TMI Tax Updates - e-Newsletter
April 21, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Service Tax Indian Laws

TMI Short Notes

1. Patent Royalty Deduction Scheme to Boost Innovation and R&D in India : Clause 152 of the Income Tax Bill, 2025 Vs. Section 80RRB of the Income-tax Act, 1961

  Bills:

2. Incentivize and support authors by providing a tax deduction on royalty and copyright income : Clause 151 of the Income Tax Bill, 2025 Vs. Section 80QQA of the Income-tax Act, 1961

  Bills:

3. Tax Incentives for Strengthening Agricultural Producer Companies : Clause 150 of Income Tax Bill, 2025 Vs. Section 80PA of the Income-tax Act, 1961

  Bills:

4. A Contemporary Recasting of Section 80P for Strengthening the Co-operative Sector : Clause 149 of the Income Tax Bill, 2025 Vs. Section 80P of the Income-tax Act, 1961

  Bills:

Articles

1. Why LLPs Can’t Skip Annual Return Filing – Even with No Business?

   By: Ishita Ramani

2. LIABILITY FOR FAILURE TO REALISE AND REPATRIATE EXPORT PROCEEDINGS UNDER SECTION 7 AND 8 OF ‘FEMA’

   By: DR.MARIAPPAN GOVINDARAJAN

3. Detailed Analysis of the Rescinding of Circular No. 29/2020-Customs and its Impact on Trade Between India and Bangladesh

   By: YAGAY andSUN

4. Food Recall in India: Overview and FSSAI Guidelines

   By: YAGAY andSUN

5. FSSAI: Heavy Metals and Food Safety{Consumer Education/Awareness/Protection}

   By: YAGAY andSUN

6. Calcium Carbide or Ripening Masala Used in Fruits – Toxicity and Health Risks{Food Safety; Consumer Protection/Education/Awareness}

   By: YAGAY andSUN

7. HOW TO READ FOOD LABELS: “CHOOSE HEALTHY AND STAY HEALTHY”{FSSAI - Consumer awareness/education/protection}

   By: YAGAY andSUN

8. Project Exports Promotion Council of India (PEPC)

   By: YAGAY andSUN

9. Council of Leather Exports (CLE)

   By: YAGAY andSUN

10. Coir Board: (Introduction, Constitution, Legal Framework, Functions, Schemes, Products, Services, Membership).

   By: YAGAY andSUN

News

1. Claims that Government is considering levying Goods and Services Tax (GST) on UPI transactions over ₹2,000 are completely false, misleading, and without any basis

2. Data Users Conference on insights of latest survey results and key initiatives in macro-economic indicators

3. Agricultural and Processed Food Products Export Development Authority (APEDA) facilitates First Commercial Sea shipment of Indian pomegranates from Maharashtra to USA

4. IMEC 'one of the greatest economic integration, connectivity projects of this century,' says US-Italy joint statement

Highlights / Catch Notes

GST

• CBIC Introduces Streamlined GST Registration Process with Clear Verification Guidelines and Standardized Timelines

  Circulars : The CBIC issued comprehensive instructions for processing GST registration applications, establishing clear guidelines for tax officers to streamline and standardize the verification process. Key directives include: (a) accepting one documentary proof for principal place of business ownership, (b) restricting additional document requests, (c) mandating registration approval within 7-30 days depending on risk assessment, and (d) prohibiting presumptive queries unrelated to submitted documents. Officers must carefully scrutinize applications, avoid unnecessary delays, and ensure genuine applicants are not harassed while preventing fraudulent registrations. The instructions aim to create a transparent, efficient GST registration mechanism with defined timelines and reduced administrative discretion.
  Visit to Get Source

  ---

• E-way Bill Violation: Invalid Documentation Leads to Penalty Confirmation for Goods Transportation Under GST Regulations

  Case-Laws - HC : HC upheld the penalty order for non-compliance with e-way bill requirements under the Uttar Pradesh GST Act, 2017. The goods were intercepted on 19.01.2023 with invalid e-way bills: one bill was for a different vehicle than declared, and the other had expired prior to transportation. The Court followed precedential rulings establishing that absence of a valid e-way bill creates a rebuttable presumption of tax evasion. The petitioner failed to provide sufficient evidence to rebut this presumption. Consequently, the Court dismissed the petition, affirming the mandatory nature of e-way bill compliance post-01.04.2018 and sustaining the imposed penalty.
  Visit to Get Source

  ---

• Universities Exempt from GST on Affiliation Fees as Non-Commercial Regulatory Activities Under Section 7 of CGST Act

  Case-Laws - HC : HC adjudicated the jurisdictional dispute regarding GST levy on university affiliation fees. The court determined that university's statutory affiliation activities do not constitute a commercial transaction under Section 7 of CGST Act. Fees collected for affiliation, PG registration, and convocation are regulatory in nature, lacking commercial intent, and therefore not amenable to GST. The court found no jurisdictional basis for the show cause notice, emphasizing that the university's primary educational function precludes treating incidental transactions as business activities. Consequently, the HC allowed the petition, invalidating the proposed GST demand on the university's regulatory fees.
  Visit to Get Source

  ---

• Taxpayer Wins Challenge to Input Tax Credit Denial, Court Orders Comprehensive Review of Transaction Evidence Under Section 16(2)(b)

  Case-Laws - HC : HC allowed the petitioner's challenge to the rejection of ITC claim, finding a procedural error in the original orders. The court determined that physical movement of goods is not the sole criterion for ITC eligibility. The matter was remanded to the Deputy Commissioner to re-examine the case, specifically focusing on verifying the memorandum of understanding between the dealer and supplier, and assessing the documentation related to goods delivery. The court directed a fresh review of the ITC claim under Section 16(2)(b) of CGST Act, emphasizing the need for comprehensive examination of transaction details and supporting evidence.
  Visit to Get Source

  ---

• Accused in Fraudulent ITC Case Secures Conditional Bail Following Comprehensive Investigation Review and Preliminary Allegations Assessment

  Case-Laws - HC : HC grants bail to accused in fraudulent ITC case after considering investigation completion, potential five-year maximum sentence, and pending trial. The court recognized the applicant's ongoing incarceration and noted that the specific role in creating fake firms remains an evidentiary matter. Bail was conditionally granted, acknowledging the preliminary nature of allegations and the absence of trial commencement. The decision reflects a balanced approach to pre-trial detention, prioritizing the applicant's liberty while maintaining judicial oversight through prescribed bail conditions.
  Visit to Get Source

  ---

• High Court Rules Physical Tax Invoice Essential for Goods Transport Under WB GST Rules, Electronic Display Insufficient for Statutory Compliance

  Case-Laws - HC : HC held that under West Bengal GST Rules, 2017, a physical tax invoice is mandatory during goods transportation. While electronic display was attempted, it did not constitute statutory compliance with Rule 138A(1)(a). The court noted no evidence of tax evasion intent and referenced prior precedent in Ashok Sharma case. Critically, the revenue authority did not dispute tax invoice authenticity or allege tax payment default. Consequently, the court set aside the penalty order, finding Section 129 invocation unjustified without demonstrable tax evasion intention. The appellate authority's order affirming the original penalty was quashed, and the petitioner was deemed entitled to penalty refund.
  Visit to Get Source

  ---

• Renting Property to Social Justice Department for Girls' Hostel Qualifies as Exempt Service Under GST Notification 12/2017

  Case-Laws - AAR : The AAR determined that renting immovable property to the Social Justice and Special Assistance Department for a girls' hostel constitutes an exempt service under GST. The service falls within constitutional functions related to Panchayat (Article 243G) and Municipality (Article 243W) provisions. Since the activity involves residential accommodation for backward class girls, it qualifies for tax exemption as per Notification No. 12/2017-Central Tax (Rate). The service is considered a pure service without goods supply, and therefore, is completely exempt from GST levy.
  Visit to Get Source

  ---

• Employee Service Recoveries Taxable Under GST: Canteen and Transport Charges Subject to Specific Rate Structures

  Case-Laws - AAR : The AAR ruled that recoveries from employees for canteen and transportation services are taxable under GST laws. Transportation services fall under SAC 9964, taxable at 5% without ITC or 12% with ITC. The taxable value is limited to the actual amount recovered from employees, with the perquisite portion considered non-taxable. Notice pay recoveries for premature employment termination are not considered taxable, as they are penalties designed to discourage non-serious employment candidates. The ruling clarifies the tax treatment of various employee-related recoveries, emphasizing the distinction between recoveries, perquisites, and penalty payments.
  Visit to Get Source

  ---

• Employee Canteen and Transportation Services Trigger Complex GST Implications for Salary Deductions and Benefit Provisions

  Case-Laws - AAR : The AAR ruled that deductions from employee salaries for factory canteen services constitute a taxable supply under Section 7 of CGST Act, 2017. Recoveries from employees are liable for GST as consideration for canteen services. ITC is not available for catering services under Section 17(5)(b). Regarding transportation services, the AAR determined that employee bus transportation provided as a contractual perquisite is not a GST supply. ITC is also disallowed for transportation services under Section 17(5)(g), as these are considered personal consumption services not mandated by statutory obligations. The decision effectively distinguishes between taxable and non-taxable employee benefits within the GST framework.
  Visit to Get Source

  ---

• Geo Membrane Water-Proof Lining Classified as Technical Textile Under Tariff Item 59111000 with 12% GST Rate

  Case-Laws - AAR : AAR held that Geo Membrane for Water Proof Lining-Type-II is classifiable under Tariff Item 59111000, a textile article laminated with plastic used for technical purposes. The product comprises HDPE woven fabrics manufactured with specific weaving patterns to create water-impermeable characteristics. Despite involving plastic components, the item does not fall under Chapter 39's residuary entries but is specifically classified under Chapter 59. Consequently, the product attracts 12% GST rate, recognizing its technical textile nature and specialized manufacturing process involving precise weaving and lamination techniques.
  Visit to Get Source

  ---

• Land Rights Transfer Triggers 18% GST, Covering Leasehold, Buildings, and Infrastructure Under Comprehensive Service Classification

  Case-Laws - AAR : The AAR held that: (i) assignment of leasehold land rights constitutes a taxable service under GST Laws, classifiable as "Other miscellaneous service" (SAC 999792) and taxable at 18%; (ii) transfer of building does not qualify as a separate goods or services transaction, but is part of leasehold rights assignment, also taxable at 18%; and (iii) sale of plant and machinery qualifies as goods supply, with GST applicable based on input tax credit rules or agreed price, subject to Section 18(6) of CGST Act. The ruling emphasizes that leasehold rights transfer, including associated buildings and infrastructure, is a comprehensive service subject to GST taxation.
  Visit to Get Source

  ---

Income Tax

• Zero Coupon Infrastructure Bonds: HUDCO's Rs. 5,000 Crore Investment Strategy for Self-Sustaining Project Development by 2027

  Notifications : The GoI notification specifies a ten-year zero coupon bond issued by Housing and Urban Development Corporation Ltd. with a total maturity value of Rs. 5,000 crores and a discount of Rs. 2,351.49 crores. The bond will be issued before 31 March 2027, with five lakhs bonds to be released. The proceeds are mandated exclusively for infrastructure projects that can self-service debt without relying on state government support. The notification is issued under section 2(48) of the Income-tax Act, 1961, defining infrastructure as per the updated Harmonised Master List of Infrastructure sub-sectors, with specific conditions for project qualification and utilization of bond proceeds.
  Visit to Get Source

  ---

• Government Approves KIMS Foundation as Scientific Research Institution, Granting Tax Benefits Under Section 35(1)(ii)

  Notifications : The Central Government, exercising powers under Section 35(1)(ii) of the Income-tax Act, 1961, approves KIMS Foundation and Research Centre, Hyderabad as an "Other Institution" under the "University, College or Other Institution" category for Scientific Research. The notification applies retrospectively from the Previous Year 2025-26, covering Assessment Years 2026-27 to 2030-31, with no adverse impact on any party. The approval enables tax benefits for scientific research activities conducted by the institution.
  Visit to Get Source

  ---

• Income Tax Assessment Remanded: Comprehensive Re-examination Ordered with Detailed Verification and Fair Hearing Mandate

  Case-Laws - AT : ITAT remanded the matter to Assessing Officer (AO) for comprehensive re-examination of income tax assessment under Section 56(2)(ix). The tribunal directed AO to conduct a detailed verification of submitted documents, provide fair hearing to the assessee, and assess correct taxable income after carefully examining evidence. The appellate proceedings were disposed of statistically, mandating the assessee to cooperate during reassessment and avoid frivolous adjournments. The key directive emphasizes procedural fairness and substantive evaluation of factual claims before final income determination.
  Visit to Get Source

  ---

• Tax Probe Reveals No Evidence of Evasion, Petitioner Granted Access to Investigation Report Within Two Weeks

  Case-Laws - HC : HC analyzed a Tax Evasion Petition regarding income tax investigation, finding no substantive evidence of tax evasion. The court determined that the investigation report was not confidential and ordered its disclosure to the petitioner. The HC dismissed the application but directed the Income Tax Department to provide a copy of the 29.08.2024 report within two weeks, with the petitioner permitted to obtain a certified copy from the court if the department fails to comply. The investigation revealed no significant discrepancies in the petitioner's income tax returns, and the contact details associated with the returns were linked to both the petitioner and her spouse.
  Visit to Get Source

  ---

• Taxpayer's Genuine Unawareness Justifies 161-Day Appeal Delay, Substantial Cause Recognized Under Procedural Fairness Principles

  Case-Laws - HC : HC condoned a 161-day delay in filing an appeal before ITAT, finding substantial cause in the appellant's unawareness of the CIT(Appeals) order uploaded on ITBA portal. Following SC guidance in Vidya Shankar Jaiswal, the court adopted a justice-oriented approach, noting the Revenue's failure to contest the appellant's explanation. The delay was deemed excusable, and the matter was remitted to ITAT for merits-based adjudication, emphasizing procedural fairness and substantial justice over strict technical compliance.
  Visit to Get Source

  ---

• International Transaction and Charitable Donation Scrutinized: SBLC Pricing Adjusted and 80G Deduction Conditionally Allowed

  Case-Laws - AT : ITAT adjudicated two primary issues: (1) International transaction involving Standby Letter of Credit (SBLC) and (2) Deduction under Section 80G for charitable donation. In the SBLC matter, the Tribunal held that issuance of SBLC to Associated Enterprise can be subject to Arm's Length Price (ALP) tests, directing Assessing Officer to consider 0.5% rate instead of 1.3%. Regarding donation, the Tribunal restored the matter to Assessing Officer, providing opportunity to re-examine the receipt's authenticity and accounting period, with liberty to allow Section 80G deduction if the assessee satisfactorily demonstrates the trust's proper accounting of the donated funds.
  Visit to Get Source

  ---

• Taxpayer Wins Appeal: Capital Gains Calculation Overturned, Original Tax Treatment Preserved for Property Sale Transaction

  Case-Laws - AT : ITAT adjudicated a dispute regarding capital gains taxation for property sale. The tribunal found the Assessing Officer's (AO) determination of short-term capital gains incorrect, particularly concerning the holding period computation and classification of property acquisition. The key holding affirmed the assessee's position that the property sale transaction, previously declared in AY 2010-11 and accepted by the department, should not be re-characterized as short-term capital gains. The tribunal ruled in favor of the assessee, allowing the appeal and rejecting the AO's assessment that attempted to reclassify the gain without valid justification, thereby preserving the original tax treatment of the property transaction.
  Visit to Get Source

  ---

• Charitable Trust Wins Tax Exemption Battle as Tribunal Rejects Revenue's Challenge to Valid 12AA Registration

  Case-Laws - AT : ITAT held that the AO exceeded statutory authority by denying exemption u/s 11 when the appellant held valid 12AA registration. The tribunal affirmed CIT(E)'s findings that once 12AA registration is granted, the AO cannot ignore such registration or probe further into trust's objectives. The question of applicability of section 2(15) remained academically unresolved, as the primary procedural issue favored the assessee. The decision effectively upheld the appellant's tax exemption status, rejecting revenue's contentions and maintaining the prior appellate order. Ultimately, the matter was decided against the revenue, preserving the appellant's tax-exempt standing.
  Visit to Get Source

  ---

• Tax Revision Order Invalidated: Section 263 Limited When Identical Issues Pending in Appellate Proceedings Under Doctrine of Merger

  Case-Laws - AT : ITAT quashed CIT(E)'s revision order under section 263, holding that the Commissioner cannot exercise revisional jurisdiction when identical issues are pending appeal before CIT(A). The tribunal applied the Doctrine of Merger, emphasizing that only one operative order can govern the same subject matter simultaneously. Since the assessment order under section 143(3) was not found erroneous or prejudicial to revenue's interests, the revisional order was set aside. The assessee's appeal was allowed, reinforcing procedural limitations on revisional powers when appellate proceedings are ongoing.
  Visit to Get Source

  ---

• Tax Reassessment Invalidated: Procedural Defects in Approval Process Nullify Reopening of Assessment Beyond Statutory Timeframe

  Case-Laws - AT : ITAT invalidated reassessment proceedings due to procedural irregularities in sanctioning authority under section 151. The tribunal found that the approval for reopening assessment beyond three years was not granted by the competent authority as prescribed under the new regime. The assessment order under section 147 read with sections 144 and 144B was struck down due to lack of valid jurisdictional sanction. The tribunal determined that the revenue's reliance on previous judgments was misplaced, and the assessment order was consequently quashed, rendering the entire reassessment process invalid. The decision was rendered in favor of the assessee, effectively nullifying the tax department's attempt to reopen and reassess the tax liability.
  Visit to Get Source

  ---

• Transfer Pricing Dispute Resolved: Tribunal Refines Comparable Company Selection and Arm's Length Price Calculation Under Section 92

  Case-Laws - AT : ITAT adjudicated transfer pricing dispute regarding comparable company selection. The tribunal determined the Arm's Length Price (ALP) computation by the Transfer Pricing Officer (TPO) was fair and reasonable, with a critical modification. The tribunal directed exclusion of one specific comparable company due to significantly divergent operating margin of 38% from toll operations. Consequently, the Assessing Officer (AO) was instructed to recalculate the transfer pricing adjustment using the average Profit Level Indicator (PLI) derived from the remaining 11 comparable companies. The ruling effectively refined the methodology for establishing an accurate arm's length benchmark while maintaining the substantive framework of the original transfer pricing assessment.
  Visit to Get Source

  ---

• Tax Dispute Resolved: Municipal Rateable Value Trumps Actual Rental Income for Property Annual Value Assessment

  Case-Laws - AT : ITAT adjudicated a tax dispute involving annual letting value (ALV) and transfer fee. For let-out property, the tribunal affirmed municipal rateable value as the appropriate benchmark for computing annual value, rejecting lower actual rental income. The tribunal consistently upheld that actual rent received from different tenants cannot retroactively determine rental valuation for prior assessment years. Regarding transfer fee, the tribunal followed Supreme Court precedent, determining that transfer fee/amenities fee receipts are non-taxable income for the assessee. The decision reinforces established principles of property income assessment, prioritizing municipal valuation and exempting specific cooperative society transfer-related receipts from taxation.
  Visit to Get Source

  ---

Customs

• Customs Duty Notifications Upheld: Additional Levies Valid Despite Exemption Claims Under Section 25 Customs Act

  Case-Laws - HC : HC affirmed the validity of customs duty notifications, rejecting petitioner's challenge to additional duty levies. The court held that goods exempted from basic customs duty can still be subject to additional duty under respective enactments. Notification No.24/2005 does not preclude levy of 4% additional duty under Notification No.19/2005. The government retains discretionary power under Section 25 of Customs Act to grant conditional or absolute exemptions. The court emphasized that nil or free tariff classification does not automatically eliminate potential duty liability. Consequently, the petition was dismissed, upholding the customs authorities' right to impose supplementary duties on imported goods.
  Visit to Get Source

  ---

Corporate Law

• Corporate Governance Dispute: Specialized Tribunal Jurisdiction Bars Civil Suit Under Section 430 of Companies Act, 2013

  Case-Laws - HC : HC held that the civil suit concerning oppression and mismanagement is not maintainable. Section 430 of the Companies Act, 2013 explicitly bars civil court's jurisdiction in matters falling within NCLT's domain. The plaint is liable to be rejected under Order VII Rule 11(d) CPC as the suit is barred by law. The Court determined that plaintiffs must pursue their remedy before the specialized tribunal (NCLT), which possesses broader adjudicatory powers for expeditious resolution of corporate disputes. The suit stands rejected, with plaintiffs directed to seek appropriate relief through the designated corporate tribunal, without any observations on the substantive merits of the case.
  Visit to Get Source

  ---

• Corporate Governance Triumph: NCLAT Strikes Down Unilateral Order, Upholds Natural Justice Principles in Rule 154

  Case-Laws - AT : NCLAT quashed the order dated 10.03.2025 for procedural irregularities in exercising suo motu rectification powers under Rule 154 of NCLT Rules. The Tribunal's rectification order was deemed invalid due to violation of natural justice principles, specifically the audi alteram partem rule, as no notice was issued to parties prior to modifying the original docket order. The appellate tribunal held that substantive rectifications cannot be made without providing an opportunity of hearing to affected parties, emphasizing the critical requirement of procedural fairness in judicial proceedings. Appeal was consequently allowed, setting aside the impugned rectification order.
  Visit to Get Source

  ---

Indian Laws

• Forgery Case Quashed: Civil Settlement Trumps Criminal Proceedings Under Section 482 CrPC

  Case-Laws - SC : SC quashed criminal proceedings initiated by CBI against appellants involving allegations of forgery and cheating. The Court determined the dispute was predominantly civil in nature, with the bank having no grievance and the entire amount already settled. Applying principles from prior precedent, the Court found the criminal case lacked substantive merit, and continuation would cause significant prejudice to the appellants. The timing of settlement prior to chargesheet filing was crucial in the Court's decision. The inherent powers under Section 482 CrPC were invoked to terminate the criminal proceedings, recognizing the overwhelming commercial character of the underlying transaction. The impugned High Court order was set aside, and the appeal was allowed.
  Visit to Get Source

  ---

Central Excise

• Interim Boards of Settlement Established to Resolve Tax and Customs Disputes Across Four Major Metropolitan Zones Under Section 31A

  Circulars : The CBIC issued an office order establishing four Interim Boards for Settlement (IBS) in Delhi, Kolkata, Mumbai, and Chennai. Each IBS comprises three members from senior tax and customs leadership positions within their respective zones. The boards will be supported by a Secretary of Additional/Joint Commissioner rank from the Chief Commissioner's Unit, with ministerial staff as deemed necessary by the first member. The order is issued under section 31A of the Central Excise Act, 1944, and aims to operationalize the settlement mechanism across key administrative zones of India.
  Visit to Get Source

  ---

• Customs Authority Reassigns 500 Tax Appeals to Audit Commissioner Vijay Risi Under Central Excise and Finance Act Provisions

  Circulars : The Central Board of Indirect Taxes and Customs (CBIC) has issued an order reassigning appeals filed after July 1, 2017, under the Central Excise Act, 1944 and Finance Act, 1994 to Vijay Risi, Commissioner (Audit) in the Nagpur Zone. The order covers 500 different appellants from various districts including Nashik, Ahmednagar, Jalgaon, and Aurangabad, with appeals ranging from Appeal No. 564 to 1484. Each appeal is assigned to Vijay Risi for passing Orders-in-Appeal, ensuring systematic administrative management of pending tax-related appeals across multiple jurisdictions.
  Visit to Get Source

  ---

• Tax Appeals Redistributed: CBIC Reassigns 900 Pending Cases Across Three Commissioners for Efficient Legal Processing

  Circulars : The document represents an administrative order by the Central Board of Indirect Taxes and Customs (CBIC) regarding the re-assignment of pending appeals in the Kolkata Zone. Under the powers conferred by Central Excise Rules, 2017 and Service Tax Rules, 1994, the order systematically allocates 900 distinct service tax and central excise appeals to three specific commissioners: Pravin Kumar Agrawal (Audit-I), Kumar Amrendra Narayan (Howrah), and Sanjay Kumar Roy (Haldia). Each appeal is assigned a unique identification number, involves various businesses and individuals across different sectors, and specifies the registration details and the designated commissioner responsible for passing orders-in-appeal. The order appears to be an administrative reorganization mechanism for managing pending tax-related legal proceedings within the Kolkata tax jurisdiction.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2025 (4) TMI 1058
  Violation of provisions of Rule 138 of the U.P. Goods and Service Tax Rules, 2017 - transporting goods accompanied by a tax invoice and e-way bill issued by a supplier whose registration had been cancelled prior to the date of invoice and e-way bill generation - HELD THAT:- From perusal of Rule 138 of the U.P. Goods and Service Tax Rules, 2017, it is clear that the goods in transit has to be accompanied by the tax invoice along with e-way bills. In the instant case, though e-way bill and tax invoice was there, but registration of the supplier firm had already seized on 07.11.2020 as it was cancelled by the Taxing Authorities. Once, the supplier firm was not in existence, it could not have issued the tax invoice dated 01.12.2020 and the transaction is sham. The tax invoice as produced by the petitioner firm issued by the supplier firm is against the provisions of Rule 138 of the Rules of 2017. The order passed by the appellate authority needs no interference of this Court - Petition dismissed.

  ---

• 2025 (4) TMI 1057
  Challenge to penalty order - requirement to carry a valid e-way bill for the movement of goods from one place to another under the Uttar Pradesh Goods and Service Tax Act, 2017 (the Act of 2017) and the related Rules - HELD THAT:- The question is no more res integra after the 14th Amendment of the Uttar Pradesh Goods and Service Tax Rules, 2017 which came into effect from 01.04.2018. Post amendment in the Rule, it has become obligatory that goods should be accompanied with valid e-way bill. The co-ordinate Bench in Akhilesh Traders [ 2024 (2) TMI 1128 - ALLAHABAD HIGH COURT ] had held that in case goods are not accompanied by e-way bill, a presumption may be read that there is an intention to evade tax. Such a presumption of evasion of tax then becomes rebuttable by the materials to be provided by the owner/transporter of the goods. In Jhansi Enterprises [ 2024 (3) TMI 219 - ALLAHABAD HIGH COURT ], the co-ordinate Bench following the decision rendered in Akhilesh Traders further held that mere furnishing of documents subsequent to interception cannot be a valid ground to show that there was no intention to evade tax. The Court further held that reliance placed upon the decision by petitioner therein was of transaction prior to April, 2018 but after April, 2018, those difficulties have been resolved and there is no difficulty in generating and downloading the e-way bill. In the instant case, it is an admitted case that the goods were intercepted on 19.01.2023 at 3:22 pm at Lalitpur Road, Jhansi. The said transit in question was being done on basis of e-way bill no. 7713 1109 2438 and e-way bill no. 4313 0563 8265. After enquiry, it was found that transportation of goods was being done through different vehicle in place of the vehicle declared in Part B of the e-way bill no. 7713 1109 2438 and validity of e-way bill no. 4313 0563 8265 was only till 15.01.2023 while it was being transported on 19.01.2023. Conclusion - Carrying a valid e-way bill during the transit of goods is mandatory under the Act of 2017 and Rules post 01.04.2018. Petition dismissed.

  ---

• 2025 (4) TMI 1056
  Jurisdiction to levy GST on the affiliation fees collected by the petitioner University from its affiliated colleges - validity and legality of the Circular dated 17.02.2021 and paragraph 2 of the Circular dated 11.10.2021 - legality of paragraph 6 (ii) of the Press Note dated 09.09.2024 issued to summarize recommendations made in the 54th meeting of the GST Council - HELD THAT:- The Constitution of India has been amended vide Constitution (101st Amendment) Act, 2016 with effect from 16th September 2016. In terms of the above-referred Constitutional Amendment, the legislative competence of the Parliament and State Legislature to levy and collect tax on supply of goods and services is now traceable to Article 246A of the Constitution. Article 246A (1) of the Constitution empowers the Parliament and the State Legislatures to concurrently make laws with regard to tax on intra-state supply of goods and services. Article 246A (2) of the Constitution states that Parliament alone shall have exclusive power to make laws with regard to tax on supplies of goods or services or both made in the course of inter-state trade or commerce . The GST is being levied with concurrent jurisdiction of the Centre and the States on the supply of goods or services or both. GST is a destination-based value added tax on supply of goods or services or both which has come into force in India from 01/07/2017. GST is based on fundamental principle of consumption-based tax. In other words, tax shall accrue to the jurisdiction where consumption takes place. It is well settled that the authority to act depends on the existence of jurisdictional fact. A jurisdictional fact is a fact which must exist before a Court, Tribunal or an authority assuming jurisdiction over a particular matter. If an authority wrongly assumes the existence of such fact, the order could be questioned under Article 226 of the Constitution. Section 9 of CGST Act, 2017/GGST Act, 2017, is the charging section which provides for levy of GST on supply of goods or services or both. Section 7 of the aforesaid statutes defines the scope of the phrase supply , in terms whereof, all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course of furtherance of business. In Laxmi Engineering Works Vs P.S.G. Industrial Institute [ 1995 (4) TMI 294 - SUPREME COURT] , the Supreme Court held that the term commercial activity in turn has been held to mean something pertaining to commerce or connected with or engaged in commerce; mercantile; having profit as the main aim. The requirements of Section 7 of the CGST Act. Section 2 (31) of the CGST Act defines the phrase consideration in terms whereof, the money or money value in respect or in response to the supply would be a consideration. The affiliation is undertaken by the University in terms of the requirement of the statute and in discharge of public functions, the fee so collected for affiliation fails to qualify as consideration . The fees collected by the University i.e. Affiliation fees, PG registration fees and convocation fees are not amenable to GST in as much as the fees collected by the University is not a consideration as contemplated in section 7 of CGST Act/GGST Act, as the fees are collected in the nature of statutory fee or regulatory fee in terms of the statutory provisions and not contractual in nature. The same cannot be given a colour of commercial receipts as there is no element of commercial activity involved in the subject transaction. The Impugned Show Cause Notice relies on the clarifications issued by the Respondent No. 2 vide Circular dated 17/06/2021. The Circular while clarifying the exemptions available to the National Board of Examination, in paragraph 4(iii) of the circular states that GST at the rate of 18% applies to other services provided by such Boards, namely of providing accreditation to an institution. Based on the recommendations of the 54th GST Council meeting, the Respondent No. 2, vide paragraph 2 of the Circular dated 11/10/2024, clarified that affiliation services provided by universities to their constituent colleges are not covered within the ambit of exemptions provided to educational institutions. The petitioner University has reported income in the income and expenditure account and its schedules and sub-schedules have been listed and the GST is demanded on the same without establishing as to how these incomes would be liable to GST. The GST is proposed on the sale of prospectus, sale of old newspaper, various fees towards sports, eligibility certificate, migration certificate, admission fee etc., received from students are also taken for the purpose of demand. Further, demand of tax is also proposed on interest income earned by the university. The Petitioner University has also tabulated the details of income which are listed for tax and also provided the reasons why such income cannot be subjected to tax. Learned Senior Advocate for the Petitioner University is justified in contending that where the main activity is not a business then any incidental or ancillary transaction held, would normally amount to business only if an independent intention to carry on business in the incidental or ancillary transaction is established. The burden to prove such intention rests on the Department. Hence, where the main and dominant activity of the University is education, it cannot be termed as business activity to demand tax. Conclusion - The activities of the petitioner University not being commercial in nature, are not amenable to GST. There is a complete absence of jurisdictional facts to issue the impugned show cause notice. Petition allowed.

  ---

• 2025 (4) TMI 1055
  Rejection of ITC claim of the petitioner on the sole issue that whatever purchases of goods made from the supplier by the petitioner, there is no actual movement of goods in terms of Section 16 (2) (b) (i) of CGST Act / BGST Act - HELD THAT:- On purchase of goods from the supplier, supplier was requested to deliver the goods to the end consumer directly, resultantly, there is no physical movement of goods to the petitioner from the supplier. This has not been appreciated by both the authorities in their impugned orders. In fact, respective contentions urged by the petitioners have not been appreciated and not dealt with, to that extent there is total non-application of mind. Whatever documents demanded by the authorities have been furnished from time to time with reference to their show cause notices and other communications. Refund of accumulated ITC, for claiming ITC petitioner has to file form RFD 01 with supporting material information within the time slot under Section 54 of the CGST Act read with Rule 89 of CGST Rules (i) supplier has filed GST returns and (ii) supplier has uploaded the invoice in their GSTR - 1 and GSTR 2B of the recipient or buyer. In terms of CGST Circular No. 241/35/2024-GST dated 31.12.2024 in cases where goods are delivered by the supplier to the registered person (dealer), either directly or to any other person on the instruction of the said registered person. In view of these facts and circumstances, receipt of goods by the dealer from supplier need not be in physical mode. On the other hand, if the dealer apprise the competent authority to the extent that there is an agreement / memorandum of understanding among the supplier, dealer and intimation to the end consumer insofar as transactions of purchase of goods and its delivery to the end consumer. In the present case, the petitioner submitted that he had produced all necessary material information to the concerned authority to the extent that he is in receipt of goods from the supplier. On the other hand, he had given instruction to the supplier to supply the purchased goods to the end consumer - To this extent the concerned authority is required to examine relevant material information like papers of memorandum of understanding / agreement among the petitioner dealer and supplier and intimation to the end consumer so as to complete the transactions relating to purchase of goods by the dealer from the supplier and further selling the goods to the end consumer and receipt of goods or not? Conclusion - The petitioner has made out a case so as to interfere with the impugned orders dated 14.01.2023 (Annexure P 14) and 07.10.2023 (Annexure P 1) and they are set aside. Matter is remanded to the second respondent the Deputy Commissioner of State Tax, Patliputra Circle, Central Division, Pant Bhawan, Bailey Road, Patna to undertake fresh exercise insofar as compliance to Rule 16 (2) (b) of the CGST Act only to the extent that whether is there any memorandum of understanding between the petitioner - dealer with the supplier and further materials relating to informing the end consumer to the extent of receipt of goods (delivery of goods by the supplier, directly or through transporter or not?) Petition disposed off by way of remand.

  ---

• 2025 (4) TMI 1054
  Seeking grant of first bail - availment of fake ITC - master-mind for creating a nexus of many fake firms to pass on fake Input Tax Credit (ITC) to various recipients - HELD THAT:- It appears that applicant stands accused of creation of fake firms for the purposes of availing Input Tax Credit fraudulently. The aspect of whether applicant s signatures or his being instrumental in creation of fake firms is subject matter of evidence. It is admitted between learned counsel for parties that maximum sentence in the sections imputed against applicant is being only five years, applicant is under incarceration since 14.11.2024. It is evident that investigation has already concluded. Conclusion - Considering the aforesaid facts and circumstances that as yet trial has not yet commenced after conclusion of investigation and maximum sentence being only a five years, with the aspect of applicant s involvement in creation of fake firms being subject matter of evidence, prima facie, this Court finds, the applicant is entitled to be released on bail in this case. The applicant is granted bail subject to fulfilment of conditions imposed.

  ---

• 2025 (4) TMI 1053
  Challenge to penalty order - detention of goods - Requirement of person in-charge of a conveyance is statutorily required to carry a physical copy of the tax invoice under the West Bengal Goods and Service Tax Rules, 2017 - HELD THAT:- Section 68 of the 2017 Act deals with inspection of goods in movement. Sub-section 3 of Section 68 empowers the intercepting officials to require the person in charge of the conveyance to produce the documents prescribed and upon being required to do so the said person shall be liable to produce the documents and devices and also allow the inspection of the goods. Clause (a) of sub-Rule (1) of Rule 138A of the 2017 Rules states that the person in-charge of a conveyance shall carry the invoice or bill of supply or delivery chalan, as the case may be. Clause (b) of sub-Rule (1) of Rule 138A speaks of a copy of the e-way bill. Sub-Rule 2 of Rule 138A deals with invoices issued in the manner prescribed under Sub-Rule (4) of Rule 48. It states that such invoice may be produced electronically for verification by the proper officer in lieu of physical copy of such tax invoice - Upon a conjoint reading of Sub-Rule 1(a) and Sub-Rule 2 of Rule 138A of the 2017 Rules, this Court holds that the person in-charge of a conveyance shall carry the physical copy of the tax invoice, except in cases falling under sub-Rule (2) of Rule 138 A of the 2017 Rules. It is well settled that mere change of route or even if the conveyance is intercepted at a location which may not be en route geographically as per the declaration made in the e-way bill, cannot be a ground for invocation of the provisions of Section 129 of the 2017 Act as no inference can be drawn in such cases that there was intention to evade taxes. It is not in dispute that the e-way bill was produced at the time of inspection of the goods carried by the conveyance. It is not the case of the revenue that there is any discrepancy as to the quality or quantity of the goods as mentioned in e-way bill with that found at the time of physical inspection of the goods which were in the conveyance. The Hon ble Division Bench in Ashok Sharma [ 2025 (2) TMI 1002 - CALCUTTA HIGH COURT ] held that in case there is no dispute as to the quantity or quality of the goods and also that there is no intention to evade payment of tax the provision under Section 129 of the 2017 Act could not have been invoked. Conclusion - The person in-charge of a conveyance shall carry the physical copy of the tax invoice, except in cases falling under sub-Rule (2) of Rule 138 A of the 2017 Rules. The order passed by the appellate authority dated January 16, 2025 affirming the penalty order passed by the original authority dated May 2, 2024, are set aside. The writ petition stands allowed.

  ---

• 2025 (4) TMI 1052
  Challenge to penalty order - person in charge of the conveyance is required to carry a physical copy of the tax invoice under the West Bengal Goods and Service Tax Rules, 2017 or not - HELD THAT:- Section 68 of the 2017 Act deals with inspection of goods in movement. Sub-section 3 of Section 68 empowers the intercepting officials to require the person in charge of the conveyance to produce the documents prescribed and upon being required to do so the said person shall be liable to produce the documents and devices and also allow the inspection of the goods. It is not the case of the petitioner that the tax invoice was produced electronically. Therefore, the person in-charge of the conveyance was under a statutory obligation to carry the physical copy of the tax invoice. For such reason, this Court is not inclined to accept the contention of the learned Advocate for the petitioner that displaying the image of the tax invoice from the mobile set of the person in-charge of the conveyance amounts to sufficient compliance of the requirements under Rule 138A (1) (a) of 2017 Rules. This Court holds that mere change of route or even if the conveyance is intercepted at a location which may not be en route geographically as per the declaration made in the e-way bill, cannot be a ground for invocation of the provisions of Section 129 of the 2017 Act as no interference can be drawn in such cases that there was intention to evade taxes - The appellate authority in its order dated January 16, 2025 has not returned any finding that there was any intention on the part of the petitioner to evade the payment of taxes. Though the petitioner may not have produced the tax invoices either before the adjudicating authority or before the appellate authority but the fact remains that a copy of such tax invoice has been annexed to this writ petition. It is also not the case of the revenue that there has been any default or short payment in payment of taxes, duty. The veracity of the tax invoice which is annexed to this writ petition has also not been questioned by the revenue in course of hearing of this writ petition. The Hon ble Division Bench in Ashok Sharma [ 2025 (2) TMI 1002 - CALCUTTA HIGH COURT ] held that in case there is no dispute as to the quantity or quality of the goods and also that there is no intention to evade payment of tax the provision under Section 129 of the 2017 Act could not have been invoked. The said decision shall squarely apply to the facts of the case on hand. Conclusion - i) Without evidence of an intention to evade tax, the invocation of Section 129 is unjustified. ii) The penalty order and its affirmation by the appellate authority are set aside, and the petitioner was entitled to a refund of the penalty paid. The order passed by the appellate authority dated November 14, 2024 affirming the penalty order passed by the original authority dated May 22, 2024, are set aside. The writ petition stands allowed.

  ---

• 2025 (4) TMI 1051
  Taxability - service of renting out immovable property by the applicant to the Social Justice and Special Assistance Department of Maharashtra Government for running a hostel for backward class girls - time of supply - applicability of Reverse charge or Forward charge mechanism - property is jointly owned by two persons registered separately under GST, all receipts should be disclosed under the applicant s GST registration number or otherwise - separate registration Under GST is required by joint name or not. Whether such service is taxable or exempt? - HELD THAT:- The services provided are renting of immovable property services. These supplies of services do not involve any supply of goods and can be regarded as pure services. Further, the services are given to Social Justice and Special Assistance Department of Maharashtra Government. Thus, the services have been provided to the State Government. Whether the said service is in relation to any functions entrusted to a Panchayat under article 243G or to a municipality under article 243W of the Constitution of India? - HELD THAT:- The renting out of immovable property, provided by the Appellant to the State Government, will definitely be construed as an activity in relation to the function entrusted to a Panchayat under article 243G of the Constitution, or in relation to the function entrusted to a Municipality under article 243 W of the Constitution, and thereby, are rightly eligible for exemption from GST in terms of the exemption entry at Sl. No. 3 of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017. As the activities related to residential accommodation of the girls or women, belonging to the Backward Classes are held to be exempt from the levy of GST, other questions are not applicable. Conclusion - Service provided by the applicant to the Social Justice and Special Assistance Department, Government of Maharashtra qualifies to be an exempted supply of pure services vide Sl. no. 3 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

  ---

• 2025 (4) TMI 1050
  Taxability - recoveries made by the Applicant from the employees for providing canteen facility to its employees - recoveries made by the Applicant from the employees for providing bus transport facilities to its employees - exemption under the SI. No. 15 of Notification No. 12/2017-Central Tax (Rate) - notice pay recoveries made by the Applicant from its employees for not serving the notice period - value on which GST is payable. Whether the recoveries made by the Applicant from the employees for providing canteen facility to its employees is taxable under the GST laws? - Whether the recoveries made by the Applicant from the employees for providing bus transport facilities to its employees is taxable under the provisions of CGST Act? - HELD THAT:- As per Income Tax Act, 1961, perquisite is defined to be the value of free benefit or facility given by the employer to his employees. The collection from the employees of whatever value, is not covered under perquisite . It could be inferred from the above, that any service rendered free of charge, or, any service rendered on a concessional basis shall qualify as a perquisite. But, it is to be noted that only the value/ portion to the extent of concession offered by the employer is to be treated as a perquisite and not the remaining portion/value that has been charged by the employer. Applying the said analogy to the instant case, in respect of the canteen and transportation services provided by the applicant to its employees, it becomes clear that the exemption provided in Entry 1 of Schedule III to the CGST Act, 2017 applies only to the concession part extended to the employees and not on the value charged to the employees. Thus, the recoveries made from the employees for canteen and transportation services are liable to levy of tax. Whether the Applicant would be exempted under the SI. No. 15 of Notification No. 12/2017-Central Tax (Rate)? - HELD THAT:- As per clause (b) of above SI. No. 15 of Notification No. 12/2017-Central Tax (Rate), dated 28.6.2017, the services of transportation of passengers, with or without accompanied belongings, by non-air-conditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire is exempt from GST. Further, the hire or charter services are excluded from the said entry 15 (b) of Notification No. 12/2017 CT(R) dated 28.06.2017. In view of aforesaid discussion, the transportation services provided by the Applicant to its employees are not covered by entry 15 (b) of the Notification No. 12/2017 CT(R) dated 28.06.2027. The services provided by M/s. Ferrero India Pvt. Ltd. squarely fall under transport of passengers under SAC 9964 and taxable at 5% without ITC or 12% with ITC (If ITC is not blocked by other provisions) under entry No. 8 (vi) of Not. No. 11/2017-CT (R) dated 28.06.2017 as amended from time to time. Without prejudice, even if GST is payable in respect of aforesaid employee recoveries, what would be the value on which GST is payable? - HELD THAT:- The value of the outward supply of canteen and transportation service can be considered as having two parts. First part is the amount of recovery that is made from the employees, and second part is balance value of the services provided by the employer as perquisite which is in the lieu of the services provided by employees to the employer. The entire balance value of the services for which no amount is charged is the perquisite provided by the employer to the employees. As this part is in lieu of services of the employees to the employer which fall under schedule 3, the perquisite part is not taxable, as a corollary, deeming it to be falling in the said entry of schedule 3. Hence, though the employer and employee are related parties, the value on which tax is a liable to be paid is only the recovered amount from the employee as the remaining part of the value is the perquisite provided by the employer which is not liable to tax. Whether the notice pay recoveries made by the Applicant from its employees for not serving the notice period is taxable under the GST laws? - HELD THAT:- The provisions for forfeiture of salary or recovery of bond amount in the event of the employee leaving the employment before the minimum agreed period are incorporated in the employment contract to discourage non-serious candidates from taking up employment. The said amounts are recovered by the employer not as a consideration for tolerating the act of such premature quitting of employment but as penalties for dissuading the non-serious employees from taking up employment and to discourage and deter such a situation. Further, the employee does not get anything in return from the employer against payment of such amounts. Therefore, such amounts recovered by the employer are not taxable as consideration for the service of agreeing to tolerate an act or a situation. In view of this clarification, notice pay recoveries made from the employees are not liable to levy of tax under CGST Act, 2017. Conclusion - i) The recoveries made by the Applicant from the employees for providing canteen facility to its employees is taxable under the GST laws. ii) The recoveries made by the Applicant from the employees for providing bus transport facilities to its employees is taxable under the provisions of CGST Act. iii) The services provided by M/s. Ferrero India Pvt. Ltd. squarely fall under transport of passengers under SAC 9964 and taxable at 5% without ITC or 12% with ITC (If ITC is not blocked by other provisions) under entry No. 8 (vi) of Not. No. 11/2017-CT (R) dated 28.06.2017 as amended from time to time. iv) Value on which GST is payable is the actual amount of recoveries made from the employees. v) The notice pay recoveries made by the Applicant from its employees for not serving the notice period is not taxable under the GST laws.

  ---

• 2025 (4) TMI 1049
  Supply of service - deduction of a nominal amount by the Applicant from the salary of the Employees who are availing the facility of food provided in the factory premises - applicability of GST - Availability of ITC to the Applicant on GST charged by the Canteen Service Providers for providing the catering services - services by the way of non-air-conditioned bus transportation facility provided by the Transport Service Providers - availability of ITC on GST charged by the Transport Service Providers for providing the non-air-conditioned bus transportation services. Whether the deduction of a nominal amount by the Applicant from the salary of the Employees who are availing the facility of food provided in the factory premises would be considered as a Supply of Service by the Applicant under the provisions of Section 7 of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017? - HELD THAT:- If a transaction or activity is not a supply u/s 7 (1) of CGST Act, then there would not be necessity to place such a transaction u/s 7 (2)(a) for deeming it to be neither supply of goods nor supply of services. Hence, Applicant s activity of supply of canteen services falls u/s 7 (1) of CGST Act, 2017. Only the perquisites i.e., free supplies, in terms of a contractual agreement between the employer and employee are not to be subjected to GST as these are in lieu of the services provided by employee to the employer in relation to his employment. Hence, the recoveries made from the employees are liable to levy of tax as it is consideration against canteen services provided by the Applicant to the employees. Whether ITC of tax paid to caterer for Canteen Services is available? - HELD THAT:- As per Section 17 (5) (b) of the CGST Act, ITC on food and beverages, outdoor catering, etc. is not available. However, it is seen that a proviso after sub- clause (iii) of clause (b) of sub- section (5) of section 17 of the CGST Act is provided to clarify that the ITC in respect of such goods or services or both would be eligible where it is obligatory for an employer to provide the same to its employees under any law for the time being in force. It is clear that Canteen Contractor is providing Restaurant Service to the Applicant which is chargeable to GST @ 5% rate in terms of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, without availment of ITC. Under explanation to the aforesaid entry, it has been clarified that the concessional rate is mandatory rate and availing the normal rate of tax will not apply and that is the reason the amended Notification No. 20/2019-C.T. (Rate) dated 30.09.2019 has been issued exercising power under Section 16 (1) and Section 148 of the CGST Act, 2017, so as to come out of the provisions permitting availment of ITC. In other words, a Taxpayer providing Restaurant Service has no option of taking ITC by providing Restaurant Service at normal GST rate - Accordingly, the canteen service provider is providing the restaurant service to the employees of the Applicant on behalf the said Applicant and paying Tax at specified rate of 5% in terms of the Notification ibid. Whether the services by the way of non-air-conditioned bus transportation facility provided by the Transport Service Providers would be construed as supply of service by the Applicant to its employees under the provisions of Section 7 of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017? - HELD THAT:- The perquisites in terms of a contractual agreement between the employer and employee are to be kept outside the ambit of GST. From the appointment letter given to the employees, it is seen that the Company promises other benefits as per the company policy. As per the HR policy of the company, company offers free transportation facility to its employees. Thus, free bus transportation facility is given to the employees as part of their contractual agreement. In respect of canteen services, supply of transportation services to the employees would in normal course constitute to be the supply of services u/s 7 (1) of GST Act 2017. However, it is now clarified by the CBIC circular No. 172/04/2022/GST dated 6th July 2022 that perquisite provided to the employees in view of the Contractual Agreement would not be subjected to GST. It is clarified that such perquisite are in lieu of the services provided by the employees to the employer in the course of or in relation to his employment, and should not be subjected to GST. As the supply of perquisite by the employer to the employee would not have respite from above two aspects mentioned at Sr.No.1 and 2 above as the said supply is neither exempted nor a Non-GST supply. Hence, it would be appropriate to interpret that the perquisite given to the employees in view of the contractual agreement are in lieu of services given by the employee to the employer and would not be subjected to GST by deeming it to be part of Schedule III as a corollary to entry at Sr.No.1 of Schedule III for cohesive interpretation. In view of this, supply of free transportation service provided by the employer to the employee in view of contractual agreement with them will not be supply u/s 7 of MGST ACT. Whether ITC is available to the Applicant on GST charged by the Transport Service Providers for providing the non-air-conditioned bus transportation services? - HELD THAT:- Section 17 (5) (g) of CGST/MGST Act 2017 states that input tax credit shall not be available in respect of goods or services or both used for personal consumption. Provision of service of transportation of employees from residence to factory or office premises has been used for personal consumption or comfort of employees. The applicant is not under any statutory obligation to provide these services to his employees and the services provided comes under category of personal consumption which makes the applicant ineligible to avail input tax credit on the invoices issued to him by the transporter for transportation of employees as per Section 17 (5) (g) of CGST/MGST Act 2017. Conclusion - ia) The deduction of a nominal amount by the Applicant from the salary of the Employees who are availing the facility of food provided in the factory premises would be considered as a Supply of Service by the Applicant under the provisions of Section 7 of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017. ib) Nominal amounts deducted are not in the nature of perquisite provided to the employees and liable for levy of GST. ic) ITC is not available to the Applicant on GST charged by the Canteen Service Providers for providing the catering services. iia) The services by the way of non-air-conditioned bus transportation facility provided by the Transport Service Providers would not be construed as supply of service by the Applicant to its employees under the provisions of Section 7 of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017. iib) ITC is not available to the Applicant on GST charged by the Transport Service Providers for providing the non-air-conditioned bus transportation services.

  ---

• 2025 (4) TMI 1048
  Classification of goods - HSN code - GST rate - Geo Membrance laminated HDPE woven polymer lining - whether the product manufactured by the applicant i.e. Geomembrane for Water Proof Lining-Type-II as per IS:153151:2015 is classifiable under Chapter 39 or Chapter 59 of the GST Tariff? - HELD THAT:- From the process of manufacture, as described by the applicant, it is apparent that after the process of extrusion and slitting, HDPE Tapes/ Strips of width less than 5mm are taken to circular looms and are woven into HDPE Woven Fabrics. The said High Density UV Stabilized Woven Fabrics are manufactured with specific weaving pattern through circular ring on horizontal and vertical direction to impact the essential property of Geomembrane fabrics i.e. impermeable to water for the specific end use of water retention. The said HDPE Tapes/Strips of width less than 5mm in width are appropriately classifiable under Heading 5404. Further Section Note 1(g) of Section XI excludes only strips of plastic where the width is exceeding 5mm. The strips of plastic, of less than 5 mm width would be appropriately classifiable under Tariff Heading 5404 and the fabric woven out of the said strips would be appropriately classifiable under Tariff Heading 5407 20. Such fabrics would also be considered as a textile fabric. In this regard, we find that the Apex Court in the case of M/s. Porritts and Spencer (Asia) Limited, [ 1978 (9) TMI 72 - SUPREME COURT] has held that when yarn, whether cotton, silk, woollen, rayon, nylon or of any other description or made out of any other material, is woven into fabric, what comes out is a textile. It has been further held in the said case that whatever be the mode of weaving employed, the woven fabric would be textile . It is further held that the use to which it may be put is also immaterial and does not bear on its character as a textile. In terms of Section Note 1 (h) of Section XI, even woven fabrics which are laminated with plastics or articles thereof of Chapter 39 are excluded from the said Section. Section XI covers Chapters 50 to Chapter 63 of the Customs Tariff. Therefore, even if during the course of manufacture of the said product, any woven fabric emerges and even if the said woven fabric is classified under Chapter 57 as a textile fabric, if the said goods are laminated with plastic and can be classified under chapter 39, the same will go out of the purview of Section XI and consequently out of the purview of Chapter 50 to Chapter 63. The product manufactured by the applicant i.e. Geo Membrane for Water Proof Lining - Type-II as per IS 153151:2015 is an article of textile, laminated with plastic, of a kind used for technical purposes. This product is and can be classified under Tariff Item 59111000. When a classification based on the specification and use of any product is possible, it would not be proper to classify it in the general and residuary entry of Other articles of plastic and articles of other materials of Heading 3901 to 3914 . It is also for this very reason that the provisions of Section Note 1(h) of Section XI would also not be applicable to the goods in the instant case as the goods in the instant case i.e. geo membrane does not find mention under any of the tariff items under Chapter 39 and when they can be correctly classified under Tariff Item 59111000, it would not be proper to consign it to the orphanage of a residuary entry as other articles of plastic under Chapter 3926. Conclusion - i) Geo Membrance for Water Proof Lining is classifiable under Tariff item 591110. ii) Geo Membrance laminated HDPE woven polymer lining attract @ 12% GST.

  ---

• 2025 (4) TMI 1047
  Taxable supply of services - assignment of Lease Hold Rights of land by the Applicant in terms of the Asset Purchase Agreement (APA) - transfer of building by way of sale by the Applicant to HMI in terms of the APA - sale of items of plant and machinery, in terms of the APA. Whether assignment of Lease Hold Rights of land by the Applicant in terms of the Asset Purchase Agreement qualifies as taxable supply of services under GST Laws? If yes, whether GST would apply on the price agreed for transfer of Lease Hold Rights under the Asset Purchase Agreement? - HELD THAT:- In the instant case, the applicant agrees to transfer the lease rights with the approval of MIDC. After the approval from MIDC, the lease rights get assigned to HMI. The leasehold rights in land are deemed to be services under paragraph 2(a) of Schedule II of CGST Act, 2017. Hence agreeing to assign such services which were being received by the Applicant from MIDC to the assignee i.e. HMI is a service. Service of leasing of land is provided by the MIDC. Now, original recipient of this service i.e. applicant has agreed to assign those service to HMI - This agreement results in transfer of leasehold rights to HMI after the approval of MIDC. As the resultant activity of leasehold rights of land getting transferred is a deemed service under para 2 of Schedule 2, the Act of pecasioning such resultant services squarely falls into the definition of Services 2 (102) of the GST Act. The activity of assignment is in the nature of agreeing to transfer one s leasehold rights. It is in the nature of compensation for agreeing to do the transfer of the applicant s rights in favour of the assignee. It is a service classifiable under Other miscellaneous service (SAC 999792) and taxable at 18% under SI No. 35 of Notification No. 11/2017-CT (Rate) dated 28/06/2017, as amended from time to time. Whether the transfer by way of sale of building by the Applicant to HMI in terms of the Asset Purchase Agreement qualifies as neither a supply of goods nor a supply of services under Section 7 read with entry 5 of Schedule III of the GST Laws? - HELD THAT:- The Lease Deed dated 03.07.2010 clearly stipulates that the lease would be of 300 acres of plot of land together with the buildings and erections now or at any time hereafter and being thereon. The lease also includes any buildings and structures currently present or built in the future, along with all associated rights and access, except for any underground mines and minerals, which remain with the Lessor. As the lease includes the lease of buildings, currently present or built in the future, the lessee holds only the leasehold rights towards the buildings and not the ownership rights of buildings built on leased land with the approval of MIDC - lease is transfer of the right to use property for a specific period of time in exchange for rent or consideration as agreed upon. The Hon ble Supreme Court in the case of Raghunath Ors Vs. Radha Mohan Ors [ 2020 (10) TMI 1362 - SUPREME COURT] held that a conveyance deed is an important document to prove the transfer of ownership from seller to the buyer. However, the conveyance deed alone is not conclusive proof of ownership. It must be supported by other evidence such as proof of sellers title to the property, evidence of possession, absence of encumbrances or competing claims etc. Further possession itself is a relevant factor but not conclusive. Possession must be supported by a valid title to be legally recognized. A clear and marketable title is essential to proving ownership. The transfer/ assignment of leasehold rights are liable to tax under GST Act, being the service provided in terms of agreeing to assign leasehold rights in the building. As building is part of the Lease, there cannot be sale of the building as the applicant does not hold ownership rights in the buildings constructed on the plot. Thus, though the consideration for transfer of building has been shown separately, it is integral part of the total consideration received for agreeing to assign the leasehold rights in the Lease and is liable to tax under GST Act under Other miscellaneous service (SAC 999792) and taxable at 18% under SI No.35 of Notification No. 11/2017-CT (Rate) dated 28/06/2017, as amended from time to time. Whether the sale of items of plant and machinery in terms of the Asset Purchase Agreement qualifies as taxable supply of individual goods under GST Laws? - If yes, whether GST would apply on the price agreed between the parties for the sale of each such items under the Asset Purchase Agreement, as per classification and rate applicable to each item? - HELD THAT:- In the instant case, the Applicant has sold to HMI the plant and 33 machinery, which are undisputedly goods. These goods were capitalised in GMI books. Thus, the plant and machinery, to be sold in the present case qualify as a supply of goods in the present case and are liable to tax under GST Act - If the applicant has taken input tax credit on the said capital goods, the value of the goods shall be determined in terms of Section 18 (6) of the CGST Act, 2017. Conclusion - i) The assignment of Lease Hold Rights of land by the Applicant in terms of the Asset Purchase Agreement qualifies as taxable supply of services under GST Laws. GST would apply on the price agreed for transfer of Lease Hold Rights under the Asset Purchase Agreement. The activity of assignment is in the nature of agreeing to do the transfer of the applicant s leasehold rights in favour of the assignee. It is a service classifiable under Other miscellaneous service (SAC 999792) and taxable at 18% under SI No.35 of Notification No. 11/2017-CT (Rate) dated 28/06/2017, as amended from time to time. ii) The transfer by way of sale of building by the Applicant to HMI in terms of the Asset Purchase Agreement does not qualify as neither a supply of goods nor a supply of services under Section 7 read with entry 5 of Schedule III of the GST Laws. Transfer of building does not constitute to be sale of building . Transfer is in the nature assignment of leasehold rights in the building. The activity of assignment is in the nature of agreeing to do the transfer of the applicant s leasehold rights in favour of the assignee. It is a service classifiable under Other miscellaneous service (SAC 999792) and taxable at 18% under SI.No. 35 of Notification No. 11/2017-CT (Rate) dated 28/06/2017, as amended from time to time. iii) The sale of items of plant and machinery in terms of the Asset Purchase Agreement qualifies as taxable supply of individual goods under GST Laws. GST would apply on the price agreed between the parties for the sale of each such items under the Asset Purchase Agreement or the amount of input tax credit availed, if any, on such capital goods reduced by such percentage points as may be prescribed, which ever is higher, as provided under Section 18 (6) of the CGST Act, as per classification and rate applicable to each item.

  ---

• Income Tax

• 2025 (4) TMI 1059
  Applicability of provisions of the Interest Tax Act 1974 - ITAT treating appellant is a credit institution as defined in Section 2(5A) r.w. Clause (va) of Section 2(5B) of the Interest Tax Act - Whether Appellate Tribunal is right in law in concurring with the views of the Commissioner (Appeals) and holding that mere acceptance of monies as deposits without any scheme or arrangement as contemplated in the Reserve Bank directions/notification will attract the provisions of the Interest Tax Act? HELD THAT:- Amendments to the 1974 Act in 1991 have not authorized a levy of interest tax on the interest paid or the liability incurred by a scheduled bank or credit institution under Section 4 of the 1974 Act. Even if the Appellant/Assessee is covered under the ambit of the definition of credit institution in Section 2(5A) of the 1974 Act read with Section 2(5B) of the 1974 Act as it includes any other financial company as defined in Section 2(5B) of the 1974 Act, would not mean that the Appellant/Assessee was liable to pay interest tax on the interest paid on deposits collected from its Directors, Shareholders or its Group Companies. Only if the amounts were lent by the Appellant/Assessee and interest were charged on the amount lent by the Appellant/Assessee, interest tax would be payable at the rate prescribed under Section 4(2) of the 1974 Act up to 31.03.2000 by the Appellant/Assessee. In our view, no interest tax referred to in Section 4 of the 1974 Act is chargeable on the interest paid either by the scheduled bank or by a credit institution to its creditors/lenders. In our view, there was no question of the Appellant/Assessee being held liable to pay interest tax under the 1974 Act on the interest paid on the deposits collected from its Shareholders, Directors and Group Companies. Consequently, invocation of Section 8, Section 9 and Section 10 of the 1974 Act were without jurisdiction. The interest charged under Section 12A of the 1974 Act was also without jurisdiction. Assessing Officer, the Commissioner of Income Tax (Appeals) III, Chennai and the ITAT have failed to consider the provisions of the 1974 Act and have wrongly held that the interest paid by the Appellant/Assessee as credit institution , its Directors, Shareholders and Group Companies was liable to tax under the 1974 Act. Unfortunately, the Assessment Order dated 08.11.1999 has seen two rounds of litigation, from the stage of assessment up to ITAT. Neither the Assessing Officer nor the Tribunal have examined the provisions before concluding that the interest tax was payable on the interest paid on the amounts received from deposits/loans by the Appellant/Assessee from its Directors, Shareholders and Group Companies. We answer the second substantial question of law raised in these Appeals in favour of the Appellant/Assessee and against the Income Tax Department.

  ---

• 2025 (4) TMI 1046
  Inquiry conducted in response to the Tax Evasion Petition [TEP] filed by petitioner - Income Tax Department obligation to disclose the full investigation report conducted pursuant to a Tax Evasion Petition - entitlement to receive the investigation report despite confidentiality provisions - income reflected in the petitioner s ITR which is denied to be hers but of spouse - HELD THAT:- First things first, there is nothing confidential about the report dated 29.08.2024, a bare perusal of which would show that, pursuant to directions of this Court, notices under Section 133 (6) of the Income Tax Act, 1961 were issued to various banks seeking the bank statements of the petitioner as well as her husband, including the companies in which he happens to be a Director/Shareholder. Summons under Section 131 (1A) of the Income Tax Act, 1961 were also issued to her husband,for furnishing of relevant details and for his personal deposition. In response to the notices, both petitioner and her husband appeared before the concerned authority. The findings are to the effect that no case of tax evasion on the part of Mr. Sanjay Srivastava was found upon examining the ITRs for the assessment years 2018 to 2022-23. Insofar as the petitioner is concerned, although the ITRs filed up to the assessment year 2021-22 mentioned the contact details and email address of her husband, it was found that the same were linked with the Aadhar Card of the petitioner, and the OTP [One Time Password] for re-verification of the ITRs had been sent to the personal mobile number of the petitioner. It is also noted in the report dated 29.08.2024 that the ITRs of the petitioner up to the assessment year 2021-22 had been filed by her Chartered Accountant, Mr. Ajay Aggarwal, presumably based on the information supplied by her as well as her husband. No ITR for the assessment year 2022-23 has been filed by the petitioner. As regards the assessment year 2023-24, the contact details of the petitioner, namely her mobile number and email address, are mentioned in the ITR. The aforesaid facts do not constitute any matters that could be said to be confidential or disclosure of which would prejudice the respondent/Department of Income Tax in any manner. Accordingly, CM APPL is hereby dismissed. The respondent/Department of Income Tax is directed to supply a copy of the report dated 29.08.2024 to the petitioner within two weeks from today, failing which, the petitioner shall be at liberty to avail a certified copy of the same from this Court.

  ---

• 2025 (4) TMI 1045
  Delay of 161 days in filing the appeal before the ITAT - appellant has assigned the reason that the CIT (Appeals) had dismissed the appeal vide its order dated 21.03.2022 and uploaded the order on ITBA portal about which the appellant was not aware and he came to know about this development while filing Tax Audit Report for assessment year 2022-23 and, therefore, he could not prefer an appeal right in time HELD THAT:- The Supreme Court vide its Order in the matter of Vidya Shankar Jaiswal [ 2025 (1) TMI 1526 - SC ORDER ] while setting aside the order of this Court rejecting the appeal on the ground of delay, has held that the High Court ought to have adopted justice oriented and liberal approach by condoning the delay. In view of above and also for the reason shown by the assessee/appellant herein coupled with the fact that though the application of the appellant was supported by the affidavit, but the Revenue did not file any counter-affidavit controverting the reason assigned by the assessee and, as such, the delay of 161 days occurred in filing the appeal remained uncontroverted and also for the reason that the assessee was not aware of order passed by the CIT(Appeals) as it was only uploaded on ITBA portal, therefore, the sufficient cause has been show by the assessee/appellant for the delay of 161 days occurred in filing the appeal. Accordingly, the delay of 161 days occurred in filing the appeal deserves to be and is hereby condoned. The matter is remitted back to the ITAT for deciding the appeal on merits.

  ---

• 2025 (4) TMI 1044
  Addition u/s 56(2)(ix) - assessee has forfeited the said amount received in advance against agreement to sale of land by making various incorrect irrelevant observations - HELD THAT:- When the assessee filed the additional evidence, considering the specific prayer of the assessee same was forwarded for AO s comments and without considering the merits of the dispute and without verifying the veracity of the documents the documents signed by third party cannot be directly held to be colorable devise. Therefore, the bench is of the view that lis between the parties has to be decided on merits, providing opportunity of being heard to the assessee. We deem it fit to remand the matter to the file of the AO who will consider the factual aspect of the matter as raised by the assessee after due verification of the facts and charge the correct income in hands of the assessee after affording due opportunity to the assessee and dealing with the evidence placed on record. The assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the AO. Appeal filed by the assessee is disposed off for statistical purposes.

  ---

• 2025 (4) TMI 1043
  Denial of registration u/s 12AB - CIT(E) observed that the objects of the Trust are for the benefit of the residents of the Dwarika Green Society and its member and are not for the benefit of the public at large - HELD THAT:- In the present case, CIT [E] has considered the provisions of sec 13(1)(b) of the Act, which is applicable only in a case of Charitable Trust or Institution created or established after commencement of this Act and only for the benefit of the residents of the Dwarika Green Society and its members and thereby denied the registration, which in our considered view is well within the provision of amended law and therefore the order denying registration passed by Ld CIT[E] does not require any interference. Case law relied by assessee namely Bayath Kutuchhi Dasha Oswal Jain Mahajan Trust [ 2016 (9) TMI 8 - GUJARAT HIGH COURT] held that the Trust had large number of other objects for the benefit of General Public apart from objects for benefit of Religious Community, therefore held that the Tribunal was correct in allowing Registration to the Trust Thus the ratio of the above judgment will not be applicable to the facts of the assessee case, since the objects of the Assessee Trust which is meant only for the residents and members of the Society not for Public at Large. Thus we don t find any infirmity in the order passed by Ld. CIT(E) and the same does not require any interference. Decided against assessee.

  ---

• 2025 (4) TMI 1042
  Unexplained investment in a property transaction which was not reflected in the books of accounts - reliance on loose unsigned hand written paper found at the premises of third party - HELD THAT:-The loose sheet has been recovered from the searched person i.e. Gurvinder Singh Duggal who is a third party, which bears no signature of either the Assessee or searched person and the same is not in the hand writing of either searched person or the Assessee. Further, third party has specifically denied receiving any cash payment. In the absence of any corroborative material brought on record during the assessment proceedings, the AO has committed error in making the addition based on the said loose sheet. Therefore, CIT(A) has erred in upholding the addition made by the A.O - Thus, addition made u/s 69B which has been sustained by the Ld. CIT(A) is hereby deleted. Appeal of the Assessee is allowed.

  ---

• 2025 (4) TMI 1041
  Issuance of a Standby Letter of Credit (SBLC) by the assessee in favor of its Associated Enterprise (AE) constitutes an international transaction or not? - HELD THAT:- We find that the issue has been extensively examined by the Bench on which both of us were in quorum and the Bench has considered the ratio in the case of CIT v. Everest Kento Cylinders Ltd. [ 2015 (5) TMI 395 - BOMBAY HIGH COURT ] and has concluded that there is no difference between bank guarantee and SBLCs as compared to corporate guarantees. Further, we have also concluded that issuance of SBLC in the international transaction can be put to ALP tests. As for completeness, the observations and finding of the Bench in the case of Anand NVH Products Pvt. Ltd. [ 2025 (1) TMI 1003 - ITAT DELHI ] Thus, we are inclined to hold that the AO/TPO shall consider rate of 0.5% as against 1.3% to ALP for international transaction and accordingly determine the adjustment required to be made. Ground no.2 and its sub-grounds are accordingly decided in favour of the assessee. Deduction u/s 80G - assessee made a donation to FCS Foundation a trust registered u/s 80G - AO has made the disallowance of cheque of Rs. 55 lakh on an allegation that the receipt issued by the said foundation is not of period ending 31.03.2016 as there was a cutting in the date - HELD THAT:- The assessee has produced the affidavit of the director as additional evidence before the DRP. However, the assessee could not produce any evidence from the recipient as to how this fund was received and acknowledged in the financials of the recipient. At the same time, the AO has also not made any effort to enquire into the alleged fact of the receipt being dated 31.03.2016, thus we consider it appropriate to restore the issue to the file of the AO to give liberty for enquiry afresh with regard to the correctness of the claim of the assessee with respect to the disputed receipt number 400 to the extent of the date on which it was received by the trust namely FCS Foundation and the year in which it was accounted for. AO will allow the deduction u/s 80G if it was satisfactorily demonstrated by the assessee before the AO that the trust namely FCS Foundation has accounted the receipt paid by cheque. Accordingly, the ground allowed with the above observations.

  ---

• 2025 (4) TMI 1040
  Disallowance of late payment of Provident Fund - HELD THAT:- This issue is covered against the assessee by the Hon ble Supreme Court judgment in the case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] Rectification orders passed u/s 154 reducing the refund claimed by the assessee when the intimation under section 143(1) was not served on the assessee - HELD THAT:- As perused the rectification order dated 08-11-2022 in that there is a column details of previous order to be rectified wherein it is mentioned as 143(1) dated 26-07-2022 but it is without DIN number. This makes it very clear since there is no DIN allotted to the 143(1) intimation, the same to be treated as not passed and therefore not served on the assessee. As per 2nd proviso to Section 143(1) of the Act no intimation under sub-section shall be sent after the expiry of nine months from the end of the financial year in which the return was filed. Further as per 1st proviso to Section 143(1) of the Act, the intimation shall be sent to the assessee declaring the loss assessed/adjusted but no tax, interest or fee payable or no refund due to the assessee. Since the intimation made u/s. 143(1) of the Act was not served on the assessee, therefore, there cannot be adjustment or rectification u/s.154 of the Act, consequently the additions made by CPC are liable to be deleted and the refund claimed by the assessee is to be allowed.

  ---

• 2025 (4) TMI 1039
  Validity of revision proceedings against the reassessment order - scope of reason to believe v/s reason to suspect - HELD THAT:- The case of the assessee was reopened on the ground that the assessee has deposited, during the financial year 2008-09, the amount in cash into his saving account maintained with HDFC Bank Ltd., despite the fact that the assessee had filed return of income on 30.09.2009 for the impugned assessment year which stood accepted as such. It is thus evident that the AO re-opened the case only for the purpose of verification of the source of deposits in the bank account. It is now well settled that no re-assessment can be done to make an enquiry or verification of the deposits in the bank account. Hon ble Delhi High Court in the case of United Electrical Co. (P) Ltd. [ 2002 (10) TMI 86 - DELHI HIGH COURT ] has held that existence of tangible material, for the formation of opinion is a pre-requisite for initiation of action u/s 147. It is noted that there was no information on record which could provide foundation for the Assessing Officer s belief that the source of the deposits in the bank account was not explained and income had escaped assessment on that account. Therefore, the impugned action of the AO cannot be sustained. Further, in the case of CIT vs. Indian Oil Corporation [ 1986 (5) TMI 1 - SUPREME COURT ] has held that the, `reason to believe is not the same thing as `reason to suspect . We hold that the present proceedings being collateral proceedings and if the assessment order is inherently invalid or bad in law, then validity of such an order can be challenged at any stage in the collateral proceedings including the proceedings u/s. 263, because invalid order cannot be set aside or can be revised to make it valid; therefore, the order of assessment u/s 147/143(3) and the impugned order u/s 263 of the Act are held to be without jurisdiction. Even otherwise proceedings u/s 263 have been initiated on the basis of audit objection - As relying on Raghuvir Singh [ 2023 (11) TMI 1273 - ITAT DELHI ] and Maharashtra Hybrid Seeds Co. Ltd. [ 2018 (9) TMI 294 - BOMBAY HIGH COURT ] proceedings u/s 263 of the Act is based on audit objection raised by the audit party which is not in accordance with law. The final order is restricted to disallowance as deduction of interest paid to partnership firm and claimed in the computation of income which apparently is without any opportunity and therefore not in accordance with law in view of the judgment Amitabh Bachchan [ 2016 (5) TMI 493 - SUPREME COURT ] Thus we set aside the impugned order passed u/s. 263 of the Act and appeal of the assessee is allowed.

  ---

• 2025 (4) TMI 1038
  Reassessment proceedings u/s 147 as barred by limitation u/s 149 - HELD THAT:- By virtue of section 3(1) OF TOLA time for completion of specified acts was extended till 30-06-2021. Thus, the notice dated 22-06-2021 was issued 8 days prior to the expiry of period of limitation for issuing a notice u/s 148 of the Act as the extended time by TOLA. The period between 04-05-2022 to 30- 05-2022, the date on which the AO has issued the notice u/s 148A(b) of the Act in furtherance of his earlier notice dated 22- 06-2021 is also required to be excluded by virtue of the third proviso to section 149(1) of the Act as held in Rajeev Bansal Case [ 2024 (10) TMI 264 - SUPREME COURT (LB) ] AO has issued notice to the assessee dated 19-05-2022 and the two weeks-time was granted to respond the notice. The assessee had furnished its response to the notice u/s 148A(b) of the Act on 02-06-2022. AO was issued the second notice dated 06-07-2022 to the assessee and the assessee has filed the response in the compliance on 11-07-2022.Thus, the period of limitation began running from that date i.e11-07-2022. By virtue of TOLA, the AO had period of 8 days limitation left on the date of commencement of the reassessment proceedings, which began on 22-06-2021, to issue a notice u/s 148 of the Act. AO was required to pass an order u/s 148A(d) of the Act within the 8 days notwithstanding the time stipulated u/s 148A(b) of the Act. This period expired on 19-07-2022. Since the period of limitation, as provided u/s 149(1) of the act had expired prior to issuance of the reassessment order dated 23-07-2022. Thus, the reassessment order is beyond the period of limitation. Decided in favour of the assessee.

  ---

• 2025 (4) TMI 1037
  Exemption u/s. 11 - applicability of section 2(15) - claim denied no educational activities has been carried out by the Appellant and receipts of consultancy charges, seminar fees sponsorship are in the nature of services provided to trade and commerce - HELD THAT:- The arguments raised on behalf of the assessee with respect to non-applicability of Hon ble Apex Court case of AUDA [ 2022 (10) TMI 948 - SUPREME COURT] are more convincing than the arguments raised by the revenue/appellant in that regard. The ratio of the Hon ble Jurisdiction High Court squarely covers the facts and circumstances of the case in hand. As is evident from the para 6.3 onwards of the impugned judgment as Ld. CIT(E) held that if 12A registration was not withdrawn on the date of the assessment order then the income of the assessee was exempt in entirety and the Ld. AO could not have travelled beyond the certificate of registration granted u/s 12A of the Act. It was further held by Ld. CIT(E) that once the 12AA registration is granted, there is no power with the AO to ignore such registration and the Ld. AO was wrong in denying exemption u/s 11 when the appellant is approved u/s 12AA. CIT(E) further held that since the AO exceeded his authority in denying exemption u/s 11, he was not going into merit of whether the appellant was engaged in Education as contemplated in section 2(15) of the Act. While deciding so, the Ld. CIT(E) has relied upon the judgment of Hon ble Supreme Court in Surat City Gymkhana [ 2008 (4) TMI 16 - SUPREME COURT] wherein it was held that the registration u/s 12A was a fait accompli to hold the AO back from further probe into the objects of the trust. The Surat City Gymkhana case (supra) has been relied in Gemological Institute of India [ 2016 (4) TMI 1357 - BOMBAY HIGH COURT] . It is to be noticed that the SLP filed by revenue against the Jurisdictional High Court judgment was dismissed by the Hon ble Supreme Court [ 2019 (5) TMI 1365 - SUPREME COURT OF INDIA] . Only ground no. 1 pertains to the matter decided by Ld. CIT(E) and the ground no. 2 and 3 pertains to applicability of section 2(15) of the Act and the said aspect has not been decided by the Ld. CIT(E) because the AO has exceeded his authority in denying exemption u/s 11 and therefore the question of applicability of section 2(15) in the case of assessee was left open being academic as there was no need to decide the said question on merit. We do not find any illegality in the impugned order passed by Ld. CIT(E) which may warrant interference by this Tribunal. Decided against revenue.

  ---

• 2025 (4) TMI 1036
  Addition u/s 68 - unsecured loan received by the assessee - assessee has mismanaged his loan received and repayments made and has also failed to offer proper explanation with regard to the loans shown in his balance sheet, hence, the creditworthiness of lender and genuineness of transaction remained unverified - CIT(A) deleted addition - HELD THAT:- The assessee has claimed that the loan from the above parties were received in earlier years and there is no case of any inflow or credit of funds in the year under reference thus negating the applicability of section 68 of the Act and rendering the addition as factually incorrect. The copies of confirmed ledger account of parties are placed and copy of bank statement are placed. Appreciating the ledger account, it can be seen that the loan from Mr. Ajay Katara was taken in FY 2015-16 and loan from Mr. Kumar Bombay (Director of M/s. Panorma Studios P. ltd.) was taken in FY 2016-17 and other than cheque reversal entry, there is no case of any fresh credit in the year under reference. The CIT(A) after verifying the factual position including bank statement and confirmed ledger account of the parties deleted the addition by giving a factual finding to the effect that the loan transactions do not pertain to the year under consideration. In fact, even in the ground as raised the assessing officer has not disputed the factual position. Thus in absence of any credit in the year under consideration, the provision of section 68 of the Act do not apply and order of ld. CTI(A) needs no interference. Part disallowance of claim of cost and denying benefit of indexation by computing short term capital gain as against long term capital loss computed by the assessee in respect of sale of property - HELD THAT:- We find that the CIT(A) after examining the documentary evidences in support of purchase of property at A1/1, Loha Mandi, Ghaziabad and appreciating the overall position, held that the said property was long term capital asset and rejected the action of AO in making addition of Rs. 54,65,640/- on account of STCG. The CIT(A) accepted the computation of Long term capital loss (LTCL) of Rs. 32,54,636/- in respect of the said property after considering benefit of indexation. CIT(A) upheld the action of AO in restricting the claim of exemption u/s 54 and the same is not in dispute in this appeal. Accordingly, we are of the considered view that the CIT(A) rightly computed the net taxable LTCG at Rs. 1,47,82,585/- as against Rs. 2,18,40,380/- computed by the assessing officer. Rejection of books of account u/s 145(3) and estimation of gross profit - Bogus purchases - HELD THAT:- AO has accepted sales made out of purchases made from M/s. Panna lal Co. and the goods purchased from M/s. Panna lal Co. were sold at a profit thus the allegation of bogus purchase, suppression of profit or manipulation is self destructive. There is substance in the contention that no discrepancy was found in the stock record at the time of search which was physically verified, thus the allegation of manipulation and bogus purchase, is not justified. The reliance of ld. AR on the decision of this Tribunal in the case of Gorja Steel Processors [ 2024 (10) TMI 1651 - ITAT DELHI] is squarely applicable as under identical circumstances and purchases made from the very same party, the rejection of books of account and estimation of Gross profit was held to be invalid. Thus the allegation of bogus purchases, rejection of books of account and consequential addition based on estimation of gross profit to the extent as also sustained by the ld. CIT(A) deserve to be deleted. The ground is sustained.

  ---

• 2025 (4) TMI 1035
  Addition u/s 68 - unexplained cash credit - AO observing that assessee has taken unsecured loan from the company during the year, however, as per the Inspector report, no such company was in existence at the address provided by the assessee and subsequently, a statement of Director of the assessee company submitted that assessee has taken unsecured loan through banking channel and returned the same through banking channel - HELD THAT:- Assessee has submitted all the relevant information to prove the identity, creditworthiness and genuineness of the transactions and it is also fact on record that assessee has repaid the unsecured loan within three months and all the transactions were routed through banking channel. Therefore, respectfully following the decision of Signature Global India Pvt. Ltd. [ 2025 (2) TMI 393 - ITAT DELHI ] we do not find any reason to disturb the findings of the ld. CIT (A) and accordingly, the grounds taken by the Revenue are dismissed.

  ---

• 2025 (4) TMI 1034
  Disallowance u/s 36(1)(va) - delayed payments of employee contributions towards PF and ESIC - HELD THAT:- As decided in Suzlon Energy Ltd [ 2020 (2) TMI 792 - GUJARAT HIGH COURT] where assessee had not deposited employees contributions towards PF and ESI within prescribed period in law and AO by invoking provisions of section 36(1)(va) read with section 2(24)(x) made addition of aforesaid amount to income of assessee, impugned addition made to income of assessee was justified. Section 38 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 makes it obligatory for the employer before paying him his wages to deduct the employee s contribution along with the employer s own contribution as fixed by Government. The employer is further obliged to pay the same within fifteen days of the close of every month pay i.e. such contribution and administrative charges. The reference to fifteen days of the close of the month must be in relation to month during which the payment of wages is to be made and corresponding liability to deduct employee s contribution to the fund arises. Decided against assessee.

  ---

• 2025 (4) TMI 1033
  Validity of reopening of assessment - reason to believe or suspect - assessment was reopened to make addition u/s 68 but ultimately AO has made no such addition and he has ended up making addition u/s 28(ii) - HELD THAT:- The less strict interpretation of the words reason to believe vis- -vis an intimation issued u/s 143(1) cannot be permitted. There is no whisper in the reasons recorded, of any tangible material which came to the possession of the AO subsequent to the issue of the intimation which reflects an arbitrary exercise of the power conferred under section 147. The ratio of cited decision would squarely apply to the facts of present case. The decision in Cognizant Technology Solutions India P. Ltd. [ 2022 (8) TMI 1095 - MADRAS HIGH COURT ] is also on the same lines. Considering the ratio of this decision, the adjudication of CIT(A) on legal grounds could not be faulted with. We would hold that the impugned order is liable to be quashed since Ld. AO did not have valid jurisdiction to reopen the case of the assessee. Assessment was reopened to make addition u/s 68 but ultimately AO has made no such addition and he has ended up making addition u/s 28(ii) - The ratio of decision of Jet Airways (I) Ltd. [ 2010 (4) TMI 431 - BOMBAY HIGH COURT ] would also apply as held by Hon ble Court that Explanation-3 could not override the necessity of fulfilling the conditions set out in the substantive part of Sec.147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has this effect that the Assessing Officer has to assess or reassess the income ( such income ) which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open for him to independently assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. This decision has been followed in the case of Ranbaxy Laboratories Ltd. [ 2011 (6) TMI 4 - DELHI HIGH COURT ] Thus, the impugned additions are not sustainable on this score only. The corresponding grounds raised by the assessee in the cross-objection succeeds.

  ---

• 2025 (4) TMI 1032
  Short Term Capital Gain earned on account of sale of flat - Period of holding - whether the holding period of the property should be computed from the date of the conveyance deed or from the date of the allotment letter? - HELD THAT:- AO has pointed out certain mistakes in the computation of the deduction u/s 54F of the Act for AY 2010-11, but said assessment year is not available before us and, therefore, we can t go into correctness of the same. But the assessing officer cannot ignore the said long term capital gain declared in A.Y. 2010-11 and assessee the gain arising from the sale of the property in the year under consideration as short term capital gain, without any valid reason for rejection of capital gain shown in AY 2010-11. Thirdly, assessee has rightly pointed out the assessee has purchased those flats under sale component of the SRA scheme and not under the slum occupation category. The finding recorded by the AO to that extent is incorrect. We are of the opinion that the registration of the flat No. 1404 and 1405 for purchase and sale entered into the year under consideration are liable for any capital gain tax as the assessee had already declared the said transaction of the sale in A.Y. 2010-11, which has been duly accepted by the department. Appeal of the assessee are accordingly allowed.

  ---

• 2025 (4) TMI 1031
  Revision u/s 263 - denial of exemption u/sec. 11 on the ground that assessee is registered u/sec. 12A treating the amount being excess utilization over the receipts during the year as unexplained anonymous donation u/sec. 115BBC and treating the sum spent towards Charities Donations as not being towards attainment of the objectives of the assessee-society - HELD THAT:- Explanation (1)(c) provided u/section 263 of the Act is based on the Doctrine of Merger and according to which, there cannot be more than one operative order governing the same subject matter at a given point of time. In the instant case, it is undisputed that the issues which are considered by the CIT(E) in the impugned order, which are under challenge, has been subject matter of appeal before the First Appellate Authority namely, CIT(A), pending for adjudication. Therefore, CIT(E) in terms of Explanation (1) to section 263 of the Act, cannot assume a valid jurisdiction to revise an order when an appeal filed by the assessee on identical issues pending for adjudication before the CIT(A) and therefore, on this account itself, order passed by the CIT(E) u/sec. 263 of the Act cannot be sustained and liable to be quashed. This principle is supported by the decisions of various courts, including in the case of CIT vs Farida Prime Tannery [ 2002 (8) TMI 44 - MADRAS HIGH COURT] and also in the case of Renuka Philip [ 2018 (12) TMI 129 - MADRAS HIGH COURT] A very similar issue has been considered by the Hon ble Madhya Pradesh High Court in the case of CIT vs Shalimar Housing Finance Ltd [ 2009 (4) TMI 406 - MADHYA PRADESH HIGH COURT] It is relevant to consider the decision of Ranka Jewellers [ 2010 (3) TMI 544 - BOMBAY HIGH COURT] , where the Hon ble High Court under identical set of facts and in light of powers of CIT and PCIT u/s. 263 of the Act, held that once the issue has been considered and decided in the appeal then there is no scope for the PCIT to invoke his jurisdiction u/s. 263 of the Act on said issue and set aside the assessment order. In this view of the matter and considering the facts of the case and also in the light of ratio of various case laws discussed hereinabove, we are of the considered view that, the assessment order passed by the AO u/sec. 143(3) is neither erroneous nor prejudicial to the interest of revenue on three issues questioned by the learned CIT(E). CIT(E) without appreciating the relevant facts has simply set-aside the assessment order passed by the AO by exercising powers conferred u/sec. 263. Thus, we quash the order passed by the CIT(E) u/sec. 263. Appeal of the Assessee is allowed.

  ---

• 2025 (4) TMI 1030
  Addition u/s 69A r.w.s. 115BBE - unexplained cash - AR submitted that the assessee has made cash withdrawals on various dates which was deposited subsequently - HELD THAT:- It is an admitted fact that the assessee has made cash deposits and cash withdrawals on various dates during the impugned assessment year and has shown the opening balance of cash of Rs. 32,25,000/- as on 07.11.2016. The contention of the AO is opening balance of cash of Rs. 32,25,000/- was not deposited during the demonetization period wherein the assessee has retracted her own statement regarding the availability of cash as on 07.11.2016. AO therefore did not consider the reply of the assessee regarding the availability of cash as on 07.11.2016. Further Ld. AO has also observed that when the assessee held huge cash questioned the necessity of withdrawal of further cash by the assessee from the bank accounts. No documentary evidences have been produced for verification. We therefore find no infirmity in the order of the Ld. CIT(A) and hence no interference is required. Application of the amended higher tax rate of 60% u/s 115BBE - Respectively following the decision of Naranbhai Samatbhai Bharwad [ 2025 (1) TMI 1545 - ITAT AHMEDABAD] as held from the language of the object that instead of allowing people to find illegal ways of converting their black money into black again , it is evident that the government is intended to impose the same for future transactions. Especially the use of word again in the object would clearly indicate it is for future transactions i.e. from 01.04.2017. Therefore this Court is of the considered opinion that the revenue is empowered to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut-off date. And for prior transaction the revenue is empowered to impose only 30% rate of tax - we allow this ground of appeal raised by the assessee on the issue of section 115BBE.

  ---

• 2025 (4) TMI 1029
  Rejection of application for grant of registration u/s 12A and cancelling the provisional registration granted earlier u/s 12AB - as argued adequate opportunity was not granted to the assessee by the CIT(E) - HELD THAT:- Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the CIT(Exemption) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details to his satisfaction and decide the issue as per fact and law. Appeals filed by the assessee are allowed for statistical purposes.

  ---

• 2025 (4) TMI 1028
  Reopening of assessment u/s 147 - assessee has not filed any return of income u/s 139(1) and the AO has initiated the proceedings u/s 148 on the basis of information in his possession that assessee has made time deposit in his bank account - HELD THAT:- We find no merit in the conclusion drawn by the AO and the ld.CIT (A) which are based on suspicion and without application of mind. Thus, the proceedings initiated vide notice under section 148 is void- ab-initio since the ld. PCIT, Alwar has not recorded proper satisfaction and gave approval without application of mind and in mechanical manner which is unjustified and bad-In-law. In view of the reasons set out above, as also bearing in mind entirety of the case, we are of the considered view that the reasons recorded by the Assessing Officer, as set out earlier, were not sufficient reasons for initiating the assessment proceedings under section 147 read with section 148 of the IT Act, 1961. We, therefore, quash the reassessment proceedings. Time deposit in the bank account - Assessee failed to furnish documentary evidence regarding time deposit made during the year under consideration - AO considered the said information as reason to believe that income of the assessee has escaped assessment. Thus, the AO initiated proceedings for reopening of assessment and ultimately made addition on account of unexplained time deposit in the bank account. From perusal of Assessment order, we note that the AO has failed to make any enquiry in respect of the time deposits in the bank account reflecting the name of the bank, account numbers, nature of time deposit, source of time deposit etc. and further we note that the AO has not brought on record any evidence on the basis of which the reasons and conclusion was drawn. We also note that both the assessment order and appellate order has made no reference of specific section under which the addition has been made which is very much required to be mentioned by the AO so as to enable the assessee to represent his case accordingly and effectively. Therefore, non-mentioning the precise provision of law makes the impugned addition bad in law. We note that the Coordinate Bench of the Tribunal, Jaipur in the case of Shri Ram Lal [ 2024 (8) TMI 1554 - ITAT JAIPUR] held that non-mentioning the precise provision of law makes the entire impugned addition bad in law. The assessee submitted that he was in service in the Indian Navy for 11 years (retired in 1988) Post retirement, he was actively and exclusively engaged in farming and driving agriculture income therefrom. Therefore, it will not be abnormal to assume that the appellant had accumulated fund over the period of time since it is a general practice of a person to save money in bank. We note from the submission of assesee that assessee in his first reply dated 23.07.2023, submitted that he had savings from Indian Navy Service and the time deposit were made from the agriculture income gathered over the time. Therefore, the source of time deposit was very well explained by the appellant that the time deposit was made from the available fund out of past savings and we note that neither the AO nor the ld. CIT (A) had brought any record to suggest that the assessee was not serving in the Indian Navy or have any other source of income. Thus addition made by the lower authorities deserves to be deleted. Appeal of assessee allowed.

  ---

• 2025 (4) TMI 1027
  Validity of reassessment proceedings - specified authority to give sanction u/s 151 - addition u/s 69A - notice u/s 148 issued beyond 3 years from the end of the relevant AY - HELD THAT:- Since, the issue of sanctioning authority is no more res integra, as has been specifically deliberated upon and guided by the Hon ble Apex Court in the case of Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB) ] analyzing the order of Ashish Agrawal [ 2022 (5) TMI 240 - SUPREME COURT ] wherein it is categorically held that, as per the provisions of new regime the sanctioning authority shall be decided as prescribed amended section 151(new regime). In the present case because the reopening has been initiated after 3 years therefore, clause(ii) of section 151 shall apply. We, thus, find substance in the contention of the Ld. AR that the approval granted u/s 151(ii) (new regime) was not by the Ld. PCIT, who do not have jurisdiction to do so in a case wherein the process of reopening has been triggered beyond 3 years from the end of the relevant assessment year. The contention of the revenue, placing reliance on the judgment in the case of Ashish Agrawal [ 2022 (5) TMI 240 - SUPREME COURT ] that in present case the prescribed authority is Principal CIT-1, Raipur found to be misplaced or misconstrued, as the directions by the Hon ble Apex Court are clear, which are further clarified that the provisions of amended section 151 shall be applied in the cases in which the revenue has availed the benefit of extended life limit under TOLA and had proceeded for reopening assessment under the provisions of new regime. We, thus, are unable to persuade and concur with the response of the Ld. AO as per their report dated 12.12.2024. We are of the considered view that the impugned assessment order framed u/s 147 r.w.s. 144 r.w.s. 144B passed by the Ld. AO is liable to be struck down, being invalid for the want of valid assumption of jurisdiction on account of sanction u/s 151 by an authority, who is not vested with jurisdiction to grant such approval or other than the specified authority under clause (ii) of section 151 (new regime). Consequently, the assessment u/s 147 r.w.s. 144 r.w.s. 144B stands quashed. Decided in favour of assessee.

  ---

• 2025 (4) TMI 1026
  TP Adjustment - comparable selection - HELD THAT:- After deselection of compnaies as functionally dissimilar, we are of the view that ALP as computed by the TPO in the present facts and circumstances of the case is fair and reasonable to the extent of 11 comparables except M/s Ashoka Highways (Durg) Ltd. who has operating margin of 38% from toll operation business. Accordingly, we direct the AO to exclude the company M/s Ashoka Highways (Durg) Ltd. from the list of comparables and recompute the adjustment to be made in specified domestic transaction based on the average PLI for remaining 11 comparables as taken by the TPO.

  ---

• 2025 (4) TMI 1025
  Addition in respect of let out property - whether in the case of let out property if the actual rent received is less than municipal rateable value then the rental value should be adopted as ALV? - CIT(A) directing to adopt the Municipal rateable value for computation of ALV - HELD THAT:- Issue is squarely covered by the order of the Co-ordinate Bench for A.Y.2011-12 [ 2021 (9) TMI 597 - ITAT MUMBAI] as held that the actual rent received by the assessee in respect of let out property to some other tenant in subsequent assessment year cannot be used as a fair rental value for an earlier assessment year in respect of property that is let out to different tenant. While that has been held for a let out property, the same principle would indeed be applicable for vacant property also. We have also held in ground No.2 of the Revenue hereinabove that in such a scenario, municipal value should be adopted with the actual rent and higher of those two should be considered as the annual value. We find that the ld. CIT(A) has also directed the ld. AO to consider only the municipal value as the annual value in respect of vacant properties, on which finding, we do not find any infirmity. Taxability of transfer fee - As in view of the fact that as on date, the issue in dispute before us is already decided in the case of ITO vs. Venkatesh Premises Co-operative Society Ltd [ 2018 (3) TMI 675 - SUPREME COURT] to hold that the receipt on account of transfer fee / amenities fee cannot be brought to tax as income of the assessee.

  ---

• 2025 (4) TMI 1024
  Unexplained cash deposits u/s 69 - stand of the assessee that he is an agriculturist and he did not have any taxable income except exempt agriculture income and therefore he was not required to file his income tax return - Regarding cash deposit it is submitted that assessee had cash withdrawal and the payment was deposited against cash withdrawal. It is also submitted that assessee s wife and his father had received huge amount compensation on acquisition of their agricultural land which was exempt from income-tax, out of which assessee s wife had kept few cash with him and assessee s father had given cash which was deposited by the assessee in his bank account from time to time and support, the assessee has filed copies of bank account of self, wife and his father HELD THAT:- No material to the contrary has been brought on record by the authorities below. Therefore, considering the totality of facts of the present case, assessee has successfully proved the source of cash deposit in his bank account. Accordingly, assessment order passed u/s 144/147 of the Act is quashed. Grounds of appeal are allowed.

  ---

• 2025 (4) TMI 1023
  Addition u/s 69A - cash deposited in the bank account during the demonetisation period - HELD THAT:- The case of the assessee is that he is engaged in the business of purchase and sale of Electronic Voucher Distribution (EVD) for Tata Sky TV Setup Box Recharge and has been making cash sales. This fact is not rebutted by the Revenue that the cash receipts had also made cash sales. From the record it is transpired that the lower authorities have proceeded on the basis of mere suspicion which should not be the basis for addition in dispute. It is also pointed out that no discrepancy was found by the AO related to books of account. Under these facts the impugned addition cannot be sustained. Thus, hold accordingly. The AO is directed to delete the addition. Appeal of the assessee is allowed.

  ---

• Customs

• 2025 (4) TMI 1022
  Classification as Naphtha under Tariff Item 27101290 or as Natural Gasoline Liquid (NGL) under Tariff Item 27101220 - Department responsibility to discharge burden cast on it to establish their claim for classification of goods - it was held by CESTAT that the classification of goods as Naphtha under Tariff item 27101290 as declared by the appellant is held to be correct. - HELD THAT:- There are no good reason to interfere with the impugned order dated 28.10.2024 passed by the Customs, Excise Service Tax Appellate Tribunal, West Zonal Bench at Ahmedabad. Appeal dismissed.

  ---

• 2025 (4) TMI 1021
  Monetary amount invlolved in the appeal - Undervaluation of the export goods - challenge to Expert Panel Opinion inasmuch as it does not reveal the source for the market value - it was held by CESTAT that Valuation provisions under the Customs Act apply only for levy and collection of customs duty and not otherwise. - HELD THAT:- It is not inclined to issue notice in the present appeals but clarify that the question of law is left open. Appeal dismissed.

  ---

• 2025 (4) TMI 1020
  Demand of additional duty on the ground that as per the N/N.19/2005-Cus dated 01.03.2005, the goods covered under the exemption N/N. 24/2005-Cus dated 01.03.2005 are liable to pay additional duty at the rate of 4%. The goods imported by petitioner fell under the Customs Tariff (9027 80), which is found in the Customs Exemption N/N.24/2005-Cus. - HELD THAT:- he Customs Tariff Act specifies the rate at which duties of customs shall be levied. For the goods imported by petitioner in 2004 and 2005, the duty was 5%. In 2005-06, the goods were made free of customs duty. Therefore, what the Customs Tariff Act only signifies is what is the rate of duty that will be levied on goods imported into India. Section 2 of the Customs Tariff Act, 1975 provides the rates at which duties of customs shall be levied under the Customs Act, 1962 and are specified in the First and Second Schedules. Notification No.19/2005 has been issued in exercise of the powers conferred by Subsection (5) of Section 3 of the Customs Tariff Act, 1975 and in the table it only indicates the description of goods that shall be liable to additional duty at 4% ad valorem. That has nothing to do with Section 25 of the Customs Act. It does not mean that where goods are allowed to be imported free of customs duty, Government of India is not empowered under Section 25 of the Customs Act, 1962 to exempt the goods from the whole of the customs duty leviable thereon under the First Schedule. The goods imported, even though exempted from basic customs duty, may still be subject to levy of additional duty under the respective enactments and they would be so subject unless and until they are specifically exempted by the competent authority in exercise of the powers vested under those respective enactments from such additional duty. The Division Bench in Century Floor Mills Ltd. v. Union of India [ 2013 (10) TMI 1053 - MADRAS HIGH COURT ] held that under Section 25 of the Customs Act, the Government has authority to grant exemption from duty only conditionally or in absolute terms and in which event, the power under Section 25 of the Customs Act will only go for exempting generally and in absolute terms, thus making import free of any liability under the Act or permit import subject to other conditions as it may deem fit in the given circumstances. The Court held that there could not be much of difference in an item being notified under the Customs Tariff Act as nil or free, which matters very little. Conclusion - i) The petitioner s contention that goods exempted from basic customs duty cannot be subjected to additional duty is rejected. ii) Notification No.24/2005 is valid and not bad in law. iii) The levy of 4% additional duty under Notification No.19/2005 on goods covered under Notification No.24/2005 is lawful and valid. Petition dismissed.

  ---

• Corporate Laws

• 2025 (4) TMI 1019
  Oppression and mismamangement - Maintainability of suit - wrongfully continuing as members of the Executive Committee and are illegally occupying management positions - whether this Court has the jurisdiction to entertain the suit, in light of provisions of Section 430 of the 2013 Act? - whether the plaint can be rejected at the threshold in the absence of a formal application under Order VII Rule 11 CPC? - HELD THAT:- There is merit in the contention of Defendant No. 1 that under Order VII Rule 11 (d) of CPC, a plaint shall be rejected where the suit appears from the statement in the plaint to be barred by law and Court need not wait for the Defendant to appear on issuing summons and/or on appearance of the Defendant to file a formal application for rejection of plaint. In Sopan Sukhdeo Sable [ 2004 (1) TMI 726 - SUPREME COURT ], the Supreme Court held that Rule 11 of Order VII CPC lays down an independent remedy made available to the Defendant to challenge the maintainability of the suit itself, irrespective of his right to contest the same on merits. The law ostensibly does not contemplate any stage when the objection can be raised and also does not say in express terms about the filing of a written statement. In Patil Automation Private Limited [ 2022 (8) TMI 1494 - SUPREME COURT ], the Supreme Court held that Order VII Rule 11 CPC does not provide that the Court is to discharge its duty of rejecting the plaint only on an application. The Rule is in fact silent about any such requirement. Since summon is to be issued in a duly instituted suit, in a case where plaint is barred under Rule 11 (d), the stage begins at that time when Court can reject the plaint. Thus, there can be no debate that at the threshold itself, the Court can reject a plaint where it is barred on account of any infirmity or disability under Rule 11 of Order VII CPC and as observed by the Supreme Court, it is in fact that the duty and obligation of the Court to examine if the plaint has any infirmity based on the averments in the plaint, before issuing summons and therefore, there is no requirement of waiting for a formal application under Order VII Rule 11 CPC in that event and contention of the Plaintiffs to this extent merits rejection. The inevitable conclusion is that Section 430 of the 2013 Act bars the jurisdiction of the Civil Court in matters falling in the domain of NCLT, which it is empowered to adjudicate under different provisions of the Act and these powers are wider and broader than the powers of the Civil Court under Section 9 CPC, being a specialised Tribunal created for the purpose of regulating adjudication of the affairs of the companies expeditiously. Conclusion - i) The Civil Court lacks jurisdiction to entertain the suit due to the bar under Section 430 of the Companies Act, 2013. ii) The plaint is liable to be rejected at the threshold under Order VII Rule 11(d) CPC as the suit is barred by law. The suit is not maintainable as the remedy of the Plaintiffs lies in approaching NCLT. Accordingly, the plaint is rejected leaving the Plaintiffs to avail their remedies in accordance with law before the NCLT, making it clear that this Court has neither entered into nor expressed any opinion on the merits of the case.

  ---

• 2025 (4) TMI 1018
  Rectification of order - Exercise of suo motu powers under Rule 154 of the NCLT Rules, 2016, to rectify a docket order, particularly when the principal detailed order was uploaded after the rectification order was passed - vice of audi alterem partem - principles of natural justice - HELD THAT:- The provision of Rule 154 of the NCLT Rules, provides power with the Tribunal of rectification . The rectification herein would mean only making any clerical or arithmetical mistakes in the order within the scope contemplated under it, arising out of an accidental slip or omission, which could only be corrected by the Tribunal, on its own motion or on an application preferred under Sub-rule (2) of Rule 154, which prescribes the format i.e., NCLT-9, under which the application contemplated under Sub-rule (1) of Rule 154, is to be preferred. Exercising the aforesaid powers, the Ld. Tribunal is shown to have passed an order on 10.03.2025, whereby certain rectifications were permitted to be carried in the light of the observations made in Para 11 of the order dated 10.03.2025. The basic parameters for putting a challenge to the said order dated 25.03.2025, as agitated by the Ld. Senior Counsel for the Appellant, is that the order dated 10.03.2025, involving rectification of order under Rule 154 of the NCLT Rules, and the order passed on 25.03.2025, on a memorandum filed by the Administrator, ordering rectification of orders of both 07.03.2025 10.03.2025 it is in utter derogation to the principle of natural justice, as the Appellants were not served with its copy nor were heard, and the order was permitted to be modified on the basis of a memorandum preferred by the Administrator above. Thus, they contend that the order happens to be bad in the eyes of law as it suffers from vices of audi alteram partem. How could there be a rectification of a docket order dated 07.03.2025, by an order passed on 10.03.2025 when the order of 07.03.2025 effecting substantive rights, itself was uploaded for the first time on 11.03.2025? - HELD THAT:- It is an admitted case that at the stage of passing of the order on 10.03.2025, or even prior to it no notice of any nature whatsoever was ever issued to any of the parties to the proceedings. Hence, even if the orders of 10.03.2025, is taken as to be an order passed in the exercise of suo motu powers, it would be bad, suffering from derogation of the principles of natural justice, as prior to passing of an order, on much less substantial changes such as arithmetical corrections, the parties are required to be heard, which apparently was not done nor does it reflect that the said power was exercised by the Tribunal in the exercise of suo motu powers. he docket order of 07.03.2025 itself attaches finality to it, upon being uploaded on 07.03.2025. Finality is more particularly attached when, by the docket order of 07.03.2025, itself was directed not to be enforced for the time specified there. The question would be whether the said order at all subsequently without notice to the other party could be suo motu rectified by the Ld. Adjudicating Authority. What effect such rectification would have to the final order, is altogether a different question which can be answered, only when such rectification, if any is passed after hearing the parties to the proceedings. As far as the order, dated 10.03.2025 as rendered in CP No. 44/241/HDB/2023, is concerned, being in violation of the uploading of the docket order of 07.03.2025, coupled with the fact, that, as per available records, no prior notice was issued by the Tribunal even while taking a suo motu cognizance, while passing the order of 10.03.2025, the order would be bad in the eyes of law. Hence, the order of 10.03.2025 deserves to be quashed, and is hereby quashed. Conclusion - The provision of Rule 154 of the NCLT Rules, provides power with the Tribunal of rectification . The rectification herein would mean only making any clerical or arithmetical mistakes in the order within the scope contemplated under it, arising out of an accidental slip or omission, which could only be corrected by the Tribunal, on its own motion or on an application preferred under Sub-rule (2) of Rule 154. Appeal allowed.

  ---

• Service Tax

• 2025 (4) TMI 1017
  Levy of service tax - interior decoration service - appellant is undertaking orders for supplying, assembling, fixing, installation and erection of cubicles/modular furniture - wilful suppression of facts or not - extended period of limitation. Whether for the relevant period, the demand made on the appellant for rendering Interior Decoration Services is tenable? - HELD THAT:- Since the services provided by the appellant in the instant case is of the nature of a composite works contract involving sale of goods as well as work and labour, and is clearly not a contract of services simpliciter, given the law laid down by the Apex Court in CCE v. Larsen and Toubro [ 2015 (8) TMI 749 - SUPREME COURT ] and Total Environment Building Systems Pvt Ltd v. Deputy Commissioner of Commercial Taxes, [ 2022 (8) TMI 168 - SUPREME COURT ], without going into further details of the dispute or quantification of tax liability, it is held that the impugned order to the contrary, confirming the demand of service tax liability on the appellants under the category of interior decorator service , cannot sustain and is liable to be set aside. Whether the invoking of extended period of limitation is tenable? - HELD THAT:- There is no allegation that the appellant is not regularly filing its returns or have not reflected the manner of its levy of service tax in its invoices. In such circumstances, when the appellant was inspected and audit conducted and the audit queries replied to, there could not be a case of suppression and the Department could not have invoked the extended period of limitation, as has been held in a line of decisions, such as CCE, Bangalore v Pragathi Concrete Products (P) Ltd, [ 2015 (8) TMI 1053 - SC ORDER ], Rajkumar Forge v UOI [ 2010 (8) TMI 796 - BOMBAY HIGH COURT ], to cite a couple. Conclusion - i) The demand for differential service tax on the appellant for the period April 2006 to February 2007 under the category of Interior Decorator Services is not tenable and is set aside. ii) The invocation of the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994, is legally unsustainable in the absence of any allegation or evidence of wilful misstatement or suppression of facts with intent to evade tax, and the demand made beyond the normal limitation period is barred by limitation. iii) The demand of differential service tax, interest, and penalty imposed by the original and appellate authorities are quashed. Appeal allowed.

  ---

• 2025 (4) TMI 1016
  Levy of service tax - Supply of Tangible Goods service - leasing of machinery to the lessee - extended period of limitation - HELD THAT:- Given that in this instance the appellant is leasing out certain machinery, it is only when the right to use the machinery is provided to the service recipient, without giving right of possession and right of effective control, the service would come within the ambit of the aforementioned service of supply of tangible goods. What would constitute a transaction of the transfer of right to use goods was stated in the decision of Bharat Sanchar Nigam Ltd v. Union of India [ 2006 (3) TMI 1 - SUPREME COURT ] by the Honourable Supreme Court, in the course of deciding the question of the nature of the transaction by which mobile phone connections are enjoyed, whether is it a sale or is it a service or is it both? The Hon ble Apex Court has, inter-alia, dwelling on Article 366(29A), the legislative competence of the state to levy sales tax under Entry 54 List II of the Seventh Schedule and the powers of Central Government to levy service tax under Entry 97 of List I, elaborated upon a transaction of the transfer of right to use goods. It is pertinent to note that while the SCN merely states that from the lease agreement it can be seen that the lessee has no legal right of possession and effective control of the machinery taken on lease from the taxpayer, yet it fails to put the appellant to notice as to which term exactly is being interpreted by the SCN issuing authority in this fashion, thereby rendering the charge vague and lacking in details. The Honourable Supreme Court in its decision in CCE, Bangalore v. Brindavan Beverages [ 2007 (6) TMI 4 - SUPREME COURT ], has held that the show cause notice is the foundation on which the department has to build up its case and if the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations indicated in the show cause notice. Extended period of limitation - HELD THAT:- The appellant has consistently taken a plea before the lower authorities that the issue was that of interpretation and that the appellant was of the view that since they have paid VAT the transaction itself was not within the scope of service tax law. Therefore, in such circumstances, coupled with the fact that there has been no evidence let in of any positive act of willful suppression or misstatement of facts with intent to evade payment of duty that has been made by the appellant, the SCN dated 27-04-2012 for the period from April 2008 to March 2010 is also barred by limitation having been issued beyond the normal period. Conclusion - i) Supply of tangible goods for use and leviable to VAT/sales tax as deemed sale of goods, is not covered under the scope of the service of supply of tangible goods and whether a transaction involves transfer of possession and control is a question of facts and is to be decided based on the terms of the contract and other material facts. ii) The demand of duty along with appropriate interest thereon and penalty imposed by the original authority, as upheld by the learned appellate authority, are untenable and cannot sustain. Appeal allowed.

  ---

• Indian Laws

• 2025 (4) TMI 1015
  Reference to the powers of the High Court to be exercised under Section 482 CrPC as also under Article 226 of the Constitution to quash an FIR - criminal proceedings initiated by the Central Bureau of Investigation (CBI) - forgery and cheating - HELD THAT:- It is already observed that the dispute involved is primarily of civil nature. The aggrieved party, if any, would have been the Bank which has no grievance against the Appellants. Further, no loss has been caused to the Bank as is apparent from the calculations presented by the appellants before this Court. Not only the principal amount has been returned but an amount over and above thereto, on the basis of the settlement, has been received by the Bank. The case is at the very initial stage with the chargesheet having been filed. Keeping in view the observations made by this court in Narinder Singh [ 2015 (2) TMI 1042 - SUPREME COURT ], in the facts of this case, it can safely be said that the criminal case which has been sought to be projected and proceeded with against the Appellants has an overwhelming and pre-dominant civil character arising out of pure commercial transaction where the parties have resolved their entire dispute amongst themselves. In the light of the fact that the allegations against the Bank Manager relating to his involvement in the commission of offences, which has been alleged against the Appellants, having not been substantiated, the possibility of conviction of the appellants is remote and bleak. Continuation of these criminal proceedings would put the Appellants to great oppression and prejudice and extreme injustice would be caused to them by not quashing the criminal proceedings. It would not be out of place to mention here that, in the present case, the proceeding for settlement was not only initiated but the finalization thereof in the form of settlement took place prior to the filing of the chargesheet against the Appellants by the CBI. This Court in the case of Narinder Singh [ 2015 (2) TMI 1042 - SUPREME COURT ], also observed that the stage and timing of the settlement play a crucial role in determination as to whether to exercise power under Section 482 of the CrPC 1973 or not. It was observed that cases where settlement has arrived at either immediately or in close vicinity after the alleged commission of offence and the matter is still under investigation, the High Court may be liberal in accepting the settlement to quash the criminal proceeding/investigation. Conclusion - i) The High Court should have exercised its inherent jurisdiction to quash the FIR, chargesheet, and criminal proceedings in the present case. ii) The timing of the settlement strongly supported quashing of the criminal proceedings. iii) The dispute involved is primarily of civil nature. The aggrieved party, if any, would have been the Bank which has no grievance against the Appellants. The impugned order passed by the High Court is hereby quashed and set aside - appeal allowed.

  ---