TMI Tax Updates - e-Newsletter
March 31, 2023

Case Laws in this Newsletter:

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

Articles

1. REJECTION OF APPLICATION FOR ADVANCE RULING

   By: DR.MARIAPPAN GOVINDARAJAN

2. Mere ‘reason to believe’ do not satisfy the condition for re-opening of the assessment

   By: Bimal jain

3. MEANING AND SCOPE OF CIRCULARS IN TAXATION

   By: Dr. Sanjiv Agarwal

4. Assessee permitted to rectify its GSTR-1 for FY 17-18 & 18-19 to avail ITC benefits

   By: Bimal jain

5. Where unexplained income cannot be entangled in the clutches of The Section 69 family

   By: Vivek Jalan

6. Assessment Order Must be passed after Personal Hearing

   By: Abhishek Raja

News

1. Customs duty full exemption for all imported drugs&Food for Special Medical Purposes for personal use for treatment of all Rare Diseases

2. MoS (Finance) Dr. Bhagwat Kishanrao Karad inaugurates the first G-20 Trade and Investment Working Group (TIWG) Meeting in Mumbai

3. Calendar for Auction of Government of India Treasury Bills (For the Quarter ending June 2023)

4. Issuance Calendar for Marketable Dated Securities for April 2023 - September 2023

5. Government’s Borrowing plan for First Half of FY 2023-24

Notifications

Customs

1. 18/2023 - dated 29-3-2023 - Cus

Exemption notifications for medical, surgical, dental or veterinary uses - Seeks to amend notification 8/20120-Customs, dated 02.02.2020 to continue/provide health cess exemption on import of goods for use in the manufacture of X-ray machines

2. 17/2023 - dated 29-3-2023 - Cus

Effective rates of customs duty and IGST for goods imported into India - continue/provide BCD exemption on import of specific items - Seeks to amend notification 50/2017-Customs dated 30.06.2017.

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/046 - dated 29-3-2023

Cyber Security and Cyber Resilience framework for Portfolio Managers

Highlights / Catch Notes

GST

• PVC Cushion Mats for Cars Classified Under GST Tariff Chapter 39 with 18% Tax Rate.

  Case-Laws - AAR : Classification of goods - PVC Cushion mats for motor vehicles (with no Textile material to be used in these) after cutting to size from rolls, to fit in vehicle floors as per the requirement of the buyers and packing - the goods do not fall under chapter 57 and also cannot be considered as purely car accessories. - The supply of the said goods i.e. PVC cushion mats falls under the chapter 39 of the GST tariff rates. Applicable rate of tax is 18% - AAR
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• GST Applies to Space Leasing for Hospital Gastroenterology Services; Exemption for Healthcare Services Not Applicable.

  Case-Laws - AAR : Exemption from GST - Healthcare services - sharing of the charges paid by the patients - contract of taking a space with all amenities related to the Gastroenterological department - the scope of supply under the GST Act is quite vast and covers all aspects of the nature of supplies. And the said supply which is to be made between the applicant and M/s Asian Hospital is duly covered under the definition of the scope of supply, hence taxable under the Act. - AAR
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Income Tax

• No Penalty for Non-Compliance: Appellant Not Notified of Special Audit u/s 142(2A) by Assessing Officer.

  Case-Laws - AT : Levying penalty u/s 272A(1)(d) - non-compliance of correspondences for special audit u/s 142(2A) - AO has written a letter to the Auditor for special audit of four case including the appellants but, the AO had never issue a specific notice with point of special audit to the appellant assessee u/s 142(2A) of the Act with the Approval of the PCIT. - No penalty - AT
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• Assessee challenges Section 68 additions over disputed cash deposits, denies ownership, and seeks investigation for clarity.

  Case-Laws - AT : Additions u/s 68 - unknown cash deposits made in two bank accounts - from the very first instance, assessee had been in a very loud and clear manner categorically denying the fact that the alleged two bank accounts and the transactions of deposit in cash/transfer therein are not his and has always disowned the same. He has taken the possible steps of making complaint to the Police station seeking appropriate redressal and enquiry on the matter by bringing the relevant facts on record. - AT
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• Court Upholds 7.375% Interest Rate Plus 1% Markup as Arm's Length for USD Loan Transfer Pricing Adjustment.

  Case-Laws - AT : TP adjustment - Since the funds have been borrowed in USD and also advanced in USD, the currency and exchange risks are minimised and the only risk to be considered is the lending risk for determining the markup. - No infirmity in the impugned order in treating 7.375% plus markup of 1% as the arm’s length rate of interest in respect of loan advanced by the assessee to its AE. - AT
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• Assessing Officer Must Review VRS Expenditure Details as Directed by Dispute Resolution Panel u/s 144C(8.

  Case-Laws - AT : Disallowance of expenditure incurred under Voluntary Retirement Scheme (VRS) - AO has not examined the details as per the directions of the DRP and has made disallowance considering the provisions of Section 144C(8) and sustained the disallowance. Since the AO has not verified the details of spends towards VRS payments based on the details furnished by the assessee we remit the issue back to the AO with a direction to examine the details of and decide the allowability accordingly. - AT
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• TDS Credit Must Be Split Between Spouses u/s 5A of Income Tax Act, Goa's Portuguese Civil Code Applies.

  Case-Laws - AT : Not giving credit of the TDS as available in the form 26 AS - Portuguese Civil Code of 1867 which is in force in the State of Goa - the legislative expression “assessee” herein must be read as “the spouses assessees” in light of section 5A of the Act and therefore, such TDS amount has to be consequentially apportioned going by scheme of the Act. The assessee’s instant arguments seeking entire TDS credit in his hands stand rejected therefore. - AT
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Customs

• Court Grants De-sealing of Premises; Clarifies Seizure Rules Under Customs Act Sections 110, 121, and 142.

  Case-Laws - HC : Seeking de-sealing of his premises - Smuggling of Gold - Attachment of immovable property - It is thus clear that the seizure of the goods contemplated under Section 110 or Section 121 is only of movable property which is not immovable property. Even otherwise no immovable property can be seized and confiscated, though it can be attached and sold for making recovery of loss to or dues of the government as for example, when done in exercise of the power under Section 142 (1) (c) (ii) of the Customs Act, 1962, but that stage, however, is yet to reach in this case. Therefore, even the second prayer made in the petition deserves to be allowed. - HC
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• Court Upholds Withholding Confidential Note Sheet in Anti-Dumping Case Under RTI Act to Protect Economic Interests.

  Case-Laws - HC : Scope of discloser of information under RTI - The specific note sheet that has been sought by the RTI Applicant is the note sheet relating to initiation of anti-dumping investigation. From a bare perusal of the original file produced before the Court, it is evident that the note sheet contains various portions of information which may be confidential to the Complainants - For ‘good cause’ the said information can be refused to be disclosed. - this Court is of the opinion that the imposition of anti-dumping duty and confidential information disclosed in such proceedings would have a significant impact on the economic interest and trade relations of India - HC
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• Document Identification Number Essential for Valid Customs Communications u/s 151A of the Customs Act.

  Case-Laws - HC : Provisional assessment on the bills of entry - The non-generation of a DIN is fatal to the communication itself. Section 151A of the Act enables the Board to issue Instructions to officers of Customs and such Instructions bind the officers, barring in two situations - The thrust of the exercise is to ensure that every communication issued by the State, including e-mails, must contain an authorisation. The move is a progressive one backed by the avowed objects of transparency and accountaibility, the crying need of the day. - HC
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• Court Rules Demand Invalid Without Show Cause Notice for Clearing Agents u/s 28.

  Case-Laws - HC : Validity of demand against the clearing and forwarding agent in the absence of Service of SCN - In the present case, admittedly no notice has been issued to the clearing agent under Section 28. The argument of the respondents that mere imposition of liability does not require prior notice on the clearing agent is rejected straightaway for the reason that such mulcting of duty is itself bound by the requirement of proper procedure for assessment, as set out under Section 28 of the Act. It simply cannot be countenanced that a demand could be thrust on an entity without following due process prior thereto. - HC
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• Customs Duty Valuation: Wholesale Prices Not Retail Under SWM Rules for CVD on Non-Consumer Goods Sales.

  Case-Laws - AT : Levy of differential Additional Duty of Customs - Valuation for CVD - In this case since the goods are not sold to the consumer there cannot be a retail sale price. The price at which goods are sold in wholesale or to an industrial or institutional consumer cannot be retail sale price as per the SWM Rules. Retail sale price is available only in those few cases where set top boxes have been damaged and subsequently sold to the subscriber. Undisputedly, the set top boxes were sold were much lower prices than Rs. 2,100/- in respect of such retail sales. The price at which the goods were sold to Dish TV cannot be considered as retail sale price. - AT
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IBC

• CIRP Withdrawal u/s 12A: IRP's Objections Dismissed; Regulation 30A Safeguards Met by Operational Creditor.

  Case-Laws - SC : Seeking withdrawal of CIRP under section 12A of Insolvency and Bankruptcy Code, 2016 - Regulation 30A of IBBI Regulations provide a complete mechanism for dealing with the applications filed under such provision. The issue raised by the IRP regarding its claim for expenses is well taken care of under the said provision. Various safeguards have been provided in Regulation 30A of IBBI Regulations to be fulfilled by the OC which apparently have been fulfilled as there is no complaint in that regard either by the IRP nor it is apparent from the impugned order of the NCLT. Thus, the objection raised by the IRP does not merit any consideration in this appeal. - SC
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• NCLAT Confirms CoC's Authority to Issue Fresh RFRP Under CIRP Regulations; Adjudicating Authority's Decision Upheld.

  Case-Laws - AT : Approval of Resolution Plan - actions of the Resolution Professional and the CoC are consistent with the NCLAT order or not - When none of the Resolution Plans was approved, the CoC under the CIRP Regulations was empowered to issue fresh RFRP. There are no error in the order of the Adjudicating Authority refusing the prayers of the Appellant to reissue RFRP and reinitiate the voting process. - AT
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PMLA

• Court Urges Agencies to Expedite Money Laundering Investigation Involving Multiple Parties, Stresses Timely Conclusion Without New Orders.

  Case-Laws - HC : Money Laundering - siphoning off of funds - This Court, in the interest of justice, is of the opinion that the Investigating Agencies deserve a command to conclude the investigation and bring it to a logical conclusion at an early date keeping in view the totality of the circumstances of the case and especially the fact that the investigation is already underway by different agencies, this Court is not inclined to pass any further order in the matter. - HC
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VAT

• Court Dismisses Appeal After 2569-Day Delay; Lawyer's Illness and Death Not Sufficient Justification for Late Filing.

  Case-Laws - HC : Condonation of delay of 2569 days in filing the appeal - the Lawyer handling the case had suffered from serious illness and ultimately died - ufficient cause for delay - The long and short of the narration is that as far as the Petitioner/Assessee is concerned, the explanation offered for an extraordinary delay of 2569 days was not convincing at all. - HC
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Case Laws:

• GST

• 2023 (3) TMI 1326
  Levy of penalty for late filing of the GST returns - cancellation of its GSTIN registration - HELD THAT:- It is clear from the above that the order dated 14.12.2020, rejecting the petitioner s application for revocation of cancellation of GSTIN registration is unsustainable. It provides no reason as to why the petitioner s application was rejected - the only reason is that the petitioner had not responded to the Show Cause Notice dated 27.10.2020. It is hard to accept that there could be any meaningful response to the said Show Cause Notice. It sets out no reason at all for proposing to reject the petitioner s application for revocation of cancellation. It is also noticed that the petitioner s principal contention was that it had already complied with the requirement of filing the returns on the date when the order cancelling its registration was passed and, therefore, the said order was unsustainable - from the date of the petitioner filing an application for revocation of its cancellation, that is, 16.10.2020, the petitioner cannot be held responsible for not filing its returns during the period when the registration stood cancelled. Thus, for the purpose of calculating any penalty for the late filing of the returns, the period, 16.10.2020 to 22.04.2022, is liable to be excluded. List on 14.04.2023.

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• 2023 (3) TMI 1325
  Request for the statements to be videographed - permission to be accompanied by an advocate who will be present at the venue at a visible distance but not audible - HELD THAT:- It is directed that the statement of the petitioner or its officer shall be recorded during business hours that is during 09:00 a.m. to 07:00 p.m., shall be videographed during the said proceedings, and the concerned employee / officer of the petitioner company, if accompanied by an advocate would be allowed to remain at a visible but not audible distance. Petition disposed off.

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• 2023 (3) TMI 1324
  Rejection of request for amendment of TRAN-1 - HELD THAT:- The petitioner has categorically missed the bus, seeing as the judgment of the Hon ble Supreme Court in the case of UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] has granted a window as a final opportunity for correction of all errors arising from filing of TRAN-1 and 2. The petitioner, being an assessee for the purposes of the Act would/should, no doubt had been aware of all these developments and should have availed of the same in time. Substantial efforts were taken by the Registry of this Court as well as by the revenue authorities in listing those matters that related to amendment of TRAN-1 and 2 during the period when the benefit under the aforesaid judgment was operative, till 30.11.2022. However, the primary responsibility for the same lies in the hands of the petitioner and as on date it is too late - The impugned order is hence confirmed and this writ petition, dismissed.

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• 2023 (3) TMI 1323
  Seeking grant of regular bail - availment of input tax credit by fabricating invoices resulting in the generation of bills - evasion from payment of Goods and Services Tax (GST) - bail rejected on the ground that the petitioner is the main accused in a scam involving evasion of GST to the tune of crores of rupees and that in case he is released on bail, he is likely to influence the witnesses and in turn the course of his trial. HELD THAT:- Primarily, the evidence collected by the State against the petitioner is documentary; investigation in this case is complete; it is not the case of the State that during the course of investigation the petitioner did not cooperate; the petitioner has already undergone actual custody of nearly 01 year and 05 months; even if convicted, the maximum sentence which can be imposed on him is 05 years; most of the material witnesses for the prosecution, at the precharge stage, stand examined; the proceedings that the petitioner faces are presently at the pre-charge stage in which 37 prosecution witnesses still remain to be examined and that in case the petitioner is even put to trial, the same is likely to take a long time to conclude. The present case is considered to be a fit one in which the petitioner be directed to be released on regular bail. Resultantly, subject to the satisfaction of the CJM/Duty Magistrate, Gurugram, which shall include the condition of the deposit of the petitioner s valid passport, if any, the petitioner is directed to be released on bail. Application allowed.

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• 2023 (3) TMI 1322
  Detention of goods and conveyance of the petitioner - interaction, interplay and inter se application of Section 129 and Section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- As far as prayer for interim relief is concerned regarding release of the goods and vehicle of the petitioner, the same deserves to be considered on the same line and upon imposition of the similar conditions as done in M/S. VED ENTERPRISE VERSUS STATE OF GUJARAT [ 2022 (11) TMI 1335 - GUJARAT HIGH COURT] . It is directed that the respondents shall release the goods and conveyance of the petitioner, confiscated and detained pursuant to the aforementioned order No. 877 dated 12.11.2022 passed in FORM GST MOV-11, subject to the conditions imposed - application allowed.

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• 2023 (3) TMI 1321
  Scope of Advance Ruling - Levy of GST - Government Subsidy - Applicant is involved in installation of Solar system on roof top and subsidy is provided by Central Govt. for this work through Renewable Energy Corporation - How to Generate GST including Subsidized Invoice? HELD THAT:- Applicant filed their application before the Rajasthan Authority for Advance Ruling (RAAR) on 14.10.2022 i.e. much later from the supply of services. Applicant is discharging his GST liability since starting on the service supplied by him and asked advance ruling when subsidy has not been given to him from concern department. It is observed that applicant motto is to find out whether the mechanism opted by him for payment of GST on said service is right or wrong, which is against the spirit of advance ruling. From the definition of Advance Ruling, it is very much clear that the scope of the ruling for Authority for Advance Ruling (AAR) is limited to the transactions being undertaken or proposed to be undertaken - In the instant case, the application seeking advance ruling was filed on 14.10.2022 before the RAAR with respect to supplies already being undertaken and GST being paid. Hence, the case is out of the purview of the Advance Ruling. The subject application for advance ruling made by the applicant is not maintainable and hereby rejected under the provisions of the GST Act, 2017.

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• 2023 (3) TMI 1320
  Classification of goods - PVC Cushion mats for motor vehicles (with no Textile material to be used in these) after cutting to size from rolls, to fit in vehicle floors as per the requirement of the buyers and packing - fall under HSN Code 39181090/39041090 or 87089900? - applicability of N/N. 1/2017-Central Tax(Rate) dated 28.06.2017 and N/N. 1/2017-Statc Tax(Rate) dated 28.06.2017 - If the PVC Cushion mats are received by the Applicant from their supplier in roll form under HSN Code 39181090, would its cutting to size, as per the requirement of the buyers and packing make it a different product for classification and tax purposes? HELD THAT:- The applicant will be procuring these goods in rolls and cutting into the specified measurement as per the demand of his customers. The applicant has also submitted a sample of goods i.e. car foot mat made of PVC material and it is observed that there is no textile material/fabric used in it and this authority is convinced that neither there is any use of fabric material nor these are hand made. The said goods is made from PVC only and there should be no doubt that the same would fall in chapter 39 which covers PVC, a polymer and articles thereof. From the perusal of all the aspects of the issue at hand, i.e. factual and legal provisions and relevant notifications and the judgements of the courts of the land, it is observed that the goods do not fall under chapter 57 and also cannot be considered as purely car accessories. The supply of the said goods i.e. PVC cushion mats falls under the chapter 39 of the GST tariff rates. Applicable rate of tax is 18%.

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• 2023 (3) TMI 1319
  Scope of Advance Ruling - Availability of ITC - GST charged by the hired work contractors against construction, of factory building including foundation of machinery, rooms for chiller, generators, transformers and erection of electric poles, lying of internal roads, factory building, internal drainage, storage tank, laboratories etc on the construction services with or without material is available to them or not - Section 17(5) of GST Act 2017 - HELD THAT:- Availment of ITC on services depends so many factors viz type and nature of services, condition of services supplied etc. Availment of ITC without specific details cannot be generalized and ruling cannot be given in absence of particular services. s per Section 95 of CGST Act, 2017; this authority shall decide on matters or on questions specified in sub-section (2) of Section 97, and Authority means the Authority for Advance Ruling, constituted under Section 96 - the question on which advance ruling is sought is vague in nature. Applicant is going for setting up a plant and without knowing the nature of construction categorically; it s not possible to give ruling unless and until details are not provided. Applicant has not provided the details as asked to his authorized representative during PH. The subject application for advance ruling made by the applicant is not maintainable and hereby rejected under the provisions of the GST Act, 2017.

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• 2023 (3) TMI 1318
  Exemption from GST - Healthcare services - sharing of the charges paid by the patients - contract of taking a space with all amenities related to the Gastroenterological department - whether the consideration to be received by the applicant from the Asian Hospital as to be agreed upon by both parties(the contract is yet to be executed) is eligible for exemption under Sr. No 74 of Notification No 12/2017/CT(R) dated 28 June, 201 7 as amended? HELD THAT:- In the case at hand, the Applicant has stated that authorised medical practitioner employed in M/s ARPK Healthcare Provide Ltd. will provide Gastroenterologist services (Healthcare Services) to the patients of M/s Asian. So, M/s Asian will pay to M/s ARPK for the services rendered by it to the patients of M/s Asian Hospital. Both M/s Asian hospital and M/s ARPK healthcare will share the charges paid by the patients. The Recipient of the services is the hospitals/ Clinical establishment i.e. M/s Asian Hospital Pvt. Ltd., who will enter into contract with the applicant. In short, it is said that the Applicant is vested with contract of taking a space with all amenities related to the Gastroenterological department or in other words M/s Asian will enter into a contract with M/s ARPK to outsource the supply of doctors (specialists)/ nurses and other staff. Further, it is also observed that the applicant who is a company will render its specialized services at the premises of M/s Asian hospital Faridabad, who are the recipient of the services, and the applicant will supply the services to consumers/ patients who don t make payment to the applicant. The applicant is paid only by the recipient of the services (M/s Asian). Here it can be said that the services are rendered by one company to another company/ hospital and one of them is supplier and another is recipient of the services. It needs to be seen, what is the legislative intention behind any exemption of tax given under the GST Act i.e. the purpose for not taxing the healthcare services is to give benefit to the common man/patients as it (Healthcare services) is one of the basic necessities of life. Similarly in the field of education i.e. School/College/University tuition fees is exempted whereas the tuition fees charged by the coaching centres institutions is taxable. The authority is of view that the scope of supply under the GST Act is quite vast and covers all aspects of the nature of supplies. And the said supply which is to be made between the applicant and M/s Asian Hospital is duly covered under the definition of the scope of supply, hence taxable under the Act. So, it can be said that the claim of the applicant that the services rendered by the applicant to M/s Asian Hospital is covered under the Notification No. 12/2017- Central Tax (Rate) dated 28th June 2017 is not sustainable rather it falls under the taxable supply of services by a company/ legal entity to an another company/hospital.

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• Income Tax

• 2023 (3) TMI 1317
  Proceedings initiated both under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - Look Out Circular ( LOC ) issued against petitioner - HELD THAT:- The assessment order is already under challenge before the CIT (Appeals) where 20% of the demand amount has already been stated to have been deposited. Insofar as the Black Money Act proceedings are concerned, the Petitioner has already deposited the amount demanded. The language used in paragraph (J) is that the originating agency must keep reviewing the LOCs opened at its behest on a quarterly and annual basis and submit the proposals to delete the LOC, if any, immediately after such a review. Clearly, the counter affidavit does not state that such a review has been undertaken either on a quarterly basis or annual basis and the reasons why the LOC is being continued against the Petitioner. The Office Memorandum also clearly records categorically that if the person is no longer wanted by the originating agency, the LOC cannot be continued. Thus, the spirit of the OM is to ensure that LOCs are not continued without periodic application of mind by the Originating Agency. In the present case, the following facts are borne in mind by this Court- (i) The Petitioner has participated in the investigation of the Income Tax department and his statements stand recorded. (ii) The assessment is already completed and the demand has been raised. (iii) 20% of the demand has already been deposited before the CIT (Appeals) and the proceedings are now pending before the CIT (Appeals). (iv) The proceedings under the Black Money Act have been concluded and the demanded amount has been paid. (v) No prosecution has been launched by the Respondent under the Income Tax Act. (vi) No prosecution has been launched even under the Black Money Act. (vii) The LOC has been continued since 2019 without being reviewed. In view of the above factual and legal position under the OM, the LOC does not deserve to be continued and the same is quashed. The petition is allowed in the above terms.

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• 2023 (3) TMI 1316
  Exemption u/s 11(1) - Denial of the claim of exemption u/s 11 was for the reason that the assessee had belatedly filed Form No.10B by 5 days (i.e. on 26.09.2018) - HELD THAT:- The due date of filing of return u/s 139(1) was 30.09.2018. The return of income was filed on 21.09.2018. Audit Report in Form No.10B was e-filed on 26.09.2018. Audit Report has been filed 5 days after filing of the return. CPC has denied the claim of exemption u/s 11 for the reason that the Audit Report was not filed along with the return of income. The assessee has placed on record the order of the CIT(E), wherein he has condoned the delay of 5 days in furnishing the Audit Report in Form No.10B. Since the CIT(E) has condoned the delay in filing the Audit Report, the assessee is entitled to exemption u/s 11 of the I.T.Act, provided other conditions are satisfied for claiming exemption u/s 11. Appeal filed by the assessee is allowed.

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• 2023 (3) TMI 1315
  Addition u/s 68 - unexplained cash credit - assessee failed to prove genuineness of the transactions and creditworthiness of the subscribers - CIT(A) allowed the appeal of the assessee by holding that the assessee has proved all the three ingredients of Section 68 - HELD THAT:- In the present case the assessee has filed all the evidences before the AO and AO in stead of carrying of further investigation only harped on the plea that summons u/s 131 of the Act were not complied with and thus the transactions remained unexplained. CIT(A) appreciated all these facts and after discussing and relying on the various decisions allowed the appeal of the assessee. We observe from the facts before us that all the share applicants were existing assessees under the Act and in some of the cases assessments were framed u/s 143(3) and the assessment orders were also placed before us. Therefore the genuineness of these investors cannot be doubted. Considering all we are inclined to uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue.

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• 2023 (3) TMI 1314
  Unexplained money u/s 69A r.w.s. 115BBE - during demonetization period, the assessee made a cash deposit - HELD THAT:- On careful perusal of bank statement, find that cash was clearly available from self-withdrawal with the assessee, therefore, the assessee has clearly explained the deposit in part. So far as remaining sum find that the assessee also made cash withdrawal of Rs. 60,000/- on 21/10/2016. Now only a small amount of Rs. 30,000/-is left, considering the smallness of amount that the assessee was having regular withdrawal in his bank account and Rs. 30,000/- is not a big amount which can be doubted on the basis of facts and circumstances of the case and financial transactions of the assessee. Therefore no justification in treating Rs. 6.00 lacs as unexplained cash credit. In the result, the grounds taken by the assessee are allowed.

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• 2023 (3) TMI 1313
  Levying penalty u/s 272A(1)(d) - non-compliance of correspondences for special audit u/s 142(2A) - HELD THAT:- CIT(A) has failed to appreciate the fact that the letters of communication of special audit in the present case were no direction u/s 142(2A) ever issued to the assessee during the course of assessment proceedings, containing particulars for which the exercise of special audit was to be undertaken and further, the Ld. AO has admitted in order u/s 154 that letters are not direction issued u/s 142(2A) but are letters in continuation of notice u/s 142(2A) issued on 24.02.2021. AO has written a letter to M/s Surendra Mahajan and Associates as above, for special audit of four case including the appellants but, the AO had never issue a specific notice with point of special audit to the appellant assessee u/s 142(2A) of the Act with the Approval of the PCIT. In view of the matter we hold that there was no failure on the part of the assessee to comply with a direction u/s 142(2A), and accordingly, penalty u/s 272(l)(d) vide order dated 31.07.2021 cannot be sustained. We accept the grievance of the assessee as genuine and justified. As such, the penalty levied u/s 272(1)(d) of the Act, is hereby deleted. Appeal of the assessee is allowed.

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• 2023 (3) TMI 1312
  Addition u/s 68 r.w.s. 115BBE - higher average sales - HELD THAT:- AO nowhere recorded that the information and the evidences obtained by him from sundry creditors were shares with the assessee or any show cause to explain the discrepancy was issued to the assessee. At the time of making submissions before us, assessee explained certain discrepancy about the amount received by way of cheque from Swastik logistic, though the same amount was shown by Swastik Logistic in cash in their books. Thus, find merit in the submissions of assessee that had the AO issued show cause notice on such alleged discrepancy, the assessee would have explained all the entry. When the sales of the assessee is not doubted by the assessing officer and accepted the books result, the addition of section 68, on the basis of higher average sales is also not justified. Addition is deleted - Decided in favour of assessee.

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• 2023 (3) TMI 1311
  Reopening of assessment u/s 147 - as argued notice issued u/s. 148 as not in accordance with the provisions contained in section 148 to 151 - Additions u/s 68 - Unknown and unexplained cash deposits in bank accounts - HELD THAT:- In the present case, the communication of the satisfaction by the Ld. Pr. CIT-12, Kolkata on the proposal made by the Ld. AO for taking action u/s. 148 of the Act was communicated to the AO only on 31.03.2017 as is evidenced by the letter dated 27.03.2017 extracted above. However, the notice u/s. 148 has been issued on 29.03.2017 which is prior to the date of receipt of communication from the office of Ld. Pr. CIT-12, Kolkata towards his satisfaction that it is a fit case for the issue of such notice. Accordingly, in our considered view, we find force in the submissions made by the Ld. Counsel, to hold that the notice issued u/s. 148 of the Act is not in accordance with the provisions contained in section 148 to 151 of the Act, rendering the entire assessment proceeding invalid. On the merits of the case, we note that from the very first instance, assessee had been in a very loud and clear manner categorically denying the fact that the alleged two bank accounts and the transactions of deposit in cash/transfer therein are not his and has always disowned the same. He has taken the possible steps of making complaint to the Police station seeking appropriate redressal and enquiry on the matter by bringing the relevant facts on record. We note that both Ld. AO as well as Ld. CIT(A) have not undertaken any exercise of enquiry or examination on the assertions made by the assessee nor have made any attempt to find out the status of any action taken by the Police on the complaints made by the assessee. Thus chronology of events, provisions of the Act and the lack of adequate enquiries on the part of the authorities below despite possible actions undertaken by the assessee, we are of considered view to allow the grounds of appeal, both on the legal issues raised and on the merits of the case holding that assessment order is bad in law and no addition is called for as alleged by the Ld. AO. Appeal of the assessee is allowed.

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• 2023 (3) TMI 1310
  TDS u/s 194I - Addition u/s 40(a)(ia) - Non deduction of TDS - HELD THAT:- Assessee was liable to deduct tax at source. The assessee failed to deduct the tax at source. Hence as per section 40(a)(ia) the amount needs to be disallowed. AR submitted that the actual amount was paid by the purchaser directly to the warehouses. However, this does not change the character of the Rent. It was the liability of the assessee. The assessee has admittedly debited the said amounts in its books. It is also a fact that assessee could not file any confirmations from the warehouses that they have shown the amounts as Income and paid taxes. Disallowance made by the AO u/s 40(a)(ia) was right. Accordingly the disallowance is upheld. Therefore, the ground numbers 1 and 3 of the assessee are dismissed.

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• 2023 (3) TMI 1309
  Under reported sale price of flats - A survey u/s 133A was carried out wherein statement of partner was recorded and several loose papers were impounded - HELD THAT:- The document found during the survey was unsigned and was not registered. The price which was mentioned by the assessee was not only confirmed by the purchaser but also through the various document such as bank entries the cash entries received during the course of purchase of the sale of flats. Thus, the assessee has proved that there was no installment of sale price but the actual price received and therefore, the addition made by the Assessing Officer is not justifiable. Thus, Ground No. 2.1(i) is allowed. Addition towards cash found during survey - Whether Cash belong to deceased father? - HELD THAT:- The cash found during survey was properly explained by the assessee during the course of survey as well as at the time of assessment proceedings through cash books where the said amount was included. The books was not rejected by the Assessing Officer and hence, the addition made by the Assessing Officer does not sustain. Hence, Ground No. 2.1(ii) is allowed.

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• 2023 (3) TMI 1308
  TDS u/s 194C - payment made to both the parties for clearing and forwarding expenses - HELD THAT:- It is not a case of the AO that the assessee could not produce necessary bills and vouchers for entire expenditure debited into profit and loss account. In fact, the assessee could able to furnish necessary details along with bills and vouchers for majority of expenses. Therefore, AO is erred in disallowing part of expenditure for non-furnishing of vouchers for clearing and forwarding expenses and thus, we direct the AO to delete addition made towards disallowance towards clearing and forwarding expenses. Disallowance of C F charges u/s. 40(a)(ia) - In this case, there is an agreement between the assessee and C F agents for rendering certain clearing and forwarding services, which in our considered view is definitely a contract in terms of provisions of section 194C and thus, the assessee ought to have deduct TDS, when payment is made to C F agents because the assessee is a person responsible for making payment for rendering services. Therefore, we are of the considered view that, there is no error in the reasons given by the AO and the CIT(A) to make addition towards disallowance of C F charges u/s. 40(a)(ia) of the Act. As decided in case of Prahari Agency Private Limited [ 2021 (11) TMI 82 - ITAT CHENNAI] where it has been held that TDS is applicable u/s. 194C of the Act, for C F charges and for non-deduction of TDS, expenses can be disallowed u/s. 40(a)(ia). Alternate plea of the assessee for disallowance of 30% in light of amendment to section 40(a)(ia) of the Act, by the Finance Act, 2014 w.e.f. 01.04.2015 - We find that said amendment is considered to be prospective in nature from assessment year 2015-16 onwards and thus, it is not applicable for the impugned assessment year as held in the case of Shri. Choudhary Transport Company [ 2020 (8) TMI 23 - SUPREME COURT] where it has been clearly held that amendment to section 40(a)(ia) of the Act, is prospective in nature which cannot be applied for retrospective purpose. Therefore, we are of the considered view that there is no merit in the alternate plea taken by the assessee and thus, same is rejected. Appeal filed by the assessee is partly allowed.

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• 2023 (3) TMI 1307
  Income deemed to accrue or arise in India - consideration received from ancillary support services as Fee for technical service ( FTS ) as per India- United Kingdom of Great Britain and Norther Ireland ( UK ) Double taxation Avoidance Agreement ( DTAA ) and as per the Income-Tax Act, 1961 - HELD THAT:- We notice that a similar issue has been considered by the coordinate Bench in the case of LLC [ 2021 (8) TMI 1370 - ITAT BANGALORE] as held receipts by way of sale of software licenses and provision of ancillary support services connected with the sale of software products cannot be assessed as royalty/FTS income in the hands of the assessee. Accordingly, we set aside the order passed by the AO on this issue. We notice that in assessee s case [ 2021 (7) TMI 615 - ITAT BANGALORE ] the consideration received is towards sale of software and other ancillary support services which fact has not been disputed by the lower authorities. We are therefore of the considered view that the decision of the apex Court in the case of Engineering Analysis [ 2021 (3) TMI 138 - SUPREME COURT ] and the above decision of the coordinate Bench are clearly applicable in assessee s case. Accordingly, we set aside the order passed by the AO and delete the addition made. Decided in favour of assessee.

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• 2023 (3) TMI 1306
  Loss from business or profession - A.R. submitted that disallowance of business expenses is bad in law and therefore, the AO should be directed to allow the same by computing the total income - A.R.submitted that the assessee s case is covered under Section 71 and said section state that barring exception losses, business loss can be set off against other heads (as Inter Head Adjustment ) for the Assessment Year under consideration - HELD THAT:- A.R. submitted that for A.Y. 20101-11 on the identical facts the issue was held in assessee s favour. At that time the assessee has set off his business income against the income from house property which has been allowed by the Tribunal. D.R. remark that the return of income was not filed and Section 139(1) will not allow the assessee to take set off of business expenses to income from house property, as incorrect as the assessee has genuinely invoke the Section 71 and has set off against the other head the business loss. The Section does not state that the assessee has to file the return under Section 139 only. Thus, appeal of the assessee is allowed.

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• 2023 (3) TMI 1305
  Penalty u/s 271(1)(c) - Quantum addition deleted - HELD THAT:- Where the whole of the addition have been deleted in the quantum proceedings by the CIT(A) and which has attained finality as per records, we agree with the contention of the Ld. AR that very foundation for levy of penalty no more exist. Hence the penalty so levied is hereby directed to be deleted as pronounced in the Open Court. Appeal of the assessee is allowed.

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• 2023 (3) TMI 1304
  Income deemed to accrue or arise in India - Royalty or FTS - Taxability of payments received by the assessee from GIPL as per terms of the distribution agreement as well as the payments received by the assessee directly from Indian advertisers - HELD THAT:- As regards assessment years 2009-10 to 2012-13 [ 2022 (10) TMI 1039 - ITAT BANGALORE ] the issue was decided in favour of GIPL by the Tribunal by holding that the impugned payment made by it to GIL cannot be characterised as royalty under Act or DTAA The payment made by GIPL to GIL is not in the nature of Royalty or FTS under the Act and DTAA, a different treatment cannot taken in the hands of the payee, i.e. the assessee in the instant case. The contentions raised in the written submission of the learned D.R. has been addressed by the Tribunal in the payer s case i.e. GIPL (supra). Hence, we are not dealing with the same in this order. Therefore, we hold that a sum cannot be brought to tax in the hands of the assessee. Receipt on sale of advertisement space from Indian customers other than GIPL - The contentions raised by the learned D.R. in her written submission regarding receipt from other Indian customers has been dealt with in the order of the Tribunal in the case of GIPL (supra). Therefore, we hold that the payment on online advertisement is not liable to be taxed as Royalty in view of the aforesaid judicial pronouncements. It is ordered accordingly.

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• 2023 (3) TMI 1303
  Penalty u/s 271D - violation of provisions of Section 269 SS - assessee argued that the cash loan has been taken for urgent disbursal of the salary - HELD THAT:- In the instant case, we find that though the assessee argued that the cash loan has been taken for urgent disbursal of the salary, the same fact could not be brought on record that the salary has been indeed paid from the loans taken. The assessee could not prove the fact of payment of salary subsequent to the receipt of loan and hence, we decline to interfere with the order of the ld. CIT(A). Appeal of the assessee is dismissed.

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• 2023 (3) TMI 1302
  Maintainability of appeal before ITAT - condone delay in filing of Form No. 10B - order passed with reference to Section 12A - assessee submitted that remedy lies either by filing Writ Petition with Hon ble Jurisdictional High Court or filing petition with CBDT, against the order passed by ld. CIT(E) refusing to condone delay in filing late Form No. 10B beyond the time stipulated Section 139 read with Rule 17 of the Income-tax Rules, 1962 - HELD THAT:- After considering the contentions of both the parties and perusing the material on record, we dismiss the appeal filed by the assessee as not maintainable. While dismissing the appeal, we have extracted the manner in which the appeal was filed with tribunal along with other factual background. Assessee has also claimed that it was under a genuine and bonafide belief that appeal against order passed by CIT(E) refusing to condone the delay in filing form no. 10B beyond due date is an order passed with reference to Section 12A which is an order challengeable before tribunal. There is some merit in the plea of the assessee that it was persuing legal remedy before tribunal under bonafide belief. So far as condonation of delay in filing appeal with tribunal belatedly is concerned, since the appeal itself is not maintainable before tribunal we do not propose to consider the condonation of delay where the appeal itself is not maintainable before tribunal. The Court/authority where the assessee, if so advised , chose to persue further legal remedy, can certainly take cognizance of the above factual matrix, in arriving at their own independent decision w.r.t. condonation of delay, if so sought by the assessee. Thus, in nutshell appeal of the assessee stand dismissed as not maintainable. We order accordingly.

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• 2023 (3) TMI 1301
  Disallowance u/s 14A - both the direct as well as indirect expenditure attributable to earning exempt income needs to be disallowed u/s 14A - HELD THAT:- On perusal of the records placed before us, the AO has stated that the assessee had incurred certain amount of interest expenditure for earning exempt income, while the case of the assessee is that no interest expenditure has been incurred at all for earning such interest income. Accordingly, this ground is being set aside to the file of the AO to verify whether in fact, firstly, whether the assessee has claimed any expenditure for earning interest income and secondly whether all investments for earning exempt income were made from his personal account using own personal funds and not the funds from the proprietary concern. If both the above conditions are satisfied i.e. the investments made in earning exempt income for made out of own personal funds by the assessee in his personal capacity and secondly, no interest expenditure has been incurred and claimed for earning such exempt income, we are of the view that no disallowance is called for under section 14A of the Act. Nature of expenses - Disallowances of expenses claimed in Stavya Spine Hospital (SG Road) - HELD THAT:- The opening of new hospital at the SG Road in the same line of speciality i.e. spine treatment, would constitute extension/expansion of the existing business and since the said expansion is in the same line of business and the same/common management as the existing hospital at Ashram Road, the expenses should be allowed as revenue expenses. It is not the case of Revenue that the expenses are capital nature or that the same have not been incurred exclusively for the purpose of business of the assessee. Accordingly, other expenses i.e. expenses other than depreciation are concerned, the same should be allowed as revenue expenditure. Depreciation for the year under consideration - claim of the assessee is that the depreciation should be allowed since the assets purchased during the year under consideration are ready to use - HELD THAT:- We are in agreement with the arguments of the counsel of the assessee to the effect that once the new hospital is an extension of the existing business, the machinery viz. Air-conditioning unit and electrical fittings have been purchased during the year under consideration, the assessee has shown consultancy receipts from the new hospital unit at SG Road, the new hospital is in the same line of business i.e. Spine Speciality as the existing hospital at Ashram Road, then depreciation on the assets should be allowed to the assessee during the year under consideration. Notably, in the assessment order passed for the year under consideration, the AO held that business of the assessee commenced from assessment year 2015-16, however, in the immediately succeeding assessment year i.e. AY 2014-15, the AO allowed the assessee s claim of depreciation in respect of those assets. Accordingly, keeping in view the totality of facts placed before us for consideration, we are of the view that the assessee is entitled to depreciation on the above assets.

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• 2023 (3) TMI 1300
  Depreciation on editing equipment - Depreciation on the additions to plant and machinery made during the year - HELD THAT:- We find that this issue is recurring in nature since the assessment year 2004 05. We further find that assessee is claiming depreciation on computer-based editing equipment, part of which was acquired in preceding years and part was purchased during the year under consideration. As noted addition during the year mainly consist of processors, hard disk and hard drives, software, workstation platforms, drivers, monitors, servers, display, and control panels with different types of software. In assessee s own case in the immediately preceding assessment year, in DCIT vs Prime Focus Ltd [ 2017 (4) TMI 1614 - ITAT MUMBAI] following the judicial precedent in assessee s own case decided a similar issue in favour of the assessee. Decided against revenue. TP adjustment - assessee raised an amount in the UK via FCCB at a compound rate of 7.375% - AO made a reference under section 92CA(1) to TPO to determine the arm s length price of the international transactions entered into - HELD THAT:- Since the funds are borrowed in USD and advanced in USD the learned CIT(A) came to the conclusion that the question of currency and exchange risks is minimal and therefore, only risk that needs to be factored in was the lending risks by the assessee to its AE. Accordingly, CIT(A) computed the arm s length rate of interest on loan granted to AE at 8.375% i.e. rate of FCCB borrowings of 7.375% + markup of 1% for other lending rates. Since it is undisputed that advance was made by the assessee to its AE out of the funds generated from FCCB, therefore, we are of the considered view that the learned CIT(A) was right in considering the FCCB compound rate of 7.375% as the base rate. Since the funds have been borrowed in USD and also advanced in USD, the currency and exchange risks are minimised and the only risk to be considered is the lending risk for determining the markup. The learned CIT(A) considered 1% markup as an appropriate markup in the above circumstances. No infirmity in the impugned order in treating 7.375% plus markup of 1% as the arm s length rate of interest in respect of loan advanced by the assessee to its AE. Accordingly, ground No. 3 raised in Revenue s appeal is dismissed.

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• 2023 (3) TMI 1299
  TP Adjustment - comparable selection - exclusion of Lotus Labs as comparable by the DRP - HELD THAT:- As the company fails the RPT filters for the year under consideration. Accordingly respectfully following the decision of the coordinate bench in assessee s own case [ 2023 (1) TMI 1114 - ITAT BANGALORE] we see no reason to interfere with the decision of the DRP. This ground of the Revenue is dismissed. Expenses by pharma companies - expenditure incurred towards freebies to doctors by the Pharma Agencies as disallowable u/s.37(1) - HELD THAT:- The additional evidence furnished by the assessee providing the details of expenditure and the breakup incurred on doctors goes to the root of the dispute, therefore for substantial justice the same is admitted and taken on record for adjudication. We remit the issue back to the AO to examine the nature of expenditure incurred by the assessee and to verify the issue afresh in the light of the recent judgement of the Hon ble Supreme Court in the case of Apex Laboratories Pvt. Ltd. [ 2022 (2) TMI 1114 - SUPREME COURT] Ground Nos. 4 to 7 are allowed for statistical purposes. Disallowance of contribution towards gratuity funds - HELD THAT:- We noticed that the AO has not examined the details as per the directions of the DRP and has admitted that gratuity payment required further enquiry. AO has made disallowance considering the provisions of Section 144C(8) of the Act and sustained the disallowance. Since the AO has not verified the details of gratuity based on the details furnished by the assessee we remit the issue back to the AO with a direction to examine the details of payment of gratuity and decide the allowability accordingly. This ground is allowed for statistical purposes. Disallowance of expenditure incurred under Voluntary Retirement Scheme (VRS) - assessee in the original return inadvertently claimed deduction of entire VRS payment instead of 1/5th of the amount as per section 35DDA and filed revised return rectifying the same - AO disallowed the same on the reason that same was not disclosed in the tax audit report - HELD THAT:- We noticed that the AO has not examined the details as per the directions of the DRP and has made disallowance considering the provisions of Section 144C(8) and sustained the disallowance. Since the AO has not verified the details of spends towards VRS payments based on the details furnished by the assessee we remit the issue back to the AO with a direction to examine the details of and decide the allowability accordingly. These grounds are allowed for statistical purposes. TP adjustments @ 5% of the expenses reimbursed by the AE - HELD THAT:- In our view whether the mark-up of the cost of the services rendered by the Third Party can be applied for determining the ALP in the hands of the assessee should be examined from the angle of whether by making the payment on behalf of AE the assessee is performing any function or deploying any assets or has born any risks. DRP has not examined these facts based on the details furnished and has calculated an adhoc margin of 5% without any bench marking analysis and without attributing any reasons as to why the reimbursement is a separate international transaction. DRP has not considered the assessee s submission that the entire expenses incurred on behalf of AE does not pertain to coordination of clinical trial segment since the AEs who have reimbursed the expenses are not those to whom clinical trial services are rendered by the assessee. The issue should be remitted back to the DRP to examine the various details and submissions furnished by the assessee and decide the issue in accordance with law. The DRP is directed to keep in mind the decision of the Hon ble Delhi High Court in the case of Li and Fung India Pvt Ltd [ 2014 (1) TMI 501 - DELHI HIGH COURT] while deciding the issue. Accordingly this ground is allowed in favour of the assessee for statistical purposes

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• 2023 (3) TMI 1298
  TP Adjustment - assessee had advanced loan to its overseas subsidiary and assessee charged interest at the rate of 3.24% per annum - interest was charged at LIBOR plus 300 points - HELD THAT:- As submitted that the assessee charged interest on loan at 3.24% p.a. This fact is also evident which is the notes to Audit report in Form No 3CEB. During the year under consideration, average USD LIBOR was 0.58%. Interest rate considering LIBOR + 300 bps would be 3.58%. This rate is within +/- 5% range applicable for the year under consideration as per second proviso to section 92C(2). Hence, the interest received from loan given to Sasken Inc, USA should be considered at arm s length price. The TP addition should therefore be deleted. We direct the Ld.AO/TPO to consider the claim of the assessee based on the observation hereinabove. Accordingly this ground raised by the assessee stands allowed. Corporate guarantee given in respect of loan from banks availed by Sasken OY came to an end in September 2011 - There is a consistent approach taken by this Tribunal in adopting the rate of corporate guarantee at 0.5% in assessee s own case. We direct the Ld.AO/TPO to restrict the corporate guarantee adjustment at 0.5% based on the outstanding payables from Nordea Bank during F.Y. 2011-12. Adjustment made on use of trademark sasken as royalty - Assessee contended that question of AE s paying royalty does not arise - HELD THAT:- As decided in assessee own case [ 2021 (8) TMI 1359 - ITAT BANGALORE ] passive association should be distinguished from active promotion of the MNE group s attributes that positively enhances the profit-making potential of particular members of the group. Each case must be determined according to its own facts and circumstances. Ld.TPO shall carry out necessary verification based on the which it must first be determined whether there is any Royalty that could be attributed. In the event Royalty is to be attributed, proper benchmarking needs to carried out the accordance with section 92CA of the Act, by selecting an authorised method and comparables. Adjustment proposed on software development segment - TPO rejected the TP analysis of the assessee in respect of the software services rendered and received by assessee which was done based on internal comparables - HELD THAT:- As margins of comparables as per the TPO for provision of services and receipt of services is 20.5% and 19.22% respectively and the above details have been not considered by the Ld.TPO/AO. In the interest of justice, we remand this issue to the Ld.AO/TPO to verify the above details. In the event, the margins computed at segmental levels are found to be within +5%, no adjustment is warranted. The Ld.AO/TPO is directed to consider the claim of assessee based on the above observations in accordance with law. Accordingly, this ground raised by assessee stands allowed for statistical purposes. Disallowance computed u/s. 14A r.w.r.8D - HELD THAT:- AO has not made any disallowance under Rule 8D(2)(ii) whereas the disallowance has been computed under Rule 8D(2)(iii). There is a conscious application of mind by the Ld.AO because of which no disallowance has been made under interest. We therefore cannot agree with the submissions of assessee that there needs to be an expressed satisfaction recorded by the Ld.AO. The act of the Ld.AO in computing the disallowance reveals that the accounts of the assessee has been verified. No merit in the Ld.AR s argument that an expressed satisfaction has to be recorded by the Ld.AO. Computation of disallowance under Rule 8D(2)(iii), the ratio laid down by Hon ble Special Bench of Delhi Tribunal in case of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] has to be followed. We direct the Ld.TPO to restrict the disallowance only to the extent of the investment that has yielded exempt income during the year under consideration under Rule 8D(2)(iii).

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• 2023 (3) TMI 1297
  Not giving credit of the TDS as available in the form 26 AS - appellant is governed by the system of community of property under the Portuguese Civil Code of 1867 which is in force in the State of Goa - whether the appellant apportioned half of the income earned by the appellant with his spouse as required from the assesses governed by u/s. 5A of Income Tax Act, 1961? - appellant s 26AS disclosed the TDS Credit but credit of less was given while processing the return thus reducing the refund received HELD THAT:- Section 5A is a special provision wherein the legislature has prescribed in the latter limb thereof that and the remaining provisions of the Act shall apply accordingly. Therefore, apply the age old principle generilia specialibus non derogant i.e., the other general provisions of the Act in other chapters must make way for the same for all intents and purposes. A perusal of section 198 of the Act that all TDS amounts deducted under Chapter XVII of the Act, are indeed deemed as income received of the concerned assessee - we wish to reiterate here that the legislative expression assessee herein must be read as the spouses assessees in light of section 5A of the Act and therefore, such TDS amount has to be consequentially apportioned going by scheme of the Act. The assessee s instant arguments seeking entire TDS credit in his hands stand rejected therefore. As stated that Rule 37BA in Income Tax Rules does not provide for such an apportionment for the purpose of claiming TDS credit and, therefore, the assessee husband herein has rightly raised the claim of entire TDS credit. There is hardly any merit in the assessee s contentions as Rule 37BA (2) read with Proviso thereunder casts a liability on the concerned deductee /assessee herein to file a declaration with the deductor that the whole or any part of the income on which the TDS has to be deducted, which is assessable in the hands of any other person i.e., the spouse herein by virtue of section 5A. The assessee could hardly be allowed to take advantage of his own failure in not furnishing the necessary declaration before his deductor therefore. His instant last argument also fails. Assessee s appeal is dismissed.

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• 2023 (3) TMI 1296
  TP Adjustment - Addition with regard to payment of interest on CCDs by recharacterising the same to be external commercial borrowing s - HELD THAT:- Respectfully following the decision of the coordinate bench of the Bangalore Tribunal A.Y. 2012-13 [ 2022 (2) TMI 1279 - ITAT BANGALORE ] and A.Y. 2011-12 we uphold the TP study done by the assessee to arrive at the interest rate of 9% and 12% calculated based on the average rupee cost comparing the same with SBI prime lending rate. Adjustment made with respect to the payment of royalty at 1% - HELD THAT:- As per assessee own case [ 2021 (12) TMI 1167 - ITAT BANGALORE ] we allow this ground in favour of assessee and hold the payment of royalty by assessee to be at arms length. Disallowance of expenditure u/s. 14A r.w.Rule 8D - as submitted by the Ld.AR that there is no exempt income earned by the assessee for year under consideration - HELD THAT:- We note that Coordinate Bench of this Tribunal for A.Y. 2012- 13 has deleted the disallowance u/s. 14A [ 2022 (2) TMI 1279 - ITAT BANGALORE ] as assessee do not have any exempt income for the year under consideration. Thus, as there is no difference in facts, we direct the Ld.AO to delete the addition made u/s. 14A r.w.Rule 8D. MAT computation on addition u/s 14A - addition made to the books profits by applying the provisions of section 14A - HELD THAT:- This issue is no longer resintegra by virtue of the decision of ACIT vs. Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] and the decision of Gokaldas Images Pvt. Ltd. [ 2020 (11) TMI 345 - KARNATAKA HIGH COURT ] - Thus we direct the Ld.AO to delete the disallowance u/s. 14A while computing book profits u/s. 115JB of the Act. Short credit of TDS - HELD THAT:- We direct the Ld.AO to verify the same and consider the claim in accordance with law. Interest charged u/s. 244A - HELD THAT:- As submitted that the Ld.AO has not provided the consequential interest u/s. 244A - We direct the Ld.AO to verify the same and consider in accordance with law.

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• 2023 (3) TMI 1295
  TP adjustment - international transaction of provision of IT enabled data conversion services - assessee adopted TNMM as the most appropriate method for demonstrating that this international transaction - assessee pleaded that foreign exchange fluctuation gain should have been considered as operating revenue of the assessee as well as that of the comparables - HELD THAT:- In light of the business profile of the assessee, this contention raised on behalf of the assessee about inclusion of foreign exchange gains in operating revenue finds merit. Apparently, it seems that foreign exchange gain earned by the assessee is in relation to the revenue earned from its AE in connection with provision of ITES. We find that foreign exchange gain directly results from consideration received from rendering ITES to AE and therefore, we fail to understand how such foreign exchange fluctuation gain should be considered as non-operating. Since the TPO has computed PLI of the assessee as well as comparables by ignoring the amount of forex gains, we set aside the impugned order and remit the matter back to the file of the AO/TPO to recompute assessee s margin as well as that of comparables by considering forex gain as an item of operating revenue. It would be pertinent to make it clear that our direction is restricted to consider forex gain from transactions of revenue nature only as part of operating revenue. If some part of forex gains is found to be relatable to transactions on capital account, then that part should be excluded from the operating revenue. Selection of comparable companies - Eclerx Services Limited, ICRA Techno Analytics Limited, Acropetal Technologies Limited - A close look at the business profile of the three comparable companies mentioned elsewhere shows that the services offered by these companies are in the nature of ITES only. In fact, we are unable to understand how single customer business (like that of the assessee) affects the functional similarity of the company. The assessee is having single customer business and so also TCS E-Serve Limited, Eclerx Services, which offers ITE services to city group. Similar is the case of ICRA Techno Analytics Limited and Acropetal Technologies Limited. Inclusion of CG Vak Software and Exports Limited and Calibre Business Point Business Solutions Ltd. - High turnover or high profit can be no reason to eliminate an otherwise comparable company. The same applies with full force in the converse manner as well to a low turnover/low profit company. We, therefore, hold that a company cannot be excluded from the list of comparables on the ground of its low turnover. In principle, we direct the inclusion of the relevant segment of this company in the list of comparables. The TPO is directed to include the operating profit/operating costs of the ITES segment of this company in the list of comparables, after due verification of the necessary figures for determination of the operating profit margin etc. Inclusion of R System International Ltd, Jindal Intelicom Private Limited and Calibre Business Point Business Solutions - We set aside the impugned order and remit the matter to the file of TPO/AO for examining this aspect of the matter. It is clarified that only if the assessee succeeds in providing the relevant data of these companies for the concerned financial year on the basis of the information available from their Annual reports only, the TPO should include these companies in the list of comparables by considering their OP/OC on the basis of the financial year ending 31.3.2010. If however, even though their quarterly data is available and can be compiled for the relevant financial year, but the amounts of operating profit or operating cost etc. for the relevant financial year are not directly available without any apportionment or truncation, then these companies should not be considered as comparable. Exclusion of Cosmic Global Limited and Informed Technologies India Ltd. - In so far as Cosmic Global Limited is concerned, we find that this Tribunal in earlier years i.e. Assessment Years 2009 10 and 2010 11 has held that export earnings filter need not be applied which has been followed by the DRP and, therefore we do not find any merit in exclusion of these comparables and it will remain in the final set of comparables Informed Technologies India Limited is concerned, it is contended that the turnover of this company is more than Rs. 1 crore and, therefore, passes turnover filter applied by the Assessing Officer whereas the TPO has rejected because this company does not pass turnover filter. It appears that this company was rejected by the TPO on the basis of turnover filter in show cause notice itself. Therefore, the DRP has directed to verify the turnover and decide the inclusion/exclusion of this company after affording reasonable opportunity of being heard to the assessee. We do not find any error or infirmity in such direction of the DRP and, we accordingly direct the TPO/Assessing Officer. We set aside the impugned order and remit the matter for determination of ALP of the international transaction of provision of ITE data conversion services to the file of the AO/TPO for fresh decision in accordance with our above observations/directions after affording adequate opportunity of being heard to the assessee. Interest on a delayed/Non-realization of export proceeds - HELD THAT:- TPO has taken normal credit period of 60 days and accordingly made addition on account of transfer pricing adjustment for the period in excess of 60 days. In our considered opinion, since the assessee has entered into an agreement with its AE for realization of invoices within the period of 150 days, therefore the interest amount of non-realization of invoices upto 150 days appears to have been factored in the price charged for the services rendered. Interest should be charged in excess of 150 days - This is also additional/ supplementary grounds taken by the assessee at 4.1.5. We, accordingly direct the AO/TPO to charge interest for delay of more than 150 days, which means that any delay above 150 days should be considered as a separate international transaction in terms of Clause C of Explanation to section 92B of the Act. Rate of interest - We find that this issue is covered by the decision of Cotton Natural [I] Pvt Ltd [ 2015 (3) TMI 1031 - DELHI HIGH COURT] as held that it is the currency in which loan is to be repaid which determine the rate of interest and hence prime lending rate should not be considered for determining interest-rate. We, therefore, set aside the impugned issue and remit the matter back to the file of the TPO/AO for fresh determination of addition on account of TP adjustment towards interest not realized from its AE on the debts arising during the course of business in line with our above observations.

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• Customs

• 2023 (3) TMI 1294
  Time Limitation - levy of Anti Dumping Duty - whether the learned CESTAT was right in rejecting the petitioner s appeal on the ground of limitation in the given facts and circumstances of the case? - HELD THAT:- Undisputedly, the appellant s appeal was delayed by a period of ninety-one days, as noted by the learned CESTAT. However, it appears that the learned Tribunal failed to appreciate that the petitioner was not raising any other ground but merely sought to keep his earlier appeal alive, whereby the appellant had challenged the levy of Anti-Dumping Duty on two chemicals, namely, Vinylidene Fluoride and Hexafluoropropylene Polymer. The learned CESTAT had faulted the petitioner for not participating in the proceedings for the sunset review. However, the petitioner had explained that he was not aggrieved by levy of Anti-Dumping Duty on the product Fluoroelastomers; the appellant s limited grievance was with regard to two chemicals, which were sought to be included within the net of Anti- Dumping Duty. It is considered apposite that the impugned order be set aside and the appellant s appeal be restored before the learned CESTAT for consideration on merits - appeal disposed off.

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• 2023 (3) TMI 1293
  Smuggling - gold of foreign origin - prohibited goods - statements of accused recorded under Sections 108 Customs Act - whether value of individually recovered gold should be considered or value of combined recovered gold should be considered? - Sections 104 and 135 of Customs Act. HELD THAT:- In Section 135 Customs Act, term any person has been used and it denotes to an individual. The term any person cannot be interpreted as a group of persons. From the plain reading of Section 135 Customs Act it appears that it refers to an individual. Delhi High Court also in the case of AIR CUSTOMS VERSUS BEGAIM AKYNOVA [ 2022 (1) TMI 137 - DELHI HIGH COURT] observed that punishment which is to be imposed on the accused should correspond to the gold that has solely been recovered from his possession and each person should be made answerable for the recovery of gold found in his possession - for the purpose of Section 135 Customs Act value of individually recovered gold should be considered and not the value of combined recovered gold. Whether alleged recovered gold was prohibited goods as if it was prohibited goods then by virtue of Section 104 (6) and 135 Customs Act, the alleged offence committed by the applicants would be non-bailable and maximum punishment provided for such offence is seven years? - HELD THAT:- From the perusal of Section 2(33) Customs Act it appears that every good is prohibited if its import or export is subject to an prohibition under the Customs Act or any other law for the time being in force. Recently three Judges Bench of the Apex Court in the case of COMMISSIONER OF CUSTOMS VERSUS M/S. ATUL AUTOMATIONS PVT. LTD., AND PARAG DOMESTIC APPLIANCES [ 2019 (1) TMI 1324 - SUPREME COURT] with regard to multi function device observed that MFDs were not prohibited but restricted items for import and further observed that there will exist fundamental distinction between what is prohibited and what is restricted. Therefore, from the case of Atul Automation, it appears that on the basis of restriction on import a good cannot be said to be prohibited good in terms of Section 2 (33) Customs Act. In case as hand, according to the prosecution, gold was recovered from the possession of the applicants which was liable for confiscation under Section 111 of the Customs Act and as per Section 125 Customs Act the authority concerned may levy fine in lieu of confiscation and, therefore, it appears from the provisions of Section 11 of Customs Act gold is not prohibited goods but it is restricted goods and as per Section 125 Customs Act in lieu of confiscation fine may be levied. Therefore, as import of gold is not prohibited but restricted subject to prescribed payment of duty, thus alleged recovered gold is not prohibited goods under Section 2(33) Customs Act but it is restricted goods. The applicants committed offence under the provisions of Customs Act for which maximum punishment is three years and as their case does not fall under Section 104 (6) Customs Act, therefore, by virtue of Section 104(7) Customs Act the alleged offence committed by applicants is bailable one, therefore, they are entitled to be released on bail. Let the applicants-Mohd. Tufail and Mohammad Alam be released on bail in the case on furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court concerned with the conditions imposed - application allowed.

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• 2023 (3) TMI 1292
  Seeking recording of statement u/s 108 of Customs Act, 1962 in the presence of advocate at visible but not audible distance - seeking de-sealing of his premises - Smuggling of Gold - HELD THAT:- The best possible manner to deal with it is to allow presence of the advocate at a visible distance but beyond the audible distance. This will also ensure transparency in the enquiry that Custom Officers propose to make with the Petitioner and this is what has been done by this Court in several similar cases in the past - reliance can be placed in case of SHRI BYJU CHANDRASEKHARAN NAIR VERSUS UNION OF INDIA AND ANR. [ 2022 (4) TMI 1515 - BOMBAY HIGH COURT] , HARSHBHAI AMARSHIBHAI GOYANI VERSUS UNION OF INDIA AND ORS. [ 2022 (4) TMI 1517 - BOMBAY HIGH COURT] , MANIPRABHA IMPEX PVT. LTD. VERSUS UNION OF INDIA [ 2022 (4) TMI 1516 - BOMBAY HIGH COURT] - thus, the first prayer to the extent, it seeks presence of advocate at visible distance but not audible distance deserves to be allowed. De-sealing of the premises of the Petitioner - HELD THAT:- There is no power available with the custom authorities to seal premises of any person, which are nothing but a form of immovable property. Under Section 110 or Section 121 of the Customs Act, 1962 what can be seized and confiscated is the goods or movable property. Section 110 and Section 121 respectively empower the customs authorities to seize the goods liable to confiscation and confiscate the sale proceeds of the smuggled goods, which are sold by the person, having knowledge or reasons to believe that the goods are smuggled goods. The word goods has been defined in Section 2(22) of the Customs Act, 1962 and it includes (a) vessels, aircraft and vehicles (b) Stores (c) baggage (d) currency and negotiable instruments and (e) any other kind of movable property. It is thus clear that the seizure of the goods contemplated under Section 110 or Section 121 is only of movable property which is not immovable property. Even otherwise no immovable property can be seized and confiscated, though it can be attached and sold for making recovery of loss to or dues of the government as for example, when done in exercise of the power under Section 142 (1) (c) (ii) of the Customs Act, 1962, but that stage, however, is yet to reach in this case. Therefore, even the second prayer made in the petition deserves to be allowed. It is directed that if any statement of the Petitioner is to be recorded in terms of Section 108 of Customs Act, 1962, same shall be recorded in the presence of advocate of the Petitioner kept at a visible distance but not audible distance during interrogation. The prayer for videography is, however, rejected - Petition allowed in part.

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• 2023 (3) TMI 1291
  Scope of discloser of information under RTI - Interplay of anti-dumping proceedings under the Customs Tariff Act, 1975 and Anti-Dumping Rules with the Right to Information Act, 2005 - only objection of the Petitioners is in respect of disclosure of the photocopy of the note sheet which contains confidential information of the complainants - It is the submission of ld. Counsels for the Petitioners that the information that is sought by the RTI Applicant is confidential in nature and, specifically, it is third party information given to the DA for the purpose of anti-dumping investigation. HELD THAT:- A perusal of the provision of the Anti-Dumping Agreement would show that countries were conscious of the need to preserve confidentiality of the information disclosed during proceedings relating to anti-dumping duties. Authorities are permitted to treat the information, which could be commercially sensitive, as confidential and the same is not to be disclosed to any third party, without permission of the party providing the information. The above provisions, in fact, recognised the concept of confidential documents and information on the one hand and non-confidential summary on the other hand. The latter is meant to ensure that requisite information is still provided to third parties to comply with the principles of natural justice while maintaining confidentiality of specific information. The ultimate discretion under the Anti-Dumping Agreement is to be vested in the authority concerned to decide as to whether any information is to be disclosed or not - The scheme of the Anti-Dumping Rules is that as per Rule 5, a written complaint can be filed on behalf of the domestic industry, as defined in Rule 2(b), to the effect that injury is being caused to the domestic industry by furnishing evidence of dumping. The Anti-Dumping Rules require a link between the dumped imports and the alleged injury to be established. The Court needs to examine whether the Anti-Dumping Rules are inconsistent with the provisions of the RTI Act. The legal issue in the context of specific Rules framed by various authorities in respect of disclosure of information, in different contexts, has been subject matter of at least two decisions. In the case of Registrar of THE REGISTRAR, SUPREME COURT OF INDIA VERSUS RS MISRA [ 2017 (11) TMI 2022 - DELHI HIGH COURT] , a ld. Single Judge of this Court was dealing with a request for information under the RTI Act in the context of Supreme Court Rules, 1966/2013 framed by the Supreme Court. In the said decision, the Court considered the framework of the said Rules framed under Article 145 of the Constitution of India, 1950. In the said judgment, the Court drew a distinction between the administrative functioning and the judicial functioning of the Supreme Court. perusal of the above two decisions shows that the Rules which are made by specific authorities to deal with information provided by parties on the judicial side cannot per se be held to be inconsistent with the provisions of the RTI Act. Moreover, the Supreme Court has specifically held that on the judicial side the information is held by courts as a trustee for litigants in order to adjudicate upon the matter and the same cannot be permitted to be accessed by third parties. A proper balance is to be maintained in order to ensure the confidentiality of documents and other information pertaining to the litigants to the proceedings. In the case at hand, it is the submission of the RTI Applicant itself that the Anti-Dumping Authority is acting as a quasi-judicial body when dealing with the complaint of the complainant in respect of dumping. This Court has no doubt in holding that the information that has been supplied by the Complainants has been given in the course of adjudication, in the capacity of a litigant. Thus, the information has been received by the Anti-Dumping Authority which now forms part of the record in discharge of its judicial/quasi-judicial function. None can claim an absolute right to get a certain piece of information, and the nature of the information that is sought would be material. The specific note sheet that has been sought by the RTI Applicant is the note sheet relating to initiation of anti-dumping investigation. From a bare perusal of the original file produced before the Court, it is evident that the note sheet contains various portions of information which may be confidential to the Complainants - For good cause the said information can be refused to be disclosed. A perusal of the note sheet sought would also show that the disclosure of the same under the RTI Act, especially in a case where the RTI Applicant was a party to the anti-dumping investigations and is a competitor of the Petitioners could cause serious prejudice and adversely affect various sections of the domestic industry. In the present case, this Court is of the opinion that the imposition of anti-dumping duty and confidential information disclosed in such proceedings would have a significant impact on the economic interest and trade relations of India, as also would constitute information received by the authority in confidence, which cannot be subjected to disclosure. Section 11 of the RTI Act itself recognizes the intention to protect the information received from third parties. This principle is also the very basis of Rule 7 of the Anti-Dumping Rules, which requires specific authorization of the party providing the information. Thus, in effect, there is no inconsistency between the provisions of the RTI Act and the Anti-Dumping Rules. The Anti-Dumping Authority is vested with specialised knowledge relating to the trade as also the exclusive knowledge in respect of anti-dumping proceedings. Such knowledge would enable the said Authority to take a considered decision as to whether the particular information is to be disclosed or not. Such expertise does not vest with the CPIO/PIO or other authorities under the RTI Act. Petition allowed.

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• 2023 (3) TMI 1290
  Provisional assessment on the bills of entry - alleged misclassification of the imported BSP platforms - Non-generation of DIN - Change in the basis of the enquiry to classification of the BSP platform, on the premise that such classification would be under Customs Tariff Entry 8517 62 90 instead of Customs Tariff Entry 8471 50 00 - HELD THAT:- Impugned communication dated 04.08.2020 constitutes a demand that had been raised on the petitioner for the differential duty of Rs.3,91,60,068/- along with interest under Section 28AA of the Customs Act, 1962. The communication, styled as a letter, refers to the provisional assessment on the bills of entry and the alleged misclassification of the imported BSP platforms - In light of the admitted position that the demand has not been preceded by either a show cause notice or order revising the bills of entry (self assessments) such demand has no basis in law and is set aside. The question of bills of entry having been assessed as stated in the counter thus does not arise. The non-generation of a DIN is fatal to the communication itself. Section 151A of the Act enables the Board to issue Instructions to officers of Customs and such Instructions bind the officers, barring in two situations - The exceptions are, that no order, instruction or direction will require any officer of Customs to make a particular assessment or dispose a particular case in a specified manner and no instructions shall be issued so as to interfere with the discretion of the Commissioner of Customs (Appeals) in the exercise of appellate functions. Both exceptions thus concern the conduct of judicial duties only. As far as administrative duties are concerned the Board has the final word to prescribe guidelines that are mandatory qua the officers. In fact, the judgments cited by learned Standing Counsel stand testimony to the aforesaid settled position of law. The respondents cannot thus attempt to wriggle out of the requirements imposed under Circular Nos.37/2019 and 43/2019. Incidentally, Circulars issued on 05.11.2019 and 23.12.2019 by the Board have not been brought to the notice of the Hon ble Supreme Court. The thrust of the exercise is to ensure that every communication issued by the State, including e-mails, must contain an authorisation. The move is a progressive one backed by the avowed objects of transparency and accountaibility, the crying need of the day. The impugned communication dated 04.08.2020 is set aside - petition allowed.

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• 2023 (3) TMI 1289
  Validity of demand against the clearing and forwarding agent in the absence of Service of SCN - it is alleged that liability has been fastened on the petitioner (agent) in violation of principles of natural justice - applicability of provisions of Section 147 of Customs Act - HELD THAT:- The impugned order is vitiated on several grounds. One of the modes of assessment under the Customs Act is in terms of Section 28 thereof, which is invoked as against the importer by issue of a show cause notice. Section 147 is a provision which fastenes a corresponding, parallel and deemed liability on the agent of the principle as well. It thus stands to reason that the process and procedure for assessment that is followed qua the principle, the importer in this case, would have to be necessarily followed in the case of the agent as well. In the present case, admittedly no notice has been issued to the clearing agent under Section 28. The argument of the respondents that mere imposition of liability does not require prior notice on the clearing agent is rejected straightaway for the reason that such mulcting of duty is itself bound by the requirement of proper procedure for assessment, as set out under Section 28 of the Act. It simply cannot be countenanced that a demand could be thrust on an entity without following due process prior thereto. That apart, and as far as recovery is concerned, it is the case of the respondents that there has been no recovery in this matter as they are cognizant of the requirements under the proviso to Section 147(3) that the assessing officer has to record his opinion that the duty has not been recovered from the importer and proceed only thereafter with measures to recover the same from the agent. Petition allowed.

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• 2023 (3) TMI 1288
  Permission to redeem the goods on payment of fine - import of Kerosene (Petroleum Hydro Carbon Solvent) (prohibited goods) or not - HELD THAT:- The writ petition is disposed of with the directions imposed - The 2nd respondent shall provide to the petitioner copies of all test reports/report relied upon in Ext.P2 order to establish that the goods imported by the petitioner are prohibited goods. This shall be done within one week from the date of receipt of a certified copy of the judgment - A sample of the product shall also be permitted to be drawn by the petitioner for establishing that the goods in question are not prohibited goods. This shall also be permitted within a period of one week from the date of receipt of a certified copy of the judgment.

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• 2023 (3) TMI 1287
  Refund of 4% CVD - time limitation - main argument of Department is that when the period of three months is computed from the date of receiving the Order-in-Original by the reviewing authority, the review orders passed are well within time - HELD THAT:- As per Sub Section (2) of Section 129 D of Customs Act, 1962, the review authority has to examine the decision or order passed by adjudicating authority so as to satisfy the legality or propriety of such decision or order and has to pass a review order directing the department to prefer an appeal before the Commissioner (Appeals). Sub Section (3) of Section 129 D provides that every such order under Subsection (2) shall be made within a period of three months from the date of communication of the decision or order passed by the adjudicating authority. It cannot be understood why the Department failed to point out the date seal of the Reviewing Authority before the Commissioner (Appeals). The very same facts and issue came up for consideration before the Tribunal in other appeals filed by the Department - The Tribunal in M/S. VCR TIMBER ENTERPRISES AND M/S. MEHNDIPUR BALAJI IMPEX (P) LTD. [ 2023 (3) TMI 1082 - CESTAT CHENNAI ] held that we have no reason to disbelieve the Commissioner (Appeals) that no evidence was placed before him as to the date on which the Orders-in-Original was received by the reviewing authority, in spite of repeated requests. Revenues actions should be beyond suspicion. Hence the strong inference that can be drawn is that there was no evidence available to establish as to the date on which the order-in-original was received by the Review Cell and apparently there was a delay in passing the review order. The contention of the Department that the order was received by the reviewing authority only on 23.03.2010, cannot be accepted - there are no grounds to interfere with the observations and findings of the Commissioner (Appeals). The appeal filed by the Department is dismissed.

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• 2023 (3) TMI 1286
  Valuation for the purpose of CVD - Levy of differential Additional Duty of Customs - institutional buyer - should the additional duty of customs be assessed as per Section 4 or Section 4A of the Central Excise Act? - if assessment is done under Section 4A if Rs. 2,100/- can be taken as RSP? - demand of interest and imposition of penalty under Section 112 - Circular dated 11 March 2016 issued by the CBEC. HELD THAT:- It is an institutional consumer because it uses the STBs to provide service to the subscribers. Therefore, the bulk of STBs purchased by Dish TV cannot be considered as having a retail sale nor can the price of Rs.2,100/- be called Retail Sale Price. There can be retail price only if the STBs are sold to the ultimate consumer. In this case since the goods are not sold to the consumer there cannot be a retail sale price. The price at which goods are sold in wholesale or to an industrial or institutional consumer cannot be retail sale price as per the SWM Rules. Retail sale price is available only in those few cases where set top boxes have been damaged and subsequently sold to the subscriber. Undisputedly, the set top boxes were sold were much lower prices than Rs. 2,100/- in respect of such retail sales. The price at which the goods were sold to Dish TV cannot be considered as retail sale price. Dish TV cannot be considered as retail buyer because it is not using the goods for itself but is using them to provide service to its subscribers. Therefore, the price of Rs. 2,100/- at which the goods were sold to Dish TV cannot be considered as retail sale price even if the assessment is not modified and continues to be under Section 4A as was done in this case. The assessment should correctly be done under Section 4 as per Bharti Telemedia. Assessment in this case was done under Section 4A as per RSP with abatement as decided by the assessing officer of Rs. 1465/- - the assessing officer has rejected declared RSP of Rs. 1000/- per set top box and recalculated it after adding the basic customs duty to the landed cost of the STB and adding 20% as post importation cost which came to Rs. 1832/-. After allowing 20% abatement, he determined the additional duty of Customs on a value of Rs. 1465/-. How can the retail sale price be lower than the institutional sale price of Rs. 2,100/-? - HELD THAT:- There is no retail sales but only institutional sales in this case and, there are nothing in Rule 23(2) that permits sale price to institutional buyers to be reckoned as retail sale price. It is true that assessment (both self assessment and re-assessment) were done under Section 4A and the appellant had not assailed the assessment. However, by issuing the SCN Revenue has re-opened the assessment on one ground (that RSP should be taken as Rs.2,100/-) and it is open to the appellant to plead any grounds in defence including any question of law (that Section 4 and not Section 4A should have been applied) and it is for the adjudicating authority and appellate authorities to consider the defence. Appeal allowed.

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• Corporate Laws

• 2023 (3) TMI 1280
  Oppression and Mismanagement - mismanagement on the part of the R-1 Company and R-2 in particular - reduction in shareholding - wrongful removal of R-5 and R-6 as directors of the R-1 Company - HELD THAT:- Even non-members could be transferred shares of the company if it is in the interest of the company. This provision is supported by the list of non-members produced by the Appellant who have been transferred shares of R-1 Company from the year 1987-88 onwards. Significantly, this averment has not been disputed by the Respondents. The rights of a nominee are different from the actual holder of the shares and those of the guardian are not the same as that of the nominee of the shares, in the event that the owner of the shares is deceased. It is quite clear that the Appellant could not have claimed to be holder of the 3890 shares whose nominee was Ms Harsheika Doshi, more so when he does not show in the original company petition how the interests of the minor Ms. Harsheika are being prejudiced by the action of the Respondents. It would be a matter of adjudication though, as the Appellant was relying on the entry in the Register of Members to claim shareholding of 3890 shares by him. Yet it is a fact that he was holder of the 4160 shares till the time of their cancellation, which is also one of the acts of oppression alleged by the Appellant. The ownership of 4160 shares, certainly vests with Mr. Yash Vardhan Mall and the allegation that the Company has not followed the due procedure in cancelling these shares is found to be correct. The plea taken by the R-2 that these shares were awarded on the mistaken notion that Mr. Yash Vardhan Mall is the holder of 3890 shares is also not found to be supported by facts since the transfer of 4160 shares to Yash Vardhan Mall has nowhere been shown to be done in consequence of his holding 3890 shares and moreover Article 30 of the Articles of Associations allows transfer of shares to non-members if it is done in the interest of the company. Therefore, the unilateral cancellation of the 4160 shares, which is alleged to be an oppressive act, is a question open for adjudication. The section 241-242 petition preferred by the Appellant cannot be, therefore, decided at the threshold on the issue of maintainability on the basis of non-ownership of these shares as their illegal cancellation is itself the subject matter of the original company petition C.P. No. 189 of 2015. The issue of maintainability which was raised in the demurrer application C.A. 1755 of 2015 should not have been adjudicated at the threshold to arrive at the main petition s non-maintainability when the issue was itself claimed as an act of oppression - The NCLT, by allowing the demurrer application on the basis on non-ownership of these 4160 shares, and consequently dismissing CP No. 189 of 2015 in a cursory manner without looking at the merits of the various allegations made in the company petition has incorrectly adjudicated both the demurrer application and also C.P. 189 of 2015. The Impugned Order, which allows the demurrer application, is set aside - issue of guardianship of 3890 shares and whether the Appellant was entitled to maintain the original company petition on the basis of these 3890 shares should also be looked at afresh - appeal allowed.

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• Insolvency & Bankruptcy

• 2023 (3) TMI 1285
  Seeking withdrawal of CIRP under section 12A of Insolvency and Bankruptcy Code, 2016 - appeal was preferred against the admission order before the National Company Law Appellate Tribunal (NCLAT) apparently on the ground that section 9 of IBC petition was not maintainable as there was a pre-existing dispute - HELD THAT:- Regulation 30A of IBBI Regulations was introduced after insertion of section 12A in IBC. It provided the mechanism of dealing with applications filed for withdrawal. Later on, it was substituted by notification dated 25.07.2019 in IBBI Regulations. According to the said provision, withdrawal under section 12A of IBC could be moved before Adjudicating Authority by the applicant through IRP before constitution of the CoC and in case the CoC has been constituted, then also by the applicant through IRP or the RP. However, the applicant would be required to justify the withdrawal by giving reasons. It further provides the procedure for dealing with such an application. The application had been filed prior to the constitution of the CoC. The settlement had been arrived at within two days of the admission order. The payment as per the settlement had been made within the next five days i.e. in a weeks time from the date of admission. The application for withdrawal was filed on the 10th day. The NCLT ought to have immediately taken the decision on the application. Once the parties had settled the dispute even before the CoC had been constituted, the application ought to have been allowed then and there rather than await the other creditors to jump into the fray and allow the IRP to proceed further. Alternative Remedy - HELD THAT:- Plea of alternative remedy is a self-imposed restriction by the superior Courts and is never an absolute bar unless barred by the statute. Further, in the present case, this Court had entertained the SLP in 2021 itself and had granted an order of status quo on 20.04.2021. Substantial time has passed since then. As such we are not inclined to entertain the said objection relating to availability of alternative remedy of filing the appeal before the NCLT. Violation of the Moratorium - HELD THAT:- The intervenors have vehemently contended that after 01.03.2021, once the NCLT has admitted the petition and had issued restraint order, section 14 of IBC had come into play; the transactions made in the accounts of the CD would be unlawful and illegal as such payment of the settlement amount from the funds of the CD transferred to the account of the suspended Director after 01.03.2021 ought to be rejected and no discretion should be exercised permitting withdrawal of the proceedings. In this respect, it would suffice to state that even the NCLT was not satisfied with the said submission of the IRP and has not approved the same. Secondly, even if there was any transaction from the account of the CD, the same may at best be held to be a wrongful transaction and in any other proceedings where CIRP is initiated the amount so transferred could be recovered under section 66 of IBC by the IRP or the RP subject to establishing that the said transactions would be hit by the said provision. Multiple claims of OCs - HELD THAT:- It only needs to be mentioned that other creditors would have their own right to avail such legal remedies as may be available to them under law with respect to their claims. The rights of the creditors for their respective claims do not get whittled down or adversely affected if the settlement with the OC in the present case is accepted and the proceedings allowed to be withdrawn. Claims for expenses for IRP - HELD THAT:- Any amount spent by the IRP legally admissible to him could always be recovered in the same proceedings and the NCLT or the Adjudicating Authority would be well within its power to get the same cleared under Clause 7 of Regulation 30A of IBBI Regulations. Section 12A of IBC permits withdrawal of applications admitted under sections 7, 9 and 10 of IBC. It permits withdrawal of such applications with approval of 90 percent voting share of CoC in such manner as may be specified. The role of CoC and 90 percent of its voting share approving the said withdrawal would come into play only when CoC has been constituted. Section 12A did not specifically mention withdrawal of such applications where CoC had not been constituted but at the same time it does not debar entertaining applications for withdrawal even before constitution of CoC. Therefore, the application under section 12A for withdrawal cannot be said to be kept pending for constitution of CoC, even where such application was filed before constitution of CoC - The substituted Regulation 30A of IBC as it stands today clearly provided for withdrawal applications being entertained before constitution of CoC. It does not in any way conflicts or is in violation of section 12A of IBC. There is no inconsistency in the two provisions. It only furthers the cause introduced vide section 12A of IBC. Thus, NCLT fell in error in taking a contrary view. Regulation 30A of IBBI Regulations provide a complete mechanism for dealing with the applications filed under such provision. The issue raised by the IRP regarding its claim for expenses is well taken care of under the said provision. Various safeguards have been provided in Regulation 30A of IBBI Regulations to be fulfilled by the OC which apparently have been fulfilled as there is no complaint in that regard either by the IRP nor it is apparent from the impugned order of the NCLT. Thus, the objection raised by the IRP does not merit any consideration in this appeal. The impugned order of the NCLT cannot be sustained. The application filed under Regulation 30A of IBBI Regulations deserves to be allowed - Appeal allowed.

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• 2023 (3) TMI 1284
  Seeking release of pending amount (for work done prior to CIRP period or not) - it is construed that the Company, had received the money from the Employer and the same is due to be transferred to the Appellant herein - whether the work was executed prior to the initiation of CIRP? - HELD THAT:- As per the terms of the I B Code, 2016, for any work done prior to the CIRP period, and for amounts pending in relation to the same, the Creditor, is required to file its Claim, with the Resolution Professional or the Liquidator, as the case may be. In the instant case, the Appellant, had filed the Form C for Admission of the Claim, in relation to the pending amount 26.08.2019, one day after the last date for submission of the claim. The Liquidator had sent an email that the claim submitted by the Appellant, cannot be considered by the Liquidator as it is filed after the expiry of the last date for submission of the Claim . The Application I.A. No. 454 of 2020 pertains to release of the Pending Amount, and not in relation to the Admission of the Claim, filed by the Appellant, for the Condonation of the Delay. Therefore, this Tribunal, is of the considered view that there are no substantial grounds to interfere with the impugned Order dated 27.08.2021, whereby and whereunder, the Adjudicating Authority, had directed the Liquidator, to admit the Appellant s Claim and make the payment as per Section 53 of IBC, 2016. Appeal dismissed.

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• 2023 (3) TMI 1283
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - date of default - main case of the Appellant is that the previous Order of this Tribunal is dated 09.09.2021, whereby and whereunder six months time was granted and the same ended on 09.03.2022 and this date of 09.03.2022, cannot be taken as the Date of Default - HELD THAT:- It is seen from the record that there is correspondence dated 14.01.2022 and OTS Letter dated 27.11.2019. Apart from the fact that the issue of Limitation, is already answered in the previous Order and has attained finality, this Tribunal, is of the considered view that, it is not the Date of NPA, which is 30.09.2015, which is to be taken into consideration, keeping in view the facts of the attendant case, but rather, it is the Date of Default, which is six months, subsequent to the time given by this Tribunal, in the Order dated 09.09.2021, that is to be considered. This Tribunal, does not have any Equity Jurisdiction, and also conscious and alive to the candid fact that more than sufficient/ ample time, was extended to the Corporate Debtor. Besides that, the Debt and Default, are clearly demarcated in Para-IV of the Section 7 Application of the I B Code, 2016, in CP (IBC) 46/KOB/2022, and the available material on record establishes the same. Viewed in that perspective, this Tribunal, does not find any ground, much less a valid ground, to interfere in the well considered and reasoned order of the Adjudicating Authority / Tribunal. Appeal dismissed.

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• 2023 (3) TMI 1282
  Approval of Resolution Plan - actions of the Resolution Professional and the CoC are consistent with the NCLAT order or not - HELD THAT:- On looking into order dated 18.01.2023 passed by this Tribunal, it is clear that this Tribunal directed the Resolution Professional to initiate fresh voting process on the Resolution Plans received in the process which was to be completed within a month. The Adjudicating Authority has noticed that in pursuance of the order dated 18.01.2023, all the Resolution Plans were put before the CoC in its meeting dated 25.01.2023 and voting result was declared in its meeting dated 10.02.2023 where all plans were rejected by voting share of 89.10% and it was decided by the CoC to issue fresh RFRP. Consideration of all Resolution Plans and voting on the plans by the CoC as per direction of this Tribunal dated 18.01.2023 cannot be said to be non-compliance of order of this Tribunal. When none of the Resolution Plans was approved, the CoC under the CIRP Regulations was empowered to issue fresh RFRP. There are no error in the order of the Adjudicating Authority refusing the prayers of the Appellant to reissue RFRP and reinitiate the voting process. The present Appeal arise out of the order dated 20.02.2023 by which I.A. No. 602/2023 was rejected, by which Appellant was challenging the RFRP issued on 10.02.2023. Subsequent events which took place after 10.02.2023 are not subject matter of this Appeal and needs no consideration by this Tribunal. Learned counsel for the Appellant submitted that Resolution Professional has already filed an I.A. No. 791/2023 before the Adjudicating Authority for approval of a Resolution Plan. It is open for the Appellant to file an appropriate application/objection in I.A. No. 791/2023, the issues raised by the Appellant subsequent to 10.02.2023 need no consideration. Appeal dismissed.

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• 2023 (3) TMI 1281
  Condonation of delay for four days in filing of the appeal - Appellant was in jail and was not keeping well and admitted in the jail hospital - Sufficient cause for delay or not - whether the delay caused in filing of the appeal much beyond the period of 45 days can be condoned by this Tribunal? - HELD THAT:- Section 61(1) provides for a right of appeal to an aggrieved person. Section 61(2) provides a period of limitation 30 days for preferring an appeal in terms of Section 61(1) before the Appellate Authority. Section 61(2) proviso provides another period of 15 days which can be extended in case the Appellant satisfies the Appellate Authority about the existence of a sufficient cause for not filing the appeal in time. There is no further provision in the Code for looking into the aspect of condonation of delay beyond the period of 15 days much less 45 days. In the case of NATIONAL SPOT EXCHANGE LIMITED VERSUS MR. ANIL KOHLI, RESOLUTION PROFESSIONAL FOR DUNAR FOODS LIMITED [ 2021 (9) TMI 1156 - SUPREME COURT ] the Hon ble Supreme Court has held that considering the statutory provisions which provide that delay beyond 15 days in preferring the appeal is uncondonable, the same cannot be condoned even in exercise of powers under Article 142 of the Constitution. Thus, it is clear that there is no scope for condonation of delay beyond the period of 15 days much less 45 days as there is no window available for this Tribunal to exercise its jurisdiction for condonation of delay - application dismissed.

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• 2023 (3) TMI 1279
  Payment of Electricity dues during CIRP period - application rejected since the electricity Department cannot use the non-payment of pre-CIRP dues for disconnecting the electricity - HELD THAT:- There can t be any dispute that the Appellant/Monitoring Professional/Resolution Professional were liable to make the payment of the dues during the CIRP period, which according to Appellant stood paid. It is observed that in the event any amount is still due with regard to the electricity dues during the CIRP, it shall be open for the Department to issue bill and realise the same. It is further made clear that R-1 having not filed any claim in the CIRP regarding pre-CIRP dues, it is not entitled to recover the pre-CIRP dues and on non-payment of the said amount, to disconnect the electricity. The prayers made in the application does not require any consideration. Appeal disposed off.

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• 2023 (3) TMI 1278
  Condonation of delay of 15 days (beyond the period of entire 45 days) in filing appeal - delay caused on medical grounds - sufficient cause or not - HELD THAT:- As per Section 61(1) any person aggrieved by the order of the Adjudicating Authority under this part may file an appeal to the Appellate Tribunal. As per Section 61(2) every appeal which is to be filed under Section 61(1) has to be filed within 30 days before the Appellate Tribunal. As per 61(2) proviso the Appellate Tribunal has the jurisdiction to extend the period of 15 days if it is satisfied that there is a sufficient cause for not filing the appeal within the prescribed time - The present appeal has been filed beyond the period of 45 days i.e. a period of 30 days provided in Section 61(1) and 15 days provided in proviso to Section 61(2). Reliance placed upon two judgments of the Hon ble Supreme Court in the case of V. Nagarajan Vs. SKS Ispat and Power Limited [[ 2021 (10) TMI 941 - SUPREME COURT] ] and National Spot Exchange Limited Vs. Mr. Anil Kohli, RP for Dunar Foods Limited [[ 2021 (9) TMI 1156 - SUPREME COURT] ], where it was held that considering the statutory provisions which provide that delay beyond 15 days in preferring the appeal is uncondonable, the same cannot be condoned even in exercise of powers under Article 142 of the Constitution. Thus, even if, the Appellant has submitted that a fraud has been played, in so far as, the delay is concerned, it cannot be condoned by this Tribunal because of lack of jurisdiction - The application is thus dismissed and as a consequence of dismissal of the application for condonation of delay, the main appeal is also dismissed.

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• PMLA

• 2023 (3) TMI 1277
  Money Laundering - siphoning off of funds - sham and bogus transaction for diverting money belonging to the homebuyers - Petitioner states that he, along with other homebuyers who had invested in the said project, have not been handed over their houses as assured by Respondent No. 5 - HELD THAT:- It is trite law that the Courts should monitor investigation only in rarest or rare cases and only when it is absolutely necessary. In DUKHISHYAM BENUPANI VERSUS ARUN KUMAR BAJORIA [ 1997 (11) TMI 428 - SUPREME COURT] , the Apex Court has held It is not the function of the court to monitor investigation processes so long as such investigation does not transgress any provision of law. It must be left to the investigating agency to decide the venue, the timings and the questions and the manner of putting such questions to persons involved in such offences. A blanket order fully insulating a person from arrest would make his interrogation a mere ritual. This Court has carefully gone through the status report filed in the matter and the facts of the case remains that SFIO is investigating into the matter. All minute details have been filed in the status report - The facts further reveal that the status report of Directorate of Enforcement also reveals that the cases were registered under the PMLA and the investigation under the PMLA is going on. Therefore, this Court is of the considered opinion that Investigating Agencies are proceeding ahead with the matter to bring it to the logical conclusion. This Court, in the interest of justice, is of the opinion that the Investigating Agencies deserve a command to conclude the investigation and bring it to a logical conclusion at an early date keeping in view the totality of the circumstances of the case and especially the fact that the investigation is already underway by different agencies, this Court is not inclined to pass any further order in the matter. The Writ Petition is disposed of.

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• Service Tax

• 2023 (3) TMI 1276
  CENVAT Credit - input services - re-insurance services (Indian Business as well as Foreign Insurance) after the amendment in the definition of Input Service defined in Rule 2 (1) of the CENVAT Credit Rules w.e.f. 01.04.2011 - recovery of Rule 14 of the CENVAT Credit Rules read with proviso to Section 73 (1) and Section 73 (4) of the Finance Act. Whether the respondent was entitled to avail CENVAT Credit on re-insurance premium in respect of insurance policies issued in respect of motor vehicles including motor third party insurance? HELD THAT:- It is clear from the definition that the re-insurance is insurance of part of the insurer s risks by another insurer. Thus, what the re-insurer, in effect, does is to insure the risks of another insurer. This is qualitatively different from the risks of the policy holder covered by the insurance policy issued by the insurer. The insurer, in fact, covers the risks of the policy holder - Re-insurance is a matter between one insurance company and another, where the former insurer company indemnifies the latter against part of the loss that the latter insurance company may sustain under policy or policies issued by it. Re-insurance is, essentially, to distribute the risks assumed by an insurance company. Thus, ensuring stability to the business of the insurance company that is covered by re-insurance. There is merit in the contention that the insurance company that reinsures another insurance company covers the business risks of that insurance company; it does not cover the risk to the asset or other risks, covered by that insurance company. In M/S SHRIRAM GENERAL INSURANCE COMPANY LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [ 2020 (3) TMI 1295 - CESTAT NEW DELHI] , the learned CESTAT had considered the question whether amendment to Rule 2(l) of the CCR with effect from 01.04.2012 would affect the eligibility of the appellant insurance company to avail CENVAT Credit in respect of re-insurance services availed during the relevant period. There is no infirmity with the decision of the learned CESTAT that re-insurance services were not excluded from the definition of input service as defined under Section 2(l) of the CCR with effect from 01.04.2011. The allegation that re-insurance services were specifically excluded from the scope of input services by virtue of an amendment to Rule 2(l) of the CCR introduced with effect from 01.04.2011 that is, by virtue of the exclusion contained in Clause (B) of Rule 2(l) of the CCR is not one of the grounds clearly stated in the show cause notice. The impugned order allowing OIC s appeal is founded solely on the conclusion that re-insurance services were not excluded from the definition of input services under Rule 2(l) of the CCR during the period in question (Financial Year 2011-2012) - the question projected by the Revenue in this appeal are answered against the Revenue and in favour of OIC. The appeal is dismissed - decided against Revenue.

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• 2023 (3) TMI 1275
  Classification of services - services provided to DMRC with respect to Cost Centre A (Preliminaries and General Requirements) and Cost Centre B (Detailed Design) - classifiable under the taxable category of consulting engineer service or not - services provided by the appellant to DMRC with respect to Cost Centre D (Installation and Site Testing) and Cost Centre E (System Acceptance Test and Integrated Testing Commissioning) - classifiable under the taxable category of erection, commissioning or installation services or not - Non-payment of Service Tax - HELD THAT:- It is seen that for the period prior to 01.07.12, the service provided by the appellant would be covered within the exclusion clause of the definition of works contract service since the service provided by the appellant to DMRC is with respect to metro (which is covered within the purview of Railways). This issue was also decided in favour of the appellant in CCE, JAIPUR-I VERSUS M.M. CONSTRUCTIONS, KIRAN UDYOG (KIRAN INFRA ENGS. LTD.) AND KIRAN INFRA ENGGS., M.M. CONSTRUCTIONS, ALCATEL PORTUGAL S.S. (NOW KNOWN AS THALES PORTUGAL SA) VERSUS CCE, JAIPUR/DELHI [ 2017 (1) TMI 1385 - CESTAT, NEW DELHI] where it was held that works contract service provided to Indian Railways as well as DMRC are excluded for tax liability. For the period post 30.06.2012, the service rendered by the appellant would be covered under Serial No. 14 of the Exemption Notification dated 20.06.2012 - It is, therefore, clear that services provided by way of erection, commissioning and installation of machinery or equipment to DMRC by the appellant is covered under Serial No. 14 of the Notification dated 20.06.2012 and thus, would be exempt from payment of service tax w.e.f. 01.07.2012. It is not possible to sustain the order dated 24.10.2016 passed by the Commissioner (Appeals) - Appeal allowed - decided in favour of appellant.

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• 2023 (3) TMI 1274
  Condonation of delay in filing appeal - time limitation - appeal dismissed for the reason that it had been filed beyond the period of limitation prescribed under section 85 of the Finance Act, 1994 - HELD THAT:- On a plain reading of the provisions of section 85(3A) of the Finance Act, it is clear that any person aggrieved by any decision or order passed by the adjudicating authority may appeal to the Commissioner (Appeals) within two months from the date of receipt of the decisions or orders. The proviso, however, stipulates that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, allow it to be presented within a further period of one month. It is, therefore, clear that an appeal can be filed within two months from the date of communication of the order but if the Appeal is filed after two months but within one month after the expiry of two months, the Commissioner (Appeals) may condone the delay in filing the Appeal if he is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within two months. It, therefore, implies that if the Appeal is filed after one month after the expiry of the initial period of two months, the delay cannot be condoned. This issue was considered by the Supreme Court in Singh Enterprises [ 2007 (12) TMI 11 - SUPREME COURT ], the Supreme Court examined the provisions of section 35 of the Central Excise Act, 1944, which is para materia to the provisions of section 85 of the Finance Act, and observed that delay can be condoned in accordance with the language of the Statute which confers power on the Appellate Authority to entertain the appeal by condoning the delay only up to 30 days after expiry of 60 days which is normal period for preferring the appeal. It is for this reason that the Supreme Court observed that the Commissioner and High Court were justified in holding that there was no power to condone the delay after expiry of 30 days period. As the appeal was preferred before the Commissioner (Appeals) even beyond the extended period of one month after the expiry of the statutory period of two months, it was liable to be dismissed and was rightly dismissed by the Commissioner (Appeals). It is, therefore, not possible to accept the contention of the appellant that the delay in filing the appeal should have been condoned by the Commissioner (Appeals) - there are no error in the order passed by Commissioner (Appeals) - appeal dismissed.

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• 2023 (3) TMI 1273
  Rejection of Refund of Service Tax - tax deposited by the appellant under a mistaken belief that service tax was leviable on construction of individual independent residential houses - denial of refund of service tax for the reason that the appellant cannot claim benefit of the Exemption Notification dated June 20, 2012 for the period after July 01, 2012 - rejection of refund claim also on the ground of unjust enrichment. HELD THAT:- A Division Bench of the Tribunal in AS SIKARWAR VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE [ 2012 (11) TMI 1000 - CESTAT, NEW DELHI ] also observed that service tax can be demanded only if the building concerned has more than 12 residential units in the building and such levy will not apply in cases where one compound has many buildings, each having not more than 12 residential units. It is true that w.e.f July 01, 2012 construction of complex is a declared service, but the Exemption Notification exempts services by way of construction, erection, commissioning or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex have been exempted - the Commissioner (Appeals) was not justified in holding that the appellant would not be entitled to the benefit of the Exemption Notification. The Commissioner (Appeals) was also not justified in holding that the refund was hit by the principles of unjust enrichment. As per the work orders, service tax was to be borne by the appellant and the Commissioner (Appeals) has also found, as a fact, that the contract awarded by the Housing Board to the appellant mentions that service tax shall be borne by the contractor. The Allahabad High Court in COMMISSIONER OF CUSTOMS CENTRAL EXCISE SERVICE TAX VERSUS M/S. INDIAN FARMERS FERTILIZERS COOPERATIVE LTD. [ 2014 (7) TMI 891 - ALLAHABAD HIGH COURT ] held that a refund can be claimed by a person who has borne the incidence of tax. Even in accordance with the Exemption Notification dated June 20, 2012, 50% of the tax to be deposited by the Housing Board under the reverse charge mechanism was deducted by the Housing Board from the amount payable to the appellant. Appeal allowed.

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• Central Excise

• 2023 (3) TMI 1272
  Maintainability of Review petition - HELD THAT:- A false averment has been made that the Review Petition was only dismissed on limitation and thus that was found to be a ground itself, apart from anything else for dismissal of the application. Now, the present Review Petition has been filed in that M.A.! - On examination of the same, we see no reason whatsoever, to entertain this application in view of what has been set out. The Review petition is dismissed.

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• 2023 (3) TMI 1271
  Recovery of central excise duty or penalty - no personal guarantee for the dues of the company to the respondents - Shell company - existence of any enabling law as may allow the Central Excise Authority to recover any part of the demand from the personal assets of the petitioner - HELD THAT:- There is no denying that there is complete lack of any enabling law that may allow the Central Excise Authority to recover any part of demand raised against the Company from the personal assets of the petitioner. Merely because such demand may have remained outstanding against the Company would not entitle the revenue to proceed to recover the same from the personal assets of Director of the Company. The counter affidavit also does not indicate any fact as may allow this Court to infer that the Company-an independent juridical entity, against which dues have been determined, was a shell operated by the present petitioner for his own benefit. Unless the revenue authority had looked through the constitution and functioning of the Company in accordance with law, it may never have been enabled to claim the dues determined against the Company, from the personal assets of the present petitioner. The order dated 17.12.2021 passed by the Assistant Commissioner Central Goods and Service Tax, Division-I, Muzaffar Nagar seeking to recover the dues of the Company from the petitioner is clearly non-speaking. Despite specific objection raised by the petitioner and despite taking notice of the same, no reason has been noted in the impugned order to recover the dues of the Company from the personal assets of the petitioner. Petition allowed.

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• CST, VAT & Sales Tax

• 2023 (3) TMI 1270
  Entitlement for interest on the amount due as there is no specific provision under the VAT Act for payment of interest on refund - HELD THAT:- Admittedly, the assessment order was quashed upholding the order of this Court - the respondent was obliged to refund the amount so collected to the petitioner immediately after dismissal of SLP. Even though, there is no provisions of payment of interest on refund of amount so collected under the VAT Act, but, looking to the fact that the SLP was dismissed on 17.04.2017, the petitioner would be eligible for interest@6% per annum w.e.f. 17.04.2017 till the date of refund. In the circumstances, petition is allowed - Respondents are directed to refund the amount so collected and withheld since 2016 alongwith interest @6% per annum w.e.f. 17.04.2017 till the actual date of payment.

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• 2023 (3) TMI 1269
  Reopening of assessment under Section 12(8) of the O.S.T. Act, 1947 - rate of tax - turnover relating to payments received towards supply of goods - taxable at 4% or 13%? - works contract or transaction of sale - HELD THAT:- The law regarding contract for supply, erection and thereafter installation of machinery was entertained as contract work and no independent sale had ever been made since the principles of law have already been decided in number of cases also and the petitioner is deriving the principles from the case of COMMISSIONER OF SALES TAX, MAHARASHTRA STATE, BOMBAY VERSUS BRIMCO PLASTIC MACHINERY PRIVATE LIMITED [ 1995 (2) TMI 379 - BOMBAY HIGH COURT ] had categorically stated that the works contract executed along with supply installation etc. will be taxed as works contract exigible to Orissa Sales Tax @ 4%. In the case of STATE OF ORISSA VERSUS UGRATARA BHOJANALAYA [ 1992 (7) TMI 300 - ORISSA HIGH COURT ], it has been held that if the assessing authority initiates proceeding under Section 12(8) of the O.S.T. Act in respect of assessment which has merged with the appellate order, it would be without jurisdiction. Since the assessment for the subject-year framed under Section 12(4) has already attained finality at the second appellate level, there was no scope to initiate proceeding under Section 12(8) of the O.S.T. Act. The reopening of the case basing on the A.G. audit report has further negated the issues, as held in the case of COMMISSIONER OF INCOME-TAX VERSUS LUCAS TVS. LTD. [ 2000 (12) TMI 102 - SC ORDER ] by the apex Court that if the Assessing Officer accepts the audit report, it would be vulnerable and report of the audit party cannot make the basis to issue notice for reassessment under Section 148 of the of the I.T. Act, which is pari materia to Section 12(8) of the O.S.T. Act, 1947, since the common issues were involved on erection and installation of machinery, which constituted works contract but not for sale. Once the Full Bench of the Odisha Sales Tax Tribunal held that the petitioner being a contractor executed works which were indivisible contract and came to a conclusion that works executed by the dealer during the period were entertained as works contract and made exigible to tax @ 4%, a different view should not have been taken on the basis of the audit report submitted before the Assessing Officer and notice should not have been issued under Section 12(8) of the O.S.T. Act, 1947 for reassessment and the order of reassessment, which has been passed by him by holding that contract is divisible and, therefore, the petitioner is liable to pay higher tax @ 13%, which has been confirmed in First Appeal and Second Appeal, should not have been passed. The reason being, once the Full Bench as well as Coordinate Bench of the Tribunal has come to a definite conclusion that it should be treated as works contract and exgible to tax @ 4%, instead of 13%, thereby, the questions formulated in this revision petition are answered in favour of the petitioner and against the Revenue. The revision petition is allowed.

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• 2023 (3) TMI 1268
  Club and Association Services - applicability of doctrine of mutuality - supply of goods/services/amenities/luxuries by the club to its members - supply effected by one person to another for consideration or not - HELD THAT:- In Lotus Club [ 2018 (10) TMI 452 - KERLA HIGH COURT] , the Division Bench essentially followed an earlier division bench judgment of this Court in Trivandrum Club v. Sales Tax Officer (Luxury Tax) [ 2013 (1) TMI 606 - KERALA HIGH COURT ] that unambiguously held that under the KTL Act, the charging section recognised the club as the person liable to luxury tax. The Division Bench therefore recognised the club as the person on whom the incidence of tax fell. Since the later division bench in Lotus Club did not find any cause for doubting the propositions laid down in Trivandrum Club and dismissed the appeal preferred by Lotus Club by following the decision in Trivandrum Club, we cannot read the observations of the Division Bench in Lotus Club as having laid down the proposition that the incidence of tax under the KTL Act is on the person enjoying the luxury and not on the proprietor who provides the luxury. Similarly, the observation of the division bench of this court in M/s Madhavaraja Club [ 2013 (2) TMI 614 - KERALA HIGH COURT ] that the doctrine of mutuality is relevant only for the purposes of the Income Tax Act and is not apposite in the context of the KTL Act cannot be seen as laying down the correct law in the light of the subsequent judgment of the Supreme Court in Calcutta Club Ltd [ 2019 (10) TMI 160 - SUPREME COURT ] where the doctrine of mutuality was held applicable in the context of legislations regulating the levy of indirect taxes such as VAT and Service Tax - the principle recognised in Calcutta Club Ltd, that the absence of two distinct persons to a transaction viz. a supplier/provider of goods/ services/ amenities/ luxuries and a recipient thereof, makes the transaction a supply to oneself, which cannot be taxed under the statute, applies equally to the KTL Act which contemplates the levy of tax whenever a luxury is provided by one specified person to another. Matters remanded to the assessing authority for de novo assessment taking note of the observations in this judgment as also the applicability of the mutuality principle to the assessment of members clubs under the KVAT Act, as declared by the Supreme Court in Calcutta Club Ltd. - petition allowed by way of remand.

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• 2023 (3) TMI 1267
  Seeking grant of stay on deposit of 20% of the existing tax demand - non-maintenance of books of account properly - pattern of suppression was established - HELD THAT:- The Tribunal has considered the relevant facts and has also exercised discretion in accordance with the law. On perusing the orders impugned before it, it has granted a conditional stay, which is found to be reasonable and legal. There are no merit in the original petition, which will stand dismissed. However, as a measure of indulgence, we extend the time granted by the Tribunal for complying with the conditions imposed up to 17.04.2023. If the petitioner complies with the order of the Tribunal before 17.4.2023, it will be treated as compliance with the order of the Tribunal for the grant of stay of the recovery. The petitioner may also move the Tribunal for an expeditious hearing of the appeal.

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• 2023 (3) TMI 1266
  Condonation of delay of 2569 days in filing the appeal - reasons put forth in the application for condonation of delay before the Tribunal was that the Lawyer handling the case had suffered from serious illness and ultimately died on 6th August, 2012 - Sufficient cause for delay, present or not - HELD THAT:- The Court is of the view that what was expressed in the context of the Land Acquisition proceedings cannot ipso facto be extrapolated to proceedings like the present one which arise under the Sales Tax legislation. Here, the Assessee is fully aware of the requirement of having to file returns and proceedings within time. After all, the Petitioner is a dealer registered under the Orissa Sales Tax Act and is aware of the necessity for filing returns, for challenging demands before an Appellate Authority and of the fact of the further appeal before a Second Appellate Authority like the Tribunal. The long and short of the narration is that as far as the Petitioner/Assessee is concerned, the explanation offered for an extraordinary delay of 2569 days was not convincing at all. Since no substantial question arises from the impugned order of the Tribunal, the present revision petition is dismissed.

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