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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter April 1, 2024 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws Articles 1. Income though chargeable under head other than business income can still be income from business for accounting and some tax purposes under some provisions. By: DEVKUMAR KOTHARI and CA UMA KOTHARI Summary: Income chargeable under non-business heads can still be considered business income for accounting and tax purposes under certain provisions. In business organizations, funds are often interlaced, with investments in properties, securities, and deposits being part of trade or commerce. While income may be taxed under different heads, it often arises from business activities. The Bombay High Court, in a recent judgment, ruled that rental income, though taxable under 'income from house property,' can be considered part of business income for deductions under Section 32AB. This applies to income from various activities if they form part of the business. 2. PRESUMPTIVE TAXATION FOR PROFESSIONALS By: DR.MARIAPPAN GOVINDARAJAN Summary: Presumptive taxation allows professionals to compute tax based on a fixed percentage of their total revenue without maintaining detailed accounts, as outlined in Section 44ADA of the Income Tax Act, 1961. This method applies to certain professions, including legal, medical, and engineering, with gross receipts up to Rs. 50 lakhs, extendable to Rs. 75 lakhs if cash receipts are minimal. It simplifies tax filing by assuming 50% of gross receipts as profits. However, deductions for expenses are not allowed, and partnership firms cannot claim deductions for partner salaries or interest. Tax returns must be filed using ITR-4-Sugam by July 31, 2024. 3. Notification challenged as there was no force majeure in existence to exercise power under Section 168A By: Bimal jain Summary: The Gauhati High Court addressed a challenge by Indus Towers against a notification issued under Section 168A of the CGST Act, which extended the time limit for tax recovery due to alleged force majeure conditions. The court noted that the term "force majeure" includes events like epidemics, and interim reliefs by various High Courts allowed proceedings to continue without final orders. The petitioner argued that the COVID-19 pandemic was no longer a valid reason for such extensions. The court ordered that the petitioner must respond to the notice by March 15, 2024, but no final order should be issued until the returnable date. 4. RBI streamlines process to standardise filing of supervisory returns by banks, NBFCs By: Vivek Jalan Summary: The Reserve Bank of India (RBI) has streamlined the process for filing supervisory returns by banks and non-banking financial companies (NBFCs) through a new master direction issued on February 27, 2024. This directive consolidates existing instructions to provide clarity and reduce compliance burdens. Commercial banks must file 36 returns, while NBFCs and other financial institutions have varying requirements. The RBI has excluded regional rural banks and housing finance companies from these norms. Public sector banks must now submit reviews within 21 days of receiving the statutory central auditor report, and interest rate sensitivity returns within 15 days monthly. The directive emphasizes adequate IT infrastructure for reporting. 5. Commission received from foreign buyers for services and procurement of goods do not fall under the definition of ‘intermediary services' By: Bimal jain Summary: The Supreme Court dismissed the appeal by the Commissioner of GST and Central Excise against M/s SNQS International Socks Private Limited. The case involved export sales commissions received by the respondent for procuring export orders from foreign buyers. The authorities claimed these services were intermediary services under the Place of Provision of Services Rules, 2012. However, the Customs Excise and Service Tax Appellate Tribunal ruled that the respondent provided a range of services beyond mere procurement, including vendor selection and quality checks, on a principal-to-principal basis. The Supreme Court upheld this decision, confirming the services did not qualify as intermediary services. Highlights / Catch Notes GST E-auction Service Challenges TCS Liability on Exempt Supplies under GST Act; Court to Address Preliminary Objections. Case-Laws - HC : Liability of Collect Tax at Source (TCS) - Exempt supplies - Section 52 of the Central Goods and Services Tax Act, 2017 (CGST Act) - Petitioner operating an e-auction service for agricultural and non-agricultural commodities. It is contended that payment for the contract can either be settled through the Petitioner’s platform, or it can be settled directly between the buyer and seller. The Petitioner does not guarantee settlement of transactions by way of delivery of goods or payment. The Petitioner merely charges transaction fees for providing the platform to its members for the purpose of e-auction. - The High Court, after considering the submissions of both parties, directs the adjudicating officer to address the petitioner's preliminary objections regarding the applicability of Section 52 of the CGST Act. Visit to Get Source Parent Company Equity Holding Not a GST Service Supply; Show Cause Notices Annulled for Lack of Jurisdiction. Case-Laws - HC : Levy of GST - activity of holding equity capital by the parent Company in the Petitioner - ultravires Section 5 of the IGST Act, 2017 read with Section 7 of the CGST Act, 2017 or not - The High Court concluded that mere holding of shares by a holding company in its subsidiary cannot be classified as a supply of service, as clarified by circulars issued by both the Central and State Governments. The court held that such activity does not fall within the purview of GST. - Given the similarity of the present case to the referenced judgment, the High Court held that the impugned Show Cause Notices were without jurisdiction or authority of law. Consequently, the court quashed the notices issued by the respondent. Visit to Get Source High Court Emphasizes Exhaustion of Statutory Remedies Before Article 226 Relief in GST Order Challenge. Case-Laws - HC : Demand of GST - Validity of the order in FORM GST DRC-07 - The High Court declined to entertain the petition directly, emphasizing the need to exhaust statutory remedies before seeking relief under Article 226. The Court cited precedents to support its stance that writ jurisdiction should not be invoked against show-cause notices unless they are wholly without jurisdiction or illegal. It directed the petitioner to approach the appellate authority for redressal, underscoring the importance of adherence to the statutory regime. Visit to Get Source Are Corporate Guarantees Taxable Under GST? Court Examines Validity of Circular and Legal Precedents in Ongoing Case. Case-Laws - HC : Taxability of Personal Guarantee and Corporate Guarantee in GST - Corporate Guarantees provided by a holding company to its subsidiary under the Central Goods & Service Tax Act, 2017. The petitioner sought a declaration that such activity does not constitute a taxable supply of services. Arguments were presented regarding the validity of a Circular issued by the Central Board of Indirect Taxes & Customs, interpretation of previous legal precedents, the impact of recent amendments, and the nature of Corporate Guarantees as contingent contracts. The High Court allowed time for further submissions from both parties and directed no coercive action against the petitioner until further proceedings. - Matter listed for next date. Visit to Get Source Resolution Path for Pre- and Post-GST Contract Tax Disputes: Submit Representation to Finance Dept. for Final Decision. Case-Laws - HC : Additional tax liability for execution of subsisting Government contracts either awarded in the pre-GST regime or in the post-GST regime without updating the Schedule of Rates (SOR) - The Court disposed of the writ petition, granting the petitioner the liberty to file an appropriate representation before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from the date of the order. The Additional Chief Secretary was directed to make a final decision within four months of receiving the representation, after consulting all relevant departments. Visit to Get Source Bail Granted in Tax Credit Case: Balancing Liberty and Justice Amidst Allegations and Ongoing Trial. Case-Laws - HC : Seeking grant of regular bail - irregular availment of Input Tax Credit - The High Court, after considering the arguments of both parties, granted bail to the petitioner in a complaint case under the CGST Act, 2017. It emphasized the presumption of innocence until proven guilty and the importance of balancing the right to liberty with societal interests. Despite allegations against the petitioner, the court deemed it necessary to release them on bail, considering factors such as the pending trial, the severity of potential punishment, and the lack of evidence suggesting witness tampering. The court imposed specific conditions for bail to ensure the petitioner's compliance with legal proceedings and prevent any potential interference with the case. Visit to Get Source GST Registration Revoked Without Notice: High Court Annuls Orders, Demands Fair Re-evaluation and Response Opportunity. Case-Laws - HC : Cancellation of GST registration of petitioner - The petitioner contended that they were not served the notices and thus were unable to reply, resulting in ex-parte demands being raised against them. The High Court found merit in the petitioner's argument regarding the lack of access to the notices and set aside the impugned orders, remitting the matter for re-adjudication. The court emphasized the importance of providing opportunities for parties to be heard and directed the petitioner to file a reply within two weeks, with the matter to be re-adjudicated by the Proper Officer in accordance with the law. Visit to Get Source Petition Maintainability Challenged Due to Non-Existent Appellate Tribunal Under CGST/OGST Act Section 112. Case-Laws - HC : Maintainability of petition - appealable order or not - non-constitution of the Appellate Tribunal - The High Court acknowledges that the impugned order is appealable under Section 112 of the CGST/OGST Act. It also recognizes that due to the non-constitution of the Appellate Tribunal, the petitioner is deprived of its statutory remedy of appeal and the corresponding benefits under the mentioned sections of the Acts. Visit to Get Source Income Tax Appellate Tribunal Overturns TPO's Decision on Transfer Pricing, Supports Appellant's Methodology and Account Segmentation. Case-Laws - AT : TP Adjustment - Provision of Administrative and Agency Services - Determination of Arm's Length Price (ALP) - allocation of expenses relating to income streams between two segments - The appellant challenged the actions of the Assessing Officer (AO) and Transfer Pricing Officer (TPO) in determining the ALP and rejecting their TP analysis. The Appellate Tribunal found in favor of the appellant, concluding that the TPO's actions were beyond jurisdiction and based on incorrect facts. The Tribunal upheld the appellant's use of Transfer Pricing Methodology and segmentation of accounts, directing the AO to delete the adjustments made. Visit to Get Source Petition Dismissed for Lack of Diligence in Recovering Seized Documents; Costs Imposed for Judicial Process Abuse. Case-Laws - HC : Reopening of assessment without releasing seized documents by Crime branch - Petitioner seeking the release of seized documents and items to effectively respond to reassessment notices. Despite a court order directing the release of seized items, the petitioner allegedly failed to diligently pursue their release over several years. The High Court noted the petitioner's lack of effort in complying with court orders and found the petition to be an abuse of the judicial process. Consequently, the Court dismissed the petition and imposed costs on the petitioner. Visit to Get Source Secured Creditor Rights Prevail Over Government Dues; Unregistered Auction Certificate Can Be Registered Despite Attachments. Case-Laws - HC : Priority Charge - Seeking directions to remove the order of attachment over the property of the borrower, which according to the petitioner, is mortgaged and is a secured asset - The petitioner, being a secured creditor with the security registered with the Central Registry, was entitled to the benefit of Section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The Court affirmed that the rights of secured creditors to realize secured debts shall have priority over all other debts and government dues. - The Court clarified that even if an auction is conducted by the secured creditor and the sale certificate is not registered, the Registering Authority may register it, notwithstanding the attachment by government departments. Visit to Get Source Appellate Tribunal Partially Allows Income Accumulation Claim Under Sec 11(2) Due to Shortfall in Required Amount. Case-Laws - AT : Rectification u/s 154 - Exemption u/s 11(2) - Accumulation of income - The Appellate Tribunal found merit in the appellant's contention regarding the amount to be accumulated under section 11(2) of the Act. - It was established that the appellant had accumulated Rs. 110,94,73,718/- in the specified modes under section 11(5) of the Act, which was lower than the required accumulation of Rs. 120,00,31,900/-. - Therefore, the deduction under section 11(2) was allowable only on the amount accumulated, resulting in a partial allowance of the claim. Visit to Get Source Tribunal Rules Tax Assessment Order Void for Non-Existent Entity Post-Merger, Stresses Jurisdictional Accuracy. Case-Laws - AT : Validity of Order passed against a non-existent entity - The Appellate Tribunal's decision revolves around the critical legal principle that an assessment order issued in the name of a non-existent entity, due to merger or amalgamation, is void from the outset. This principle was upheld through reliance on established judicial precedents, particularly from the Supreme Court and Delhi High Court. The case underscores the necessity for the Assessing Officer to ensure that assessment orders reflect current legal realities, including the existence of the entities involved. By quashing the order as void ab initio, the Tribunal reaffirmed the importance of jurisdictional correctness over procedural regularity in tax assessment proceedings. Visit to Get Source Customs Suspension of third-party cargo operations without notice violates natural justice, case remanded for procedural fairness. Case-Laws - HC : Suspension of operations of handling the cargo of third parties - The High Court observes that the absence of a show cause notice and an opportunity for a hearing violates fundamental principles of natural justice, particularly given the significant civil consequences of the order. Additionally, the Court takes into account the potential adverse impact on third parties associated with the petitioners. Consequently, it orders the remand of proceedings to the Commissioner for a fresh order, emphasizing the necessity of adherence to procedural fairness. Visit to Get Source Court Rules Cost Recovery Charges Regulation as Unauthorized Tax, Deems it Ultra Vires to Customs Act 1962. Case-Laws - HC : Levy and collection of Cost recovery charges - Validity Of Notification No.26/2009 issued by Central Board of Excise and Customs - The appellants (CBEC) argued that the regulation was valid under Sections 141 and 157 of the Customs Act, 1962, and justified as administrative charges. However, the High Court found that the regulation lacked specific statutory authorization and amounted to an unauthorized tax, violating constitutional provisions. Therefore, the Court concluded that the regulation was ultra vires the Customs Act, 1962, and dismissed the appeal. Visit to Get Source Tribunal Overturns Customs Broker License Revocation Due to Procedural Errors in Investigation and Notice Issuance. Case-Laws - AT : Revocation of CHA License - Customs Broker resorted to unprofessional methods while clearing the goods imported vide Bill of Entry - It was revealed during the investigation that an employee of the appellant's office had manipulated the redemption fine and penalty amounts in the Order-in-Original, leading to the overcharging of the importer. - While the tribunal acknowledged the manipulation in the Order-in-Original, the crux of the decision rested on procedural irregularities rather than the merits of the fabrication allegations. - The tribunal ruled in favor of the appellant, emphasizing the importance of adherence to procedural timelines outlined in Regulation 20 of CBLR, 2013. It noted that the absence of a specific offence report and the delay in issuing the Show Cause Notice beyond the prescribed period rendered the proceedings against the appellant invalid. Visit to Get Source Tribunal Overturns Time-Barred Rejection, Remands Lithium-Ion Battery Import Duty Exemption Case for Reassessment. Case-Laws - AT : Exemption from Basic Customs Duty - import of Lithium-Ion Batteries falling under Customs Tariff Heading 85076000 - Time limitation for submission of Country of Origin certificate - The appellant couldn't produce the COO certificate initially but later obtained it and appealed against the Commissioner (Appeals)'s decision, which rejected the appeal as time-barred and deemed the appellant ineligible for exemption. The Tribunal noted that the limitation period for filing appeals was extended due to the COVID-19 pandemic, thereby setting aside the rejection on grounds of being time-barred. The matter was remanded to the Commissioner (Appeals) for reconsideration, specifically regarding the retrospective issuance of the COO certificate and its implications on exemption eligibility. Visit to Get Source Tribunal Annuls Order Against Customs Broker Due to Lack of Evidence on Bribery Allegations; Proceedings Deemed Premature. Case-Laws - AT : Revocation of Licenced Customs Broker Licence - The Commissioner alleged violations of various provisions of the CBLR, particularly related to bribery. However, the appellant contested these allegations, arguing that the amounts in question were for legitimate expenses, not bribes, and that they cannot be held responsible for the actions of their employees without evidence of authorization. The Tribunal found that the allegations were based on preliminary findings and lacked sufficient evidence to substantiate them. Therefore, it set aside the Commissioner's order, ruling that the proceedings were premature and unsubstantiated. - Therefore, the Tribunal set aside the Commissioner's order. Visit to Get Source Tribunal Rules Against Using Cum-Duty Value for Calculating Export Duty on Iron Ore Fines. Case-Laws - AT : Valuation - export duty - Liability to pay customs duty on the FOB value, on export of iron ore fines considering the same as cum-duty value or otherwise - After considering the arguments presented by both parties, the Tribunal referenced several past rulings that had addressed similar issues. These precedents consistently held that cum-duty value cannot be used to determine the value for the levy of export duty. In light of this established interpretation of the law, the Tribunal upheld the Impugned Orders and dismissed the Appeals. Visit to Get Source Tribunal Rules in Favor of Exporters on Gold Import Duty-Free Status, Corrects Value Addition Calculations in FTP Case. Case-Laws - AT : Value addition - Duty-free import of gold - Replenishment of gold under the ‘replenishment scheme’ from DIL against export of gold jewellery - The tribunal concluded that the manufacturing process was indeed fully mechanized, dismissing the department's claim of a semi-mechanized process. This determination was crucial as it affected the applicable wastage norms and minimum value addition required under the FTP. - Regarding Value Addition Calculation, the tribunal, referencing FTP provisions and clarifications from the Director-General of Foreign Trade (DGFT), sided with the appellants. It was held that the calculation method adopted by the department was incorrect, and the appellants had indeed met the value addition criteria as per the correct interpretation of FTP guidelines. Visit to Get Source Court Upholds Port's Right to Charge for Container Storage After Customs Confiscation; Appellant's Liability Confirmed. Case-Laws - HC : Container storage charges - The High Court upheld the decision of the single judge, stating that since the goods were indeed confiscated by customs authorities while in transit, the port trust was justified in levying container storage charges. The appellant's inactivity after requesting permission to de-stuff the goods did not absolve them of liability. The court dismissed the appellant's argument that containers could not be considered "goods" under the Customs Act. It upheld the legality of the customs authorities' orders of confiscation, as they had the power to confiscate both goods and containers under Section 111(d) of the Customs Act. Visit to Get Source DGFT India Updates Import Rules for Precious Metals to Enhance Transparency and Economic Strategy. Circulars : The amendments in Appendix 4B of the Handbook of Procedures 2023 represent a calibrated adjustment to India's foreign trade regulatory framework concerning the importation of precious metals. It illustrates a meticulous approach to integrating regulatory agility with strategic economic considerations, aiming to ensure a balanced, transparent, and efficient importation process. Visit to Get Source State GST Clarifying TCS Liability for E-commerce: Who Pays the Supplier Bears the Compliance Burden Under DGST Act 2017. Circulars : Clarification on TCS liability under section 52 of the DGST Act, 2017 in case of multiple E-commerce Operators in one transaction - The circular clarifies the TCS liability under section 52 of the DGST Act concerning transactions involving multiple ECOs. It distinguishes between scenarios where the supplier-side ECO is and isn't the direct supplier, attributing TCS compliance to the entity responsible for remitting payment to the supplier. In cases where the supplier-side ECO acts solely as a facilitator, it bears the TCS burden, whereas, when the supplier-side ECO is also the supplier, the buyer-side ECO assumes TCS collection responsibilities. Visit to Get Source Corporate Guarantees as GST Supply Between Related Entities: New Valuation Rules Explained. Circulars : Taxability issues surrounding personal and corporate guarantees in the realm of Goods and Services Tax (GST). - The circular extends its clarification to corporate guarantees provided by one company for another related company or by a holding company for its subsidiary. These guarantees, too, are considered supplies of service between related persons under the HGST / GST Act, thereby attracting GST. It further specifies that the valuation of such supplies will follow Rule 28 of the HGST Rules, with a recent amendment introduced through Notification, to ensure uniformity in valuation practices. Visit to Get Source Assam GST Circular Enhances Return Scrutiny Process to Boost Compliance and Integrity in Tax Administration. Circulars : The Assam State GST Circular No. 3/2023, addresses the structured approach and guidelines for the scrutiny of returns under the GST framework. This directive builds on earlier instructions and aims to fortify the procedural integrity and compliance within the tax administration system. The circular elucidates the processes, from the selection of returns for scrutiny to the eventual conclusion of scrutiny proceedings, ensuring a thorough and time-bound examination of returns filed by the registered persons. The intention is to maintain a robust compliance mechanism that aligns with the legal and procedural framework established under the Assam GST Act, 2017, and its accompanying rules. Visit to Get Source Indian Laws Land Allotment Cancelled Over False Affidavit; Court Rules Undisclosed HUF Property Disqualifies Petitioner. Case-Laws - HC : Cancellation of allotment of land on the basis of an alleged false affidavit - Hindu Undivided Family (HUF) property - the petitioner argued that the Defence Colony property, previously owned by him, was absorbed into the HUF before the acquisition of his land in Yakootpur, rendering him eligible for an alternate plot - The court rejected the petitioner's contention that the property being in the HUF's name exempted him from disclosure, underscoring that an HUF and its members hold collective ownership of its properties. Consequently, the court held that the petitioner's failure to disclose his interest in the Defence Colony property, irrespective of its HUF status, disqualified him from the allotment under the scheme. Visit to Get Source IBC NCLAT Upholds Operational Creditor Claim: Appellant Fails to Dispute Debt and Prove Payment Arrangement Validity. Case-Laws - AT : Admission of section 9 application - Operational Creditors - debt payable or not - NCLAT noted that the existence of the operational debt was established, and the Appellant failed to refute the observations regarding the Reply Notice. - Regarding the back-to-back payment arrangement, the Tribunal determined that the contract terms did not support the Appellant's claim. Payments were to be made based on running accounts, not solely dependent on funds received from a third party. - The Tribunal concluded that there was no evidence of a prior dispute raised by the Appellant before the demand notice. Additionally, the invocation of the arbitration clause was not pursued by the Appellant, raising questions about bonafide intentions. Visit to Get Source Interim Stay Denied: Appellant's Inaction Leads to Waiver on Corporate Debtor's Asset Sale in E-Auction. Case-Laws - AT : Seeking grant of Interim Stay of the Sale Notice - sale of assets of the Corporate Debtor and the property of one Mr. S. Srinivasan (Guarantor) - The adjudicating authority dismissed the appellant's application for relief, citing reasons such as the corporate debtor's properties being mortgaged to a secured financial creditor and previous decisions allowing joint sales of assets. - The tribunal emphasized that the appellant's failure to challenge the subsequent e-auction notice amounted to waiver and estoppel by conduct. Visit to Get Source Tribunal Enforces Full Payment of EPF and ESI Dues, Mandates Settlement of Section 7Q and Waiver Application for 14B. Case-Laws - AT : Approval of the Resolution Plan - Requirement of liability of PF and ESI dues to be paid in Full - Claim u/s 7A, 7Q, and 14B of the Employees' Provident Funds & Miscellaneous Provisions Act 1952 - The Tribunal noted that while the amount under Section 7A had been fully paid, no payment had been made towards the amounts claimed under Sections 7Q and 14B. It referred to legal precedents and held that all amounts claimed under Sections 7A, 7Q, and 14B were part of provident fund dues, emphasizing the importance of paying them in full. The Tribunal cited judgments and directed the Successful Resolution Applicant to make the necessary payments under Section 7Q within two months and apply for waiver of damages under Section 14B within 30 days. Visit to Get Source Tribunal Reinstates Section 7 Insolvency Application After Noting Appellant's Compliance Efforts and Respondent's Defaults. Case-Laws - AT : Rejection of Section 7 application - The appellate tribunal overturned the adjudicating authority's decision to dismiss the Section 7 application due to non-compliance with previous orders. It emphasized the appellant's efforts to comply and highlighted the respondent's failure to fulfill their obligations despite appearing through counsel. As a result, the tribunal revived the Section 7 application for further proceedings. Visit to Get Source Tribunal Upholds Pre-CIRP Land Cost Demand, Asserts Public Authority Rights Over Leased Assets Against IBC 2016. Case-Laws - AT : Ownership of leasehold rights over the subject plot - demand for enhanced land cost was raised much before initiation of CIRP - The tribunal held that the demand for enhanced compensation by the respondent was valid and pre-dated the initiation of CIRP. It was emphasized that the respondent's rights could not be overridden by the provisions of the IBC, 2016, without compliance with the original terms of the lease deed. - The tribunal clarified that the clean slate principle does not extend to demands made by public authorities before the initiation of CIRP, especially when such demands pertain to clearing defects in the title of the land itself. - The judgement highlights the balance between the objectives of the IBC, 2016, and the rights of public sector authorities over leased assets. Visit to Get Source Service Tax Marketing Services Ruled as Export, Exempt from Tax; Tribunal Annuls Penalty and Confirms Exemption for Appellant. Case-Laws - AT : Export of service or not - Palace or provision of services - The case revolved around the Appellant's provision of sales promotion and marketing services to companies located outside India. The department contended that these services were taxable as they were provided and used in India. However, the Appellant argued that the services constituted exports, exempt from service tax, as they were provided to recipients outside India. The Tribunal, after considering the submissions and relevant legal provisions, ruled in favor of the Appellant. It concluded that the services fell under the category of export of service and were therefore not liable to service tax. Additionally, the Tribunal upheld the Appellant's entitlement to exemption under Notification No. 18/2009-ST and set aside the penalty imposed by the department. Visit to Get Source Appellate Tribunal Rules on CENVAT Credit Refund and Service Tax Issues, Remands for Further Verification. Case-Laws - AT : Refund of CENVAT Credit - services related to Information Technology (ITSS) - The appellate tribunal analyzed submissions regarding the eligibility for refund on ITSS, the denial of CENVAT credit, denial of credit for service tax paid on generators, and discrepancies between CENVAT records and ST-3 returns. The Tribunal found that while the appellant demonstrated independence from M/s Agilent Technologies (Singapore), they failed to provide evidence of valid orders for ITSS services, leading to the denial of the refund claim. However, they ruled in favor of the appellant regarding the denial of CENVAT credit, credit for service tax paid on generators, and discrepancies between records, remanding these matters for further verification and consideration by the Original Authority. Visit to Get Source Appellate Tribunal Affirms CENVAT Credit Eligibility for Erection and Commissioning Services in Overseas Operations. Case-Laws - AT : CENVAT Credit - input services - erection and commissioning of machines carried out in China and Italy based on invoices / debit notes raised by M/s.Voltas Ltd., Coimbatore - The department contested the eligibility, arguing that these services were not directly related to the manufacture of the appellant's finished products. However, the Appellate Tribunal ruled in favor of the appellant, citing the broad definition of "input services" during the relevant period, which encompassed activities relating to business. Additionally, they acknowledged the necessity of the outsourced services for the operation of the exported machines, thereby allowing the appellant's claim for credit. Visit to Get Source Life insurance premiums exempt from service tax; renting property taxable. Penalties waived due to legal uncertainties. Case-Laws - AT : Levy of service tax - Life Insurance Service - Renting of Immovable Property Service or not - On the taxability of life insurance service, the Tribunal determined that the premium collected by the appellant is exempt from service tax as it pertains to sovereign functions. Regarding renting of immovable property service, the Tribunal upheld the levy of service tax based on recent legal precedent. However, penalties for non-payment of service tax on renting of immovable property were dropped due to conflicting opinions on the applicability of service tax during the relevant period. Visit to Get Source Case Laws: GST 2024 (3) TMI 1316 Liability of Collect Tax at Source (TCS) - Exempt supplies - Section 52 of the Central Goods and Services Tax Act, 2017 (CGST Act) - It is contended that payment for the contract can either be settled through the Petitioner s platform, or it can be settled directly between the buyer and seller. The Petitioner does not guarantee settlement of transactions by way of delivery of goods or payment. The Petitioner merely charges transaction fees for providing the platform to its members for the purpose of e-auction. HELD THAT:- In the peculiar facts and circumstance of the case, when the Petitioner has raised an issue of the maintainability of the alleged demand on the ground that Section 52 of the CGST Act is not applicable, and more particularly considering the nature of the business and transaction involved, it would be appropriate that the adjudicating officer considers the same as preliminary issues and decide the same first in accordance with law. This Petition is disposed off by permitting the Petitioner to raise such preliminary issues before the adjudicating officer and the same shall be taken into consideration and decided by him in accordance with law. 2024 (3) TMI 1315 Seeking grant of regular bail - irregular availment of Input Tax Credit - violation of provisions of Section 132(1) (b) and 132(1)(c) of the CGST Act - HELD THAT:- On perusal of the record, this Court has arrived at the conclusion that the petitioner deserves to be released on bail in the present case. No doubt, the respondents have levelled specific allegations against the present petitioner, yet, the criminal liability of the petitioner is yet to be decided by the trial Court during the course of trial. Still further, the petitioner was arrested in the present case on 19.04.2023 and the maximum sentence provided under the statute is five years. Still further, the case of the prosecution is based on the testimonies of official witnesses and the petitioner may not be in a position to influence the witnesses, who are to be produced by the prosecution before the trial Court. Even otherwise, the petitioner cannot be confined in jail as an under-trial for an indefinite period. Thus, without commenting any further on the merits, the present petition is allowed and the petitioner is ordered to be released on bail on his furnishing bail bonds/surety bonds to the satisfaction of the learned trial Court/Duty Magistrate/CJM concerned subject to the conditions imposed - petition allowed. 2024 (3) TMI 1314 Levy of GST - activity of holding equity capital by the parent Company in the Petitioner - ultravires Section 5 of the IGST Act, 2017 read with Section 7 of the CGST Act, 2017 or not - HELD THAT:- In the instant case, the parent company is M/s. Metro Cash and Carry International GmbH of which the petitioner herein i.e., M/s. Metro Cash and Carry Pvt. Ltd., is a subsidiary and merely because the parent company M/s. Metro Cash and Carry International GmbH holds shares in its subsidiary i.e., the petitioner herein, the said circumstance cannot be classified, treated or construed as supply of service for the purpose of GST. Since the issue in controversy involved in the present petition is directly and squarely covered by the judgment of this Court in M/S. YONEX INDIA PRIVATE LIMITED VERSUS UNION OF INDIA, STATE OF KARNATAKA, COMMISSIONER OF COMMERCIAL TAXES BANGALORE, ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT 2. 8) BANGALORE [ 2024 (2) TMI 59 - KARNATAKA HIGH COURT] , the impugned Show Cause Notices issued are without jurisdiction or authority of law and the same deserves to be quashed. Petition allowed. 2024 (3) TMI 1313 Cancellation of GST registration of petitioner - non-service of notice to the Petitioner on his address or email and was only uploaded on the common portal - violation of principles of natural justice - HELD THAT:- The petitioner was unable to access the Show Cause Notices or reply to the said Show Cause Notices. The impugned orders dated 04.12.2023 which have been passed solely because petitioner had not file a reply cannot be sustained. The matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned orders dated 04.12.2023 are set aside. The matter is remitted to the Proper Officer for re-adjudication. Petition disposed off. 2024 (3) TMI 1312 Demand of GST - Validity of the order in FORM GST DRC-07 - Violation of natural justice - impugned order was passed before the period of 15 days could expire and the petitioner-Firm has therefore not been given a fair opportunity to put forth its defence to SCN - Appealable order or not - HELD THAT:- In the first place, a challenge to the show-cause notice, charge memo or charge-sheet is generally not entertained in a proceeding under Article 226 of the Constitution of India. There is a sound policy in law behind this rule of non-interference that the aggrieved person should first avail of the remedy provided under the statutory regime. The impugned order dated 28th December 2023 passed by the State of Tax Officer, Special Circle, Ranchi is appealable under section 107 of the GST Act and under section 107 of the JGST Act. The summary of show-cause notice is dated 13th December 2023. Through this notice, the petitioner-Firm was intimated that within 15 days if it deposits the assessed amount or provides satisfactory reply the notice shall be withdrawn. Now the stand of the petitioner-Firm is that it submitted a detailed show-cause reply dated 29th December 2023 but before that the impugned order dated 28th December 2023 has been passed - The notice is dated 13th December 2023 and the petitioner-Firm itself affirms that the said notice was mailed on 16th December 2023 in FORM DRC-1. The petitioner-Firm is required to approach the appellate authority who shall have the benefit of the records and would be in a better position to adjudicate the disputes on facts - this Court is not inclined to entertain the present writ petition which is dismissed only on the ground that no case is made out for entertaining this petition notwithstanding the statutory regime under the JGST Act. Petition dismissed. 2024 (3) TMI 1311 Taxability of Personal Guarantee and Corporate Guarantee in GST - Seeking a declaration that the activity of the holding company providing a Corporate Guarantee to a subsidiary is not in the nature of supply of services taxable under Section 9 of the Central Goods Service Tax Act, 2017 - HELD THAT:- Issue notice. List on 08.07.2024. 2024 (3) TMI 1310 Maintainability of petition - appealable order or not - non-constitution of the Appellate Tribunal - petitioner is deprived of its statutory remedy of Appeal and the corresponding benefit of sub-sections-8 9 of section 112 of the CGST/OGST - HELD THAT:- The petitioner is desirous of availing the statutory remedy of Appeal under the said provisions. Apparently, acknowledging the absence of constitution of Appellate Tribunal, in exercise of the power conferred under section 172 of the CGST Act, 2017, the Government of India based on the recommendation made by the G.S.T. Council, has issued Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 on 03.12.2019. In tune with the said Removal of Difficulties Order dated 03.12.2019, the Central Board of Indirect Taxes and Customs, GST Policy Wing vide Circular No. 132/2/2020-GST Dated 18th March, 2020 has come out with the clarification in respect of appeal having regard to non-constitution of the Appellate Tribunal - Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No. 132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition, subject to conditions imposed. The writ petition stands disposed of. 2024 (3) TMI 1309 Additional tax liability for execution of subsisting Government contracts either awarded in the pre-GST regime or in the post-GST regime without updating the Schedule of Rates (SOR) - HELD THAT:- This writ petition is disposed of by giving liberty to the petitioner to file appropriate representation in the aforesaid regard as referred in preceding paragraph of this order, before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from date. On receipt of such representation the Additional Chief Secretary, Finance Department shall take a final decision within four months from the date of receipt of such representation after consulting with all other relevant departments concerned. Income Tax 2024 (3) TMI 1308 Reopening of assessment without releasing seized documents by Crime branch - as argued Crime branch has seized certain documents, computers, hard disks, etc. from the petitioner and until all this is released, the petitioner would not be in a position to effectively respond to the notices of reassessment - HELD THAT:- There is a vague and omnibus statement in the petition that the petitioner pursued the matter with the second respondent for release in terms of the JMFC s order, however, this vague and omnibus statement is not backed by any material, documents, etc. There is no averment in the petition about furnish of any indemnity bond. Orally it was attempted to submit that the indemnity bond must have been given at some time after the JMFC made her order dated 06.02.2018. Thus, it is apparent to us that the petitioner, even after securing the order dated has not pursued the matter for the last about six years with the necessary seriousness and just because the tax authorities are proceeding with the reassessment proceedings, this petition has been instituted. This petition is nothing but an attempt to stall the reassessment proceedings without any justifiable cause. On the ground that the seized documents have not been released the petitioner succeeded in securing a remand from the lTAT. This is evident from the order dated 30.08.2022 made by the ITAT. ITAT, after granting an opportunity to the petitioner remanded the reassessment proceedings or the block assessment proceedings to the ITO for de novo assessment. The petitioner was also directed to comply with the notices in respect of the assessment proceeding and be diligent by avoiding to take any adjournments. This order was made on 30.08.2022. Despite the order of there is nothing on record to indicate that the petitioner took any serious steps for obtaining the documents/material/hard disks from the second respondent. The only letter produced on record is dated when, in fact, even the IT notice was issued on 25.01.2024. Thus, it is very apparent that the petitioner simply wants to stall the reassessment proceedings or the de novo proceedings at any cost. The writ Court cannot assist the petitioner in such endeavours. 2024 (3) TMI 1307 Seeking directions to remove the order of attachment over the property of the borrower, which according to the petitioner, is mortgaged and is a secured asset - petitioner is a creditor of respondents 2 and 3 and account of the borrowers was declared as a non-performing asset and notice u/s 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was issued HELD THAT:- It is not a matter of debate that the petitioner being a secured creditor and the security being registered with CERSAI would have a priority charge u/s 26E of the Act of 2002. A Full Bench of this court in the case of Assistant Commissioner (CT) Anna Salai-III Assessment Circle vs Indian Overseas Bank and Another 2016 (12) TMI 373 - MADRAS HIGH COURT] answered the reference and held that the rights of the secured creditors to realise secured debts due and payable to them by sale of assets over which security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority. The Full Bench of the Bombay High Court in the case of Jalgaon Janta Sahakari Bank Ltd. and another vs Joint Commissioner of Sales Tax and another [ 2022 (9) TMI 163 - BOMBAY HIGH COURT] held that the secured creditor would have the priority charge, as contemplated under Section 26E of the SARFAESI Act, 2002, in case the same is registered under Section 26B of the SARFAESI Act, 2002. The secured creditor in this petition claims that its security is registered under Section 26B of the SARFAESI Act, 2002. In view of the Full Bench judgments, as referred to above, it is held that the secured creditor has priority charge over the claims of the Sales Tax, Commercial Tax and Income Tax. In case auction is held by the secured creditor and the sale certificate is not registered, then the Registering Authority may register the same, notwithstanding the attachment of Sales Tax, Income Tax or Commercial Tax Departments. In case the auction sale is conducted by the secured creditor and it has received excess amount than its dues, then it is liable to remit the excess amount to the Departments. However, if it has not received the amount in excess of the amount due and payable to it, then it is not required to remit any amount to the Departments and the Departments cannot sustain prosecution against the Authorised Officer or the Officer of the secured creditor for not remitting the amount. 2024 (3) TMI 1306 Rectification u/s 154 - Exemption u/s 11(2) - Accumulation of income - difference in figures in computation of income in return of income and in Form 10 in respect of total amount of accumulated funds under section 11(2) - as argued that the Ld. CIT(A) did not ask for clarification from the assessee for alleged discrepancy found by him while matching the details of investment with evidence furnished, thus this is in violation of the principles of natural justice - HELD THAT:- In our view, the claim of the assessee needs verification. We, therefore, consider it judicially expedient to restore the matter back to the file of the Ld. AO to carry out necessary verification of the assessee s claim and if on verification, the claim of the assessee is found to be correct and in accordance with law, modify the assessment. Appeal of the assessee is treated as allowed for statistical purposes. 2024 (3) TMI 1305 Order passed against a non-existent entity - amalgamation/merger of the erstwhile company with the successor company - HELD THAT:- A cursory glance of the draft assessment order dated 21.12.2019 clearly reveals that against the name of the assessee, the Assessing Officer has mentioned Boeing International Corporation India Ltd. Whereas, in the column showing address of the assessee, the Assessing Officer has mentioned M/s. Boeing International Corporation India Ltd. (3rd Floor) DLF Centre, Sansad Marg, New Delhi (India) . The aforesaid facts clearly show that the assessment order has been passed in the name of Boeing International Corporation India Ltd., which as on the date of passing of the draft assessment order has become a non-existent entity. Undisputedly, against the draft assessment order, assessee raised objections before learned DRP. Interestingly, the directions of learned DRP is in the name of Boeing India Pvt. Ltd., the successor company. However, the final assessment order has again been passed by the Assessing Officer in the name of Boeing International Corporation India Ltd., the erstwhile company. More interestingly, the name of the successor company i.e. Boeing India Pvt. Ltd., nowhere appears in the body of the final assessment order. Also further relevant to observe, the PAN appearing both in the draft and final assessment orders is of the erstwhile company, Boeing International Corporation India Ltd. and not of the successor company Boeing India Pvt. Ltd. Thus, the facts on record establish beyond doubt that both the draft as well as final assessment orders have been passed in the name of a non-existent company. Applying the ratio laid down by the Hon ble Supreme Court, in case of Maruti Suzuki [ 2019 (7) TMI 1449 - SUPREME COURT] and Sony Mobile Communications India Pvt. Ltd [ 2023 (2) TMI 1074 - DELHI HIGH COURT] to the factual matrix of the issue, we have no hesitation in holding that the impugned assessment order passed in the name of a non-existent entity is void ab initio. Accordingly, it is quashed. 2024 (3) TMI 1304 TP Adjustment - Provision of Administrative and Agency Services - Determination of Arm s Length Price (ALP) - allocation of expenses relating to income streams between two segments - HELD THAT:- As seen that the assessee has allocated common expenses and has also given basis of apportionment. We find that the CIT(A) has put a doubt on whether segmental accounts are to be accepted and the only reason given by the authorities, as we understand from the respective orders, is that it is not audited. Merely because segmental accounts are not audited cannot make them untrustworthy without pointing out any specific defect/error/fallacy in them. Observations of the ld. CIT(A) that non compete fee and good will has not been allocated is not accepted as the TPO himself has not allocated these expenses. Assessee has not only provided segmental account but has also allocated expenses and has given basis of allocation. We do not find any merit in the stand taken by the TPO/AO as confirmed by the ld. CIT(A). We, accordingly, direct the AO to delete the impugned adjustment. Appeal of assessee allowed. Customs 2024 (3) TMI 1303 Classification of imported goods - Reformate - whether the goods to be classified under CTH 2710 12 19 or under CTH 2707 50 00? - Tribunal held that Reformate would merit classification under CTH 2707 50 00 - HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the Customs, Excise Service Tax Appellate Tribunal. Civil Appeal is, accordingly, dismissed. 2024 (3) TMI 1302 Suspension of operations of handling the cargo of third parties - Non-issuance of a show cause notice - Validity Of order passed by the Commissioner of Customs (G) - failure to comply with the provisions of Regulations 5 10(1)(m) of the SCMTR, 2018 and Section 33, 34, 39, 40 41 of the Customs Act, 1962 - confiscation of goods - penalty - HELD THAT:- As the petitioners are handling the cargo of third parties and if the order-in-original is not suspended, it would be a serious and an irreparable prejudice not only to the petitioners but also to third parties with whom the petitioners have contracts to handle their cargo. Thus, in our opinion, it is in the interest of justice that the proceedings are remanded to the Commissioner of Customs for a fresh order to be passed after an opportunity of hearing is granted to the petitioners after issuance of a show cause notice, so that the petitioners are made aware in regard to the allegations intended to be made against the petitioners for such action to be resorted and on which the petitioners can be heard by the Adjudicating Officer. Thus, for such course of action to be adopted, the impugned order dated 14 March 2024 would be required to be quashed and set aside, as also the consequences emanating from the said order namely the Public Notice dated 20 March 2024 would also be required to be not acted upon. Ordered accordingly. We, accordingly, dispose of this petition in terms of our aforesaid observations. 2024 (3) TMI 1301 Levy and collection of Cost recovery charges - Validity Of Notification No.26/2009 issued by Central Board of Excise and Customs - Duties, functions and obligations of custodian appointed under section 45 of the Customs Act, 1962 - Regulation 5(2) of the Handling of Cargo in Customs Areas Regulations, 2009 - Regulation ultra vires to section 157 and 158 of the Customs Act, 1962 - HELD THAT:- It is submitted that even if the same are treated to be a fee, there is no justification for levy of fees as no service is being rendered to the Company. In the absence of any element of quid pro quo, it is urged that the decisions of Bombay and Delhi High Courts in Mumbai International Airport Private Limited [ 2014 (10) TMI 508 - BOMBAY HIGH COURT] and Allied ICD Services Limited [ 2018 (8) TMI 1610 - DELHI HIGH COURT] are distinguishable and the learned Single Judge of this Court has rightly held that the 2009 Regulations are ultra vires the Customs Act, 1962. In support of the aforesaid submissions, reliance has been placed on the decisions of the Supreme Court in Government of Maharashtra vs. Deokar s Distillery [ 2003 (3) TMI 727 - SUPREME COURT] and Gupta Modern Breweries vs. State of Jammu and Kashmir [ 2007 (4) TMI 684 - SUPREME COURT] . From a perusal of Section 157 of the Customs Act, it is evident that Section 157 does not enumerate any specific provision under which cost recovery charges i.e., the amount of salary payable to the officials of the Customs Department, who are deployed at the Airport who perform their statutory duties, can be recovered. The 2009 Regulations have been framed in exercise of the powers conferred under Section 141 and Section 157 of the Customs Act. From a close scrutiny of the aforesaid provisions of Sections 141 and 157, it is evident that there is no express statutory provision conferring authority on the appellants to levy cost recovery charges. In the absence of any special authorization to levy cost recovery charges, appellants have no authority to impose cost recovery charges by means of a Regulation. The inevitable conclusion is that the 2009 Regulations are ultra vires the Customs Act, 1962. Therefore, the officers of the Customs Department, who were employed at the Airport between the years 2008 and 2013, were deployed to perform their statutory duties. The levy of cost recovery charges, which is in fact salaries payable to the customs staff deployed at the Airport is in the nature of administrative charges and is a tax. It cannot be exacted from the respondent without any statutory provision. Therefore, the same is also violative of Article 265 of the Constitution of India. Even assuming that the said levy to be a fee, the same cannot be recovered from the respondent as no services are provided to it by deployment of additional staff at the Airport between the years 2008 and 2013. Contention that the Company at the time of application seeking appointment as Custodian has furnished an undertaking that it shall abide by the 2009 Regulations is concerned, suffice it to say that the Company subsequently on 06.05.2007 and 22.11.2007 had submitted applications seeking to waive the condition Nos.10 to 13 of Circular No.34/2002. Therefore, the undertaking furnished by the Company does not bind it in the facts of the case. Thus, we agree with the conclusion of the learned Single Judge that the impugned 2009 Regulations are ultra vires the Customs Act. In the result, the Appeal fails and the same is hereby dismissed. 2024 (3) TMI 1300 Levying Container Storage Charges - ground rent - Storage of confiscated containers to treated as Goods or not - declaration of Custodian at Kandala Port Trust issued from the office of the Commissioner of Customs, the Custom House, Kandala - Section 45(1) of the Customs Act, 1962 - HELD THAT:- The contention of the learned counsel for the petitioner that the Kandala Port Trust could not have charged ground rent from the petitioner as the containers could not have been confiscated by the Customs authorities, as they did not fall within the meaning of goods , is found to be misconceived. The reference to the decision of the Apex Court in Chairman, Board of Trustees, Cochin Port Trust [ 2020 (8) TMI 300 - SUPREME COURT ] is found to be misplaced. No ground rent can be levied on the petitioner shipping agent, once the Kandala Port Trust became the custodian of the goods with the confiscation by the Customs department. There are inherent fallacy in the arguments of the learned counsel for the petitioner, inasmuch as, the said notification only decides the liability of the Kandala Port Trust for being custodian of the Custom department and Clause 18 of the said notification can only be interpreted to mean that the Kandala Port Trust would not charge any rent/ demurrage on the goods/containers detained from the Customs department. There are no error in the order passed by the learned single Judge in holding that the petitioner has failed to make out a case that there was an error on the part of the Kandala Port Trust in levying container storage charges from the petitioner. Appeal disposed off. 2024 (3) TMI 1299 Revocation of CHA License - Customs Broker resorted to unprofessional methods while clearing the goods imported vide Bill of Entry - Fabrication of redemption fine and penalty in the order in original - time limit stipulated in Regulation 20 of CBLR, 2013 - whether the Order directing for continuation of suspension issued by the Department dated 20.12.2013 is legal and proper - HELD THAT:- The prohibitary order was issued on 05.06.2013. If such date is considered as the date on which the Department had come to know of the incident, the Show Cause Notice ought to have been issued on or before 05.12.2013. In the present case, the Show Cause Notice is issued only on 20.12.2013 which is beyond the period of 90 days prescribed in Regulation 20 of CBLR, 2013. Further, it has to be noted that though an inquiry officer was appointed by the Department, no inquiry report (offence report) was submitted by the Department. The Hon ble Jurisdictional High Court in the case of Sabin Logistics Pvt. Ltd. [ 2019 (4) TMI 1713 - MADRAS HIGH COURT] had held that the compliance of the time limit as prescribed in the Regulation is mandatory. This Tribunal in the case of M/s. Trade Wings Logistics India Pvt. Ltd. [ 2023 (7) TMI 892 - CESTAT CHENNAI] had occasion to consider a similar issue and held that when the Department has not complied with the time limit, the order issued for revocation of licence or the order issued for continuation of the suspension licence cannot sustain. Thus, we are of considered opinion that the Order issued by the Department directing for continuation of suspension of the licence cannot sustain and requires to be set aside. In the result, the impugned order is set aside. The appeal is allowed with consequential relief, if any, as per law. 2024 (3) TMI 1298 Exemption from Basic Customs Duty - Import of Lithium-Ion Batteries falling under Customs Tariff Heading 85076000 - Time limitation for submission of Country of Origin certificate - the goods are originating from the Republic of Korea - HELD THAT:- The Commissioner (Appeals) ought not to have rejected the appeals on the ground of being time barred. There is no requirement to file a petition for condonation of delay as the said period during the Pandemic has been excluded by the Hon ble Apex Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER] . The rejection of appeals as time barred cannot be sustained and requires to be set aside. The matter is remanded to the Commissioner (Appeals) for reconsideration of the issue of benefit of exemption notification. In such reconsideration of the issue, the Commissioner (Appeals) shall look into the Country of Origin certificate issued retrospectively as per the Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of the Republic of India and the Republic of Korea) Rules, 2009 to ascertain the eligibility of exemption. The decision of Tribunal in the case of THE COMMISSIONER OF CUSTOMS VERSUS M/S. KOMOS AUTOMOTIVE INDIA PVT. LTD. [ 2023 (9) TMI 1446 - CESTAT CHENNAI] on similar issue shall also be looked into by the appellate authority. The impugned orders are set aside - The matter is remanded to the Commissioner (Appeals) who shall dispose of the case within a period of two months from the date of receipt of this order - Appeal allowed by way of remand. 2024 (3) TMI 1297 Revocation of Licenced Customs Broker Licence - violation of Regulations 10(d), 10(e) and 10(i) - forfeiture of security deposit - Penalty - Appraiser at the CFS Chennai demanding and accepting undue advantage from the Custom House Agents (CHA) for issuing Let Export Order / out of charge order on the consignments and registration of bills pertaining to import/export - HELD THAT:- The entire proceedings are based on CBI report, which in turn is based on the slips and vouchers recovered from the customs officials, the appellant and various statements of the employees. These are only allegations/charges arrived at a preliminary stage which is yet to be corroborated with the evidences and to be finalised by the CBI. Moreover, based on the same set of facts, the Customs Brokers are penalised differently either by imposing only penalty or by revocation of license along with imposition of penalty as is the case of the present appellant. Based on the facts and allegations levelled against the appellant and the facts placed on record do not in any way prove the contravention of clause 10(d) and (e) of the Regulations and to invoke clause 10(i), the allegations/charges are yet to be proved by the competent court. Moreover, the decisions relied upon by the appellant clearly observed that the appellant cannot be penalised for the actions of the employee when there is no proof on record to establish that the conduct of the employee was authorised by the appellant. Thus, the entire proceedings being based on CBI report which is pending adjudication are pre-mature and without any basis. We set aside the impugned order and allow the appeal. 2024 (3) TMI 1296 Valuation - export duty - Whether the Appellant/Assessee is liable to pay customs duty on the FOB value, on export of iron ore fines considering the same as cum-duty value or otherwise - HELD THAT:- We find that the issue is no longer res integra as has been decided in catena of rulings against the Appellant/Assessee holding that Cum Duty Value cannot be used for arriving at the value for levy of export duty. In the following rulings of this Tribunal, this view has been taken in Sesa Goa Ltd vs CCE,C ST,[ 2014 (4) TMI 658 - CESTAT KOLKATA] and Essel Mining Industries Vs CCE, [ 2017 (4) TMI 87 - CESTAT KOLKATA] . Thus, we dismiss the Appeals and uphold the Impugned Orders. 2024 (3) TMI 1295 Value addition - Duty-free import of gold - Replenishment of gold under the replenishment scheme from DIL against export of gold jewellery - Not fulfilled the mandatory requirements - balance quantity of gold supplied - duty demand - confiscation - Penalty u/s 114A - limitation for adjudication - Violation of the conditions of Notification No. 57/2000-Cus. i) Whether or not the subject kadas were manufactured by a fully mechanized process as declared by BL/JR in the shipping bills. ii) Whether or not the claim made by BL/JR that the value addition was 2.05% of the export FOB value, is correct? HELD THAT:- Gold has been supplied by DIL by way of replenishment and there is no allegation that matching quantum of gold has not been exported as required under Notification No. 57/2000-Cus. In the said Notification, in the second proviso, it clearly provides that Nominated Agency supplying gold to the exporter is liable only for difference (shortage) between the quantity issued and that contained in the exported jewellery or articles. We further find that the value addition norm was required to be checked by the proper officer of customs on presentation of goods with the export documents. Admittedly, all the shipping bills along with the export invoices were approved by the proper officer of customs on being satisfied as to the declarations and requirements. Thus, we find that no case of violation of the conditions of Notification No. 57/2000-Cus is made out in the facts and circumstances. Thus, we hold that the Appellant DIL has not violated the provisions of Customs Act read with Notification No. 57/2000-Cus. From the facts on record and the evidence recorded, it is evident that the jewellery in question which have been exported, was manufactured by the said job worker by fully mechanised process. The Govt. approved jewellery valuers, who are experts, have also certified so. Further, the said valuers have not stood by their statements recorded during investigation. The Chartered Engineer has also certified the process as fully mechanized. Therefore, the value addition here would be 2% and not 3.5% as held in OIO. Value addition - I t is obvious that the interpretation of DGFT Authority would prevail over Customs Authority, which has also been admitted by DGEP in their circular (quoted supra). Therefore, if that norm is followed instead of the calculation method adopted by the Revenue, the requirement of Notification No. 57/2000 is met, in as much as, the conditions for duty-free imports stand fulfilled and therefore, there is no short levy. Evidential value of email clarification - It is also noticed that this mail has come in response to DIL s letter dt.09.10.2020. Since it is an official mail, it cannot be held as having no authority to clarify as indicated in the said mail. If Revenue had any doubt about genuineness of this mail, they could have cross-checked from the DGFT as regard bonafide of this mail. It is obvious that the original Circular dt.27.09.2019 also, in Para 3, has clarified that for the purpose of value addition, inputs in B in Para 4.38 means the duty-free (either on advance or replenishment basis). Therefore, it would be obvious that the term dutyfree used here in conjunction with either on advance or replenishment basis, would obviously mean imported inputs or in other words, what has been clarified in email is inputs imported duty free. Therefore, the objection taken by the Revenue on this ground does not hold any substance. Further, we have held that the process of manufacture is fully mechanised, we find that the wastage allowable was 0.9%. Further, the required value addition is 2% as per the table in Para 4.61 4.62 in the Handbook of procedures. Thus, we find that the whole allegation by revenue of not achieving minimum value addition is misconceived and bad. There is no allegation in the SCN that the customs authorities proper officer did not perform their duty diligently or have abetted with the exporter. Further, all duly endorsed documents were submitted by DIL to jurisdictional Customs officer for final assessment and closure of the bond and the said bonds were closed without raising any doubt or query based on endorsement of proper officer of customs, at the time of export of gold jewellery. Thus, the whole allegation is not substantiated and has got no legs to stand. We further find that there is also no allegation that the Appellant have exported gold jewellery using less quantum of gold, than declared or made by some other metal other than gold. Also, there is no allegation regarding purity of gold as declared. Thus, we hold that the provisions of section 113(i) for confiscation are not attracted, there being no case of any misdeclaration. DIL as the Nominated agency - We hold that there is no case of any violation against DIL under the Customs act, read with the notification. We further take notice of the fact that the bonds given by the Nominated agency DIL to the customs, have been duly discharged or closed by the proper officer after due verification of relevant documents under the scheme. Jewellery valuer - We find that, the allegation against him would also not stand. It is evident that this Appellant has valued the gold jewellery under export, in the export shed in presence of the Customs officials. He has certified certain other parameters including weight and purity but that does not make him accomplice. No case of any suppression or collusion in the valuation report is made out. In this view of the matter, we allow the appeals of the jewellery valuer and set aside the penalties imposed on him. Consequently, we hold that no penalties are imposable on any of the parties/Appellants. Accordingly, all the penalties imposed on all the Appellants are set aside. Limitation for adjudication - The Revenue has however put on record an Order dt.21.08.2019, whereby, in the case of SCN dt.31.08.2018, the approval for extension of one year as per first proviso to Sec 28(9) of Customs Act was recorded by the competent authority. Further produced a notification viz., 06/2019-CUS dt.27.02.2019, under sub-sec (8) of Sec 28 of Customs Act, whereby in respect of SCN dt.26.09.2018 of DIL was extended by further period of one year. The Appellants have relied on the judgment of Gautam Spinners vs CC (Import) [2023 (386) ELT 62 (Del)] to substantiate their claim that regardless of causative factors, the notice needs to be adjudicated within the statutory period. Be the case as may be, since the entire issue has been decided on merit itself, we keep the issue of limitation open without expressing any view on this aspect. Further, as we have allowed the appeals on merits, we also leave the question of limitation open. All appeals are allowed with consequential benefits, including entitlement to receive the balance quantity of gold, which has not been released by the Nominated agency DIL to the Appellant/exporter M/s BL/JR under the replenishment scheme. Insolvency & Bankruptcy 2024 (3) TMI 1294 Admission of section 9 application - Operational Creditors - debt payable or not - prior existence of the dispute between the parties or the pendency of other proceedings filed elsewhere - effect upon the liability of Corporate Debtor in respect of the unpaid operational debt. Whether based on the documentary evidence which were furnished by the Corporate Debtor whether any debt was payable at all and what is the basis on which it has been claimed to have been paid? - HELD THAT:- A careful scrutiny of the contract agreement dated 03.09.2012 particularly in the context, to its contents provided in clause I.10 and I.40, dealing with the schedule of payment agreed to show that it does not envisage the payment by the Corporate Debtor to the Operational Creditor, would be depending only upon the receipts of amount made from M/s. GVK Coal (M/s. Tokisud Company Pvt. Ltd.). Hence, as far as the purchase order and the contract agreement are concerned, they will have to read only for the contract purposes and not to the liability of payment of the dues to the Operational Creditor. Thus, it could be rightly inferred that prior dues left unpaid by the Corporate Debtor to the Operational Creditor which necessitated invocation of Section 9 of the Insolvency and Bankruptcy Code, 2016, was justified in the eyes of law. Whether there is a prior existence of the dispute between the parties or the pendency of other proceedings filed elsewhere? - whether such will at all have any effect upon the liability of Corporate Debtor in respect of the unpaid operational debt? - HELD THAT:- The said issue has been dealt with by the Hon ble Apex Court in matters of Mobilox Innovations Private Ltd. vs Kirusa Software Pvt. Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ], wherein it was ultimately held that the Adjudicating Authority at the stage when it is examining an application under Section 9, will only have confine itself to determine whether there happens to be an operational debt, exceeding amount prescribed under the Code and further the only precaution which is required to be taken is that based on documents on rigour as furnished, the aspects of liability of dues stand established and that if any of the ingredients as aforesaid exists, the application under Section 9 would be sustainable. As per the records, there is nothing on record to otherwise that the Corporate Debtor had any intention to pay the amount due prior to the date the Demand Notice was issued by the Operational Creditor and that there was existence of any dispute with Operational Creditor by the Corporate Debtor prior to the receipt of demand notice served as a mandatory notice in terms of Section 7 of the Insolvency and Bankruptcy Code, 2016. Hence, since despite the demand notice the amount therein was not paid by the Corporate Debtor in all to the Respondent/Operational Creditor. the existence of amount due to be paid becomes an admitted fact, more so in the light of the aforesaid fact that the Corporate Debtor has not raised any dispute as per terms of the purchase order - the Adjudicating Authority while admitting the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 and dealing with the aspect of moratorium under Section 14 of the Code had not committed any legal error of law and fact in relation to the guidelines for the purpose of arrears or claim raised under Section 9 of the Code. The act of the Adjudicating Authority in declaring the moratorium for the purpose of Section 14 of the Code, in the light of provisions contained under Section 9 dealing with the aspect of remittance of the dues claimed, does not appear to suffer from any apparent error of law or a fact on record which could call for acceptance of the defence taken by the Corporate Debtor or questioning the existence of the dues to be paid and/or admitting the existence of any prior dispute regarding the amount due remaining unpaid. The admission of proceedings by the Adjudicating Authority under Section 9 of the Insolvency and Bankruptcy Code do not suffer from any apparent error of fact and law, calling for any interference while exercising Appellate jurisdiction under Section 61 of the Insolvency and Bankruptcy Code, 2016 - Appeal dismissed. 2024 (3) TMI 1293 Seeking grant of Interim Stay of the Sale Notice - sale of assets of the Corporate Debtor and the property of one Mr. S. Srinivasan (Guarantor) - HELD THAT:- This Tribunal, pertinently points out, that obviously, the Learned Counsel for the Appellant/Petitioner, is not desirous of assailing the subsequent E-auction Notice dated 15.02.2024, (being the later development, after the earlier Auction Notice dated 16.09.2023) and in the absence of any challenge to the subsequent E-auction Notice dated 15.02.2024, then in law, it amounts to waiver, Acquiescence and also Estoppel By Conduct, of the Appellant/Petitioner. The instant Comp. Appeal filed by the Appellant, is only an exercise in futility/otiose one, in the considered opinion of this Tribunal. As such, this Tribunal is not inclined to entertain the instant Comp. Appeal and Dismisses the same, at the Admission stage, without traversing, or delving deep into the subject matter in issue. Company appeal dismissed. 2024 (3) TMI 1292 Ownership of leasehold rights over the subject plot - demand for enhanced land cost was raised much before initiation of CIRP - Applicability of clean slate principle - Seeking quashing of demand notice - direction to to issue No Objection Certificate (NOC) for the subject plot - whether in the factual matrix of this case, the successful resolution applicant can be granted ownership of leasehold rights over the subject plot without payment of dues to the respondent? HELD THAT:- Hon ble Supreme Court in the MUNICIPAL CORPORATION OF GREATER MUMBAI (MCGM) VERSUS ABHILASH LAL ORS. [ 2019 (11) TMI 844 - SUPREME COURT ] has held that the provisions of Section 238 of IBC, 2016 do not override the rights of Municipal Corporation of Greater Mumbai (MCGM) to control and regulate how its properties are to be dealt with. It is public duty of MCGM to control and regulate how its properties are dealt with. The provisions of Section 238 could be of importance when the properties and assets are of debtor and not when a third party like MCGM are involved and therefore in the absence of approval in the terms of Sections 92 and 92-A of the Mumbai Municipal Corporation Act, 1880 (MMC), the Adjudicating Authority under IBC, 2016 cannot create a fresh interest in respect of MCGM s property and lands. From the perusal of the aforesaid judgment, it follows that the rights of the Public Sector/ State Land Development Authorities on assets owned by them cannot be overridden by provisions of IBC, 2016 and any transfer to the successful Auction Purchaser or Successful Resolution Applicant has to be in accordance with the terms and conditions of the original allotment or lease deed or policy of the Authority. The demand for enhanced land cost was raised much before initiation of CIRP and evidently, it was not brought to the notice of the IRP or the CoC. Even the pending litigation before Civil Judge (Senior Division), Ludhiana regarding the subject plot was not brought to the notice of the CoC and the successful Resolution Applicant. The protective umbrella of IBC, 2016 for CIRP cannot be extended to an extent that public authorities are asked to part with their assets without full payment of their dues or without compliance to terms and conditions of the sale or lease deed or their transfer policy. The clean slate principle will not apply to the factual matrix of the present case, where there was prior demand from public sector land authority which was also not disclosed during CIRP to the IRP or the CoC. The Adjudicating Authority in the impugned order has rightly noted that the payment demanded by the respondent is to clear the defect in the title of the land itself, and is not linked to the CIRP proceedings. There are no reason to interfere in the order of the Adjudicating Authority - appeal dismissed. 2024 (3) TMI 1291 Approval of the Resolution Plan - Requirement of liability of PF and ESI dues to be paid in Full - Claim u/s 7A, 7Q, and 14B of the Employees Provident Funds Miscellaneous Provisions Act 1952 - Approval of Resolution Plan in which only amount proposed was amount u/s 7A - HELD THAT:- Similar issue decided in REGIONAL PROVIDENT FUND COMMISSIONER, VATWA, EMPLOYEES PROVIDENT FUND ORGANIZATION VERSUS SHRI MANISH KUMAR BHAGAT, (RESOLUTION PROFESSIONAL OF M/S. PERFECT BORING PVT. LTD.) , M/S. N.A. ROTA MACHINES MOULDS INDIA [ 2023 (10) TMI 535 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] . One of the claims which was not paid by the Resolution Plan in the said case was also claim under Section 14B of the Employees Provident Fund Miscellaneous Provisions Act, 1952. This Tribunal taking note of the claim under Section 14B took the view that the Central Board is empowered to waive the damages under Section 14B as per the scheme under the 1952 Act. It was observed that Section 14B referred to recommendation by Board under the 1952 Act. The said Act having been repealed and now repealed by the IBC Code, the power of recommendation can be exercised by NCLT. This Tribunal ultimate directions in paragraph 18(i) (c) permitted the SRA to make an application to Central Board for waiver of 100 per cent damages along with the copy of the order. In the facts of the present case, we are inclined to grant liberty to SRA to make an application to the Central Board for waiver of the amount of damages under Section 14B as provided in Section 14B of the 1952 Act. Now coming to another part of the claim which was admitted in the CIRP i.e. amount under Section 7Q amounting to Rs.75,62,576/- - the said amount is required to be paid by SRA to the Appellant. The SRA- Respondent No.3 is directed to make payment of amount of Rs.75,62,576/- within the period of two months from today to the Appellant which was admitted claim under Section 7Q - With regard to amount admitted under Section 14B of Rs.1,05,63,927/-, liberty granted to the SRA to make an application to the Central Board to waive 100% damages levelled under Section 14B. The impugned order passed by the Adjudicating Authority is affirmed. 2024 (3) TMI 1290 Rejection of Section 7 application - rejection on the ground that there is non-compliance of order dated 11.08.2022 and 05.12.2022 - direction for publication of notice in two leading newspapers not complied with - issuance of fresh notice to the Respondents and directing the Appellant to serve notice along with copy of petition to the Respondent by all modes and file proof of service. HELD THAT:- From the order dated 11.08.2022, it is noted that notices were issued and direction was to issue notice by paper publication in two leading newspapers. On 16.09.2022, the Respondent have appeared before the Adjudicating Authority through counsel and time was allowed to them to file vakalatnama and counter affidavit and thereafter again on 05.12.2022 fresh notices were directed to be issued. Affidavit of service was already filed by the Appellant on 08.08.2022, however, thereafter order for publication was issued. The Appearance of counsel on behalf of the Corporate Debtor on 16.09.2022 clearly indicates that the Corporate Debtor was well aware of the proceedings. In the present appeal, inspite of issuance of notice and publication in newspapers, no one appeared for the Corporate Debtor - the Adjudicating Authority committed error in rejecting the Section 7 application due to non-compliance of order dated 11.08.2022 and 05.12.2022. The Corporate Debtor having appeared before the Adjudicating Authority through counsel who took time for filing vakalatnama and counter affidavit, the Adjudicating Authority ought to have dismissed the application for non-compliance. The order dated 02.02.2023 set aside - Section 7 application is revived before the Adjudicating Authority to be heard and decided in accordance with law - appeal disposed off. Service Tax 2024 (3) TMI 1289 Imposition of penalty u/s 76 and 78 of the Finance Act, 1994 - Recovery of service tax - business auxiliary services - payments made by the Appellants to foreign commission agents - period from 2003 04 to 31.12.2007 - HELD THAT:- There is no dispute as regards the fact that the Appellant have paid service tax along with interest upon intimation by the Department. It is the claim of the Appellant that they were under bonafide belief as regards their liability to pay tax and when they were intimated about their obligation, they have discharged the tax liability along with interest there upon. It is found that it is settled legal position as enumerated by the Hon ble Gujarat High Court in the case of M/S RAVAL TRADING COMPANY VERSUS COMMISSIONER OF SERVICE TAX [ 2016 (2) TMI 172 - GUJARAT HIGH COURT] that penalty under section 76 and 78 cannot be imposed simultaneously. Similar view has been upheld by this Tribunal in the case of MD ENGINEERS VERSUS C.C.E. S.T. -VADODARA-I [ 2023 (8) TMI 903 - CESTAT AHMEDABAD] wherein it was held that the appellant have been imposed penalty under section 76 and 78 simultaneously. The penalty under Section 76 and 78 cannot be imposed simultaneously. Accordingly, penalty under section 76 should not be imposed on the Appellant when they have paid the service tax along with interest whereas penalty under section 78 and other penalties is upheld. The impugned order is modified to the above extent. The appeal is partly allowed. 2024 (3) TMI 1288 Benefit of N/N. 1/2006 ST dated 01.03.2006 - Industrial or Commercial Construction Services - appellant to provide the materials such as cement, steels etc., and in terms of some it was required for the appellant to provide the services along with the materials - Cenvat credit was being availed - HELD THAT:- The issue settled by this Tribunal in the appellant s own case M/S SMP CONSTRUCTIONS PVT LTD VERSUS C.C.E. S.T. -VADODARA-II [ 2018 (8) TMI 179 - CESTAT AHMEDABAD ] pertains to the condition as prescribed under Notification No. 1/2006-ST as regards exemption and benefit of abatement where it was held that the condition of the Notification was complied with, merely in some of the contract the appellant had availed the cenvat credit, and the same has no effect on the service where the exemption Notification No. 1/2006-ST was availed. Thus, following the above observations of this Tribunal, the adjudicating authority can reconsider the issue afresh based out of the factual matrix of the present case taking into account the submissions made by the Appellant as regards the effect of availment of Cenvat credit and abatement where credit was not availed at all. Therefore, the issue needs to be remanded back to the adjudicating authority for reconsideration. The appeal is allowed by way of remand to the adjudicating authority. 2024 (3) TMI 1287 Levy of service tax - services of sales promotion and marketing provided outside India - service in the present case is provided in the taxable territory of India or not - failure to fulfil the condition as provided in clause (d) of the Rule 6A as per which the place of provision of service is outside India - Section 66B of the Finance Act read with Rule 6A of the Service Tax Rules - HELD THAT:- The said issue has been settled by this Tribunal in Solvay Specialities India Pvt Limited Versus Commissioner of Central Excise ST, Surat-II [ 2023 (4) TMI 828 - CESTAT AHMEDABAD ] in the Appellant s own case where it was held that the service of the appellant in present case being absolutely identical, under the same set of facts, it amounts to Export of Service hence it is not liable to service tax. Accordingly, the demand on the Export of Service i.e. Business Auxiliary Service is not sustainable hence the same is set-aside. The services have been provided by the Appellant which have been received outside India thereby establishing that the said services have been exported. The issue is no longer res-integra. The impugned order set aside - appeal allowed. 2024 (3) TMI 1286 Refund of CENVAT Credit - services related to Information Technology (ITSS) - export of services or not - eligibility to avail CENVAT credit when the supplier of services pays service tax on a mistaken notion of law - credit can be denied for the difference in the ST-3 Returns and CENVAT credit Register or not. Whether the appellants are eligible for claiming refund on the ITSS Services claimed to have been rendered to M/s Agilent Technologies, Singapore? - HELD THAT:- On going through the agreement, one gets understanding that the same are not in the field of ITSS. An addendum of a later date cannot be construed to be an order valid during the relevant period. Therefore, there was no specific order placed by M/s Agilent Technologies, Singapore, on the appellant, for providing ITSS Services during the relevant period. It is found that the addendum and the certificate issued much later than the impugned period that to after rejection of the refund cannot take place of an Order as envisaged in the proviso to Rule 3(1)(iii) of Export of Service Rules, 2005. It is found that the argument of the appellants that development of Software Services rendered by the appellants is linked to the R D Agreement is not acceptable. The appellants have also taken the plea that prior to 16.05.2008, they have claimed refund of Business Support Services and not in respect of ITSS Services and thus, partial refund claim was wrongly rejected to the tune of Rs.2,81,87,493/-. This claim needs to be verified from the records by the Adjudicating Authority. Though, it is held that during the relevant period, the appellants are not entitled to refund of CENVAT credit on services utilized for ITSS Services, they would be eligible for the refund of CENVAT credit on services utilized for other services, if otherwise, applicable. For this reason, it is found that the matter requires to go back to the Original Authority. Whether the appellants are eligible to avail CENVAT credit when the supplier of services pays service tax on a mistaken notion of law? - HELD THAT:- As there is no dispute regarding the fact of duty being paid on the generator, credit cannot be disallowed at the service receiver s end. Learned Authorized Representative for the Department submits that all the cases cited by the appellant are in the realm of Central Excise and therefore, not applicable to the issue of service tax. This proposition cannot be accepted. The basic principle of CENVAT credit being same under Central Excise Service Tax regime, any differentiation in this regard would be artificial. Whether the credit can be denied for the difference in the ST-3 Returns and CENVAT credit Register? - HELD THAT:- Appellant submitted that learned Commissioner has not given any findings on the same - In the case of M/s Temenos India Pvt. Ltd. [ 2020 (2) TMI 354 - CESTAT CHENNAI] , the Tribunal held Further I find that the Commissioner (Appeals) in the impugned order has observed that the appellants have not submitted any 11 documents to prove their contention that they have rightly availed the cenvat credit. It appears that both the authorities have not examined all the documents which have been filed by the appellant in support of their refund claim. In view of this, I set aside the impugned order and remand the matter back to the original authority to examine the refund claim on the basis of other documents filed by the appellant. Refund cannot be rejected for the reason that there is a discrepancy between the CENVAT record and ST-3 Returns. However, the submissions of the learned Authorized Representative, agreed upon, that the same can be allowed only if records maintained by the appellants demonstrate that the input services were used/ utilized for the export of services - the issue requires to travel back to the Original Authority for a re-consideration in view of our findings as above. The appeal is allowed by way of remand to the Original Authority. 2024 (3) TMI 1285 Classification of services - Business Auxiliary Services (BAS) or Goods Transport Agency Services (GTA) - extra amount collected from the clients over and above the amounts actually paid to the vehicle owners on back-to-back basis - HELD THAT:- The undisputed fact in the present case is that the appellant renders service of transporting goods of their customers in exchange for a consideration and for this purpose, the appellant hires vehicles from third party owners under the agreement. Further, the appellant s customers are not privy to the agreement for hiring vehicles and the Margin Money collected and retained by the appellant is nothing but the surplus of transportation income, over and above the hire charges paid, on which service tax is paid after availment of 75% abatement. In the appellant s own case M/S. ASPINWALL CO. LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE TIRUNELVELI [ 2019 (4) TMI 182 - CESTAT CHENNAI] for the previous period, this Tribunal allowed the appeal of the appellant by holding On perusal of the order as well as records, we do not find any element that would attract the activity or the amount collected by the appellant in relation to hiring of vehicles or transportation of goods to be falling under BAS. The impugned order is not sustainable in law and the same is set aside - appeal allowed. 2024 (3) TMI 1284 CENVAT Credit - input services - erection and commissioning of machines carried out in China and Italy based on invoices / debit notes raised by M/s.Voltas Ltd., Coimbatore - HELD THAT:- The appellant has availed credit in regard to services only upto 01.04.2011. As rightly argued by the learned counsel for appellant that during the period prior to 01.04.2011, the definition of input services was wide enough as it included the words activities relating to business . Undeniably, the services are related to the business of manufacture of the appellant. For this sole reason, the appellant is eligible for credit. Further, as argued by the appellant, the erection and commissioning has been outsourced by appellant through M/s.Voltas Ltd., Coimbatore. The agreement between the appellant as well as the foreign buyer shows that the appellant has to do erection and commissioning of the machines sold at the buyer s premises. Therefore, the cost incurred by the appellant to M/s.Voltas Ltd. has gone into the cost of the machines sold/exported by the appellant. For this reason also, the appellant is eligible for credit - the denial of credit is not justified - impugned order is set aside - Appeal allowed. 2024 (3) TMI 1283 Levy of service tax - collection of excess amount from customers over and above the actual ocean freight paid to the shipping lines - period from April 2012 to September 2012 - HELD THAT:- The Adjudicating Authority has considered in Paragraphs 10.4 and 10.5 that the amount collected during the course of providing the Steamer Agent Service is subject to levy of Service Tax. However, he has not stated under which category and how this amount is an excess amount collected as freight would be consideration and the appellant has paid the Service Tax on the commission received as Steamer Agent. The amount collected is some excess of ocean freight as they were not able to quantify the exact freight to be paid to shipping lines. The ocean freight cannot be subjected to levy of Service Tax as it is not a consideration for Steamer Agency Services. The Department itself admits that these are amounts collected in excess of ocean freight. There is no provision for levy of Service Tax on ocean freight. Further, as per the decision in the case of MESSRS SAL STEEL LTD. 1 OTHER (S) VERSUS UNION OF INDIA [ 2019 (9) TMI 1315 - GUJARAT HIGH COURT ], the Hon ble High Court has held that the demand of Service Tax on ocean freight cannot sustain. It is found that though Department alleges that the appellant has collected excess amount towards freight, the Show Cause Notice does not say as to which category of service the said amount would be liable to Service Tax. So also, it is not stated whether the amount is consideration for Steamer Agency Service. The Show Cause Notice does not propose to include the amount under particular category of service and demand the Service Tax under any category. The Adjudicating Authority has not made any finding as to whether the excess amount collected would be consideration for service. The Show Cause Notice is the foundation of the litigation. When the Show Cause is insufficient as to clarify the category of service, the demand cannot sustain and requires to be set aside. The impugned order is set aside - The appeal is allowed 2024 (3) TMI 1282 Service or not - levy of service tax - collection of liquidated damages for supply of goods and services beyond the due date as per the agreement entered into with various suppliers and service providers - HELD THAT:- The issue is squarely covered by the judgement of the Principal Bench of this Tribunal in appellant s own case for Bhopal / Dehradun Unit. Referring to the earlier judgment of the Tribunal on the same issue, it is observed The amount cannot be made liable to tax in the name of it being consideration for providing deemed service. The judgment have been accepted by the Board vide Circular No.214/2023-S.T. dated 28.02.2023. The impugned order is set aside and the appeal is allowed. 2024 (3) TMI 1281 Levy of service tax - Life Insurance Service - premium collected by the appellant for providing life insurance service to its employees - Renting of Immovable Property Service or not - amount received towards renting of immovable property - HELD THAT:- Undisputedly, the appellant is a department of Karnataka State Government and not an insurance company and in pursuance to the Karnataka Government Servant s (Compulsory Life Insurance) Rules, 1958 under the welfare scheme applicable to all Government employees irrespective of their status, collected contribution of 6.5% of mean pay as monthly premium towards the policy. The Service Tax Department proposed to levy service tax on the premium so collected by the appellant. On the said issue, this Tribunal in appellant own case, considering the Circular dt. 18/12/2006 issued by the Board, held that the amount of premium collected in rendering life insurance service is in the nature of sovereign function and not leviable to service tax - there are no reason not to follow the aforesaid finding of the Tribunal as no contrary decisions have been placed by the Revenue. Levy of service tax on renting of immovable property - HELD THAT:- The appellant is not contesting the same and also covered by the judgment of the Hon ble Supreme Court in the case of KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ALWAR [ 2022 (2) TMI 1113 - SUPREME COURT] . Since the issue relates to interpretation of law relating to applicability of service tax on Renting of Immovable Property Service during the period in question and conflicting opinions on the subject expressed, levy of penalty for non-payment of service tax on the said service cannot be sustained. The demands relating to service tax on life insurance service provided to the employees are hereby dropped and service tax on renting of immovable property in both the appeals are confirmed with interest. However, penalties imposed for failure to discharge service tax on renting of immovable property are hereby dropped. The impugned orders are modified - Appeal disposed off. 2024 (3) TMI 1280 Demand of service tax - SSI exemption - Construction of boundary and main gate at the sub-station at Dhaka and Gopalganj - time limitation - demand alongwith interest and penalty - HELD THAT:- The impugned order has confirmed the demand of service tax of Rs.78,341/- on the amount of Rs.21,60,967/- received by the Appellant from PGCIL. Out of this Rs.14,78,589/- was shown to have been received by the Appellant on 10.05.2008, but the Appellant submitted that this amount has been received on various dates in the year 2004-05 - the submission of the Appellant is agreed upon, that the amount of Rs.14,78,589/- was not received on 10.05.2008, but on various dates in the year 2004-05. Hence, the Notice issued on 30.09.2011 demanding service tax on these amounts received in 2004-05 is barred by limitation. Accordingly, the demand confirmed on this amount is set aside. It is observed that the amount of Rs.1,27,505/- and Rs. 2,05,234/-, totally amounting to Rs. 3,32,739/-, was received by the Appellant in the Financial Year 2006-07 and the amount of Rs.3,49,639/- was received in the Financial Year 2007-08. In both the Financial years 2006-07 and 2007-08, their turnover was below the threshold limit of Rs.10 lakhs. Accordingly, no service tax is payable by the Appellant on these receipts. Interest and penalty - HELD THAT:- The demand of service tax confirmed in the impugned order is not sustainable. Since the demand of service tax is not sustainable, the question of demanding interest and penalties under sections 77 and 78 does not arise. The impugned order set aside - appeal allowed. Central Excise 2024 (3) TMI 1279 Valuation - it is alleged that appellant is receiving Nutrient Based Subsidy, treating the same as additional consideration and thus form part of the assessable for the levy of Central Excise Duty - suppression of facts or not - HELD THAT:- The issue is covered in favour of appellant in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE VERSUS MAZAGON DOCK LTD. [ 2005 (7) TMI 105 - SUPREME COURT] and M/S CORAMANDEL INTERNATIONAL LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, VISAKHAPATNAM-I [ 2014 (8) TMI 775 - CESTAT BANGALORE] where it was held that Subsidy paid by the Government cannot be considered as an additional consideration includable for excise duty in accordance with statute. As the issue is apparently covered in the favour of the appellant in view of the precedent rulings, the impugned order is set aside - this appeal is allowed. Indian Laws 2024 (3) TMI 1278 Cancellation of allotment of land on the basis of an alleged false affidavit - whether the petitioner had submitted a bona fide and genuine affidavit at the time of submission of his application seeking allotment of alternate plot of land in lieu of the compulsory land acquisition of his property? - HELD THAT:- The Allahabad High Court in IN RE : RAM KUMAR RAMNIWAS OF NANPARA [ 1952 (8) TMI 32 - HIGH COURT OF ALLAHABAD ] had held that the HUF is not like a corporation or a limited concern and it cannot, therefore, be said that it had a legal entity quite distinct and separate from that of those who constituted it. It further observed that HUF is a status which can only be acquired by birth or adoption and the head or karta of that family has certain rights by which he can bind every member of the family though, the property may not belong to him and belongs to all. In another words, it appears to this Court that though the HUF may be a legal entity for the purposes of Income Tax and may hold a property in its own name, yet it cannot be said that the individual members constituting it, do not have any share in the said property. The share in such property on devolution may change or vary in proportions with the increase or decrease in the members constituting the HUF. This surely cannot mean that the individual members do not have any rights whatsoever over the HUF property. It is clear that the HUF under the Income Tax Act, 1961 is a juridical person. However, the right or entitlement of the individual members constituting such HUF in respect of any property owned by it, has also been accepted. The role of karta in respect of such property is also clearly delineated - All the analysis leads this Court to the firm conclusion that the property belonging to the HUF also belongs to each of the individual constituents in the proportionate share. In another words, every member of the HUF has some share in the said property. Thus, it is clear that though the Defence Colony Property was placed in the common hotchpotch of the HUF in the year 1962, yet the shares of the petitioner as also his wife and two minor children, as they then were, in the said property cannot be undisputed. As to what were the proportion of shares, is irrelevant to consider in the present dispute - this Court needs to examine as to whether the petitioner can now be said to have violated the eligibility conditions at the time of filing the affidavit in support of the application for allotment of alternate plot of land. As on that date, not only the petitioner but also the family members, who individually constituted the HUF had a proportionate share in the Defence Colony Property. This fact was not disclosed. In the considered view of this Court, this was a concealment of material fact, which would have otherwise disentitled the petitioner from allotment of alternate plot of land as per the 1961 Scheme - The argument that the petitioner had thrown the self-acquired Defence Colony Property in the common hotchpotch of the HUF in the year 1962 even before the compulsory acquisition of his lands in the year 1964, and as such, had not committed any concealment is concerned, the same is recorded only to be rejected. The said rejection is on the basis of the aforesaid reasons in the preceding paragraphs, holding that each of the individual members of the HUF had proportionate share in such property. The sanctity of the declaration and solemn affirmation was to be maintained at all times. In case an applicant furnished a false declaration or concealed material facts, it would be direct violation/contravention of mandatory condition of allotment. Since the petitioner had not disclosed the existence of a HUF property of which the petitioner himself was the karta and his wife and two minor children were the remaining members, in the considered opinion of this Court, that sanctity was broken. Though the Defence Colony property was claimed to have been thrown in the common hotchpotch of the HUF in the year 1962, there was no reason furnished by the petitioner as to why the mutation of the said property in the name of HUF was not applied for till the month of January, 1979 which was finally carried out by the authority on 26.10.1979. Admittedly, the said property was leased out on rent indicating that the petitioner was not in dire need of an alternate plot of land. There is no doubt that there was a delay however, keeping in view the ratio down by the Supreme Court in SP CHENGALVARAYA NAIDU VERSUS JAGANNATH [ 1993 (10) TMI 315 - SUPREME COURT] , whereby it was categorically laid down that fraud vitiates all solemn acts . On the strength of this, this Court is of the considered opinion that the petitioner had obtained the allotment of an alternate plot by concealment of material facts amounting to fraud and as such cannot be heard to say that the respondents have delayed adjudication of the show cause notice. In that view of the matter, the said argument has no substance. There is no merit in the writ petition and the same is dismissed.
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TMI Tax Updates - e-Newsletter April 1, 2024

Articles

1. Income though chargeable under head other than business income can still be income from business for accounting and some tax purposes under some provisions.

2. PRESUMPTIVE TAXATION FOR PROFESSIONALS

3. Notification challenged as there was no force majeure in existence to exercise power under Section 168A

4. RBI streamlines process to standardise filing of supervisory returns by banks, NBFCs

5. Commission received from foreign buyers for services and procurement of goods do not fall under the definition of ‘intermediary services'

Highlights / Catch Notes

GST

E-auction Service Challenges TCS Liability on Exempt Supplies under GST Act; Court to Address Preliminary Objections.

Parent Company Equity Holding Not a GST Service Supply; Show Cause Notices Annulled for Lack of Jurisdiction.

High Court Emphasizes Exhaustion of Statutory Remedies Before Article 226 Relief in GST Order Challenge.

Are Corporate Guarantees Taxable Under GST? Court Examines Validity of Circular and Legal Precedents in Ongoing Case.

Resolution Path for Pre- and Post-GST Contract Tax Disputes: Submit Representation to Finance Dept. for Final Decision.

Bail Granted in Tax Credit Case: Balancing Liberty and Justice Amidst Allegations and Ongoing Trial.

GST Registration Revoked Without Notice: High Court Annuls Orders, Demands Fair Re-evaluation and Response Opportunity.

Petition Maintainability Challenged Due to Non-Existent Appellate Tribunal Under CGST/OGST Act Section 112.

Income Tax

Appellate Tribunal Overturns TPO's Decision on Transfer Pricing, Supports Appellant's Methodology and Account Segmentation.

Petition Dismissed for Lack of Diligence in Recovering Seized Documents; Costs Imposed for Judicial Process Abuse.

Secured Creditor Rights Prevail Over Government Dues; Unregistered Auction Certificate Can Be Registered Despite Attachments.

Appellate Tribunal Partially Allows Income Accumulation Claim Under Sec 11(2) Due to Shortfall in Required Amount.

Tribunal Rules Tax Assessment Order Void for Non-Existent Entity Post-Merger, Stresses Jurisdictional Accuracy.

Customs

Suspension of third-party cargo operations without notice violates natural justice, case remanded for procedural fairness.

Court Rules Cost Recovery Charges Regulation as Unauthorized Tax, Deems it Ultra Vires to Customs Act 1962.

Tribunal Overturns Customs Broker License Revocation Due to Procedural Errors in Investigation and Notice Issuance.

Tribunal Overturns Time-Barred Rejection, Remands Lithium-Ion Battery Import Duty Exemption Case for Reassessment.

Tribunal Annuls Order Against Customs Broker Due to Lack of Evidence on Bribery Allegations; Proceedings Deemed Premature.

Tribunal Rules Against Using Cum-Duty Value for Calculating Export Duty on Iron Ore Fines.

Tribunal Rules in Favor of Exporters on Gold Import Duty-Free Status, Corrects Value Addition Calculations in FTP Case.

Court Upholds Port's Right to Charge for Container Storage After Customs Confiscation; Appellant's Liability Confirmed.

DGFT

India Updates Import Rules for Precious Metals to Enhance Transparency and Economic Strategy.

State GST

Clarifying TCS Liability for E-commerce: Who Pays the Supplier Bears the Compliance Burden Under DGST Act 2017.

Corporate Guarantees as GST Supply Between Related Entities: New Valuation Rules Explained.

Assam GST Circular Enhances Return Scrutiny Process to Boost Compliance and Integrity in Tax Administration.

Indian Laws

Land Allotment Cancelled Over False Affidavit; Court Rules Undisclosed HUF Property Disqualifies Petitioner.

IBC

NCLAT Upholds Operational Creditor Claim: Appellant Fails to Dispute Debt and Prove Payment Arrangement Validity.

Interim Stay Denied: Appellant's Inaction Leads to Waiver on Corporate Debtor's Asset Sale in E-Auction.

Tribunal Enforces Full Payment of EPF and ESI Dues, Mandates Settlement of Section 7Q and Waiver Application for 14B.

Tribunal Reinstates Section 7 Insolvency Application After Noting Appellant's Compliance Efforts and Respondent's Defaults.

Tribunal Upholds Pre-CIRP Land Cost Demand, Asserts Public Authority Rights Over Leased Assets Against IBC 2016.

Service Tax

Marketing Services Ruled as Export, Exempt from Tax; Tribunal Annuls Penalty and Confirms Exemption for Appellant.

Appellate Tribunal Rules on CENVAT Credit Refund and Service Tax Issues, Remands for Further Verification.

Appellate Tribunal Affirms CENVAT Credit Eligibility for Erection and Commissioning Services in Overseas Operations.

Life insurance premiums exempt from service tax; renting property taxable. Penalties waived due to legal uncertainties.

Case Laws:

GST

Income Tax

Customs

Insolvency & Bankruptcy

Service Tax

Central Excise

Indian Laws

Quick Updates:

TMI Tax Updates - e-Newsletter
April 1, 2024