TMI Tax Updates - e-Newsletter
March 25, 2025

Case Laws in this Newsletter:

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

Articles

1. No More Delay Please

   By: K Balasubramanian

2. MORATORIUM IS APPLICABLE ONLY TO CORPORATE DEBTORS NOT TO INDIVIDUALS

   By: DR.MARIAPPAN GOVINDARAJAN

3. Which Forms Are Required for LLP Annual Return Filing?

   By: Ishita Ramani

4. E-Waste Management and Urban Mining: The Very Foundation of De-Mining of the Earth. [Environmental Laws]

   By: YAGAY andSUN

5. Formal and Informal E-Waste Recycling Sector in India: MOEFCC, CPCB, SPCB, and Municipal Corporations Initiatives and Support.

   By: YAGAY andSUN

6. E-Waste Management and the Right to Repair: Government of India (GOI) Initiatives.[Environmental Laws]

   By: YAGAY andSUN

7. E-Waste Management and Recovery of Rare Earth Materials: India’s Perspective.[Environmental Laws]

   By: YAGAY andSUN

8. E-Waste Management: Recovery of Rare Earth Materials and the Circular Economy - Cradle to Cradle Concept.

   By: YAGAY andSUN

9. Environmental Impact Assessment (EIA)[Environmental Laws]

   By: YAGAY andSUN

10. How RBI Handles LRS limit breach cases, offences and penalty. Compounding.

   By: YAGAY andSUN

News

1. CBI arrests accused Superintendent of GST, Medak, Hyderabad, Telangana for demanding and accepting bribe of Rs 8,000/- from the complainant

2. CGST Delhi East Commissionerate encourages greater compliance and awareness among unregistered manufacturers and traders during GST Registration Campaign 2025

3. NC-led govt tables bill to amend J&K GST Act, 2017

4. Equalisation Levy on online advertisements to be abolished from April 1

5. Tharoor describes Finance Bill classic case of 'patchwork'

6. Govt proposes to abolish Equalisation Levy on online advertisements

7. Delhi Budget Session begins with 'Kheer' ceremony; BJP leaders say sweetness symbolises progress

8. Delhi Assembly Budget session: AAP MLAs stage walkout

9. Delhi Budget Session begins with 'Kheer' ceremony; BJP leaders say 'sweetness symbolises progress'

10. Goa assembly session to start from Monday; budget presentation on Mar 26

11. Delhi Assembly's budget session set to start on stormy note on Monday

12. Government Launches BAANKNET and e-BKray to enhance PSU Bank E-Auctions for Asset Sales

13. Government has taken several initiatives to facilitate ease of access to credit to Women Entrepreneurs

14. APEDA Facilitates Export of GI-Tagged Dalle Chilly from Sikkim to the Solomon Islands

15. PMG Reviews Mega Infrastructure Projects in Bihar, Odisha, and West Bengal

16. India to host 3-day FATF Private Sector Collaborative Forum 2025 (PSCF 2025) from 25th -27th March, 2025, in Mumbai

17. Advancing Cashless India

18. Bihar's economic progress during NDA, RJD tenures same: Tejashwi

19. Removal of 20pc export duty on onion to boost farmers' income: Agri Min

20. UP transformed from a struggling state to an economic powerhouse in 8 years: CM

21. UP transformed from struggling state to an economic powerhouse in 8 years: CM

22. PLI scheme incentivizes domestic manufacturing, increases production, creates new jobs and boosts exports

23. APEDA Flags-off of Goli Pop Soda – India's Iconic Goli Soda for Global Markets

24. Indian Institute of Corporate Affairs (IICA) launches Samarthya: National Competition on Corporate Rescue Strategies 2025 at Manesar

25. 'Catastrophic consequences' if Skoda gets limitation relief in USD 1.4 bn tax case: Customs to HC

Notifications

Customs

1. 19/2025 - dated 22-3-2025 - Cus

Seeks to amend notification No. 27/2011-Customs dated 01.03.2011 to withdraw the export duty of 20% on Onion (HS 0703 10) from 1 St April, 2025.

GST - States

2. 20 /GST-2 - dated 20-3-2025 - Haryana SGST

Notification for appointing dates for bringing into effect rules of HGST (Amendment) Rules, 2024 under the HGST Act, 2017.

3. 19/GST-2 - dated 20-3-2025 - Haryana SGST

Notification under section 128 for waiver of late fees under the HGST Act 2017.

4. 18 /GST-2 - dated 20-3-2025 - Haryana SGST

Haryana Goods and Services Tax (Amendment) Rules, 2025

5. 5/2025-State Tax (Rate) - dated 5-2-2025 - Mizoram SGST

Amendment in Notification No. 11/2017-State Tax (Rate), dated the 11th July, 2017

Circulars / Instructions / Orders

Customs

1. PUBLIC NOTICE NO. 03 / 2025 - dated 17-3-2025

Mandatory additional qualifiers in import declarations in respect of coking/ non-coking coal w.e.f 15.12.2024 – reg.

Highlights / Catch Notes

GST

• 11-Year Delay in Show Cause Notice Adjudication Violates Due Process Rights and Warrants Quashing of Proceedings

  Case-Laws - HC : The HC quashed Orders-In-Original issued after an 11-year delay in adjudicating a Show Cause Notice, holding that inordinate delay constituted sufficient ground for quashing proceedings. The court rejected respondents' justifications based on CGST implementation, COVID-19, and alleged delays by petitioners. Relying on Vos Technologies India precedent, the court emphasized that authorities are obligated to conclude adjudication expeditiously, and that matters with financial or penal consequences cannot remain unresolved for years. The statutory flexibility cannot be construed as sanctioning indolence or used routinely without justification. The HC ordered release of bank guarantees furnished by petitioners.
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• GST Claim Rejection Overturned: Petitioner Granted Fresh Opportunity to Submit Documentation Under Section 128A

  Case-Laws - HC : The HC set aside the impugned order and remitted the matter for fresh consideration by respondent No.4, who had rejected petitioner's claim under various GST circulars solely on grounds of insufficient documentation. The court determined that petitioner should be given another opportunity to file additional pleadings and documents for reconsideration. Following reassessment, petitioner would be entitled to apply for benefits under the Amnesty scheme under Section 128A of the CGST Act, which the concerned respondent must consider in accordance with law. The court refrained from expressing any opinion on the substantive merits of the rival contentions.
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• IRS Assessment Order Quashed for Ignoring Taxpayer's Multiple Replies and Denying Personal Hearing Opportunity

  Case-Laws - HC : The HC held that the impugned assessment order violated principles of natural justice and suffered from non-application of mind. Despite the petitioner filing multiple replies on 28.10.2023, 21.11.2023, 29.11.2023, and 18.12.2023 to the Show Cause Notice, the authority failed to consider these submissions or even reference them in the final order. Additionally, no opportunity for personal hearing was provided to the petitioner before passing the order. The Court determined that this constituted a gross violation of natural justice principles and demonstrated failure to properly consider material evidence on record. The petition was accordingly disposed of in favor of the petitioner.
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• Service Tax Recovery Order Quashed After Authority "Forgot" to Consider Exemption Claim Under Notification 25/2012

  Case-Laws - HC : The HC quashed the impugned order for violating principles of natural justice, as the authority failed to consider the petitioner's defense reply to the show cause notice regarding recovery of service tax with interest and penalty. The petitioner had claimed exemption under Mega exemption Notification 25/2012, but this defense was apparently "forgotten" by the adjudicating authority. The matter was remanded to the competent authority with directions to consider the petitioner's reply, provide an opportunity for hearing, and pass a fresh order in accordance with law. The application was allowed.
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• Bank Property Attachment Under GST Act Set Aside, Petitioner Given Fresh Chance Despite Prior Non-Response

  Case-Laws - HC : The HC set aside the order dated 08.11.2023 regarding attachment of petitioner's bank property under CGST/KGST Act, 2017, remitting the matter back to the first respondent for fresh consideration. Despite petitioner's failure to respond to pre-intimation notice and show cause notice, the Court adopted a justice-oriented approach, accepting petitioner's claim that non-compliance stemmed from bona fide reasons and unavoidable circumstances. The petitioner was granted one more opportunity to submit a reply to the show cause notice, with the Court imposing costs of Rs.10,000/- payable to the High Court Advocate Welfare Fund. The petition was allowed by way of remand.
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• ITC Denial for Construction Services Must Follow Safari Retreats Precedent Under GST Section 17(5)(d)

  Case-Laws - HC : The HC remitted the matter back to the respondent for reconsideration after finding that the respondent had not properly considered the Supreme Court's judgment in Safari Retreats (P.) Ltd. The case involved questions about the scope of "plant and machinery" in Section 17 of the CGST Act, specifically whether the explanation to Section 17 applies to the expression "plant or machinery" in Section 17(5)(d), and the constitutional validity of Sections 17(5)(c), 17(5)(d), and 16(4) of the CGST Act. The petition was allowed by way of remand for fresh consideration in accordance with law.
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• GST Refund Claim Must Be Processed Immediately After Verification of Facts and Entitlement as per Government Orders

  Case-Laws - HC : The HC disposed of the petition directing State Authorities to immediately process the petitioner's GST refund claim after verification of facts and entitlement. The authorities must consider the State Government's order dated 10.10.2018 and all subsequent relevant orders. The court noted the petitioner's contention that despite repeated approaches, respondents had failed to act on the GST refund that was collected during contract execution, and that similar refunds had been granted in comparable cases. The decision requires authorities to properly evaluate the petitioner's entitlement to GST refund in accordance with existing government directives.
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Income Tax

• Purchasing Shares in Non-Profit Company Not an "Investment" Under Sections 11(5) and 13(1)(d) of Income Tax Act

  Case-Laws - HC : The HC ruled that the Assessee's purchase of shares in BARC, a Section 25 company (non-profit), did not constitute an "investment" under Sections 11(5) and 13(1)(d) of the Income Tax Act. The Court determined that an essential feature of "investment" is the intention to earn financial returns or profits. Since BARC was legally prohibited from distributing dividends or profits to shareholders, and its surplus upon liquidation would transfer to another charitable entity, the Assessee's fund deployment was not intended to yield income. Rather, it was made to fulfill statutory and regulatory obligations advancing charitable objectives. Consequently, the Court affirmed the CIT(A) and ITAT decisions allowing exemption under Sections 11 and 12, ruling against revenue.
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• Income Tax Reassessment Valid Where Rental Discrepancies and TDS Non-Deduction on Salaries Not Properly Disclosed Under Section 147

  Case-Laws - HC : The HC upheld the reopening of assessment under s.147 regarding two issues: (1) difference in rental figures between profit and loss account and AIR, and (2) non-deduction of TDS on staff salary. The Court found that the assessee's explanation to the audit memo could not be treated as disclosure during assessment proceedings, as it occurred post-assessment. Regarding TDS on salary, the Court noted insufficient disclosure in the original assessment. However, the Court rejected reopening grounds related to depreciation claims, as the assessee had properly disclosed claiming 60% depreciation on printers. Similarly, the Court found the assessee had adequately reconciled differences in total receipts. Nevertheless, since reopening was valid on two grounds, the overall challenge to reassessment proceedings failed.
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• Step-Siblings Qualify as "Relatives" for Gift Tax Exemption Under Section 56(2)(vii) of Income Tax Act

  Case-Laws - AT : The ITAT ruled that gifts between step-siblings qualify for exemption under Section 56(2)(vii) of the Income Tax Act. The Tribunal held that although "brother and sister" is not explicitly defined in the Act, the term "relative" should be interpreted to include relationships by affinity. Applying common law principles, step-siblings who become related through their parents' marriage fall within the definition of "brother and sister" for tax purposes. Consequently, property received as a gift by a step-brother from his step-sister cannot be taxed under Section 56(2) as income from other sources. The addition made by the AO was deleted and the appeal was decided in favor of the assessee.
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• Property Undervaluation: Section 56(2)(x) Addition Upheld When Purchase Price Falls Below Valuation Officer's Assessment

  Case-Laws - AT : ITAT upheld additions under section 56(2)(x) based on the difference between the actual purchase price (38,44,884) and property valuation. The Tribunal found no reason to doubt the District Valuation Officer's assessment (42,51,700), noting it was significantly below the registration value (60,15,959). The appellant failed to provide valid evidence supporting their claimed purchase price. The burden of proof rested with the appellant to establish the accuracy of the sale deed value, which they failed to discharge. The ITAT dismissed the appeal, finding no infirmity in the orders passed by the AO and CIT(A).
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• Substantial Expansion Under Section 80IC Requires Verification for 100% Deduction Despite Prior Year Allowance

  Case-Laws - AT : ITAT principally agreed that the assessee-company could claim 100% deduction under Section 80IC after "substantial expansion," treating it as an "initial assessment year" per Aarham Softronics (SC). However, the Tribunal found that CIT(A) had improperly allowed the modified deduction without verifying whether the assessee had actually carried out "substantial expansion" as defined in Section 80IC(8)(ix) or satisfied other statutory pre-conditions. The fact that AO had allowed enhanced deduction in the preceding year supported the assessee's claim but did not justify dispensing with verification requirements. The matter was restored to CIT(A) for readjudication after proper verification of all pre-conditions. Revenue's appeal and assessee's cross-objection were allowed for statistical purposes.
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• Unexplained Income Additions Under Section 69A Deleted Where Cash Withdrawals Were Redeposited Without Diversion

  Case-Laws - AT : The ITAT ruled that additions under section 69A regarding unexplained income were unjustified as the Assessing Officer failed to prove that cash withdrawals were used elsewhere before being redeposited. The Tribunal deleted additions related to sales of Renault Fluence and Santro cars where the appellant had furnished complete purchaser details. However, the addition for Mercedes Benz sale was sustained as the appellant failed to establish transaction genuineness beyond claiming it was sold through an agent. The Tribunal also upheld additions under section 68 for alleged joint venture contributions from Prabhatsinhji Thakor, as the appellant failed to demonstrate the contributor's creditworthiness. Similarly, additions under section 69A for purported bogus share sales were maintained due to insufficient evidence of cash payment from the purchasing company.
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• Patent Application Drafting Fees and Software Translation Expenses Qualify as Revenue Expenditure Under Section 37(1)

  Case-Laws - AT : The ITAT ruled that professional fees paid for drafting patent applications constitute revenue expenditure deductible under s.37(1) as they were incurred in the regular course of business without creating any specific intangible asset. Similarly, translation expenses for software development were held to be revenue expenditure as they were customer-specific, created no new asset, offered no enduring benefit, and were incurred to facilitate sales rather than develop software. Regarding s.14A disallowance, the Tribunal limited the disallowance to Rs.1,210/- (the amount of exempt dividend income earned) following Joint Investment (P.) Ltd., and deleted the remaining disallowance of Rs.1,02,574/-.
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Customs

• Anti-Dumping Duties Imposed on PVC Paste Resin Imports from Six Countries for Five Years

  Notifications : The Ministry of Finance has imposed definitive anti-dumping duties on imports of Poly Vinyl Chloride Paste Resin from China PR, Korea RP, Malaysia, Norway, Taiwan, and Thailand for five years, effective from June 13, 2024. The duty varies by country and producer, ranging from nil to USD 707 per MT. The designated authority concluded that the subject goods were being dumped into India, causing material injury to domestic industry. Kaneka Paste Polymer SDH BHD, Malaysia is exempted from the duty due to an accepted price undertaking. Certain products including PVC with K-value below 60K, PVC Blending Resin, and specific co-polymers are excluded from the scope of anti-dumping measures.
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• Diamond Import Rules Amended: New Size and Weight Tolerances for Round and Other-Shaped Diamonds Under Customs Act Section 25(1)

  Notifications : Pursuant to powers under s.25(1) of the Customs Act, 1962, the Central Government has amended Notification No. 9/2012-Customs dated March 9, 2012. The amendment modifies condition (v) by substituting a new proviso that permits specific variances for diamonds: +/-0.05 mm in diameter for round diamonds, +/-0.07 mm in length and breadth for other shapes, +/-0.01 mm in height, and +/-1 cent in weight. This modification, implemented through Notification No. 18/2025-Customs dated March 20, 2025, was deemed necessary in the public interest and provides greater tolerance parameters for diamond specifications in customs matters.
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• Department's Appeal Dismissed Under Monetary Limits: Bank Guarantee Held for 14 Years Ordered Released Within 8 Weeks

  Case-Laws - HC : In exercise of powers under Article 227 of the Constitution, the HC dismissed the Department's appeal before CESTAT, finding the dispute clearly covered by the circular dated November 2, 2013, as the amount involved (Rs. 29,66,805 plus Rs. 20 lakhs) was below the Rs. 50 lakhs monetary limit. The Court determined that disregarding the Instruction would serve no useful purpose and would unnecessarily prolong the retention of the Petitioner's bank guarantee, which had been held for over 14 years. The HC ordered the release of the bank guarantee within 8 weeks, acknowledging that while the appeal predated the Instruction, the monetary limits would apply to pending matters.
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• Designated Authority Properly Rejected Late Submissions in Anti-Dumping Case Under Rule 8; Physical Inspection Not Always Required

  Case-Laws - HC : In a case concerning anti-dumping duty, the HC ruled that the Designated Authority appropriately rejected petitioners' delayed submission. Under Rule 8, the Authority must verify information accuracy as outlined in the initiation notice and questionnaire. The disclosure statement noted that petitioners' reported transactions failed to identify export products-a crucial investigative element. The Court clarified that physical inspection is not mandatory in every case, as it depends on product specifics, nature of injury to domestic industry, and furnished data. While rejecting the petition, the Court granted petitioners until March 21, 2025, to submit correctly formatted responses to the disclosure statement, which the Authority must consider in accordance with applicable Rules.
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• DRI Officials' Authority to Issue Show Cause Notices Under Section 28 of Customs Act Examined After Canon-II Decision

  Case-Laws - HC : The HC addressed the jurisdiction of DRI officials to issue show cause notices under Section 28 of the Customs Act, 1962. Following the Supreme Court's decision in Canon-II, the Court determined that the challenged SCN dated November 17, 2017, issued by DRI Lucknow Zonal Unit, falls under paragraph 168(vi)(a) of Canon-II. Consequently, the proceedings initiated by the SCN will continue before the appropriate adjudicating authority according to law. Given the lengthy pendency of the petition, the petitioner was granted 60 days to respond to the SCN and assured a personal hearing before adjudication. The petition was disposed of accordingly.
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DGFT

• RoDTEP Scheme Extended for SEZ and EOU Exports Until February 5, 2025 Under Section 5 of FT Act

  Notifications : The DGFT has partially superseded Notification No. 32/2024-25 by extending the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for exports manufactured by Advance Authorizations holders, Special Economic Zones, and Export-Oriented Units only until February 5, 2025. Effective February 6, 2025, exports from these categories will no longer qualify for RoDTEP benefits. This time-limited extension was issued pursuant to powers under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, read with Para 1.02 of the Foreign Trade Policy 2023. The RoDTEP scheme will continue uninterrupted for Domestic Tariff Area (DTA) units as per the original notification.
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Budget

• Government Proposes to Abolish 6% Equalisation Levy on Online Ads Through Finance Bill 2025 Amendments

  News : The government has proposed to abolish the 6% Equalisation Levy on online advertisements through amendments to the Finance Bill 2025 introduced in the Lok Sabha. This move follows last year's removal of the 2% Equalisation Levy on e-commerce transactions. The decision appears strategically timed to demonstrate an accommodative stance toward the US, which had threatened reciprocal tariffs beginning April 2. The abolition aims to address international concerns about the unilateral nature of the levy while providing greater certainty to taxpayers. Additional amendments include modifications to offshore fund investment requirements and clarifications regarding tax assessments under search and seizure provisions, specifically introducing the term "Total Undisclosed Income" to better define the scope of such proceedings.
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Indian Laws

• Delay of 292 Days Condoned in Dishonored Cheque Case to Protect Public Interest Despite Government's Obligation to Follow Timelines

  Case-Laws - HC : The HC condoned a 292-day delay in filing an appeal in a dishonored cheque case, despite acknowledging that government organizations should strictly adhere to limitation periods without automatic relaxation. The Court found the appellant provided a plausible explanation for the delay, and noted the original dismissal was for non-prosecution rather than on merits. Applying a pragmatic approach to advance justice, the HC determined sufficient cause existed to condone the delay, reasoning that public interest would be severely affected if government appeals were lost due to procedural defaults. The appellant was granted leave to file the memorandum of appeal within the statutory period.
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PMLA

• Detention Under PMLA Upheld as Court Finds Procedural Requirements Met Under Section 19(1)

  Case-Laws - HC : The HC dismissed a petition challenging the petitioner's detention under the Prevention of Money Laundering Act (PMLA). The petitioner alleged procedural violations in his arrest, claiming grounds were not provided in writing as required by Section 19(1) of PMLA. The court determined that the petitioner had confined his challenge to the remand order dated 09.06.2023 without questioning the earlier remand order of 08.06.2023, thus implicitly accepting its validity. The court noted that the petitioner had signed acknowledgments of receiving arrest grounds and subsequently pursued bail on merits rather than challenging procedural defects. Finding no impropriety in the contested remand order and that procedural requirements were satisfied, the court declined to interfere.
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SEBI

• SEBI Extends Timeline for Related Party Transaction Standards Implementation from April to July 2025

  Circulars : SEBI has extended the implementation timeline for Industry Standards on "Minimum information to be provided for review of the audit committee and shareholders for approval of a related party transaction" from April 1, 2025, to July 1, 2025. This extension follows stakeholder feedback requesting additional time. The Industry Standards Forum, comprising representatives from ASSOCHAM, CII, and FICCI, will consider feedback to simplify the standards in time for the revised deadline. The circular was issued under Section 11(1) and 11A of the SEBI Act, 1992, read with regulation 101 of LODR Regulations.
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• SEBI Relaxes "Skin in the Game" Rules for Mutual Fund Employees with Revised CTC Slabs Effective April 2025

  Circulars : SEBI has amended the "skin in the game" requirements for mutual fund Designated Employees, effective April 1, 2025. The modifications relax investment obligations based on revised CTC slabs and employee categories. Key changes include: reduced mandatory investment percentages, options to include or exclude ESOPs in calculations, reduced lock-in periods for employees who resign or retire early, exemption from certain insider trading restrictions for mandatory investments, and modified disclosure requirements. For liquid fund managers, up to 75% of required investments may be placed in higher-risk schemes. The amendments aim to facilitate ease of doing business while maintaining alignment between AMC employees' interests and unitholders' interests.
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• SEBI Revises Shareholding Disclosure Requirements Under Regulation 31 to Include NDUs and Enhanced Encumbrance Reporting

  Circulars : SEBI has modified the disclosure requirements for shareholding patterns under Regulation 31 of the Listing Regulations. The amendments require listed entities to disclose details of Non-Disclosure Undertakings, other encumbrances, and total pledged shares. The revised format clarifies that underlying outstanding convertible securities include ESOPs and adds a column capturing shares on fully diluted basis. Table II now includes a footnote regarding promoters with nil shareholding. Stock Exchanges must notify listed companies and amend relevant regulations, while Depositories must update their systems accordingly. These modifications to Master Circular SEBI/HO/CFD/PoD2/CIR/P/0155 will take effect from the quarter ending June 30, 2025.
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• Stock Exchanges Now Permitted to Operate as Risk-Return Verification Data Centers Under New Regulation 38B

  Notifications : SEBI has amended the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 through notification F. No. SEBI/LAD-NRO/GN/2025/238 dated March 20, 2025. The amendment introduces Regulation 38B, which permits recognized stock exchanges to function as Past Risk and Return Verification Agency Data Centres with SEBI's approval. This new provision, which takes effect upon publication in the Official Gazette, creates a regulatory framework allowing stock exchanges to verify risk-return metrics as referenced in Regulation 12A(2) of the SEBI (Credit Rating Agencies) Regulations, 1999, subject to conditions specified by the Board.
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• SEBI Requires Third-Party Verification for Performance Claims by Investment Advisers Under New Amendment Regulations

  Notifications : SEBI has introduced the Securities and Exchange Board of India (Intermediaries) (Second Amendment) Regulations, 2025, effective upon publication in the Official Gazette. The amendment inserts Chapter IIIC mandating that Investment Advisers, Research Analysts, Algo Providers, and certain intermediaries may only make claims regarding returns or performance metrics if verified by a SEBI-recognized credit rating agency designated as a Past Risk and Return Verification Agency. Such claims must follow SEBI-specified protocols. Non-compliance may result in regulatory action under Chapter V of the regulations. The amendment establishes a verification framework to enhance transparency and accountability in performance reporting within the securities market.
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• SEBI Introduces Framework for Past Risk and Return Verification Agencies Under Credit Rating Regulations

  Notifications : SEBI has amended the Credit Rating Agencies Regulations, 1999 by introducing Chapter IIA through notification dated March 20, 2025. The amendment establishes a framework for "Past Risk and Return Verification Agency" activities, allowing credit rating agencies to perform this function with SEBI's approval under specified conditions. Per the new Regulation 12A, approved credit rating agencies must engage a recognized stock exchange as a "Past Risk and Return Verification Agency Data Centre." The amendment comes into force immediately upon publication in the Official Gazette and creates a new regulatory category while maintaining existing credit rating agency operations under the primary regulations.
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VAT

• Section 25A of KVAT Act Doesn't Override Time Limits for Reassessment Despite CAG Objections

  Case-Laws - HC : The HC ruled that Section 25A of the KVAT Act, despite its non-obstante clause, merely provides an additional ground for reassessment and does not override the limitation period under Section 25(1). When the Assessing Officer receives a CAG objection, they must determine its lawfulness after giving the dealer an opportunity to be heard. If satisfied, reassessment must still follow the statutory procedure under Section 25(1), including adherence to limitation periods. The Revenue cannot circumvent time-barred assessments by initiating reassessment based on subsequent CAG reports. The court dismissed the State's O.T. Revisions and Writ Appeal, affirming that procedural due process in taxation cannot be inferred but must be explicitly provided in statute.
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Service Tax

• Retention Charges from Cancelled Reservations and Employee Meal Recoveries Not Taxable Under Section 66E(e)

  Case-Laws - AT : CESTAT held that retention charges from customers who cancelled reservations were not taxable under Section 66E(e) of the Finance Act as there was no agreement to tolerate an act. These amounts constituted damages/compensation rather than consideration for service. Similarly, amounts recovered from employees for subsidized canteen food were not taxable as providing such food was a legal obligation under labor laws, distinct from the restaurant's commercial operations. The Tribunal concluded that service tax could not be levied on either the retention charges or employee meal recoveries, and consequently dismissed the Revenue's appeal, rejecting associated interest and penalty demands.
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Central Excise

• Appeal Succeeds: Tribunal Rejects Clandestine Manufacturing Allegations Due to Procedural Violations Under Sections 9D(2) and 36B

  Case-Laws - AT : In this CESTAT decision, the Tribunal allowed the appeal against allegations of clandestine manufacture and removal of MS ingots. The Tribunal found multiple procedural violations by the adjudicating authority, including failure to comply with Section 9D(2) of the Central Excise Act when relying on statements recorded under Section 14, and non-compliance with Section 36B regarding electronic evidence admissibility. The Tribunal emphasized that in cases involving serious financial penalties, Revenue must meet a "clear and convincing evidence" standard, which was not satisfied. The investigation lacked corroborative evidence such as unaccounted raw material procurement, production capacity evaluation, or statements from transporters. Consequently, the demands for duty on alleged clandestine clearances, recovery of CENVAT credit, and associated penalties were found unsustainable.
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Case Laws:

• GST

• 2025 (3) TMI 1132
  Challenge to N/N. 56/2023-Central Tax dated 28th December, 2023 and N/N. 56 of 2023 dated 16th January, 2024 issued by Respondent No. 1 - HELD THAT:- In Writ Petition No. 5146 of 2024 as well as Writ Petition No. 2616 of 2025, this Court has issued Rule and granted interim relief to the Petitioners in both these Writ Petitions on the prima facie ground these Notifications could not have been issued without the recommendation of the GST Council. Considering these facts, in the present case also similar reliefs ought to be granted to the Petitioner. In these circumstances, Rule issued. A Strong prima facie case is made out for granting interim relief to the Petitioner - Petition allowed.

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• 2025 (3) TMI 1131
  Confiscation of seized goods - Inordinate delay of over 11 years in the adjudication of the Show Cause Notice (SCN) - Sufficient ground to quash the Orders-In-Original (OsIO) issued on 30.12.2022 and 02.03.2023 or not - Sufficient cause for delay or not - HELD THAT:- This court, in Vos Technologies India [ 2024 (12) TMI 624 - DELHI HIGH COURT] , had the opportunity to consider the effect of inordinate delay and failure on the part of the tax authorities to conclude the adjudication proceedings within a reasonable period of time (arising out of the Customs Act [Custom Act], 1962, the Finance Act, 1994 [Finance Act] and the CGST Act) and held that such delay/ failure to act within a reasonable period of time, constituted sufficient ground to quash such proceedings. This Court also held that the authorities are bound and obliged in law to make endeavors to conclude adjudication with due expedition. The relevant portion of Section 11A of the Act is pari materia to the corresponding provisions of the Customs Act, the Finance Act and the CGST Act, and thus, the mandate of the said judgement is applicable to the present cases. The Respondents in the impugned OsIO have not given any explanation as to why the SCN could not be decided finally for over 11 years. However, in the counter affidavits, the Respondents have endeavored to give a feeble justification for the delayed adjudication premised on (a) the advent of the CGST Act in 2017 its shortfall in the administrative functioning subsequently, (b) COVID-19 and (c) the delay caused by the Petitioners by not filing reply on time or filing belated reply to the SCN and by avoiding joining the physical hearings. In Vos Technologies India, this Court categorically held that, matters having financial liabilities or penal consequences cannot be kept unresolved for years; and the phrase where it is possible to do so cannot be a license to keep matters pending for years. The flexibility provided by the legislation is not meant to be overused or construed as sanctioning indolence. The statutory leverage cannot be brought into play routinely and in an unfettered manner for years, without any due justification or explanation. Conclusion - The statutory authorities must conclude adjudication within a reasonable time and cannot rely on statutory flexibility to justify indefinite delays. The impugned OsIO quashed due to the unjustified delay in adjudication and ordered the release of the Bank Guarantee furnished by the Petitioners - petition allowed.

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• 2025 (3) TMI 1130
  Entitlement to benefit of Amnesty scheme under Section 128A of the CGST Act, post-reassessment - respondent No. 4 did not consider the claim of the petitioner qua Circular bearing No. 123/42/2019-GST dated 11.11.2019, Circular No. 183/15/2022-GST dated 27.12.2022 and Circular No. 193/05/23/GST dated 17.07.2022 on the sole ground that the petitioner had not produced relevant documents in this regard - HELD THAT:- A perusal of the impugned order will indicate that respondent No. 4 has referred to specific submission/contention of the petitioner that he places reliance upon the aforesaid three circulars in support of its claim. However, the said contention/claim had been rejected on the sole ground that the petitioner had not produced relevant documents in this regard as can be seen from page No. 45 of the impugned order at paragraph 30, wherein respondent No. 4 has come to the conclusion that the details, invoices, debit notes etc., have not been furnished by the petitioner. However, in the light of the specific assertion on the part of the petitioner that if one more opportunity is provided to the petitioner, the petitioner would file additional pleadings, documents etc., without expressing any opinion on the merits/demerits of the rival contentions, it is deemed just and appropriate to set the impugned order and remit the matter back to the concerned respondent for reconsideration afresh and pass appropriate order, within a stipulated time frame, in accordance with law. In so far as the submission made on behalf of the petitioner that they intend to avail the benefit of Amnesty scheme under Section 128A of the CGST Act is concerned, immediately upon respondent No. 4 passing appropriate orders as stated supra, the petitioner would be entitled to make an application for the benefit under the earnesty scheme, which shall be considered by the concerned respondent, in accordance with law. Conclusion - The petitioner is entitled to apply for the Amnesty Scheme benefits post-reassessment. The impugned order is set aside, and the matter remitted for fresh consideration.

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• 2025 (3) TMI 1129
  Violation of principles of natural justice - non-application of mind - failure to consider the petitioner s objections and responses to the SCN - Opportunity of hearing not provided - HELD THAT:- The petitioner filed its reply on 28.10.2023, 21.11.2023, 29.11.2023 and 18.12.2023. However, the impugned order has been passed without affording an opportunity of personal hearing to the petitioner nor even referring to the reply which amounts to gross violation of principles of natural justice. Thus the impugned order suffers from non-application of mind to the material on record. Conclusion - There is merit in the submission of the learned counsel for petitioner that the impugned order suffers from the vice of non-application of mind inasmuch as there is not even a reference to the replies referred above, in the impugned order of assessment. Petition disposed off.

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• 2025 (3) TMI 1128
  Violation of principles of natural justice - non-consideration of the petitioner s defense reply to the SCN - recovery of service tax with interest and penalty, given the petitioner s claim of exemption under the Mega exemption N/N. 25/2012 - HELD THAT:- The impugned order as contained in Annexure P/8 suffers from violation of principles of natural justice. The reply submitted by the petitioner seems to have been forgotten and not considered by the competent authority while passing the impugned order as contained in Annexure P/8 . Matter remanded back to the competent authority who will consider the reply submitted by the petitioner, give an opportunity of hearing and shall pass a fresh order in accordance with law - application allowed.

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• 2025 (3) TMI 1127
  Attachment of petitioner s bank property - Due service of pre-intimation notice and SCN under the CGST/KGST Act, 2017 - Failure to respond to the notices - time limitation - HELD THAT:- Having regard to the specific assertion on the part of the petitioner that his inability and omission to submit replies and contest the proceedings was due to bona fide reasons, unavoidable circumstances and sufficient cause, it is deemed just and appropriate to adopt a justice oriented approach and provide one more opportunity to the petitioner by setting aside the impugned order dated 08.11.2023 and remitting the matter back to the first respondent for reconsideration of the matter afresh in accordance with law to the stage of petitioner submitting reply to the impugned show-cause notice by imposing cost of Rs.10,000/- on the petitioner payable to the High Court Advocate Welfare Fund. The matter is remitted back to the first respondent for reconsideration afresh in accordance with law - petition alowed by way of remand.

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• 2025 (3) TMI 1126
  Scope of plant and machinery in the explanation appended to Section 17 of the CGST Act applies to the expression plant or machinery used in clause (d) of sub-section (5) of Section 17 or not - constitutional validity of clauses (c) and (d) of Section 17 (5) and Section 16 (4) of the CGST Act - the issue is similar to the issue in Safari Retreats (P.) Ltd. [ 2024 (10) TMI 286 - SUPREME COURT] , which i s not considered properly - HELD THAT:- In the instant case, a perusal of the impugned order in original at Annexure-P dated 09.12.2024 will indicate that the aforesaid judgment of the Apex Court in Safari Retreats (P.) Ltd., has not been considered in its right perspective. Under these facts and circumstances, it is deemed just and appropriate to dispose of the petition by remitting the matter back to the respondent for reconsideration afresh in accordance with law. Matter is remitted back to respondent No.1 for reconsideration afresh in accordance with law - petition allowed by way of remand.

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• 2025 (3) TMI 1125
  Inaction on the part of the respondents in not refunding the amount of GST collected from the petitioner in the course of the execution of the contract that was awarded to the petitioner - grievance of the petitioner is that inspite of repeated approach being made to the respondents, there is a total inaction on the part of the respondents so far as refund of GST is concerned - HELD THAT:- The writ petition as of now stands disposed of directing the State Authorities to immediately process the claim of the petitioner so far as refund of GST is concerned, after due verification of facts and also the entitlement part of the petitioner is concerned. Let an appropriate decision be taken keeping in view the earlier order of the State Government dated 10.10.2018 in this regard and all subsequent orders also passed in this regard by the State. The State Authorities shall also keep in mind the contention of the petitioner that in many of the similar cases, the govt. itself has refunded the GST. Petition disposed off.

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• Income Tax

• 2025 (3) TMI 1124
  Exemption u/s 11 - transactions of purchasing shares and investment by the way of Share Application Money in BARC,a 100% subsidiary of the Assessee - HELD THAT:- BARC, being a company registered u/s 25 of the Companies Act, is legally prohibited from distributing any dividends or profits to its shareholders. Additionally, in the event of liquidation, Memorandum of Association of BARC mandates that any surplus must be transferred to another company registered u/s 25 of the Companies Act with similar objectives, thereby negating any possibility of personal gain or profit for the Assessee from its deployment of funds. Therefore this Court finds merit in the Assessee s submission that the deployment of funds by the Assessee in BARC, by way of purchase of its shares, was prima facie not for earning any income or profit, but solely to meet the Assessee s objectives, as mandated by Government policy, following the TRAI Recommendations. Whether the deployment of funds by the Assessee in the shares of BARC constitutes an investment within the meaning of Section 11 (5) read with Section 13 (1) (d)? - Scope and meaning of the term investment - Essential feature of an investment is the intention to earn a return, profit, or income from the money laid out. The term investment in both common parlance and legal sense implies an expenditure with the objective of generating a financial return or profit. We note that in Sir Sobha Singh Public Charitable Trust [ 2001 (2) TMI 78 - DELHI HIGH COURT ] had discussed the scope of the term investment and highlighted that the intention to earn income is central to the concept of investment. As in Dr. Vikhe Patil Foundation [ 2013 (12) TMI 1157 - BOMBAY HIGH COURT ] had addressed the issue as to whether a transaction involving the purchase of shares in cooperative banks by a charitable trust constituted an investment u/s 11 (5) held that the investment in shares of cooperative banks was a precondition of raising of loans and it was therefore not an investment as normally understood. From the foregoing discussion, we are of the view that the essence of investment lies in the intention and the capacity of the expenditure to yield income, profit, or return. The consistent judicial view is that mere deployment of funds does not amount to an investment unless it is aimed at earning income or return. It is evident that the Assessee had invested funds in the shares of BARC, a not-for-profit company, which is legally prohibited from distributing any dividends or profits. Even on liquidation, the surplus of BARC would be transferred to another charitable entity and not to its shareholders. Thus, no financial return or gain was possible from the Assessee s deployment of funds in BARC. As a sequitur to the aforesaid, we are of the opinion that the application of funds by the Assessee in BARC does not qualify as investment u/s 11 (5) r.w.s. 13 (1) (d) of the Act, inasmuch as the said deployment was not intended to yield income, profit, or return, but was made pursuant to a statutory and regulatory obligation to further the Assessee s charitable objectives. Since we have held that there was no violation of Section 11 (5) read with Section 13 (1) (d) committed by the Assessee herein; consequently, the decision of the CIT (A), upheld by the learned ITAT, to allow the exemption to the Assessee u/s 11 and 12 of the Act, is also affirmed. Decided against revenue.

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• 2025 (3) TMI 1123
  Validity of reopening of assessment u/s 147 - difference of rent in the profit and loss account and AIR - HELD THAT:- We are surprised as to how the audit memo came to the attention of the petitioner since the audit memo is internal correspondence between the audit department of the revenue and the AO. An explanation in response to the audit memo cannot be treated as disclosure during the assessment proceedings, but it is post the assessment proceedings. Therefore, the response to the audit memo cannot be considered for adjudicating whether there was a failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment. In the clarification to the audit memo, there is no explanation of the difference between rental figures. However, it appears that the petitioner s contention in the course of giving audit clarification seems to be that the TDS was deducted in some cases @10% and not @2%. This is a very vague reply, and indeed, this reply was not presented during the assessment proceedings. We upheld the reopening of the assessment regarding the difference in rental figures. Non-deduction of TDS on staff salary - In the letters filed by the petitioner during the assessment proceedings, there are no details concerning the deduction of TDS on salary. The letter dated 17 August 2015 states that the ledger copy of the salary expenses is attached. However, such ledger copy has not been annexed in the writ petition, but the same appears to have been annexed with the rejoinder. On a perusal of the salary ledger account, it is unclear whether the TDS has been deducted. There is no mention in the objections on this issue and, therefore, the only inference which could be drawn is that there has been no disclosure during the regular assessment proceedings on this issue. Hence, the reopening is upheld even on this account. Claim of depreciation - Reasons recorded show that the petitioner has claimed depreciation on printers @60% in the audit report and the balance sheet, whereas according to the revenue, the depreciation should be only @15% / 7.5%. Insofar as this issue is concerned, since the petitioner has claimed depreciation by disclosing the same @60%, at least prima facie, there cannot be any failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment and, therefore, on this issue, we do not uphold the initiation of the reassessment proceedings. However, since we have upheld the reassessment proceedings on the above two grounds, this issue can be examined during the reassessment proceedings. Difference in the total receipts as appearing in the profit and loss account and, as per AIR details - In the letter dated 17 August 2015, in Item 7, there is a reference to reconciliation of TDS with 26AS statement. The said statement was not annexed to the petition but the same is annexed in the rejoinder of the petitioner at page 232. On a perusal of the said statement, it appears that the petitioner has filed a reconciliation of the figures as per the profit and loss account, the 26AS statement and the statistics that appear in the reasons recorded can be found in the said statement. Therefore, insofar as this issue is concerned, in our view, the petitioner has prima facie disclosed and explained the difference in the course of the assessment proceedings, and, therefore, reassessment of this account might be vulnerable. However, since we have upheld the reassessment proceedings on the other two items, the petitioner will be free to explain the reconciliation during the reassessment proceedings. Therefore, the overall challenge of reopening the assessment fails. Decided in favour of assessee.

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• 2025 (3) TMI 1122
  Disallowance u/s 40A (3) - amount paid by the respondent (Assessee) for purchase of the first and second floors of the property - HELD THAT:- Undisputedly, the balance sheet reflects the assets in question (first and second floors of the subject property) as an investment. Revenue is unable to draw the attention of this court to any material which would suggest that the amount spent by the Assessee was debited to its P L Account or that the final accounts of the company for the relevant financial years reflect the first and second floors of the subject property as stock-in-trade and not as an investment. We find no grounds to fault the decision of the ITAT in upholding the CIT(A) s decision that no disallowance u/s 40A (3) is admissible as the Assessee had not claimed the amount spent on purchasing the first and second floors of the subject property as expenditure. Since the amount is not claimed as an expenditure, the question of disallowance of the same does not arise. - Decided in favour of assessee.

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• 2025 (3) TMI 1121
  Addition u/s. 56(2)(vii)(b) - donor and donee were not relatives[Step brother sister] and therefore, the receipt of the property gifted without consideration was chargeable to tax - whether the gift given by step sister to a step brother falls within the definition of relative as given by Section 56 (2) ? - HELD THAT:- As per the Dictionary meaning of the term relative , it includes a person related by affinity, which means the connection existing in consequence of marriage between each of the married persons and the kindred of the other. If the aforesaid Dictionary meaning is to be referred and relied upon, then the term relative would include step brother and step sister by affinity. If the term brother and sister of the individual has not been defined under the Income Tax Act, then, the meaning defined in common law has to be adopted and in absence of any other negative covenant under the Act, in our view, brother and sister should also include step brother and step sister who by virtue of marriage of their parents have become brother and sister. Accordingly, we hold that gift given by step sister to a step brother falls within the definition of relative , that is, they are to treated as brother and sister as per Section 56(2)(vii) and consequently, property received by brother from sister cannot be taxed u/s. 56(2). Accordingly, the claim of the assessee is exempt from being taxed as income from other sources is accepted and accordingly, the addition made by the ld. AO is deleted. Decided in favour of assessee.

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• 2025 (3) TMI 1120
  Reopening of assessment u/s 147 - reasons have not been supplied - addition on account of unexplained money u/s. 69A and unexplained jewellery - HELD THAT:- We find that at no point of time, the reasons recorded by the AO were ever supplied to the assessee despite specific request as per the letter dated 24/12/2015 incorporated supra. As noted above assessee has challenged this issue specifically before the CIT (A) and detailed submissions were made, however, nowhere, CIT (A) has even addressed this point. At least at the appellate stage, CIT (A) could have asked the AO to provide the reasons recorded and he himself could have taken note of the objections. Even before us, no material has been brought on record that these reasons which have been given before us, was ever made available to the assessee. Accordingly, we hold that no reasons were supplied to the assessee despite specific request. Once that is so, then it is a clear violation of the law enunciated by the Hon ble Supreme Court in the case of GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] . Thus, if the reasons have not been supplied, then the entire re-assessment notice u/s. 148 and consequently, the entire re-assessment order u/s. 148 is bad in law - Decided in favour of assessee.

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• 2025 (3) TMI 1119
  Addition u/s 56(2)(x) - difference between the actual purchase price of a property and its valuation by the District Valuation Officer (DVO) - HELD THAT:- There is no reason to believe that the DVO has not valued the property correctly. After considering the submissions of both the parties, when the registration value of the property is Rs. 60,15,959/-, the burden lies on the assessee to establish that the value of the property mentioned in the Sale Deed is true and correct. In this case, the assessee has not given even any valid evidence to believe that the value of the property is only Rs. 38,44,884/-. However, the matter was referred to the DVO and DVO has valued at Rs. 42,51,700/-. Admittedly the registration value is Rs. 60,15,759/-. Therefore, no hesitation to come to the conclusion that there is no infirmity in the orders passed by AO as well as the ld. CIT(Appeals) and also, no infirmity in the valuation made by the DVO. Therefore, there is no valid reason in the arguments of assessee saying that DVO has not properly valued the property. Hence, the grounds raised by the assessee are liable to be dismissed.

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• 2025 (3) TMI 1118
  Deduction u/s. 80IC - cumulative satisfaction by the assessee company of the pre-conditions for claiming the modified deduction - HELD THAT:- There is neither any whisper in the order of the CIT(A) as to whether or not the assessee-company had in substance carried out substantial expansion as defined in clause (ix) of sub-section (8) of section 80IC nor he had verified to his satisfaction that the other pre-conditions for supporting the aforesaid modified claim of deduction raised by the assessee company were duly complied with. AR s claim that the AO had allowed the enhanced claim for deduction u/s 80IC to the assessee company in the immediately preceding year, the same in our considered view, would though support the latter s claim for modified deduction for the subject year, but cannot be stretched to the extent of justifying dispensing with verification as regards the cumulative satisfaction of the pre-conditions for claiming the modified/enhanced deduction during the year under consideration. Accordingly, we, though principally concur with the CIT(A), that as per the judgment of Aarham Softronics.[ 2019 (2) TMI 1285 - SUPREME COURT] assessee-company on carrying out substantial expansion as defined in clause (ix) of subsection (8) of section 80IC would pass the eligibility criterion to claim 100 percent deduction of its profits and gains reckoned from the previous year in which such substantial expansion was undertaken by treating the same as the initial assessment year , but are unable to approve his summarily allowing of the modified claim for deduction by dispensing with the verification of the cumulative satisfaction of the pre-conditions contemplated in the said statutory provision. We thus, are of a firm conviction, that the matter in all fairness requires to be restored to the file of the CIT(A), who is directed to read-judicate the same after verifying the cumulative satisfaction by the assessee company of the pre-conditions for claiming the modified deduction so raised by it under Sec. 80IC(2)(a)(ii). Appeal filed by the Revenue and the cross-objection filed by the assessee company are allowed for statistical purposes.

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• 2025 (3) TMI 1117
  Rectification application u/s.154 - assessee is a charitable trust registered u/s. 12AA, assessee filed its return of income showing gross receipt which were utilized towards the objects of the trust, assessee inadvertently claimed exemption u/s.10(23C) instead of Section 11 - HELD THAT:- No action has been taken by the AO as against the first rectification application filed by the assessee. When the second rectification application filed on 14.12.2022 the same also rejected on the ground of barred by limitation. Therefore, in the interest of justice, we deem it fit to set aside the matter back to the file of the Jurisdictional Assessing Officer to pass order on the rectification application dated 26.05.2016 filed by the assessee by giving opportunity of hearing to the assessee. In the result, appeal filed by the assessee is allowed for statistical purposes.

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• 2025 (3) TMI 1116
  Additions u/s 69A - unexplained income - HELD THAT:- We observe that the assessee had submitted cash book for various years under consideration, on the basis of cash withdrawn / deposited by the assessee in his bank accounts held with various banks. AO has not pointed out any source of income of the assessee, apart from salary income and there is no allegation that the assessee had earned any unexplained income outside the books of accounts. Further, there is no allegation by the Department that the cash so withdrawn by the assessee from his bank accounts, was not available with the assessee for being re-deposited in his bank account. It is a well settled principle that if the AO has not brought on record any evidence to show that the cash withdrawals made by the assessee has been used elsewhere and that the same were not available with the assessee for re-depositing, then it has to be presumed that the subsequent re-deposit in the bank accounts were sourced out of earlier withdrawals made by the assessee from his bank account. Accordingly, since opening cash balance was sourced out of withdrawals made from the assessee s bank accounts and since there was no specific allegation that the amount was not available with the assessee for re-depositing, the opening cash balance cannot be added as income of the assessee u/s 69A of the Act. Addition u/s 69A - HELD THAT:- Since there is no specific allegation that the assessee had utilized the cash withdrawals elsewhere, in our view, there is no reason for the Assessing Officer to make addition u/s 69A of the Act. On going through the facts of the instant case, we observe that no specific observations were made by the AO while making the addition that the assessee had utilized the cash withdrawals elsewhere and further, the Assessing Officer has not pointed out as to why the cash withdrawn by the assessee from his bank account was not available with the assessee for re-deposit. Accordingly, keeping in view the assessee s facts, the addition is directed to be deleted. Addition received by the assessee from sale of cars - HELD THAT:- Sale of Renault Fluence Car and Santro Cars are concerned, complete details with regards to the purchaser were furnished by the assessee, during the course of assessment proceedings and the only reason why the addition was made in the hands of the assessee was only on the ground that the purchaser failed to respond to notices issued by the Income Tax Department. No other adverse inference / observations was made by the AO/ CIT(A) while confirming the addition in the hands of the assessee. Accordingly, looking into the assessee s set of facts, in our considered view addition on sale of Fluence car and Santro car are liable to be deleted. Sale of Mercedes Benz car - Assessee has not brought anything on record to controvert the findings made by the Assessing Officer / CIT(A) while confirming the addition. The only submission given by the assessee is that the car was sold through an agent. However, apart from this statement, no this has been brought on record to controvert the findings of the AO and the assessee in our view, has not been able to establish the genuineness of the sale of Mercedes Car. Therefore, on going through the records of the assessee s case, we find no infirmity in the order of CIT(A) so as to call for any interference. Accordingly, addition on sale of Mercedes Benz car is liable to be sustained in the hands of the assessee. Addition received from Late Prabhatsinhji Thakor as contribution for joint venture u/s 68 - HELD THAT:- Joint Development deal with Shri Prabhatsingh Attaji Thakore did not materialize and the land development in terms of the MOU never took place. Further, we were also informed that the money so statedly received by the assessee from Shri Prabhatsingh Attaji Thakore was also never returned back by the assessee. Although, the confirmation of Shri Prabhatsingh Attaji Thakore was placed on record, however, in our considered view, this itself does not prove the genuineness of the transaction and nor does it prove the creditworthiness of the party. Shri Prabhatsingh Thakore had not filed return of income for the impugned year under consideration and nothing has been brought on record to show the creditworthiness of Shri Prabhatsingh Attaji Thakore to advance such substantial amount to the assessee. Bogus sale of shares u/s 69A - assessee submitted that all evidences regarding transaction of shares viz. Shares transfer Form, audited accounts of the purchaser company etc. were furnished, and that there is no doubt that such sale of shares were made by the assessee, in lieu of cash - HELD THAT:- We are of the considered view that the assessee has failed to furnish the creditworthiness of M/s. Fincruise Services Pvt. Ltd. and there is nothing on record to show that M/s. Fincruise Services Pvt. Ltd. paid an amount of Rs. 49,99,990/- to the assessee in cash. Assessee despite being given several opportunities, did not produce cash book of the purchaser company to show separate cash payment. Further, in absence of cash book of M/s. Fincruise Services Pvt. Ltd. it is also not possible to ascertain whether the purchaser company had availability of cash at the relevant time to make such share purchase in cash, as stated by the assessee. Accordingly, keeping in view the fact of assessee s case, we find no infirmity in the order of CIT(A) so as to call for any interference.

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• 2025 (3) TMI 1115
  Nature of expenditure - professional fees paid for drafting application for patents - revenue or capital expenditure - HELD THAT:- Considering that the genuineness of the expenditure is not in dispute, are of the view that since the expenditure in question before us has been incurred in the regular course of business and no specific intangible asset has been created, therefore, the assessee deserves the deduction of the alleged expenses u/s 37(1) and it has been rightly claimed as revenue expenditure . Thus, ground no.2 raised by the assessee is allowed. Translation expenses for software development - This claim of the assessee has been denied by AO treating it to be a capital expenditure - HELD THAT:- We observe that the assessee in the business of providing solutions for enterprise application language localization across all industry verticals for which the assessee requires experts who can translate various words into the customers specified language. The translation expenses is specific to each sale as the dictionary prepared for one customer once is hardly of any use in any other sale. We also observe that no new asset came into existence and the expenditure is customer specific and has no enduring benefit. Further, the intention of the expenditure is to facilitate sales and not develop software. Therefore, since the alleged expenditure towards translation expenses for software development has been incurred in the regular course of business for the year under consideration, the same is hereby treated as revenue expenditure and the claim made by the assessee deserves to be allowed. Disallowance u/s 14A - assessee has claimed that AO has not made proper satisfaction - HELD THAT:- Considering the fact that the assessee had earned dividend income from mutual funds investments only at Rs. 1210/- therefore as decided in Joint Investment (P.) Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT ] wherein it has been held that disallowance u/s 14A of the Act cannot exceed exempt income earned by it, we affirm the disallowance u/s 14A of the Act at Rs. 1210/- and delete the remaining amount of disallowance at Rs. 1, 02, 574/-. Thus, ground no.4 raised by the assessee is partly allowed.

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• 2025 (3) TMI 1114
  Rejection of application for registration and cancelling the provisional registration granted to the assessee u/s 80G(5) - HELD THAT:- CIT(E) was not justified in dismissing the application for registration and cancelling the provisional registration granted to the assessee u/s 80G(5) of the Act. Revenue has not brought on record any contrary material/judicial precedent before us. We therefore deem it fit, in the interest of justice and fair play to restore the matter back to the file of the Ld. CIT(E) with a direction to consider and decide afresh the assessee s application for registration u/s 80G(5) of the Act on merits. Appeal of assessee is treated as allowed for statistical purposes.

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• 2025 (3) TMI 1113
  Penalty u/s 270A - underreporting of income - HELD THAT:- CIT(A) while deciding the appeal had dealt with ground nos.7 to 11 regarding section 270AA of the Act and failed to deal with ground nos.1 to 6 regarding levying penalty under section 270A of the Act It is well settled principle of law, in interest of justice, it is considered expedient to restore the matter to the file of the CIT(A) for fresh decision in accordance with law. Appeal filed by assessee is allowed for statistical purposes.

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• Customs

• 2025 (3) TMI 1112
  Seeking to quash the impugned order - Seeking provisional release of goods - allegation of undervaluation was raised against the Petitioner - a bank guarantee has been furnished by the Petitioner for the last more than 14 years which is now lying with the Respondent/Department - HELD THAT:- The present dispute would, in the opinion of this Court, be clearly covered by the circular dated 2nd November, 2013, as the amount involved is less than Rs. 50 lakhs. Upon hearing both the parties in detail, this Court is of the opinion that in view of the said instructions, the appeal of the Department before CESTAT deserves to be dismissed. Accordingly, in exercise of powers conferred under Article 227 of the Constitution of India, the appeal filed by the Department before CESTAT stands dismissed, in view of the monetary limits. The bank guarantee shall be released within a period of 8 weeks. The Court acknowledges that the appeal was filed before the Instruction dated 2nd November, 2023 came into effect and finds no lapse on the part of the Department. However, the present order has been passed considering the fact that disregarding the Instruction dated 2nd November, 2023 would serve no useful purpose, as it would necessitate the restoration of the appeal for a fresh hearing. It would also mean that the Bank Guarantee would continue to be kept alive incurring further costs. Conclusion - Considering the monetary limit of the Instruction would apply even to pending matters, the CESTAT would also inevitably follow the same course of action. Thus, instead of remanding the matter, considering that the monetary value in the Appeal before CESTAT is Rs. 29,66,805/- plus Rs. 20 lakhs, which is below the limit fixed for CESTAT appeals, the appeal before CESTAT deserves to be dismissed on this short ground itself. Petition allowed.

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• 2025 (3) TMI 1111
  Imposition of Anti-dumping Duty - rejection of the Petitioners response due to a delay in submission - HELD THAT:- Under Rule 8, the Designated Authority is to satisfy itself about the accuracy of the information supplied by interested parties. The manner in which the information is to be provided is also set out in the initiation notice and the questionnaire which is put up by the designated authority in the present case. Under Rule 8, the accuracy can be ascertained on the basis of the information provided by the interested parties. Paragraph number 89 of the disclosure statement in fact records various observations about the information gleaned from the response filed by the Petitioners. The said paragraph also specifically records that the reported transactions which are relied upon by the Petitioners do not allow the identification of the product which is to be exported which would be a very crucial aspect in the investigation itself. The system of imposition of anti-dumping duty does not end with the disclosure statement being published. In fact, after the disclosure statement is published, the authority has to determine the nature of the injury which the domestic industry is suffering and thereafter arrive at its preliminary findings or final findings in terms of the Rules. After arriving at such findings, the anti-dumping duties are determined. The Petitioners are always at liberty to respond to the Designated Authority in respect of any grievances that they may have in the consideration of the data which has been given. In terms of the operating manual it cannot be stated that physical inspection is mandatory in every case. Moreover, it depends upon the product concerned, the nature of the injury which the domestic industry is suffering and the data which is furnished by the exporters/suppliers. In each and every case, if physical inspection is mandated, it would result in delay of the investigation. Upon seeing the facts of this case, it cannot be said that adequate consideration has not been given at this stage. The Petitioners are free to file their responses and give any clarifications which they may deem appropriate to the disclosure statement which shall also be duly considered in terms of the Rules. Conclusion - The Court allowed the Petitioners additional time to submit their response in the correct format, extending the deadline to 21st March, 2025, and disposed of the petition accordingly. Petition disposed off.

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• 2025 (3) TMI 1110
  Seeking direction to the Respondent to unconditionally release the seized gold bangles of the Petitioner forthwith - recovery of two yellow bangles weighing 50 grams - HELD THAT:- Once the goods are detained, it is mandatory to issue a show cause notice and afford a hearing to the Petitioner. The time prescribed under Section 110 of The Customs Act, 1962, is a period of six months and subject to complying with the formalities, a further extension for a period of six months can be taken by the Department for issuing the show cause notice. In this case, the one year period itself has elapsed, thus no show cause notice can be issued. The detention is therefore impermissible. Let the goods be appraised by the Respondent department on their own and the same be released, subject to verification, within four weeks to the Petitioner. Since the Petitioner has now attained majority, the appraisement shall be done either in the presence of the Petitioner or an Authorized Representative. Petition disposed off.

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• 2025 (3) TMI 1109
  Jurisdiction of Directorate of Revenue Intelligence (DRI) officials under Section 28 of the Customs Act, 1962 to issue SCN - proper officer or not - HELD THAT:- A common issue raised in all these writ petitions, including the present one, pertains to the jurisdiction of the DRI officials to issue show cause notices or pass adjudication orders. However there are various other issues that have been raised in some matters, which are not common across all petitions. Accordingly, in each of these matters, the Court will have to determine whether they are liable to be disposed of in light of the Supreme Court s decision in Canon - II [ 2024 (11) TMI 391 - SUPREME COURT (LB)] or if any outstanding issues remain to be adjudicated. In this writ petition, the show cause notice dated 29th December, 2020 was challenged, however, during the pendency of the writ petition the Order-in-Original dated 28th September, 2022 has also been passed. The said order is stated to have been challenged by the Department as also by the Petitioner before CESTAT in two appeals being Customs Appeal Nos. C/87924/2022-CUS and C/87921/2022-CUS. In view of the fact that both parties have availed of their remedies before CESTAT, no further orders are called for in this writ petition. Petition disposed off.

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• 2025 (3) TMI 1108
  Jurisdiction of Directorate of Revenue Intelligence (DRI) officials under Section 28 of the Customs Act, 1962 to issue SCN - proper officer or not - HELD THAT:- A common issue raised in all these writ petitions, including the present one, pertains to the jurisdiction of the DRI officials to issue show cause notices or pass adjudication orders. However there are various other issues that have been raised in some matters, which are not common across all petitions. Accordingly, in each of these matters, the Court will have to determine whether they are liable to be disposed of in light of the Supreme Court s decision in Canon - II [ 2024 (11) TMI 391 - SUPREME COURT (LB)] or if any outstanding issues remain to be adjudicated. The show cause notice/s dated 31st December, 2020 issued by the DRI, Lucknow Zonal Unit were under challenge. During the pendency of the petitions, the adjudicating authority has passed the Order-in-Original dated 20th December, 2022 in favour of the Petitioners. The same was brought on record vide separate applications bearing nos. CM APPL. 12354/2023 in W.P.(C) 6850/2021 and CM APPL. 12275/2023 in W.P.(C) 6851/2021. In view of the fact that the Order-in-Original is passed, in favour of the Petitioners, the challenge in these matters no longer survives. In the present petition, the show cause notice which is under challenge is SCN dated 31st December, 2020 issued by the DRI, Mumbai Zonal Unit. This would be covered by directions given in paragraph 168 (vi) (a) of the Canon-II [ 2024 (11) TMI 391 - SUPREME COURT (LB)] , wherein the adjudication of the show cause notice is to be restored to the adjudicating authority. Petition disposed off.

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• 2025 (3) TMI 1107
  Jurisdiction of Directorate of Revenue Intelligence (DRI) officials under Section 28 of the Customs Act, 1962 to issue SCN - proper officer or not - HELD THAT:- In this matter, there were two grounds for challenge. One is that the DRI did not have jurisdiction which is now settled by the Canon - II [ 2024 (11) TMI 391 - SUPREME COURT (LB)] and the next ground is to the fact that while passing the Order-in-Original dated 26th February, 2021, no hearing was afforded to the Petitioner. List for hearing on 8th April, 2025 at 2:30 p.m. Petition disposed off.

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• 2025 (3) TMI 1106
  Jurisdiction of Directorate of Revenue Intelligence (DRI) officials under Section 28 of the Customs Act, 1962 to issue SCN - proper officer or not - HELD THAT:- A common issue raised in all these writ petitions, including the present one, pertains to the jurisdiction of the DRI officials to issue show cause notices or pass adjudication orders. However there are various other issues that have been raised in some matters, which are not common across all petitions. Accordingly, in each of these matters, the Court will have to determine whether they are liable to be disposed of in light of the Supreme Court s decision in Canon - II [ 2024 (11) TMI 391 - SUPREME COURT (LB)] or if any outstanding issues remain to be adjudicated. In the present petition, the show cause notice dated 17th November 2017 issued by the DRI, Lucknow Zonal Unit is challenged. This SCN would be covered by directions given in paragraph 168 (vi) (a) of the Canon-II - Accordingly, the proceedings in the show cause notice under challenge dated 17th November 2017 shall now proceed before the adjudicating authority in accordance with law. Since the writ petition was pending for a long period, the Petitioner is afforded 60 days to file a reply to the show cause notice. The opportunity of a personal hearing shall be granted to the Petitioner and the show cause notice shall then be adjudicated. Petition disposed off.

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• Insolvency & Bankruptcy

• 2025 (3) TMI 1105
  Condonation of delay of 233 days in refiling the appeal by the appellant - delay caised due to old age and health issues - Sufficient reasons for delay or not - HELD THAT:- The Appeal being filed on 22.02.2024 through e-filing, which was within the 30 days from the impugned order dated 24.01.2024, was filed within limitation period and there is no delay in filing of the Appeal. However, it is to be noted that the defects have to be cured within a period of 7 days as per Rule 26 of the National Company Law Appellate Tribunal Rules, 2016. But in this case, it has not been done repeatedly and the cumulative delay in refiling is 233 days. Furthermore, same defects were being notified again and again and the Appellant has allowed the Appeal to remain defective for a very long time with the Registry. The Appellant has been callous in not correcting the defects pointed out by the NCLAT registry in a timely manner. The grounds taken by the Appellant giving health reasons of the Appellant do not correlate with the reality in the present case. The grounds taken by the Appellant giving health reasons of the Appellant do not correlate with the reality in the present case. It is not clear as to why the Appellant was not pursuing his case for curing of the defects in a timely manner. In case if the defects were not curable, the Appellant could have mentioned it before this Tribunal to take up the Appeal with defects, which was not done in this case. The explanation provided in the Additional Affidavit also doesn t inspire much confidence. The reasons as provided are not sufficient to condone the delay in refiling. Conclusion - As there is no sufficient cause explained by the Appellant, therefore, the condonation of delay application is dismissed. The condonation of delay application is dismissed.

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• PMLA

• 2025 (3) TMI 1104
  Money Laundering - Challenge to detention/arrest of the petitioner - question to validity of the arrest said to be not in consonance with the provision of Section 19 (1) of the PML Act, 2002 since the grounds of arrest has not been supplied at the time of arrest of the petitioner in writing, rather, the grounds of arrest were for the first time supplied on 10.11.2024 along with the counter affidavit filed on behalf of respondent - HELD THAT:- In the first FIR, six charge sheets have been filed. More than 2000 accused have been named in the charge sheets. 550 witnesses have been named. In the case of the second FIR, there are 14 accused named in the chargesheet. In connection with this FIR, 24 witnesses have been cited. In the third FIR, 24 accused have been named in the charge sheet and 50 prosecution witnesses have been cited. The offences alleged in the aforementioned crimes are mainly under Sections 120B, 419, 420, 467 and 471 of the Penal Code, 1860 and Sections 7, 12, 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. Section 34 of the Penal Code, 1860 has been invoked. These offences are scheduled offences within the meaning of Section 2(y) of the PMLA. Therefore, relying on the final reports filed in aforementioned scheduled offences, for an offence of money laundering under Section 3 of the PMLA punishable under Section 4, the Enforcement Directorate (ED) registered an Enforcement Case Information Report (for short ECIR ) bearing ECIR No. MDSZO/21/2021 on 29th July 2021. Consequently, the appellant was arrested on 14th June 2023 in connection with the said ECIR and was remanded to judicial custody. A complaint was filed for the offence under Section 3 of the PMLA Act, which is punishable under Section 4, on 12th August 2023. The appellant is the only accused named in the complaint. Cognizance has been taken based on the complaint by the Special Court under the PMLA. The scheduled offences cases have been transferred to the learned Assistant Sessions Judge, Additional Special Court for Trial of Criminal Cases related to Elected Members of Parliament and Members of Legislative Assembly of Tamil Nadu (Special MPMLA Court), Chennai. The Hon ble Apex Court while taking note of the settled principle that the stringent provisions regarding the grant of bail, such as Section 45(1)(iii) of the PMLA, cannot become a tool which can be used to incarcerate the accused without trial for an unreasonably long time has allowed the appeal and direction has been passed that the appellant shall be enlarged on bail till the final disposal of the case. The provisions of Section 167(2) of the Code deals with both types of remand i.e. judicial remand and police remand . The police have been given a right to apply before the Magistrate concerned for giving the accused in police custody and on being satisfied of adequate grounds the Magistrate may grant police remand of the accused for a specific period not beyond first fifteen days and later on, he can authorise only judicial detention of the accused till 90 to 60 days, as the case may be. Sections 209 and 309 of the Code deal with judicial custody during inquiry and trial - So far as authorisation of police custody of accused under Section 167 (2) is concerned it is legislative mandate that in no way the detention of the accused in police custody can be authorised for any time after expiry of the period of first fifteen days remand. The Magistrate may allow detention other than custody in police till 90/60 days, as the case may be. The Hon ble Apex Court in the case of Central Bureau of Investigation, special investigation cell-I Vs. Anupam J. Kulkarni [ 1992 (5) TMI 191 - SUPREME COURT] has observed that the Magistrate is competent to authorise detention of any accused in police custody for a specific period on adequate grounds only for the first fifteen days and that detention in police custody or judicial custody or vice versa can be authorised only within first fifteen days. After fifteen days detention the accused cannot be sent to police custody at all except in other cases in which remand of first fifteen days has not yet started. The purpose of remand as postulated under Section 167 is that investigation cannot be completed within 24 hours. It enables the Magistrate to see that the remand is really necessary. This requires the investigating agency to send the case diary along with the remand report so that the Magistrate can appreciate the factual scenario and apply his mind whether there is a warrant for police remand or justification for judicial remand or there is no need for any remand at all. It is obligatory on the part of the Magistrate to apply his mind and not to pass an order of remand automatically or in a mechanical manner. Admittedly, the writ petitioner has challenged order dated 09.06.2023 but has not questioned the illegality and propriety of order dated 08.06.2023 meaning thereby the writ petitioner is having no grievance with respect to the issue of remand dated 08.06.2023 otherwise said order would have been challenged by the writ petitioner. It means, the writ petitioner has accepted the remand order and has not challenged the order of remand rather he has chosen to prefer application under Sections 439 and 440 Cr.P.C before the Court of Sessions on merit by denying the allegation as referred in the ECIR by filing Misc. Cri. Application No. 1915 of 2023 for grant of bail, which was dismissed vide order dated 07.07.2023 by learned Special Judge, CBI-cum-Special Judge under PMLA, Ranchi. The moment the petitioner has shown no grievance with respect to any of the issues even the issue of arrest by raising the ground that he is not knowing as to on what ground he has been arrested rather he in each and every page has endorsed by putting his signature and gave note that he read over the content of the ground of arrest and did not shown any dissatisfaction. This Court is not hesitant in coming to the conclusion that the writ petitioner was having no grievance with respect to the issue of remand order dated 08.06.2023. Had the remand order dated 08.06.2023 have any infirmities, the writ petitioner would have made objection to that effect showing his dissatisfaction in the application which was filed before the Court having the jurisdiction for the purpose of remand of the present petitioner but admittedly that has not been done. This Court in the entirety of the facts and circumstances, as has been discussed herein above, is of the view that in view of confinement of prayer, the writ petition is required to be considered only with respect to the propriety/impropriety of order dated 09.06.2023 and in view of discussions made, the petitioner has not been able to make out a case for showing interference in order dated 09.06.2023. Conclusion - i) The petitioner could not challenge the arrest order after confining the writ petition to the remand order, as recorded in the judicial order dated 04.10.2024. ii) The remand order dated 09.06.2023 was valid, as the petitioner was informed of the grounds of arrest, and the procedural requirements for remand were met. iii) The petitioner failed to establish grounds for interference with the remand order dated 09.06.2023. Petition dismissed.

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• Service Tax

• 2025 (3) TMI 1103
  Levy of service tax on transportation service providers where consignment note is not issued - invocation of extended period of limiattion - penalty - HELD THAT:- Admittedly, the ld.Adjudicating Authority found that the appellant is not the GTA. In that circumstances, the appellant is not liable to pay service tax under Section 66D (p) of the Act., which exempts services by way of transportation of goods by road except the services of goods transportation agency or courier agency. Admittedly, it has been held that the appellant is not the Goods Transport Agency, therefore, the said service falls under negative list as per Section 66D (p) of the Finance Act, 1994. The appellant is not liable to pay service tax. In such circumstances, the service recipient is liable to pay service tax under reverse charge mechanism, but as the service recipients are not present, therefore, no comments passed against service recipient whether they have paid the service tax or not. Conclusion - The demand of service tax against the appellant on transportation of goods by road, who has not issued consignment note and being not GTA, is not liable to pay service tax, therefore, whole of the demand of service tax is set aside. Consequently, no penalty is imposable on the appellant. The impugend order set aside - appeal allowed.

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• 2025 (3) TMI 1102
  Refund of service tax on account of retrospective exemption from payment of Service Tax being accorded by Section 102 of the Finance Act, 2016 with effect from 14.05.2016 - refund claim barred by time limitation or not - HELD THAT:- The order of the Ld. Commissioner (Appeals) dated 10.09.2021, wherein DG MAP was directed to file the refund claim before the adjudicating authority within a period of one month, has attained finality as the said order has been affirmed by the Hon ble Calcutta High Court. Accordingly, the refund claim has been filed by the Respondent No. 2 within one month, in compliance of the order of the Ld. Commissioner (Appeals) dated 10.09.2021. Therefore, the refund claim filed by the Respondent No. 2 is not barred by limitation. In these circumstances, there are no infirmity in the impugned order. Conclusion - The Respondent No. 2 viz. DG MAP, is entitled to the claim of refund of Service Tax paid by them to the Respondent No. 1, which is not payable, and the same shall be sanctioned to the Respondent No. 2 within a period of one month from the date of receipt of this order. Appeal of Revenue dismissed.

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• 2025 (3) TMI 1101
  Levy of service tax - commissions paid to overseas agents for services rendered prior to 18.04.2006, despite the payments being made after this date when the service tax on import of services became applicable on a reverse charge basis - HELD THAT:- It is not in dispute that the services rendered by overseas agents became taxable with effect from 18.04.2006. A Division Bench of the Tribunal in Reliance Industries Ltd. and Commissioner of Central Excise and Service Tax, LTU, Mumbai [ 2016 (6) TMI 1108 - CESTAT MUMBAI] , in connection with the service tax on reverse charge mechanism under intellectual property services held that The service itself having been rendered prior to the introduction of the levy, the mere fact that payments for the same were made on a staggered basis over a period of time cannot be a ground for levying service tax merely with reference to the date on which payments were being made. It is, therefore, clear that what has to be examined is the point of time when the services were actually rendered and not the point of time when the payment was made. It is only upon introduction of the point of Taxation Rule 2011 that the date of receipt would have no relevance. Prior to this, what was relevant was that the date on which services were actually provided. The Commissioner (Appeals) failed to correctly appreciate the certificate of the Chartered Accountant and, therefore, committed an error in holding that no evidence had been placed by the appellant to show that the services were rendered by overseas agents to the appellant prior to 18.04.2006. Conclusion - The appellant would not be required to pay service tax on reverse charge mechanism on the service rendered by overseas agents prior to 18.04.2006. Appeal allowed.

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• 2025 (3) TMI 1100
  Liability of sub-contractor to pay service tax when the main contractor has already discharged the service tax liability on the full contract value - levy of penalty. Liability of sub-contractor to pay service tax when the main contractor has already discharged the service tax liability on the full contract value - HELD THAT:- The issue of service tax liability on the appellant being a sub-contractor is no more res-integra and has been decided by the Larger Bench in Melange Developers [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB] . Considering the scheme of the Service Tax read with the Cenvat Credit Rules and the master Circular dated 28.08.2007 issued by the Government of India, it was held that A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract. Levy of penalty - HELD THAT:- The present case cannot be set to be a case of suppression, willful mis-statement, fraud etc. which are the necessary ingredients for imposing the penalty under Section 78. The penalty of equivalent amount imposed by the Adjudicating Authority set aside. Conclusion - i) A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract. ii) The present case cannot be set to be a case of suppression, willful mis-statement, fraud etc. which are the necessary ingredients for imposing the penalty under Section 78, penalty set aside. Appeal allowed in part.

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• 2025 (3) TMI 1099
  Levy of service tax - amounts which the respondent had retained from the customers who cancelled their reservation for stay with a shorter period - amounts recovered by the respondents from its own employees towards the food provided to them. Amounts which the respondent had retained from the customers who cancelled their reservation for stay with a shorter period - HELD THAT:- What is covered under Section 66E (e) of the Finance Act is only a situation where there is a contract itself to tolerate an act. In such a case tolerating the act becomes a consideration from one side and the consideration paid for tolerating so becomes the consideration from other side. However, a situation is dealt where there is no agreement to renege from a contract between the respondent and its guests. Therefore, there was no consideration. The amounts which were paid to the respondent were in the form of damages/compensation. Thus, no service tax can be charged on the retention charges received by the respondent. Amounts recovered by the respondents from its own employees towards the food provided to them - HELD THAT:- Labour laws require the respondent to provide subsidized food to its employees and workers. The respondent made an arrangement to cook food and supply it through its own canteen to its employees. It must be noted that the canteen for its employees was different from the restaurant in which it serves the guests - there was no service whatsoever in the respondent supplying food at subsidized rate to its own employees as part of its legal obligations. No service tax can therefore be charged. Conclusion - The demand of service tax on the retention charges and also amounts collected from its own employees cannot be sustained. Consequently, the demand of interest and penalties also cannot be sustained. The appeal filed by the Revenue is dismissed.

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• Central Excise

• 2025 (3) TMI 1098
  Clandestine manufacture and removal - MS ingots - recovery of incriminating records, seizure of one pen drive, one computer and a hard disk and various other incriminating documents - existence of corroborative evidence or not - admissibility of the printed material under Section 36B of CEA - Mandatory complaince with Section 9D by the Adjudicating Authority or not - non-compliance with the mandate of Section 9D(2) be raised at the Appellate Stage when not raised before the Adjudicating Authority - electronic evidence collected admissible given the absence of certificate issued under Section 36B(4) or not - HELD THAT:- Both S.14 and S.9D of the CE Act are pari-materia with S.108 and S.138B of the Customs Act respectively and therefore judicial pronouncements in respect of these provisions of Customs Act, 1962 would also hold good for the pari-materia provisions of Central Excise Act, 1944. A three judge bench of the Honourable Supreme Court, in K. I. Pavunny v Asst.Collr.(H.Q).,C.Ex.Collectorate, Cochin, [ 1997 (2) TMI 97 - SUPREME COURT] , had an occasion to consider whether the confessional statement of the appellant therein, given to the Customs officers under Section 108 of the Customs Act, 1962 (for short, the `Act ), though retracted at a later stage, is admissible in evidence and could form basis for conviction and whether retracted confessional statement requires corroboration on material particulars from independent evidence. The Supreme Court in Ram Bihari Yadav vs. State of Bihar [ 1998 (4) TMI 578 - SUPREME COURT ] itself has observed that more often than not, the expressions relevancy and admissibility are used as synonyms but their legal implications are distinct and different from for more often than not facts which are relevant are not admissible; so also facts which are admissible may not be relevant, for example questions permitted to put in cross examination to test the veracity or impeach the credit of witnesses, though not relevant are admissible. The probative value of the evidence is the weight to be given to it which has to be judged having regards to the fact and circumstances of each case. Since the adjudicating authority has not followed the mandate of Section 9D (2) in the instant case and had not given an opportunity to the affected party to make submissions post intimation of his intent to rely on such materials duly stating the reasons why he intends to arrive at the said opinion. We are therefore of the considered view that the adjudicating authority has grossly erred in placing reliance on the statements recorded under Section 14 without following the mandate of Section 9D of the CEA. The reliance placed by the adjudicating authority on all these untested statements cannot sustain. This has rendered the case of clandestine removal made against the appellants wholly unsustainable on this ground alone. Whether the electronic evidence collected during investigation in this case, is admissible given the absence of certificate issued under Section 36B? - HELD THAT:- Given that the Adjudicating Authority, despite noticing the protestations of the appellants regarding noncompliance of Section 36B (4), and even after the law was laid down in P.V. Anvar s case [ 2014 (9) TMI 1007 - SUPREME COURT ], yet chose not to cure the same, we refrain from embarking on this course of remand as it would tantamount to affording a second opportunity that was undeserved, not to mention the prolongation of the litigation, which the appellants do not deserve. Moreso, since it is conscious that there are balance the rights of the parties before us, and such conscious non-compliance by the adjudicating authority has to be considered adversely to the detriment of the Revenue and the benefit thereof should then enure to the appellants. The standard of proof denotes the level of conviction or the decisional threshold that enables the court to decide whether the party who shoulders the burden of proof has discharged the same. In customs and excise matters, where the assessee can be visited with financial penal consequences, Courts have always tried to apply a qualified preponderance of probabilities standard - The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility. Thus, while the general standards of proof for civil cases are the preponderance of probability and the standards for criminal cases are beyond reasonable doubt, these standards have also been eschewed in favour of clear and convincing evidence when the allegations are of more serious nature and also attract heavy financial consequences. Having detailed some of the lacunae and shortcomings in the investigation supra as well as the standard of proof required to be adduced by Revenue in clandestine removal matters as aforementioned, we shall now deal with the evidence relied upon qua each of the demands confirmed in the impugned order and examine whether the evidence relied upon meet the standard of clear and convincing evidence , to establish the case of clandestine removal and to establish the availment of cenvat credit without actual receipt of inputs. The Department has not let in any evidence in the form of unaccounted procurement of the other raw materials required for manufacture of MS Ingots, evidence of their procurement, evidence of the quantum of fuel/ electricity, labour etc., used, the examination or test evaluation of the production capability and capacity of the Appellant s factory etc. There are no quarrel with the proposition of the Authorised representative in his contention that as per Section 61 of the erstwhile Evidence Act, 1872 it is necessary that the contents of a document has to be proved either by primary or secondary evidence and that the evidence of the contents contained in a document is hearsay evidence unless the writer thereof is examined before the court and further that as per section 67 of the erstwhile Evidence Act, 1872, the signature or handwriting of the person alleged to have signed the whole or part of the documents has to be proved. These contentions are precisely in tandem with our findings supra on the manner in which the adjudicating authority has to evaluate the statement under Section 14 for its relevance as per the mandate of Section 9D(2). However, the reliance placed by the authorised representative on Section 36A (1) and 36A(2) are misplaced in that these presumptions would apply only in a proceedings before the Court, being rebuttable presumptions. However, unlike Section 9D (2) or Section 36B which deems a document to be admissible in any proceedings under the Act when accompanied with the certificate mandated under Section36B(4), Section 36A does not permit the presumption to be drawn in adjudicatory proceedings under the Act and is confined only to Court proceedings. There is no justification available, either in the show cause notice, or in the impugned order, to explain the absence of statements of most relevant persons or the reasons for delay in conducting follow up searches. The transporters, who actually transported the goods, have also not been questioned. In short, the investigation has failed to establish the allegations raised in the show cause notice and the findings of the adjudicating authority are also decidedly untenable in the light of discussions regarding the lack of demonstrable, reliable and corroborative evidence. Conclusion - The finding of the adjudicating authority that the main appellant has indulged in clandestine manufacture and clearances of MS ingots during period February 2010 to February 2012 and the consequent demand of duty made is untenable; the demand of cenvat credit availed for the period February 2010 to May 2010 by the main appellant terming it ineligible, is incorrect; the demand made on M/s. SKSRM for clearances of TMT Rods alleged to have been cleared without payment of duty and allegedly made out of MS ingots procured from the main appellant without payment of duty, as confirmed in the impugned Order in Original, is untenable and consequently the penalties imposed on the appellants are unsustainable. Appeal allowed.

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• CST, VAT & Sales Tax

• 2025 (3) TMI 1097
  Issuance of personal cheque to the extent of refund wrongly availed to the officer of LVO-540 by the then consultant - order passed by predecessor can be altered in the order passed by the Successor in a different direction or not - proceedings instituted pursuant to a notice under section 64 (1) of the KVAT issued in contravention of Rule 154 of the KVAT Rules 2005 can be sustained or not - Validity of consideration of total turnovers as per erroneous monthly returns filed in form VAT-100 in the absence of the books of account ACCT Bidar - Validity of disallowance of deduction claimed towards labour like charges - HELD THAT:- The indulgence in the matter declined broadly agreeing with the submission of learned AGA. Firstly, the questions of law are haphazardly framed and they lack coherence both in terms of law and language. Secondly, these questions are not of law inasmuch as, to answer them, turning the pages of statute book would not come to aid. Despite taking through the Paper Book of the appeal, it is not shown which finding in the impugned order is perverse that is to say contrary to evidence borne out by record or which of the observations in the impugned order are made without evidentiary basis. The vehement submission of the learned counsel appearing for the assessee that his client was not given a reasonable opportunity to produce relevant evidentiary material such as books of accounts is liable to be rejected inasmuch as, despite granting opportunity, the assessee failed to avail the same. The vehement submission of learned counsel for the appellant that for the fraud committed by the Tax Consultant, the assessee should not be made to suffer is too broad a proposition to accept. Ordinarily, as rightly submitted by learned AGA, Tax Consultant is an Agent of the assessee, notwithstanding the professional elements involved in the Act. It is not that the assessee had not put his signatures to the Returns and Records filed before the Revenue, in a normative way. The last contention of the appellant s counsel that the respondent had approached the matter with prejudicial mind is too farfetched a submission. Why a high functionary of the State who acts quasi-judicially in deciding the tax liability of the assessee should be presumed to be prejudicial, remains unanswered. Such a contention cannot be countenanced without laying foundational basis. A perusal of the impugned order in the light of other material accompanying the appeal memo leaves no manner of doubt that the respondent has judiciously considered all contentions of the assessee as reflected in the impugned order. Conclusion - i) The questions presented were not coherent questions of law. The appellant failed to demonstrate any perverse findings or observations in the impugned order without evidentiary basis. ii) The argument that the appellant was not given a reasonable opportunity to present evidence, noting that the appellant did not avail the opportunity provided, rejected. iii) The argument that the tax consultant s fraudulent actions should absolve the appellant of responsibility, highlighting that the consultant acted as the appellant s agent rejected. iv) There are no basis for the claim that the respondent acted with a prejudicial mind, noting the lack of foundational evidence for such a contention. Appeal dismissed.

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• 2025 (3) TMI 1096
  Completion of an assessment under the Kerala Value Added Tax Act has become barred by limitation under Section 25 (1) of the KVAT Act - mere fact that a notice is issued by the Revenue invoking the provisions of Section 25A of the KVAT Act would enable the Revenue to complete a re-assessment by ignoring the period of limitation under Section 25 (1) of the KVAT Act or not - Whether Section 25A of the KVAT Act fits in the Scheme of assessment under the KVAT Act? - HELD THAT:- Section 25A begins with a non-obstante clause, and it provides for nothing more than an additional ground on which the power to re-assess can be exercised by the Assessing Authority. The scope of that power can be gathered from the words used in the provision to define it. It is a power to proceed to re-assess the dealer and the power is to be exercised only if the Assessing Officer is satisfied that the objection raised by the CAG is lawful. It is in the backdrop of the above analysis of the power conferred under the Section that we must look for the meaning of the words order passed that appear in the proviso to the said Section. In our view, the order passed must necessarily be taken as a reference to the expression of satisfaction of the Assessing Officer, as to whether or not the objection raised by the CAG is lawful. Further, that satisfaction of the Assessing Officer must be one that is arrived at only after affording the dealer an opportunity of being heard. The contention of the Revenue that Section 25A also provides for the procedure for re-assessment cannot be accepted, not only because the provision itself does not say so, but also because procedural due process in a taxing statute cannot be inferred but must necessarily find a place in the statute itself. Article 265 of the Constitution clearly mandates that there shall be no levy or collection of tax save by authority of law. In our view, therefore, once the Assessing Officer arrives at the satisfaction envisaged under Section 25A, he has to proceed to re-assess the dealer in the manner envisaged under the Statute, namely, by following the procedure under Section 25 (1) of the KVAT Act. In that process, he must also ensure that the substantive safeguards envisaged for an assessee, such as the requirement of exercising the power within the time permitted by the Statute, are strictly adhered to. Conclusion - In cases where the completion of an assessment under the KVAT Act has become time barred by virtue of the limitation provisions under Section 25 (1) of the KVAT Act, the Revenue cannot proceed to re-assess an assessee on the basis of a subsequent report obtained from the CAG. The O.T. Revisions and Writ Appeal filed by the State dismissed.

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• 2025 (3) TMI 1095
  Exemption from payment of tax under the GST regime and the tax is leviable at the first point of sale - petitioner is the second purchaser of clinker - failure to produce cogent relevant documents before the revisional authority during the revisional proceedings to substantiate their contention so far as claiming exemption from payment of GST - non-payment of sale tax as the seller from whom the petitioner had purchased, having not paid the sale tax for the sales made to the petitioner - HELD THAT:- Though the counsel for the respondent tried to oppose the petition on the ground that the Tribunal s finding cannot be found fault with as the petitioner had failed to avail the opportunity granted to them at the revisional stage in substantiating their contentions and the Tribunal could not have gone into veracity of the revisional authority s order relying upon materials which were not produced before the revisional authority and, therefore, the finding given by the Tribunal cannot be found fault with and prays for rejection of the tax revision case, there are not much force in the said argument for the simple reason that the finding of the Tribunal, a portion of which has already been reproduced in the preceding paragraph, clearly reflects that the Tribunal has the power to go into the merits of the case scrutinizing the documents which have been produced before the Tribunal. Undisputedly, in the instant case, the petitioner has, in fact, produced all relevant documentary proofs and it has also been accepted by the Tribunal as having been produced before them, yet the Tribunal rejected the appeal only on hyper technicality of the documents having not been brought before the revisional authority at the first instance. The findings given by the Tribunal and the arguments advanced by learned counsel for the department both would not be sustainable and the same deserves to be and are, accordingly, set aside. The matter stands remitted back to the Tribunal for deciding the matter on its own merits both on the aspect of exemption of payment of GST as also so far as the payment of sale tax is concerned. Conclusion - The Tribunal must consider the merits of a case based on all available evidence, even if not initially presented at the revisional stage, provided there are sufficient reasons for its late submission. The tax revision case stands allowed and disposed of.

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• 2025 (3) TMI 1094
  Unreasonable delay in completing the reassessment proceedings - manifest arbitrariness, thereby falling foul of Article 14 of the Constitution or not - HELD THAT:- It is trite law that wherever limitation has not been prescribed for taking any action or passing any orders, it has been consistently held that action ought to be taken or orders ought to be passed within a reasonable time. It may be relevant to note that this Court had held that though the issuance of notice was within the period of limitation, however if the orders are not made within a reasonable time, mere issuance of show cause notice would not by itself provide immunity to the assessment orders being challenged as having been made beyond reasonable period thereby suffering from the vice of arbitrariness. It is thus clear that even if the notice was issued within the prescribed period of limitation, inordinate/unreasonable delay in completing the proceedings would vitiate the same. In the present case, there is no explanation as to why it has taken more than 16 years after the issuance of the first notice on 12.11.2004 to issue the hearing notice on 08.07.2021 while proceeding to pass the impugned order on 02.09.2021 after almost 16 years from the date of deemed assessment. This Court in the case of J.M.Baxi [ 2016 (6) TMI 813 - MADRAS HIGH COURT ] found that failure to explain the delay of 5 years after initiation would vitiate the proceeding on the ground of unreasonable delay. In view of the same and following the above orders of this Court and in particular, the case of Kanthimathy Estate vs. The Assistant Commissioner Commercial Taxes [ 2019 (7) TMI 1991 - MADRAS HIGH COURT ], wherein it was held that failure to complete the reassessment proceedings within a reasonable time after initiation of proceedings within the prescribed period would vitiate the reassessment, this Court is of the view that the impugned order of reassessment cannot be sustained and is liable to be set aside. Conclusion - It is trite law that wherever limitation has not been prescribed for taking any action or passing any orders, it has been consistently held that action ought to be taken or orders ought to be passed within a reasonable time. Petition allowed.

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• Indian Laws

• 2025 (3) TMI 1093
  Condonation of delay of around 292 days in preferring the instant appeal - sufficient cause for delay or not - procedural delays within a government enterprise - Dishonor of cheque - HELD THAT:- Any party to an application even if it is a government organization should strictly adhere to the rules of limitation and therefore no relaxation should automatically be granted to a party for being a government organization due to procedural delay. Having regard to the aforesaid principle, the power of the Court to condone a delay varies from case to case and strictly on the basis of sufficiency of cause. In the case at hand, the appellant/petitioner has given plausible and acceptable explanation regarding the delay in filing the special leave petition. Moreover, the dismissal of the case by the Learned Trial Judge was not on merit but only due to non- prosecution. Therefore, it cannot be said that the fate of the plea raised by the petitioner is decided beyond reasonable doubt. It cannot be abstained from providing a leeway to the petitioner with regard to delay in filing special leave petition as sufficiency of cause has to be judged in pragmatic manner so as to advance the cause of justice. In the given facts and circumstances and after due consideration of all the available materials on record, it is deemed appropriate to condone the delay of 292 days as it cannot be ignored that if appeals brought by the Government are lost for such defaults, it is the public interest which gets severely affected. Conclusion - The condonation of the 292-day delay allowed, granting the appellant leave to file the memorandum of appeal within the statutory period. Application allowed.

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