TMI Tax Updates - e-Newsletter
April 21, 2023

Case Laws in this Newsletter:

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

Articles

1. Some of the Amendments made by Finance Act, 2023 which is applicable for F.Y. 2022-23 (A.Y. 2023-24)

   By: GEETANJALI PANDEY

2. Employers to take declarations in April 2023 from employees whether they wish to enter New Scheme/Old Scheme

   By: Vivek Jalan

3. IMPACT OF AMENDMENT MADE BY FINANCE ACT, 2023 ON NON-RESIDENT/NOT ORDINARILY RESIDENT

   By: GEETANJALI PANDEY

4. Addition to be made for unexplained cash found during search proceedings

   By: Bimal jain

5. Cost Inflation Index for the FY 2022-23 AY 2023-24

   By: Ishita Ramani

6. FILING OF NDH-3 FORM

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. India-UK 2nd Financial Markets Dialogue: Joint Statement

Notifications

Customs

1. 05/2023 - dated 19-4-2023 - ADD

Seeks to levy ADD on imports of "Vinyl Tiles other than in roll or sheet form" originating in or exported from China PR, Taiwan and Vietnam.

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD/POD 3/CIR/P/2023/58 - dated 20-4-2023

Issue of Master Circular by Stock Exchanges, Clearing Corporations and Depositories

DGFT

2. Trade Notice No. 03/2023-24 - dated 20-4-2023

Amendments under Interest Equalisation Scheme in respect of UIN

Highlights / Catch Notes

GST

• Sections 13(8)(b) & 8(2) of IGST Act upheld as valid; limited to IGST, not CGST/MGST. Awaiting Division Bench.

  Case-Laws - HC : Intra-state day - Export of services - Intermediary Services - Constitutional validity of provisions for determination of place of supply - Zero rated supply - difference of opinion - Third Member decision - The provisions of Section 13(8)(b) and Section 8(2) of the IGST Act are legal, valid and constitutional, provided that the provisions of Section 13(8)(b) and Section 8(2) are confined in their operation to the provisions of IGST Act only and the same cannot be made applicable for levy of tax on services under the CGST and MGST Acts - The office to place the matter before the Division Bench. - HC
  Visit to Get Source

  ---

• Coal Smuggling Case: Vehicle and Goods Seized; Petitioner Accused of Tax Evasion in Meghalaya Coal Mafia Involvement.

  Case-Laws - HC : Seizure of goods alongwith vehicle - loaded coal was transported by the trucks with the connivance of the truck owners and the coal mafia from Meghalaya - The petitioner is alleged with an offence of evading payment of taxes to the Government by smuggling coal to different states - This is an offence against the society at large. - Proceedings to continue - HC
  Visit to Get Source

  ---

• Court Quashes GST Cancellation Order for Lack of Clarity and Violation of Natural Justice Principles.

  Case-Laws - HC : Cancellation of GST registration of petitioner - Not only the order is nonspeaking, but cryptic in nature and the reason of cancellation not decipherable therefrom. Principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences. - HC
  Visit to Get Source

  ---

Income Tax

• High Court Upholds ITAT Decision: Assessment Order Quashed for Ignoring CBDT Instructions and Jurisdictional Issues.

  Case-Laws - HC : Scrutiny assessment - Instructions issued by CBDT not complied with - Since, in the present case, the question of jurisdiction was to be decided first by the Assessing Officer, which has not been done, the assessment order was quashed being against the instructions of the CBDT - Order of ITAT quashing the order sustained - HC
  Visit to Get Source

  ---

• Interest Deduction u/s 57(iii) Must Align with Income Tax Act; Dismissal Without Consideration is Unsustainable.

  Case-Laws - AT : Allowability of deduction of interest expenditure u/s 57 - The provisions of section 57(iii) of the Act categorically provide for allowability of deduction of interest expenditure that has been incurred for the purpose of earning exempt income. When the claim has been in accordance with the statutory allowable provision by the assessee, the action of the lower authorities dismissing the plea thereon without even considering the provisions of the Act cannot be sustained. - AT
  Visit to Get Source

  ---

• Appellant not liable for TDS u/s 201(1) as deductee reported amounts in income tax return.

  Case-Laws - AT : Non-deduction of TDS - It is a fact on record that the amounts of provisions created by the appellant on which TDS was not deducted had been duly included by the deductee in the return of income filed for the year in which the amounts were actually received by the deductee and in which the invoices were raised. As such no demand u/s 201(1) is justified - AT
  Visit to Get Source

  ---

• Assessee Proves Identity and Source of Investments, Section 68 Invocation Deemed Inapplicable by Assessing Officer.

  Case-Laws - AT : Unexplained cash credit u/s. 68 - primary onus that lay on the assessee to establish the identity, genuineness and creditworthiness of the assessee is being proved beyond doubt by the assessee. Further the assessee also proved source of source of the investment made by the three parties. The Ld. A.O. could not disprove the same with necessary evidences, therefore the question of invoking Section 68 does not arise. - AT
  Visit to Get Source

  ---

• Court Rules Hypothetical Rent Cannot Be Taxed as Income if Property Remains Vacant Without Actual Rent Received.

  Case-Laws - AT : Income from house property - Vacancy allowance - deemed income / fictitious income - since the assessee has not received rental income from 19.04.2016 to 31.03.2017, hence, hypothetical rent should not be taxed in the hands of the assessee. - AT
  Visit to Get Source

  ---

• Taxpayers eligible for Section 80IA deductions shouldn't lose benefits due to honest errors. Authorities urged to assist in filings.

  Case-Laws - AT : Deduction u/s 80IA - If an assessee is entitled to certain deductions under the provisions of the Income Tax Act, the same should not be disallowed, merely because of any bona fide mistake or error on the part of the taxpayer, rather, the Income Tax Authorities should assist the concerned assessees in filing their correct returns of income. This is not the case of the Department that the assessee was not entitled to the deduction claimed u/s 80IA. - AT
  Visit to Get Source

  ---

Customs

• Court Orders Processing of RoDTEP Export Benefits Claim for White Sugar Despite Missing Shipping Bill Declaration.

  Case-Laws - HC : Recovery of Export benefit of RoDTEP Scheme - exports of white refined sugar - Period of dispute from 1.6.2022 to 30.11.2022 - Restricted goods or not for the said period under FTP - Unable to claim in the shipping bill - The non-mentioning of the claim of the benefit in the shipping bill by the petitioner shall also not be treated as waiver on part of the petitioner by the authorities. - Claim directed to be processed - HC
  Visit to Get Source

  ---

• Valuation Investigation Finds Price Discrepancies at Nhava Sheva Port, But No Evidence of False Transaction Values.

  Case-Laws - AT : Valuation of imported goods - NIDB data of contemporaneous imports - The only thing established during the investigation is that other importers imported goods through Nhava Sheva port at different prices and the difference in quantities was between 3 times to 500 times. This does not in any way prove that the declared transaction value was not true or not accurate. - AT
  Visit to Get Source

  ---

• Refund Claim on Special Additional Duty: CA Certificate's Scope Questioned, Revenue's Appeal Rejected Due to Insufficient Analysis.

  Case-Laws - AT : Refund claim of SAD - Principles of Unjust Enrichment - Scope of CA certificate - Refund already sanctioned by the lower authorities - Merely stating that ‘the review order was issued on grounds that the certificate is not emphatic to the effect that unjust enrichment is not applicable and the incidence of duty was not passed on to the ultimate customer’, will not suffice, a more focused approach is required. - Revenue appeal rejected - AT
  Visit to Get Source

  ---

• Customs Broker's License Suspended for Filing Restricted Goods Entry; Regulation 17 Inquiry to Proceed Without Suspension.

  Case-Laws - AT : Suspension of Customs Broker License - restricted goods - As the mandatory documents could not be arranged in time, the Customs Broker has advised the importer to file Warehousing Bill of Entry to save demurrage charges. Even though warehousing is not permissible for second hand goods, they filed warehousing bill of entry only to minimize the loses and opted for First check. It is observed that they have opted for first check on their own and fully cooperated with the investigation by the SIIB (Port) - The enquiry proposed under Regulation 17 of CBLR, 2018 can go on even without suspension of the license. - AT
  Visit to Get Source

  ---

• Anti-Dumping Duties Require Verified Origin Info; Local Trader Data Insufficient for Determining Origin u/r 9.

  Case-Laws - AT : Levy of Anti-Dumping duty - Local traders can hardly be accepted as authoritative sources for establishing origin and the transaction allegedly entered into between these traders and the importer may have relevance for proceedings under some other statute without any bearing on conformity with the conditions for imposition of the definitive anti-dumping duty. - The market price in India shall not be the basis for determination of value under rule 9 - no valid grounds for holding that the goods did originate from China and, thereby, liable to the anti-dumping duty. - AT
  Visit to Get Source

  ---

Indian Laws

• India's Debt Recovery Tribunals to Maintain Hybrid Filing; Focus on Gender-Based Digital Exclusion Challenges in E-Filing.

  Case-Laws - SC : E-filing Rules - seeking direction to the DRTs and DRATs across the country to continue with hybrid filing of pleadings and applications before them - The representations by the Bar Associations on specific difficulties faced in the process of e-filing, and the reports prepared by the Chairpersons of the DRATs and the Presiding Officers of the DRTs should be cognizant of digital exclusion on the basis of gender, while submitting their respective representations/ reports. The help desks can consider providing a dedicated portal to address the grievances of female litigants - There is no reason to postulate that there is a gender divide in one’s inherent ability to use technology. - SC
  Visit to Get Source

  ---

• Accused sentenced to 6 months imprisonment and Rs. 5,000 fine for cheque dishonor u/s 138, Negotiable Instruments Act.

  Case-Laws - HC : Dishonour of Cheque - punishment - The trial Court has sentenced the accused to undergo rigorous imprisonment for six months and to pay fine of Rs.5,000/- - Section 138 of NI Act gives various options, either there may be imprisonment or there may be fine being twice the amount of cheque or both. In this case, the accused can be sentenced to fine of double the amount of cheque, out of that compensation can be paid to the Appellant. - HC
  Visit to Get Source

  ---

IBC

• NCLT Admits CIRP Application; Post-CoC Settlement Needs 90% Approval, December 8 Settlement Can't Challenge November 11 Order.

  Case-Laws - AT : CIRP - NCLT admitted the application - settlement entered into by the parties - Any settlement after passing of the impugned order and after constitution of the CoC is only permissible when the same is approved with 90% vote share of CoC. Hence, the settlement dated 08.12.2022, which is relied by the Appellant in this Appeal can be of no ground to interfere with the impugned order dated 11.11.2022. - AT
  Visit to Get Source

  ---

Service Tax

• High Court Rules 13-Year Delay in Show Cause Notice Adjudication as Unlawful Due to Time Limits.

  Case-Laws - HC : Belated adjudication of SCN after a gap to 13 years - Time Limitation - the proceedings pursuant to the impugned show cause notice are inordinately delayed and it is now impermissible for the respondents to continue the same. - HC
  Visit to Get Source

  ---

• Computational Error in Cargo Transport Demand Calculation Identified; Case Restored for Reconsideration to Uphold Natural Justice Principles.

  Case-Laws - HC : Principles of natural justice - mistake in the computation of demand - Petitioner had clearly pointed out that there was a mistake in the computation of the demand, that while calculating the demand, value of exempted service of transportation of cargoes was not taken into consideration and that the Petitioner had offered that his personnel would approach the department to explain the workings when called for - Matter restored back - HC
  Visit to Get Source

  ---

• Appellant Penalized for Service Tax Evasion u/ss 77 & 78 of Finance Act; Financial Hardship Not Accepted as Defense.

  Case-Laws - AT : Levy of penalty u/s 77 and 78 of the Finance Act, 1994 - evasion of service tax - appellant collected service tax from the service receivers but failed to deposit the service tax amount - The circumstances of financial difficulty in arranging the funds for payment of service tax collected and raising funds for the treatment of her daughter cannot be a ground to invoke Section 80 for setting aside the penalty imposed under Sections 77 and 78 of the Finance Act, 1994.- AT
  Visit to Get Source

  ---

• Understanding Works Contract Services: Goods vs. Services Classification Impacts Tax Obligations, VAT and Service Tax Considerations.

  Case-Laws - AT : Classification of services - Goods or service - No VAT may be payable on some goods under the state laws but that does not convert the Works Contract Service into a pure service contract. Conversely, if no service tax is payable on the service portion of some types of works contracts, they do not automatically become contracts for sale of goods. The nature of the contract has to be examined and if it involves supply or deemed supply of goods and rendering service, it will be a Works Contract Service regardless of whether or not VAT or Service tax is payable. - AT
  Visit to Get Source

  ---

Central Excise

• Discrepancies in Petroleum Quantity Due to Temperature and Measurement Variations Highlighted; Demand Requires Quantification per Departmental Guidelines.

  Case-Laws - AT : Clandestine Removal - Loss of quantity due to temperature variation - petroleum products - The demand is raised only because of the difference in quantity when the petroleum products are despatched from the refinery and after it is received at the terminals at Muttam. There is no allegation of clandestine removal. It can be reasonably perceived that loss of the quantity is due to temperature variation, the variation caused in dip method of measurements etc. - Demand to be quantified as per the clarification issued by the department. - AT
  Visit to Get Source

  ---

• Rule 6(3A) Cenvat Credit Rules doesn't apply; no dual activities of exempt and taxable services. No credit reversal needed.

  Case-Laws - AT : Reversal of cenvat credit - Rule 6(3A) is applicable only in such cases where one particular activity either service as a whole or sale of goods as whole is involved apart from independent taxable service/dutiable goods. Here, there are no two activities i.e. exemption service as well as taxable service which involve therefore, in the present case Rule 6(3A) cannot be made applicable. - AT
  Visit to Get Source

  ---

VAT

• Supreme Court Affirms Mandatory Penalty and Interest Enforcement u/ss 45 and 47 of the 1969 Act.

  Case-Laws - SC : Levy of penalty - Bonafide opinion of the assessee - On strict interpretation of Section 45 and Section 47 of the Act, 1969, the only conclusion would be that the penalty and interest leviable under Section 45 and 47(4A) of the Act, 1969 are statutory and mandatory and there is no discretion vested in the Commissioner/Assessing Officer to levy or not to levy the penalty and interest other than as mentioned in Section 45(6) and Section 47 of the Act, 1969 - HC is not correct in deleting the penalty - SC
  Visit to Get Source

  ---

• Court Upholds Odisha Sales Tax Tribunal's Decision on Peas Sales Suppression, Rules Against Petitioner-Assessee in Favor of Revenue.

  Case-Laws - HC : Suppression of sales or not - peas - Since this Court held that there is little scope in interfering with the factual adjudication made by the learned Odisha Sales Tax Tribunal, Cuttack, question Nos. I, II and III are answered against the petitioner-assessee and in favour of the Revenue-opposite party - HC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2023 (4) TMI 822
  Constitutional validity of Section 140(3)(iv) of the Central Goods and Service Tax Act, 2017 - Revenue fairly submits that he has no objection if the Order dated 22.07.2022 is recalled qua the applicant/petitioner - HELD THAT:- M.A.No. 108 of 2023 is allowed - the Order dated 22.07.2022, disposing of SLP(C)No. 30333 of 2018, is recalled and the said SLP is restored to its original number and file. Consequently, IA No. 194090/2022 stands disposed of. Let SLP(C)No. 30333 of 2018 be listed along with SLP(C)No. 30204 of 2018.

  ---

• 2023 (4) TMI 821
  Intra-state day - Export of services - Intermediary Services - Constitutional validity of provisions for determination of place of supply - Zero rated supply - difference of opinion - Third Member decision - Constitutional validity of the provisions of Section 13(8)(b) of the Integrated Goods and Services Tax Act, 2017 - whether Section 13(8)(b) of the IGST Act 2017 is ultra vires the Constitution and the provisions of the IGST Act or otherwise? - HELD THAT:- It is seen that insofar as the IGST Act is concerned, export of services as defined under Section 2(6) fall within the purview of the provisions of Section 16, namely, the provision made for zero rated supply . The contention of the petitioners is also to the effect that once a transaction is of export of services and as defined under Section 2(6) of the IGST Act, in regard to which there is no definition under Section 2 of CGST Act or under section 2 of MGST Act, Section 13(8)(b) cannot by a legal fiction and/or an implication form any transaction to be taxed under the CGST Act and MGST Act, by categorizing it to be an intra-State sale. A bare reading of Section 9 of the CGST Act would indicate that subject to the provisions of sub-section (2) thereof, there shall be levy of a tax called the Central Goods and Services Tax on all intra-State supplies of goods or services or both . By virtue of Section 2(65) of the CGST Act intra-State supply of services is required to have the same meaning as assigned to it in Section 8 of the IGST Act - Section 8 of the IGST Act provides for intra-State supply . Section 8(2) of the IGST Act provides that subject to the provisions of Section 12, the supply of services where the location of the supplier and the place of supply of services are in the same State or same Union Territory shall be treated as intra-State supply. Sub-section (2) of Section 8 recognizes the effect of Section 12(2) namely that the place of supply of services made to any person other than a registered person shall be the location of the supplier of services and hence, for transaction of such nature, the supply of services becomes an intra-State supply. The consequence brought about by such provision is that by mere inclusion of Section 8 of the IGST Act within the provisions of Section 2(65) of the CGST Act, which defines intra-State supply of services , a legal effect which emerges is that not only Section 8 of IGST Act, but also the accompanying provisions, namely, Section 12 relating to the place of supply of services, stands embedded, implanted and/or incorporated, and are deemed to form an integral part of the CGST Act. Similarly, Section 2(86) of the CGST Act defines place of supply to mean the place of supply as referred to in Chapter V of the IGST Act. Thus, Chapter V of the IGST Act stands incorporated under the provisions of the CGST Act. Chapter V of the IGST Act, which deals with the place of supply of goods or services or both, contain the provisions from Section 10 to Section 14 incorporating within such Chapter the impugned provision, namely Section 13(8)(b). The conflict is that, the export of services for a commission to be received by the petitioners, fructify only after the goods are supplied by the foreign principals who are beneficiaries of the export of services provided by the intermediaries and the same are received as imports by the Indian purchasers. Thus, applying the destination principle, the amount by way of commission, to be paid to the petitioners are already subsumed in the transaction which the foreign principal may have with its customer (the Indian importer) on which the Indian importer is already being taxed - there is another apparent incongruity which can be noted from the conjoint reading of sub-Section (5) of Section 7 and the provisions of Section 13(8)(b) of the IGST Act. This is to the effect that sub-section (5) of Section 7, which categorically provides that in regard to supply of goods or services or both, when a supplier is located in India and the place of supply is outside India, such supply of goods or services shall be treated to be a supply of goods or services or both, in the course of Inter-State trade or commerce , whereas in respect of a clear transaction of export of service as defined under sub-section (6) of Section 2 by virtue of Section 13(1), which provides that such provision shall apply to determine the place of supply of services where the location of the supplier of services or recipient of services is outside India, shall be the location of the supplier of services, when it concerns intermediary services, that is to classify the export of service as an intra-State trade or commerce. What can be discerned and derived, is that it is necessary to confine transactions which are clearly transactions in the course of Inter-State trade or commerce and more particularly transactions of export of services as defined under Section 2(6) of the IGST Act and the intermediary services, to be subjected, relevant and confined only to the provisions of the IGST Act, and transactions which are in the course of Intra-State trade or commerce, shall remain confined to the provisions of the CGST Act and the MGST Act - the approach of the Court would be by interpretative process to make the provisions of the respective enactments meaningful for their smooth and effective implementation. The duty of the Court would also to accept the constitutionality of the provision rather than being tilted to read the provision to be ultra-virus or unconstitutional. It may be observed that it is well-settled that every provision in an enactment is required to be understood and interpreted within the framework of the object and intention the legislation intends to achieve. The provisions of Section 13(8)(b) and the provisions of Section 8(2) of IGST Act be struck down as unconstitutional being violative of the provisions of Articles 14, 19(1)(g), 245, 246, 246A, 265, 269A and 286 of the Constitution. This more particularly considering the fact that the impugned provisions insofar as they stand and are applicable only under IGST Act. It may be observed that the legislative wisdom to have the provisions of Section 2(6), Section 7, Section 8(2), Section 12 and Section 13 under the IGST Act and the consequence of any such transaction of export of service being scrutinized for the benefit under Section 16 of a Zero Rated Tax, need not be gone into, suffice it to observe that the mechanism for Section 13(8)(b) to operate is confined only to the provisions of the IGST Act - insofar as the provisions of Section 13(8)(b) is concerned, the same are required to be read to confined only to the provisions of the IGST Act. Constitutionally and for the reasons as discussed in the forgoing paragraphs, it is not permissible for such provision to operate under the CGST Act and the MGST Act. It is not possible to foresee and visualize such provision becoming relevant in case of a particular transaction which may purely fall under the IGST Act. The provisions of Section 13(8)(b) and Section 8(2) are confined in their operation to the provisions of IGST Act only and the same cannot be made applicable for levy of tax on services under the CGST Act and MGST Act, on such interpretation, the provisions are intra vires the Constitution, the IGST, the CGST and the MGST Acts - it is not necessary to consider the validity of the impugned provisions on the touchstone of Articles 14 and 19(1)(g) of the Constitution as canvassed by the petitioners. The provisions of Section 13(8)(b) and Section 8(2) of the IGST Act are legal, valid and constitutional, provided that the provisions of Section 13(8)(b) and Section 8(2) are confined in their operation to the provisions of IGST Act only and the same cannot be made applicable for levy of tax on services under the CGST and MGST Acts - The office to place the matter before the Division Bench.

  ---

• 2023 (4) TMI 820
  Maintainability of petition - availability of statutory remedy of appeal - non-constitution of the Tribunal - deprival of statutory remedy under Sub- Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act - deprival of benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112. HELD THAT:- Considering the facts and circumstances noted above, this Court in the case of ANGEL ENGICON PRIVATE LIMITED VERSUS STATE OF BIHAR, ASSISTANT COMMISSIONER OF STATE TAX [ 2023 (3) TMI 879 - PATNA HIGH COURT ] has disposed of the writ petition with certain observations and directions holding that 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 under Section 112 of the B.G.S.T. 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. There is an additional fact in the instant case, as asserted by the petitioner, that in terms of the liberty granted under earlier order dated 10.11.2022, in these proceedings, he has already deposited 20 percent of the remaining amount of tax in dispute. 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 B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act, for he 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 - petition disposed off.

  ---

• 2023 (4) TMI 819
  Seizure of goods alongwith vehicle - loaded coal was transported by the trucks with the connivance of the truck owners and the coal mafia from Meghalaya - allegation of smuggling coal to different states - HELD THAT:- This Court, in a catena of decisions, consistently gave a note of caution that inherent power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases. This Court also held that the High Court will not be justified in embarking upon an inquiry as to the reliability or genuineness or otherwise of the allegations made in the F.I.R. or the complaint and that the extra-ordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whims and caprice. The petitioner is alleged with an offence of evading payment of taxes to the Government by smuggling coal to different states - This is an offence against the society at large. The document submitted by the petitioner does not even substantiate his averments. There appears to be no justified ground to invoke the inherent jurisdiction of 482 Cr.P.C. - this criminal petition stands disposed of.

  ---

• 2023 (4) TMI 818
  Cancellation of GST registration of petitioner - cancellation without giving proper opportunity of filing reply and without giving opportunity of hearing - defreezing/ de-attaching of the Bank Account of the petitioner company - recovery of the amount in demand during pendency of the present writ petition - violation of principles of natural justice - HELD THAT:- It cannot be disputed that with the passing of the said order, petitioner is liable to both civil and penal consequences. To say the least, the authority ought to have at least referred to the contents of the show cause and the response thereto, which was not done. Not only the order is nonspeaking, but cryptic in nature and the reason of cancellation not decipherable therefrom. Principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences. Record, as made available, reveals that the petitioner had applied for registration which request was favourably considered by the authorities under the Act with a specific registration number allotted to the petitioner. After Covid-19 Pandemic, petitioner s firm started work. In the peculiar facts and circumstances, the authority ought to have condoned the delay which unfortunately was not done, despite the petitioner having made a fervent request for condonation of delay in accepting the return, preventing cancellation of registration. The order dated 28/08/2021 passed by the respondent no.3, namely the Joint Commissioner of State Tax, Danapur Circle, Patna is quashed with the petitioner s registration restored, with a further direction to the respondent no. 1, namely The Commissioner, Department of State Taxes, Government of Bihar, Patna to finalize the petitioner s assessment and/or pass appropriate orders, in accordance with law - Petition allowed.

  ---

• Income Tax

• 2023 (4) TMI 817
  Scrutiny assessment - Instructions issued by CBDT for selection of case for scrutiny not complied with - Assessment u/s 144 completed making the additions - Hon ble ITAT quashing the notice as well as assessment made in the case of the assessee by holding that instructions issued by CBDT for selection of cases for scrutiny for the financial year 2007-08 are not shown to have been satisfied for assumption of jurisdiction - HELD THAT:- Tribunal has followed the guidelines issued by Hon ble the Supreme Court UCO BANK, TAMIL NADU INDUSTRIAL INVESTMENT CORPORATION LTD. [ 1999 (5) TMI 3 - SUPREME COURT] and has observed that with respect to the notice dated 27.11.2007. The appellant submitted reply on 18.01.2008 and had taken up the issue with regard to jurisdiction of the assessing authority to issue such notice. Tribunal has rightly observed that it cannot be held that the appellant had acquiesced to the jurisdiction. As per CBDT instructions, the burden was on the authority assuming jurisdiction to show and establish that such instructions have been duly complied and satisfied in letter and spirit. Since notice under Section 143 (2) of the Act was not in terms of the instructions of the CBDT, both the notice and the assessment framed were held to be without valid jurisdiction and were accordingly, quashed. Since, in the present case, the question of jurisdiction was to be decided first by the Assessing Officer, which has not been done, the assessment order was quashed being against the instructions of the CBDT. After going through the impugned judgment(s), this Court is of the view that the in this case, the instructions issued by the CBDT have not been complied with in letter and spirit. Tribunal has rightly allowed the appeal(s) of the assessee by appreciating the facts in the right perspective.

  ---

• 2023 (4) TMI 816
  Allowability of deduction of interest expenditure u/s 57 - Interest claimed as expenditure against the interest paid on loan taken from ICICI Home Finance - Interest claimed as expenses only up to the interest earned on FDR made out of the loan taken - interest has not claimed other source of income, but claimed upto the income earned and allowed in A.Y.2009-10 completed u/s 143(3) - HELD THAT:- It is not in dispute that the assessee could not obtain the requisite permission from the competent authority for proceeding with the additional floor construction. Since, the loan amounts were lying idle with the assessee, the assessee thought it fit to use the said loan funds by making investment in fixed deposits with ICICI Bank and State Bank of Patiala. Hence, it is crystal clear that loan funds received by the assessee were directly utilized for making investment in fixed deposits. Admittedly, the interest income earned on fixed deposit is taxed under the head of interest income u/s 56 of the Act. The provisions of section 57(iii) of the Act categorically provide for allowability of deduction of interest expenditure that has been incurred for the purpose of earning exempt income. When the claim has been in accordance with the statutory allowable provision by the assessee, the action of the lower authorities dismissing the plea thereon without even considering the provisions of the Act cannot be sustained. Hence, we direct the Ld. AO to allow the interest claimed by the assessee in the sum u/s 57(iii) of the Act. Allowability of business loss - AO had disbelieved the fact that the assessee had not carried on any business and, accordingly, the entire business expenditure were disallowed - HELD THAT:- AO himself while disallowing certain business expenditure on adhoc basis partially, had practically conceded to the fact of assessee carrying on the business. AO made adhoc disallowance of driver salary, labour charges, manager salary, Security Guard etc. @ 60% in AY 2014-15, which goes to prove that remaining 40% of the very same expenditure would be allowable as business expenditure. This clearly proves that the Ld. AO himself in AY 2014-15 had accepted the fact that assessee was indeed carrying on business. The reasons for business not being conducted in full fledged manner in AY 2013-14 was also clearly explained by the assessee that he was not well during the year under consideration i.e., AY 2013-14. The business of the assessee was never closed. Hence, once the business is continued, there is absolutely no justifiable reasons for the Ld. AO to disallow the business loss entered thereon. Accordingly, we direct the Ld. AO to allow the business loss claimed for AY 2013-14.

  ---

• 2023 (4) TMI 815
  Long term capital gain - value determined by the valuation officer - HELD THAT:- As in the case of Virendra Natwarlal Jariwala [ 2021 (6) TMI 975 - ITAT SURAT] whereby the issue relating to Section 55A(a) inserted with effect from 01.07.2012 by the Finance Act, 2012 for providing for reference by Assessing Officer to DVO for determination of value of property sold by assessee and which was not applicable retrospectively has been discussed and adjudicated in favour of the assessee. In view of the amendment to Section 55A(a) of the Act by which the words is less than the fair market value is substituted by the words is at variance with its fair market value is clarificatory in nature and it should be given retrospective effect. Therefore, the amendment was made effective only from 01.07.2012 which is applicable for the AY. 2013-14. However, in the assessee s case under consideration, the assessment year involved is AY.2012- 13, therefore, the amended provisions are not applicable to the assessee under consideration. Thus held without going into the merits of the basis of valuation so adopted by the registered valuer and subsequently by the department s valuation officer, in absence of a valid reference to the valuation officer, the addition so made under the head long term capital gains so far as it relates to cost of acquisition as substituted by fair market value as on 1-4-1981 is directed to be deleted. Therefore, respectfully following the binding judgment of the Co-ordinate Bench above, we allow the appeal of the assessee.

  ---

• 2023 (4) TMI 814
  Addition of entire professional receipts as 100% business profit of the appellant - Denial of benefit of Life Insurance Premium, housing loan interest and repayment of housing loan - HELD THAT:- We note that assessee has filed his return of income in compliance to notice u/s 148 and subsequently claimed the TDS deducted on his professional receipts and other TDS deducted on the interest income etc. NFAC/Ld. CIT(A) did not consider assessee s case in accordance with law and confirmed the action of Assessing Officer blindly. Assessee is a small professional and his gross receipts are to the tune of Rs.6,34,765/- only. Therefore, we are of the view that it is justifiable to tax income at the rate of 8% of professional receipts. Therefore, we direct the Assessing Officer to consider the income of the assessee to the tune of Rs.50,781/- on account of professional receipts for the assessment year 2010-11 and frame de novo assessment after giving TDS benefit and deduction under Chapter-VIA of the Act. Appeal of the assessee is allowed.

  ---

• 2023 (4) TMI 813
  Assessment of trust - Depreciation claim - show cause notice called for the information from the assessee so as to prove that whether the assessee has in earlier claimed the capital expenditure on which the depreciation is claimed and assessee has not filed any details the same was denied - HELD THAT:- AR was not sure whether the reply of the said information was filed or not. As regards the alternate claim of the assessee so as to allow the claim of capital expenditure incurred in the current year as application of income, we concur with the arguments of the ld. DR that even the ld. CIT(A) cannot allow the alternative plea without submitting any details before him. Here also ld. AR failed to demonstrate as to whether this pleas was supported with any other details / information before the ld. CIT(A) or not. In absence of these information, we do not find any faults in the finding of the lower authorities. However, we have acceded the request of the ld. AR of the assessee to allow one more opportunity to the assessee so as deal the case of the assessee on its merits and therefore, in the interest of justice we consider the request of the assessee and restore the matter to the file of the assessing officer to decide the issue in accordance with law. Appeal of the assessee is allowed for statistical purpose.

  ---

• 2023 (4) TMI 812
  TDS u/s 195 - Income taxable in India - licence fee - payment made by the assessee in the nature of Royalty under the provisions of the India Israel tax treaty and the same - Whether would be taxable in India at the rate of 10% of the gross amount of the royalties? - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case in Celltick Mobile (India) Pvt. Ltd. [ 2021 (3) TMI 1121 - ITAT MUMBAI] allowed the appeal filed by the assessee and deleted similar addition made in the hands of the assessee for non-deduction of TDS while making the licence fees payment to Celltick Israel. Since a similar issue has been decided in Revenue s appeal for the assessment year 2016-17, the decision rendered therein shall apply mutatis mutandis. As a result, grounds raised by the Revenue are dismissed.

  ---

• 2023 (4) TMI 811
  Non-deduction of TDS on provision made for Misc. and conference expenses and Business development conference expenses - Default u/s. 201(1)/201(1A) - assessee submitted that the provision is made for certain expenses wherein the payees are not identifiable at the time of making provision. Hence deduction of tax at source could not be made on the same - HELD THAT:- The deductee had filed the return of income for the Ay in which the invoices were raised in the AY immediately succeeding the year in which the provisions were created and had included the amounts received on account of these expenses including the amount of provisions created by the appellant in the total income for the year under consideration and also paid taxes thereonA copy of the certificate of the Accountant under first proviso to sub-section 1 of section 201 filed by the appellant in this regard is enclosed as Annexure-1 to this order. The appellant contention that in view of the decision of Hindustan Coca-Cola Beverage (P.) Ltd. [ 2007 (8) TMI 12 - SUPREME COURT] and in view of the CBDT Circular No. 2758201/95-IT/B dated 29/01/1997, the demand raised w/s 201(1) may be deleted is aggreable. It is a fact on record that the amounts of provisions created by the appellant on which TDS was not deducted had been duly included by the deductee in the return of income filed for the year in which the amounts were actually received by the deductee and in which the invoices were raised. As such no demand u/s 201(1) is justified - The demand raised us 201(1) is accordingly deleted. Since the Department was deprived of the TDS amount in time, that is till the date of filing the return of income by the payee, the interest u/s. 201 (1A) would be eligible to be paid by the assessee. No infirmity in the order of the ld. CIT(A) granting the relief to the assessee in respect of demand raised u/s 201(1) of the Act and confirming the action of levy of interest u/s. 201(1A) of the Act. Decided in favour of assessee.

  ---

• 2023 (4) TMI 810
  Unexplained cash credits u/s 68 - addition of unsecured loan - HELD THAT:- As in the books of account of the assessee, sum has been credited against the said cash creditor, M/s Josh Trading Pvt Ltd, and therefore, assessee has passed journal entry in its books of account debiting M/s Garware Synthetics Pvt Ltd. Thus, it is undisputed that credit is appearing in the books of account of the assessee and, therefore, in terms of section 68 of the Act, the assessee is responsible for explaining the identity, creditworthiness and genuineness of the transaction. This claim of the assessee for limiting provisions of section 68 to the extent of loan actually received in bank account is accordingly rejected. The additional ground of appeal of the assessee is accordingly dismissed. Amount received as fees, miscellaneous income and sale of products assessed as unexplained cash credit u/s 68 - HELD THAT:- When the said commission has already been credited and offered for tax, then either addition under section 68 of the Act can be retained or the income offered by the assessee as commission income can be retained. Both the income offered by the assessee in the return of income and addition under section 68 in respect of the same entry of Rs.9 lakhs cannot be retained. Section 115BBE of the Act has been introduced with effect from 01/04/2013, hence, same is not applicable in the instant assessment year under consideration, therefore, even if the said amount is added under section 68 of the Act, same is subject to normal rate of taxation.merely on the ground that services were rendered by the director of the company and not by the company, treating the said commission income as unexplained cash credit, is not justified. CIT(A) has also not identified the expenses claimed by the assessee for earning the said commission income. In the circumstances, we set aside the order of the lower authorities on the issue in dispute and direct the Assessing Officer to delete the addition made under section 68 of the Act. Miscellaneous income and sale of product the assessee failed to provide details of name and address of the parties and, therefore, the CIT(A) sustained the addition - We find that in absence of any documentary evidence, the action of the Ld.CIT(A) in upholding the addition u/s 68 is justified. Corresponding income which has already been declared in the regular return of income needs to be reduced or subtracted from the total income. Thus, the income will though be assessed under the provisions of section 68 of the Act, there will be no additional tax liability as the incomes assessed under section 68 of the Act are also liable to be taxed at the same rate for the year under consideration. Typographical error in the order of the Ld.CIT(A) - As this was only a mistake apparent on the record and the assessee should have approached the Ld.CIT(A) for rectification of the said mistake. However, in the interest of justice, we direct the Assessing Officer to consider the amount deleted as Rs.1,79,530/- which is apparent from the finding of the Ld.CIT(A). This ground of the appeal of the assessee is accordingly allowed

  ---

• 2023 (4) TMI 809
  Unexplained cash credit u/s. 68 - Onus to prove - onus of proof u/s. 68 in the case of listed company - Assessee contended that it is a listed company with Bombay Stock Exchange, therefore, proviso to section 68 is not applicable and accordingly onus of proof u/s. 68 in the case of listed company is different compared to the onus that is required to be discharged in the case of private non listed company - whether CIT(A) grossly erred in giving relief to the assessee on the ground that it was a listed company, ignoring the law that provisions of Section 68 applied to one and all? - HELD THAT:- Revenue failed to consider the first proviso to Section 68 of the Act which was introduced by the Finance Act, 2012 with effect from 01.04.2013 which specifically says where the assessee is a company, not being a company in which public or substantially interested . It is for this reason, the Ld. CIT(A) at Para 5.9 of his order clearly held that the assessee company is a listed company in which public are substantially interested and invocation of section 68 not applicable. Further the assessee submitted the confirmation, bank statement, Return of Income and Allotment Advice, etc. before the A.O. We also see from record that Shri Chintan N. Shah has appeared before the A.O. in response to the summons issued and also explained his source of investment in the share capital of the assessee company which was from the commission received from his brother in law in Dubai. Shri Harshal K. Shah who is the director in M/s. Akhil Retail Pvt. Ltd. and M/s. Shvansh Estate Pvt. Ltd. submitted the copy of the confirmation bank account and Profit and Loss account and balance sheet, in response to the summons issued by the A.O. Shri Harshal K. Shah submitted the share application money details through bank transactions and the loan taken from M/s. India Infraspace and M/s. Shree Ghantakarna Rolling Mills Pvt. Ltd. which is reflecting in the balance sheet. Thus primary onus that lay on the assessee to establish the identity, genuineness and creditworthiness of the assessee is being proved beyond doubt by the assessee. Further the assessee also proved source of source of the investment made by the three parties. The Ld. A.O. could not disprove the same with necessary evidences, therefore the question of invoking Section 68 does not arise. As relying on M/S. KRAFT LAMINATE, C/O. LAXMI TIMBER, NR. MAHALAXMI TEXTILE MILL [ 2022 (3) TMI 774 - ITAT AHMEDABAD] , DARSHAN ENTERPRISE [ 2022 (1) TMI 605 - GUJARAT HIGH COURT] and RANCHHOD JIVABHAI NAKHAVA [ 2012 (5) TMI 186 - GUJARAT HIGH COURT] we have no hesitation in confirming the order passed by the Ld. CIT(A) deleting the addition made u/s. 68 of the Act. Decided in favour of assessee.

  ---

• 2023 (4) TMI 808
  Unexplained credit in bank account - As argued AO has erred in making addition knowing the fact that Bank account is holding jointly by husband and wife - HELD THAT:- In the affidavit, the assessee contended that no return of income was filed by her as her income was below the taxable limit. No books of account was required to be maintained. The matter was very old and considerable time was passed as her case relates to A.Y. 2011-12. The assessee collected bank account and other material and his accountant prepared necessary details and books of account. Due to non-availability of such material evidence, the assessee could not produce the details before the AO in time which resulted in passing ex parte order. The assessee in the affidavit also prayed to produce additional evidence. For admission of additional evidence, the assessee contended that the documents are necessary to decide the matter effectively and completely. The assessee tried her best with due diligence to produce document but she could not receive such documents in time. Such documents are necessary to prove the genuineness of claim of assessee. There was no fault on the part of assessee as the assessee made sufficient effort to collect such evidence. Assessee has filed the assessment order in case of her husband wherein the same addition with regard to cash credit in joint bank account has been made. It is settled legal position under law that the same income cannot be taxed twice. Therefore, the appeal of assessee is restored back to the file of ld. CIT(A) to decide the appeal on merit. CIT(A) is also directed to consider the additional evidence which was filed by assessee on record. Appeal of the assessee is allowed for statistical purpose.

  ---

• 2023 (4) TMI 807
  Revision u/s 263 - Addition u/s 68 - cash deposits made into the bank account during the demonetization period under the provisions of section 115BBE - AO s order as erroneous as well as prejudicial to the interest of the revenue - HELD THAT:- Hon ble Apex Court in Malabar Industries Ltd. vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT] wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 by the CIT. Twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. Jurisdictional condition as required u/s 263 of the Act to revise the order of the Assessing Officer is absent in assessee`s case, since the order of the Assessing Officer cannot be termed as erroneous as well as prejudicial to the interest of the revenue . The whole cash deposit (After giving benefit as declared under PMGKY), the AO had in fact enquired the issue raised by ld PCIT. The Assessing Officer made adequate enquiry in respect of closing stock also. Thus Assessing Officer s order cannot be termed as erroneous as well as prejudicial to the interest of the revenue and therefore, jurisdictional condition as prescribed by statute for invoking revisional jurisdiction is absent and therefore, we are inclined to quash the impugned order of the ld. PCIT. Appeal of the assessee is allowed.

  ---

• 2023 (4) TMI 806
  Revision u/s 263 - C.I.T. sustained on the principle of erroneous nature of the order of the A.O - As per CIT there is increase in sales without increase in fixed assets, and there is increase in salary expenses also, which the assessing officer has not verified properly - Also there were two VAT returns filed by the assessee, and the assessing officer did not apply his mind as at why the assessee has filed two VAT returns - HELD THAT:- As during the assessment proceedings, the assessee has submitted justification of increase in sale, and increase in salary expenses. Assessee also submitted the justification of VAT returns and explanation about fixed assets - the Monthly VAT returns for the Month of July and October, the annual VAT return, the acknowledgement of Return of Income and Computation of total income, tax audit report along with audited Balance Sheet and Profit and Loss account, the ledger account of advertisement expenses, the justification for increased sale due to Diwali festival etc. We note that AO made sufficient enquiry and applied his mind also. Hence, assessment order passed by the assessing officer should not be erroneous and prejudicial to the interest of Revenue. AO was satisfied, after making an enquiry and examining the evidence produced by the assessee. The PCIT in his order of Revision does not indicate any doubts in respect of the examination of evidences and documents and to conduct further enquiry by the assessing officer. The satisfaction of the AO on the basis of the documents produced is not shown to be erroneous. This is a case where a view has been taken by the Assessing Officer on enquiry. Even if this view, in the opinion of the PCIT is not correct, it would not permit him to exercise power u/s 263 of the Act. The exercise aimed at ascertaining the correct income of the assessee has been fulfilled by the Ld. A.O. by exercising his quasi-judicial functions vis-a-vis passing the assessment order u/s.143(3) of the Act. Therefore, certainly it is not a case wherein adequate enquiries at the assessment stage were not carried out or assessment was made in haste. What is an opinion formed as a result of these enquiries and verification of the materials is something which is in exclusive domain of the AO and even if Ld. Pr. Commissioner does not agree with the results of such enquiries, the resultant order cannot be subjected to revision proceedings. Provisions of section 263 of the Act do not permit substituting one opinion by another opinion. Therefore, the order of the C.I.T. cannot be sustained on the principle of erroneous nature of the order of the A.O., as it is not erroneous. Decided in favour of assessee.

  ---

• 2023 (4) TMI 805
  Estimation of income - bogus purchase - HELD THAT:- Profit made by the assessee in the case before us by procuring the goods at a discounted value from the open/grey market can safely be determined by bringing the G.P rate of such bogus purchases at the same rate as that of the other genuine purchases. We, thus, restore the matter to the file of the A.O, with a direction to him to restrict the addition in the hands of the assessee qua the impugned bogus/unverified purchases by bringing the GP rate of such bogus purchases at the same rate as that of the other genuine purchases. A.O in the course of the set-aside proceedings shall quantify the profit element which the assessee company would have made by procuring the goods in question at a discounted value from open/grey market after considering the judgment of M/s. Mohhomad Haji Adam Company [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] - Appeal of the assessee is allowed for statistical purposes

  ---

• 2023 (4) TMI 804
  Income from house property - Vacancy allowance - deemed income / fictitious income - Computing notional rent u/s 23(l)(a) as against the income declared by the Appellant in the return of income - HELD THAT:- As per the terms and conditions of the agreement, by which the lessee may terminate the said agreement anytime during the currency of the said agreement by giving a prior written notice of three months (3 months). Accordingly, the lessee bank has given 3 months notice on 18.01.2016 to the assessee, to terminate the agreement with effect from 18.04.2016. Therefore, during the financial year 2016-17, the assessee has received 18 days rent from 01.04.2016 to 18.04.2016, which the assessee has offered for tax in the relevant AY.2017-18. After 18.04.2016 the property was vacant, as the assessee could not get any customer to let out the property. We note that on rental income TDS has been deducted by the ICICI Bank during the current year. ICICI Bank has issued a letter to the assessee, which shows that the lease agreement has been terminated by the ICICI Bank on 18.04.2016. Based on this factual position, the assessee has received the rental as rent income only for eighteen days in the AY.2017-18 which has already been offered for tax on which TDS has also been deducted. Therefore, since the assessee has not received rental income from 19.04.2016 to 31.03.2017, hence, hypothetical rent should not be taxed in the hands of the assessee. Therefore, we note that assessee has disclosed the actual rent received by him, therefore fictitious rental income should not be taxable in the hands of the assessee. Neither the AO nor before the Ld. CIT(A) has demonstrated with cogent evidences that assessee has let out the property for the remaining period from 19.04.2016 to 31.03.2017. Therefore the notional rental income assessed by the AO should be deleted - Appeal filed by the assessee is allowed.

  ---

• 2023 (4) TMI 803
  Revision u/s 263 - deduction u/s 54B as well as under Section 54F - Whether AO examined both the issues thoroughly and took reasonable plausible and legally sustainable view? - HELD THAT:- We find that the assessee furnished construction agreement and purchase deed of said house. The assessee has already filed copy of various notices issued by assessing officer and reply of assessee on record. Before us, the assessee vehemently submitted that assessing officer on verification of facts and examination of all the documents accepted the claim of assessee on deduction under Section 54B as well as under Section 54F of the Act. We find merit in the submissions of assessee that both the issues were examined by the assessing officer. Although, there is no detail discussions in the assessment order on both the issues. CIT at the time of revision observed that there is no sanction plan from the Municipal Committee and that there is mismatch in the balance sheet of assessee as on 31/03/2015 - We find that coordinate bench of Chennai Tribunal in B Siva Subramanian [ 2015 (1) TMI 49 - ITAT CHENNAI] held that there is no condition in section 54F that building plan of residential house should be approved by Municipal Corporation or any other competent authority. Also in CIT Vs P V Narasimhan [ 1989 (9) TMI 58 - MADRAS HIGH COURT] held that utilisation of sale proceed of one house to construct first floor after demolishing old structure of second house, the assessee would be entitled for exemption under section 54F. Thus, considering the above legal view by the Tribunal and High Court of Madras, we are of the view that the view taken by assessing officer in passively allowing relief to the assessee on the deduction/ exemption under section 54F is not erroneous Deduction u/s 54B, we find that the only objection raise by the assessing officer is that the assessee purchased new agriculture land prior to transfer of old agriculture land. We find that the sale consideration paid by the assessee is from the advance of Rs. 25.00 lakhs received on execution of agreement. This fact is clearly discernible from the bank statement of the assessee - We find that the combination of this bench in Atul K Patel [ 2021 (12) TMI 689 - ITAT SURAT] by following the decision of Praveen P Bharucha [ 2013 (1) TMI 295 - BOMBAY HIGH COURT] held that when part payment so received in advance, was utilized by the assessee in purchasing another agricultural land the assessee is entitled to claim exemption under section 54B of the Act. Thus Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the Pr CIT does not agree, it cannot be treated as an erroneous order unless the view taken by the Assessing Officer is legally not stainable. Decided in favour of assessee.

  ---

• 2023 (4) TMI 802
  Penalty u/s 271(1)(c) - quantification of the penalty - HELD THAT:- In the present case, the assessee had filed appeal before the Tribunal against quantum addition in the year under consideration. The Tribunal vide order [ 2021 (10) TMI 1402 - ITAT AHMEDABAD] had remitted the issue back to the file of the ld.CIT(A) for reconsideration and no addition exists as of now, therefore, imposition of penalty at this stage is premature and not justifiable. Since the addition on quantum has been remitted to the file of the ld.CIT(A), we also remit the issue regarding levy of penalty to his file for reconsideration based on the outcome in set aside proceedings pending before him - Appeal of the assessee is allowed for statistical purpose.

  ---

• 2023 (4) TMI 801
  Bogus LTCG/STCL - Penny stock purchases - scrips treated as bogus transactions and the loss claimed by the assessee should not be entertained - CIT-A deleted the addition - HELD THAT:- As noticed from the record that assessee has submitted all the relevant documents of purchase and sale of these scrips in the recognized stock exchange and all the details were submitted before the AO including the payments were made through banking channels only. AO completely overlooked the various documents and supporting evidences submitted by the assessee and he has not analysed these documents and he merely proceeded to make the addition based on the investigation carried on by the investigation agencies and he did not eventually make any investigation on the various documents submitted before him, merely because assessee has dealt with suspected scrips, therefore he has proceeded to make the disallowance. Assessee has purchased and sold these shares through recognized stock exchange and authorised brokers and nowhere it is brought on record that assessee is one of the party involved in the entry provider or involved in manipulating the prices or it is proved that assessee is one of the exit provider. It is fact on record that all the scrips in which assessee has dealt with were already proved to be a non penny stock based on the various decisions of the various Hon ble High Courts and Tribunal benches. Assessee is a regular trader in various scrips and particularly in this year assessee has dealt with more than 150 scrips and the transactions of the assessee in trading of shares having turnover of more than Rs..528.9 crores and also having substantial dividend and speculation income during this year. This proves to show that assessee is a regular investor and may be assessee has dealt with suspected scrip merely on the basis of movement of share prices and there is nothing on record to prove that assessee has anywhere involved in any types of irregularities. No reason to interfere with the findings of the CIT(A). Accordingly, ground raised by the revenue is dismissed.

  ---

• 2023 (4) TMI 800
  Revision u/s 263 by CIT - Unaccounted cash and deemed dividend addition - merely filing of various details like financials, annual reports would not constitute or lead to the conclusion that there has been application of mind by the Ld.AO. - HELD THAT:- We note that admittedly no specific query has been raised by the Ld.AO on the two issues that are subject matter of 263 proceedings. As in respect of the cash deposits during the demonetisation period, the Ld.AO has not followed the circulars issued by the CBDT to carry out necessary verifications in respect of the genuineness of cash deposited by the assessee during the relevant time. Admittedly, the assessee accepted the SBNs which were no longer a legal tender and were to be explained in accordance with the relevant circular mentioned hereinabove. These instructions gives a hint regarding what kind of investigation, enquiry, evidences that the assessing officer is required to take into consideration for the purpose of assessing such cases. Assessee is directed to establish all relevant details to substantiate its claim in line with the above applicable instructions. We are aware of the fact that not every deposit during the demonetisation period would fall under category of unaccounted cash. Burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash. AO shall verify all the details / evidences filed by the assessee based on the above direction and to consider the claim in accordance with law. Needless to say that proper opportunity of being heard must be granted to the assessee. The assessee may be granted physical hearing in order to justify its claim. We direct the Ld.AO to verify the cash deposited in the light of the above circular by granting proper opportunity of being heard to the assessee. Applicability of provisions of section 2(22)(e) - Queries raised by the Ld.AO do not indicate that there is an application of mind in respect of the money paid by assessee to M/s. Valmark Realty Holding and the money deposited by M/s. Avant Garde Fashion wear Pvt. Ltd. with assessee. The share holding of assessee in M/s. Avant Garde Fashion wear Pvt. Ltd. is also not been a subject matter of verification by the Ld.AO. The Ld.AR submitted that assessee is a NBFC and therefore advancing of loans is a regular activity on day-to-day basis. It was thus submitted that provisions of section 2(22e) will not attract to a NBFC company. Very pertinently the Ld.AO has also not looked into whether assessee is a NBFC or not. We direct the Ld.AO to verify the documents relating to assessee being a NBFC and to consider the issue in respect of applicability of provisions of section 2(22e) in accordance with law. We therefore do not find any infirmity in the 263 proceedings initiated in the present facts of the case. With these above modified directions, we uphold the order passed by the Ld.PCIT u/s. 263 of the act.

  ---

• 2023 (4) TMI 799
  Unexplained investment in Silver articles of 22 kgs u/s 69B - Admittedly, the disputed silver articles weighing 22kgs was claimed to have been received by the appellant from her parents at the time of her marriage in 2004 - AR contended that the required details including bills and documents have been filed in support of such acquisition as evident from the fact that a reference of such document is made in the remand report of the AO - HELD THAT:- It is evident from the Assessment Order of the Wealth Tax Officer ( WTO) made u/s 18(1)(c) Wealth Tax Act, 1957 in the case of appellant wherein the silver articles of 22 kgs have been assessed for the Assessment Year 2013-14, and continued in the following AY 2014-15 and AY 2015-16. Under the facts and circumstances, no addition would be called for the AY 2017-18 on account of investment in Silver Articles of 22kgs per se - Addition deleted - Decided in favour of assessee.

  ---

• 2023 (4) TMI 798
  Revision u/s 263 by CIT - manner and determination of the debitable royalty was required to be analysed thoroughly by the AO - provision created in respect of claim of royalty expenses has to be examined with reference to the liability for the year, CIT thus, observed that Ld. AO erred in not examining the discrepancy in respect of debit towards royalty expenses while disposing the case and accepting the assessee s claim without any application of mind or query - HELD THAT:- Pr. CIT has invoked the revisionary proceedings by merely observing a variation in the amount of royalty expenses debited in the profit and loss account and the amount of provision reported in the balance sheet towards royalty. The extent of enquiry undertaken and replies filed in the assessment proceedings as well as those furnished before him in the revisionary proceedings, forms part of the records of the case on which Pr. CIT ought to have applied his mind before embarking upon the journey of initiating the revisionary proceedings. We find that the issue in the present case is purely on facts which are verifiable from the records of the assessee placed on record. Examination and verification of the audited financial statement i.e. Balance sheet and Profit and Loss Account of the assessee together with notes to accounts and significant accounting policies, perusal of the ledger accounts and the details made by the assessee in the paper book for the data maintained by it, reveals the correct state of affairs in respect of the issue raised in the impugned revisionary proceeding. Accordingly, action u/s. 263 is not justifiable which in our considered view cannot be sustained under the facts and circumstances of the present case. - Decided in favour of assessee.

  ---

• 2023 (4) TMI 797
  Employees contribution for the Provident Fund and ESI, which was made after due date of respective Act and paid within due date of filing return u/s 139(1) - HELD THAT:- This issue came for consideration before Hon ble Supreme Court in the case of CHECKMATE SERVICES PVT LTD [ 2022 (10) TMI 617 - SUPREME COURT] decided the issue on allowability/treatment of delayed Employee PF Contribution payment in hands of assessee under provisions of Income Tax Act and held that Section 36(1)(va) and Section 43B(b) operate on totally different equilibriums and have different parameters for due dates, i.e., employee s contribution is linked to payment before the due dates specified in the respective Acts and employer s contribution is linked to the payment before the prescribed due date for filing of return u/s. 139(1) of Income Tax Act, 1961. The result of any failure to pay within the prescribed dates also leads to different results. In the case of employee s contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer s claim for deduction permanently forever u/s.36(1)(va). On the other hand, delay in payment of employer s contribution is visited with deferment of deduction on payment basis u/s.43B and is therefore not lost totally. Therefore, as per the above decision, the disallowance made by the Revenue authorities, were fully justified. Decided against assessee. Adjustment u/s 143(1) - Since the issue is already disposed of by the Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. cited (supra), it has to be followed by the department as well as by this Tribunal. We find no merit in the argument of the assessee s counsel that disallowance of employees contribution to ESI/PF deposited by the assessee after the specified date prescribed under the respective Act was beyond the scope of adjustment u/s 143(1) of the Act - Decided against assessee.

  ---

• 2023 (4) TMI 796
  Deduction u/s.80P(2)(d) - interest received from Co-operative banks - assessee is a co-operative housing society - HELD THAT:- For cooperative banks or cooperative societies which are carrying on banking business but not registered with RBI, they would be entitled for deduction u/s.80P(2)(a)(i) of the Act and would not be hit by the provisions of Section 80P(4) of the Act. The Hon ble Supreme Court Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] had taken cognizance of the CBDT Circular dated 28/12/2006 containing the explanatory notes on provisions contained in the Finance Act 2006 and the CBDT clarification dated 09/05/2008 while laying down the aforesaid proposition. The fact of co-operative societies investing in co-operative banks were never disturbed by this decision. Hence, we hold that the reliance placed by the ld. DR on the aforesaid decision of the Hon ble Supreme Court would not advance the case of the Revenue as they are factually distinguishable. Accordingly, by placing reliance on the co-ordinate Bench decision of this Tribunal in the case of Tulsiani Chambers Premises Co-operative Society Ltd [ 2022 (5) TMI 548 - ITAT MUMBAI] which are reproduced hereinabove, we hold that assessee society would be entitled for deduction u/s.80P(2)(d) of the Act in respect of interest received from co-operative banks. Accordingly, the ground raised by the assessee on this issue is allowed.

  ---

• 2023 (4) TMI 795
  Deduction u/s 80IA - denial of deduction as assessee might not have filled the columns of corresponding schedule u/s 80IA or might not have e-filed the Form 10CCB within the due date - HELD THAT:- It is neither the case of the Assessing Officer nor of the CIT(A) that the assessee is not entitled to claim deduction u/s 80IA - CPC has denied the claim only on the basis of vague and ambiguous reasons. As held time and again by the courts of law that the Income Tax Authorities must charge the legitimate taxes from the taxpayers. If an assessee is entitled to certain deductions under the provisions of the Income Tax Act, the same should not be disallowed, merely because of any bona fide mistake or error on the part of the taxpayer, rather, the Income Tax Authorities should assist the concerned assessees in filing their correct returns of income. This is not the case of the Department that the assessee was not entitled to the deduction claimed u/s 80IA. As decided in G. M. Knitting Industries (P) Ltd. Others [ 2015 (11) TMI 397 - SC ORDER] that even though, necessary certificate in Form 10CCB along with the return of income has not been filed, but, if the same was filed before the final order of assessment, the assessee, even in such circumstances, would be entitled for claim of deduction u/s 80IB of the Act. The facts of the assessee s case are on much better footing. The assessee has duly filed the audit report before the due date of filing of the return of income which was very much part of the return of income as on the due date of filing of the return of income. Lower authorities in denying the deduction u/s 80IA of the Act to the assessee cannot be held to be justified - Decided in favour of assessee.

  ---

• 2023 (4) TMI 794
  TP Adjustment - Interest on outstanding receivables - assessee submits that the TPO had not provided the working of the adjustment determined in respect of interest on outstanding receivables - As stated since, it is debt free company; no adjustment can be made towards notional interest on receivables - HELD THAT:- TPO during the study had not considered this issue in light that the assessee is a debt free company. So the adjustment of interest cannot be warranted in respect of the assessee. The assessee-company is not in other hard paying any interest to the creditor. Normally the assessee allowed credit to debtors for 60 days on the other hand they are enjoying the credit on same days against creditors. We find the issue was not properly adjudicated by the AO/TPO in the order. The DR had not made any strong objection on this issue. We remand back this issue to the TPO for further adjudication in light of our observations above. Grant of working capital adjustment - Trade terms of payment of debtor is 60 days. So, the price of goods should equate to the price for immediate payment plus 60 days of interest on immediate payment price. For making working capital adjustment is an attempt to adjust for the differences in time value of money between the tested party and potential comparable for which is the work out the adjustment on account of working capital adjustment. As the issue is first time agitated before the ITAT, we remit back the issue to the AO/TPO for further adjudication and to grant actual working capital adjustment after duly examining it. Accordingly, this ground is remitted back to the file of AO/TPO for reconsideration. Selection of comparables - Exclusion of companies as functionally dissimilar with that of assessee characterised as the contract service provider .

  ---

• 2023 (4) TMI 793
  Disallowance of ESOP expenses - allowable revenue expenses u/s 37 or not? - AR submitted that ESOP form parts of the employee s compensation as perquisite - whether ESOP expenses is not notional/ contingent in nature and allowable under section 37 ? - HELD THAT:- As decided in Novo Nordisk India P. Ltd. case [ 2013 (11) TMI 218 - ITAT BANGALORE] the expenditure in question was wholly and exclusively for the purpose of the business of the assessee and had to be allowed as deduction as a revenue expenditure. Thus we hold that the expenditure towards ESOP is eligible for deduction u/s 37 - Appeal by the assessee is allowed.

  ---

• 2023 (4) TMI 792
  Computation of Long term capital gains - transfer of capital asset acquired by assessee by way of gift or will - applicability of provisions of section 49(1) - as per AO assessee had computed indexed cost of acquisition by adopting Fair Market Value of the property as on 01.04.1981 contrary to the provisions of Sec.49 - assessee has acquired his 1/4th share of property by inheritance, but remaining 3/4th share of property, has been acquired from other legal heirs by way of Release Deed by payment of consideration - benefit of indexation from the date previous owner held asset - HELD THAT:- In so far as 1/4th share of property is concerned, the assessee is acquired right over the property by inheritance as per provisions of Sec.49 of the Act and thus, he is entitled to claim the benefit of indexation from the period the previous owner held the property or from 01.04.1991, whichever is later - we direct the AO to allow benefit of indexed cost of acquisition towards 1/4th share of property from the date of previous owner held the asset or from 01.04.1991 as claimed by the assessee. Remaining 3/4th share of property, admittedly other three legal heirs had released their right in property in favour of the assessee on 16.02.2006 for a consideration of Rs.3 lakhs. Since, the assessee has acquired right over the property in respect of 3/4th share of property from 2006, he cannot claim indexed cost of acquisition from the date previous owner held asset, because, 3/4th share of property, has not been acquired in any one of the modes specified u/s.49 - AO to allow the benefit of indexation for 3/4th share of property from the year 2006 - we direct the AO to re-compute capital gains arising out of transfer of property by adopting cost of acquisition as directed by us hereinabove. Deduction claimed u/s.54 - amounts spent for construction of new building - We find that the assessee has obtained Demolition Re-construction Permission from Corporation of Chennai on 15.05.2012 and also obtained Building Plan Permission on 19.05.2012. If you go by the date of permission given by the Corporation of Chennai, then, it is within three years from the date of sale of original asset, which expires on 30.07.2012. But, fact remains that on the basis of Building Permission Plan obtained on 19.05.2012, it cannot be assumed that the assessee has completed construction of house property on or before 30.07.2012. The assessee had also filed Estimate for construction of residential building and Valuation Report obtained from approved Valuer along with photos taken, but fact remains that Valuation Report obtained from approved Valuer specified probable date of completion of construction of house property and further, the photographs alone cannot give any indication of completion of house property. On the basis of said evidences, it cannot be concluded that the assessee has satisfied conditions prescribed u/s.54 of the Act, to allow the benefit. But fact remains that if you go by cumulative of all evidences filed by the assessee, there seems to be merit in the arguments of the Ld.Counsel for the assessee that the assessee has constructed a new house by demolishing old structure on property purchased in the year 2012 and hence, facts need to be further verification from the AO. We set aside the issue of deduction claimed u/s.54 of the Act, to the file of the AO and direct the AO to re-examine the claim of the assessee considering Building Plan Permission, EB Card and Valuation Report obtained from approved Valuer along with photographs of the building. The assessee is directed to furnish all evidences before the AO to justify his case.

  ---

• 2023 (4) TMI 755
  Employee contribution to PF/ESI beyond the due dates as prescribed u/s. 36(1)(va) - adjustment made by the lower authorities u/s 143(1) - HELD THAT:- Assessee demonstrated that the tax auditor has merely given the details as required in the form no 3CD and at the same time in 3CA has given his view that considering the favorable decision for ESI and PF they have considered the same as allowable and not considered the deemed income of the assessee. On going the tax audit report and provision of section 143(1) of the Act we are of the considered view that the PF and ESI being the deemed income of the assessee as the same is collected from the employee salary and therefore, the same is not under the permissible adjustments. Thus we are of the considered view that the adjustment made by the lower authorities are outside the purview of Section 143(1) of the act - To support the view taken by us we have relied upon the detailed finding in the case of Garg Heart Center Nursing Home Private Limited [ 2022 (8) TMI 1135 - ITAT DELHI] - Decided in favour of assessee.

  ---

• Customs

• 2023 (4) TMI 791
  Seeking provisional release of the goods alongwith vehicle - section 110A of the Customs Act, 1962 - HELD THAT:- The facts in the present case is similar to the case of BAANI TECHNOLOGY SERVICES PVT. LTD. VERSUS THE INTELLIGENCE OFFICER, DIRECTORATE OF REVENUE INTELLIGENCE ORS. [ 2022 (12) TMI 1255 - BOMBAY HIGH COURT ] where it was held that by way ad-interim order, we direct that clause 3 of the impugned order shall stand suspended if the Petitioner complies with clause nos. 1 and 2 of the impugned order, subject to further order. The Petitioner shall keep the vehicle in good condition and shall not create third party rights in respect thereof, and shall produce the vehicle before the concerned Respondents as and when demanded. Accordingly, by way ad-interim order, we direct that subclause (vi) [should be sub-clause (iii)] of clause-7 of the impugned order shall stand suspended if the Petitioner complies with subclauses (iv) and (v) [should be sub-clauses (i) and (ii)] of clause-7 of the impugned order, subject to further order. The Petitioner shall keep the vehicle in good condition and shall not create third party rights in respect thereof, and shall produce the vehicle before the concerned Respondents as and when demanded. Petition disposed off.

  ---

• 2023 (4) TMI 790
  Provisional release of goods - Eucalyptol or Eucalyptus Oil - illegal seizure of goods - HELD THAT:- Since the reports of the laboratory received by the Respondents themselves indicate that it is Eucalyptus Oil, the Respondents are directed to take necessary action on the basis that the goods of the subject consignment are Eucalyptus Oil as per law and as a consequence, the seizure memo will not survive. Writ petition stands disposed of.

  ---

• 2023 (4) TMI 789
  Recovery of Export benefit of RoDTEP Scheme - exports of white refined sugar - Period of dispute from 1.6.2022 to 30.11.2022 - Restricted goods or not for the said period under FTP - Unable to claim in the shipping bill - seeking protection against the coercive recovery and further seeking the entitlement to the export benefit under the RoDTEP Scheme - HELD THAT:- The court is of the view that the following directions would serve the ends of justice. Accordingly it is provided that, (i) The petitioner shall be entitled to claim the RoDTEP Scheme benefit in respect of the exports of white refined sugar at the rate permissible. Even if such benefit is not claimed or mentioned in the shipping bills, the petitioner is permitted to make necessary application seeking such benefit in respect of the consignments concerned. (ii) The passage of time in making such applications which would occur as amount would not be mentioned in the shipping bills, would not render the claim of the petitioner time barred. (iii) The non-mentioning of the claim of the benefit in the shipping bill by the petitioner shall also not be treated as waiver on part of the petitioner by the authorities. (iv) The authority shall process the claim of the petitioner for RoDTEP Scheme benefit irrespective of the fact that the same was not mentioned or lodged along with the shipping bill concerned. (v) If any adjudicatory proceedings are require to be undertaken by the authorities in respect of the claim of the petitioner for the benefit, the respondent Nos.3- The Commissioner of Customs, Kandla and respondent No.4- The Assistant Commissioner of Customs, (DBK), Kandla, shall while deciding the claim, extend opportunity of hearing to the petitioner and shall act in accordance with Section 28 of the Customs Act. Petition disposed off.

  ---

• 2023 (4) TMI 788
  Valuation of imported goods - NIDB data of contemporaneous imports - electric motors of various capacities - comparison of values of the electric motors declared in the bills of entry with the values of electric motors in the National Import Data Base (NIDB) - rejection of declared value - Rule 12 of Customs Valuation Rules - recovery of differential duty invoking the extended period of limitation - HELD THAT:- It is a matter of record that the appellant declared the transaction values which were accepted in two cases and enhanced in three cases by the proper officer at the time of clearance of the goods. Long after the clearance of the goods, the officers from the SIIB compared the values in these bills of entry with the values of similar goods cleared and found that the values were different. For this reason, they initiated investigation and recorded the statement of the proprietor. In his statement, the proprietor said that what he declared was the transaction value and that he was not aware of the values in the NIDB. This contention must be accepted because the NIDB is data base of the Customs department and it is not open for public to see. All that is required from the importer in the bill of entry is to declare his transaction value truly and accurately. If there is any relationship between the buyer and the seller or if there is any additional consideration for sale they also have to be declared. In this case, there is no allegation that there was any additional consideration for sale or that the buyer and seller were related. Therefore, there was no lapse on the part of the respondent in his declaration. Rule 12 of the Customs Valuation Rules provides for proper officer to reject the transaction value and it requires two steps. On receiving additional information or if no such information is provided by the importer, the proper officer still has reasonable doubt regarding the truth and accuracy of the transaction value, he can reject it under Rule 12 and re-determine the value under Rules 4 to 9 in that order. Rule 4 deals with transaction values of identical goods and Rule 5 deals with transaction value of similar goods - the importer has no means of knowing at what prices others were importing goods which are identical or similar and at various customs locations across the country. Only Customs officers have access to this information. The quantity of the goods imported by the appellant varied between 525 and 671 electric motors in each of the five bills of entry and in the imports whose values were taken from comparison, the quantities ranged between 1 and 185 motors. The quantities imported by the respondent were three times to 500 times the quantities in the bills of entry with which the values have been compared. No speaking order was issued. Since the importer had waived its show cause notice and order as per the provisions of Section 17(5) of the Customs Act, it was held that the importer cannot renege on his submission waiver of SCN and the order after the goods have been cleared. The only thing established during the investigation is that other importers imported goods through Nhava Sheva port at different prices and the difference in quantities was between 3 times to 500 times. This does not in any way prove that the declared transaction value was not true or not accurate. The findings of the impugned order agreed upon - there are no reason to interfere with it - The impugned order is upheld and appeal is rejected.

  ---

• 2023 (4) TMI 787
  Refund claim of SAD for the whole of the additional duty of customs paid at the time of import of electronic goods which were subsequently sold in the domestic market with proper sales invoice - Principles of Unjust Enrichment - HELD THAT:- M/s. LG Electronics India P. Ltd. has imported goods claiming exemption under Notification No.102/2007-Cus. dated 14.9.2007. As noted by the Commissioner (Appeals), Revenue has not produced any documentary evidence at any stage of the appeals to show that discrepancy exists between the description of goods imported and those sold. The Commissioner (Appeals) is agreed upon that Revenue has not provided evidence to establish the fact as alleged by them and their appeal in this regard fails. Unjust enrichment - HELD THAT:- The appeal has stated that the procedure to be adopted for refund of 4% additional duty of customs is given in Board Circular No. 6/2008-Customs (F. No. 401/104/2007-Cus.III) dated 28.4.2008 and Customs Public Notice No. 39/2011 dated 14.6.2011 - As per para 6.2 of the said Board s circular, Statutory Auditors / Chartered Accountants are required to explain how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirements of unjust enrichment. It is found that the certificate of the Chartered Accountant submitted in this case does mention that the aforesaid claim of Rs.43,98,399 is out of Additional Duty of Customs and has been recorded in the books of accounts as Claims Recoverable from Customs Department. There is nothing in the appeal to show that 100% verification of invoices was not done by the Chartered Accountant before submission of the claim. The Boards Circular only requires the statutory auditor/Chartered Accountant who certifies the importer s annual financial accounts under the Companies Act or any statute, to explain how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirement of unjust enrichment - as stated by the respondent, satisfied by the Chartered Accountant s certificate - there are no grounds in the appeal strong enough to prima facie differ from the views of the respondent. Appeal filed by Revenue rejected.

  ---

• 2023 (4) TMI 786
  Refund of SAD - Submission of forged documents with the customs authority with a view to get the refund fraudulently - suppression of material facts - preparation of forged invoices - N/N. 102/2007-CUS dated 14.09.2007 - HELD THAT:- On perusal of the para 3 of Notification it is clear that jurisdictional customs officer shall sanction the refund on satisfying himself that the conditions referred to in above notification are fulfilled. In the present case it is on record that Appellants filed the refund applications which covered all the requisite documents and details. The Assistant Commissioner (refund sanctioning authority) after examining the documents and details related to the refund claim and after satisfying himself that the conditions of notification are fulfilled by the appellants, sanctioned the refund and passed the refund order - in the present matter for recovery of refund amount by issuing show cause notices on the ground that the conditions of Notification has not been fulfilled by the appellants is unjustified. In the present case, when the refund sanctioning order has been upheld upto the CESTAT and no further appeal was preferred by the revenue, the revenue could not have proceeded for recovery by issuing a fresh show cause notice - in the present matter the Lower Authorities held that number of logs mentioned in the sales invoices do not match with the number of logs declared in the Bills of Entry in some cases. In some cases, number of logs have exceeded the log numbers than declared in the Bills of Entry and in some cases log numbers reduced as against declared in the Bills of Entry. Number of logs would increase than the declared in the Bill of Entry. Further Appellant sold logs in the same form or sawn form on CBM. They had never focused on number of logs sold to customers. They imported many consignments under various Bills of Entry. The Appellant sold goods based on CBM. Hence, in some of the cases, number of logs would have been decreased while selling the product. But, the Appellants sold duty paid imported logs on payment of VAT/ Sales Tax through sales invoices in domestic market - while the refund claim were sanctioned to the Appellants the Refund sanctioning authority also verified the said facts and also observed that the conditions of Notification fulfilled by the appellants. Hence, clearly in the present matter department erred in demanding sanctioned refund of SAD from the Appellants. The investigating authority to find out the truth of the said disputed transaction had not inquired with the customers to whom the Appellants sold the goods, therefore, allegations of the revenue is contrary to the facts. Appellants issued manual invoices to the customers and the same were filed with the refund claims. Refund sanctioning authority nowhere dispute the fact related to not mentioning details of number of logs sold to the customers. In the said matter there is no other disputes regarding sale of timbers to the customers after payment of ST/CST as well as compliance of the Notification No 102/2007. The Appellants complied with all the conditions of the above notification, and therefore, actions of the lower authorities for recovery of refund based on number of logs not mentioned in the invoices attached with the refund claim is not sustainable. There are no justifiable reason to uphold the impugned orders - The same are accordingly set aside and appeals are allowed.

  ---

• 2023 (4) TMI 785
  Suspension of Customs Broker License - restricted goods - immediate action required as specified under Regulation 16(1) CBLR 2018 - illegal attempt (on the part of Customs Broker) to import the restricted goods namely second-hand Data Processing Servers without having mandatory documents - HELD THAT:- The import of second hand goods is restricted and importable only against an authorization from DGFT. Also, Data Processing Servers are notified goods at Sl.No.15 of Electronics and IT Goods (Requirements of Compulsory Registration) Order, 2012 (hereinafter referred as CRO, 2012) as amended from time to time and the import is restricted and attracts mandatory BIS certification and import of unregistered/non compliant notified products as in CRO, 2012 as amended, is prohibited. As per para 2.13 of Foreign Trade Policy (2015-2020), regarding Clearance of Goods from Customs against Authorization , the filing of Warehousing Bill of Entry, in case of Restricted goods is not available - However, in the present case, the importer has imported the second hand goods and filed the Bill of Entry for Warehousing without having any valid authorization which violates the provisions of Para 2.13 of Foreign Trade Policy (2015-2020) as amended from time to time. It is observed that Regulation 16(1) provides for suspension of license of the Customs Broker where an inquiry against them is pending or contemplated. It is required only in appropriate cases where immediate action is necessary. Thus, the suspension of CB license is not a mandatory requirement in all cases. Suspension of CB license is resorted only in cases where immediate action is warranted. It is observed that the goods in question have been received in the Port area on 23.02.22 and the Customs Broker has filed the warehousing Bill of Entry on 31.05.22. The Customs Broker was issued the CB Order 19.12.22 and the same was confirmed on 10.01.23. It is observed that after filing of the warehousing Bill of Entry by the Customs Broker, the SIIB (Port) has initiated the investigation against the imported consignment and issued a Show Cause Notice dated 19.02.2022 - the investigation in this case has already completed and there is no urgent necessity warranting restriction on the Customs Broker. Immediate suspension of the Customs Broker is warranted when there is an apprehension that the CB may interfere in the investigation or tamper with any evidence which will be detrimental to the investigation. There is no such apprehension in this case, as the investigation has already been completed and Notice issued. Thus, there is no urgent necessity to suspend the license of the CB. The clearing agent has filed the warehousing Bill of Entry, as the importer was not having the mandatory documents. Arranging the documents is the responsibility of the importer. There are no fault with the Customs Broker for not arranging the documents before importation of the second hand goods. As the mandatory documents could not be arranged in time, the Customs Broker has advised the importer to file Warehousing Bill of Entry to save demurrage charges. Even though warehousing is not permissible for second hand goods, they filed warehousing bill of entry only to minimize the loses and opted for First check. It is observed that they have opted for first check on their own and fully cooperated with the investigation by the SIIB (Port) - The enquiry proposed under Regulation 17 of CBLR, 2018 can go on even without suspension of the license. After completion of the enquiry, the Competent Authority will decide whether revocation of license is warranted or not in this case - there are no merits of the case as to whether the CB has violated Regulations 10(d), 10(e), 10(f) and 10(m) of CBLR, 2018 or not, as alleged in the notice. That decision will be taken by the competent authority after completion of the Inquiry proceedings. The suspension of the licence is not warranted in this case, at this stage, after completion of the investigation and issue of Show Cause Notice - Appeal allowed.

  ---

• 2023 (4) TMI 784
  Demand of Customs Duty on value by applying exchange rate of the date on which ex-bond bill of entry was filed - exchange rate applicable on the date of warehousing has to be applied for the purpose of valuation or not - benefit of limitation by treating the normal period of limitation as 1 Year - period 2007-08 to 2009-10 - HELD THAT:- The sole issue is if currency exchange rate applicable to imports will be the rate prevalent at the time bill of entry is filed or the rate prevalent when Ex-bond bill of entry is filed. The impugned order relies on para 12 and 13 of the order in original to hold that the demand is sustainable. A perusal of para 13 of the O-I-O reveals that the said order relies on the decision of Tribunal in the case of SRI MAHARAJA INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [ 2006 (8) TMI 407 - CESTAT, CHENNAI ] where it was held that the Commissioner of Customs is not competent to issue any public notice contrary to the provisions of the Act. The appellants themselves accepted that they were aware of the duty due and payable, but the system thwarted their efforts to file correct ex-bond Bs/E. The decision relied in the Order In Original does not support the case of the Revenue and is totally contrary to what Revenue has alleged. The aforesaid decision of Tribunal clearly holds that the exchange rate applicable will be the rate on the date the warehousing bill of entry was filed for putting goods in bond. The demand cannot be sustained. The appeal is consequently allowed.

  ---

• 2023 (4) TMI 783
  Levy of Anti-Dumping duty - misdeclaration of origin as Malaysia with intent to evade the antidumping duty (ADD) - discarding of cross-examination in the adjudication order - HELD THAT:- The proceedings, culminating in recovery of differential duty and anti-dumping duty on measuring tapes made of steel and measuring tapes made of fiber glass from the principal noticee, has had a curious passage commencing, as it did, with alert issued by Directorate General of Valuation on the steep under-invoicing of such goods from several countries including Malaysia, on which, as yet, anti-dumping duty was not contemplated then before going on to render the finding that the impugned goods did not originate in Malaysia. In the context of the notification resorted to in the adjudication order, it has to be clearly established that the impugned goods were produced in China. That is the test which the impugned order must overcome to exclude setting aside of the anti-dumping duty devolving on the importer. That the import is covered by invoice of M/s Reva Technologies, Dubai indicating the goods to be of Malaysian origin, backed by certification to that effect issued by Dubai Chamber of Commerce, is on record. That the bill of lading covers the shipment of the impugned goods from Singapore is also on record - the incriminating pamphlet was not in the intercepted consignment and that, containing, as it does, the name of an allegedly non-existent entity in Malaysia, its evidentiary value for purpose intended by the adjudicating authority is suspect. Local traders can hardly be accepted as authoritative sources for establishing origin and the transaction allegedly entered into between these traders and the importer may have relevance for proceedings under some other statute without any bearing on conformity with the conditions for imposition of the definitive anti-dumping duty. The market price in India shall not be the basis for determination of value under rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The redetermined value in the impugned order is, therefore, not consistent with law and must be set aside. The appropriateness of invoking rule 12 of the said Rules is, thus, relegated to an academic exercise - the impugned order has erred in concluding that the impugned goods should be subjected to levy of differential duty and anti-dumping duty and the extrapolation thereto onto the past consignments is no less untenable; consequently, the confiscation of the goods lacks statutory sanctity as also the penalties imposed on the importer and the other two appellants connected with the intercepted consignment. Appeal allowed.

  ---

• Corporate Laws

• 2023 (4) TMI 782
  Oppression and Mismanagement - maintenance of status quo relating to remaining 227 units by not creating any third party interest and not to carry on work construction beyond 302 units till disposal of main CP - HELD THAT:- The learned counsel for the both the parties oblivitious of the fact that the present appeal was confined to an interim order, i.e. status quo order, even then learned senior counsel of both the sides had taken precious time of the Court on the issue which is secondary in the present context. In any event while we are examining correctness of the interim order, we are not expected to record any finding, which may affect either of the party in a proceeding which is pending before NCLT. Admittedly the company petition filed under Section 241 and 242 of the Companies Act is pending before NCLT. Accordingly, we are of the opinion that we may not record any finding either in favour of the sale deed executed in question or against the said transaction. If we record such finding it will amount to usurping the jurisdiction of the NCLT. From the order impugned it is reflected that NCLT at least at the time of passing interim impugned order has not accepted the valuation report of the private valuer and recorded that the land was sold to the price fixed as per ready reckner rates fixed by the Govt of Gujarat properties situated in that area. Meaning thereby that the contention of the applicant before the NCLT regarding undervalued sale was not accepted by the NCLT for passing ad interim order. It is also not reflected as to any question was raised that the appellant had not purchased the land in good faith, rather the transaction appears to have been done in good faith by the appellant. It is also not disputed that the (i) sale deed was registered on 13.7.2020; (ii) the pleading that after registration permission was obtained from competent authority for construction of the building; (iii) approval of the plan and mortgaging of the land for obtaining loan; (iv) thereafter almost completion of the project by way of construction of above 302 units;(v) creation of third party right since 61 persons had already purchased the unit; and (vi) NOC for another 14 purchasers from the Bank was received. In such a situation it was not permissible for the NCLT to pass an order affecting the right of the appellant as well as affecting right of those persons who were neither arrayed as party in the petition before NCLT nor they were noticed. On perusal of the language of the interim relief it is evident that the applicant was under impression as if some construction on land was going to be done by the appellant herein whereas facts noticed hereinabove makes it clear that construction over the land was almost complete and some of third party right was also created - learned NCLT by the impugned order i.e. direction to respondents particularly the appellant herein for maintaining status quo relating to remaining 227 units by not creating any third party interest or no construction beyond 302 units till disposal of the main CP has to go and as such the impugned order is hereby set aside. Appeal allowed.

  ---

• Insolvency & Bankruptcy

• 2023 (4) TMI 781
  Maintainability of application - Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing disputes - Plea of petitioner/appellant/operational Creditor is that the Adjudicating Authority/ National Company Law Tribunal, Division Bench-I, Chennai had merely placed Reliance, upon the reference, under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006, dated 07/10/2020, made by the Petitioner/ Appellant/ Operational Creditor, addressed to the Chairperson of the Micro, Small and Medium Enterprises Facilitation Council, Puducherry and that itself, will not be a Decisive Factor, for the Petitioner/ Appellant/ Operational Creditor, for the Adjudicating Authority/ National Company Law Tribunal, Division Bench-I, Chennai, to arrive at a Conclusion that there was a Dispute/ amounting to Pre existing dispute, coming within the Definition of the Dispute, as per Section 5(6) of the Insolvency and Bankruptcy Code, 2016. HELD THAT:- A Perusal of the Ingredients of Section 18(3) of the MSME Act, unerringly, points out and also empowers that the Facilitation Council, to arbitrate the dispute, under the Provisions of the Arbitration. In the Instant case, the very fact that the Petitioner/ Appellant/ Operational Creditor, had approached the Chairperson of Micro, Small Enterprises Facilitation Council, Puducherry, to reference dated 07/10/2020, in regard to the non payment of amount, as per the provisions of Section 15 of the Micro Small and Medium Enterprises Act, 2006, by the Respondent/ Corporate Debtor, itself indicates that there has been a Dispute, and in fact, that the amount which was not paid, is now the subject matter of Controversy/ the issue being pending for Resolution, one way or the other, before the said Authority, viz, Chairperson of the Micro Small Enterprises Facilitation Council, Puducherry. Taking into account, the entire gamut of the facts and circumstances of the instant case, in an Holistic Fashion, comes to an Irresistible and Inescapable Conclusion that the view arrived at, by the Adjudicating Authority, ultimately, in the instant Case, that there is a Pre existing dispute, and by placing reliance upon the principles laid down by the Hon ble Supreme Court of India in Mobilox Innovations Pvt. Ltd. V Kirusa Software Pvt. Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ], is free from any Legal Infirmites, in the eye of Law. Resultantly, the Appeal, sans Merits. Appeal dismissed.

  ---

• 2023 (4) TMI 780
  Mis-disclosure of facts for seeking condonation of delay - HELD THAT:- What has been sought to be pointed out is that the ignorance expressed about the order passed in the review petition is false as it was well known to the appellant in view of the proceedings in the appeal before the NCLAT, inter alia, as recorded in the order dated 22.8.2022 in presence of their counsel - we are not inclined to interfere with the oblique endeavour of the petitioner through the present proceeding as it is their say that their own appeal is pending before the NCLAT. Appeal dismissed.

  ---

• 2023 (4) TMI 779
  Initiation of CIRP - personal guarantor of Corporate Debtor - Jurisdiction of NCLT Mumbai Bench to entertain Section 95 Application filed by the State Bank of India - HELD THAT:- From the facts which have been brought on record by the State Bank of India, it is clear that on the date when Section 95 Application was filed before the Adjudicating Authority, i.e., 23.06.2021, no insolvency resolution was pending against the Corporate Debtor before NCLT Mumbai. Hence, Section 60 sub-section (2) could not have been invoked. NCLT Mumbai Bench had no territorial jurisdiction to entertain Section 95 Application filed by the State Bank of India against the Appellant. The jurisdiction to entertain Section 95, sub-section (1) Application was only before the NCLT under whose jurisdiction the registered office of the Corporate Debtor is situated, which in the present case happens to be NCLT Chandigarh. Appeal allowed.

  ---

• 2023 (4) TMI 778
  CIRP - NCLT admitted the application - Appellant submitted that, there being settlement entered into by the parties on 07.12.2021, which was acted upon, there was no occasion to admit the Company Petition and the Operational Creditor did not bring into the notice of the Adjudicating Authority about the settlement - HELD THAT:- Operational Creditor proceeded with the Application even after 07.12.2022, which indicates that Operational Creditor was not fully satisfied with the settlement, if any reached. Even according to the Appellant s case, full payment under the said settlement was never made before admission of Section 9 Application. The Corporate Debtor does not appear before the Adjudicating Authority, nor raised any defense and the debt and default is proved as held by the Adjudicating Authority, no error was committed by the Adjudicating Authority in admitting Section 9 Application. The Appellant has relied on another settlement entered vide Minutes of Meeting dated 30.11.2022 with Agreement dated 08.12.2022 under which the Appellant has claimed to have paid the amount of Rs.8.5 lakhs by 08.12.2022. From the facts which have been brought on record, it is clear that CoC was constituted on 02.12.2022 by the RP and the first Meeting of the CoC has also been held on 10.12.2022. After constitution of the CoC, settlement if any, needs to be approved by the CoC with 90% of vote share as per Section 12A read with CIRP Regulation 30A. Any settlement after passing of the impugned order and after constitution of the CoC is only permissible when the same is approved with 90% vote share of CoC. Hence, the settlement dated 08.12.2022, which is relied by the Appellant in this Appeal can be of no ground to interfere with the impugned order dated 11.11.2022. The RP has brought on record the claims received in pursuance of public announcement and the RP has stated in his reply that before holding of the first CoC Meeting, the claims upto INR 1067.97 crores were received. Some of the Intervenors are the Members of the CoC, who have filed Intervention Applications opposing the Appeal - there are no grounds made out in this Appeal to interfere with the impugned order. Appeal dismissed.

  ---

• 2023 (4) TMI 777
  Condonation of delay in filing appeal - Appellant has been prosecuting the civil remedy by way of filing I.A. No. 2623 of 2021, which was rejected only on 03.01.2023 and thereafter immediately the Appeal has been filed on 07.01.2023 challenging order dated 08.10.2021 - seeking that the period during which the Appellant was prosecuting his I.A. No. 2623 of 2021 be excluded giving the benefit of Section 14 of the Limitation Act. Whether the Appellant is entitled to claim benefit of exclusion of period from 17.11.2021 till 03.01.2023 during which Intervention Application filed by the Appellant being I.A. No. 2623 of 2021 in Company Appeal (AT) (Ins.) No. 880/2021 was pending? HELD THAT:- The Limitation Act, 1963 in several sections has used the word suit , application and appeal . Section 12 which provides for exclusion of time in legal proceedings uses all three expressions i.e. suit, appeal or application , whereas Section 13 uses expression suit or appeal - A plain reading of provisions of Section 14 indicate that Section 14 does not apply to appeal, however, the Hon ble Supreme Court had occasion to consider as to whether even if Section 14 of Limitation Act does not expressly apply to appeal, whether the principles underlying Section 14 are applicable to appeal or not. The Hon ble Supreme Court in MP. STEEL CORPORATION VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2015 (4) TMI 849 - SUPREME COURT ] has laid down that where Section 14 may not apply, the principles on which Section 14 is based, would nevertheless apply. - The law laid down by the Hon ble Supreme Court is that even if Section 14 of the Limitation Act does not apply in an appeal, however, the principles underlying Section 14 can be applied while considering exclusion of period under Section 14. Thus, we proceed to examine the contentions of the parties on the premise that principles underlying Section 14 are also attracted in an appeal filed under Section 61 of I B Code. When Section 61 provides that right to appeal to be exercised within a prescribed period of 30 days with power to condone the delay of only 15 days, the party who chose not to file an appeal, comes after 400 days for filing an appeal cannot be said to be acting with due diligence. The Appellant is a Financial Creditor of the Corporate Debtor who is an entity backed by large number of advisors and consultants. The remedy of appeal and an intervention application in an appeal are entirely different. When Appellant chose not to file appeal challenging order dated 08.10.2021 and chose to file Intervention Application in an appeal filed by the another creditor it cannot be said that it was prosecuting the proceeding with due diligence. Appellant is not entitled to claim benefit of Section 14 of the Limitation Act on the ground that I.A. No. 2623 of 2021 was pending in Company Appeal (AT) (Ins.) No. 880 of 2021. The Appellant being not entitled for benefit of Section 14 and this appeal being filed against order dated 08.10.2021 after 400 days, we see no reason to condone the delay in filing the appeal - Delay condonation application is dismissed.

  ---

• 2023 (4) TMI 776
  Condonation of delay of 14 days in filing appeal - Direction for reversal of the transaction in favour of the Corporate Debtor - Section 43 of I B Code - proceeding before the Adjudicating Authority against the Respondent No.2 proceeded ex-parte since despite serving notice, Respondent No.2 (Appellant herein) did not appear - HELD THAT:- The judgment of V. Nagarajan vs. SKS Ispat and Power Limited Ors. [[ 2021 (10) TMI 941 - SUPREME COURT] ] has considered provisions of Section 61 of the I B Code providing for period of limitation for filing the appeal. The Hon ble Supreme Court while noticing the Section 61 has also noted the provisions of Section 421 of Companies Act, 2013 which provides for limitation for filing appeal. Hon ble Supreme Court has noticed the legislative change under Section 61 and has held that change in the scheme of Section 61 is a notable difference and the absence of the words from the date on which a copy of the order of the Tribunal is made available to the person aggrieved has significance - The Hon ble Supreme Court, thus, has clearly held that running of the limitation shall start from the date of pronouncement of the order and it is not dependent on the communication of the order to aggrieved person. The Appellant did not appear before the Adjudicating Authority despite service of notice, hence, it will be treated that it was served and the Appellant could not be heard in saying that the order dated 22.12.2022 is exparte and limitation to file appeal shall only begin when he has knowledge of the order. This submission of the Appellant cannot be accepted. It is further observed that even the ground taken in the delay condonation application that Appellant came to know about the order when he received letter of the Liquidator on 08.01.2023 is unfounded and not supported by any material. Whereas the Liquidator in his reply has brought material on record which indicate that order was sent by Liquidator on 04.01.2023 by email to the Appellant. Thus, even if, for argument sake only, if limitation is calculated from date of receipt of email, then also the Appeal filed was beyond 15 days after expiry of limitation. There are no ground to allow the delay condonation application. The delay condonation application is dismissed.

  ---

• 2023 (4) TMI 775
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - demand of service notice - HELD THAT:- Perusing the statutory construct of IBC post issue of demand notice by the Operational Creditor as laid down in Section 9 of IBC. Under Section 9(1), if the Operational Creditor does not receive payment from the Corporate Debtor or notice of the dispute under Sub-section (2) of Section 8, he may file an Application under Section 9(1) of the Code. It is also an undisputed fact in the present matter that the Operational Creditor did not receive any payment from the Corporate Debtor and therefore proceeded to file an application under Section 9 of IBC. From a plain reading of the above provisions, it is clear that with regard to an Operational Creditor, the existence of dispute and its communication to the Operational Creditor is therefore statutorily provided for in Section 8. In the present case, it is an undisputed fact that the demand notice was issued by the Operational Creditor on 16.09.2019 and notice of dispute raised by the Corporate Debtor on 27.09.2019 - since payments were not forthcoming, Section 8 demand notice issued on 16.09.2019 was followed by Section 9 application before the Adjudicating Authority. While admitting that the Corporate Debtor had raised disputes in their communication dated 23.08.2019, it was pointed out that the Adjudicating Authority failed to appreciate the fact that this communication had been triggered by the fact that the Corporate Debtor had been informed on 19.08.2019 that action would be initiated against them before the NCLT in case of non-payment. It has been clearly mentioned that there is a pre-existing dispute and that inspite of having pointed out these discrepancies, the operational creditor had continued to ignore the same and rejected the debit notes which has led to filing of a civil suit No.517/2019. It has been pressed in the said reply that the Civil Suit was filed before the receipt of the demand notice of the Operational Creditor and hence the demand notice is illusory and unwarranted having no legs to stand. In the present factual matrix, the defence raised by the Corporate Debtor therefore cannot be held to be moonshine, spurious, hypothetical or illusory. The tone and tenor of the letter dated 23.08.2019 clearly manifested existence of dispute prior to the date of Section 8 demand notice on 16.09.2019. It is well settled that in Section 9 proceeding, there is no need to enter into final adjudication with regard to existence of dispute between the parties regarding operational debt. For such disputed operational debt, Section 9 proceeding under IBC cannot be initiated at the instance of the Operational Creditor. The Adjudicating Authority has therefore correctly noted that the application filed by the Operational Creditor under Section 9 has been hit by Section 9(5)(ii)(d) and accordingly rejected. The Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant. There is no merit in the Appeal. Appeal is dismissed.

  ---

• 2023 (4) TMI 774
  Principles of natural justice (audi alterem partem) - emphatic stand that the Adjudicating Authority / Tribunal, while passing the main Impugned Order, dated 25.08.2022 in IA(IBC)/601(CHE)/2022 in CP/1264/IB/2018, had not provided an opportunity to explain the facts as to why the 2nd Respondent / Resolution Professional, was a necessary Party - HELD THAT:- A Reasoned Order, will have an appearance of justice. In any Order, Reasons, one way or the other, ascribed by the Tribunal / Adjudicating Authority / Competent Court of Law, will be its Heart and Soul, and so to say a Jewel in a Crown. An Unreasoned Order, will have an appearance of injustice, being meted out to the Affected Party, because of the fact that the concerned Party, is prejudicially and substantially affected. However, even an unreasoned order, may be valid, from the view point of the person, who got a favourable order - It is an axiomatic principle in Law, that the Tribunal / an Appellate Tribunal, are guided by the Principles of Nature Justice, notwithstanding the fact that it can regulate its own procedure, as it deems fit and proper. However, the Tribunal (Adjudicating Authority), under Section 5 (1) (a) of the I B Code, 2016 - 408 of the Companies Act, 2013 and an Appellate Tribunal (NCLAT), as per Section 410 of the Companies Act, 2013, are very much required and guided to adhere to the Principles of Natural Justice, in terms of ingredients of Section 421 (4) of the Companies Act, 2013, and as per Rule 34 of the NCLT Rules, 2016. The Principle of Audi Alteram Partem, has been negated, as seen from the Impugned Order. On this simple ground alone, this Tribunal, without delving deep into the merits of the matter nor expressing any opinion, one way or the other simpliciter, at this juncture, is inclined to set aside, the Impugned Order, dated 25.08.2022 in IA(IBC)/601(CHE)/2022 in CP/1264/IB/2018 and allows, the Comp. App (AT) (CH) (INS.) No. 54 / 2023, in furtherance of Substantial Cause of Justice. The matter is remitted back to the Adjudicating Authority, who shall restore the IA(IBC)/601(CHE)/2022 in CP/1264/IB/2018 to its file and after restoration of the said Application, and taking it on file, is to pass an reasoned / speaking order, De novo, both on, qualitative and quantitative term(s), by adverting to the Arguments / Factual and Legal pleas. Application disposed off.

  ---

• Service Tax

• 2023 (4) TMI 773
  Belated adjudication of SCN after a gap to 13 years - Time Limitation - whether the respondents can continue the proceedings for adjudication of the impugned show cause notice, after the lapse of almost thirteen years? - HELD THAT:- Section 73 of the Act, as in force at the material time, did not stipulate any time period. However, by virtue of the Finance (No.2) Act, 2014, sub-section (4B) was introduced in Section 73 of the Act which stipulates that where it is possible to pass an order, the Central Excise Officer would determine the amount of service tax within a period of one year in respect of cases falling under the proviso to sub-section (1) or the proviso to sub-section (4A), and within a period of six months from the date of notice in cases falling under Section 73(1) of the Act - It is settled law that where there is no period stipulated for exercising jurisdiction, the same must be done within a reasonable period. Section 73 of the Act, as in force at the material time, did not stipulate any period within which the show cause notice was required to be adjudicated. It merely stipulated the period within which the show cause notice was required to be issued. However, there is no cavil that the authority conferred with the jurisdiction is required to exercise the same within a reasonable period - In the facts of the present case, it is not necessary for this Court to examine the validity of the procedure of placing the matter in the Call Book as it is apparent that there is a gross delay on the part of respondent no. 1 and there are no justified reasons for the same. In Sanghvi Reconditioners Pvt. Ltd. v. Union of India through the Secretary, Department of Revenue Ors. [ 2017 (12) TMI 906 - BOMBAY HIGH COURT ], the Court had observed that the larger public interest requires that the Revenue and its officials adjudicate the show cause notice expeditiously and within a reasonable time. The Court had further observed that the term reasonable time is flexible enough and would depend upon the facts and circumstances of each case . However, there was no justification for not adjudicating the notice for more than fifteen years after its issuance. The Court had also highlighted that it is necessary for the Revenue to inform the assessee that the show cause notice has been kept in abeyance, otherwise there would be no necessity for the assessee to preserve the record for the inordinately long period. It is thus concluded that the proceedings pursuant to the impugned show cause notice are inordinately delayed and it is now impermissible for the respondents to continue the same. The respondents are, accordingly, interdicted from taking any action or continuing any proceedings pursuant to the impugned show cause notice. - petition allowed.

  ---

• 2023 (4) TMI 772
  Principles of natural justice - mistake in the computation of demand - value of exempted services not taken into account - tickets booked in India for passengers embarking on journeys outside India - as per Petitioner, service tax liability arises on the basis of where the journey originates and not where the tickets are sold - place of provision of service Rules - HELD THAT:- The Adjudicating Authority has in paragraph 4.15 of the Order-in-Original recorded the lack of documentary evidence or verification or certification by the Chartered Accountant as well as the deficiency of supporting evidence. There is also a recording that only figures of reversal made in each financial year have been furnished without detailing as to how the figures were arrived at vis-a-vis their claim and those appearing in the ST-3 Returns which have been furnished by the Petitioner to the Respondents. It is also not in dispute that Petitioner had clearly pointed out that there was a mistake in the computation of the demand, that while calculating the demand, value of exempted service of transportation of cargoes was not taken into consideration and that the Petitioner had offered that his personnel Shri Gaurav would approach the department to explain the workings when called for. It emerges from the above that this is nothing but a case of breach of principles of natural justice, as despite Petitioner s offer to assist the Adjudicating Authority in explaining the computational errors and inspite of the Adjudicating Authority s admitted inability to figure out the details with respect to the actual reversal in relation to the subject ST-3 Returns resulting in rejection of petitioner s claim for reduction in demand, which the Authority could have simply been able to resolve by asking for the assistance of petitioner s personnel. Therefore, the decisions cited on behalf of the Respondents would not apply in the facts of this case. Matter remanded back to the Respondent Adjudicating Authority to pass a fresh order - The Adjudicating Authority to complete the entire exercise within a period of six weeks after affording an opportunity to the Petitioner to explain the computation errors in detail for the purposes of re-computation of the demand in accordance with law. Petition allowed by way of remand.

  ---

• 2023 (4) TMI 771
  Seeking direction to deposit the discounted amount under the Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 - It is the contention of petitioner that due to reasons beyond his control [Covid-19 pendemic], the petitioner could not avail the benefit under said scheme by depositing the said amount before the last date - HELD THAT:- The SVLDRS scheme is a complete code in itself. It is trite law that in tax jurisprudence, any provision relating to concession/discount/rebate are to be construed strictly and any doubt arising therefrom has to be decided in favour of the Revenue. In NOVOPAN INDIA LTD. VERSUS COLLECTOR OF C. EX. AND CUSTOMS, HYDERABAD [ 1994 (9) TMI 67 - SUPREME COURT ], the Apex Court held that a person, invoking an exception or exemption provisions, to relieve him of tax liability must establish clearly that he is covered by the said provisions and, in case of doubt or ambiguity, the benefit of it must go to the State. The extension of time is sought by the petitioner to deposit the discounted tax under the Scheme cannot be granted since it would violate the very essence and ethos of the Scheme - Petition disposed off.

  ---

• 2023 (4) TMI 770
  Levy of Service Tax - Franchise service or not - providing the service of promotion and marketing and distribution of various products of BSNL for which they were receiving the commission - HELD THAT:- The issue is no more res-intera in view of the judgement in the case of GOYAL AUTOMOBILES AND NAROTA RAM GOYAL SONS VERSUS COMMISSIONER OF CENTRAL EXCISE CHANDIGARH - II [ 2016 (2) TMI 725 - CESTAT NEW DELHI ] which was not challenged by the Revenue before the appellate authority. It was held in the said case that the commission paid to appellants is also included in the value on which tax has been collected from the customer. The customer is, consequently, the recipient of the full value of services from none other than M/s Bharat Sanchar Nigam Ltd; thus, it is no different from the other two products. BSNL has already deposited service tax on commission received by the appellant, which is clear from the certificate produced by them on record - appeal allowed.

  ---

• 2023 (4) TMI 769
  Levy of penalty u/s 77 and 78 of the Finance Act, 1994 - evasion of service tax - appellant collected service tax from the service receivers but failed to deposit the service tax amount so collected with the Government Treasury - case of appellant is that they were under severe financial crisis - HELD THAT:- Financial Crisis cannot be a reasonable cause for non-payment of service tax even though collected from the customers but not deposited with the Government. Also, the process of payment of collected service tax was commenced only after the Department initiated investigation and issued the demand notice to the appellant. The circumstances of financial difficulty in arranging the funds for payment of service tax collected and raising funds for the treatment of her daughter cannot be a ground to invoke Section 80 for setting aside the penalty imposed under Sections 77 and 78 of the Finance Act, 1994. Appeal dismissed.

  ---

• 2023 (4) TMI 768
  Classification of services - Management, Maintenance Repair Service - Board s circular No. B1/16/2007-TRU dated 22.5.2007 - appellant s first contention is that the department could not have charged service tax without first identifying which services were rendered and if they were taxable during the relevant period - HELD THAT:- When the appellant was asked for details of his business activity, he said that he did not have any ledger or balance sheets and that his invoices were destroyed. He, however, provided Form 26AS issued by the Income tax department. Since most of his clients were large, organized firms, they would deduct tax at source and issue Forms 16A with the income tax which shows how much amount has been paid and how much was deducted as tax. The data from these Forms is consolidated by the income tax system in Form 26AS. The Superintendent, then wrote to the clients and all but one provided Forms 16A which showed how much they had paid to the appellant. In this situation, when the appellant had not done anything which he was required to under service tax law, collected service tax of Rs. 15 lakhs from its clients and had not deposited it in the Government exchequer, had not provided the details of the services provided by him, claimed that the invoices were destroyed and that he had no balance sheet or ledger, the Superintendent did what could best be done based on the available information- viz., the Form 26AS provided by the appellant and the Forms 16A provided by the clients of the appellant. The appellant cannot now cry foul and claim that the department failed to classify the service. The second contention of the appellant is that some of the services rendered were in the nature of Works Contract Service and its claim for classification under Works Contract Service was rejected - It is found that this plea was taken by the appellant in respect of some contracts before the adjudicating authority. However, the adjudicating authority did not agree with this contention holding that unless VAT was paid on the goods which were transferred, it will not amount to Works Contract Service. There is no actual sale of goods but there is deemed sale of the goods which have been used while rendering the service. The deemed sale of the goods is exigible to VAT but it is not necessary that VAT has to be charged or must be chargeable in every such transaction. No VAT may be payable on some goods under the state laws but that does not convert the Works Contract Service into a pure service contract. Conversely, if no service tax is payable on the service portion of some types of works contracts, they do not automatically become contracts for sale of goods. The nature of the contract has to be examined and if it involves supply or deemed supply of goods and rendering service, it will be a Works Contract Service regardless of whether or not VAT or Service tax is payable. The appellant s contention that some of the contracts were Works Contracts must be examined by the original authority. The third main contention of the appellant is that no reason has been given for confirming demand after 1.7.2012. We find that all services were taxable from 1.7.2012 except those that fall in the negative list. If the appellant can show that its service fall under the negative list, it will be eligible to the exemption and not otherwise. Matter remanded to the original authority to re-adjudicate the case as follows. a) Any amounts collected by the appellant as representing service tax must be deposited in the Government exchequer whether or not the services which were rendered were actually exigible to service tax. b) The appellant s services may be classified as far as possible based on the work orders, invoices or other information which the appellant may provide. To the extent they are not provided, the adjudicating authority should exercise his/her best judgment.

  ---

• 2023 (4) TMI 767
  Refund of unutilized accumulated CENVAT Credit - export of services - Service Tax paid on Event Management Service - Service Tax paid on Renting of Immovable Property - deficiency memo issued but there was no issue of show cause notice for rejection of refund - reason for rejection was that the premises in respect of which the rent was paid was not included in the Service Tax registration by the appellant. HELD THAT:- It is now settled law that unless CENVAT Credit availed by the appellant has not been recovered by way of issue of show cause notice invoking Rule 14 of CENVAT Credit Rules, 2004, the CENVAT Credit available on the books of account cannot be rejected when it is accumulated on account of export of Service. In the present case, it is found that above stated amounts of CENVAT Credit was not disallowed by way of invoking Rule 14 of CENVAT Credit Rules, 2004 and therefore, the said amounts are available in the account of the appellant. Since the CENVAT Credit is available on the accounts of the appellant, the refund of the same could not be rejected. The impugned order is set aside to the extent of rejection of refund of CENVAT Credit respectively to the tune of Rs. 5,97,465/- and Rs. 6,17,759/- and the original authority is directed to allow the refund of the same. Appeals allowed.

  ---

• Central Excise

• 2023 (4) TMI 766
  Constitutional Validity of Rule 8(3A) read with Rule 8(1) and Rule 8(3) of Central Excise Rules, 2002 - default in payment of Central Excise Duty - It is the submission in the grounds of appeal that the Commissioner should have appreciated that the provisions of Rule 8(3A) would apply only till the date the assessee pays the outstanding amount including the interest thereon - HELD THAT:- The issue is no more res integra and is squarely covered by the judgement of the Hon ble Calcutta High Court in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS [ 2017 (8) TMI 1515 - CALCUTTA HIGH COURT ], wherein it is categorically held that when Rule 8 (3A) is declared ultra vires by the different High Courts then the Revenue cannot take a different stand contrary to the said judgements. The Hon ble Court further declared Rule 8(3A) as invalid which is not stayed by the Hon ble Supreme Court. The Hon ble Gujarat High Court in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT ] has declared the words without utilizing Cenvat Credit under Rule 8(3A) as ultra vires which means that the assessee can discharge duty by utilizing Cenvat Credit which is what exactly has been done in the instant case by the Appellant. The said judgment has been followed by the Hon ble Calcutta High Court in the case of Goyal MG Gases Pvt. Ltd. v. UOI which is not stayed by the Hon ble Supreme Court. The Hon ble Calcutta High Court in the said case, has declared the provisions of Rule 8(3A) ibid as invalid and further has held that the Revenue cannot take a different stand and parity has to be extended to the assessee - the demand in the instant case has been raised for contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court, hence the demand cannot be sustained. Appeal allowed.

  ---

• 2023 (4) TMI 765
  Valuation for calculation of Excise Duty - cost of corrugated boxes (packing material) supplied free of cost by the buyers to the appellant is includible in the transaction value of the metal containers manufactured and supplied by the appellant for the purpose of payment of central excise duty, or not - applicability of Clause (a) of Sub-section (1) of Section 4 of the Central Excise Act - HELD THAT:- The matter is no longer res-integra as this tribunal in the appellant s own case M/S. KAIRA CAN COMPANY LTD VERSUS C.C.E S. T- AHMEDABAD-III [ 2019 (12) TMI 114 - CESTAT AHMEDABAD ] has already decided the issue against them and has held that the cost of free supplied corrugated boxes need to be included into the assessable value of the metal containers for the purpose of payment of Central Excise duty. The demand on merit is sustainable - appeal dismissed.

  ---

• 2023 (4) TMI 764
  Clandestine Removal - Loss of quantity due to temperature variation - Difference in the quantity of petroleum products that has been despatched from the refinery and the quantity received at the terminal at Muttam - demand of duty on the pipeline quantity of Naphtha - HELD THAT:- It is an undisputable fact that there may be loss in quantity during the transportation of the petroleum products from the refinery to the terminals. Such variation in the quantity may occur due to variation in temperature, the dip method of measuring etc. Some times, there may be some excess quantity of petroleum product which is still in the pipeline and will result in showing excess quantity received at the terminal at Muttom. For these reasons, there has been confusion in the field as to the calculation of duty on the petroleum products which are cleared from the refinery and transported to the terminals of the Oil Marketing Companies. The demand is raised only because of the difference in quantity when the petroleum products are despatched from the refinery and after it is received at the terminals at Muttam. There is no allegation of clandestine removal. It can be reasonably perceived that loss of the quantity is due to temperature variation, the variation caused in dip method of measurements etc. As the goods are petroleum products, which are volatile in nature, some times there may be loss in quantity at the time of receipt at terminal. Likewise, there may be receipt of excess quantity reaching the terminal as some quantity may be retained in the pipeline. After considering these situations, based on the C AG Report, the department has issued clarification that net quantity after adjusting the gain and loss has to be taken for demand of duty. Demand of duty on the pipeline quantity of Naphtha - HELD THAT:- According to the department, the quantity that is retained in the pipeline has to be construed a goods already cleared from the refinery and therefore the appellant is liable to duty. The Ld. Counsel for appellant has submitted that they maintain some quantity of Naphtha in the pipeline to facilitate transportation of Naphtha upto the port which cannot be considered as quantity cleared from the refinery. It is seen that the appellant has paid duty much before issuance of the show cause notice and therefore the department ought not to have imposed penalty. The issues are interpretational in nature. A clarification had to be issued by the department as to the method for demand of duty on petroleum products. In regard to the issue of demand of duty on the pipeline quantity of Naphtha, the appellant has paid the duty at the earliest. Taking note of these facts, it is concluded that penalties imposed on account of both the issues are unwarranted and requires to be set aside. The matter is remanded to the original authority who is directed to re-quantify the duty demand on the basis of the clarification issued by the Department dated 14.02.2014. The penalty imposed are entirely set aside - Appeal allowed in part and part matter on remand.

  ---

• 2023 (4) TMI 763
  Reversal of CENVAT Credit - works contract service under Composition Scheme - non-availment of cenvat credit in respect of any inputs used in relation to the said works contract service - payment of VAT to the state government on a deemed sale value of the goods - HELD THAT:- The show cause notice proposing demand of cenvat credit attributed to the value of deemed sale of goods involved in composite Works Contract service provided by the respondent on the pretext that the said portion of sale of goods is deemed exempted service therefore, the common input service used in service portion as well as sale of the goods would disentitle the cenvat credit of input service to deny proportionate cenvat credit attributed to the sale of goods. The respondent are not involved in two separate activity of providing Works Contract Service and sale of goods. Respondent have provided a composite Works Contract Service, in the provision for taxation of Works Contract Service under the Finance Act, 1994 a special mechanism was provided by the legislator under Works Contract (composition scheme for payment of service tax) Rules, 2007 and the valuation of the same was provided under Rule 2A of Service Tax (Determination of Value) Rules, 2006. Valuation for the purpose of payment of VAT - HELD THAT:- It is a deemed fiction which does not represent the exact value of the goods moreover, when there is a composite contract between service provider and service recipient, the service recipient is not concerned with the proportion of the material used in the works contract whereas, he is only concerned with the overall project to be executed as per the terms and conditions of the contract between the service provider and the recipient. There is no separate activity of sale of goods involved, it is only for the purpose of VAT portion of the total value of the project under Works Contract as determined as deemed sale of goods. In fact, no separate sale of goods is involved, no separate invoice of goods is made therefore, infact no sale of goods is involved in the execution of the overall project under Works Contract Service. This is simpliciter case of a particular service on which there is a concessional rate of service tax is prescribed subject to certain conditions - Rule 6(3A) is applicable only in such cases where one particular activity either service as a whole or sale of goods as whole is involved apart from independent taxable service/dutiable goods. Here, there are no two activities i.e. exemption service as well as taxable service which involve therefore, in the present case Rule 6(3A) cannot be made applicable. The order does not suffer from any infirmity - Appeal of Revenue dismissed.

  ---

• 2023 (4) TMI 762
  Utilisation of cenvat credit on account of Education Cess and SHE Cess paid through DEPB scrips towards payment of central excise duty in terms of Rule 3(7)(b) of Cenvat Credit Rules, 2004 - HELD THAT:- Similar issue decided in the appellant s own case Hindustan Zinc Ltd. [[ 2016 (7) TMI 1612 - CESTAT NEW DELHI] ] for the subsequent period where it was held that Since the entire disputed amount was reflected under the CVD head in the Bill of Entry, taking of Cenvat Credit of such amount is in conformity with Rule 3 read with Rule 9 of the Cenvat Credit Rules. Further, I also find that the Notification no.89/2005-Cus dated 04.10.2005 has specifically permitted an importer to avail Cenvat Credit of additional duty leviable under Section 3 of the Customs Tariff Act against the amount debited in the Duty Entitlement Passbook Script. Since, no provisions of the Cenvat Statute have been contravened in this case, I am of the view that taking of disputed Cenvat Credit by the appellant is proper and justified. Since the issue involved herein is no more res integra in view of the aforesaid decision, therefore, the appeals filed by the appellant are allowed.

  ---

• CST, VAT & Sales Tax

• 2023 (4) TMI 761
  Waiver of penalty and interest levied under subsection (6) of Section 45 of the Gujarat Sales Tax Act, 1969 - classification of services - contract of coating of pipes - civil works contract or not - case of Revenue is that the composition amount is payable not at the rate of 2% as deposited by the respondent but it falls under Residuary Entry8 to the notification dated 18.10.1993. The High Court has set aside the penalty and interest on the ground that the assessee was under the bonafide opinion and following the advice, paid the tax at 2% and that thereafter, when the enhanced tax as imposed has already been paid by the assessee, the penalty and interest is not required to be paid by the assessee. HELD THAT:- On a fair reading of Section 45 of Gujarat Sales Tax Act, 1969, it can be seen that as per subsection (2) of Section 45 of the Act, 1969, penalty is leviable if it appears to the Commissioner that a dealer has concealed the particulars of any transaction or deliberately furnished inaccurate particulars of any transaction liable to tax. In the present case, it cannot be said that the dealer has concealed the particulars of any transaction or deliberately furnished inaccurate particulars of any transaction liable to tax. However, in so far as penalty leviable under subsection (6) of Section 45 of the Act, 1969 is concerned, the penalty leviable under the said provision is as such, a statutory penalty and there is no discretion vested with the Commissioner as to whether to levy the penalty leviable under subsection (6) of Section 45 of the Act, 1969 or not. Subsection (5) of Section 45 provides that in the case of a dealer where the amount of tax assessed for any period under sections 41 or 50 or reassessed for any period under Section 45 exceeds the amount of tax already paid by the dealer in respect of such period by more than 25% of the amount of tax so paid, the dealer shall be deemed to have failed to pay the tax to the extent of difference between amount so assessed or reassessed as aforesaid and the amount paid - Considering subsection (5) of Section 45 of the Act, 1969, if a dealer is deemed to have failed to pay the tax to the extent mentioned in subsection (5), there shall be levied on such dealer a penalty not exceeding one and onehalf times the difference referred to in subsection (5). Under the circumstances, to the aforesaid extent and on the difference of tax, as per subsection (5) of Section 45, the respondent assessee dealer shall be liable to pay the penalty as mentioned under subsection (6) of Section 45. On a bare reading of subsections (5) and (6) of Section 45, it is evident that it is integral part of the assessment that the penalty be levied on the difference of amount of tax paid and amount of tax payable as per the order of assessment or reassessment as the case may and the same shall be automatic. Therefore, when the penalty on the difference of amount of tax paid and tax payable is more than 25% of the amount of tax so paid, there shall be automatic levy of penalty under Section 45(6) of the Act. The Gujarat High Court while considering the very provision and penalty and interest imposed under Section 45(6) and Section 47(4A) of the Act, 1969, has taken a consistent view in the cases of Riddhi Siddhi Gluco Biols Ltd. [ 2017 (4) TMI 309 - GUJARAT HIGH COURT ] and Oil and Natural Gas Corporation Limited [ 2016 (4) TMI 94 - GUJARAT HIGH COURT ] that the penalty leviable under Section 45(6) of the Act is a statutory and mandatory penalty and there is no question of any mens rea on the part of the assessee to be considered. In the aforesaid decisions, it is observed and held that levy of penalty is automatic on the eventualities occurring under subsection (5) of Section 45 of the Act, 1969. On strict interpretation of Section 45 and Section 47 of the Act, 1969, the only conclusion would be that the penalty and interest leviable under Section 45 and 47(4A) of the Act, 1969 are statutory and mandatory and there is no discretion vested in the Commissioner/Assessing Officer to levy or not to levy the penalty and interest other than as mentioned in Section 45(6) and Section 47 of the Act, 1969. It is needless to observe that such an interpretation has been made having regard to the tenor of Sections 45 and 47 of the Act, 1969 and the language used therein. The impugned judgment and order passed by the High Court on the grounds that the amount of tax has already been paid by the assessee dealer; that the assessee dealer was under the bonafide belief that it was liable to pay the tax at the rate of 2%, is unsustainable. The impugned judgment and order passed by the High court is hereby quashed and set aside - Appeal allowed.

  ---

• 2023 (4) TMI 760
  Suppression of sales or not - peas - confirmation of order based on conjectures and surmises - doubt and suspicion - Levy of penalty - satisfaction of the Assessing Officer that the escapement of tax was without reasonable cause - Section 43(2) of the Odisha Value Added Tax Act, 2004. HELD THAT:- The discretionary exercise of power amounts to something that is not compulsory, but it is left to the discretion of the person or authority involved, such as a discretionary grant. It is opposite to mandatory . Therefore, discretionary is a term which involves an alternative power, i.e., a power to do or refrain from doing a certain thing. In other words, it would be power of free decision or choice within certain legal bounds - The significant words employed in Section 43(2) of the OVAT Act are he may direct the dealer to pay, by way of penalty . The language itself gives clear indication of application of discretion. Discretion, as it appears from generic sense, may be unrestricted, but in its application it demands certain rule of law to be followed and reposes conduct and application of mind, testing whether the delegates of it acted rationally, fairly without fear and favour taking all relevant fact and material considerations. Discretion conferred, if unqualified and untrammelled, it has to be exercised sparingly with abundant caution when facts and circumstances warrant. Such being conceptual understanding of the term discretion based on well-settled dicta of different Courts and its application to fact-situation of given case, considering the present case in the said perspective, it seems that the learned Odisha Sales Tribunal, while considering certain allegations out of eight categories as reflected in the Assessment Order based on the contents of Fraud Case Report as unsustainable but for two, failed to apply its judicial discretion while imposing penalty by invoking powers under Section 43(2) of the OVAT Act. Discretion as applied by the Tribunal should have been supported by independent reason for exercise of said power. In the case at hand, the learned Odisha Sales Tax Tribunal after computing the tax effect on establishing suppression of turnover to the tune of Rs. 6,00,332/-, as if there is absence of discretion in invoking power under Section 43(2) and construing the provision as mandatory in every circumstance, without discussing anything more, simply imposed penalty equal to twice the amount of tax so determined. Such exercise of power, in the opinion of this Court, is arbitrary, illogical and indicative of non-application of mind. Since penalty is a statutory liability and is substantive in nature, the provisions for imposition thereof are to be strictly construed. It is, therefore, pertinent to put forth the well-accepted principle with regard to strict interpretation. In a taxing statute one has to look at what is clearly said. There is no equity about a tax. There is no intendment. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly on the language used. If the meaning of the provision is reasonably clear, Courts have no jurisdiction to mitigate harshness. A Court of law, has nothing to do with the reasonableness or unreasonableness of a provision of a statute except so far as it may hold it in interpreting what the Legislature has said - The Court is to ascribe the natural and ordinary meaning to the words used by the Legislature and the Court ought not, under any circumstances, to substitute its own impression and ideas in place of the legislative intent as is available from a plain reading of the statutory provisions. Section 43(2) of the OVAT Act specifically requires satisfaction of the Assessing Authority to be recorded while proceeding to exercise said power to impose penalty. The authority has to determine whether a penalty should be imposed and if it decides to impose a penalty the extent of the penalty liable to be imposed has been fixed in the statutory provision under Section 43(2) of the OVAT Act - Sri Rudra Prasad Kar, learned counsel for the petitioner laid stress upon the fact that the learned Tribunal accepted the explanation proffered by the petitioner with respect to 29 written pages contained in small note book which related to transactions procured through brokers and held that the allegation in the Fraud Case Report is not established - Agreeing with the contention of the learned counsel for the petitioner, there is no warrant for imposition of penalty under Section 43(2) of the OVAT Act. Since this Court held that there is little scope in interfering with the factual adjudication made by the learned Odisha Sales Tax Tribunal, Cuttack, question Nos. I, II and III are answered against the petitioner-assessee and in favour of the Revenue-opposite party. So far as question No. IV is concerned, this Court, having noticed infirmity in exercise of power and improper use of discretion to impose of penalty under Section 43(2) of the OVAT Act by the learned Odisha Sales Tax Tribunal, answers said question in the affirmative, i.e., in favour of the assessee-dealer and against the opposite party- Revenue. The sales tax revision petition is disposed off.

  ---

• 2023 (4) TMI 759
  Validity of assessment order - benefit of C-forms denied - framing of default assessment on the basis that the C Forms relied upon by the petitioner, were subsequently cancelled by the Rajasthan Tax Authority - whether respondent No. 3 is justified in denying the benefit of C Forms to the petitioner that were issued by the Rajasthan Tax Authorities at the instance of the selling dealer located in the said State? - HELD THAT:- Undisputedly, the selling dealer who had furnished the C Forms was registered with the Rajasthan Tax Authorities in respect of the goods purchased by the petitioner at the material time. In the present case, there is no dispute that the purchasing dealer was duly registered with the Rajasthan Tax Authorities in respect of the goods sold by the petitioner. There is also no dispute that the C Forms are genuine and had been issued by the concerned authority at the material time - the benefit of the C Forms cannot be denied to the petitioner. It is necessary to bear in mind that C Forms are an integral part of the consideration received by the selling dealer. The commercial bargain struck by dealers factors in the value of these forms. The effect of denying the benefit of the C Forms would amount to rewriting a commercial transaction that has been consummated. The cancellation of C Forms at a subsequent date would have a disruptive effect on the stream of commercial transactions, which is impermissible - the benefit of C Forms, on the ground that they have subsequently been cancelled, is not sustainable. Petition allowed.

  ---

• Indian Laws

• 2023 (4) TMI 758
  Seeking to vacate the status quo granted by the tribunal - seeking further to vacate the rights of the SLP petitioner with respect to the disputed project - HELD THAT:- In the present case at hand, the reliefs sought by the applicant through the present applications are issues that are already pending adjudication before the Arbitral Tribunal, and no award has been passed regarding the same as of now. The provisions of the Arbitration and Conciliation Act,1996, as well as a catena of judicial pronouncements of this Court have time and again stated that the courts normally ought not interfere with arbitral proceedings, especially till the time an award is not passed. This practice of filing applications in disposed of SLPs in order to side-step the arbitration process should be discouraged, and such applications must not be entertained by this Court - Application allowed.

  ---

• 2023 (4) TMI 757
  Validity of provisions of amended Rule 3 of the E-filing Rules - seeking direction to the DRTs and DRATs across the country to continue with hybrid filing of pleadings and applications before them - HELD THAT:- There can be no gainsaying the fact that e-filing provides transparency and efficiency in the administration of justice. E-filing provides for 24x7 access to the court system and, in fact, facilitates the convenience of lawyers as well as litigants. With the march of technology, it would be too late in the day to postulate that e-filing should not be adopted. As a matter of fact, the decision to take up e-filing must be replicated by other tribunals and courts in the country, including the High Courts in a phased manner and that it eventually becomes mandatory. The Court cannot be unmindful of the fact that there is a digital divide in the country and not all citizens have access to the internet or the facilities required for the effective use of technology. Technology is an enabler and a facilitator. Hence, no segment of the citizens should be left behind in the adoption of technology, least of all, in terms of access to justice - the grievance which has been portrayed in this proceeding can be addressed at two levels. Firstly, we would permit the Bar Associations representing the collective voice of the lawyers in the DRTs/DRATs to submit their representations to the Department of Financial Services if any specific difficulties are encountered in the process of e-filing. The National Informatics Centre (NIC), which has put into place the e-filing facilities for the DRTs/DRATs, has also been facilitating the same exercise in the judicial system. NIC is equipped with a robust team of officials. The Director General of NIC shall constitute a team to monitor the progress of e-filing in the DRTs/DRATs so that any difficulties which are encountered can be suitably addressed on a real time basis. The e-filing module must be upgraded with periodical developments. Help desks which have been set up at the DRTs/DRATs - HELD THAT:- The representations by the Bar Associations on specific difficulties faced in the process of e-filing, and the reports prepared by the Chairpersons of the DRATs and the Presiding Officers of the DRTs should be cognizant of digital exclusion on the basis of gender, while submitting their respective representations/ reports. The help desks can consider providing a dedicated portal to address the grievances of female litigants - There is no reason to postulate that there is a gender divide in one s inherent ability to use technology. The exercise which has been directed to be carried out in the above terms should be completed within a period of three months from the date of this order. This would not preclude the Department of Financial Services from making such further arrangements as are found necessary to deal with an emergent situation in any of the DRTs/DRATs in various parts of the country. In a country as diverse like India, a one-size-fits approach cannot be adopted in all circumstances and situational modifications can be suitably adopted according to exigencies. Petition disposed off.

  ---

• 2023 (4) TMI 756
  Dishonour of Cheque - legally recoverable debt or not - rebuttal of presumption - perjury against the complainant for interpolation in the cheque - HELD THAT:- The cheque in question was issued towards discharge of existing liability and the transaction is not hit by the provisions of the Bombay Money Lenders Act, 1946. There are compliances about proving reason for dishonour as not arranged for , issuing notice in time, receipt of notice and failure to make payment. There are two witnesses from the bank, one is Pradeep Vaidya, from Syndicate Bank, who is banker of the complainant and another is Atul Jadhav from Thane Janta Sahakari Bank on whom the cheque was drawn. So the complainant has satisfied all ingredients for the offence punishable under section 138 of the NI Act. He has proved commission of offence by accused - accused is liable to be dealt with as per law. The trial Court has sentenced the accused to undergo rigorous imprisonment for six months and to pay fine of Rs.5,000/- - Section 138 of NI Act gives various options, either there may be imprisonment or there may be fine being twice the amount of cheque or both. In this case, the accused can be sentenced to fine of double the amount of cheque which comes, to Rs. 8,00,000/- out of that compensation can be paid to the Appellant. Appeal allowed.

  ---