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TMI Tax Updates - e-Newsletter
March 4, 2025
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
FEMA
Service Tax
CST, VAT & Sales Tax
Indian Laws
Articles
By: DR.MARIAPPAN GOVINDARAJAN
By: Pradeep Reddy
By: YAGAY andSUN
By: DEVKUMAR KOTHARI and CA UMA KOTHARI
By: Ishita Ramani
By: Bimal jain
By: YAGAY andSUN
By: YAGAY andSUN
By: YAGAY andSUN
By: YAGAY andSUN
News
Summary: Gross GST collections in India rose by 9.1% to Rs 1.84 lakh crore in February, driven by increased domestic consumption, suggesting economic revival. Central, State, and Integrated GST contributed Rs 35,204 crore, Rs 43,704 crore, and Rs 90,870 crore respectively, with compensation cess at Rs 13,868 crore. Domestic GST revenues increased by 10.2% while imports grew by 5.4%. Refunds issued rose by 17.3% to Rs 20,889 crore. Experts suggest this growth reflects the impact of Atma Nirbhar Bharat policies and easing of working capital pressures. The fiscal deficit estimate for FY24-25 is adjusted to 4.8% due to these collections.
Summary: Gross GST collections in February rose by 9.1% to approximately Rs 1.84 lakh crore, with domestic revenues increasing by 10.2% to Rs 1.42 lakh crore and import revenues rising by 5.4% to Rs 41,702 crore. Central GST collections amounted to Rs 35,204 crore, State GST to Rs 43,704 crore, Integrated GST to Rs 90,870 crore, and compensation cess to Rs 13,868 crore. Refunds issued totaled Rs 20,889 crore, marking a 17.3% increase from the previous year. Net GST collections for February 2025 grew by 8.1% to about Rs 1.63 lakh crore.
Summary: Karuna Sharma, the estranged wife of a Maharashtra minister, claimed that senior leaders have requested the minister's resignation, which will be announced before the upcoming budget session. The minister has faced opposition pressure following the arrest of his aide in an extortion case linked to a murder. Sharma stated that the minister had previously committed to resigning if his aide was found guilty. The chargesheet in the murder case implicates the aide in extortion activities. Despite these developments, the minister indicated he would attend a state cabinet meeting.
Summary: Prime Minister Narendra Modi emphasized the swift implementation of agricultural and rural development budget proposals, urging stakeholders to focus on actionable steps rather than new deliberations. Highlighting the government's vision for a "Viksit Bharat," Modi stressed the importance of overcoming obstacles in budget execution. He noted significant achievements in agriculture, such as increased foodgrain and horticulture production, and introduced initiatives like the PM Dhan Dhanya Krishi Yojana. Modi also underscored the need for high-yielding seeds, improvements in pulses production, and advancements in the fisheries sector. He highlighted the impact of schemes like PM-KISAN and PM Matsya Sampada Yojana on rural prosperity and employment.
Summary: The Bihar Economic Survey 2024-25 reveals that the Ganga river water in Bihar is unfit for bathing due to high bacteriological contamination, primarily from sewage discharge. The Bihar State Pollution Control Board (BSPCB) monitors water quality at 34 locations and found elevated levels of total and faecal coliforms, exceeding permissible limits. While other parameters like pH, dissolved oxygen, and BOD are within acceptable ranges for aquatic life, the high coliform levels pose health risks. The BSPCB is working to improve sewage treatment plant operations and monitoring industrial effluents to address the contamination issue.
Summary: Argentina's President, facing a challenging first year, announced an impending deal with the IMF in his congressional address, highlighting economic improvements such as reduced inflation and a fiscal surplus. He proposed leaving the Mercosur trade bloc to secure a US trade agreement, aligning with US policies. Despite economic claims, his administration faces criticism for bypassing congress, using executive powers for reforms, and appointing Supreme Court justices by decree. Amidst political tension and an ongoing investigation into a cryptocurrency scandal, the upcoming midterm elections are crucial for his administration's future.
Summary: The Enforcement Directorate issued a notice to One97 Communications, the owner of Paytm, and its subsidiaries Little Internet and Nearbuy, for alleged violations of FEMA regulations related to investment transactions. These alleged breaches, totaling over Rs 611 crore, occurred between 2015 and 2019, before the companies became Paytm subsidiaries. Paytm stated that the issue is being addressed legally, with no impact on its services. The company acquired Little Internet and Nearbuy in 2017. The matter is being handled with a focus on compliance with applicable laws.
Summary: Economic affairs secretary was assigned additional responsibilities as the secretary of the Department of Revenue due to the previous revenue secretary's appointment as chairman of the Securities and Exchange Board of India (SEBI). This temporary assignment will remain in place until a permanent appointment is made. The personnel ministry confirmed the decision following the former secretary's transition to lead the capital markets regulator.
Notifications
FEMA
1.
FEMA 10(R)/(4)/2024-RB - dated
28-2-2025
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FEMA
Corrigendum - Notification No. FEMA 10 (R)/(4)/2024-RB dated 19th November 2024
GST - States
2.
08/2025-Puducherry GST (Rate) - dated
4-2-2025
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Puducherry SGST
Amendment in Notification 17/2017- Puducherry GST (Rate), dated 29th June, 2017
3.
07/2025-Puducherry GST (Rate) - dated
4-2-2025
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Puducherry SGST
Amendment in Notification No. 13/2017-Puducherry GST (Rate), dated 29th June, 2017
4.
06/2025-Puducherry GST (Rate) - dated
4-2-2025
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Puducherry SGST
Amendment in Notification No. 12/2017- Puducherry GST (Rate), dated 29th June, 2017
5.
05/2025-Puducherry GST (Rate) - dated
4-2-2025
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Puducherry SGST
Amendment in Notification No. 11/2017-Puducherry GST (Rate), dated 29th June, 2017
Law of Competition
6.
F. No. CCI/Reg.-R.R./2024-25 - dated
25-2-2025
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Competition Law
Competition Commission of India (Manner of Recovery of Monetary Penalty) Regulations, 2025
Circulars / Instructions / Orders
DGFT
1.
49/2024-25 - dated
3-3-2025
Fixation of one new Standard Input Output Norms (SIONs) at SION A-3684 under 'Chemical and Allied Product' (Product Code 'A').
Customs
2.
PUBLIC NOTICE NO. 16 / 2025 - dated
7-2-2025
Procedure to be followed to check the status of container for scanning – reg.
Highlights / Catch Notes
GST
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GST Show-Cause Notices Without Physical or Digital Signatures of Proper Officer Declared Invalid Under Rule 142
Case-Laws - HC : HC ruled that GST show-cause notices and final orders lacking physical or digital signatures of the Proper Officer are legally invalid. The court emphasized that Rule 142 of GST Rules mandates prescribed Forms requiring signatures, making it a statutory requirement rather than optional. The presence of signature fields in DRC-01 and DRC-07 forms establishes this as a mandatory element. Section 160 of GST Act regarding procedural defects does not protect unsigned notices. The court aligned with precedents from other High Courts and IT Act provisions requiring proper authentication of electronic records. Consequently, the impugned notices and orders without Proper Officer signatures were held invalid and the petition was allowed.
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Bank Account Provisional Attachment Under GST Section 83 Upheld After Hearing Objections and Passing Reasoned Order
Case-Laws - HC : HC dismissed writ petition challenging provisional bank account attachment. Petitioner was granted hearing opportunity per earlier court directive and filed objections, which authorities rejected on October 30, 2024. Show cause notice under Sec. 74 was adjudicated with final order issued. Provisional attachment justified under Sec. 83 for one year until July 7, 2025. Court held petitioner has statutory alternative remedy to file appeal against Sec. 74 order. Petition dismissed with liberty to approach appellate authority according to law. Principles of natural justice not violated as reasoned order was passed after hearing petitioner's objections.
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IGST Refund Rejection Order Overturned: Exporter Not Given Fair Chance to Explain Data Mismatch Under Rule 96(4)
Case-Laws - HC : HC set aside refund rejection order under GST RFD-06 concerning export transactions with IGST payment. Petitioner, a manufacturer-exporter, made zero-rated supplies under Section 16 of IGST Act, 2017, through invoices dated April 17 and June 3, 2023, with corresponding shipping bills. Refund was withheld under Rule 96(4) due to data mismatch between shipping bills and GSTR-1. Court found violation of natural justice principles as petitioner wasn't given adequate opportunity to respond to show cause notice. Emphasizing benefit of doubt doctrine, HC invalidated refund rejection order dated September 25, 2024, directing fresh consideration of refund claim after providing proper hearing opportunity.
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Tax Appeal Filed on 90th Day Counted from Email Date Cannot Be Rejected When Original Order Was Two Days Earlier
Case-Laws - HC : HC overturned dismissal of tax appeal that was rejected due to two-day filing delay. Appeal was filed on 90th day from email communication dated 22.12.2023 of original order dated 20.12.2023. Under Section 107 of KGST Act 2017, three-month appeal period runs from order date or communication date. Appellant had filed rectification application with delay condonation request supported by affidavit within condonable period. Second respondent failed to judiciously exercise powers under Section 107(2) to consider delay condonation. Court directed appeal to be heard on merits, finding technical dismissal unjustified.
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GST Show Cause Notice Challenges Must Be First Addressed Before Adjudicating Authority Under Section 74
Case-Laws - HC : HC affirmed that challenges to show cause notice under Section 74 of CGST/SGST Acts should be addressed before Adjudicating Authority. The petitioner's contentions regarding inadequate consideration of their submissions in Audit Report and procedural objections to Section 74 proceedings are matters within adjudicating authority's jurisdiction. Court found no compelling reason to intervene at show cause notice stage, noting that adjudicating authority is competent to evaluate all objections including audit report findings and applicability of Section 74. Alternative remedy being available, writ petition was disposed of directing petitioner to pursue remedies before statutory authority.
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E-way Bill Expiry During Stock Transfer Not Grounds for Detention When No Tax Evasion Intent Proven
Case-Laws - HC : HC ruled in favor of petitioner regarding detained goods due to expired e-way bill during intra-state stock transfer. While authorities detained goods citing e-way bill expiration, petitioner demonstrated goods were part of legitimate stock transfer between units, not a sale transaction. Driver's delay was documented through contemporaneous letter explaining personal emergency. Court found no evidence of tax evasion intent, following SC precedent in Satyam Shivam Papers. Detention, seizure, and penalty were deemed unjustified as basic compliance requirements for intra-state transfer were met despite procedural lapse. HC emphasized substance over form, noting absence of fraudulent intent or revenue loss. Petition allowed with costs.
Income Tax
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Income Tax Reassessment Under Section 147 Quashed Due to No Fresh Evidence and Violation of Natural Justice Principles
Case-Laws - HC : HC invalidated reassessment proceedings under s.147 for AY 2014-15 initiated beyond four years. AO failed to demonstrate any failure by assessee to fully disclose material facts necessary for assessment. Reopening was based on existing records already furnished during original assessment. No fresh tangible material existed to form independent opinion for reopening. Mandatory procedures under s.144B were violated as objections to reopening notice were not addressed. AO passed final order within one day of receiving assessee's reply to draft assessment order without providing reasonable opportunity of hearing. Order declared void for violating natural justice principles and jurisdictional requirements under first proviso to s.147.
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Secured Creditor's Rights Prevail Over Tax Claims: Bank's Hypothecation Agreement Trumps Income Tax Department's Prohibitory Order
Case-Laws - HC : HC held that secured creditor's rights take precedence over government tax dues, affirming a fundamental banking law principle. The court validated the auction sale of two helicopters to petitioner, dismissing income tax department's objections. The hypothecation agreement predated the tax department's prohibitory order, establishing secured creditor's priority rights. Tax authorities' failure to object despite prior auction notice (dated 06.09.2023) constituted tacit acceptance. Court emphasized that attachment order cannot impede auction sale when secured creditor's rights are superior. The sequential requirement of "attachment and sale" under Section 222(1)(a) remained unfulfilled by tax authorities who only issued prohibitory order without proceeding to sale. Petitions allowed, confirming petitioner's rightful acquisition through auction.
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Walmart Salary Reimbursements to Seconded Employees Exempt from Additional TDS Under Triple Test Control Principle
Case-Laws - HC : HC ruled in favor of assessee regarding TDS deductions on salary reimbursements made to Walmart USA for seconded employees. The court rejected Revenue's argument about lack of documentation demonstrating services rendered and training purposes. The court applied the Triple Test (Direct Control, Supervision, Direction) from ABBEY BUSINESS precedent to establish employer-employee relationship. The arrangement was deemed valid despite lacking traditional employment indicators, acknowledging modern international business practices. The court accepted assessee's position that TDS was properly deducted from salaries before reimbursement to Walmart, noting this fact was undisputed by Revenue. The reimbursement payments were held to be legitimate salary transactions, not technical service fees requiring separate TDS treatment.
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Income Tax Section 119(1): Delay in Reassessment Condoned After Taxpayer Waives Refund Rights Through Authorized Memo
Case-Laws - HC : HC allowed petitions challenging CBDT's rejection of applications under Section 119(1) of Income Tax Act for condonation of delay in reassessment. Following CG Power precedent, Court found rejection unsustainable both legally and factually. Petitioner voluntarily waived rights to potential tax refunds through authorized memo dated 15.02.2024, demonstrating commitment to fair assessment without financial implications for Revenue. Court confirmed waiver's validity through Power of Attorney dated 22.11.2013, covering refunds post-adjustment of tax liabilities for AY 2002-03 to 2008-09. Petition granted under Article 226, permitting reassessment with condition of no refund claims, ensuring Revenue faces no additional burden.
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Cooperative Bank Wins Appeal: No TDS Required on Interest Payments to Co-op Societies Under Section 194A(3)(v)
Case-Laws - AT : Cooperative bank appealed against TDS obligations on interest payments to cooperative societies and a temple trust. ITAT held that under Sec 194A(3)(v), cooperative banks are exempt from TDS deduction on interest payments to other cooperative societies, regardless of membership status. The exemption applies broadly to inter-cooperative society transactions. For interest paid to Jagan Nath Temple, ITAT ruled no TDS requirement exists under Sec 194A(3)(iii)(f) as the temple qualifies as a government-financed entity per notification 3489 dated 22/10/1970. The tribunal emphasized that the statutory exemption is explicit and unambiguous, requiring no additional conditions. Appeal allowed, affirming appellant's position on non-deduction of TDS.
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Reassessment Under Section 147 Invalid: AO's Mechanical Reliance on Portal Data Without Independent Verification Fails Legal Test
Case-Laws - HC : HC invalidated reassessment proceedings initiated under s.147 for AY 2014-15. AO's reliance solely on insight portal information regarding transactions with ASE Capital Markets Ltd was deemed mechanical and without independent application of mind. The assessee had fully disclosed F&O losses of Rs.41,56,218 in original return, accepted under s.143(3). AO failed to explain why only Rs.27,61,650 was considered non-genuine. No tangible material or verification supported the reopening, and AO's belief was based on borrowed satisfaction without considering existing assessment records. Court found no failure by assessee to disclose material facts, making reopening after four years unjustified as it merely reflected change of opinion.
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Long Term Capital Gains from Penny Stock Trading Held Genuine Under Section 68 as Payment Trail Documented
Case-Laws - AT : ITAT reversed addition made by AO under s.68 regarding Long Term Capital Gains from penny stock transactions. Assessee traded shares of KPL through recognized stock exchange with documented payment trails via account payee cheques. Following precedents from Gujarat HC, tribunal found no evidence of price manipulation or cash kickbacks. Genuineness of transactions established as assessee had no control over share prices, payments were properly documented through banking channels, and trades executed through official exchange. The alleged unexplained cash credits treated as legitimate LTCG exempt under s.10(38), resulting in deletion of additions made by AO. Appeal allowed in assessee's favor.
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Tax Exemption Under Section 54B Restored After Email Notice Mix-up Between Taxpayer and Chartered Accountant
Case-Laws - AT : ITAT addressed disallowance of exemption under s54B where appellant failed to submit required documentation to CIT(A)/NFAC despite multiple notices. While notices were sent to appellant's CA's email, who failed to inform appellant, resulting in appeal dismissal for non-prosecution. ITAT, considering overall circumstances and interests of justice, remanded matter back to CIT(A)/NFAC with directions to grant appellant final opportunity to substantiate claim with requisite details. CIT(A)/NFAC directed to adjudicate based on facts and law after appellant's submission. Appeal allowed for statistical purposes, contingent on appellant's compliance with submission requirements on appointed date.
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Reassessment Under Section 147/148 Invalidated Due to Mechanical Approval and Lack of Actual Land Transfer Evidence
Case-Laws - AT : ITAT invalidated reassessment proceedings due to procedural defects in approval under s.147/148. The mandatory prior approval for reopening was found mechanical and lacked proper application of mind, being granted without adequate review of reasons to believe. Regarding sale consideration addition, CIT(A)'s finding that land transfer did not occur during relevant assessment year within meaning of s.2(47) was upheld, as AO failed to demonstrate actual transfer. ITAT found no merit in revenue's contentions on both grounds - procedural invalidity of reopening and timing of land transfer. Revenue's appeal dismissed, nullifying reassessment and associated additions.
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Additions Under Section 153A Search Assessment Invalid Without Incriminating Material Found During Search Operations
Case-Laws - AT : ITAT ruled against additions made under section 153A for unsecured loans (s.68) and interest expense disallowance (s.37(1)) in a concluded assessment year. Following SC precedent in Abhisar Buildwell and Delhi HC in Pavitra Realcon, the Tribunal held that absent incriminating material discovered during search under s.132, AO lacks jurisdiction to reassess completed assessments. A statement under s.132(4) alone, without corroborating search evidence, is insufficient basis for assessment. Since the year in question was an unabated assessment with no incriminating evidence found during search, the additions were invalidated and ruled in assessee's favor.
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Trust's Hostel Operations Generating Rs 6.21 Crore Surplus Disqualifies Section 10(23C)(vi) Educational Institution Tax Exemption
Case-Laws - AT : ITAT reversed CIT(A)'s decision and upheld AO's denial of exemption under section 10(23C)(vi). While providing education and integrated hostel facilities qualifies as charitable activity, operating hostels separately on commercial basis constitutes business activity. Following Supreme Court's precedent in Ahmedabad Urban Development Authority case, ITAT held that charging substantially higher fees over cost amounts to "trade, commerce or business." The Trust's hostel operations generating surplus of Rs. 6.21 crores exceeded mere cost recovery with nominal markup. Since commercial activities were not incidental to educational purposes and exceeded 20% threshold under section 2(15), the Trust failed to meet "solely educational purposes" requirement. Revenue's appeal allowed.
Customs
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Duty Drawback Cannot Be Denied Based on Non-Duty or Concessional Duty Paid Inputs for Export Manufacturing
Circulars : CBIC clarified that All Industry Rate (AIR) of duty drawback cannot be denied or reduced for export goods manufactured using partially non-duty paid or concessionally duty paid inputs. The rates are determined based on weighted average duties paid on inputs across a representative cross-section of exporters. Field formations are not authorized to investigate whether exempted inputs were used in manufacturing export goods. This reaffirms Board Circular No. 19/2005-Customs position that AIR calculation considers average duty patterns, making individual input duty status irrelevant for drawback eligibility. The instruction ensures uniform application of drawback rules across customs jurisdictions.
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Customs System Update: Officers Can Now Modify Quantity and Charges During Final Assessment of Bulk Cargo Bills
Circulars : JNCH customs authority has implemented system modifications allowing amendments during final assessment of bulk and liquid bulk cargo bills of entry. The update enables customs officers to modify quantity, invoice number, freight charges, and miscellaneous charges at the final assessment stage, in addition to the previously available unit price amendment option. The system automatically recalculates assessable/invoice value based on amended unit price and quantity. This administrative change addresses stakeholder concerns regarding the inability to adjust invoice values and quantities in the EDI system according to final invoices and analysis certificates. Implementation is effective immediately with technical support available through designated channels.
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Customs Updates Tariff Values: Gold at $927/10g, Palm Oil at $1173/MT Under Section 14(2) of Customs Act
Notifications : CBIC exercised powers under Section 14(2) of Customs Act 1962 to revise tariff values for specified commodities. New values effective March 1, 2025: Crude Palm Oil at USD 1173/MT, RBD Palm Oil at USD 1189/MT, Brass Scrap at USD 5511/MT. For precious metals, gold tariff value set at USD 927 per 10 grams, silver at USD 1025 per kilogram. Special provisions apply to gold bars with manufacturer's serial numbers and gold coins with 99.5%+ purity. Areca nuts maintain previous value at USD 8140/MT. Amendment modifies earlier notification No. 36/2001-Customs (N.T.) through substitution of revised tariff tables.
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Cement Importer Denied Duty Concession Under N/N. 4/2006-CE for Violating Direct Purchase and Usage Requirements
Case-Laws - HC : HC reversed CESTAT's ruling on concessional duty benefits for cement imports. Importer violated notification conditions by purchasing cement through high-sea trade from non-manufacturer instead of directly from manufacturer, and using it for manufacturing hollow bricks rather than institutional/industrial purposes. The imported cement in 50kg retail packs failed to meet N/N. 4/2006-CE requirements. HC found CESTAT's order defective for ignoring factual evidence from Bills of Entry and importer's admission. The court emphasized that mere manufacturer details in Bill of Entry were insufficient for duty concession, as notification mandated direct manufacturer purchase and specified manufacturing mode/capacity requirements. Appeal allowed, favoring Department's position on duty assessment.
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Customs Exemption Under Notification 12/2012 Denied for Coke Breeze Imports Due to Product Classification Differences
Case-Laws - AT : CESTAT denied exemption under Notification No.12/2012-Cus for imported Coke Breeze, upholding that metallurgical coke and coke breeze are distinct products with different characteristics and applications. Following precedent in Company A case, the Tribunal emphasized that coke breeze, being a byproduct of coke manufacture, cannot be equated with metallurgical coke used in blast furnaces. The significant price difference and distinct product characteristics preclude extending the notification benefits meant for metallurgical coke to coke breeze imports. The interpretation of exemption notification was deemed irrelevant given the fundamental product differences. Appeal dismissed, confirming differential treatment for customs duty purposes.
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Importer Exempted from Duty on Contaminated Shell Shrimps Despite Export Failure Under Rule 8 and Notification 32/1997
Case-Laws - AT : CESTAT ruled in favor of appellant regarding import of contaminated Shell on Shrimps under Notification 32/1997-Cus. Though goods were found unsuitable for export due to Nitrofuran Metabolite AHD contamination, appellant had demonstrated compliance with Rule 8 of Customs Rules by subjecting goods to job work with clear export intent. Following precedent from BPL Display Devices Ltd case, tribunal held that customs duty cannot be demanded when goods become unfit due to unforeseen circumstances, provided importer had no intention to divert goods for other purposes. Appellant's request for goods destruction rather than disposal evidenced genuine export intent. Appeal allowed with no duty liability imposed.
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Customs Duty Refund Claim Valid When Filed Within Limitation Period After Final Assessment Under Section 27 and 18
Case-Laws - AT : CESTAT determined refund claim's limitation period starts from final adjudication date (13.10.2015), not provisional assessment date. Refund application filed on 30.11.2015 was within limitation under Section 27 of Customs Act. Regarding unjust enrichment, Chartered Accountant's certificate validly demonstrated duty burden was not passed to customers. Lower authorities erred in dismissing CA certificate without cogent reasons. Appellant's accounting records showed excess duty paid on raw materials was not incorporated into final product costs. CESTAT held appellant entitled to refund as requirements under Section 18 of Customs Act were satisfied and unjust enrichment doctrine not applicable. Appeal allowed with consequential relief.
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Customs Duty Reclassification Order Invalid as Re-Test Report Not Shared with Importer Under Section 28 Requirements
Case-Laws - AT : CESTAT allowed appeal against customs duty reclassification based on re-testing of imported fabric samples. The authorities failed to comply with Section 28 of Customs Act requirements by not providing appellants with the Central Revenue Control Laboratory's re-test report that formed the basis for reclassification from non-textured to textured polyester filament yarn. Initial clearance was granted after examination and testing by Textiles Committee Laboratory. The demand for differential duty was invalidated due to violation of natural justice principles, as appellant-importer was neither furnished with the re-test report nor given reasonable opportunity to present their case before the order was passed.
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Extra Duty Deposit Distinct From Customs Duty: Security Deposit Not Subject To Section 27 Refund Time Limitations
Case-Laws - HC : HC held that Extra Duty Deposit (EDD) does not constitute customs duty under Section 27 of Customs Act, 1962, but rather functions as a security deposit as clarified in Circular No.5/2016-Customs. EDD was collected to secure potential customs duty liability due to alleged under-declaration concerns. The limitation period prescribed under Section 27 for customs duty refund claims is not applicable to EDD refunds. The court rejected respondent's stance that refund application was time-barred, noting that EDD remained distinct from duty determined by Special Valuation Branch. The impugned order's reliance on limitation period was found legally untenable, leading to petition's allowance.
DGFT
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DGFT Allows E-Invoice Verification for Advance Authorization Closures When Export Details Exceed Character Limits Under Para 4.42(iii)
Circulars : DGFT addressed technical limitations affecting Advance Authorization (AA) closures where shipping bill description fields cannot fully capture export item details exceeding 120 characters, causing compliance issues under Para 4.42(iii) of FTP 2023. Regional Authorities are now permitted to verify complete export item descriptions using self-attested GST system generated e-invoices for AA redemption/EODC processing. Exporters must upload these e-invoices alongside other mandatory redemption documentation. This administrative remedy facilitates smoother AA closures while maintaining regulatory oversight through alternative documentary evidence.
FEMA
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Foreign Exchange Tribunal Can Impose FERA Penalties But Cannot Pronounce 'Guilty' Verdict As It Lacks Criminal Jurisdiction
Case-Laws - HC : HC affirmed that proceedings under FERA are adjudicatory rather than criminal in nature. While the Appellate Tribunal for Foreign Exchange, acting as a quasi-judicial body, has authority to impose penalties for FERA violations, it lacks jurisdiction to pronounce parties "guilty" of offenses. Such determinations of guilt remain exclusively within the purview of competent courts. The tribunal's penalty against appellants was upheld, but the term "guilty" in the 02.06.2016 order was deemed redacted, as pronouncements of guilt carry significant legal implications that exceed the tribunal's administrative and adjudicatory scope.
IBC
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Resolution Plan with 86.67% CoC Approval Upholds 13.44% Payout to Dissenting Creditors Under Section 30(2)(b)
Case-Laws - AT : NCLAT affirmed the approval of a resolution plan where unsecured dissenting financial creditors received Rs.1.5 Crore against their admitted claim of Rs.10.94 Crore, representing 13.44% vote share. The plan secured 86.67% CoC approval within the 330-day CIRP period. The Tribunal held that the payout complied with Section 30(2)(b) of IBC, rejecting appellant's contention regarding homebuyers receiving units without haircuts. The fact that Adjudicating Authority's approval came on 14.05.2024, after the CIRP period, was deemed immaterial since the plan was approved and filed within the statutory timeframe. The NCLAT emphasized its limited jurisdiction to interfere with resolution plans and dismissed the appeal, finding no violation of statutory requirements.
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Incorrect Form 18 Declaration During Company-to-LLP Conversion Not Perjury Under IPC Section 199, NCLT Lacks Authority
Case-Laws - AT : NCLAT overturned NCLT's perjury conviction and fine against appellants for incorrect Form 18 declaration to ROC during company-to-LLP conversion. While appellants erroneously stated no pending proceedings existed when CIRP was filed, the tribunal held this inadvertent misstatement before ROC did not constitute perjury under IPC s.199. NCLT lacked jurisdiction to prosecute under s.340 CrPC without establishing it was "expedient in the interest of justice." Furthermore, per IBC s.236(1), NCLT had no authority to convict for offenses under IBC Chapter VII Part II, as jurisdiction lies with Special Court under Companies Act, 2013. Fine and conviction set aside, appeal allowed.
Indian Laws
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Government Must Pay Interest on E-Stamp Paper Refund as Compensation for Withholding Legitimate Money from Citizens
Case-Laws - SC : SC held that interest must be paid on refund of stamp duty for lost e-stamp paper, applying the principle that a person deprived of legitimate use of money deserves compensation. The court rejected a narrow statutory interpretation, ruling that interest represents normal capital accretion rather than penalty. Following restitution doctrine and precedents from Secretary, Irrigation Department v. G.C. Roy, the court determined that compensation for deprivation of money use is justified, whether termed as interest, compensation, or damages. The appellant was awarded interest on Rs. 28,10,000, considering the extended retention period and necessity of court intervention. Interest rate was set at 8% from deposit date until actual refund.
SEBI
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SEBI Revises Nomination Rules for Securities Market: Three-Phase Implementation Allows Online Opt-out and Multiple Nominees
Circulars : SEBI has issued amendments and clarifications to the January 2025 circular on nomination facilities in Indian securities market, implementing changes in three phases starting March 1, 2025. Key modifications include allowing surviving joint holders to update details during/after transmission without mandatory KYC reverification, permitting single holders to opt-out of nomination online/offline, enabling nominees to operate accounts during investor's incapacitation, and clarifying transmission procedures. The circular introduces pro-rata distribution among multiple nominees with odd lots going to first nominee. Implementation timeline spans Phase I (March 2025), Phase II (June 2025), and Phase III (September 2025). AMCs and Depositories must report readiness status to SEBI by specified dates in 2025. The amendments aim to streamline nomination processes while protecting investor interests.
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NBFCs and HFCs Now Qualified Buyers Under SARFAESI Act With Restrictions on Defaulting Promoters' Asset Access
Notifications : SEBI issued notification specifying NBFCs and HFCs regulated by RBI as qualified buyers under SARFAESI Act, 2002. The notification supersedes previous directive from March 2008. Key conditions mandate that defaulting promoters or related parties cannot access secured assets through security receipts, either directly or indirectly. NBFCs and HFCs must also comply with additional conditions as prescribed by RBI. This notification expands the scope of qualified buyers while implementing safeguards against potential misuse by defaulters, strengthening the securitization and asset reconstruction framework under SARFAESI Act.
Service Tax
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CENVAT Credit Allowed on Health Services and PR for Brand Enhancement; Denied for Interior Decor and Photography
Case-Laws - AT : CESTAT partially allowed appeal concerning CENVAT credit eligibility on various input services. Health & fitness services used for employee assignments and public relations services for brand enhancement qualified as eligible input services. Interior decorator services for guesthouse renovation (Rs.6,93,107/-), packaging services for employee goods transport, photography, and ship management services were deemed ineligible due to insufficient evidence linking them to output services. Rent-a-cab services prior to 01.04.2011 qualified for CENVAT credit per CBIC Circular 943/4/2011-CX. Tribunal rejected denial of credit based on premises address exclusion from registration certificate, considering it a procedural lapse. Event Management, Insurance, and GTA services demands were set aside.
Case Laws:
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GST
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2025 (3) TMI 111
Legality, validity and propriety of the show-cause notices and final orders which admittedly do not contain physical or digital signatures of the Proper Officer - HELD THAT:- There is no head on between Sections 73/74 of the GST Act and DRC-01 and DRC-07 and hence we find no merit in the contention of Sri Swaroop Oorilla that since Sections 73/74 of the GST Act are silent about the requirement of digital/physical signature any such requirement in DRC-01 and DRC-07 can be ignored. This is trite that Rules are introduced to translate the scheme of the Act into reality. When there is no difference or head on between the Sections and the Rules/Forms, the Rules supplement the Sections and do not supplant it. In this view of the matter, it is constrained to hold that once there exists a specific column earmarked for the signature, the said requirement becomes a statutory requirement. For this reason, the argument that taxation statute must be strictly interpreted based on the judgment of Supreme Court in Dilip Kumar Co [ 2018 (7) TMI 1826 - SUPREME COURT (LB)] is of no assistance to the respondents. Instead it supports the contention of the petitioners. A careful reading of sub-section (1) of Section 160 of the GST Act makes it clear that the assessment, re-assessment, adjudication, review, revision, appeal, rectification, notice, summons and other proceedings will not become invalid for any mistake, defect or omission if in substance and same is in conformity with and according to the intent, purpose and requirement of this Act or any existing law. As noticed above, the requirement of the GST Rules read with Forms is to put the signature on DRC-01 and DRC-07 at specified place. Thus, sub-section (1) does not help the respondents in any way. A minute reading of this Rule makes it clear like noonday that the Rule mandates and makes it imperative for the Proper Officer to serve the notice/order in the prescribed Forms. At the cost of repetition, the requirement of the Form is to provide signature, name, designation, jurisdiction and address - in every sub-rule of Rule 142 of the GST Rules, the law makers have used the word shall for issuance of Statutory Forms which makes the issuance of Forms in prescribed form as mandatory. Since prescribed Forms as per Rule 142 need signature, such requirement must be held to be mandatory. In absence of signature, notice/order cannot be held to be a valid notice/order. As analyzed, in view of judgment of Supreme Court in M/s. M.M. Rubber and Company [ 1991 (9) TMI 71 - SUPREME COURT] and Kailasho Devi Burman [ 1996 (2) TMI 2 - SUPREME COURT] , such notices/orders issued without signatures are held to be invalid, the same will not get immunity in the teeth of sub-sections (1) and (2) of Section 160 of the GST Act. Chapter-II of the IT Act deals with digital signature and electronic signature. The authentification of electronic records is based on fulfillment of requirement of Sections 3 and 5 and we find substance in the argument of Sri Karan Talwar that apart from GST Act, GST Rules and Statutory Forms prescribed thereunder and Sections 3 of the IT Act, make it obligatory for the Proper Officer to put his signature. Section 3A of the IT Act on which Sri Swaroop Oorilla placed reliance does not insulate the notice/order if it does not contain signature of Proper Officer. From the view point of comity also, it is inclined to interpret the provisions of the GST Act, GST Rules and Statutory Forms prescribed thereunder in the same manner different High Courts have considered it. More-so, when Revenue could not make out any exception based on aspects of per incuriam, sub silentio, obiter dicta or concession, etc. The scheme of the GST Act, Rules and Statutory Forms prescribed thereunder considred and, judgment, the impugned show cause notices and the orders which are not pregnant with the signature of the Proper Officer cannot sustain judicial scrutiny. Conclusion - The absence of a signature renders the notices/orders invalid. Petition allowed.
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2025 (3) TMI 110
Challenge to order passed by the respondent under Section 74 of the State Goods and Services Tax Act, 2017 - HELD THAT:- A bare look at the show cause notice dated 12.10.2022 reveals that only indication made is that for the period in question, the difference between GST DRC-01 and GST-3B was Rs. 13,55,943.00/- and that no response to notice under Section 61 of the Act was given and, therefore, the petitioner must deposit a sum of Rs. 13,55,943.00/- as tax along with interest and penalty. The petitioner deposited the tax, whereafter the order impugned under Section 74 of the Act has been passed demanding interest and penalty. For invoking Section 74 of the Act, the allegations pertaining to suppression etc. are sine qua non in absence thereof, the jurisdiction under Section 74 of the Act itself cannot be invoked by the authorities. The order impugned dated 16.03.2024 passed by respondent no. 2 demanding interest and penalty from the petitioner invoking provisions of Section 74 of the Act cannot be invoked - Petition allowed.
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2025 (3) TMI 109
Challenge to order whereby the respondents have passed order in original and raised demand - an interim order was granted by this Court - HELD THAT:- The Court, until further orders, has stayed payment of GST for grant of mining lease/royalty by the petitioner. In view of the above, it cannot be said that the respondents were not justified in passing the order of assessment and raising the demand as otherwise they are bound to follow the direction, i.e. not to enforce the demand. The petitioner was not required to question the validity of the assessment order and the demand notice by filing a separate writ petition - petition disposed off.
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2025 (3) TMI 108
Provisional attachment of the bank account of the petitioner - reasoned order or not - violation of principles of natural justice - HELD THAT:- In the present case, subsequent to the provisional attachment, the petitioner had approached this Court and the coordinate Bench of this Court had directed the respondent authorities to consider the objection filed by the petitioner and grant an opportunity of hearing. The petitioner availed of the said opportunity and filed his objections and was heard by the respondents authorities, which culminated subsequently in the order dated October 30, 2024 wherein the objections of the petitioner were rejected by the respondent authorities. Furthermore, in the present the case show cause notice issued under Section 74 of the Act has also been adjudicated upon and a final order passed under Section 74 of the Act. The objections of the petitioner were dealt with by the respondent authorities and the provisional attachment was justified under Section 83 of the Act for a period of one year. The said period would only come to an end on July 7, 2025. Conclusion - Since show cause notice has already been adjudicated upon and order was passed under Section 74 of the Act, the petitioner has the statutory alternative remedy under the law to file an appeal against the same. This writ petition is dismissed with liberty granted to the petitioner to approach the appellate authority in accordance with law.
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2025 (3) TMI 107
Detention and seizure of goods due to the expiration of the e-way bill during intra-state stock transfer - HELD THAT:- Admittedly, the goods were in transit when the same was intercepted on the ground that validity of e-way bill accompanying with the goods, was expired. The petitioner at the time of detention / seizure has filed a letter dated 16.3.2021 stating therein that due to mistake of the driver of the vehicle, e-way bill was expired without knowledge of the petitioner. In the letter it is specifically stated that the goods in question was despatched to Aligarh as intra-state stock transfer from one unit to another unit. Since the goods in transit were not sold goods but intra-state stock transfer, therefore, no adverse view should be drawn. Further, the mistake of the driver has been disbelieved only on the ground that at the time of making statement, the driver did not make statement that he visited his village due to illness of his child and stayed there for three days but on the very first instance, letter dated 16.3.2021 was filed before the respondent authority stating therein that due to mistake of the driver, the validity of e-way bill was expired and without there being any intimation to the petitioner, the driver of the vehicle has started his onward journey after expiry of e-way bill. The said fact has not been disbelieved at any stage. Hon ble the Apex Court in the case of Assistant Commissioner (ST) others Vs. M/s Satyam Shivam Papers Private Limited [ 2022 (1) TMI 954 - SC ORDER ] has held that it has precisely been found that there was no intent on the part of the writ petitioners to evade tax and rather, the goods in question could not be taken to the destination within time for the reasons beyond the control of the writ petitioners. . Conclusion - The detention and seizure of goods, as well as the penalty imposed, were not justified in the absence of evidence of tax evasion and compliance with intra-state transfer regulations. Petition allowed.
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2025 (3) TMI 106
Rejection of refund claim - mismatch of invoices in GSTR-2A - HELD THAT:- Despite time having been granted on earlier occasions, the petitioner has failed to file a rejoinder affidavit. There are no justification to continue the writ petition on our board and dispose of the same by permitting the writ petitioner to file its response to the stand as taken by the respondents and which stands reflected in Paragraphs 15 and 16 of the counter affidavit as reproduced. The said response may be filed within a period of three weeks from today. Petition disposed off.
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2025 (3) TMI 105
Challenge to refund rejection order issued in Form GST RFD-06 - mismatch between the data furnished by the exporter of goods in shipping bill and those furnished in the statement of outward supply in Form GSTR 1 - lack of opportunity to respond to the SCN - violation of principles of natural justice - HELD THAT:- It is an admitted position that the petitioners are engaged in the business of manufacture and exports, and in usual course had exported certain goods. The petitioners claim to have exported the goods with payment of integrated goods and service tax under two several invoices dated 17th April, 2023 and 3rd June, 2023 along with two corresponding shipping bills dated 18th April, 2023 and 5th June, 2023. According to the petitioners, it had exported the goods in compliance with the provisions for making zero rated supply as prescribed in Section 16 of the IGST Act, 2017. Since the petitioners claim to have exported the goods along with duty, the petitioners were expecting that upon furnishing of the return filed by the petitioners in Form GSTR-3B, the petitioners bank account would be credited with the integrated goods and service tax already paid in respect of the shipping bill to the petitioners bank account. In the instant case, records would reveal that the petitioners refund was not effected and the same was withheld in terms of Rule 96 (4) of the said Rules. The benefit of doubt should be given to the petitioners, especially when the petitioners may not have got appropriate opportunity to respond to the show cause - Accordingly, on the ground of violation of principle of natural justice the refund rejection order dated 25th September, 2024 is set aside. Conclusion - The petitioners should be given the benefit of doubt, especially considering the lack of opportunity to respond to the show cause. Petition disposed off.
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2025 (3) TMI 104
Dismissa of appeal solely on the ground of a two-day delay in filing the appeal - HELD THAT:- Admittedly, order under appeal was passed on 20.12.2023 which was communicated to the petitioner through e-mail on 22.12.2023. In terms of Section 169 of 2017 Act, one of the mode of communication is by e-mail. From the date of communication, appeal is filed on 90th day. Section 107 of KGST Act, 2017 provides three months time to file appeal from the date of order or from the date of communication. Even otherwise, the petitioner had filed rectification application and along with rectification application, petitioner had also filed application along with affidavit, praying to condone the delay, if any in preferring the appeal. If such rectification application along with application for condonation of delay is filed, second respondent ought to have exercised its power under Section 107 (2) of 2017 Act, judiciously since the appeal was presented within the condonable period. The respondent No. 2 failed to apply its mind judiciously and failed to take a decision in terms of Section 107 (2) of 2017 Act. Conclusion - The dismissal of the appeal based on a minor delay was unjustified and it is directed that the second respondent shall hear the appeal on its merits. Petition disposed off.
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2025 (3) TMI 103
Challenge to order made by the First Appellate Authority - non-constitution of Tribunal - HELD THAT:- The submission made on behalf of petitioner is accepted regarding corresponding notification reducing requirement of the deposit to 10% of disputed tax for impugned first appellate order to remain stayed. The deposit be made accordingly. Petition disposed off.
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2025 (3) TMI 102
Failure on the part of the respondents to provide a copy of the various documents as well as electronic articles which had been seized from the petitioner and are detailed in the panchnama which has been placed on the record - HELD THAT:- It is informed that some of the documents which had been seized were provided to the petitioner only as late as 20 January 2025 and that the personal hearing itself has been concluded yesterday. In view of the above, it is alleged that the petitioner was unable to furnish an effective response to the allegations leveled. It is inclined to direct the respondents to provide copies of all material which had been seized and is noticed in the panchnama, in light of the closure of proceedings by the respondents no purpose would be served today by issuance of such a direction. Petition disposed off.
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2025 (3) TMI 101
Challenge to show notice issued under the provisions of Section 74 of the CGST/SGST Acts - no cause of action to issue a show cause notice under Section 74 of the CGST/SGST Acts - HELD THAT:- There is considerable merit in the contention taken by the learned Government Pleader that all contentions taken by the petitioner before this Court, in challenge to Ext.P4 show cause notice, are matters that can be taken up before the Adjudicating Authority. The contention of the petitioner that the Audit Report was finalized without considering the contentions taken by the petitioner is also a matter that can be raised before the Adjudicating Authority and I have no reason to believe that if such contention is taken, the Adjudicating Authority will not consider such objections and will proceed to finalize the demand solely on the basis of the findings in the Audit Report. Further, the question as to whether the petitioner is liable to be proceeded against under Section 74 of the CGST/SGST Acts is also a matter that can be considered by the Adjudicating Authority. Petition disposed off.
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Income Tax
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2025 (3) TMI 100
Reopening of assessment u/s 147 - Notice beyond the mandatory period of four years - eligibility of reasons to believe - HELD THAT:- A perusal of the reasons for the reopening for the petitioner s case, reveals that the assessing officer has not made out any case to the effect that the petitioner failed to disclose fully and truly all material facts necessary for assessment. The impugned order does not in any manner attribute such reasoning stipulated under proviso to Section 147 to the petitioner in any manner whatsoever. In fact, the reasons for reopening of the assessment are itself based on the records provided, by the petitioner like the books of account, documents, loan confirmation details from various parties which were furnished by the petitioner during the course of the assessment proceedings. The fact of complete disclosure by the petitioner of all details necessary for assessment were duly disclosed by the petitioner in its letter dated 19 December 2016 (supra) along with all details, annexures in specific response to the final show cause notice dated 13 December 2016 issued by the respondents for the A.Y. 2014-15. It is such material which formed the basis of reopening of the assessment as is evident from the impugned assessment order dated 29 March 2022. There appears to be no fresh tangible material before the respondents to form its own/independent opinion in regard to reopening of the petitioner assessment for the A.Y. 2014-15, under Section 147 of the IT Act. Denial of natural justice - We may observe that the mandatory procedure postulated u/s 144B is also not followed by the respondents. This is in as much as the petitioner s objection dated 18 February 2022 to the reasons recorded for reopening of the assessment by the respondent dated 9 December 2021 were neither considered, dealt with, much less disposed of by the respondents. Further the reply of the petitioner to the draft assessment order dated 24 March 2022 was filed by the petitioner on 28 March 2022, mainly pointing out that the reassessment proceedings were contrary to the provisions of section 147 read with the decision of GKN Driveshaft [ 2002 (11) TMI 7 - SUPREME COURT ] The respondent failed to even consider these vital aspects which embrace the requirement of reasonable opportunity to be given to the petitioner, rushed to pass the impugned assessment order on 29 March 2022 i.e., just within a day after receiving a reply dated 28 March 2022 from the petitioner to the draft assessment order. No opportunity of being heard/hearing was given to the petitioner despite the variations prejudicial to the petitioner were unilaterally proposed by the respondents, nor were the objections raised by the petitioner separately disposed of by the respondents. Thus, the impugned assessment order runs contrary to the intrinsic principles of natural justice inbuilt and ingrained under Section 144B of the IT Act rendering the impugned order patently illegal. Thus, there is no fresh tangible material on the basis of which the assessing officer decided to reopen the petitioner s assessment for the impugned A.Y. 2014-15 - The impugned assessment order fails to consider that the assessment cannot be reopened beyond a period of four years from the relevant assessment year A.Y. 2014-15 in terms of the first proviso to section 147. Such action would stare in non compliance of jurisdictional requirements, and is therefore, non-est in law. Decided in favour of assessee.
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2025 (3) TMI 99
Validity of reassessment proceedings - although the petitioner was deriving profits from the supply of equipment and spares to Indian companies and entities, it had failed to acknowledge the said income asserting that it had no Permanent Establishment [PE] in India - HELD THAT:- Respondents have woefully failed to establish, that the formation of opinion was based on any independent inquiry or material that the AO may have collated for the purposes of forming an opinion as to whether income in AYs 2013-14 to 2017-18 had escaped assessment. As is ex facie evident from a reading of the reasons which stood assigned for invoking Section 148, the solitary basis was the survey conducted on 06-07 June 2019. Accordingly, and for all the reasons assigned by us in our judgment rendered on Grid Solutions OY [ 2025 (1) TMI 911 - DELHI HIGH COURT] we find ourselves unable to sustain the impugned action. Decided in favour of assessee.
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2025 (3) TMI 98
Priority of Secured Creditor s Rights over Tax Dues - sequence of events - auction the two helicopters on account of it being classified as NPA and also stating that its charge over the assets had priority over the income tax dues - petitioner submits that the continued existence of the prohibitory order has prevented the DGCA, M/s Yathi Air Services and SAR Aviation Services from releasing the helicopters to the petitioner - petitioner submits that that the hypothecation of the helicopters by respondent no. 3 and the default by M/s Summit Aviation Pvt. Ltd. were established and well-documented before the issuance of the prohibitory order HELD THAT:- This Court finds no merit in the objections raised by respondent no. 2. It is a well-settled principle of law that, unless specifically stipulated by statute, the dues of a secured creditor take precedence over government debts. In this regard, the respondent no. 3, as a secured creditor, had priority over the revenue s claims and, accordingly, was entitled to exercise its rights over the secured assets and subsequently sell the concerned helicopters. In the present case, the hypothecation agreement was executed well before the issuance of the prohibitory order. This establishes the legal foundation for the respondent no. 3 s rights over the helicopters, which predate any action taken by the Income Tax Authorities. Objection raised by the Income Tax Department regarding inadequate prior notice of the auction is without merit. It is well-documented that, on 06.09.2023, the respondent no. 3 formally communicated its intention to auction the helicopters to the Income Tax Department. However, despite receiving this communication, respondent no. 2 failed to respond. Section 222(1)(a) explicitly states attachment and sale, signifying a sequential process where the property, once attached, must subsequently be sold to recover the arrears. Despite this, respondent no. 2 failed to take any action beyond the issuance of the prohibitory order. This Court finds merit in the petitioner s contention that the absence of any objection or legal challenge from the tax authorities regarding the auction conducted by respondent no. 3, despite their prior knowledge of it, signifies their acquiescence to the sale. In this regard, reliance has been rightly placed on the judgments of N Murugesan [ 2021 (10) TMI 1375 - SUPREME COURT ] and State Bank of India v. M J James [ 2021 (11) TMI 1078 - SUPREME COURT ] Respondent no. 2 was clearly informed about respondent no. 3 s intention to auction the petitioner s two helicopters through a communication dated 06.09.2023. However, respondent no. 2 did not raise any objection at that time. It was only after duly informing respondent no. 2 the intention of the respondent no. 3, a notice regarding the auction of the two helicopters was published in the Financial Express and Jansatta newspapers on 20.09.2023.Further, on 22.09.2023, respondent no. 3 issued a corrigendum to furnish additional information to bidders regarding applicable hangar charges on the helicopters and the existence of a prohibitory order. Even after the successful auction and the subsequent sale of the two helicopters, respondent no. 2 was informed about the same. Despite being duly informed at every step, respondent No. 2 failed to raise any objection/s to the auction. In any event, in view of the legal position that the dues of Respondent no. 3/ secured creditor takes precedence over the dues of respondent no. 2, the attachment order issued by respondent no. 2 cannot be construed to be an impediment to the auction sale in favour of the petitioner. Accordingly, the present petitions are allowed.
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2025 (3) TMI 97
Deduction u/s 195 - Payments made for the reimbursement of salaries to seconded employees - Assessee, an Indian Company is a subsidiary of a foreign entity in Singapore, said foreign entity had entered into Inter Company Master Service Agreement with Holding Company Walmart Inc, Delaware, which is a USA entity. US entity provides services to various affiliates across the globe pursuant to Master Service Agreement and accordingly the Walmart seconded its employees to the Assessee Company. For the seconded service, the Assessee company having deducted the TDS remitted the salary amount to the US entity by way of reimbursement. HELD THAT:- Contention of the Revenue that the Assessee had failed to place all the material to demonstrate the kind of services rendered by the seconded employees were not made available and that they were not requisitioned for the purpose of training the regular employees of the Assessee, is too farfetched to gain acceptance. So is the submission that in the course of training, there would be transmission of technical knowledge, experience, skill, know-how and that would satisfy the requirement of make available . If that idea was lurking in the mind of the Assessing Officer, he could have called for such information from the sources that be. We have to keep in mind that arrangements of the kind do obtain in a shrunk globe and that all indicia of employer-employee relationship, which ordinarily obtain in the native Service/Industrial Jurisprudence cannot be expected in the realm of international business of the kind. If Triple Test namely (i) Direct Control, (ii) Supervision (iii) Direction, is satisfied vide ABBEY BUSINESS [ 2020 (12) TMI 570 - KARNATAKA HIGH COURT ] a strong case is made out as to the existence of employer employee relationship, the absence of a few indicia notwithstanding. An argument to the contrary would offend the stark truths of business world. Added, the assertion of the Assessee-Company that the amount is reimbursed to the Walmart after deducting the TDS from the salaries earned by the seconded employees in India, is not disputed by the Revenue. We hasten to clarify that in saying this, we are not invoking the doctrine of estoppel. Decided in favour of assessee.
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2025 (3) TMI 96
Reopening of assessment - unexplained cash deposit made by the petitioner in any of the bank accounts - HELD THAT:- As reasons recorded in both the notices issued u/s 148A (a) and Section 148A (b) of the Act that there is no cash deposit made by the petitioner in any of the bank accounts and there is no information of any escaped income with AO so as to initiate the reopening proceedings. Explanation given by the petitioner in reply to the notice u/s 148A (a) of the Act and the documents annexed therewith, prima facie, shows that there is no income earned by the petitioner but there is excess of expenditure over income for the year under consideration and as such the petitioner was not liable to file the return of income if there is no taxable income or exemption claimed by the petitioner. Petition succeeds and is accordingly allowed.
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2025 (3) TMI 95
Rejecting the application seeking permission for assessment of real and actual income after condoning the delay u/s 119 - genuine hardship - HELD THAT:- Division Bench of the Bombay High Court in the case of CG Power and Industrial Solutions Ltd. [ 2024 (5) TMI 502 - BOMBAY HIGH COURT] had allowed the writ petition and had granted the relief similar to the relief sought for in the present batch of writ petitions. Reading of the facts in the said judgment passed by the Division Bench of the Bombay High Court, what is clearly reflected is that the officers of the Income Tax Department were in agreement with the petitioners to their request for condoning the delay and also going in for reassessment so as to compute the correct taxable income. In view of the fact that this Bench finding the action on the part of CBDT in rejecting the petition under Section 119 of the Income Tax Act, 1961 to be bad in law in the given factual matrix of the case, the two questions of law framed as is enunciated stands answered accordingly:- a) So far as the question whether the respondents were justified in rejecting the application u/s 119(1) of the Income Tax Act is answered in the negative holding that the rejection of the said application was bad in law and also was not sustainable factually. b) So far as the relief which has been sought for whether can be granted invoking Article 226 of the Constitution of India, the same is answered in the affirmative in the view of the findings given by this Bench in the preceding paragraphs based on the judicial precedents. This Court is conscious of the fact that post re-assessment; there is a likelihood of inflated values emerging which could possibly show surplus tax having been paid potentially burdening the Revenue. However, the petitioner Company has voluntarily agreed not to make any claim for refund. The petitioner Company has filed a memo in this regard dated 15.02.2024 undertaking to waive any such surplus tax having been paid which may arise after assessment. This proactive step by the petitioner Company provides additional compelling ground for allowing this petition, particularly in light of there being no financial implication falling on the Revenue. This gesture on the part of the petitioner to mitigate potential financial implications also shows their commitment only with an intention of getting a fair and genuine assessment so far as the income and the expenditure of the petitioner Company for the relevant period is redone by way of reassessment. This Court finds that the petitioner-Company through its Assistant Chief Corporate Counsel (Legal) and Authorized Signatory has unequivocally agreed to waive its rights to claim any refund that may arise after adjusting any tax liability arising from the de novo assessments for Assessment Years 2002-03 to 2008-09. This waiver is comprehensive and applies to any residual refunds that may arise after setting off aggregate demands across the relevant Assessment Years u/s 245. This Court finds that this decision of the Assistant Chief Corporate Counsel (Legal) has been duly authorized by the Managing Director of the petitioner Company supported by a valid Power of Attorney dated 22.11.2013. This waiver effectively ensures that there will be no additional financial burden on the Revenue following the completion of the reassessment process.
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2025 (3) TMI 94
Reopening of assessment u/s 147 - reasons to believe -information made available on the insight portal relied upon - Petitioner has entered into transactions with ASE capital Markets Ltd - HELD THAT:- We find that at no point of time, was there any failure on the part of the petitioner: (i) to make a return u/s. 139 or in response to the notice issued under sub-section (1) of section 142 or section 148; (ii) to disclose fully and truly all material facts necessary for his assessment for that Assessment Year It cannot be held that the department was justified in reopening the assessment for Assessment Year 2014-15, which, we may add, has been done mechanically without application of mind, in the absence of any tangible material. It also appears from the reasons recorded that no verification of the material on record is made by the respondent and there is no independent opinion that any income has escaped assessment due to any failure on the part of the assessee in not disclosing fully and truly all material facts necessary for assessment. Moreover, from the reasons recorded it appears that the initiation of reopening proceedings are on borrowed satisfaction as no independent opinion is formed and on bare perusal of the reasons recorded, it emerges that the AO, considering the information received from the insight portal, has issued the impugned notice forming his reason to believe that the income has escaped assessment on the presumption that the petitioner has been involved in creating the non-genuine losses which is already reflected in the return of income which is accepted in the regular course of assessment by passing the order under section 143(3) of the Act. Besides, there is no clarity in the reasons whether the transaction value in question or the loss that resulted from such transaction, amounts to Rs. 27,61,650/-. Further, the petitioner had reported a total loss of Rs. 41,56,218/- in F O Trade in its return. Why only a portion thereof, namely Rs. 27,61,650/- is considered to be non-genuine loss and the rest of the loss is considered to be genuine, is also baffling. There is no basis to form reasonable belief for escapement of income except the information made available on the insight portal. The respondent-Assessing Officer has not considered the material on record to come to the conclusion that there is failure on the part of the petitioner to disclose truly and fully all material facts to have reason to believe for escapement of income. Therefore, on the basis of the information received from another agency on insight portal or from the SEBI report, there cannot be any reassessment proceedings unless the respondent, after considering such information/material received from other sources, consider the same with the material on record in the case of the petitioner assessee and thereafter, is required to form independent opinion that income has escaped assessment. Without forming such opinion, solely and mechanically relying upon the information received from the other sources, AO could not have assumed the jurisdiction to reopen the assessment based on such information. This view is fortified by the decision of this Court in case of Harikishan Sunderlal Virmani [ 2016 (12) TMI 1558 - GUJARAT HIGH COURT] AO could not have assumed the jurisdiction merely and solely relying upon the information made available on the insight portal without forming any independent opinion on the basis of the material on record vis-a-vis the petitioner is concerned. This Court is of the opinion that the petitioner had disclosed in its return for the Assessment Year 2014-15 the particulars of the loss under the head of future and options which was subsequently accepted by the Department. Therefore, the notice for re-opening the assessment on the exact entry under the head of future and options is based on change of opinion. The assessee cannot be said to have failed to have fully and truly disclosed all materials facts which would warrant the re- opening after a period of four years, anyways. Decided in favour of assessee.
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2025 (3) TMI 93
Levy of penalty u/s 271(1) beyond period of limitation - assessee has not discharge of initial onus of filing voluntary return u/s 139(1) of the Act, thus, he concealed his income - HELD THAT:- In the instant case, the assessment was completed u/s 147/143(3) of the Act on 28/11/2019 and as per the provisions of section 275(1) (c) the time limit for passing the penalty order would be up to 30th Sept. 2020. Due to Covid-19, the time limits for levy of penalty under any provision of the Act falling during the period of continuation of Covid-19 were extended by various Circulars and finally in terms of Notification No.113/2021/f.No.370142/35/2020-TPL-Part-1], it was extended till 31st March, 2022 which is the end date up to which the limit for completion of order imposing penalty chargeable under the Act was extended. As penalty order was passed as on 1st April, 2022, the same is beyond the time limit extended by the CBDT. Appeal of the assessee is allowed.
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2025 (3) TMI 92
Penalty levied u/s 271(1)(b) - failure of compliance to notice issued u/s. 142(1) - HELD THAT:- It is seen from the list of Dates and Events, the assessee sought for details for reasons for reopening of assessment, however the same was not provided to the assessee in spite of reminders sent by the assessee. Assessee placed on record its rectification application filed u/s. 154 of the Act dated 06-02-2023 before the AO on the very same reopening of assessment and sanctioning obtained u/s.151 of the Act, itself is bad in law. It is not on record, any order is being passed against the rectification application. Regarding the hearing on 10-05-2023, the assessee sought for an adjournment for 10 days. Thus it is not the case of the assessee has not replied to the notices issued by the AO and failed to comply with the notices. Therefore A.O. was not correct in levying penalty u/s. 271(1)(b) - Appeal filed by the Assessee is allowed.
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2025 (3) TMI 91
Addition u/s 68 - Bogus LTCG - Denial of exemption exemption u/s 10(38) - purchase of shares of some penny stock companies controlled at very nominal price and thereafter sale of the same at very high price by rigging the price of these shares - HELD THAT:- The Jurisdictional High Court in the case of Affluence Commodities Pvt Ltd. [ 2024 (4) TMI 199 - GUJARAT HIGH COURT] held that where assessee purchased and sold KPL shares and incurred loss, since assessee had proved genuineness of transactions and moreover assessee had no control whatsoever on share prices, addition made by Assessing Officer on account of disallowance of losses booked in penny stocks was liable to be deleted. Similarly in the case of PCIT vs. Sandipkumar Parsottambhai Patel [ 2023 (3) TMI 926 - GUJARAT HIGH COURT] held that since payments were received through account payee cheques and transactions were done through recognized stock exchange, and there was no evidence that assessee had paid cash in return of receipt through cheque, therefore the Tribunal rightly deleted addition holding that transactions were genuine. We hereby hold the addition made by AO is not legally correct in making addition on account of LTCG earned from sale of KPL shares done through stock exchange as alleged unexplained cash credit u/s. 68 of the Act and the same liable to be deleted. Thus the Grounds raised by the assessee is allowed.
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2025 (3) TMI 90
Disallowance of exemption u/s 54B - non submission of any details before the Ld. CIT(A) / NFAC - HELD THAT:- We find due to non submission of any details before the Ld. CIT(A) / NFAC despite number of opportunities granted, the Ld. CIT(A) / NFAC dismissed the appeal for want of prosecution. It is the submission of assessee that the notices sent by the office of the Ld. CIT(A) / NFAC were delivered in the e-mail of the Chartered Accountant who did not inform the assessee for which all these unfortunate events happened. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to grant one final opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to make his submission, if any, before the Ld. CIT(A) / NFAC on the appointed date. Appeals filed by the assessee are allowed for statistical purposes
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2025 (3) TMI 89
Reopening of assessment u/s 147 - notice after four years - based on some information received from the Investigation Wing, AO framed an opinion that the assessee has received accommodation entry - HELD THAT:- We find that assessee has disclosed all the material facts necessary for the purpose of assessment. In the original assessment proceedings, the AO after considering all the material has framed an opinion. There was nothing more to disclose and a person cannot be said to have omitted or failed to disclose something when, of such thing, he had no knowledge. Not only material facts were disclosed by the assessee but also they were fully scrutinized by the AO in the original assessment proceedings and figure of income as well as the deductions were worked out by the AO. The sale was duly disclosed in the Profit Loss account which was available with the AO while framing the assessment. Now based on some information received from Investigation wing AO has tried to reopen the assessment without in any manner verifying the said information with the material available on record. This is clearly an effort of the AO to review the completed proceedings. Reopening in the instant case is not by proper application of mind and the reasons recorded by the AO are vague and not supported by independent verification done from the material already available on record. Further assessee has been able to rebut the allegation made in the reasons recorded of receiving the accommodation entry which remained uncontroverted. Thus the reassessment proceedings as initiated vide notice issued u/s 148 are hereby quashed. Decided in favour of assessee.
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2025 (3) TMI 88
Reopening of assessment u/s 147 - granting invalid approval u/s 151- Addition of unexplained cash loans and interest received - HELD THAT:- There is non-application of mind on the facts and material coming on record. Apart from many errors one particular fact that the entire premise of which reopening has been done is that amount which has been alleged to have been paid by the assessee to Mr Nilesh Bharani / Evergreen Enterprises did not even pertain to A.Y. 2011-12. On perusal of the said seized documents placed in the paper book, it is seen that the said amount falls in the period relevant to preceding A.Y.2010-11 because the date of alleged transaction was 20/01/2010 and this has also been mentioned in assessment order and also is relevant from the documents placed. This addition itself could not have been made in A.Y.2011-12. This itself shows that there is no application of mind. Invalid approval u/s.151 - We are also in agreement that the contention raised by the ld. Counsel that even the ld. PCIT while granting the approval u/s.151 has not seen these facts and particularly if the amount has been alleged to have been received or given to the firm Evergreen Enterprises in the impugned assessment years when the firm Evergreen Enterprises did not even exist at that time and how ld. AO could send reopening proposals in the assessment folders of a non-existing assessee. Thus, we hold that the reasons recorded u/s.147 is based on incorrect assumption of facts and therefore, the entire proceedings initiated vide notice u/s.148 is void ab initio and is hereby quashed. For A.Y.2012-13 to 2018-19, it has been pointed out that the entire basis for the addition made by the ld. AO is documents seized during the course of search - addition of interest earned and received in cash to be taxed as unexplained money in the hands of the assessee - From the bare perusal of the seized documents it is seen that the name mentioned as S.M. Joglekar with and with contact number. Nowhere this name or contact number pertain to the assessee because assessee is Mahesh N Joglekar and nowhere it has been brought on record whether S.M. Joglekar is the same as Mahesh N Joglekar. Further, there is a reference of some name Ramesh Gala, which also has no connection with the assessee. If the ld. AO is drawing some adverse inference based on these seized documents, at least he should have verified whether it actually pertains to the assessee or not? Because neither assessee s name is Ramesh Gala nor S.M. Joglekar. Even in para 5.19 of the AO, telephone diary seized also show alphabet J J/ 71/SJ where the name of assessee is not there. Once there is no name mentioned of the assessee in the seized documents then, it cannot be said that it is an incriminating material to rope in any addition in the name of the assessee. Since the amounts assessed in the hands of the assessee did not pertain to him at all, the additions made for the alleged amount of loan lent in cash and estimated interest earned thereon cannot be sustained and otherwise also for all the assessment years there is no other incriminating material in respect of the assessee is there or referred by the AO. Decided in favour of assessee.
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2025 (3) TMI 87
Validity of assessment order passed u/s 153A w/o valid approval granted u/s 153D - HELD THAT:- As relying on Shiv Kumar Nayyar [ 2024 (6) TMI 29 - DELHI HIGH COURT] and also in the case of Serajjudin Co. [ 2023 (3) TMI 785 - ORISSA HIGH COURT] the approval granted in this case is without application of mind and consequently the assessment order is annulled. The ground of appeal .of the assessee is allowed.
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2025 (3) TMI 86
Addition u/s 68 r.w.s.115BBE - cash deposited in the bank account treating the same as unexplained during the demonetization period - CIT(A) deleted part addition - HELD THAT:- There is material substance in the submissions advanced on behalf of the assessee that the addition was made without pointing out any defect in the books of account of the assessee and it cannot be ignored that the CIT(A) duly accepted the contentions of the assessee along with the evidences filed by the assessee, as mentioned hereinbefore and deleted the amount to some extent which is sales made from July 2016 September 2016, confirmed the balance sales and Ld. AR submitted in this regard it was without any basis. It is relevant to mention here that while made addition, the Ld. AO is not rejected the book of accounts and not found any discrepancies in the stock, sales and purchases. As decided in Bawa Jewellers Pvt. Ltd. [ 2023 (7) TMI 494 - ITAT DELHI ] wherein it was held that whereas the AO did not point out any defects in the books of account, no discrepancies were found in the stocks, sales and purchases and simply the AO concluded that there are huge deposits in the bank account during demonetization period and assessee amply demonstrated with the evidences that the cash sales and the cash deposits during relevant FYs were almost same and there was only a minimal increase in cash deposits during the FY 2016-17 relevant to A.Y. 2017-18. The addition could not be made. Appeal of the assessee is allowed.
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2025 (3) TMI 85
Revision u/s 263 - validity of Assessment u/s 153A - HELD THAT:-Hon ble Apex Court in Abhisar Buildwell P. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT ] has settled the proposition of law that search assessment framed under section 153A are to be restricted to incriminating material found during the search for those years (out of the block of six years prior to the year in which search was conducted) where the assessments are unabated. In the present case, it s a fact on record that search action took place on the case on 31.1.2018. The impugned assessment before us is Asst. Year 2013- 14. There is no dispute with regard to the fact that the assessment for the impugned year was unabated. The issue, with regards to which the ld.Pr.CIT has found the assessment order erroneous, with regard to the source of investment in the immovable property not having been inquired into by the AO, admittedly has not arisen from any evidences or documents found during the search. There is no such contention or fact put-forth either by the ld.Pr.CIT or even ld. DR before us. Therefore, it is clear that applying the ratio laid down by the Hon ble Apex Court in Abhisar Buildwell P. Ltd. (supra) this issue could not have been considered by the AO during the assessment proceedings. We have no hesitation in setting aside the order of the ld.Pr.CIT finding the error noted by him, to be not an error at all. Decided in favour of assessee.
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2025 (3) TMI 84
TDS u/s 194A - interest paid by the assessee co-operative bank to its members other co-operative societies - HELD THAT:- By virtue of section 194A(3)(v) of the Act (whether pre amended and/or post amendment assessee bank is not liable to deduct TDS on any payment made to a cooperative society and contentions canvassed by the assessee bank is meritorious in nature. The Assessee bank has rightly not deducted TDS on payment made to SMR Coop Bank Emp Society Nahan The SBI Emp Non-Agri/CR/SEV Coop Society . The addition made on this count is liable to be deleted. Section 194A(3)(v) of the Act was express and clear with regard to cooperative society. We hold that it is not mandatory requirement in law that such societies (depositors) should be Members of Cooperative Bank. Section 194A(3)(v) expressly say that Income is credited or paid by a cooperative society to any other cooperative society then such income payment or credit need not be made subject matter of TDS. The other cooperative societies to whom payment is made or amount credited need not be a member of cooperative society so making payment. We gainfully refer to the order of Punjab State Co-operative Bank Ltd. Chandigarh [ 2016 (7) TMI 205 - ITAT CHANDIGARH] . The Ludhiana Central Co-operative Bank ltd. Ludhiana [ 2016 (11) TMI 1766 - ITAT CHANDIGARH] wherein it has been that when assessee being a Cooperative Society paid interest without deducting tax at source to other cooperative societies then such assessee would enjoy immunity from deduction of tax at source by virtue of section 194A(3)(v) of the Act. The said decisions would squarely apply in the present case. We thus hold that by virtue of the provisions of Section 194(A)(3)(v) the assessee is not required to deduct from payment of interest on time deposit of other being a cooperative society and that any demand raised to the contrary view (Supra) needs to be deleted. Assessee was required to deduct TDS on interest paid to Jagan Nath Temple Nahan we hold that said temple is being run by state Government that interest payable to Temple is not liable to TDS/or subject to TDS by virtue of notification so 3489 dt. 22/10/1970 under section 194A(3)(iii)(f) which includes any undertaking or body, including a society registered under the Societies registration Act, 1860 (21 of 1860) financed wholly by the Government. We hold that Assessee s action in not deducting TDS is justifiable. Assessee appeal allowed.
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2025 (3) TMI 83
Validity of the reopening of assessment - mandation to get approval for reopening - Addition on account of sale consideration - HELD THAT:- The impugned approval which was mandatory before the initiating reassessment was quite mechanical in nature and without proper application of mind and appears to be accord before receiving the reasons to believe by the AO or based same date and specially not mentioned that which material or the relevant para of the material was perused to grant impugned approval. We find material substance in the submissions made by AR and we are of the opinion that reopening action made u/s 147/148 of the Act, without jurisdiction and consequent assessment order was also invalid and legally unsustainable and grounds raised by the assessee allowed accordingly. Addition on account of sale consideration - as per CIT(A) land was not transferred during the year under consideration within the meaning of section 2(47) - CIT(A) while passing the impugned order clearly observed that the Ld. AO has not brought anything on record to show that the land in question was transferred in the AY under consideration. Hence, no any substance in the appeal preferred by revenue and this ground is liable to be dismissed. Revenue appeal dismissed.
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2025 (3) TMI 82
Validity of additions made u/s 153A in the absence of incriminating material found during the search - addition u/s 68 for unsecured loans, and u/s 37(1) for disallowance of interest expenses - HELD THAT:- As decided in PCIT v/s Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT ] wherein held that in case no incriminating material is found during the search conducted under section 132 of the Act, the AO has no jurisdiction to make an assessment in respect of completed/unabated assessments. We find that in PCIT v/s Pavitra Realcon (P) Ltd. [ 2024 (5) TMI 1408 - DELHI HIGH COURT ] held that statement under section 132(4) of the Act alone, without any other material discovered during the search which would corroborate search statement, do not grant the AO authority to make an assessment. Since, in the present case, it is undisputed that the assessment year under consideration is an unabated/concluded year, therefore, we find no basis in upholding the additions made by the AO u/s 68 and disallowance made u/s 37(1) of the Act in the absence of incriminating evidence found during the search. Decided in favour of assessee.
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2025 (3) TMI 81
Applications filed by the assessee for renewal of registration u/s 12A(1)(ac)(iii) and approval u/s 80G(5)(iii) - non-compliance by the assessee - HELD THAT:- It is evident from the record that the assessee filed its response on 21.08.2024, within the due date mentioned in the CIT(E) s notice. CIT(E) ignored this submission and erroneously rejected the application citing non- compliance. Such an approach violates natural justice, as the assessee s submission should have been duly considered before passing an adverse order. In case of approval u/s 80G(5)(iii) also the assessee filed a detailed submission on 21.08.2024, complying with the notice dated 09.08.2024. CIT(E), however, did not examine the documents submitted and rejected the application on incorrect factual grounds. Given that the documents were submitted, the rejection was without proper verification. Appeals of the assessee are allowed for statistical purposes.
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2025 (3) TMI 80
Denial of Exemption u/s 10(23C)(vi) - as per revenue Trust was not existing solely for educational purposes, and it was engaged in carrying on activities other than the main object of providing education - CIT(A) allowed claim - HELD THAT:- CIT(A) held that the main criteria for eligibility u/s 10(23C)(vi) was that the institution is existing solely for educational purposes and not for purpose of profit and also gave a finding that providing hostel facility is an integral part of the main object and surplus generated from hostel facility of Rs. 6.21 crores is being ploughed back towards the main object of imparting education. This is where we feel that the Ld. CIT(A) erred on appreciation of the facts. CIT(A) relied on the orders in the case of Shree Shanskar Tirth Educational and Charitable Trust [ 2022 (5) TMI 1152 - ITAT RAJKOT] wherein it was held that exemption u/s 10(23C) could not be denied merely because object clause of trust deed of assessee also contained objects other than educational activities. CIT(A) relied on the order of Shree Ahmedabad Lohana Vidyarthi Bhavan [ 2018 (7) TMI 1084 - ITAT AHMEDABAD] wherein it was held that where providing hostel facility to students is an essential component of education institution and also an aid for attaining educational object, said activity would fall under purview of education as provided u/s 2(15) of the Act. Hon ble Supreme Court of India in the case of Ahmedabad Urban Development Authority [ 2022 (11) TMI 255 - SUPREME COURT] held that a charitable organisation cannot be engaged in any trade, commerce or business, or provide services in relation thereto for any consideration unless such commercial activity is incidental to the main object of GPU and is also within the monetary threshold of up to 20% of its total receipts, as prescribed under section 2(15) of the IT Act. To ascertain whether an activity would constitute trade, commerce or business , the Hon ble Apex Court clarified that it would depend on the cost at which the services are availed and the price at which they are provided by the institution to its beneficiaries. Based on the facts of the case, we hold that :- (a) Providing education is a charitable activity. (b) Providing hostel facility to the students of the school providing education is a charitable activity. The provision of hostels to the students in an integrated manner is a charitable activity. (c) Running hostels for students separately on a commercial basis is a business activity. The Hon ble Apex Court held that where fee, cess or other consideration is statutorily fixed or where it represents recoupment of cost or cost with nominal mark up, the activity may not be construed as trade, commerce or business and will be excluded from the mischief of commercial activity under the amended provision. If, however, fee, cess or other consideration charged is substantially higher over cost, it is considered as trade, commerce or business and will qualify for tax exemption only if receipts are within the quantitative limit prescribed by the amended provision. The observations and ratio thereof of the Hon ble Apex Court are squarely applicable to the facts of the instant case and hence, we hereby affirm the order of the AO and decline to support the order of the Ld. CIT(A). Appeal of the Revenue is allowed.
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2025 (3) TMI 79
Computation of interest demand u/s 201(1A) - Validity of order u/s 201(1A) charging interest for the delayed payment - HELD THAT:- On perusal of the findings of the Ld. CIT(A) it is observed that the Ld. CIT(A) directed the Assessing Officer to look into and ensure that the calculation of interest as charged by the Assessing Officer u/s 201(1A) is as per law. It is also observed that the Ld. CIT(Appeals) held that the dispute in appeal is only with regard to charging of interest u/s 201(1A) which was rightly made by the Assessing Officer for the delayed deposit of TDS. We do not see any infirmity in the order of the Ld. CIT(A). Assessee contends that interest u/s 201(1A) was incorrectly charged. Therefore, we direct the AO to look into the contention of the assessee with regard to incorrect levy of interest u/s 201(1A) of the Act and pass order afresh in accordance with law after providing adequate opportunity of being heard. Ground no.7 of grounds of appeal is allowed for statistical purpose.
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2025 (3) TMI 78
Addition u/s. 68 - unexplained cash credit in the form of cash deposited during the demonetization period - AO invoked section 115BBE of the Act - HELD THAT:- Revenue authorities have not doubted the gross sales and more particularly the credit sales effected during the demonetization period and the total sales effected in the period other than the demonetization period. It establishes that the assessee has been carrying out the regular business activity and making sales during the year which has been accepted by the Revenue authorities. Merely for the reason that there is cash deposit during the demonetization period, the present issue has arisen. It is accepted that nobody was aware about the declaration of Demonetization Scheme and the moment it was announced it created panic. In this process, people tend to make some cash purchases and also to pay their outstanding debtors. Until and unless the source of cash is not explained one cannot doubt the genuineness of cash deposit. In the instant case, the assessee successfully demonstrated that it is carrying out regular business activity, making regular sales both through cash and credit and that the alleged deposit is out of the cash balances available with the assessee in its books of account and therefore find merit in the contention of assessee. This view is further fortified in the case of Vasant and Company [ 2024 (10) TMI 1638 - ITAT CHENNAI] wherein held source of deposits has not been disputed and has been created out of ordinary business sales which has been credited into books of accounts and profits has also been duly included in the return of income filed in relevant assessment year. Therefore, we are of the considered view that, additions cannot be made u/s. 69 of the Act and taxed u/s. 115BBE of the Act towards cash deposits made to bank account of demonetized cash in SBNs The impugned addition made u/s. 68 of the Act is directed to deleted and the action of the AO invoking provisions of section 115BBE is also set-aside. Effective Grounds of Appeal raised by the assessee on merits are allowed.
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2025 (3) TMI 77
Addition u/s 68 - unexplained entries - protective assessment made by the AO in hands of assessee - HELD THAT:- CIT (A) has found that the assessee is not the real owner of funds and the funds in the bank of the assessee is for the use of ultimate beneficiaries and it acted only as a conduit. In such circumstances, we find that the protective additions have no leg to stand. It is the finding of the AO as well as the CIT (A) that the assessee is not the owner of the credits/deposits in its bank account and that the assessee acts only as a conduit for transferring the said funds to the ultimate real/actual beneficiaries. Respectfully following the decision in the cases of Zed Enterprises (P) Ltd [ 2024 (1) TMI 1442 - ITAT DELHI] , Shivij Garments (P) Ltd [ 2024 (2) TMI 454 - ITAT DELHI] , Zen Tradex (P) Ltd [ 2024 (9) TMI 1701 - ITAT DELHI] , M/s Round Square Exim Pvt Ltd [ 2025 (1) TMI 1521 - ITAT DELHI] we hold that the protective addition made in the instant case deserves to be deleted. Addition on account of commission income is also deleted as the same has been considered in the hands of the main entry operators Sh Anand Jain and Naresh Jain. Accordingly, the ground no 1 and 2 are dismissed.
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Customs
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2025 (3) TMI 76
Concessional rate of duty - import of Cement - import of cement in bags of 50 kgs retail packing and not in bulk - failure to fulfill the conditions stipulated in the N/N. 4/2006-CE - HELD THAT:- Based on the Bills of Entry and admission of the importer, the Adjudication Authority in his Order in Original dated 16.01.2015 held that the importer is not eligible for concessional rate of duty. The violation of the concession condition amounts to misdeclaration to evade duty. Whereas, the CESTAT by a common final order had set aside the order in original without adverting to the factual aspects of the individual case. The reasoning given by CESTAT to interefere the well considered order of the Adjudicating Authority of the face of it suffers patent infirmity. In the instant case, it is an admitted fact by the importer that he did not purchase the cement from the manufacturer directly. It was a high sea purchase from a non-manufacturer/trader. No doubt, the Bill of Entry contains details of the manufacturer, but that is not sufficient to claim concessional rate of duty. The concessional rule not only specifically mandates that the purchase must be from the manufacturer directly, it also specifies the mode of manufacturing and the capacity of the manufacturer. If the reasoning given by the CESTAT to be accepted, then the condition in Clause IB in the Notification which imposes condition about the mode of manufacturing and capacity of the manufacturer will become redundant. In this case, the records reveals that, by way of show cause notice the department had sought for explanation about the Post- Importation actual user confirmation. The importer has admitted that the cement imported was used for manufacturing Hollow bricks and sold to its customers. Therefore, it is evident that the cement was not used for institutional/industrial purposes. Hence, the CESTAT order which is apparently against the terms of the notification and the evidence by way of Bills of Entry and Statement of importer, is liable to be set aside. Conclusion - The CESTAT erred in allowing the benefit of concessional rate of counter veiling Duty (CVD) to the respondent M/s A-1, Hallow Bricks and Manufacturer despite gross violation of the concession condition. Hence, the question of law is answered in negative favouring the Department. Appeal allowed.
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2025 (3) TMI 75
Refund of Extra Duty Deposit (EDD) - rejection on the ground being filed beyond the period of limitation prescribed under the provision i.e., beyond one year - related party under Rule 2 (g) (2) (iv) (v) of the Customs Valuation (Determination of Value of Imported Goods), Rules, 2007 - relationship has led to undervaluation of the imported goods or not. Whether EDD constitutes a payment in the nature of customs duty under the scope of Section 27 of the Customs Act, 1962? - HELD THAT:- This issue is no longer res integra. Firstly, Circular No.5/2016-Customs dated 9th February, 2016, as submitted by the Petitioner, expressly clarifies that payment collected after provisional assessment for the release of goods shall be in the form of security deposit . The question, therefore, is as to whether EDD constitutes customs duty. This issue has been settled by various High Courts. Madras High Court in Nithin India Tech Ltd v. The Deputy Commissioner of Customs (Refund) [ 2024 (9) TMI 1502 - MADRAS HIGH COURT] has observed that The amount that was collected by the Assessing Officer in view of the Special Valuation Branch (SVB) proceedings are nothing to [ to here is to be read as but ] deposit and not a customs duty as is contemplated under Section 12 of the Customs Act, 1962, although such deposit were eligible to be appropriated towards the duty liability of the petitioner after final assessment of the Bill of Entry. A perusal of Section 27 would show that the same deals with refund of customs duty. It is abundantly clear that EDD is not in the nature of customs duty. The deposit of the EDD was itself to secure any customs duty which may have been later on found to be payable, due to the allegation of under-declaration - The impugned order holding that the refund application is beyond the limitation is, thus, untenable. Moreover, the impugned order itself acknowledges that the said amount is over and above with duty which was determined by the SVB. The Customs Department could not have rejected the prayer for EDD refund. Conclusion - The period of limitation for seeking refund of customs duty under Section 27 of the Customs Act, 1962, would not apply qua EDD. EDD is not equivalent to customs duty and thus not subject to the limitation period under Section 27. Petition allowed.
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2025 (3) TMI 74
Maintainability of appeal - appropriate forum - Classification of imported goods - Windows XPE Embedded software and Windows XPE Embedded stickers - no evidence of the imported goods being nothing other than license stickers or licenses - CESTAT, being last fact finding authority, has passed reasoned and speaking order or not - violaton of principles of natural justice - HELD THAT:- Since the basic issue which arises from the Tribunal s order deals with the classification and rate of duty, appeal under Section 130E read with Section 130 of the Customs Act would not lie before this Court since it is an order relating to determination of question having relation to rate of customs duty. Whether the goods imported fall under one particular tariff entry or another would have the effect of determination of the rate of duty and therefore, the present appeal would not be maintainable before this Court but would lie before the Supreme Court as contended by respondent-importer. Appeal dismissed as not maintainable.
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2025 (3) TMI 73
Benefit of Notification No.12/2012-Cus. dated 17.03.2012 (Sl.No.125) - imported Coke Breeze - admissibility of exemption notification to Coke Breeze has been denied by the Department on the ground that Metallurgical Coke and Coke Breeze are two different products, the exemption notification since mentions only Metallurgical Coke; therefore, Coke Breeze imported by the appellants are not eligible to the benefit of the said notification. HELD THAT:- The issue has been considered at length by the co-ordinate Bench of this Tribunal in the case of Jindal Steel Power Ltd. [ 2024 (1) TMI 1335 - CESTAT KOLKATA] , wherein the Tribunal held metallurgical coke and coke breeze are two distinct and different products having their own separate characteristics and uses. The two in no way can be considered as one and the same and thus at par. Coke Breeze being a byproduct of the process of coke manufacture and not utilizable as such in a blast furnace, where met coke alone fits the bill. As the two products are clearly distinct with wide variation in their sales price, we are of the view that the question of interpretation of an exemption notification and the case law analysis on this aspect of the matter does not actually arise. Conclusion - The benefit of Notification No.12/2012-Cus. dated 17.03.2012 (Sl.No.125) cannot be extended to Coke Breeze imported by the appellants, as it is not the same as Metallurgical Coke. Appeal dismissed.
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2025 (3) TMI 72
Alleged contravention of Condition (iii) of Notification No. 32/1997-Cus dated 01.04.1997 - import of Shell on Shrimps - goods were found contaminated with Nitrofuran Metabolite AHD, rendering them unsuitable for export or consumption - HELD THAT:- In the present case, the Appellant sought permission for destruction of the goods and had not proceeded for disposal of the goods to demand customs duty. The Hon ble Supreme Court in the matter of M/s BPL Display Devices Ltd. [ 2004 (10) TMI 92 - SUPREME COURT] , held object of grant of exemption was only to debar those importer/manufacturers from the benefit of the Notifications who had diverted the products imported for other purposes and had no intention to use the same for manufacture of the specified items at any stage. Similarly, as evidenced from the facts of the case, after import, the goods were used for job work and thereby the appellant made best efforts to comply with the Rule 8 of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. Facts being so, there is no reason or justification to demand duty from the Appellant for the goods, since the goods were subjected to job work and appellant was ready to export. However, since the sample of imported goods were held to be contaminated with the presence of Nitro furan Metabolite AHD , export obligation could not be fulfilled. Conclusion - The duty cannot be demanded when goods were intended for use but became unfit due to unforeseen circumstances. Appeal allowed.
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2025 (3) TMI 71
Time limitation of refund claim filed - appellants have failed to prove that incidence of duty has not been passed on as they have not booked/ accounted for the refund claim amount in the relevant financial year - principles of unjust enrichment. Delay in filing the refund claim - HELD THAT:- In case of Provisional Assessment under Section 18 of the Customs Act, the party become entitled for refund only after final assessment, because the provision of Section 18(2) of the Customs Act starts with words When the duty leviable on such goods is assessed finally . Further in Sub Section 18 (a) and (b), it has been provided that the amount paid shall be adjusted against the duty finally assessed. In the present case, Bill of Entry was finalized on 15.03.2007 and final assessment was done for the first time on 15.03.2007 after the cut-off date 13.07.2006, after which the doctrine of Unjust Enrichment became applicable. The appellant did not become entitled for a refund on their filing of the Bill of Entry for warehousing but only after it was finalized. After the first final assessment order, the appellant filed an appeal before Commissioner (Appeals) which was allowed vide order dated 03.06.2008. Therefore, assessee became entitled for refund as a result of the order of Commissioner (Appeals) dated 03.06.2008. Therefore, the appellant was bound to get the refund application processed under Section 27 of the Customs Act. Whether the refund application was barred by limitation as it was not filed within the prescribed period mentioned in Section 27 of Customs Act? - HELD THAT:- No doubt the duty paid by the appellant was made refundable by the Commissioner (Appeals) vide order dated 03.06.2008 but the department opted for continuation of the said litigation by filing an appeal before the CESTAT. Once that option got exercised, the final judgment about entitlement of appellant to have the refund of the said duty paid, is the judgement pronounced by CESTAT on 13.10.2015 in the said appeal. Since the appeal of the department was dismissed by CESTAT on 13.10.2015, the entitlement of the appellant to refund of duty paid got finalized only on 13.10.2015. Hence, the relevant date for counting the period of limitation is 13.10.2015. Refund application was filed on 30.11.2015 which is within the limitation period. Hence, learned Commissioner (Appeals) and the first Adjudicating Authority have wrongly held that the refund application was barred by time. Therefore, the refund application filed by the appellant is not barred by limitation. Unjust Enrichment - HELD THAT:- When the Chartered Accountant has given a certificate after verification of accounts and corroborative evidences that the duty incidence has not been passed on to the customers then this certificate should not be brushed aside without any cogent reason and the lower Adjudicating Authority and the learned Commissioner (Appeals) has brushed aside the Chartered Accountant certificate without any cogent reason - it cannot be said that the appellant had added the excess payment of duty paid provisionally on raw material in the cost of final products and burden of duty has been shifted to the end user of the final products manufactured by the appellant. Conclusion - The limitation period for a refund claim should be calculated from the date of the final adjudication of entitlement, and not from an earlier provisional or intermediate order. The refund claim was not barred by limitation and that the doctrine of unjust enrichment did not prevent the refund from being granted. Appeal allowed.
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2025 (3) TMI 70
Waiver of interest on the goods which were initially in warehouse and were cleared later - CBIC Circular No. 10/2006 - HELD THAT:- This Court has considered the materials placed before it, along with CBIC Circular and finds that the order has conveyed of the Chief Commissioner, is totally unreasoned and has denied natural justice, as even the party was not heard in the matter. The discretion has been exercised in most arbitrary manner without exhibiting any reasons, whatsoever. It is a trite law that even the administrative orders which seek to deny party any of it is entitlement need to be reasoned so the courts can exercise a mind as so whether they were correctly arrived at or not. In the instant matter, this court finds that it has been completely denied of looking into the reasons of the Chief Commissioner. Further this court finds that while the CBIC Circular is well-reasoned and gives out as to why certain kind of projects, which include, interalia, the power projects deserve to be considered sympathetically for waiver of interest, no such application of mind or reasoning is appearing from the order of the Chief Commissioner conveyed to the party vide the aforesaid letters. In view of the foregoing, the matter is remitted back to Chief Commissioner with direction to give reasoned order, after hearing the party as it affects their interest and also unnecessarily raises project cost of the power project. Appeal allowed by way of remand.
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2025 (3) TMI 69
Reclassification of goods on the basis of re-testing report of the imported remnant samples - no such re-test report is furnished to the appellants-importer - principles of natural justice - HELD THAT:- The customs authorities had send remnant samples of imported goods subsequent to the clearance of such goods, for retesting by CRCL, which is a in-house laboratory of New Custom House. It is fact on record that the Less Charge- Cum-demand notice dated 23.12.2003 gives a reference to such test report as the samples is cut piece of dyed (Navy Blue) woven fabric made of non- textured polyester filament yarn (58.4%), Textured Polyester filament yarn (balance) , and on this basis the department had gone ahead for re- classification of goods under CTI 5407 7200 for demanding higher customs duty. It is fact, that there is no legible copy of CRCL re-test report is available on record and no such copy was furnished to the appellants- importer. Inasmuch as the imported goods have been examined by the jurisdictional customs authorities and after subjecting the imported goods for examination on first-check basis, that too after testing by the Textiles Committee Laboratory and on the basis of such test report, the imported goods had been cleared, there appears no ground or evidence for re-testing the same goods under the pretext of alleged mis-declaration of goods by some other person. The essential requirements of legal provisions of Section 28 of the Customs Act, 1962 such as service of notice of the basis on which the appellants-importer is being asked to pay the differential duty, reasonable opportunity to be given for enabling them to present their representation for due consideration before passing of the order, have not been carried out by the authorities below. This is evident from the fact that the original order does not even provide the re-test report; but it has gone in detail about the visit of Joint Director of CRCL to the Textiles Committee Laboratory to state that they did not follow the standard testing requirements, to doubt the test report given by them earlier in confirmation of the imported goods as Non-texturized polyester yarn. Therefore, the confirmation of the duty demand under Section 28 ibid does not stand the scrutiny of law. In the case of Ramchand Jashanmal Narwani [ 2019 (5) TMI 1577 - CESTAT MUMBAI] involving similar set of facts, the Co-ordinate Bench of the Tribunal has held that there is lack of any record to sustain the variation in test reports and dismissed the appeal filed by the department. Conclusion - The essential requirements of legal provisions of Section 28 of the Customs Act, 1962 such as service of notice of the basis on which the appellants-importer is being asked to pay the differential duty, reasonable opportunity to be given for enabling them to present their representation for due consideration before passing of the order, have not been carried out by the authorities below. Demand of duty do not sustain. Appeal allowed.
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Insolvency & Bankruptcy
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2025 (3) TMI 68
Approval of the resolution plan - approval of resolution plan after expiry of CIRP period - compliance with Section 30(2)(b) of the IBC, specifically regarding the allocation of payments to dissenting financial creditors or not. Compliance with Section 30(2)(b) of the IBC or not - HELD THAT:- From the materials on the record, it is clear that only pay out under the plan is to the unsecured financial creditor which is Rs.1.5 Crore against the 13.81% vote shares. The appellant sought to raise a grievance that homebuyers are being provided unit and they are not sharing any haircut in their entitlement. It is true that the SRA is spending certain amount in completing the construction for delivering the unit to the homebuyer. Unsecured financial creditor who are dissenting financial creditor in the present case are entitled to the amount not less than the amount as contemplated by Section 30(2)(b) - The claim of unsecured financial creditor who are dissenting financial creditor which is admitted of not related parties is Rs.10.94 Crore. Vote share of dissenting financial creditor is 13.44, hence the payout of Rs.1.5 Crore to the dissenting financial creditor in no manner violates Section 30(2)(b). Law is well settled that jurisdiction of Adjudicating Authority and this Appellate Tribunal to interfere with approval of resolution plan is too limited. Adjudicating Authority can interfere with the approval of the resolution plan only in the case where there is a non-compliance of Section 30(2) of the IBC. Approval of resolution plan after expiry of CIRP period - HELD THAT:- According to own case of appellant, 330 days period expiring on 03.05.2023. Resolution plan has been approved by the CoC on 31.01.2023, and the application was filed for approval of the plan before the aforesaid expiry of 330 days period. The fact that Adjudicating Authority approved the resolution plan on 14.05.2024 cannot be a ground to say that the order was passed after expiry of 330 days. When the resolution plan has been approved within 330 days and the application was also filed by the RP for approval, the date of the passing of the order by Adjudicating Authority cannot be relied for contending that the said date is beyond 330 days. The resolution plan having been approved by votes of 86.67% vote shares, at the instance of dissenting financial creditor whose payments under the plan is not less than the payment which they are entitled under Section 30(2)(b), no interference is called. Conclusion - The plan complied with the statutory requirements under the IBC. Adjudicating Authority by the impugned order has not committed any error in approving the resolution plan submitted by SRA. Appeal dismissed.
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2025 (3) TMI 67
Challenge to impugned order by which appellant was held guilty of perjury and have been imposed a fine - appellants have given wrong information to the ROC in Form No.18 required for converting a company into LLP - appellants had filed an affidavit wherein the appellants had deposed the units were handed over to the parties way back in December, 2016 but whereas their learned counsel stated the units will be handed over to the parties - HELD THAT:- Admittedly the impugned order dated 17.05.2021 has held the appellants guilty of act of perjury only on account of a declaration in Form 18 filed before the ROC (see Page 194 of the Appeal Paper Book). In the said declaration, against point No.15 viz whether any proceedings by or against the company is pending in any court or tribunal or any authority, the answer given by one Mr Ajay Vij, i.e. the appellant No.1 was NO. It is fairly conceded by the learned counsel for the appellant that declaration/Form 18 dated 03.11.2018 was incorrect since by that time i.e. on 25.04.2018 an application under Section 9 IBC stood filed against Corporate Debtor. Further CIRP commenced later on 14.3.2019. A wrong declaration in Form 18 allegedly made inadvertently before the ROC cannot be said to be material in the context of conversion from a Company into LLP so as to fall within the definition of perjury u/s 199 IPC. Thus holding the Appellants guilty of an act of perjury deserves to be set aside on this ground alone; and consequential impugned order dated 04.08.2021 permitting the Liquidator to file complaint u/s 340 Cr.P.C also deserves to be set aside - Admittedly such declaration in Form 18 was never made/filed before the Ld. NCLT but before the ROC; therefore, it was not for the Ld. NCLT/Liquidator to move u/s 195 Cr.P.C for initiating action on such account. Thus, no act of perjury has been committed by the Appellants. But even if it is presumed just for the arguments sake that an offence of perjury stands committed, then also the impugned order dated 04.08.2021 r/w impugned order dated 17.05.2021 permitting the Liquidator to file complaint u/s 340 Cr.P.C is not sustainable there being admittedly no finding recoded to the effect that it is expedient in the interest of justice a complaint should be filed. In the absence of a finding to the above effect which is a sine qua non under S. 340(1)(a) Cr.P.C, the impugned order dated 04.08.2021 is not sustainable in law. Ld. NCLT has no jurisdiction to convict a person for an offence under Section 68 under Chapter VII of Part II IBC in view of the express provision contained in S. 236(1) IBC. Conclusion - There exists a Special Court per Section 236 of the Companies Act, 2013, hence the Ld. NCLT has no power to convict the appellants and impose a fine and as such the conviction and the fine imposed by Ld. Adjudicating Authority is hereby set aside. Appeal allowed.
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FEMA
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2025 (3) TMI 66
Penalty imposed for contraventions u/s 8(3) and 8(4) of FERA - person guilty of offences under the FERA Act - HELD THAT:- Proceedings under the FERA Act are not criminal proceedings but are adjudicatory in nature. Appellant Tribunal for Foreign Exchange is an adjudicatory body, which performs quasi-judicial functions and act as administrators and adjudicators. They are not courts . While it is very much within their powers, to impose penalties for non-compliance of provisions of FERA, however, it does not lie within their domain to pronounce a person guilty of offences under the FERA Act. Pronouncing a person guilty has serious consequences and to adjudicate and give a finding of guilty lies within the exclusive domain of the competent courts of jurisdiction. In this view of the matter, the penalty imposed by the Appellant Tribunal for Foreign Exchange on the appellants is upheld, however, the word guilty used in the entire order 02.06.2016 against the appellants is to be considered as redacted .
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Service Tax
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2025 (3) TMI 65
Disallowance of wrongly availed and utilized input service credit - input service or not - Packaging Service - Department was of the view that such input services were availed by the appellant not only for rendering the services to BPCL but also for the sale of their own LPG on which no excise duty or service tax was paid - HELD THAT:- The issue whether the input service tax credit taken on taxable services availed while providing taxable output services as well as engaging in the activity of trading is no more res-integra as it has now been consistently held by High Courts of different jurisdictions that credit cannot be taken of entire service tax paid on taxable services availed while providing taxable output services or manufacturing taxable goods as well as simultaneously engaging in the activity of trading. It is seen that the Honourable High Court of Madras in its decision in M/s. Ruchika Global Interlinks v The CESTAT, Chennai, [ 2017 (6) TMI 635 - MADRAS HIGH COURT] has held that learly, both before and after amendment, exempted services meant those taxable services, which were exempt from whole of Service Tax and, included those services on which Service Tax was not leviable, under Section 66 of the Finance Act. The inclusion in Explanation to Rule 2(e) trading was, without doubt, only clarificatory. As accepted by Mr. Jayachandran, the appellant had not been paying Service Tax on trading activity during the relevant period. Again, in CCE Thane II v. Milton Polyplas (I) Pvt Ltd, [ 2019 (4) TMI 240 - BOMBAY HIGH COURT] , the Honourable High Court of Bombay was deciding whether the notice issued invoking the erstwhile Rule 57 I of the MODVAT rules demanding fraudulently availed credit during the period 1995 to 1999 would abate as contended by the Respondent-assessee therein, since the MODVAT rules were omitted and/or substituted by CENVAT Rules w.e.f 1st April 2000. The effect of Section 38A, namely that it will not affect the previous operation of the rules and the right, privilege, obligation or liability acquired, accrued or incurred or incurred under the said repealed rules is subject to the caveat unless a different intention appears , stipulated therein. However, while the Cenvat Credit Amendment Rules, 2011, notified by Notification No.3/2011-CE (NT) dated 01-03-2011, which came into effect from 01.04.2011, effected sweeping changes, we could not glean or discern a different intention to curb any right, privilege, obligation or liability acquired, accrued or incurred under any rule, notification or order so amended, repealed, superseded or rescinded, so as to deny the benefit under Rule 6(5) of the CCR that is being claimed by the appellant. If the appellants were availing any of the aforementioned specified taxable services and had taken credit of service tax paid on the same and have not used such specified taxable services exclusively in or in relation to providing exempted services, then irrespective of the stipulations in sub-rules (1), (2) and (3) of Rule 6 of the Cenvat Credit Rules, 2004, credit of the whole of service tax paid on such specified taxable services shall be allowed and such taking of credit is correct and legal. The jurisdictional High Court in the case of M/s. Ruchika Global Interlinks has held that the explanation to Rule 2(e) stipulating that exempted services includes trading is clarificatory. Thus, for the relevant period, trading is to be treated as exempted services . Conclusion - i) Input service tax credit on services used in trading activities cannot be availed as trading is treated as an exempted service. ii) The benefit of Rule 6(5) of the Cenvat Credit Rules, 2004, applies to the relevant period, allowing credit on specified services unless used exclusively for exempted services. iii) Penalties imposed on the appellants are unsustainable due to the interpretational ambiguities and the appellants bona fide belief in their entitlement to credits. The matter needs to be remanded to the jurisdictional adjudicating authority in order to determine the extent to which the cenvat credit has been taken on the services which the appellants have claimed would be taxable services as specified in the sub-clauses of clause (105) of Section 65 of the Finance Act as listed in Rule 6(5), and credit of whole of service tax of which shall be allowed unless such service is used exclusively in or in relation to manufacture of exempted goods or providing exempted services - Appeal disposed off by way of remand.
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2025 (3) TMI 64
Levy of servie tax - insurance auxiliary services - incentives received from insurance companies - reverse charge mechanism - HELD THAT:- In respect of the same Appellant, the Tribunal for the earlier periods has set aside the demands and penalties vide SREE SARADAMBAL AUTOMOBILES (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, COIMBATORE [ 2018 (3) TMI 195 - CESTAT CHENNAI ] where it was held that appellants were not liable for service tax under Insurance Auxiliary Service due to their lack of qualifications as actuaries and the nature of their operations as explained during the proceedings. The impugned Order-in-Appeal cannot be sustained - appeal allowed.
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2025 (3) TMI 63
Abatement of appeal, on the death of the appellant - short payment of service tax - suppression of value - recovery alongwith penalty - HELD THAT:- The Appellant who was a sole proprietor has died on 31.05.2022 during the pendency of the present appeals. We also find that in terms of Rule 22 of Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, on the death of the appellant, the proceedings will be abated unless an application is made for continuance of such proceedings by the legal Heirs of the Appellant. In this case, no such application has been received. As the Death has occurred on 31.05.2022, nearly three years passed already. In view of the judgement of the Hon ble Supreme Court in the case of Shabina Abraham Ors. Vs. Collector of Central Excise Customs [ 2015 (7) TMI 1036 - SUPREME COURT] wherein it has been held that no proceedings can be initiated or continued against a dead person as it amounts to violation of natural justice in as much as the dead person, who is proceeded against is not alive to defend himself. Conclusion - On the death of the appellant, the appeal stands abated and disposed of in terms of Rule 22 of the CESTAT procedure Rules, 1982. Appeal is abted and disposed off.
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2025 (3) TMI 62
CENVAT Credit - input services - whether or not, the disputed services on which the CENVAT credit is taken by the appellants is duly covered under the scope and definition of Rule 2(l) of the CENVAT Credit Rules, 2004 as input service ? Catering, food and outdoor catering services - HELD THAT:- Under the unamended provisions (effective up to 31.03.2011), the phrase activities relating to business was specifically finding place in the inclusive part of the definition of input service . The inclusive definition in a fiscal statute is a well-recognized device to enlarge the meaning of the word defined and it expands the meaning of the basic definition - such an yardstick cannot be applied for the period w.e.f. 01.04.2011,as by way of amendment of the definition of input service, certain services like general insurance services, Health Insurance, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees etc., were excluded from the purview of definition of input service, and in the eventuality, when the said excluded category of service(s) are used primarily for personal use or consumption of any employee. In other words, CENVAT credit of service tax paid on such service(s) should not be considered as input service, entitling an assessee to avail CENVAT credit thereon. Health fitness service - HELD THAT:- The records placed in file and sample invoices indicate that these services have been used to keep a check over the wellness or health of a person, before taking up the assignment in the appellants company and for taking up job assignments/projects from time to time. Further, the invoices have been billed to the company and not for the individuals for their personal consumption. Hence, these services are eligible to be considered as input service . Further, it is also found that the Tribunal in the case of SITEL India Limited [ 2016 (3) TMI 203 - CESTAT MUMBAI] have held that health and fitness service as eligible input service, where the output service is being provided on 24X7 basis, which is also the situation in the present case. Interior decorator service - HELD THAT:- In the representative sample invoice submitted by the appellants, it is shown as the renovation works under taken for the guest house at Vikhroli. No other details are available to relate such renovation or interior decoration work having a relation to the provision of output service, either directly or indirectly. Therefore, it is unable to agree with the view that in the present case, there is sufficient evidence to consider the interior decorator service as an eligible input service. Therefore, CENVAT credit to the extent of Rs.6,93,107/- relatable to the interior decorator service is not admissible as eligible input service. Packaging services - HELD THAT:- The nature of services are mentioned as packing, unpacking, loading, unloading and transportation of household goods for transportation from one location to another with respect to few employees. Though it is claimed by the appellants that such services were used for packaging and movement of various goods procured for use in the provision of output services, there are no evidence to such claim in the documents placed in the appeal records or in any of the written submissions given by the appellants. In such a factual position, it is unable to find any basis for allowing such services used for personal consumption of employees under the category of eligible input service and therefore consider these services as ineligible input service. Public relations service - People relationship management service - HELD THAT:- The Co-ordinate Bench of the Tribunal in the case of Orient Bell Limited [ 2017 (1) TMI 840 - CESTAT ALLAHABAD] have examined the public relations service and have held that these are having an objective of enhancing Brand Value, support to Marketing Promotional Initiatives, Building Corporate image, Creating Awareness etc. to enable the company in providing enhanced output services. In view of the above, these services could be considered as eligible input service. Photography service - video tape service - HELD THAT:- The adjudicating authority on examination of the invoices submitted before him had given a finding that he is unable find any information other than the name of service provider, in order to relate to the output service provided by the appellants. It is unable to examine the factual aspect as no invoices or supporting documents have been produced by the appellants. Therefore, these services are not eligible to be considered as eligible input service. Rent-a-Cab service - HELD THAT:- The adjudicating authority had given a finding that even though the services have been availed prior to 01.04.2011, that may not be the ground to allow these services as eligible input service. In this regard, it is found that it is an undisputed fact that such services have been availed by the appellants for the period upto 31.03.2011 for claiming as eligible input credit and not thereafter. The CBIC in its Circular No.943/4/2011-CX dated 29.04.2011 had clarified that the credit available on rent-a-cab service received before 01.04.2011 should be available as input credit if its provision had been completed before 01.04.2011even though the invoices could have been received subsequently i.e., after 01.04.2011 - Rent-a-Cab services received prior to 01.04.2011 in the present case is eligible input service, for taking CENVAT Credit. Ship management services - transport services through waterways - sound recording service - HELD THAT:- The adjudicating authority had found that no invoice have been produced by the appellants before him to substantiate the nature of such service and its usage in provision of output service. Further, in respect of short term accommodation service , the adjudicating authority had found that such stays by the employees traveling for work are more in the nature of personal consumption. It is not required to examine the factual aspect as no invoices or supporting documents have been produced by the appellants for such services - these services are not eligible to be considered as eligible input service. Denial of input credit on the ground that the address of the premises are not included in the registration certificate - HELD THAT:- The appellants had submitted a letter for inclusion of unregistered premises in the Service Tax Registration certificate by submission of their application for addition of such addresses to the jurisdictional authority on 17.10.2008. Inasmuch as the process of revising or updation of registered certificate with additional/new addresses for new branches/ office is a deemed approval procedure on intimation basis as priced under Service Tax Rules, 1944. Further, as the appellants is a regular assessee/ registrant with the Service Tax authorities, the input credit cannot be denied on such procedural lapses and that too for the failure to approving such amendments by the department within the prescribed time. Conclusion - i) The impugned order is set aside, to the extent it has confirmed the Cenvat demand on the taxable services namely, Event Management Mandap Keeper Service, General Insurance Insurance Auxiliary Service and GTA Service and the appeal is allowed in favour of the appellant. ii) The Rent-a-Cab services received prior to 01.04.2011 in the present case is eligible input service, for taking CENVAT Credit. iii) The input credit cannot be denied on such procedural lapses and that too for the failure to approving such amendments by the department within the prescribed time. Appeal allowed in part.
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CST, VAT & Sales Tax
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2025 (3) TMI 61
Entitlement to concessional rate of tax - inter-state sale - Rejection of application filed by the writ petitioner on the ground that the tribunal cannot issue the direction sought for - HELD THAT:- It is required to be seen as to what remedy the petitioner is entitled to. Form-C declaration have been held to be documents when produce by the dealer, they will be entitled to benefit of the concessional rate of tax or reduced rate of tax. There are several decisions which have been pointed out and even if there is a defect in Form-C declaration issued in respect of an inter-State sale the same can be rectified and if there is a delay in issuance of Form-C declaration by the assessing officer of the purchasing dealer and if the Form-C declaration is issued belatedly, such declaration can be produced before the jurisdictional assessing officer of the selling dealer and the assessment for the relevant period can be revised. In the instant case, the factual position is much better as the respondent/department does not dispute the fact that the transaction done by the writ petitioner with the 7th respondent is a case of inter- State sale. There may be cases where the purchasing dealer might have faced action by the department including that of cancellation of registration and there are decisions which have held that if the registration of the selling dealer is valid during the period when the inter-State sale took place, then the selling dealer would be entitled to the concessional rate of tax. More or less an identical issue was decided by the Division Bench of this court in the case of Commissioner of Commercial Taxes and Another v. Tata Steel Limited and Others [ 2022 (11) TMI 1274 - CALCUTTA HIGH COURT ] - It is informed the said decision though the appeal was filed against the said order before the Hon ble Supreme Court, subsequently, the State Government accepted the decision and the concessional rate of tax was extended to the assessee therein, namely, Tata Steel Limited. Though this writ petition arises out of a challenge to an order passed by the learned tribunal yet this court is not denude of jurisdiction to do substantial justice in the instant matter in exercise of its powers under Article 226 of the Constitution of India, particularly when facts are not in dispute, that the transaction between the writ petitioner and the 7th respondent is a case of inter-State sale. Conclusion - The petitioner was entitled to the concessional tax rate of 2% for the inter-State sale based on the admitted facts and the 6th respondent s acknowledgment. The writ petition is disposed of by directing the 6th respondent to address a letter to the writ petitioner to the effect that the subject sale transaction is admittedly an inter-State sale, and Form-C declaration is not being able to be issued as the 7th respondent has not filed any application for issuance of Form-C declaration.
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Indian Laws
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2025 (3) TMI 60
Interest on Refund of the stamp duty paid on a lost e-stamp paper - whether the court should fold its hands and deny relief to a person, who has lost the e-stamp paper, only because the draftsman has omitted the use of such expression explicitly in the Statute? - HELD THAT:- When a person is deprived of the use of his money to which he is legitimately entitled, he has a right to be compensated for the deprivation which may be called interest or compensation. Interest is paid for the deprivation of the use of money in general terms which has returned or compensation for the use or retention by a person of a sum of money belonging to other. In the case of Secretary, Irrigation Department, Government of Orissa v. G.C. Roy, [ 1991 (12) TMI 268 - SUPREME COURT ], a Constitution Bench of this Court opined that a person deprived of use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This is also the principle of Section 34 of the Civil Procedure Code. Interest of normal accretion on capital - HELD THAT:- If on facts of a case, the doctrine of restitution is attracted, interest should follow. Restitution in its etymological sense means restoring to a party on the modification, variation or reversal of a decree or order what has been lost to him in execution of decree or order of the Court or in direct consequence of a decree or order. The term restitution is used in three senses, firstly, return or restoration of some specific thing to its rightful owner or status, secondly, the compensation for benefits derived from wrong done to another and, thirdly, compensation or reparation for the loss caused to another. In Hari Chand v. State of U.P. [ 2011 (2) TMI 1638 - ALLAHABAD HIGH COURT ], the Allahabad High Court dealing with similar controversy in a stamp matter held that the payment of interest is a necessary corollary to the retention of the money to be returned under order of the appellate or revisional authority. The High Court directed the State to pay interest @ 8% for the period, the money was so retained i.e. from the date of deposit till the date of actual repayment/refund. Considering the reasons assigned by the learned Single Judge while taking the view that the respondents could not have declined to refund the amount and the fact that the retention of the said amount was for a long time and further the appellants were left with no other option but to approach the High Court, it is opined that the appellants are entitled to have interest on Rs. 28,10,000/-. Conclusion - Interest is not a penalty or punishment at all, but it is the normal accretion on capital. The appellants are entitled to hae interest. Appeal disposed off.
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