the classification of the product or services at the recipient s end cannot be done so by the authorities. In the case in hand, I find that the classification of Technical Testing Analysis and Customs House Agent s services are being sought to be classified under various other services and refund is sought to be rejected. This is not in consonance with the law which has been laid down by various judicial pronouncements. The issue is no longer res-integra - Appeal allowed.

  ---

• CST, VAT & Sales Tax

• 2023 (3) TMI 943
  Process amounting to manufacture or not - mixture of the base paint with different colours, results in a new product or not - Revenue contended that the sale of paints which had undergone mixing (through a computerised process with the aid of a DTS machine) amounted to manufacture , thereby resulting in a new product, which was a fresh incidence of taxation - HELD THAT:- In Mahalaxmi Stores [ 2002 (11) TMI 112 - SUPREME COURT] , this court relied on previous decisions such as Commissioner of Sales Tax Vs. Pio Food Packers [ 1980 (5) TMI 30 - SUPREME COURT ], and Chowgule and Company(P) Limited Vs. Union of India [ 1980 (11) TMI 61 - SUPREME COURT ] to state that the manufacturing process can vary, and that the process of producing every type of variation, or finishing of goods, would not amount to manufacture as contained in the statute unless it resulted in the emergence of a new commercial commodity. In Sonhbadra [ 2006 (8) TMI 304 - SUPREME COURT ], this court while deciding the facts of the case before it cited a large number of decisions rendered in the context of what was meant by manufacture. This court specifically noticed in Union of India V. Delhi Cloth and General Mills [ 1962 (10) TMI 1 - SUPREME COURT ] that manufacture meant bringing into existence a new substance and did not mean merely to bring about some change in the substance. In Mahalaxmi Stores, it was held that processing or variation/finishing of goods would not per se amount to manufacture unless it resulted in the emergence of a new commercial commodity. In the present case, the findings based on the expert s evidence are that the base paint was mixed with colouring as an additive. Both of these had suffered tax. The resultant article i.e., the paint of a different shade, did not result in a new commercial product. In common parlance, the new product was nothing else but paint , and not a different article. The High Court did not fall into error - Appeal dismissed.

  ---

• 2023 (3) TMI 942
  Reopening of assessment - order of assessment itself was not issued by the Authorities - HELD THAT:- The dispute raised in the present Writ Petition is squarely covered by the decision of the Division Bench of this High Court rendered in the case of State of Chhattisgarh Ors. v. M/s Tata Teleservices Limited [ 2022 (12) TMI 264 - CHHATTISGARH HIGH COURT ]. These Writ Appeals by the State were preferred against the Order passed by the Single Bench in Writ Petition (T) No.79/2017 on 20.3.2018. In the said Writ Petition, the Writ Court in identical set of facts had held the order of reopening of assessment to be bad when the order of assessment itself was not issued by the Authorities. The said Order of the Single Bench was subjected to challenge by the State before the Division Bench in the aforesaid Writ Appeals. The Division Bench rejected the bunch of Appeals of the State, affirming the Order passed by the Single Bench. Similar matter which came up for consideration before the Division Bench in TAXC No.74/2022 in the matter of M/s. Iron Junction Rajbandha Maidan, Raipur Vs. Commissioner of Commercial Tax [ 2022 (9) TMI 1407 - CHHATTISGARH HIGH COURT ] where keeping in view the decision rendered in the case of M/s. Tata Teleservices Limited [ 2022 (12) TMI 264 - CHHATTISGARH HIGH COURT ] , the Division Bench had disposed of the said Tax Case also in terms of the Order passed in M/s. Tata Teleservices Limited . It has been emphatically held that unless there is a specific order of assessment under Section 21(1) of the Chhattisgarh Value Added Tax Act, there cannot be reopening of an assessment made under Section 21(2) of the said Act. In the light of the aforesaid judicial pronouncements by the Division Bench of this High Court, the present Writ Petition, being squarely covered by the same, deserves to be and is accordingly allowed.

  ---

• 2023 (3) TMI 941
  Claim of exemption even after the expiry of exemption period as per the scheme - Revival of viable sick industrial units - It is the case of the petitioner company that it had suffered because of serious breakdown of law and order and was not able to submit the financial returns - HELD THAT:- It appears that in the order dated 28.01.2013 by which the writ petition was disposed of, it was recorded that the petition was filed in the year 2001 seeking a direction to revive the petitioner sick unit pursuant to a minutes of meeting dated 14.06.2000 and also to quash the order dated 22.11.2001 passed by the Board of Industries and Financial Reconstruction (BIFR). The stand of the State that the petitioner was not entitled to any relief and that the benefit had already been availing by the petitioner was recorded. It appears that a concession was made by the petitioner that a final reasoned order may be passed by the Government and on such concession, the order was passed by directing that a final decision be taken within a period of three months. The present demand appears to be for exemption of Sales Tax beyond the period of the policy which cannot be claimed as a matter of right. This Court also finds force in the contention of the learned Standing Counsel, Industries Commerce Department that there has been huge diversion of money of the petitioner company to other companies. A perusal of the minutes of meeting held in the chamber of the Additional Secretary, Industries Commerce dated 14.06.2000 would show that huge amounts were diverted and the same was confirmed by the Managing Director of the petitioner. This Court is of the opinion that the relief claimed is based on speculation and assumption and it does not appear that there is any indefeasible right of the petitioner for such relief. This Court in exercise of its jurisdiction under Article 226 of the Constitution of India does not act as a Court of Appeal and its functions are only confined to the decision making process. In the impugned order dated 20.09.2013, reasons are reflected which according to this Court are cogent and acceptable. This Court is of the further opinion that the factors which have been considered, namely, availing of the benefits of five different heads are relevant and germane to the issue at hand - Though a case has been tried to be projected of hardships to operate and run the Industry, including infrastructural and law and order problem, the petitioner company choose to set up the Industry in that location knowing fully well about the situation. It is however required to be noted that while the petitioner has highlighted the difficulties, the easy availability of raw materials for the cement Industry namely, Limestone has not been focused. Appeal dismissed.

  ---

• 2023 (3) TMI 940
  Reversal of Input Tax Credit (ITC) - manufacturing / invisible loss - Interpretation of statute - construction/interplay of Section 19(2)(ii) vis-a-vis Section 19 (9) of the Tamil Nadu Value Added Tax Act, 2006 - reversal of Input Tax Credit on account of manufacturing / invisible loss - validity of Circular dated 20.10.2011 by which instructions were issued stating that wastage at all levels must be considered taking into account the nature of commodity and that the credit was to be reversed in respect of manufacturing/invisible loss in terms of Section 19 (9) of the TNVAT Act. HELD THAT:- Input Tax Credit is in the nature of a concession and is the pivot/axis around which the VAT Scheme revolves. The State legislature has under Section 19 (2) of the TNVAT Act identified circumstances under which the benefit of Input Tax Credit is granted. Importantly, Section 19(2) (ii) of the TNVAT Act provides that Input Tax Credit shall be allowed for purchase of goods made within the State from a registered dealer for use as input in manufacturing or processing of goods in the State - thus, any goods which qualifies as an input under Section 2(23) of the TNVAT Act and used in manufacture or processing of goods shall be entitled to Input Tax Credit. The object behind granting the benefit of Input Tax Credit in terms of Section 19 (2) (ii) of the TNVAT Act, is with a view to promote manufacturing activity within the State. The expressions damaged and destroyed in Section 19(9)(iii) of the TNVAT Act used to deny Input Tax Credit, must be understood to have been employed by the legislature in contradistinction to the expressions use in manufacturing or processing of goods employed in Section 19 (2) (ii) of TNVAT Act while allowing a dealer to claim Input Tax Credit. While the expression use in Section 19(2)(ii) of the TNVAT Act qualifies manufacturing or processing of goods , the expressions damaged and destroyed employed in Section 19(9) of the TNVAT Act are not used with reference to manufacture or processing of goods - the expressions use in manufacture or processing of goods , employed in Section 19 (2) (ii) of TNVAT Act is meant to convey a positive act or an act performed towards / in the direction of achieving the intended purpose/desired result viz., manufacture / emergence of a different commodity / end product. The expressions use in manufacture on the one hand and damaged and destroyed are antithetical and irreconcilable with each other. Test of quantitative requirement of inputs to manufacture desired quantity of end product - HELD THAT:- In the case of M/s.Swadeshi Polytex Ltd., Vs Collector of Central Exercise [ 1989 (11) TMI 131 - SUPREME COURT ], rejecting the contention of the revenue that ethylene glycol not contained in the end product viz., polyester fiber but in other waste/ by-product ought to be denied the benefit of credit, the Hon ble Supreme Court proceeded to hold that as long as it is not possible to use a lesser quantum of ethylene glycol to produce desired quantity of polyster fabric the same is entitled to the benefit of credit as having been used in the manufacture. The Hon ble Supreme Court in the case of Union of India Vs. Indian Aluminium Company Ltd. [ 1995 (4) TMI 62 - SUPREME COURT ] had also applied the test of quantitative requirements of inputs for the purpose of manufacturing the desired quantity of output, to determine whether the inputs are used in the manufacture of other goods. It was held an exact mathematical equation between raw materials used and found in the finished products is irrelevant to determine whether the inputs are used in the manufacture/processing of desired end products. Test of indispensability - HELD THAT:- The Hon ble Supreme Court in the case of COLLECTOR OF C. EX. VERSUS BALLARPUR INDUSTRIES LTD. [ 1989 (9) TMI 102 - SUPREME COURT ] wherein while examining the question as to what would constitute raw material while rejecting the contention that to constitute raw material it is essential that the same must form part of the end product, held that the relevant test is not its absence in the end product, but the dependence of the end product for its essential presence at the delivery end of the process. The ingredient goes into the making of the end product in the sense that without its absence the presence of the end product, as such, is rendered impossible. This quality should coalesce with the requirement that its utilisation is in the manufacturing process as distinct from the manufacturing apparatus. Applying the test of indispensability if the inputs are indispensable for the emergence of desired end product it is not open to disallow the claim of input tax credit on the ground of manufacturing/invisible loss. Test of Technical/Practical/Commercial inexpediency - HELD THAT:- Reliance made in the case of J.K.Cotton Spinning Weaving Mills Co.Ltd., Vs. The Sales Tax Officer, Kanpur and Another [ 1964 (10) TMI 2 - SUPREME COURT ] wherein the scope of the expression in the manufacture of goods employed in Section 8(3)(b) of the Central Sales Tax Act, while extending the benefit of concessional rate of tax was examined by Supreme Court. It was held that the expression in the manufacture of goods would encompass, the entire process carried on by the dealer for converting raw materials into finished goods. The Hon ble Supreme Court applied the test of commercial inexpediency to determine whether a process would fall within the expression in the manufacture of goods, while making it clear that the expression in the manufacture of goods should not be curtailed by some theoretical possibility over looking/disregarding commercial inexpediency while examining the scope of the expressions in the manufacture of goods . If manufacturing/invisible loss is tested applying the test of technical/practical/commercial expediency and found that it is incapable of manufacturing the end product without the input of the requisite/utilised quantity then there cannot be a denial of input tax credit alleging manufacture/invisible loss. The above judgments leave no room for any doubt that quantitative tally between the raw material used and the end product manufactured is foreign to the concept of manufacture. The above requirement is contrary to technical/practical/commercial expediency involved in the activity of manufacture. It is clear that once input is used in the manufacture the mere fact that it is not contained in the end product may have no bearing on the dealers entitlement to input tax credit in terms of Section 19 (2) (ii) of the TNVAT Act. Thus applying any of the above tests viz., test of indispensability, quantitative requirement, commercial expediency the irresistible conclusion is that manufacturing/invisible loss which is inevitable/unavoidable/inherent part of manufacturing process cannot be denied the benefit of Input Tax Credit in terms of Section 19(2)(ii) of the TNVAT Act invoking Section 19(9) of the TNVAT ACT. On analysis of the scope and interplay between Sections 19(2)(ii) and 19(9) of the TNVAT Act, precedents dealing with manufacturing/invisible loss and the rules of construction referred above, it is found that Section 19(9) of the TNVAT Act would not get attracted to manufacturing/invisible loss which is inevitable and inherent part of manufacture and thus covered by Section 19(2)(ii) of the TNVAT Act. The impugned Circular dated 20.10.2011 insofar as it is contrary to the law declared by this Court with regard to manufacturing/invisible loss is set-aside. Wherever the challenge is to the notice it is open to the appellants/petitioners to submit their objections which shall be decided in accordance with the law declared by this Court after affording the appellants/ petitioners reasonable opportunity of being heard - Petition disposed off.

  ---

• 2023 (3) TMI 939
  Penalty order - calculation of annual sales turnover - applicability of provisions of Section 4 of Andhra Pradesh VAT Act,2005 in general and sub-Section (9) of Section 4 of the Act in particular - HELD THAT:- A perusal of the order passed by the Assessing Officer shows that the Assessing Officer in the impugned order categorically discussed about the applicability of various provisions of law, including Section 4 and also explanation to Clause (d) of the sub-Section (9) of Section 4 of the Act and recorded the conclusions. It is not in dispute that immediately after receipt of the impugned orders, the present Writ Petitions came to be instituted before this Court. All these contentions now sought to be urged in the present Writ Petitions, in the considered opinion of this Court, can as well be agitated before the Contempt Court under the provisions of Section 31 of the Act. In view of the availability of the alternative remedy, this Court is not inclined to go into the merits and de-merits of the case. Petition disposed off.

  ---

• Indian Laws

• 2023 (3) TMI 938
  Seeking attachment of amount lying in the hands of AWHO who is indebted to pay the amount in order to enable the respondent to release the amount in favour of the petitioner - Existence of Arbitrable Disputes - Forum shopping - Notice of Invocation under Section 21 of Arbitration and Conciliation Act, 1996. Existence of Arbitrable Disputes - HELD THAT:- In the present case, though a proceeding may have been initiated by the petitioner before the NCLT asserting that there is an admitted debt as has been pointed out by the respondent, but a mere assertion would not make it into an admitted liability especially when the respondent has been refuting it at every forum and in every proceeding - It is quite evident that there is consistent stand of the respondent challenging the amounts claimed by the petitioner. Clearly, there are arbitrable disputes in regard to the claimed amounts and the objection taken by the respondent in regard to non-existence of arbitrable disputes, is not tenable. Forum Shopping - HELD THAT:- It can be seen from the various proceedings which have been initiated by the petitioner that different amounts had become due and payable at different times and also interest component which was being claimed, was a variable. The petitioner has given explanation for claiming the amounts before various forums depending upon when it had approached that particular forum. Merely because the petitioner has approached different forums for redressal of its claims, cannot be said to be a ground to hold that this is a case of forum shopping.Each of the provision invoked by the petitioner has its own individual scope and it cannot be said that resort to one has the effect of ousting the other forums or that it is a case of forum shopping - In the present case, the scope of enquiry in the proceedings before the NCLT and before the Arbitrator is absolutely distinct. Merely because the petitioner approached NCLT before seeking appointment of Arbitration, it cannot be said that he was indulging in Forum Shopping. Notice of Invocation under Section 21 of the Act - HELD THAT:- In Nirman Sindia Vs. Indal Electromelts Ltd., Coimbatore and others [[ 1999 (7) TMI 712 - KERALA HIGH COURT] ], a detailed procedure for resolution of disputes in regard to payments was envisaged whereby the disputes were first required to be settled through Superintendent Engineer and if not satisfied with the decision of the Engineer, it was required to be referred to the adjudicator. Non-referral of disputes in regard to the disputes pertaining to payment, execution, work, etc. where it could have been settled without having the need to go to arbitration, was considered as an obstruction by the petitioner in not following the procedure as envisaged in the Contract and the request for arbitration was held to be premature. The facts involved in the present case are clearly distinguishable. In BADRI SINGH VINIMAY PRIVATE LIMITED VERSUS MMTC LIMITED [ 2020 (1) TMI 1625 - DELHI HIGH COURT] , this Court had explained that Section 21 of the Act requires a party to send a request to the counter-party for the dispute to be referred to arbitration, which should indicate the facts leading to the dispute, and the nature of the claim be made clear. It also must clearly indicate the legal recourse intended to be undertaken if its claim is not satisfied. The initiation of arbitration proceedings in such a situation must be expressly contemplated. Thus, it needs to be considered if the petitioner has met the prerequisite requirement of service of Notice under S.21 of the Act. First and foremost, the intention of approaching the appropriate forum for recovery of its claims had been indicated in the Demand Notice itself. It was also stated that in case the claims of the petitioner are not satisfied, it would be compelled to approach the NCLT. Prima facie, it has been shown that there are arbitral disputes between the parties and in terms of the Clause 13 of the Work Order dated 19.12.2011, the disputes between the parties are referable to Arbitration - In light of the facts and submissions made, Ms. R. Kiran Nath, District Sessions Judge (Retd.), (Mobile No. 9910384659) is hereby appointed as the independent Arbitrator to adjudicate the disputes between the parties. Petition allowed.

  ---