TMI Tax Updates - e-Newsletter
April 18, 2024

Case Laws in this Newsletter:

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

Articles

1. REJECTION OF APPLICATION FOR INSOLVENCY RESOLUTION PROCESS OF PERSONAL GUARANTOR TO CORPORATE DEBTOR

   By: DR.MARIAPPAN GOVINDARAJAN

2. Right to personal hearing and Right to object the SCN cannot be compromised if the SCN is not uploaded on the GST portal

   By: Bimal jain

News

1. CCI approves acquisition of additional shareholding of Thyssenkrupp Industries India Private Limited by Protos Engineering Company Private Limited (Protos) and Paharpur Cooling Towers Limited (Paharpur)

2. CCI approves acquisition of stake in PAMP Technologies (India) Private Limited and MMTC PAMP India Private Limited by PAMP Ventures SA

3. Regulation of Payment Aggregators (PAs) – Draft Directions

4. CBDT signs record number of 125 Advance Pricing Agreements (APAs) in FY 2023-24

Notifications

FEMA

1. S.O. 1722 (E) - dated 16-4-2024 - FEMA

Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2024.

GST - States

2. S.O. 159 - dated 15-4-2024 - Bihar SGST

State Government notifies special procedure by a registered person engaged in manufacturing of the certain goods

3. S.O. 93 - dated 12-2-2024 - Jammu & Kashmir SGST

Seeks to extend dates of specified compliances in exercise of powers under section 168A of Jammu and Kashmir Goods and Services Tax Act, 2017

4. (04/2024)-No.KGST.CR.01/17-18 - dated 15-4-2024 - Karnataka SGST

Seeks to extend the due date for filing of FORM GSTR-1, for the month of March 2024

5. 211/XI-2–24-9(47)-17-T.C.254-U.P.Act-1-2017-Order (316)-2024 - dated 7-3-2024 - Uttar Pradesh SGST

Notify “Public Tech Platform for Frictionless Credit” as the system with which information may be shared by the common portal based on consent under sub-section (2) of Section 158A of the Uttar Pradesh Goods and Services Tax Act, 2017

Highlights / Catch Notes

GST

• GST Notification Amendment Delays Special Procedure for Tobacco and Pan Masala Manufacturers to May 15, 2024.

  Notifications : Special procedure by a registered person engaged in manufacturing of the certain goods (Involving complex supply chains like tobacco and pan masala) - In the original notification (No. 04/2024), it was set to come into effect from the 1st day of April, 2024. The new amendment postpones this effective date to the 15th day of May, 2024.
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• High Court Remands Case for Reconsideration Due to Breach of Natural Justice in GST Show Cause Notice Process.

  Case-Laws - HC : Service of SCN - Breach of principles of natural justice - intimation and SCN uploaded on the “View Additional Notices and Orders” tab on the GST portal and not communicated to the petitioner through any other mode - Upon reviewing the impugned order, the High Court observes that the tax proposal was confirmed solely because the petitioner failed to reply to the show cause notice by enclosing relevant documents. The Court decides to set aside the impugned order and remand the matter for reconsideration. The petitioner is required to remit 10% of the disputed tax demand within three weeks from receiving a copy of the order. Additionally, the petitioner is allowed to submit a reply to the show cause notice within this period.
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• High Court Sets Aside Order Due to Ignored Evidence in GST Filing Discrepancy Case; Calls for Reconsideration.

  Case-Laws - HC : Rectification petition - Validity Of Order passed - discrepancy between the GSTR 3B return - The petitioner contended that the discrepancy arose due to the belated filing of GSTR 1 by the supplier for one invoice and asserted their inability to upload a reply on the GST portal. Supporting documents, including certificates from the supplier and their Chartered Accountant, were submitted but not considered in the impugned order. - The High Court found that the non-consideration of these documents was significant and warranted interference with the order. Consequently, the court set aside the order and remanded the matter to the respondent for reconsideration.
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• Court Quashes Assessment Order Due to Stay Violation and Jurisdictional Conflict, Emphasizing Legal Protocols.

  Case-Laws - HC : Validity of assessment order - Violation of Stay Order against the operation of a notification extending the period of limitation - The High Court acknowledges the petitioner's contention regarding the stay order. It notes that the impugned order was indeed passed during the pendency of a stay against the operation of the notification extending the period of limitation. This is a violation of the stay order, constituting a procedural irregularity. - Regarding the jurisdictional conflict, the Court concluded that without notification for cross-empowerment, authorities from one jurisdiction cannot initiate proceedings against an assessee assigned to the other jurisdiction. Thus, the impugned order was quashed, with liberty given to the State authorities to proceed in accordance with established legal principles.
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• High Court Allows Reassessment of Denied ITC; Petitioner Can Submit Additional Proof of Goods Movement.

  Case-Laws - HC : Denial of Input Tax Credit (ITC) - Proof of movement of Goods (E-way bill) not produced - The High court acknowledges that the petitioner submitted original tax invoices, ledger accounts, bank statements, and relevant GSTR returns to support their position. However, they did not provide e-way bills, lorry receipts, or weighment slips to establish the actual movement of goods. The court notes that while the tax proposal was confirmed largely due to lack of proof of actual movement of goods, the documents submitted by the petitioner, including bank statements and GSTR 2A, indicated the availability of ITC. Thus, it deems it appropriate to provide the petitioner with an opportunity to produce additional documents to prove actual movement of goods. Matter restored back.
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• GST Demand Order Annulled: Lack of Show Cause Notice Violates Procedural Rules and Natural Justice Principles.

  Case-Laws - HC : Validity Of Order passed u/s 73 of the Central Goods and Services Tax Act, 2017 [“the Act”] - Demand of GST - The Delhi High Court addressed a case wherein the petitioner contested an order creating a demand against them without the issuance of a show cause notice or DRC-01 beforehand. Acknowledging the absence of such notices, the Court ruled that the impugned order, purportedly passed under Section 73 of the CGST Act, violated procedural requirements. Consequently, the Court quashed the order, emphasizing the necessity of adhering to principles of natural justice. - The Court clarified that it would be open to the respondents to pass an appropriate order after giving a proper show cause notice and an opportunity of personal hearing to the petitioner.
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• Court Grants Relief After GST Notices Land in Spam Folder.

  Case-Laws - HC : Validity of Communication over Email - The petitioner claims that notices and orders from the GST authorities were not received due to being diverted to the spam folder of their email. - The Court noted the petitioner's claim regarding the email communication being diverted to the spam folder. While acknowledging the respondent's argument about the petitioner's obligation to monitor the GST portal, the Court found it necessary to provide an opportunity to the petitioner due to the communication mishap.
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• SEZ Unit's GST Error: Court Quashes Assessment Order, Remands for Reconsideration Due to Misreported Taxable Value.

  Case-Laws - HC : Validity Of assessment order passed - SEZ unit - Supply of services without charging GST since it was a zero rated supply - turnover inadvertently reported under the column taxable value in GSTR-1 - The High Court observed that while the supply was correctly identified as zero-rated in the GSTR-3B return, the inadvertent misreporting in the GSTR-1 return was acknowledged. The petitioner's submission was supported by evidence from the tax invoice. As a result, the assessment order was quashed, and the matter was remanded for re-consideration by the assessing officer.
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• Writ petition maintainable due to lack of GST Tribunal; relief granted with temporary stay on recovery proceedings.

  Case-Laws - HC : Maintainability of Writ Petition since GST Appellate Tribunal not constituted - Order Appealable u/s 112 of the CGST/OGST Act, 2017 - Statutory benefit of stay - Ultimately, the court grants relief to the petitioner, ensuring that they are not deprived of their statutory right to appeal. The court orders that the petitioner must be extended the benefit of stay on recovery proceedings, subject to certain conditions. However, the court also emphasizes that this relief is not open-ended, and the petitioner must file their appeal once the Appellate Tribunal is constituted and functional.
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Income Tax

• High Court Upholds ITSC Decision on Bogus Purchases, Allows Capitalization and Immunity from Penalties for Taxpayer.

  Case-Laws - HC : Validity of order passed by the ITSC - Settlement of a case - Bogus purchases and Accommodation entries - ITSC allowed certain amounts to be capitalized with depreciation - ITSC also granted immunity from penalties and prosecution - The High Court concluded that the ITSC acted within its powers in accepting the expenditure claims based on the documents seized during raids, which showed the cash generated from the bogus purchases was indeed used for stated capital expenditures. Regarding the deduction under Section 80IB(10), the High Court supported the ITSC’s decision, stating that the ITSC appropriately allowed the deduction after considering the ad hoc disallowances made in the previous years which impacted the project's profitability in the assessment year 2009-10. - The High Court dismissed the Revenue’s petition, upholding the ITSC’s order.
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• Tribunal Confirms Eligibility for Section 10B Deductions Amidst Machinery Transfer and Export Payment Discrepancies.

  Case-Laws - AT : Deduction u/s 10 B - The AO argued that the units were formed by the transfer of previously used machinery, disqualifying them from certain deductions. - The tribunal, however, noted that the CIT(A) had provided a detailed examination of the history and operations of these units, establishing that they were indeed new undertakings that satisfied the statutory requirements for the deduction under Section 10B. - One of the significant issues was whether the sales proceeds of exported goods were received in India within the prescribed time frame to qualify for exemptions under Section 10B. The tribunal found that despite minor discrepancies in documentation, the majority of proceeds were indeed received within the permissible period, thus supporting the assessee's claim for deduction.
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• Trust Avoids Maximum Marginal Rate Taxation; ITAT Classifies as AOP or Individual for Favorable Tax Treatment.

  Case-Laws - AT : Denial of exemption u/s 11 & 12 - Assessment of trust - Taxation at Maximum Marginal Rate (MMR) - charging the assessee as per the provisions of section 164(1) or 164(2) - The ITAT concluded that taxing the trust at MMR was incorrect. The tribunal recognized the trust's registration under the Indian Stamp Act and noted its primary activity was the maintenance of a Jain temple, hence benefiting the public at large. The ITAT ruled that since the trust's registration under section 12A was effective from 2022, previous years should be taxed under the provisions applicable to trusts with indeterminate beneficiaries, i.e., as an AOP or individual, which allows for a more favorable tax treatment including basic exemptions.
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• Tax Assessment Order Overturned; Case Remanded for Reconsideration Due to Ignored Documents and Lack of Explanation.

  Case-Laws - HC : Reopening of assessment u/s 147 - The petitioner had initially failed to file income tax returns but later submitted various documents in response to notices received under the Income Tax Act. Despite this, the assessment order did not consider the documents submitted by the petitioner, nor did it provide reasons for the proposed variations. The court set aside the impugned order and remanded the matter to the tax authorities for reconsideration.
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• Court Rules Rectification Invalid Due to Lack of Notice and Hearing, Setting Aside Order Under Income Tax Act.

  Case-Laws - HC : Rectification u/s 154 - disallowance of carrying forward of the loss - The High Court examined the contentions of both parties and found merit in the petitioner's argument regarding the violation of Section 154(3) of the Act. It emphasized that any rectification adversely affecting the assessee's interests must be preceded by a notice and an opportunity to be heard. Since such compliance was lacking in the impugned order, the Court deemed it unsustainable and set it aside.
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• Tribunal Rules Appeal Non-Maintainable Due to Assessing Officer's Location, Dismisses Revenue and Assessee Objections.

  Case-Laws - AT : Determining the jurisdiction of appellate forum - jurisdiction of this Tribunal - The Tribunal refers to the legal precedent established in a Supreme Court case regarding the jurisdiction of appellate forums, emphasizing that the "situs of the assessing officer" is the determining factor regardless of administrative orders. Since the location of the Assessing Officer falls outside the Tribunal's territorial jurisdiction, the appeal is deemed not maintainable. Therefore, the Tribunal dismisses both the Revenue's appeal and the assessee's cross objection, granting them the option to file before the appropriate bench with jurisdiction over the Assessing Officer's location.
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• Tribunal Invalidates Assessment Reopening Due to AO's Errors and Jurisdictional Overreach in Goodwill Amortization Case.

  Case-Laws - AT : Validity of reopening of assessment - reasons to believe - The Appellate Tribunal scrutinized the reasons recorded for the reopening of the assessment and found several discrepancies. Firstly, it was noted that the AO incorrectly stated that the assessee claimed expenses on the amortization of goodwill, which was contradicted by the assessee's computation of total income and balance sheet. Additionally, the Tribunal observed that the AO overlooked the previous assessment completed under section 143(3) r.w.s. 153C of the Act. The Tribunal concluded that the reopening of the assessment was invalid and without jurisdiction. Consequently, the Tribunal allowed the appeal of the assessee on legal grounds.
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• Tribunal Overturns Disallowances, Cites Lack of Comparative Study and Evidence; Duty Drawback Incentive Upheld.

  Case-Laws - AT : The Appellate Tribunal addressed three main issues raised by the Assessee against the assessment order. Firstly, regarding the disallowance of job work charges to a sister concern, the Tribunal found that the authorities failed to conduct a comparative study, leading to the deletion of the disallowance. Secondly, the adhoc disallowance on job work charges was deemed unjustified due to lack of evidence supporting the Assessing Officer's decision, resulting in its deletion. Finally, the addition of duty drawback incentive was dismissed as the Assessee was not aggrieved by the issue and relief was already provided by the CIT(A).
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Customs

• Customs Cargo Service Upgrades: New Facilities to Support Women Participation with Panic Buttons, Creches, and Training.

  Circulars : Inclusion of gender specific infrastructure facilities - The Trade Notice issued by the Commissioner of Customs, Chennai IV, outlines significant enhancements in infrastructure at Customs Cargo Service Providers to support the increased participation of women. It references multiple previous regulations and emphasizes the need for gender-specific facilities such as panic buttons, creches, and gender sensitization training.
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• Tariff Values Revised for Key Commodities: Crude Palm Oil, RBD Palm Oil, Brass Scrap, Areca Nut, Gold, and Silver Updated.

  Notifications : Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver - The amendment Notification No. 29/2024-Customs (N.T.) updates the tariff values for commodities such as Crude Palm Oil, RBD Palm Oil, Crude Palmolein, and others, as well as precious metals like gold and silver. For example, the new tariff value for Crude Palm Oil is now set at $952 per metric tonne, an increase from the previous value. Such adjustments are crucial for calculating customs duties and have direct implications on the pricing and affordability of these commodities within the domestic market.
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• Customs Broker's License Revoked for Compliance Negligence, Security Deposit Forfeited Due to Repeated Violations.

  Case-Laws - AT : Revocation of Customs Broker Licence - forfeiture of security deposit - levy of penalty - mis-declaration of quantity of imported goods - The Tribunal found the CB guilty of contravening Regulation 11(n) by failing to verify the importer's functioning at the declared address. Despite obtaining documents, the CB neglected to ensure compliance with regulatory obligations. This failure extended over multiple consignments, indicating a pattern of negligence. It upheld the adjudicating authority's decision to revoke the license and forfeit the security deposit, considering the gravity of the violations and the CB's responsibilities.
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• Appellate Tribunal Rules Against Royalty Inclusion in Import Invoice Value Due to Lack of Legal Basis and Jurisdiction Overreach.

  Case-Laws - AT : Valuation of imported goods - inclusion of royalty in the invoice value - The Appellate Tribunal finds that the direction to modify the order and include royalty in the invoice value of imported goods lacks legal basis. The Tribunal observes that there was no notice issued under the Customs Act for recovery of duty based on the addition of royalty to the declared value. As such, the Tribunal concludes that the direction to modify the order is beyond the jurisdiction of the reviewing authority. The tribunal finds that the SVB is not empowered to assess duties or recovery subsequent to clearance for home consumption. - The Tribunal emphasizes the premature nature of the appeal before the first appellate authority and restores the appeal for proper disposal.
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• Tribunal Invalidates Reclassification of Goods Under DEEC Scheme, Orders Rehearing Due to Legal and Procedural Errors.

  Case-Laws - AT : Penalties u/s 112 and section 114AA of Customs Act, 1962 - classification of goods imported under duty exemption entitlement certificate (DEEC) scheme - The tribunal finds fault with the reclassification adopted in the impugned order, as it fails to specify the tariff item and associated rate of duty, as required by the Customs Act. Moreover, the tribunal highlights the lack of clarity in distinguishing between alloy and non-alloy steel and criticizes the simultaneous application of valuation rules, which runs counter to prescribed procedures. The tribunal concludes that the reclassification lacks legal validity. - Due to foundational lacunae and subsequent developments, the tribunal sets aside the order and directs a rehearing of the matter, allowing both parties to present their arguments afresh.
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• Tribunal Overturns Order on Marble Import, Highlights DGFT Authority in Trade Policy and Licensing Compliance.

  Case-Laws - AT : Non-compliance with the remand order of the Tribunal in the earlier round of litigation - import of rough marble blocks - The Tribunal noted the appellant's submission regarding the communication of license applications to the authorities. It criticized the adjudicating authority for disregarding the altered factual situation highlighted in the remand order and for insisting on restoring the previously discarded order. The Tribunal deemed this defiance of appellate directions as invalidating the impugned order. - The Tribunal emphasized the authority of the DGFT in administering trade policy and issuing import licenses. It clarified that the date of issue of the license was not material to quantitative restrictions, and the relevance lay in its coverage of the impugned goods. The Tribunal set aside the impugned order and allowed the appeal.
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• Tribunal Questions Black Pepper Confiscation Validity Due to Procedural Issues; Highlights Right to Cross-Examine Witnesses.

  Case-Laws - AT : Confiscation of imported goods - Black pepper - advance authorisation scheme - diversion of Goods - fulfilment of export obligation or not - The Tribunal found that the appellants indeed imported black pepper without duty payment under the advance authorisation scheme. However, it questioned the validity of the confiscation considering certain procedural irregularities. While acknowledging the 'actual user' condition, the Tribunal found discrepancies in the enforcement of this condition and raised doubts about the appellants' culpability. - The Tribunal upheld the appellants' right to cross-examine witnesses, highlighting the importance of procedural fairness and the need to validate testimonial evidence. - The Tribunal found the imposition of re-export condition exceeding the authority conferred by the statute. - Matter restored back.
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• Tribunal Remands Case on Disputed Consent Over Enhanced Value of Imported Aluminium Scrap for Further Review.

  Case-Laws - AT : Valuation of imported goods - aluminium scrap - enhancement of value - The Tribunal referred to a previous decision where it was asserted that the appellant had agreed to the enhanced value as determined by the department. However, the appellant vehemently denied giving such consent. Given the serious dispute over consent, the Tribunal decided that this core issue needed resolution before relying on any precedent. Consequently, the Tribunal decided to send the matter back to the Division Bench for a decision on this core issue.
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DGFT

• Government Facilitates Onion Exports to Sri Lanka and UAE, Strengthening Trade Ties and Ensuring Domestic Supply.

  Notifications : Export of Onions to Sri Lanka and UAE. - The issuance of Notification No. 07/2023 by the DGFT signifies the government's proactive stance in regulating and facilitating foreign trade activities, particularly in the context of essential commodities like onions. By authorizing the export of onions to Sri Lanka and the UAE through specified channels, the government aims to support international trade while ensuring the availability of essential commodities in domestic markets.
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• Export Port Restrictions Imposed on Essential Commodities to Maldives for Fiscal Year 2024-25 by DGFT.

  Notifications : The Notification No. 06/2023 issued by the DGFT imposes port restrictions on the export of prohibited/restricted essential commodities to the Republic of Maldives during the fiscal year 2024-25. The Notification formalizes the imposition of these restrictions, in alignment with the quota specified in DGFT Notification No. 03/2023 dated April 5, 2023.
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FEMA

• India Updates Investment Rules: 100% FDI in Satellite Manufacturing, Mixed Approach for Operations and Launch Vehicles.

  Notifications : The Ministry of Finance's recent notification amends the FEMA (Non-debt Instruments) Rules, particularly focusing on the space sector. These amendments introduce investment thresholds for different segments within the sector, such as 100% FDI under the automatic route for manufacturing satellite components and a mixed approach for more sensitive areas like satellite operations and launch vehicles.
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Corporate Law

• Court Dismisses Petition Seeking Evidence Gathering for Ongoing Litigation as Misuse of Judicial Process.

  Case-Laws - HC : Seeking directions against the respondent no. 1/National Housing Bank (NHB) to consider and decide upon the petitioner’s representation - The High Court noted that the petitioner's representation primarily aimed at collecting information to use in litigation before the National Company Law Appellate Tribunal (NCLAT), rather than seeking redressal of any immediate legal or constitutional rights. The Court emphasized that writ jurisdiction cannot be employed as a means to gather evidence against a party involved in pending disputes. It cited legal precedents to highlight that courts are not forums for roving inquiries or fact-finding missions. Concluding that the petitioner's petition was a misuse and abuse of the court's process, the Court dismissed the petition along with the pending application.
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IBC

• Tribunal Upholds Decision for Fresh Bids in Liquidation Sale to Maximize Asset Recovery and Ensure Competitive Process.

  Case-Laws - AT : CIRP - Liquidation of corporate debtor - Refusal to approve the private sale - The Tribunal acknowledged the procedural challenges presented by the liquidator’s initiation of a private sale, which was contested by another interested party leading to the Adjudicating Authority's decision to allow more bidders to participate, ensuring a competitive process to maximize asset recovery. The Tribunal found that despite the withdrawal of one of the interested parties, the original decision to seek more bids was justified given the potential for higher recovery. It was held that the auction process should proceed with a fresh notice and the opportunity for all interested parties, including those who had expressed earlier interests, to participate.
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• Tribunal Confirms Corporate Insolvency Resolution Process: Funds Classified as Debt, Not Equity Investment.

  Case-Laws - AT : Rejection of application against admission of CIRP u/s 7 application filed by the Financial Creditor - The tribunal pointed out that the corporate debtor’s financial statements classified the received funds as unsecured borrowing, and payments were made from these funds as per the agreements which also envisaged repayment schedules, further affirming their nature as debt. Even though initial agreements suggested equity investment, subsequent financial treatments and the lack of fulfillment of these agreements led the tribunal to regard the funds as a loan. The arrangements made did not culminate in the acquisition of equity, nor were the projected investments completed as planned. The NCLAT upheld the Adjudicating Authority’s decision, confirming that the financial transactions in question constituted a financial debt and not equity investment.
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• Security Agreement as Additional Collateral: Debtor Still Liable for Repayment, Tribunal Upholds Financial Institution's Claim.

  Case-Laws - AT : CIRP - The Tribunal concluded that the security agreement was intended as additional security and did not absolve the debtor of its repayment obligations. The Tribunal reinforced that the original and subsequent agreements clearly outlined that the debtor was to remain liable for its debts, which were to be secured by specific mortgaged properties. The Tribunal upheld the decision of the lower court, allowing the claims of the financial institution as a creditor in the insolvency process.
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PMLA

• Court Upholds Arrest, Urges Guidelines for Late-Night Statements to Protect Right to Sleep Under PMLA.

  Case-Laws - HC : Seeking release of petitioner - Right to Sleep - The High Court found that the petitioner was not detained when he entered the Enforcement Directorate (ED) office under Section 50 summons of the PMLA. The arrest was deemed legal as per Section 19 of the PMLA, and the petitioner was produced before the Special Court within 24 hours. - While acknowledging the importance of the right to sleep, the Court noted that the petitioner's statement was recorded voluntarily, albeit at an inconvenient hour. The Court deprecated the practice of recording statements post-midnight and directed the ED to issue guidelines for the timing of statement recordings under Section 50 of the PMLA.
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Service Tax

• Tax Tribunal Rules Goods and Services Must Be Separately Taxed, Not as 'Works Contract'; Invalidates Post-2012 Notices.

  Case-Laws - AT : Valuation of service - works contract service or not - The CESTAT held that the appellant’s contracts were clearly split into goods and services, which did not meet the criteria of a 'works contract' under the relevant tax laws. It was noted that the appellant had appropriately paid taxes—VAT on goods and service tax on installation services—as per the contract terms, which were well-supported by invoices. - Further the tribunal held that since the repeal of certain provisions and notifications post-July 2012, the show cause notices based on these repealed laws were incorrect. - Ultimately, the Tribunal concluded that the respondent’s approach of inclusion / amalgamating the value of goods and services for taxation under a 'works contract' was unfounded.
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• Tribunal Rules GTPL's Transport Arrangement Not a Business Support Service Due to Lack of Additional Logistics.

  Case-Laws - AT : Classification of service - Business Support services or not - The Appellate Tribunal, referring to precedent cases, concluded that GTPL's activity of arranging transportation did not qualify as business support service. They emphasized that GTPL solely organized transportation without providing loading/unloading or other logistics services. The tribunal found no evidence of a contract for the provision of business support service between GTPL and their buyers. Therefore, they dismissed the revenue's claim regarding the nature of the service provided by GTPL.
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Central Excise

• Petroleum Crude Excise Duty Raised from Rs. 6800 to Rs. 9600 per Tonne, Marking a Significant Increase.

  Notifications : Adjustments in Excise Duty for Petroleum Crude: Notification No. 12/2024-Central Excise - The amendment specifically adjusts the excise duty rate for petroleum crude to Rs. 9600 per tonne, up from Rs. 6800, indicating a substantial increase in duty.
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• CENVAT Credit Approved for Factory Paint Shop Materials as Capital Goods, Tribunal Dismisses Extended Period Claim.

  Case-Laws - AT : CENVAT Credit - capital goods - Immovable Property or not - fabrication and setting up of entire paint shop - The case involved the appellant's availing of CENVAT credit on materials used in erecting a paint shop in their factory. The department contended that the paint shop, being immovable property, was not eligible for credit. However, the tribunal ruled in favor of the appellant, stating that the items used for setting up the paint shop qualified as capital goods eligible for credit. It emphasized the relevance of specific tariff headings and previous cases supporting the eligibility of credit on such items. Additionally, the tribunal rejected the department's invocation of the extended period, finding no evidence of suppression of facts by the appellant.
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• Pole Shoe in Wind Generators Qualifies for Tax Exemption, Tribunal Confirms its Essential Role in Electricity Generation.

  Case-Laws - AT : Benefit of exemption - The appellant contends that since the pole shoe is a component of the Wind Operated Electricity Generator (WOEG), the exemption applies. The Revenue argues that since the pole shoe is used in the rotor, which is not directly part of the WOEG, the exemption does not apply. - The Tribunal noted that the pole shoe, being a part of the generator rotor assembly, is indeed essential for the functioning of the WOEG. The technical analysis supported this conclusion, emphasizing the role of the pole shoe in generating electricity within the WOEG. - Since the pole shoe contributes to the generation of electricity within the WOEG, it falls within the ambit of the exemptions provided in the notifications.
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Case Laws:

• GST

• 2024 (4) TMI 664
  Service of SCN - Breach of principles of natural justice - intimation and SCN uploaded on the View Additional Notices and Orders tab on the GST portal and not communicated to the petitioner through any other mode - HELD THAT:- On perusal of the impugned order, it is clear that the tax proposal was confirmed only because the petitioner failed to reply to the show cause notice by enclosing relevant documents. Therefore, it is just and appropriate that the petitioner be permitted to contest the tax demand on merits, albeit by putting the petitioner on terms - the petitioner submits that the petitioner is willing to remit 10% of the disputed tax demand as a condition for remand. The impugned order dated 23.12.2023 is set aside and the matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of three weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is also permitted to submit a reply to the show cause notice - Petition disposed of by way of remand.

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• 2024 (4) TMI 659
  Rectification petition - Validity Of Order passed - discrepancy between the GSTR 3B return - belated filing of GSTR 1 by the Supplier - Petitioner unable to upload the reply on the portal - HELD THAT:- The petitioner has placed on record a certificate dated 31.10.2023 from Fivestar Impex India Private Limited stating that the supply was made under invoice dated 01.11.2017. A certificate from Prabhakaran Associates, Chartered Accountant is also on record. The said certificate provides the details of invoice dated 01.11.2017 for a total value of Rs. 18,82,000/-. The e-mail dated 18.10.2023 is also on record. These documents were not taken into account while issuing the impugned order. For such reason, the order impugned herein calls for interference. Therefore, the order dated 29.12.2023 is set aside and the matter is remanded to the respondent for reconsideration. The petitioner is permitted to submit a reply to the show cause notice within 15 days from the date of receipt of a copy of this order by enclosing all relevant documents. Upon receipt thereof, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of the petitioner s reply. The writ petition is disposed of on the above terms without any order as to costs.

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• 2024 (4) TMI 658
  Validity Of assessment order - No opportunity of personal hearing - breach of principles of natural justice - difference in outward turnover between the books of account and various returns - HELD THAT:- From the impugned order, it appears that this request was not entertained and the order was issued on 31.12.2023. Although the order refers to a personal hearing notice issued on 31.12.2023, there is nothing on record to indicate that such personal hearing notice was issued. On examining the impugned order with regard to turnover discrepancy as between the different returns, it is noticeable that the petitioner explained the difference in its reply dated 28.07.2023 by pointing out that the lower amount was inadvertently reported in the GSTR 1 statement, which was subsequently rectified by filing the annual return. This aspect has not been noticed in the impugned order. Thus, the impugned order dated 28.12.2023 is set aside and the matter is remanded for reconsideration. The petitioner is permitted to submit additional documents in support of its reply within 15 days from the date of receipt of a copy of this order. Upon receipt thereof, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of additional documents from the petitioner. The writ petition is disposed of on the above terms without any order as to costs.

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• 2024 (4) TMI 657
  Validity Of Order Passed - documents submitted by the petitioner were disregarded - manufacture of alcoholic beverages - show cause notice issued - non payment of GST - limitation period - HELD THAT:- The operative portion of the impugned order, extract reveals that the assessing officer took into account the evidence placed on record, including the licence issued by the Excise Commissioner, the licence cum manufacturing agreement and the statements of Smt.N.Nalini and Shri.R.V.Ravikumar. Upon appraisal of such evidence, materiality and weight was assigned to such evidence while drawing conclusions. In exercise of discretionary jurisdiction under Article 226, I am not inclined to interfere with the impugned order in these facts and circumstances. The impugned order is dated 11.12.2023 and this writ petition was filed in January 2024. As of the date of filing, the limitation period had not expired. As on date, the condonation period is on the verge of expiry. Thus, it is just and appropriate that the petitioner be permitted to present a statutory appeal. Therefore, W.P.No. is disposed of by permitting the petitioner to present a statutory appeal within ten days from the date of receipt of a copy of this order. If such statutory appeal is presented within the aforesaid period, the appellate authority is directed to receive and dispose of the same on merits without going into the question of limitation. No costs. Consequently, W.M.P.No.10388 of 2024 is closed.

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• 2024 (4) TMI 656
  Validity of assessment order - Violation of Stay Order against the operation of a notification extending the period of limitation - Jurisdiction of Central GST authorities since the petitioner is assessed to the State Tax Authorities - Cross Empowerment - HELD THAT:- The issue regarding cross-empowerment and the jurisdiction of the counterparts to initiate proceedings when an assessee has been allocated either to Central Tax Authorities or to the State Tax Authorities was examined in detail by this Court in Tvl.Vardhan Infraastructure s case [ 2024 (3) TMI 1216 - MADRAS HIGH COURT] . After examining the provisions, this Court has concluded that in the absence of notification issued for cross-empowerment, the authorities from the counterpart Department cannot initiate proceedings where an assessee is assigned to the counterpart. Therefore, the impugned Order-in-Original No.24/2023-GST, dated 26.12.2023 passed by the respondent is quashed. However, liberty is given the State authorities to proceed against the petitioner in terms of the observations contained in the order passed by this Court in Tvl.Vardhan Infraastructure s case [cited supra]. Petition allowed.

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• 2024 (4) TMI 655
  Denial of Input Tax Credit (ITC) - Proof of movement of Goods (E-way bill) not produced - Validity of Order passed - No reasonable opportunity to contest the tax demand - show cause notice issued alleging that the petitioner had wrongly availed of Input Tax Credit (ITC) - HELD THAT:- On perusal of the petitioner s reply, it appears that the petitioner submitted original tax invoices, the ledger account pertaining to the supplier concerned, bank statement and relevant GSTR returns. The petitioner does not appear to have submitted e-way bills, lorry receipts, weighment slips and the like to establish actual movement of goods. On examining the impugned order, it appears that the tax proposal was confirmed largely on the ground that there was no proof of actual movement of goods. By taking into account the nature of documents submitted by the petitioner, which include the bank statement showing payments made to the supplier, the GSTR 2A indicating the availability of ITC, it is just and appropriate that the petitioner be provided an opportunity to produce relevant documents to prove actual movement of goods. As a condition for remand, however, it is also necessary to put the petitioner on terms. Thus, the impugned order dated 30.08.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 20% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to submit additional documents within the aforesaid period to establish actual movement of goods. Upon receipt of additional documents from the petitioner and on being satisfied that 20% of the disputed tax demand was received, the 1st respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of additional documents from the petitioner. As a consequence of the impugned order being set aside, the order of attachment is raised. The writ petition is disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.

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• 2024 (4) TMI 654
  Validity Of Order passed u/s 73 of the Central Goods and Services Tax Act, 2017 [ the Act ] - Demand - show cause notice issued proposing to cancel the GST registration - HELD THAT:- Since no show cause notice was issued prior to passing of impugned order, on the said technical ground alone, this order is liable to be set aside. The same is accordingly quashed. It is clarified that it would be open to the respondents to pass an appropriate order after giving a proper show cause notice and an opportunity of personal hearing to the petitioner. It is clarified that this Court has neither considered nor commented on the merits of contentions of either party and the impugned order has been set aside solely on the ground of infraction of principles of natural justice. All rights and contentions of the parties are reserved Petition is accordingly disposed of in the above terms.

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• 2024 (4) TMI 653
  Validity Of assessment order passed - SEZ unit - Supply of services without charging GST since it was a zero rated supply - turnover inadvertently reported under the column taxable value in GSTR-1 - HELD THAT:- The petitioner has placed on record the relevant tax invoice. Such tax invoice indicates prima facie that the supply was made to a SEZ unit and that it consequently qualifies as a zero rated supply. The GSTR-3B return of the petitioner is in line with the supply being zero rated. It is also noticeable from the invoice and returns that the supply pertained to the July quarter of assessment period 2017-18. This was during the nascent stage of GST implementation. Thus, I am of the view that this is an appropriate case to provide an opportunity to the petitioner. Consequently, the impugned assessment order is quashed and the matter is remanded for re-consideration by the assessing officer. The petitioner is permitted to submit a reply to the show cause notice within a maximum period of fifteen days from the date of receipt of a copy of this order by enclosing all relevant documents. W.P. is disposed of on the above terms.

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• 2024 (4) TMI 652
  Maintainability of Writ Petition since GST Appellate Tribunal not constituted - Order Appealable u/s 112 of the CGST/OGST Act, 2017 - Statutory benefit of stay - Non-constitution of the Appellate Tribunal as required u/s 109 - HELD THAT:- Taking into account the aforesaid 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, we deem it proper in the interest of justice to dispose of this writ petition in the following terms, with the consent of the parties:- (i) Subject to verification of the fact of deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, or deposit of the same, if not already deposited, in addition to the amount deposited earlier under Sub Section (6) of Section 107 of the CGST/OGST Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the CGST/OGST Act, for the petitioner cannot be deprived of the benefit, due to non-constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed. (ii) The statutory relief of stay on deposit of the statutory amount, in the opinion of this Court, cannot be open ended. For balancing the equities, therefore, the Court is of the opinion that since order is being passed due to non-constitution of the Tribunal by the respondent-Authorities, the petitioner would be required to present/file his appeal u/s 112 of the CGST/OGST Act, once the Tribunal is constituted and made functional and the President or the State President may enter office. The appeal would be required to be filed observing the statutory requirements after coming into existence of the Tribunal, for facilitating consideration of the appeal. (iii) In case the petitioner chooses not to avail the remedy of appeal by filing any appeal u/s 112 of the CGST/OGST Act before the Tribunal within the period which may be specified upon constitution of the Tribunal, the respondent-Authorities would be at liberty to proceed further in the matter, in accordance with law. With the above liberty, observation and directions, the writ petition stands disposed of.

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• Income Tax

• 2024 (4) TMI 665
  Reassessment proceedings against company dissolved / insolvent - Jurisdiction or authority to reopen or assess income for any period prior to the approval of the Resolution Plan - petitioner is the corporate debtor and the Resolution Plan in respect of which came to be approved by NCLT - HELD THAT:- The successful resolution applicant cannot be foisted with any liabilities other than those which are specified and factored in the Resolution Plan and which may pertain to a period prior to the resolution plan itself having been approved. See GHANASHYAM MISHRA AND SONS PRIVATE LIMITED [ 2021 (4) TMI 613 - SUPREME COURT] and COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] We allow the instant writ petition and set aside the impugned order under Section 148A(d). Decided in favour of assessee.

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• 2024 (4) TMI 663
  Validity of order passed by the ITSC - Settlement of a case - Bogus purchases and Accommodation entries - ITSC allowed certain amounts to be capitalized with depreciation - ITSC also granted immunity from penalties and prosecution - scope of intervention by a High court, in its jurisdiction u/Article 226 of the Constitution of India - HELD THAT:- As in Jyotendrasinhji [ 1993 (4) TMI 1 - SUPREME COURT] Hon ble Apex Court held that the High Court under Article 226 can interfere with an order of the ITSC only when the order is contrary to provisions of the Act and that such contravention has prejudiced assessee. ITSC is empowered to pass, after hearing the applicant and the Commissioner, and after examining such further evidence as may be placed before it or obtained by it, such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner under Sub Section (1) or (3) of Section 245C of the Act. ITSC also has power to grant immunity from penalty and prosecution, with or without conditions. The ITSC need not give any reasons and even if it gives any reason the scope of enquiry cannot go beyond - The court should be concerned with the legality of procedure followed and not with the validity of the order. The judicial review is concerned not with the decision but with the decision making process. Even if the interpretation placed by the ITSC on documents is not correct, it would not be a ground for interference since a wrong interpretation of documents cannot be said to be a violation of the provisions of the Act. There are no allegation of bias or fraud or malice alleged in the petition against the Commission. The Hon ble Apex Court in Kotak Mahindra Bank Ltd. [ 2023 (9) TMI 1231 - SUPREME COURT] held that the High Court cannot sit in appeal as to the sufficiency of the material and particulars placed before the Commission, based on which the Commission proceeded to pass its orders. While discussing the legislative intent on the provisions of Chapter XIX-A, the Hon ble Apex Court in Kotak Mahindra Bank Ltd. [ 2023 (9) TMI 1231 - SUPREME COURT] held that frequent interference with the orders or proceedings of the ITSC should be avoided and the High Court should not scrutinize an order or proceeding of the ITSC as an appellate court. The conspectus of the law therefore would be that the court could not interfere with the order if otherwise proper on the ground that the decision appeared erroneous. Wrong or right decision was binding, if it be reached fairly after giving adequate opportunity to the parties to place their case in the manner provided by the Act. The court should be concerned not with the decision but the decision making process. If grave procedural defect such as violation of the mandatory procedural requirements of the provisions of Chapter XIX-A and/or violation of rules of natural justice is made out or if it is found that there is no nexus between the reasons given and the decision taken only then the court may interfere. Claim of deduction u/s 80IB(10) - As undisputed the projects carried out by assessee at Vasundhara, Samarpan and Country Park III qualified for deduction u/s 80IB(10) and that disallowance of expenditure by way of bogus purchases and towards business promotion and travelling expenses on Adhoc basis would go to increase the profits of the eligible projects - additional deduction as also noted in the impugned order for A.Y. 2009-10 comprises of additional income arising on account by disallowance of bogus purchases and additional income arising on account of Adhoc disallowance of expenses made by the Revenue for A.Y. 2005-06, 2006-07, 2007-08, 2008-09 in the Assessment Order passed u/s 143(3) r.w.s. 153A of the Act for those years. Detailed working and explanation in respect of the same was already available as a part of the settlement application and submissions made before the ITSC. The issue raised being question of fact as to the quantum of deduction to be allowed under Section 80IB(10) of the Act can never qualify as ground for interference by this court under jurisdiction of Article 226 of the Constitution of India. Capitalization - According to Revenue, the ITSC, before allowing capitalization of the expenditure incurred by assessee on acquisition of fixed assets by way of civil work, furniture and air conditioning system at its office premises on the 10th floor at Atrium benefits the assessee ought to have conducted an enquiry or investigation on the issue as these factual issues required verification to ascertain whether the amount was spent on the assets as stated, its actual cost, year of purchase, etc. - It does not appear that any such request for verification of these aspects were made by the Revenue in the reports or statements that were filed before the Commission. Moreover, the discretionary power under Section 245D(3) discussed above will apply here also. Further, the Revenue had accepted that the seized diary discloses the correct facts in respect of the cash generated by assessee on account of bogus purchases. In view thereof, Revenue should also accept utilization of such cash as narrated in the said diary/document seized at the time of search. It is assessee s case that assessee has its office on 10th Floor at Atrium and the expenses have been incurred on civil work, furniture and air conditioning system at the said office and the said office premises has been used in the previous year relevant to A.Y. 2011-12. Assessee has been allowed deduction by way of depreciation on the other capital expenditure incurred with respect to the said office premises. The ITSC has accepted the issue of capitalization of expenditure incurred and granted the relief. Seized diary showed that part of the cash generated by the company from bogus purchases was utilized for the purposes of incurring capital expenditure at its office premises on the 10th Floor in Atrium - Such expenses incurred on civil work, furniture and air conditioning system. Further enquiry or investigation on the utilization of the amount need not be entertained because Revenue has, relying upon the same documents, accepted the fact of generation of cash by way of bogus purchases. Therefore, the manner of utilization of the cash as noted in the seized diary also has to be accepted as correct. This is the position prevailing as per Section 132 (4A) and 292C of the Act which mandates that the contents of seized documents are true. The enquiry under Section 245D(3) of the Act was subjected to discretion of the ITSC as it relates to question of fact and is not amenable to the jurisdiction of this court. ITSC was entitled to exercise discretion and has rightly exercised its discretion. We find nothing wrong in the judicial decision making process of the Commission. When the department relies on the seized records for estimating the undisclosed income, we see no reason why the expenditure stated therein should be disbelieved. We find support in P. D. Abraham Alias Appachan And Another [ 2014 (6) TMI 15 - KERALA HIGH COURT] Moreover there was no justification for doubting the entries found in seized records pertaining to expenditure while accepting the income found recorded therein. There is neither violation of any mandatory procedure prescribed under any of the sections of Chapter XIX-A of the Act nor any violation of any of the Rules of natural justice. Further, it cannot be said that the reasons assigned by the ITSC for granting relief sought for by assessee have no nexus to the decision taken. Apex Court in Kotak Mahindra Bank Ltd. [ 2023 (9) TMI 1231 - SUPREME COURT] interference with the orders of the ITSC should be avoided, keeping in mind the legislative intent. The scope of interference is very narrow and certainly the High Court should not scrutinize an order of the ITSC as an appellate court. Rule discharged. Petition dismissed

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• 2024 (4) TMI 662
  Deduction u/s 10 B - New Undertaking or The units were formed by the transfer of previously used machinery - Assessee company is engaged in the business of garlic powder, ginger powder, madras curry powder including pickles and spices, etc. and also claimed deduction u/s 10B - Whether the assessee is entitled to deduction u/s 10 B of the income tax act with respect to the eligible profits of eligible units at the Nasik and Ratlam? - whether the assessee manufacturing pickles by purchasing raw fruits and vegetables, using masala and different process can be said to engaged in manufacturing activity or not ? - HELD THAT:- Identical issue arose in case of Sterling Agro Products Processing (P.) Ltd [ 2011 (8) TMI 460 - ITAT CHENNAI] wherein as held assessee is entitled to the deduction under section 10B of the Act as the assessee is manufacturing gherkin pickles from gherkin for the purpose of deduction u/s 10B. No reason to hold that the assessee is not engaged in manufacturing activities. Thus, we hold that the process of manufacturing pickles from raw vegetables and fruits, masala and other ingredients has different marketable commodities than the raw materials which are a different value addition, and a new product emerges therefrom. With respect to the realization of the export proceeds it has been stated that the assessee has produced bank realization certificates, bank certified statement of the Forex receipt, and certificate of the auditor, therefore we do not find any infirmity in the order of the CIT A in allowing the claim of the assessee u/s 10 B to the extent of foreign exchange received during the specified period. With respect to the conversion of the firm into a company and use of plant and machinery, it is a fact that both the units of the assessee became hundred percent export-oriented units in 2001 01. The first year of claim of deduction under section 10 B was assessment year 2001 02. With respect to the use of plants and machinery the CIT A gave a categorical finding about acquisition of the machinery in different years. This is held after the obtaining of the remand report. Thus, the finding of the learned assessing officer was in consequence of nonproduction of detail by the assessee. When the assessee has produced the details before the learned CIT A, the remand report is obtained; there is no reason to sustain the disallowance. Difference of stock submitted to the banker and book stock - AO has noted that there was a difference of stock shown in the books of account in the statement shown to the banks and that the difference to the total income of the assessee of Rs. 21,909,800 - CIT A held that a similar issue arose in the case of the assessee for assessment year 2003 04 and on the basis of reconciliation the addition was deleted as difference to explained - HELD THAT:- We do not find any infirmity in the order of the CIT A because addition could not be made on the basis of difference between the closing stock declared in the statement submitted by the banker is less than the book stock. Accordingly, we dismiss this ground of appeal of the AO also. Allowability of loss in trading and spices - assessee explained that it was on account of trading operations however the learned assessing officer without verifying the details filed is held that the trading activities nothing but a speculation loss which the appellant is not entitled to get set of against the normal business income - HELD THAT:- On careful consideration of the argument of the parties it was found that that it is a loss arising from the sale of goods and high seas. Therefore, it cannot be said to be a speculation loss. Accordingly, the order of the learned CIT A holding it to be a regular trading loss is upheld. Ground of the appeal is dismissed. Addition on account of difference in closing stock which could not be reconciled by the assessee and therefore rejecting the books of accounts estimated the profit at the rate of 26% - HELD THAT:- We find that when the assessee has shown higher stock in books of accounts and shown lesser stock to the bank, we do not find any reason to make any addition in the hence of the assessee. Thus, the order of the learned CIT A is reversed to the extent of confirmation of the addition. Disallowance in respect of provident fund and ESIC payment - When the matter reached before the learned CIT A the assessee submitted that there is a double disallowance of the same amount - CIT A rejected the same holding that the learned assessing officer has started the computation from the net profit as per profit and loss account and thereafter made the disallowance. Before us also the same argument was advanced - HELD THAT:- We do not find any infirmity in the order of the learned CIT A as the computation by the learned assessing officer started from the net profit as per profit and loss account there cannot be any question of double disallowance. Thus, ground of the appeal of the assessee is dismissed. Suppression of profit by rejecting the books of accounts - CIT- A considering the average gross profit shown by the assessee held that by showing the valuation of the closing stock of inventory at higher amount by Rs. 1 20 crores the appellant has offered higher gross profit/net profit for taxation and not vice versa. The charge regarding the suppression of profit by the AO was without pointing out any defect in the books of account maintained by the assessee company. Further the manner of making an addition was also not correct - HELD THAT:- On careful consideration of the rival arguments, we find no infirmity in the order of the CIT A wherein the addition was deleted. We do not find any reason to sustain the rejection of the books of accounts by invoking the provisions of section 145 (3) of the act when the assessee has maintained the details of the accounts and the gross profit and net profit are also comparable. The rejection of the book profit and the books of accounts which are audited without pointing out latent, patents and glaring defects are not sustainable. Accordingly ground of the appeal of the AO is dismissed.

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• 2024 (4) TMI 661
  Denial of exemption u/s 11 12 - Assessment of trust - Rate of Tax - Maximum Marginal Rate (MMR) - Charging the assessee as per the provisions of section 164(1) or 164(2) - assessee argued that beneficiary are the general public so there is no share of beneficiaries whether known or unknown as the assessee is trust so charging the assessee as per the provisions of section 164(1) as held by the CIT(A) is incorrect and the relevant facts has not been appreciated - HELD THAT:- Section 13(1)(c) deals where the money spent for the related party and 13(1)(d) deals religious trust or institution. The ld. AR of the assessee submitted that the assessee subsequently already registered u/s. 12A with effect from 22.03.2022 and thus it does not come under the provision of section 13(1)(c) and (d) of the Act and therefore, based on that set of facts the assessee trust shall be charged to tax u/s. 164(2) at the rate as applicable to Individual and AOP. The decision of the ld. CIT(A) to charge the assessee u/s. 164(1) is not correct it should be charged based on the specific provision of the Act u/s. 164(2) of the Act and the tax rate as applicable to that 164(2) will apply to the rate of the AOP/Individual and the initial exemption is also available to such assessee. Ground no. 2 raised by the assessee is allowed. Amount claimed to had been used for the purposes of the trust - CIT(A) has not granted the benefit of deduction of expenditure only on the reason that the assessee is not registered u/s. 12 A of the Act. Assessee placed on record the registration certificate issued to the trust on 22.03.2022 and therefore, considering that aspect of the matter we direct the ld. AO to grant the benefit of the deduction of the expenditure claimed by the as per object of the trust. Based on these observation ground no. 1 raised by the assessee is allowed.

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• 2024 (4) TMI 651
  Adjusting or attempting to adjust any portion of the refunds receivable by the petitioner against the stayed outstanding demand - condoned revised ITRs were submitted in respect of each of the Assessment years but refunds have not been received - petition may be disposed of directing respondent No. 4 to consider and decide his aforesaid representation expeditiously within the stipulated period fixed by this Court - HELD THAT:- Having considered the facts and circumstances of the case and considering the limited prayer made by the learned counsel for the petitioner, this petition is disposed of directing the respondent No. 4 to consider and decide the representation dated 18-8-2023 (Annexure P-2) and Annexure P-23 dated 8-12-2023 filed by the petitioner within a period of 60 days from receipt /submission of copy of this order.

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• 2024 (4) TMI 650
  Reopening of assessment u/s 147 - as argued documents submitted by the petitioner were not taken into consideration while drawing up the assessment order - HELD THAT:- Findings were recorded that the assessee failed to submit export bills, proof of customs clearance, remittance proof, copy of purchase bills and confirmation of payment made to agriculturists. Out of these, export bills were certainly attached with the petitioner s reply on 15.02.2024. As regards purchase bills, the purchase ledger and the GSTR annual returns were filed. It is likely that much of the information requested for would be contained in these documents. However, it should be recognised that the petitioner does not appear to have submitted all necessary documents. Nonetheless, since the documents submitted by the petitioner were not discussed and no reasons are recorded for confirming the proposed variations, the impugned order calls for interference. Besides, it should be noticed that tax was imposed not only on deposits but also on withdrawals. For reasons set out above, the impugned order is set aside and the matter is remanded to the 1st respondent for reconsideration. The petitioner is permitted to submit any additional documents within a maximum period of 15 days from the date of receipt of a copy of this order. Upon receipt thereof, the 1st respondent is directed to provide a hearing through video-conference to the petitioner and issue a fresh assessment order within a maximum period of two months from the date of receipt of additional documents from the petitioner.

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• 2024 (4) TMI 649
  Rectification u/s 154 - disallowance of carrying forward of the loss - HELD THAT:- Since on account of disallowance of carrying forward of the loss for the financial year 2016-17 the petitioner would be denied to carry forward the said loss any further. By implication, the petitioner would suffer a loss and therefore, it is in that situation Sub-Section (3) of Section 154 stipulates issuance of notice and an opportunity of hearing. The said Sub-Section (3) otherwise has a mandatory force of law and it is this statutory requirement which has not been complied with as would be evident from the contents of paragraph No. 12 of the counter-affidavit (extracted above). Thus, we are of the firm view that the impugned order of rectification passed by the 1st respondent is in violation of the statutory provision of Section 15393) of the Act, and therefore, the same is unsustainable. Accordingly, the same is set aside. The Writ Petition stands allowed.

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• 2024 (4) TMI 648
  Determining the jurisdiction of appellate forum - jurisdiction of this Tribunal - HELD THAT:- Although certain benches of the Tribunal exercise its jurisdiction over more than one state, the explanation 4 to Standing Order dt. 01/10/1197 issued under rule 4(1) of Income Tax Appellate Tribunal Rules, 1963 prescribes that; the ordinary jurisdiction of the Tribunal should be based on the location of the Assessing Officer. The Hon ble Supreme court s decision in PCIT Vs ABC Papers Ltd. [ 2022 (8) TMI 863 - SUPREME COURT] , has put the issue of jurisdiction of appellate forum to rest by holding that, the situs of the assessing officer is the only key factor for determining the jurisdiction of appellate forum irrespective of any administrative order passed u/s 127 of the Act in relation to transfer of cases. Thus since the situs of the AO who framed the assessment is beyond the territorial jurisdiction of this Tribunal, therefore without offering our comments on threefold issue dilated at para 3 hereinbefore, we deem it fit to dismiss the present appeal of the Revenue and the cross objection of the assessee as are not maintainable, however with leave to file them before appropriate bench of the Tribunal which exercises the jurisdiction over the Ld. AO who framed the assessment. Appeal of the Revenue and Cross-Objection of the assessee stands DISMISSED.

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• 2024 (4) TMI 647
  Eligibility of the assessee for exemption u/s 80P(2)(a)(i) or u/s 80P(2)(d) - interest income earned by a cooperative society from the schedule banks - appellant is a cooperative society engaged in the business of providing credit facilities to its members and accepting deposits from its members. It does not enjoy any license to carry on the business of banking from Reserve Bank of India. HELD THAT:- Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] and Vaveru Co-operative Rural Bank Ltd [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] took a view that such interest income is attributable to the activities of the society and, therefore, eligible for exemption u/s 80P(2)(a)(i) of the Act. Similar view has been taken by the Hon ble Calcutta High Court in the case of PCIT vs. Gunja Samabay Krishi Unnayan Samit [ 2023 (1) TMI 783 - CALCUTTA HIGH COURT] and Chennai Central Cooperative Bank Ltd. [ 2023 (1) TMI 1088 - MADRAS HIGH COURT] The interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, direct the Assessing Officer to allow the exemption u/s. 80P(2)(a)(i) and section 80P(2)(d) of the Act. Thus, the grounds of appeal filed by the assessee stand allowed.

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• 2024 (4) TMI 646
  Revision u/s 263 - lack of enquiry or lack of investigation - correct appreciation of conclusion that interest on enhanced compensation during the assessment year under consideration ought to be treated as income from other sources u/s. 56(2)(viii) of the Act - HELD THAT:- We find plausible reasons in the contention of the Ld. AR that that the issue under consideration is no longer res integra, in as much as that identical issue arises into the case of other individuals namely Gulshan Kumar S/o Mohari Ram [ 2024 (2) TMI 748 - ITAT DELHI] wherein exactly similar and identical order has been has decided the issue in favour of assessee as held since the order of the Ld. AO is based on the decision of the Hon ble Supreme Court in Ghanshyam HUF [ 2009 (7) TMI 12 - SUPREME COURT] on the issue of taxability of interest received by the assessee under section 28 of Land Acquisition Act. it can at best be said to be a debatable issue on which two views are possible and the Ld. AO accepts one of the views. In this view of the matter too, the Ld. PCIT cannot assume revisional jurisdiction held by the Hon ble Delhi High Court in CIT Vs. Hindustan Coca Cola Beveraces P Ltd. [ 2011 (1) TMI 138 - DELHI HIGH COURT] Revenue has not pointed any change into facts and circumstances of the present case. We therefore, respectfully following binding precedent (Supra), hereby allow the appeal of the assessee by quashing the impugned order of the Ld. PCIT - Assessee appeal allowed.

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• 2024 (4) TMI 645
  Validity of reopening of assessment - reasons to believe - assessee has claimed huge amortization expenses on goodwill - HELD THAT:- As undisputed fact that in the reasons AO has recorded the escapement of income on account of amortization of goodwill which was not claimed by the assessee in computation of normal provisions of the Act and with regard to adjustment in book profit computed u/s 115JB of the Act AO has not disturbed the same in the order passed u/s 143(3) r.w.s. 147 of the Act. So it is very clear that the reasons recorded are without verification of the records and accordingly, without application of mind. AO has not bothered to even verify the information received with the assessment folder whether any such depreciation has been claimed by the assessee or not. It clearly reflects that the AO has mechanically recorded the reasons and issued the notice without applying his own mind. Ld. PCIT has also accorded approval u/s 151 of the Act based on the reasons recorded by the AO without ascertaining the actual facts of the case. Hon ble Bombay High Court in case of Sharvah Multitrade Compant P Ltd. [ 2022 (1) TMI 372 - BOMBAY HIGH COURT] dealt with similar case and held that reassessment initiated based on reasons recorded on irrelevant facts and without application of mind cannot survive. This, in our considered opinion, it is against the settled principles of law, as reopening of an assessment is an extraordinary power available to the ld AO and it should not be done in a cavalier manner. That is why the legislature in its wisdom had put lot of restrictions by imposing conditions for seeking approval and sanction from a superior officer in terms of section 151 of the Act. AO recorded wrong facts on many count in the reasons recorded for reopening of the assessment i.e. AO recorded incorrect fact that assessee has claimed huge amortization expenses on goodwill and disallowed the same in the assessment order u/s 32 of the Act which was deleted by Ld CIT(A) by stating that no such expenses actually claimed by the assessee. The AO in the reasons also recorded incorrect fact that no assessment has been completed in this case u/s 143(3) but assessment u/s 143(3) r.w.s. 153C completed on 29/12/2017 as recorded by the AO. AO also incorrectly stated that provisions of section 147(2)(b) are applicable, whereas in the facts of the case provisions of section 147(2)(c) are applicable where the onus on AO is higher to prove escapement of income. The AO, therefore, recorded wrong, incorrect and non-existing reasons for reopening of the assessment. It makes clear that there is a total non-application of mind on the part of the AO while recording the reasons for reopening of the assessment - Thus Reopening of the assessment is invalid and bad in law - Decided in favour of assessee.

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• 2024 (4) TMI 644
  Disallowance of total job work charges paid to sister concern - invocation of section 40A(2) - HELD THAT:- Lower Authorities failed to make comparative study of the job work charges with any third party, therefore A.O. is not correct in making disallowance u/s. 40A(2)(b) of the Act. Thus the disallowance made by the Lower Authorities are hereby deleted. Thus Ground Nos. 1 to 4 raised by the assessee are hereby allowed. Disallowance on adhoc basis on the job work charges - Addition at Rs. 2 per Kg for 16710 Kgs. on estimated basis on the job work carried out - HELD THAT:- CIT(A) confirmed the disallowance only on the ground that the smallness of the disallowance which is not excessive. However the Assessing Officer has not justified the above disallowance with proper evidence, but only on misconception of the correct facts. Therefore the adhoc disallowance made by the Assessing Officer is not sustainable in law. Therefore we direct the A.O. to delete the above disallowance. Addition of duty drawback incentive which is offered for taxation on cash receipt basis in subsequent year - D.R. submitted that the assessee is not aggrieved by this issue and the CIT(A) already given relief to the assessee, hence this ground is liable to be dismissed - HELD THAT:- We find that the Ld. D.R. is correct in stating that the assessee is not aggrieved on this issue and there is already a direction given by Ld. CIT(A) to verify this issue and rectify the assessment accordingly. Therefore this ground raised by the assessee is hereby dismissed

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• Customs

• 2024 (4) TMI 643
  Maintainability of petition - availability of alternative remedy of appeal - compounding of offence - CESTAT has jurisdiction to entertain an application vis-a-vis compounding of an offence under Section 137 of the Customs Act, 1962, or not - HELD THAT:- Bearing in mind the submissions of learned senior counsel and also the fact that the CESTAT has now remanded the matter to the Chief Commissioner to reconsider the application filed for compounding of the offence under Section 137 of the Customs Act, 1962, the matter needs no interference. The Chief Commissioner is now to re-consider the said application in accordance with law. The Chief Commissioner to dispose of the said application filed under Section 137 of the Customs Act as expeditiously as possible. SLP disposed off.

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• 2024 (4) TMI 642
  Revocation of Customs Broker Licence - forfeiture of security deposit - levy of penalty - mis-declaration of quantity of imported goods - violation of the provisions of Regulation 11(n) of CBLR, 2013 - HELD THAT:- From the facts of the present case, it is evident that the manner in which Shri Bansal was dealing with the appellant in relation to the imports for all practical purposes, he was the actual importer and Shri Praveen Singh Patwal was merely a dummy IEC holder. He categorically stated that whenever the consignment arrived, the documents were sent to him by Shri Rajesh Bansal or else his field boy used to go to the office of Shri Rajesh Bansal at Tip Top Market, Karol Bagh to collect the documents. More important was that after customs clearance, the goods used to go to the premises of Shri Rajesh Bansal at Karol Bagh is a pertinent factor which could not have been ignored by the appellant. Similarly, the payments used to be made by Shri Rajesh Bansal or Sunil Badlani. The entire working was within the knowledge of the appellant and the fact that this modus-operandi was followed in the past clearances of around 60-70 consignments clearly reflects connivance on the part of the appellant. Also on same set of facts that Narendra Narula, Proprietor of GND Cargo Movers (CHA) was well aware of the fact that Shri Praveen Singh Patwal was the proprietor of M/s. Royal International and Shri Rajesh Bansal was actually importing the goods in the name of M/s Royal International, although Shri Bansal was not the proprietor of the said firm, show cause notice dated 29.11.2013 was issued under the Customs Act, 1962 and on adjudication, order-in-original dated 30.03.2018 was passed whereby penalty of Rs.10 lakhs was imposed on Shri Narendra Narula under Section 112 (a) of the Act. The findings given on the same facts in the collateral proceedings on adjudication are binding. Customs broker is expected to act with great sense of responsibility and take care of the interest of both the client and the revenue. Violations even without intent are sufficient to take action against the appellant. Proportionality of punishment - HELD THAT:- The adjudicating authority had taken a balanced view that CB cannot escape his duty of KYC verification just by obtaining photo copies of two identity and interest proof documents and therefore having violated regulation 11 (n) rightly revoked the CB license and forfeited the security deposit amount but refrained from imposing separate penalty on the appellant. In M/S FALCON INDIA (CUSTOMS BROKER) VERSUS COMMISSIONER OF CUSTOMS (AIRPORT GENERAL) NEW DELHI [ 2022 (3) TMI 1268 - CESTAT NEW DELHI] , the Tribunal was of the view that there is no reason to show any leniency once violation is noticed and it is not for the Tribunal to interfere with the punishment meted out by the disciplinary authority, i.e. the Commissioner, unless it shocks the conscience. Referring to the provisions of Regulation 11(n) and the judicial pronouncements, Mr. Rakesh Kumar, learned Authorised Representative submitted that Shri Narula (CB) in his statement recorded under Section 108 of the Act accepted that he has not verified the antecedents of the importer as the documents were handed over by Shri Badlani, an Associate of Shri Rajesh Bansal, who is not the IEC holder and he also admitted that the imports were made through a dummy IEC holder - there are no infirmity or perversity in the conclusion arrived at in imposing the punishment by the impugned order. The impugned order upheld - appeal dismissed.

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• 2024 (4) TMI 641
  Valuation of imported goods - rejection of value - enhancement of value, on the basis of a price quote appearing on the internet website - Confiscation on account of mis-match colour, batch number and batch quantity, which occurred on account of mistake on the part of the foreign supplier - confiscation also on the ground that one batch number being omitted to be mentioned by mistake in the Test Certificate of the Testing Laboratory. Enhancement of value - HELD THAT:- Merely on the basis of the quote available on particular website it is not sufficient to enhance the value of the imported goods. at the same time the value appearing on website is abnormally high i.e. 0.36 per piece therefore the matter needs to be reconsidered on the basis of other material, if any. It is also observed that for applying the value of contemporaneous import it will also be important to see various factor such as similar goods, same quality, country of the export and the time of import. Therefore, merely on the basis of the quote available on the website value cannot be enhanced. Confiscation of the goods on the basis mis-match of colour, batch number and batch quantity - appellant submitted that the mistake has occurred in the part of the supplier which has subsequently been clarified by the supplier - HELD THAT:- It is prima facie found that because of this error it does not conclusively lead to any mala fide on the part of the appellant. The Adjudicating authority must reconsider the clarification given by the supplier and also to see that whether there is any intention to evade/ short paid the custom duty. It is also the submission of the appellant that even though this mistake has occurred the total quantity of the goods is matching. This aspect also needs to be re-looked into by the adjudicating authority. Confiscation on allegation that in test certificate one batch number is mentioned wrongly - HELD THAT:- It is found that it was a typographical error and the testing laboratory has rectified the error. Once the typographical error has been rectified, the mistake dose not remains and after rectification only for the mere typographical error goods cannot be confiscated. Therefore the adjudicating authority has to reconsider this matter accepting the rectification of the error done by the concerned laboratory. The entire matter needs to be reconsidered therefore the impugned order is set aside. The appeals are allowed by way of remand to the adjudicating authority for passing a fresh order.

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• 2024 (4) TMI 640
  Valuation of imported goods - inclusion of royalty in the invoice value - Rule 10(1)(c) of the Customs Valuation Rules, 2007 - HELD THAT:- Impliedly, the direction of the first appellate authority is not relatable to goods under import or under proceedings for recovery of duty short-paid on import. A proceedings which does not pertain to goods under import or already imported and cleared is not a proceedings acknowledgeable under Customs Act, 1962. Neither Learned Counsel nor Learned Authorised Representative were able to evince notice under section 28 of Customs Act, 1962 for recovery of duty arising from proposed addition to declared value by recourse to rule 10(1)(c) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 or for finalization of assessment under section 18 of Customs Ac, 1962 which, other than section 124 of Customs Act, 1962, should be the requisite framework for adjudication and appellate disposal. The order impugned before the first appellate authority has its origins in a peculiar institution of customs administration, viz., Special Valuation Branch (SVB) or GATT Valuation Cell (GVC), found in some of the older customs houses with specific remit to investigate acceptability of price declared for assessment of goods transacted between related persons. This arises from provisioning in section 14 of Customs Act, 1962 for assessable value to factor in relationship affecting price arrangement in transactions which frailty of human expression could but, in the nascent stage of harmonized approach to valuation, inadequately articulate as the norm or the deviation, and as remedies appurtenant thereto, to justify institutionalized support to assessment hierarchy. Furthermore, from the absence of show cause notice, as well as response by or on behalf of appellant about fiscal detriment in proceedings, we may not be wrong in speculating that such imports as may be subject to oversight of Special Valuation Branch (SVB) are, invariably, assessed provisionally for finalization to be undertaken upon completion of ascertainment by Special Valuation Branch (SVB) - As appeal has not been directed before first appellate authority against order of such proper officer , it transgresses the remand jurisdiction of such appellate authority to issue directions to a proper officer who has yet to undertake finalization. Direction to the ostensible original authority is nothing but an exercise in futility and direction to the proper officer , and the statutorily empowered potential original authority , is beyond appellate jurisdiction of Commissioner of Customs (Appeals) before whom assessment was not under challenge. There was no cause for grievance to initiate appellate remedies. Such opportunity would have presented itself after finalization. Implicit in acknowledgement of appellate remedy against advisory of Special Valuation Branch (SVB) is another round of appeal through the first appellate authority on the same goods and on the same facts which does not sit well with the principle of comity of courts. The appeal before the first appellate authority was, thus, premature. This aspect of disposal of the appeal within the scheme of Customs Act, 1962, and the role of Deputy Commissioner, Special Valuation Branch (SVB) within it, had not been evaluated by the Commissioner of Customs (Appeals). The impugned order set aside - appeal restored to first appellate authority to dispose off the pleas of the appellant-Assistant Commissioner in accordance with the scheme of Customs Act, 1962 - appeal allowed by way of remand.

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• 2024 (4) TMI 639
  Penalties u/s 112 and section 114AA of Customs Act, 1962 - classification of goods imported under duty exemption entitlement certificate (DEEC) scheme of the Foreign Trade Policy (FTP) and corresponding N/N. 93/2004-Cus dated 10th September 2004 - HELD THAT:- The adjudicating authority appeared not have given credence to the revision accorded by Norms Committee; moreover, the adjudicating authority appeared to have misconstrued the purpose of section 12 of Customs Act, 1962, which has the sole reference to the First Schedule to Customs Tariff Act, 1975, and scope for determining eligibility for exemption in a notification issued under section 25 of Customs Act, 1962 intended to operationalise a scheme in the Foreign Trade Policy (FTP) with objectives of its own by visiting the declared classification intended for ascertaining rate of duty. Supplanting of the one by recourse to unconnected jurisdiction of the other deprives the impugned order of legal validity. Compounding this glaring lacunae in an adjudication exercise, already compromised in the manner set out, are the developments since its culmination. The amending of the licence by the competent authority and the issuing of export obligation discharge certificate (EODC) by the licencing authority may have given the adjudicating authority cause for pause had these been available then. In view of these several foundational lacunae, the adjudicatory process, found wanting as model of legality and propriety, warrants appropriate rectification. To enable that, the impugned order is set aside and the matter remanded to be heard afresh for disposal after affording opportunity to the notices to make oral and written submissions. Appeal allowed by way of remand.

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• 2024 (4) TMI 638
  Non-compliance with the remand order of the Tribunal in the earlier round of litigation - import of rough marble blocks - Revenue submitted that, notwithstanding grant of licence subsequent to import, the appellant was not entitled to clear the goods in the absence of licence at the time of import - HELD THAT:- The jurisdictional Commissioner of Customs was bent upon demonstrating statutory superiority over other agencies of the State as the final arbiter of national interest. This is evident from the refusal to await outcome of application pending before the Directorate General of Foreign Trade (DGFT) and proceeding to penalise the import and importer. Even after the altered factual situation had been highlighted by the Tribunal in remand order and necessity of considering this as relevant to the outcome implicit in the remand order, the adjudicating authority remained obdurate. The authority has even gone to the extent of denigrating superior appellate authority by insisting on restoration of the order discarded by the Tribunal. It is patent lack of refresher episodes in the course of upward mobility of officers that encourages megalomaniac disregard for horizontal and vertical components of governance. Such defiance of appellate directions suffices to invalidate the impugned order. Quantitative restrictions, implemented through special licence regime, is the exclusive remit of the licencing authority. By its very nature, the date of issue of licence is not to material to quantitative restriction; its relevance to the impugned goods alone is. On that there has been no controverting either in the impugned order or in submissions of Learned Authorised Representative. It has not been unknown for the Department of Revenue to issue ad hoc exemption, in exercise of empowerment under section 25 of Customs Act, 1962 and long after goods have been imported and cleared, to regularise such imports in public interest. Sauce for the goose is sauce for the gander too. The findings in the impugned order are not in consonance with the statutes as legislated and law as judicially determined. The exercise of authority by the Directorate General of Foreign Trade (DGFT) is beyond the oversight afforded to officers of customs under Customs Act, 1962. There are no reason for such illegality, as articulated in the impugned order, to survive - the impugned order is set aside - appeal allowed.

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• 2024 (4) TMI 637
  Confiscation of imported goods - Black pepper - advance authorisation scheme - fulfilment of export obligation or not - reliability of statements - cross-examination of persons whose testimony is relied upon - HELD THAT:- Owing to non-adherence to section 138B of Customs Act, 1962, the findings of the lower authorities cannot be validated, that have relied upon statements to conclude that the appellants were aware of the diversion that M/s Bruno Exports were engaged in which has bearing on recourse to section 112 of Customs Act, 1962. The findings of the lower authorities suffer from infirmities arising from having fastened condition while ordering redemption and from the statements relied upon not having crossed the bar of relevancy prescribed by section 138B of Customs Act, 1962 - the appeals cannot be taken to its logical conclusion in the absence of validity of the impugned order on both counts. The impugned order is set aside - matter remanded back to the adjudicating authority for a fresh decision after permitting cross-examination of the witnesses sought for and to set right the terms of redemption - appeal allowed by way of remand.

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• 2024 (4) TMI 636
  Valuation of imported goods - aluminium scrap - enhancement of value - Fulfilment of requirements of Section 14 of the Customs Act or not - scope of the Section 17 (5) of the Customs Act, 1962 - Primary dispute regarding the consent of the appellant - mandatory to pass an speaking order within prescribed period by the concerned authorities in case of any changes made to self-assessment made by the importer while filing the bill of entry - HELD THAT:- When there is a serious dispute as to whether the appellant had given consent in writing to the reassessed value or not, this issue has to be first decided by the Division Bench because it is only in such circumstances that the decision of the Tribunal in COMMISSIONER OF CUSTOMS DELHI VERSUS M/S HANUMAN PRASAD SONS [ 2020 (12) TMI 1092 - CESTAT NEW DELHI] would apply. The matter is, therefore, sent back to the Division Bench so that a decision on this core issue is taken because only then reliance can be placed by the revenue on the decision of the Tribunal in Hanuman Prasad.

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• Corporate Laws

• 2024 (4) TMI 635
  Seeking directions against the respondent no. 1/National Housing Bank (NHB) to consider and decide upon the petitioner s representation dated 18th August, 2023 - seeking direction to call upon respondent no. 2, i.e., India Bulls Housing Finance Limited (IBHFL) to produce the responses and relevant documents, disclosing the actions taken by them in respect of the query dated 6th April, 2023 addressed by the petitioner. HELD THAT:- The petitioner has been in litigation with IBREL and seeks to collect information and documents through the process of the present petition, so as to use the same to file intervention application before NCLAT, New Delhi in the appeal filed by IBREL against the order dated 9th May, 2023 passed by NCLT, Chandigarh, or to file a separate appeal himself against the order dated 9th May, 2023 passed by NCLT, Chandigarh. Writ jurisdiction of this Court cannot be used by a party for collecting evidence and documents against another party, against whom the petitioner has pending disputes. Writ jurisdiction is meant to safeguard the constitutional, legal and vested rights of a party. The powers vested with this Court under writ jurisdiction are large that are used by this Court to ensure that the constitutional and legal rights of parties are protected and secured - The Court process, much less a writ jurisdiction, cannot be used as a fishing and roving enquiry against a party with whom the petitioner has pending disputes, for the purposes of collecting evidence and documents to be used against such a party. The present petition filed by the petitioner is clearly a misuse and abuse of the process of the Court. The petitioner is trying to collect evidence and documents against IBREL, as is manifest from the representation dated 18th August, 2023 submitted by the petitioner to NHB. Neither any constitutional nor any legal right of the petitioner is being violated or breached, for protection of which the present petition has been filed. This Court will not become a party in a fact finding and evidence collecting process in order to aid the petitioner, which is the manifest purpose of filing the present petition. The present petition is clearly a misuse and abuse of the process of law. Thus, no merit is found in the present petition - petition dismissed.

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• Insolvency & Bankruptcy

• 2024 (4) TMI 634
  Maintainability of petition - availability of alternative remedy - discharge of the Advocate appointed by the JCM group and seeking appointment of its own Advocate - representative of Petitioner No. 1-Company - whether Petitioner No. 1 had followed the procedure provided under Rule 120 of the NCLT Rules whilst seeking discharge of the Advocate appointed by the JCM group and seeking appointment of its own Advocate to represent Petitioner No. 1-Company? - Violation of the principles of natural justice. HELD THAT:- In the present case, there is no doubt that the NCLT had the jurisdiction to pass the said Order dated 22nd March 2024, inter alia, in respect of Interlocutory Application No. 859 of 2024 filed by Petitioner No. 1. The NCLT, in its Order dated 22nd March 2024, has considered Interlocutory Application No. 859 of 2024 filed by Petitioner No. 1 and has recorded reasons as to why the said Interlocutory Application was being dismissed. This clearly shows that there is no violation of the principles of natural justice. The case of the Petitioners is that Petitioner No. 1 had followed the procedure provided under Rule 120 of the NCLT Rules and therefore the NCLT ought to have decided the said Application in its favour. On the other hand, it is the case of Respondent No. 3 that Petitioner No. 1 had not followed the procedure under Rule 120 of the NCLT Rules, and, therefore, the NCLT has correctly rejected Petitioner No. 1 s Application. This is surely an issue which can be raised in Appeal by Petitioner No. 1 and does not warrant interference by this Court in its writ jurisdiction under Article 226 of the Constitution of India. Moreover, this Court cannot lose sight of the fact that this inter se dispute between two groups for representing the Petitioner No. 1, who is the Corporate Debtor, cannot delay or jeopardize the proceedings filed by Respondent No. 3 as the financial creditor under Section 7 of the IBC. Any interference by the Writ Court would clearly affect the said proceedings as, by the said Order dated 22nd March 2024, the Petition filed by Respondent No. 3, under Section 7 of the IBC, has been admitted against the Corporate Debtor, i.e., Petitioner No. 1. Petition dismissed.

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• 2024 (4) TMI 633
  CIRP - Liquidation of corporate debtor - Refusal to approve the private sale in favour of Eshan Minerals Private Limited - It is submitted that Appellant Eshan Minerals Private Limited has already undertaken to pay all MIDC dues, including transfer charges directly to the MIDC - Appellate being successful bidder and a prospective bidder for the debtor s assets - HELD THAT:- Adjudicating Authority did not commit any error in issuing a direction for issue of a fresh Notice of conducting sale to other interested parties one party had been already expressed interest. The submission of Sh. Abhijeet Sinha that Sachani Developers who had shown interest and filed an I.A. No.261/2024 subsequently withdrawn his offer by letter dated 26.02.2024 there is no occasion to proceed with the Auction any further. The Auction Notice was already issued on 21.02.2024 and the letter dated 26.02.2024 was issued by Sachani Developers on 26.02.2024 subsequent to e-Auction and in pursuance of Notice for fresh Auction, EMD has already been received at least by one party - fresh Auction need to be conducted by issuance of corrigendum by Liquidator in continuation of the e-Auction Notice by 21.02.2024 by fixing a date within two weeks from today for conduct of the e-Auction. The Liquidator in the corrigendum may also state that the successful bidder has to pay all the dues of MIDC. The interest of the Appellant Eshan Minerals Private Limited are also protected by the impugned order since the bid given by the Appellant has been treated to be anchor bid. In event no higher bid is received in a Swiss Challenge Method, private sale in favour of the Appellant as per LoI dated 21.11.2023, need to be confirmed without requiring any further approval from the Adjudicating Authority. The prayer of the Appellant Best One Infraventures Pvt. Ltd., challenging the order of the Adjudicating Authority insofar as it direct for adopting Swiss Challenge Method cannot be accepted. Appellant- Best One Infraventures Pvt. Ltd. in event intend to participate in the Swiss Challenge Method. It is open for Best One Infraventures Pvt. Ltd. to submit an EMD in pursuance of EoI already issued by the Appellant and subject to this liberty to the Appellant- Best One Infraventures Pvt. Ltd., no other relief can be granted. The order passed by the Adjudicating Authority, challenged in the above Appeals is upheld - Liquidator to issue a corrigendum fixing a date of e-Auction within two weeks from today in continuation of e-Auction Notice dated 21.02.2024 to conduct the e-Auction by Swiss Challenge Method as directed by Adjudicating Authority by order dated 13.02.2024.

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• 2024 (4) TMI 632
  Rejection of application against admission of CIRP u/s 7 application filed by the Financial Creditor (Respondent herein) - Financial Debt or Equity investment - disbursement by financial creditor to corporate debtor - HELD THAT:- The financial creditor i.e. Surya Testing Services Limited was not a party to the said agreement and the said agreement was between three different parties which are neither the financial creditor nor the corporate debtor - Agreement, thus, supersedes any prior oral or written agreements, commitments or understandings with respect to the matter provided therein. With regard to acquisition of ownership of Selma Precision Technologies NC, LLC , earlier transactions were superseded. The facts on the record clearly indicate that the financial creditor has neither been given any equity percentage in M/s. Selma Precision Technologies, NC, LLC nor its claim has been admitted in the liquidation of M/s. Selma Precision Technologies, NC, LLC which is going in U.S. Court. Amount of Rs.1.85 Crores was disbursed to the Corporate Debtor which disbursement have clearly been admitted in the balance sheet of the corporate debtor, the said amount has been shown as borrowing from the financial creditor. It is clear that the letter of intent dated 23.12.2017 could not be fructified which was subsequently clearly superseded by 14.02.2018 agreement as noted above. Hence, the amount disbursed by the financial creditor to the corporate debtor has to be treated to be borrowing by corporate debtor which was required to be refunded. As noted above, in the agreement dated 14.07.2018 in which director of the corporate debtor was also party, there was undertaking recorded in paragraph 5 as noted above that Warm Forgings Pvt. Ltd. shall refund amount of Rs.1.85 Crores to the Corporate Debtor. There is no denial that on 22.05.2018 amount of Rs.25 lacs was returned by the corporate debtor to the financial creditor which is an admitted fact. Had the amount of Rs.1.85 Crores was given by financial creditor only for the purposes of equity in M/s. Selma Precision Technologies, NC, LLC, there was no question of refund of any amount. The refund of Rs.25 lacs clearly proves that amount was borrowed by the corporate debtor as reflected in its balance sheet as noted by the Adjudicating Authority. Counsel for the Appellant has also referred to the Civil Suit filed by Ajay Kumar Jain in Gurugram Court which suit has been filed by Ajay Kumar Jain against Amit Rajput and others. The injunction has been sought with regard to suit property. Ajay Kumar Jain has claimed that the amount was paid by Surya Testing Services Limited to M/s. Warm Forgings Pvt. Ltd. which was payment made by the Appellant. The said pleading by Ajay Kumar Jain in a suit which was filed subsequent to filing of Section 7 application cannot be treated to be pleading on behalf of the financial creditor. The present appeal arises out of the order passed by the Adjudicating Authority rejecting two IAs being IA No.651/JPR/2022 IA No.652/JPR/2022 by which corporate debtor has prayed for dismissal of Section 7 application. The applications have been rejected by the Adjudicating Authority by the impugned order dated 19.01.2024. Thus, no ground has been made out to interfere with the impugned order passed by the Adjudicating Authority - The Appeal is dismissed.

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• 2024 (4) TMI 631
  Acceptance of claim as Financial Creditor - mutually agreed settlement arrived at - whether by virtue of Deed of Security dated 20.03.2020 SPIL was discharged from its obligation of the financing document, Consent Term, and Amendment Agreement and no claim of Financial Debt of the Financial Creditor survived after Deed of Security dated 20.03.2020? - HELD THAT:- The Consent Term between the parties dated 09.09.2019, in para 2(a) clearly contemplated creation for first and exclusive charge by way of registered mortgage in respect of 2,00,000 sq. ft. carpet area in favour of IIFL and IIFL Home Finance Ltd. as additional security in respect of the loan extended by the Financial Creditor. The Deed of Security dated 20.03.2020 is clearly in reference to Consent Term paragraph 2(a) and i.e., a Deed of Additional Security - Clause E of the Deed of Security clearly referred to creation of first ranking mortgage and charge over the property described in Clause 4.1 and Schedule 3. Clause F also referred to same obligation by mortgagor to execute this indenture/deed in favour of the lender on behalf of the obligor/SPIL as security for the payment of the secured obligation payable to the lenders in accordance with the Consent Terms and this Amendment Agreement. The present is case where from the Mortgaged Properties debt and dues of SPIL has not been discharged and SPIL is claiming discharge only on basis of execution of Security Agreement dated 20.03.2020, which is unacceptable. When all the Clauses E, F, G, I and J are read, it is clear that the Deed of Security was nothing but additional security by creating a mortgage of the assets i.e., 2,00,000 sq. ft. carpet area in the Project - The submission of the Appellant that Deed of Security discharged its obligation under the financial documents cannot be accepted. The deed of security was not an Amendment Agreement to the financial documents, Consent Terms or Amendment Agreement already executed. There is no applicability of Section 41 in the present case, since the Deed of Security dated 20.03.2020, cannot be read as discharge by the lenders to the obligations of SIPL. SIPL, who continued to be responsible for repayment which were never discharged from its obligation. The Deed of Security does not novate the terms of the facility document. Facility document were amended by the Amendment Agreement which recorded that terms of the Loan Agreement and Additional Laon Agreement shall be amended only to the extent provided therein. Deed of Security was executed as the additional security document and is not novation of financial documents or Consent Term. The Judgment of the Hon ble Supreme Court in VENKATARAMAN KRISHNAMURTHY AND ANOTHER VERSUS LODHA CROWN BUILDMART PVT. LTD. [ 2024 (2) TMI 1154 - SUPREME COURT] was on its own facts and present is not a case where Adjudicating Authority has created any terms of Agreement for the parties. The Adjudicating Authority has after noticing the relevant Agreement between the parties have only interpreted them in the facts and backgrounds of the case. The Judgment of the Hon ble Supreme Court in Venkatraman Krsihnamurthy Anr. thus is clearly distinguishable and has no application in the present case. The Adjudicating Authority did not commit any error in allowing the application. The Adjudicating Authority has rightly held that the Security Agreement was to provide for Additional Security only - thus, no error has been committed by the Adjudicating Authority, in directing for admission of the claim of the Financial Creditors. Appeal dismissed.

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• 2024 (4) TMI 630
  Recall application - power to recall/review - jurisdiction to review a judgment - HELD THAT:- The jurisdiction of this Tribunal to recall an order has already been stated by the 5 Member Bench of this Tribunal in Union Bank of India Vs. Dinkar T. Venkatasubramanian Ors. [ 2023 (7) TMI 209 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] 5 Member Bench has held that the Tribunal has a power to recall however, it has no jurisdiction to review a judgment and the circumstances under which the Court can recall a judgment has also been noted. It was further held that the recall disguised as review cannot be entertained. By the present application, although its styled as recall but Appellant is virtually asking the Court to review its judgment which was delivered after hearing the Appellant - Present application is misconceived on the ground which are submitted in the application the order cannot be recalled - application for recall is dismissed. Admission of section 7 application - existence of debt and dispute or not - HELD THAT:- Adjudicating Authority after hearing the parties noted that the only submission expressed by the Respondent is to pay the amount in instalment due to loss in their auto business - The Adjudicating Authority held that the Financial Creditor has proved the `debt and `default . It is well settled that when debt and default has been proved, Adjudicating Authority had to admit Section 7 application more so, looking to the pleadings of the Corporate Debtor before the Adjudicating Authority - thus, no ground has been made out to interfere in the impugned order admitting Section 7 application - appeal dismissed.

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• FEMA

• 2024 (4) TMI 660
  Validity of SAFEMA proceedings - petitioners submitted that the detention order have been quashed - HELD THAT:- As respondent No. 1 does not dispute the fact, that the detention order quashed by the Delhi High Court has attained finality, inasmuch as, the Apex Court has confirmed the quashing of the detention order passed by the Delhi High Court. Also does not dispute that in view of the aforesaid, the attachment of the properties under SAFEMA, will not survive. ORDER - The impugned order passed by the Competent Authority under Sections 7 and 19 of the SAFEMA as well as the order passed by the ATFP, are quashed and set aside - SAFEMA authorities to release the attachments and handover the monies attached by them to the petitioners, at the earliest and in any event within four weeks from today.

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• PMLA

• 2024 (4) TMI 629
  Seeking release of petitioner - illegality in the arrest of the petitioner or not - whether petitioner was not produced before the learned Special Court within 24 hours of his arrest as mandated in law? - HELD THAT:- It is Section 19 of the PMLA which gives power to the Investigating Officer to arrest an individual against whom material is collected as contemplated under Section 2(1)(na), after following the process contemplated under Section 50 of the PMLA. Thus, the petitioner became an accused only when he was arrested under Section 19 of the PMLA, after the authority on the basis of material in his possession had reason to believe that the petitioner was guilty of the offence. Thus, when the petitioner came to the ED office under a summons under Section 50 of the PMLA, the petitioner was not an accused. Thus, if the said time-line is considered the petitioner was produced well within 24 hours of his arrest before the Special Court. As far as producing the petitioner before the nearest Magistrate is concerned under Section 167 Cr.PC, the term nearest Magistrate used in Section 167 has to be considered where it is not possible for the investigating agency to take the arrestee before the jurisdictional Magistrate within 24 hours - In a case, where the arrestee can safely be produced before the jurisdictional Magistrate within 24 hours, then, there is no necessity of taking him first before the nearest Magistrate and then before the jurisdictional Magistrate - there is no merit in the allegations that the petitioner was not produced within 24 hours before the jurisdictional Court and as such, the petitioner s arrest cannot be termed as illegal . The petitioner was produced before the Special Court well within 24 hours and as such, there are no illegality in the arrest of the petitioner and as such, the petition being devoid of merit, is dismissed. From a perusal of Section 50, it is evident that summons are issued under Section 50(2) by the Director, Additional Director, Joint Director, Deputy Director or Assistant Director to any person whose attendance they consider necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act. Section 50(3) of the PMLA provides that all such summoned persons shall be bound to attend in person or through an authorised officer - Thus, statements recorded under Section 50(2) of the PMLA are not statements recorded under Section 161 of the Cr. P.C; and infact, are treated as evidence. It is also pertinent to note, that the ED officers are not police officers, inasmuch as, the said proceeding before the officers is a judicial proceeding, as evident from Section 50(4). In the facts, it is not as if the petitioner, aged 64 years had not reported to the Office of the ED on 3 earlier occasions, post the summons issued under Section 50 of the PMLA. This was the 4th summons which was issued to the petitioner. On all the earlier occasions, his statements were recorded and as such, the petitioner could have well been summoned on some other day or even on the next day, instead of keeping him waiting post-midnight, despite his alleged consent. Consent is immaterial. Recording of statement, at unearthly hours, definitely results in deprivation of a person s sleep, a basic human right of an individual. It is deemed appropriate to direct the ED to issue a circular/directions, as to the timings, for recording of statements, when summons under Section 50 of the PMLA are issued, having regard to what is observed - petition dismissed.

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• Service Tax

• 2024 (4) TMI 628
  Valuation of service - works contract service - inclusion of cost of material (for which separate bill raised) in providing the service - inclusion on the ground that the service is classifiable under works contract service and accordingly all the goods used for providing such works contract service should be included in the gross value of the service under the composition scheme - HELD THAT:- As per the facts of the present case there are clear contracts between the appellant and the service recipient separately for sale of goods and for Erections, Commissioning and Installation services. Since there is a clear contract for supply of material and supply of services and in respect of the goods sale bills were issued by the appellant and VAT on the sale of goods were paid the transection of supply of goods is clearly and independently a transection of sale of goods which has no connection with the provision of service. In the present case the contract of the service namely erection, commissioning, installation service being a pure service the same is not exigible to Sales Tax, VAT/CST etc. as per the law therefore the condition Number 2 above is also not applicable therefore in the present case being a service simpliciter as per the separate contract the same is not classifiable under works contract service. The appellant have admittedly paid the service tax on the erection, commissioning, and installation at the applicable rate of service tax therefore the allegation of the department that the appellant have not included the value of goods in the works contact service is incorrect. This issue has been considered by the Hon ble Supreme Court, in BSNL v. Union of India [ 2006 (3) TMI 1 - SUPREME COURT] , wherein it has held that works contracts involved a kind of service and sale at the same time. In such a case, the splitting of the service and supply was constitutionally permitted. Further, it has been held that if there is an instrument of contract which may be composite in form in any case and if the transaction in truth represents two distinct and separate contracts and is discernible as such, in that case it has become permissible to separate agreement to sale from the agreement to render service. The Hon ble Supreme Court in the case of Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes [ 2008 (1) TMI 2 - SUPREME COURT] has categorically held that payments of VAT and service tax are mutually exclusive. Further, it was observed that even in case of indivisible contracts, it would be difficult to hold that the entire contract value be subjected to service tax or VAT. Similarly in the case of Commissioner of Service Tax-V, Mumbai v. UFO Moviez India Ltd. [ 2022 (7) TMI 1064 - SUPREME COURT] , the Hon ble Supreme Court has held that where a person has regularly paid sales tax on a particular transaction, there is no question of levying service tax on the same transaction. In the present case undisputedly the appellant had manufactured and also purchased the goods from the independent supplier and sold to its customers therefore irrespective of whether the said goods were sold in transit or by way of high seas sale, when the provisions itself prescribes non-taxability of trading of goods, no service tax can be levied on the profit margin arising from such trading of goods. Thus, no service tax can be demanded on the sale of goods or by way of including the value of goods in the service. Further as per the contract and the transaction made thereunder there is clear distinction between the provision of service and transaction of sale of goods therefore the service has been correctly classified under erection commissioning and installation service and paid the service tax correctly. The impugned orders are set aside - appeal allowed.

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• 2024 (4) TMI 627
  Classification of service - Business Support services or not - service of delivery provided to some customers - Arranging transportation - The revenue contended that GTPL collected excess freight charges from customers compared to the amount paid to transporters, suggesting it as additional consideration for the goods sold - HELD THAT:- An identical issue has been decided in the case of PUSHPAK STEEL INDUSTRIES PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX PUNE - III [ 2018 (10) TMI 84 - CESTAT MUMBAI] wherein it was held that Since transportation cost, incurred was in context with delivery of goods at the buyers premises, it cannot be said that such facility extended by the appellant should be considered as a taxable service, leviable to Service Tax under the category of business support service . Further, the appellant, in the present case, had not supported the business of the buyers in any manner and arrangement of transportation was just to facilitate delivery of the duty paid excisable goods at the buyer s premises. Thus, the activities undertaken by the appellant, in our considered view, do not confirm to the definition of taxable service, for the purpose of levy of Service Tax thereon. It is noticed that no specific case of the service being provided under the head of business support service has been made out. As observed in Order In Original there is no contract for provision of the business support service between GTPL and their buyers. Even the notice does not show that GTPL were engaged in other than simply organizing transportation of goods. Relying on the decision of Tribunal in the case of Pushpak Steel Industry Private Limited, there are no merit in the appeal filed by revenue. Appeal allowed.

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• Central Excise

• 2024 (4) TMI 626
  CENVAT Credit - capital goods - Immovable Property or not - fabrication and setting up of entire paint shop - entire demand has been quantified on the basis of the figures taken from the books of accounts maintained by the appellant - suppression of facts or not - Extended period of Limitation- HELD THAT:- The department instead of analyzing whether these items fall under the category of capital goods and eligible for credit has analysed whether the paint shop as assembled at site is an excisable goods. The appellant has not availed credit on paint shop . They have availed credit on various machinery, parts, and components which have been used to set up paint shop. Some structural items falling under Chapter 73 have also been used for the fabrication and setting up of entire paint shop which is integral to carry out the activity of painting of cars. The department does not have a case that the items do not fall under 84, 85 of Central Excise Tariff Act 1985. In the case of M/s. HYUNDAI MOTOR INDIA LTD. VERSUS CCE ST LTU CHENNAI AND VICA-VERSA [ 2015 (12) TMI 940 - CESTAT CHENNAI] the Tribunal considered the issue of availment of cenvat credit on items used for setting up paint shop and held that credit is eligible. In the case of M/S OMAX AUTO LIMITED VERSUS CCE, DELHI-III [ 2013 (8) TMI 301 - CESTAT NEW DELHI] it was held that structures used in paint complex which is an integral part of the manufacture of motor vehicles used in the fabrication of paint complex is eligible for credit. The denial of credit is on the basis of erroneous appreciation of facts and law. The issue on merits is answered in favor of assessee. Extended period of limitation - Suppression of facts or not - HELD THAT:- The demand has been raised on the basis of figures as reflected in the books of accounts maintained by the appellant. There is no positive act of suppression established by the department against the appellant. In the case of PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] the Hon ble Supreme Court while considering the issue of invocation of extended period observed that when facts are known to both sides there is no ground to invoke the extended period - there is no ground to invoke the extended period. The SCN is time barred. The issue on limitation is answered in favour of the appellant. The impugned order is set aside - appeal allowed.

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• 2024 (4) TMI 625
  Recovery of duty with interest and penalty - wrongfully claiming benefit of exemption under Sl.No.84 of N/N. 6/2006-CE dt. 01/03/2006 (for the period December 2009 to 15/03/2012) and under Sl.No.332 of N/N. 12/2012-CE dt. 17/03/2012 - case of Revenue is that since pole shoe is a part of rotor being not used inside the factory for manufacture of WOEG, benefit of notification is not admissible - Extended period of Limitation - HELD THAT:- Analysing the relevant entries finally the learned Commissioner has observed that rotor and controller are items which are distinctly different from the generator being located outside the generator which are essential for generation of electricity; hence covered under Sl.No.13 of List 5/8 whereas pole shoe on the other hand is a part of the generator rotor assembly which rotates inside the generator stator assembly and converts mechanical energy into electrical energy resulting into generation of electricity. There are merit in the observation of the learned Commissioner which is based on technical opinion and also the detailed study of the manufacturing process of pole shoe and its ultimate use in the generator which has not been contradicted in any manner by the Revenue in the grounds of appeal. The Revenue in the grounds of appeal has simply stated the pole sole is part of rotor which in turn parts of the WOEG, implies that any part of the parts of the WOEG is covered under Sl.No.21 of the said list and not sr. no. 13 of the said List 5/8 of the Notification. There is a fallacy in the approach of the Revenue in appreciating the facts, inasmuch as the rotor assembly used inside the WOEG is different from the rotors which is placed outside the generator, but an essential part of the wind mill and accordingly allowed exemption - pole shoe being part of the rotor assembly which in turn used in the generator and a part of the WOEG, hence squarely covered by the N/N. 6/2006CE dated 01.3.2006 and No.12/2012CE dt 17.3.2012. The Judgement cited by the learned AR for the Revenue viz. Raydean Industries case [ 2022 (4) TMI 1155 - CESTAT NEW DELHI] is on different set of facts and hence not applicable to the present case. In the said case, the issue involved was whether module mounting structures be part of the Sl.No.10 i.e. Solar power generating system of List 8 of the said Notification 12/2012CE dt. 17.3.2012. After analysing the facts, the Tribunal concluded that there is a difference between device and system and upholding the finding of the Commissioner, held that module mounting structure is a part of solar power generating system, hence not covered under the said entry. There are no merit in the appeal filed by the Revenue. Consequently, the impugned order is upheld and the Revenue s appeal being devoid of merit is liable for dismissal - appeal of Revenue dismissed.

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• 2024 (4) TMI 624
  Requirement of reversal of CENVAT Credit - inputs used in the manufacture of dutiable and exempted goods exported - non-maintenance of separate records of receipt and consumption of inputs of dutiable and exempted goods - Rule (6) of Cenvat Credit Rules - HELD THAT:- This issue has already been considered by the jurisdictional High Court of Himachal Pradesh in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DRISH SHOES LTD. [ 2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT] wherein also the Hon ble High Court after relying upon the decisions of the Bombay High Court in the case of REPRO INDIA LTD. VERSUS UNION OF INDIA [ 2007 (12) TMI 209 - BOMBAY HIGH COURT] has held an assessee, manufacturing goods chargeable to nil duty, is eligible to avail CENVAT credit paid on the inputs under the exception clause to Rule 6(1), as contained in Rule 6(5) of CENVAT Credit Rules, 2002 and Rule 6(6) of CENVAT Credit Rules, 2004, used in the manufacture of such goods, if the goods are exported. There is no infirmity in the impugned order passed by the Ld. Commissioner which is upheld by dismissing the appeal filed by the Revenue - appeal is dismissed.

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• 2024 (4) TMI 623
  CENVAT Credit - capital goods or not - various items, used for fabrication / erection of various plants as a part of the Phase III expansion project on lumpsum key basis - invocation of Extended Period of Limitation - HELD THAT:- The issue in question has been considered by Chandigarh Bench of this Tribunal in the case of INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF C. EX. S.T, PANCHKULA [ 2020 (1) TMI 373 - CESTAT CHANDIGARH] . The facts are more or less similar to the present one inasmuch as the assesse therein are manufacturers of petroleum products falling under Chapter 27 of CETA, 1985. They have availed cenvat credit during July 2007 to March 2012 in respect of various items of capital goods received by them for erection, installation and commissioning of Nephtha Cracker Plant by entering into composite lumpsum turnkey contract with different contractors. Alleging that the assessee is not eligible to avail credit on capital goods in respect of various items of machinery and equipments, instruments falling under Chapter 84, 89 and 90 CETA, 1985 since after fixing of these capital items to the plants fixed become immovable and accordingly non-excisable. The Tribunal had observed that For capital goods Cenvat credit, the items must be among those mentioned in this Rule and should have been used in the factory of the manufacturer and how the items are not used relevant. The words used in Rule 2(a) are used in the factory of manufacturer of the final product not used in the manufacture of final product . Therefore, once any item received in the factory is capital goods in terms of Rule 2(a) of the Cenvat Credit Rules, and is used in the factory, the manufacturer would be entitled to Cenvat credit of excise duty paid in respect of the same. In the appellant s own case MANGALORE REFINERY AND PETROCHEMICALS LIMITED VERSUS C.C.E. S.T., MANGALORE [ 2023 (8) TMI 696 - CESTAT BANGALORE] , this Tribunal has already taken a view that merely because the items are used for fabrication in the erection of storage tank which affixed to earth and become immovable property, cenvat credit availed on individual items cannot be denied being capital goods as defined under Rule 2(a) of the CCR, 2004 following the judgment of the jurisdictional High Court in the case of COMMISSIONER OF C. EX., MYSORE VERSUS ICL SUGARS LTD. [ 2011 (4) TMI 1065 - KARNATAKA HIGH COURT] and other judgments on the subject including the judgment of the Hon ble Chhattisgarh High Court in the case of M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] . There are no merits in the impugned order - appeal allowed.

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• CST, VAT & Sales Tax

• 2024 (4) TMI 622
  Violation of principles of natural justice - validity of impugned order dated 23.11.2020, confirming the demand for the Assessment Year 2013-14 - HELD THAT:- In view of the materials on record, the impugned order is unsustainable as the impugned order fails to note the decision of this Court in the case of M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [ 2017 (3) TMI 536 - MADRAS HIGH COURT] . In somewhat similar circumstances, this Court in the case of M/S. ANNALAKSHI TRADERS VERSUS THE ASSISTANT COMMISSIONER (ST) , POLLACHI (EAST) ASSESSMENT CIRCLE, POLLACHI. [ 2022 (1) TMI 806 - MADRAS HIGH COURT] held Admittedly, in this case the respondent has not followed the procedure prescribed therein. Considering the same, I am inclined to interfere by quashing the impugned Assessment Order by remitting back the case to the respondent to pass a speaking order in terms of the above-said circular/guidelines of the Principal Secretary/Commissioner of Commercial Taxes. That apart, it is not in dispute that the information has been gathered by the respondent from MIS report generated with intranet web domain. The fact that the petitioner has closed down the business and surrendered the VAT registration as early as 31.03.2011 is also not in dispute - The authorities ought to have investigated and produced the dealers for cross-examination by the petitioner, as otherwise, it is quite possible, liability is being fastened on the petitioner based on the information gathered from the intranet domain based on the fictitious and bogus invoices. The duty cannot be fastened on the petitioner if indeed the petitioner had closed down the business as early as 31.03.2011. The impugned order is set aside and the case is remitted back to the respondent to pass a fresh order on merits and in accordance with law - petition allowed by way of remand.

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• 2024 (4) TMI 621
  Time limitation for availing Input Tax Credit - Validity of reassessment order and demand notices - Availment of Input Tax Credit by filing belated returns - HELD THAT:- In BEML s case [ 2023 (1) TMI 341 - KARNATAKA HIGH COURT] , the Division Bench held A plain reading of provision of Section 10(3) of the KVAT Act, 2003, shows that no time limit or restriction is prescribed for availing the input tax credit. Apart from setting aside the impugned orders passed by the Joint Commissioner of Commercial Taxes, the impugned reassessment orders at Annexures- H1 to H3 and consequent demand notices at Annexures- J1 to J3 also deserves to be set aside. Petition allowed.

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