TMI Tax Updates - e-Newsletter
April 23, 2024

Case Laws in this Newsletter:

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

Articles

1. MEETING OF CREDITORS - INSOLVENCY RESOLUTION PROCESS - PERSONAL GUARANTOR TO CORPORATE DEBTOR

   By: DR.MARIAPPAN GOVINDARAJAN

2. Goods seized cannot be released by invoking writ jurisdiction if no application filed for release of goods under GST

   By: Bimal jain

3. Various Types of Charges on Property

   By: Ishita Ramani

4. Assessment Order quashed when Assessee incorrectly reported turnover in GSTR-1 but correctly in GSTR-3B

   By: Bimal jain

News

1. Competition Commission of India (CCI) invites proposal for launching Market Study on Artificial Intelligence and Competition in India

2. Auction for Sale (re-issue) of (i) ‘7.10% GS 2034’ and (ii) ‘7.46% GS 2073’

3. Minutes of the Monetary Policy Committee Meeting, April 3 to 5, 2024 [Under Section 45ZL of the Reserve Bank of India Act, 1934]

4. Net Direct Tax collections (provisional) for Financial Year (FY) 2023-24 exceed Union Budget Estimates by Rs. 1.35 lakh crore i.e. by 7.40%

Highlights / Catch Notes

GST

• Court Denies Return of Seized Goods Despite Lapse in Notice Period, Citing Appellants' Conduct and Circumstances.

  Case-Laws - HC : Release of seized goods - The appellants argued that the seized goods should be returned as no notice was issued within six months of seizure, as stipulated by Section 67(7) of the Act. - The High Court observed that the time for issuance of notice can be extended for a further period not exceeding six months on sufficient cause being shown by the proper officer. - The court acknowledged previous representations made for the release of seized stock, indicating that the matter had been raised prior to the expiry of the statutory period. - It stated that considering the conduct of the appellants and the circumstances, they were not entitled to any relief, implying that failure to approach for release was not the determining factor in the decision.
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• Doctrine of Merger: Supreme Court Dismissal Leaves High Court Judgment Unaffected in Appellate Review Case.

  Case-Laws - HC : Doctrine of Merger of High Court Decision with the Order of Supreme Court - The Jharkhand High Court, in its analysis, delved into the doctrine of merger, a pivotal concept in legal proceedings concerning appellate review. The doctrine posits that once an appellate court has reviewed a lower court's decision, the lower court's judgement is absorbed into the appellate decision. This concept was intricately discussed in relation to a case where the Supreme Court of India dismissed a Special Leave Petition (SLP) without granting leave, thereby leaving the original High Court decision intact and unmerged. This implies that despite the Supreme Court's dismissal, the original decision by the High Court stands on its own and is not overshadowed or replaced by the dismissal itself.
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• Court Orders Reimbursement of GST for Raw Materials and Components in Contract Execution.

  Case-Laws - HC : Scope and Interpretation of Contract - Seeking reimbursement of the GST paid by them for the procurement of raw materials, intermediary components etc. and the bought-out items dispatched directly from the sub-vendors to the work site - The court held in favor of the petitioner firms, stating that the respondents are obligated to reimburse the GST paid on both direct and indirect transactions. This decision was anchored on the premise that the introduction of GST, which occurred during the execution of the contracts, mandates such reimbursement under the updated contractual obligations.
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• High Court Cancels Pre-Arrest Bail in GST Evasion Case, Citing Improper Grant and Need for Custodial Interrogation.

  Case-Laws - HC : Seeking cancellation of pre-arrest bail granted to the respondent - evasion of GST revenue - The High Court, after considering the arguments presented by both parties and referencing a decision by the Supreme Court, concluded that the anticipatory bail application was not maintainable. The Sessions Court had granted bail without properly considering the provisions of the law and the necessity for custodial interrogation. Therefore, the bail granted to the respondent deemed contrary to the law and cancelled by the High Court.
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• Court Dismisses Petition Citing Fraudulent Tax Login Credentials, Urges Use of Statutory Appeal Process.

  Case-Laws - HC : Validity of impugned order u/s 73 of the CGST Act - The case before the Calcutta High Court involved a challenge to an order issued under the CGST Act, wherein the petitioner alleged fraudulent manipulation of their taxpayer login credentials. Despite the serious criminal nature of the allegations, the Court held that such matters fell outside the ambit of constitutional writ jurisdiction under Article 226. It emphasized the availability of statutory appeal against the impugned order and dismissed the petitioner's plea, citing the lack of grounds to justify intervention by the writ court.
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• Court Dismisses Challenge to GST Council Formation; Petitioner Lacks Standing Due to No Legal Injury or Involvement.

  Case-Laws - HC : Constitutional Validity of Sections 2, 9, 12 and 18 of the Constitution (101st Amendment) Act, 2016 violating the basic structure of the Constitution of India - grounds raised are based on the constitution of a Goods and Services Tax Council (GST Council) - In its judgment, the High Court scrutinizes the petitioner's locus standi, emphasizing the necessity of demonstrating aggrievement in PILs. Despite the petitioner's assertion of public interest, the court finds that they lack standing, as they have not suffered any legal injury or prejudice resulting from the impugned provisions. Additionally, the court highlights the petitioner's absence of registration under GST enactments or involvement in commercial activities, further undermining their standing. - Ultimately, the High Court dismisses the writ petition, concluding that there is no basis to entertain it.
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• Court Quashes State GST Demand, Cites Central Authority's Prior Involvement as Justification for Overruling State Actions.

  Case-Laws - HC : Validity of demand of GST raised by State authorities - For the same cause of action, the Central Authority has already initiated action - The petitioner contested the order on the grounds of prior proceedings initiated by the Central Authority and alleged lack of timely information provided to the State authorities. The Court found merit in the petitioner's argument regarding the invalidity of the Demand Order due to prior proceedings and dismissed the State authorities' claims of lack of information. Additionally, the Court rejected reliance on a circular mandate as sufficient justification for the State authorities' actions. Consequently, the High Court set aside/quashed the impugned Demand Order.
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• AAAR Clarifies Service Classification: Focus on Exhibition Rights Over Licensing for Reproduction and Distribution.

  Case-Laws - AAAR : Classification of services - Licensing Services for The Right to Broadcast and Show Original Films, Sound Recordings, Radio and Television Programmes Etc - The AAAR upheld the original classification under SAC 999614. It reasoned that the appellant's focus was more on the exhibition (leasing out rights for a specific period) rather than outright licensing for reproduction and distribution (as defined under SAC 997332). The authority emphasized that a proper understanding of the appellant’s contractual agreements was crucial, which appeared to be lacking or inconsistent with their claims.
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• SEZ Units Exempt from GST on Services from DTA Suppliers under Reverse Charge, Must Meet Conditions for IGST Exemption.

  Case-Laws - AAR : SEZ unit - requirement to pay tax under reverse charge mechanism (RCM) on specified services - the AAR concluded that the applicant, being an SEZ unit, is not required to pay GST under RCM for specified services availed from DTA suppliers. They ruled that the applicant can avail of the exemption from IGST under certain conditions, such as furnishing a Letter of Undertaking as specified in the relevant notification.
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• SEZ Units Exempt from GST on Legal Services via Reverse Charge with LUT or Bond; AAR Clarifies Tax Obligations.

  Case-Laws - AAR : SEZ unit - Legal services - liability pay tax under reverse charge mechanism on services received from advocate - The applicant contended that various provisions and exemptions under the SEZ Act, 2005, and SEZ Rules, 2006, exempt them from certain taxes and allow for zero-rated supply of services. The Authority examined relevant provisions of the IGST Act, 2017, and considered clarifications provided by the Tax Research Unit, CBIC. They referred to Notification No. 37/2017-Central Tax, which allows for furnishing of LUT for procuring services without payment of integrated tax. Emphasizing that the recipient in SEZ is deemed the supplier for fulfilling conditions of the notification, the Authority for Advance Ruling (AAR) ruled in favor of the applicant, stating that they are not required to pay GST under RCM for specified services, provided they furnish a LUT or bond as specified.
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• Insulating M.S. Pipes with PU Foam & PE Film/HDPE Jackets Classified as Manufacturing, Subject to 18% GST.

  Case-Laws - AAR : Classification of services - activity of insulating of bare M.S. Pipes provided by the customers on job work basis by using PU Foam and PE Film/HDPE jackets owned by the applicant - The AAR confirmed that the process undertaken by the applicant qualifies as manufacturing under Section 2(72) of the CGST Act, 2017 - The AAR observed that since the inputs were owned by the applicant and not the customer, the AAR ruled that the services are correctly classified under Sr. No. 27 of heading 9989 of the notification, attracting a GST of 18%. - The AAR further discussed the definition of job work in the context of GST, affirming that while the applicant's activities met the broader definition of job work, the specific conditions of Sr. No. 26 (pertaining to goods owned by another registered person) were not met due to the ownership status of the inputs.
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• Teacher Supply to Local Authorities Exempt from GST for Educational Services, per Amended Notification 12/2017-Central Tax.

  Case-Laws - AAR : Exemption from GST - pure services being provided to a local authority (BBMP) - The Authority rules that the service of supplying teachers/lecturers to schools/colleges run by BBMP, on an outsourced basis, is exempted from GST. This exemption is granted under the category of pure services provided to a local authority by way of an activity related to promoting educational aspects, as per Notification 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.
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• AIIMS Subscription Services Classified as OIDAR, Not GST-Exempt; AIIMS Liable for GST as Importer of Online Medical Resources.

  Case-Laws - AAR : Exemption from GST - supply of services (subscription of Clinical Key) to the All India Institute of Medical Sciences (AIIMS) - Governmental Authority or not - The Advance Ruling Authority (AAR) determined that the subscription services provided to AIIMS do not qualify as 'supply of online educational journals or periodicals' as specified under the GST exemption provisions. Instead, they are more broadly classified as OIDAR services, which include a composite supply of various online medical resources. For the period up to September 30, 2023, and after October 1, 2023, AIIMS does not qualify as a non-taxable online recipient. Therefore, it is responsible for the GST liability as the importer of the services. The Applicant, being a foreign entity, is not liable to pay GST as the services are considered imported by AIIMS.
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Income Tax

• Faceless Tax Assessment Order Invalidated for Procedural Errors; Lacked Required Notices and Proper Transition.

  Case-Laws - HC : Validity of Faceless assessment u/s 144 r.w.s.144B - The High Court observed that the impugned order indeed failed to comply with the prescribed procedure under Section 144B of the Act. The absence of a proceeding shifting the assessment from the Central Assessment Circle to the regular assessment circle, as well as the failure to issue notices u/s 143(2) and 144B(1)(iii) of the Act, rendered the order invalid. The High Court observed that the combination of show cause notice and draft assessment order into a single document was procedurally incorrect. The court referenced a previous ruling that such a combination was impermissible, undermining the statutory framework designed to ensure transparency and accountability in assessments.
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• High Court Quashes Order, Allows Public Trust More Time to Respond to Tax Assessment Notice u/s 147.

  Case-Laws - HC : Validity of reopening of assessment u/s 147 - shorter period to reply to notice - The High Court acknowledged the petitioner's argument regarding the limited time provided for response. Considering the petitioner's status as a Public Trust running a school, the Court deemed it appropriate to grant an opportunity for a reply to the notice. - The Court, without expressing an opinion on the merits, quashed the impugned order and remanded the matter for fresh consideration.
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• Tribunal Overturns Tax Penalty Due to Lack of Specific Charges and Evidence in Expense Disallowance Case.

  Case-Laws - AT : Penalty u/s 271(1)(c) - The Appellate Tribunal observed that the appellant, during reassessment proceedings, had filed their return of income but failed to provide sufficient documentation to substantiate claimed expenses. Notably, the assessing officer disallowed 50% of the claimed expenses, but did not specifically charge the appellant with concealing income or furnishing inaccurate particulars in the assessment order. In the subsequent penalty order, the assessing officer invoked twin charges without clear evidence to support them. Considering the lack of specific charges and evidence, the Tribunal directed the assessing officer to delete the penalty.
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• Tribunal Rules Assessment Order Void Due to Incorrect Section Use for Incriminating Material Found in Search.

  Case-Laws - AT : Reopening of assessment v/s assessment u/s 153C - The Appellate Tribunal acknowledged the argument presented by the appellant and emphasized the importance of applying Section 153C when incriminating material pertaining to a person other than the searched party is found. Citing relevant judicial precedents, including decisions from the Supreme Court and High Courts, the Tribunal concluded that the AO should have initiated proceedings under Section 153C instead of Section 147. As the AO failed to present any additional information beyond the seized documents, the Tribunal deemed the assessment order void-ab-initio and upheld the appellant's contention regarding the invalidity of the notice issued under Section 148.
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• Tribunal Overturns Enhanced Tax Assessment, Upholds Assessee's Valuation Under Prescribed Methods.

  Case-Laws - AT : Enhancement made by the Ld. CIT(A) u/s 251(1) r.w.s. 56(2) (viib) - AO substituted fair market value determined by the assessee through his own valuation - Assessees have submitted the Valuation Report duly signed by the auditor by following NAV/DCF Method as required under Rule 11UA(2) of the Rules - The Tribunal disagreed with this decision, highlighting that the assessee had provided a valuation report as per the prescribed method (Discounted Cash Flow Method under Rule 11UA(2)(b)). The Tribunal found that the lower authorities had inappropriately rejected this valuation report without providing a basis for doing so.
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• Trust Wins: Tribunal Finds Assessing Officer Wrong on Rental Income Attribution Due to Lessee's Enhancements.

  Case-Laws - AT : Addition towards difference between the rental income received by the assessee from M/s.CFD, a partnership firm and rental income received by the partnership firm, M/s.CFD from three tenants - The tribunal sided with the trust, ruling that the Assessing Officer erred in attributing additional rental income to the trust, as the sub-leases were based on substantial enhancements made by the lessee, justifying higher rents from sub-tenants.
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• Tribunal Permits Offset of Short-Term Capital Loss from Equity Shares Against Gains from Derivatives Under Tax Law.

  Case-Laws - AT : Disallowance of set off of Loss - sale of equity shares (STT) - short-term capital gains (STCG) on sale of derivatives and short-term capital loss (STCL) - The Tribunal examined various judicial pronouncements and held that under section 70(2) of the Act, STCL arising from any asset can be set off against STCG arising from any other asset under a similar computation, regardless of the differential tax rates. It emphasized that the computation in both cases is made under the same provisions, allowing for such set-off. Consequently, the Tribunal allowed the appeal of the assessee, affirming their right to set off STCL against STCG.
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Customs

• Court Dismisses Application, Finds No Evidence Against 14-Year Delay in Show-Cause Notice Revival.

  Case-Laws - HC : Adjudication of SCN that was kept in call book for 14 years - The applicant claimed that the show-cause notice had been kept in the call book for 14 years and later revived, leading to an adverse order without considering their submissions. However, the court found no evidence to support this claim and upheld its previous decision, dismissing the application.
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• Drone Import Compliance: Tribunal Upholds Confiscation Due to Missing Approvals, Allows Re-export to Qatar for Education.

  Case-Laws - AT : Violation of importing restricted goods - Import of Litebee wing-Nano Drone Components kits - Re-export of goods - The Tribunal examined the regulations governing the import of drones, particularly highlighting restrictions and requirements imposed by DGFT notifications. It concluded that while import of drones for educational purposes was not outrightly prohibited, certain conditions and approvals were necessary, which the appellant did not meet. As a result, the Tribunal upheld the confiscation of the drone but allowed redemption for re-export to Qatar due to the delay in proceedings.
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• Tribunal Rules Imported Robot Toys as Educational Goods, Not Toys; Corrects Classification for Importer Benefit.

  Case-Laws - AT : Classification of imported goods - children building/constructable robot toys in CKD condition with individual box packing and are electronic toys - drones - Teaching Aid's in schools - The Appellate Tribunal analyzed the nature and intended use of the imported items. It determined that the goods in question were indeed imported for educational purposes, as evidenced by agreements with educational institutions. Consequently, the Tribunal concluded that the goods should be classified under CTH 9023, as declared by the importer, rather than under the category of toys (CTH 9503) as held by the adjudication authority.
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• Tribunal Penalizes Facilitators in Export Fraud for Misdeclaring Rags as Nightwear; Reduces Penalties Due to Prior Sanctions.

  Case-Laws - AT : Levy of penalty - Abetment in Fraudulent export - The judgment by the Appellate Tribunal of CESTAT Bangalore addressed a case of fraudulent export and misdeclaration of goods. Investigations revealed a pattern of misdeclaration by the exporter, involving inferior quality rags instead of declared ladies nightwear. The appellants, involved in arranging containers and customs clearance, were found complicit in facilitating these fraudulent exports. Despite their claims of innocence, their actions violated customs regulations and aided in the fraudulent scheme. The tribunal upheld penalties under Section 114 of the Customs Act, albeit reducing them considering the cancellation of DEPB licenses and penalties on the exporter.
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• Tribunal Grants Duty Exemption for Aluminium Shelving Used in Mushroom Farming, Recognizing Them as Agricultural Devices.

  Case-Laws - AT : Classification of imported goods - Imports aluminium shelving for Mushroom - The Appellate Tribunal ruled in favor of the appellant. They determined that the imported goods, particularly the aluminium shelving, were integral to mushroom cultivation mechanization and qualified as mechanical devices for agriculture. As a result, the Tribunal set aside the department's classification and allowed the appellant's claim of duty exemption.
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• Customs Broker License Restored: Tribunal Overturns Revocation Due to Unsubstantiated Allegations and Procedural Discrepancies.

  Case-Laws - AT : Revocation of the Customs Broker Licence - The appellant argued that the license had already been revoked once and reinstated by the Tribunal, making the subsequent revocation unjustified. The Department alleged violations under various provisions of the Customs Act and Customs Brokers Licensing Regulations. However, the Tribunal found no merit in the Department's allegations, highlighting discrepancies in the application of relevant provisions and logistical challenges at the Land Customs Station. Ultimately, the Tribunal ruled in favor of the appellant, setting aside the impugned order and restoring the appellant's license.
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IBC

• Machines Lawfully Seized by Customs Before Insolvency Process; Ownership Transferred to Government, Confiscation Upheld.

  Case-Laws - AT : Release of assets (machines) seized by the Customs Authorities before initiation of CIRP - The tribunal found that the goods were lawfully confiscated under the Customs Act before the initiation of the CIRP. Therefore, the goods were no longer the property of the Corporate Debtor by the time the RP sought their release. It was noted that the order for confiscation was made after a proper show-cause notice and was not contested by the Corporate Debtor at that time. - The tribunal clarified that the ownership of the confiscated goods vested with the government immediately upon confiscation, irrespective of whether the redemption fine was paid. The option to redeem the goods by paying the fine was a separate matter that did not affect the fundamental status of ownership transfer upon confiscation.
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• Order Reserved by Bench Must Be Pronounced by Same Bench Unless New Developments Warrant Re-Hearing.

  Case-Laws - AT : Bench Reconstitution and Order Pronouncement - Whether an order reserved by a bench could be pronounced by a reconstituted bench without considering a subsequent application that called for a re-hearing based on new developments. - According to Tribunal directives, a judgment reserved should ideally be pronounced by the same bench unless re-hearing is warranted by substantial subsequent developments. Ultimately, the Appellate Tribunal set aside the order pronounced by the reconstituted bench and remanded the case back to the regular bench for a fresh hearing. It emphasized that the judicial process must consider all relevant developments to ensure fair adjudication.
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• Tribunal Upholds Insolvency Process Against Corporate Guarantor Despite Limited Liability to Collateral Value.

  Case-Laws - AT : Admission of Section 7 Application of the Financial Creditor - Corporate Debtor / Guarantor failed to fulfil obligations - The tribunal noted the specifics of the guarantee, where the corporate guarantor's liability was capped to the value of the collateral lands. However, it pointed out that the guarantee remains in effect and binds the guarantor to fulfill the obligations if the principal borrower defaults. Ultimately, the tribunal found no legal infirmity in the decision of the lower tribunal (NCLT) to admit the CIRP application against the corporate guarantor.
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• Tribunal Recognizes Appellant as Secured Operational Creditors in NOIDA Authority Case.

  Case-Laws - AT : Rejection of application by the impugned order - Secured creditors or not - NOIDA Authority - The tribunal, after considering submissions and legal precedents, concluded that the Appellant should be recognized as secured operational creditors.
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Service Tax

• Tribunal Rules Internal Fund Transfers and Pre-Tax Negotiations Not Subject to Service Tax, Dismissing Demand.

  Case-Laws - AT : Levy of service tax - Amounts received by the appellant from Priyadarshini Gas Seva [PGS] - The Tribunal notes that PGS is a unit of the appellant, and it's not uncommon for units to transfer profits to their parent company. The mere transfer of funds does not inherently indicate consideration for a service provided. The Tribunal highlights that the Commissioner's finding, suggesting that the negotiation with Indian Oil Company (IOC) for PGS distributorship constituted a service, is flawed. The negotiation, which occurred in 1984-1986 when there was no service tax levy, cannot retroactively be considered a taxable service. - Ultimately, the Tribunal sets aside the demand under this head, affirming that the negotiation conducted by the parent company on behalf of its unit does not constitute a taxable service.
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• Tribunal Rules Reimbursable Expenses Excluded from Service Tax in Pure Agent Services, Overturns Previous Order.

  Case-Laws - AT : Demand of differential service tax - Valuation - non-inclusion on reimbursable expenses - pure agent services - The Appellate Tribunal analyzed the agreements and legal provisions, including previous tribunal decisions and the Service Tax (Determination of Value) Rules, 2006. It concluded that the appellant indeed acted as a pure agent and that reimbursable expenses should not be considered part of taxable services. Consequently, the Tribunal set aside the impugned order, allowing the appeal with consequential relief.
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• Tribunal Overturns Service Tax Demand on Government Contract, Grants Appeal for Financial Year 2015-16.

  Case-Laws - AT : Non-payment of Service Tax - works contract services - amounts obtained from Form 26 AS (Income Tax Department) for the Financial Year 2015-16 - The Tribunal, after considering the submissions of both parties and examining relevant notifications and circulars, concluded that the demand for service tax on a specific amount received by the appellant from a government authority for works contract services was unjustified. The Tribunal cited exemptions applicable to services provided to government entities, ultimately setting aside the order under challenge and allowing the appeal.
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VAT

• Court Denies Anticipatory Bail in Tax Evasion Case, Highlights Need for Custodial Interrogation in MVAT and IPC Charges.

  Case-Laws - HC : Seeking grant of anticipatory bail - bailable offence or not - failure to make payment of tax - wilful attempt to evade any tax or payment of any tax - The applicant argued that the primary issue was tax evasion under MVAT, citing ongoing insolvency proceedings against a debtor as the reason for non-payment of taxes. - The High Court acknowledged the serious allegations of tax evasion and misappropriation, noting the substantial amount involved and the importance of custodial interrogation for a thorough investigation. - After analyzing relevant legal provisions and precedent cases, the Court concluded that the defendant could be prosecuted under both MVAT and IPC for the same set of facts. It cited Section 26 of the General Clauses Act to support this interpretation.
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• Appeal Dismissed for Non-Appearance; Court Orders Review of Restoration Application for Unpaid Tax Recovery Under APVAT Act.

  Case-Laws - HC : Recovery of alleged outstanding dues of unpaid tax amounts - Section 29 of APVAT Act, 2005 - Appeal was dismissed for default due to the petitioner's repeated non-appearance despite being granted several adjournments. - In the interest of justice, the High Court directed the appellate authority to consider and decide the petitioner’s application for restoration within a specified period of six weeks from the date of the court order. Additionally, if the appeal is restored, the authority is instructed to decide the appeal expeditiously.
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• Court Rules C-Forms Valid for 2% Concession on Natural Gas Transactions Post-GST; Orders Tax Refund Process.

  Case-Laws - HC : Entitlement for issuance of C-Forms post the introduction of G.S.T. regime for natural gas - The High court extensively reviewed the applicability of C-Forms in the post-GST regime and reaffirmed that despite the GST implementation, certain transactions still fell under the purview of the CST Act due to the continued definition of some goods like natural gas. It was determined that the petitioner was entitled to the concessional rate of 2% if it provided the necessary C-Forms. The court also noted the confusion and transitional issues between the VAT and GST systems, which affected the submission of these forms. The court ultimately ruled in favor of the petitioner, directing the tax authorities to process the refund based on the C-Forms submitted.
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• Court Rules Custom Goods as Inter-State Sales, Denies Tax Exemption Claim Under CST Act for Stock Transfer.

  Case-Laws - HC : Benefit of Exemption from CST - stock transfer or inter-state sale - The petitioner argued for the exemption of tax under Section 6A of the CST Act, contending that the movement constituted stock transfer. However, the respondent argued that the goods were tailor-made for specific customers, invoiced directly to them, and thus constituted inter-state sales taxable under Section 3(a) of the CST Act. The High Court upheld the respondent's argument, emphasizing the tailor-made nature of the goods and the direct invoicing to customers. Additionally, the court dismissed the petitioner's argument regarding the prospective applicability of Section 6A(3), affirming the jurisdiction and authority for revision under Section 9(2) of the CST Act.
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Case Laws:

• GST

• 2024 (4) TMI 856
  Difference in turnover declared in GSTR 3B on comparison with the GSTR 1 statement - reversal of the Input Tax Credit (ITC) - HELD THAT:- The respondent recognised the fact that the petitioner paid amounts due with regard to the difference between GSTR 1 and 3B on 09.01.2023. In spite of noticing the same, the respondent recorded at page no.23 of the typed set that the taxable person did not pay the tax dues within 15 days of the receipt of the notice dated 17.03.2023. This conclusion is contrary to the documents on record. As regards the reversal of ITC in respect of purchases from Sri Vela Hardware and Paints, it is unclear as to the basis for concluding that the petitioner had purchased paint in view of the petitioner s reply dated 23.09.2023 and the documents annexed thereto. Since the petitioner s reply and the documents annexed thereto were not taken into consideration, the impugned order is unsustainable as regards these issues. The impugned order is set aside in so far as it pertains to the issues relating to difference between GSTR 1 and 3B and reversal of ITC with regard to purchases from Sri Vela Hardware and Paints. As a corollary, the matter is remanded for reconsideration only with regard to these two issues. After providing a reasonable opportunity to the petitioner, including a personal hearing, the respondent is directed to issue a fresh order with regard to these two issues within a period of three months from the date of receipt of a copy of this order. The writ petition is disposed off.

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• 2024 (4) TMI 855
  Cancellation of the petitioner s GST registration - petitioner had not filed returns for a continuous period of six months - HELD THAT:- Section 29(2)(c) of applicable GST enactments, as its stood at the relevant point of time, enabled cancellation of registration for non filing of returns by a registered person for not less than a continuous period of six months. The petitioner has placed on record proof of filing of GSTR 1 and 3B returns for August and September 2022-23. Such returns were filed in February 2023. The impugned order of cancellation was issued on 15.03.2023, which is subsequent thereto. By the time of cancellation, on account of the filing of the returns for August and September of assessment period 2022-23, it could not have been concluded that the petitioner had not filed returns for a continuous period of six months. In those circumstances, the impugned order of cancellation cannot be sustained. The impugned order of cancellation dated 15.03.2023 is set aside and, as a consequence, the registration of the petitioner shall stand restored. Such restoration is subject to the petitioner filing returns for all periods commencing from the effective date of cancellation - petition disposed off.

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• 2024 (4) TMI 854
  Power of condone the delay beyond four months - pre-deposit has been done after the period was over - HELD THAT:- The period of four months has to be calculated in terms of the General Clauses Act. Once the appeal has been submitted on 30.09.2023 in the order passed on 30.05.2023, if calculated mathematically it would be less than four months. The petitioner has also given out other reasons for not filing the appeal within the period of three months. In the opinion of this Court the delay ought to have been condoned, which was within the powers of the appellate authority upto one month. The matter remanded back to the appellate authority to decide the appeal more so as the amount of pre - deposit has already been deposited by the petitioner - petition allowed by way of remand.

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• 2024 (4) TMI 853
  Violation of principles of natural justice - the issues in the impugned order not duly considered - Short payment of GST on import of services from a subsidiary company - second proviso to Rule 28 of the Central Goods and Services Tax Rules, 2017 - non payment of GST on turnover from export of services - export invoice of the petitioner was raised in US dollars - mismatch between the GSTR 1 and 3B - mismatch occurred on account of invoices which were cancelled because services were not provided. Short payment of GST on import of services from a subsidiary company - reliance placed on second proviso to Rule 28 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- The respondents failed to record any reasons for rejecting the contention. Indeed, it appears that the order is incomplete on this issue. Non payment of GST on turnover from export of services - export invoice of the petitioner was raised in US dollars - HELD THAT:- The documents placed on record by the petitioner, such as the export invoices and the credit advice appear to indicate prima facie that the invoice was raised in US dollars; payment was also remitted into India in foreign currency; and thereafter converted into INR. This observation is, however, tentative and not intended to be binding on the respondents. Mismatch between the GSTR 1 and 3B - mismatch occurred on account of invoices which were cancelled because services were not provided - HELD THAT:- The petitioner has pointed out that no revenue loss was caused by adopting the procedure of cancelling the invoice instead of raising the credit note in respect of services not provided. Since all these issues have not been duly considered in the order impugned herein, it is just and necessary that the 1st respondent reconsiders the matter after providing a reasonable opportunity to the petitioner. At the same time, it should be recognised that the petitioner has approached this Court instead of approaching the appellate authority by remitting 10% of the disputed tax demand. In the over all facts and circumstances, it is also necessary to safeguard revenue interest to an extent - the petitioner agrees to remit a sum of Rs. 20,00,000/- as a condition for remand. The impugned order is set aside and the matter is remanded for reconsideration subject to the condition that the petitioner remits a sum of Rs. 20,00,000/- as agreed to within a maximum period of four weeks from the date of receipt of a copy of this order - petition disposed off by way of remand

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• 2024 (4) TMI 852
  Release of seized goods - contention of the appellants is that the present appellants are distinct and separate entity and has got nothing to do with the prayer made by the other writ petitioners, namely, Biswas Timber Mart and Others - HELD THAT:- In the preamble portion of the order the facts have been recorded in which a finding has been recorded that the present appellants failed to differentiate the stock of timber belonging to them out of the total stock of timber in the business premises; they failed to differentiate the stock of timber belonging to Biswas Timber Mart (one of the petitioners in WPA 17991 of 2023) out of the total stock of timber in the business premises of M/s. Kanak Timber House with valid documents and failed to provide any valid documents which proves that the individual stock of timbers of Swapan Kumar Biswas and Tapan Kumar Biswas have been carrying forward since the time of transfer of the assets i.e. 2010 and M/s. Kanak Timber House could not even prove with supporting evidence that any stock of timbers ever belonged to any individual even their father. It is not required to comment the correctness of the order dated 1st September, 2023 passed by the Assistant Commissioner of State Tax since the aggrieved persons are entitled to challenge the said order in terms of the provisions of the Act. Even going by the order passed in the writ petition dated 08.08.2023 it is seen that there have been several claims for release of the same stock of timber and these requests have been made much prior to the expiry of six months period from the date of seizure. Thus, on account of the conduct of the appellants, the appellants are not entitled to any relief in this appeal - appeal dismissed.

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• 2024 (4) TMI 851
  Scope and Interpretation of Contract - Seeking reimbursement of the GST paid by them for the procurement of raw materials, intermediary components etc. and the bought-out items dispatched directly from the sub-vendors to the work site - barred under clause 31 of the General Conditions of Contract or not - Doctrine of Merger - HELD THAT:- The effect of deletion of the latter portion in clause 10.7 of the GCC shall be that the adjustment of GST component shall no longer be restricted to direct transactions between the Employer and the Contractor. The writ Court rightly held that clause 31 of the GCC cannot be read in a manner so as to obliterate the impact of the amended clause 10.7 of the GCC. Now having thus interpreted the different clauses under the GST, we say with certainty that the entitlement of the petitioner-Firms to claim the increase in the tax liability on the indirect transactions that underwent change in the course of the working of the contract is an enforceable right under section 64-A of the Sale of Goods Act, which can be denied only in the case of a contract to the contrary. Doctrine of Merger of High Court Decision with the Order of Supreme Court - HELD THAT:- When a Special Leave Petition is dismissed in limine the order passed by the High Court does not merge with the dismissal order passed by the Hon ble Supreme Court. This seems to be the reason that even after the dismissal of the Special Leave Petition in limine the aggrieved party can move a petition for review of the order/judgment of the High Court. As indicated in KUNHAYAMMED AND OTHERS VERSUS STATE OF KERALA AND ANOTHER [ 2000 (7) TMI 67 - SUPREME COURT] the Special Leave Petition filed by the State of Jharkhand was dismissed without leave being granted by the Hon ble Supreme Court and the challenge laid to the judgment in M/S. TECHNO ELECTRIC AND ENGINEERING COMPANY LIMITED, VERSUS THE STATE OF JHARKHAND, JHARKHAND BIJLI VITRAN NIGAM LIMITED, FINANCE CONTROLLER, JBVNL, AND OTHERS [ 2023 (7) TMI 1292 - JHARKHAND HIGH COURT] was dismissed in limine. However, what is contended on behalf of the petitioner-Firms is that in the identical set of facts there cannot be more than one decision governing the same subject-matter. This is a settled law that the State and its instrumentalities are required to demonstrate fair play in action. In ABL INTERNATIONAL LTD. ANR. VERSUS EXPORT CREDIT GUARANTEE CORPORTION OF INDIA LIMITED ORS. [ 2003 (12) TMI 584 - SUPREME COURT] the Hon ble Supreme Court observed that even in contractual matters, the State and its instrumentalities are required to follow the equality clause under Article 14 of the Constitution of India. The petitioner-Firms were agitating for their right to refund/reimbursement for long. They have brought on record the copies of their representations made to the JBVNL, and the response thereto by the JBVNL was that the matter is pending litigation. The stand taken by the JBVNL that the pre-bid clarification which resulted in amendment in clause 10.7 and subsequent incorporation of clause 28 in the GCC shall not be available to the petitioner-Firms violates the basic norm of justice, equity and fair play. It is not disputed that the nature of the work awarded to the petitioner-Firms in both phases is the same and the execution of the work under the previous contracts was in progress when the amendment in clause 10.7 of the GCC was made - the petitioner-Firms and other similarly situated Contractors are entitled to reimbursement of the GST impact also on the indirect transactions on which the GST was imposed. The JBVNL shall calculate and reimburse the petitioner-Firms the GST component paid by them and it shall release the withheld amount from the bills of the petitioner-Firms, if any - the petitioner-Firms are entitled for reimbursement of the GST along with statutory interest in terms of the GST Act, 2017 read with the Rules framed thereunder - Petition allowed.

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• 2024 (4) TMI 850
  Seeking cancellation of pre-arrest bail granted to the respondent - evasion of GST revenue - running fake firms and generating fake E-way bills - HELD THAT:- Hon ble Apex Court in THE STATE OF GUJARAT ETC. VERSUS CHOODAMANI PARMESHWARAN IYER ANR. ETC. [ 2023 (7) TMI 1008 - SUPREME COURT] observed that Thus, the position of law is that if any person is summoned under Section 69 of the CGST Act, 2017 for the purpose of recording of his statement, the provisions of Section 438 of Criminal Procedure Code, 1908 cannot be invoked. We say so as no First Information Report gets registered before the power of arrest under Section 69(1) of the CGST Act, 2017 is invoked and in such circumstances, the person summoned cannot invoke Section 438 of the Code of Criminal Procedure for anticipatory bail. The only way a person summoned can seek protection against the pre-trial arrest is to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India. In the light of the above observation of the Hon ble Apex Court, in the present case also after the non-applicant is summoned in view of the provisions conferred by Section 69(1) of the GST Act, 2017 he approached to the Sessions Court and the Sessions Court without considering the provisions and the necessity, granted bail to the non-applicant in the event of his arrest. In view of the observation of the Hon ble Apex Court, the anticipatory bail application itself is not maintainable. Thus, the Sessions Court has ignored the provisions of law and granted bail which is contrary to the law. In view of that bail granted to the present non-applicant deserves to be cancelled. The bail granted to the present non-applicant is hereby cancelled - Application allowed.

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• 2024 (4) TMI 849
  Validity of impugned order u/s 73 of the CGST Act - appealable order under the CGST Act or not - fraud of criminal nature or not - HELD THAT:- This Court fails to understand as to how the nature of allegation of fraud which is fully criminal in nature can be taken cognizance by the writ Court in exercise of constitutional writ jurisdiction under Article 226 of the Constitution of India while the impugned order is the adjudication order under Section 73 of the CGST Act which is an appellable order under the statute and adjudication proceeding has been initiated in accordance with law and the petitioner has participated in the proceeding and there is no allegation of denial of opportunity of hearing to the petitioner before passing the impugned order. It is also not a case that the impugned statutory appellable adjudication order has been passed is non-speaking or is contrary to any specific provision of law or there is any procedural irregularity or that the authority who has passed the order is having inherent lack of jurisdiction. The allegation of the petitioner is purely criminal in nature and petitioner intends this Court to invoke constitutional writ jurisdiction under Article 226 of the Constitution of India by acting as an investigation authority or as an appellate authority over the impugned adjudication order and to reappreciate the material evidence and the issue raised is purely criminal in nature which is not within the ambit and scope of constitutional writ jurisdiction. The petition is dismissed on the ground of alternative remedy by way of statutory appeal against the impugned adjudication order under the CGST Act.

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• 2024 (4) TMI 848
  Constitutional Validity of Sections 2, 9, 12 and 18 of the Constitution (101 st Amendment) Act, 2016 violating the basic structure of the Constitution of India - grounds raised are based on the constitution of a Goods and Services Tax Council (GST Council), on whose recommendations the Parliament is alleged to be acting, which, according to the writ petitioner, is an abdication of the legislative functions - HELD THAT:- The Hon ble Supreme Court in AYAAUBKHAN NOORKHAN PATHAN VERSUS THE STATE OF MAHARASHTRA OTHERS [ 2013 (8) TMI 563 - SUPREME COURT] has clearly held that a stranger cannot be permitted to meddle in any legal proceeding unless he satisfies the authority or court that he falls within the category of an aggrieved person. The petitioner herein has not suffered any legal injury by the 101st Amendment, especially since he is not a person involved in commercial activities. The petitioner also does not have a case that he is registered under the Goods and Services Tax enactments. He does not even have a ground of any prejudice having been caused to him by the mechanism of reverse charge under the GST regime. A writ petition under Article 226 of the Constitution, as held by the Hon ble Supreme Court, is maintainable either for the purpose of enforcing a statutory or legal right or with respect to breach of statutory duty on the part of the authorities. The petitioner has no enforceable right judicially recognized, insofar as the 101st Amendment to the Constitution is concerned and he does not claim any prejudice having been caused to him - The public interest asserted cannot also be entertained since the dealers registered under the earlier value added tax regime, now shifted to the goods and sales tax regime, by virtue of the 101st Amendment cannot be said to be a marginalized section, who are incapable of agitating their rights before the courts of law. There are absolutely no reason to entertain the writ petition - petition dismissed.

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• 2024 (4) TMI 847
  Validity of demand of GST raised by State authorities - For the same cause of action, the Central Authority has already initiated action - The State authorities argue that there was a lack of information provided by the petitioner regarding the Order-in-Original passed by respondent No. 4. They claim that timely information was not provided before the issuance of the impugned order. - HELD THAT:- Considering the provisions of Section 6 of CGST Act, what is apparently evident is that once when the proceedings have already been drawn and finalized on the same set of facts and issue, there cannot be subsequent proceedings again drawn - Undisputedly, in the instant case, respondent No. 4 had already initiated proceedings and had concluded the same by passing the Order-in-Original on 31.10.2023. The said order has also been assailed by the assessee before this Court in W.P. No. 1357 of 2024 and there also appears to be an interim order granted by this Court on 12.01.2024. Given the said facts and circumstances of the case and in the teeth of Section 6 of the CGST Act, the two grounds raised by the State Authorities would not be sustainable. Firstly, mere not uploading of the order passed by the Central Authorities does not by itself empowers the State agencies to again initiate the proceedings in which the Central Authority i.e., respondent No. 4 has already initiated and passed an Order-in- Original. As regards the second ground raised by the learned State counsel that lack of proper and timely intimation by the petitioner, a correspondence made by the petitioner would show that the petitioner has in fact intimated the respondent authorities in this regard time and again. The impugned Demand Order dated 30.12.2023 for the tax period July. 2017 to March, 2018 would not be sustainable and the same deserves to be and is accordingly set aside/quashed - Petition allowed.

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• 2024 (4) TMI 846
  Classification of services - Licensing Services for The Right to Broadcast and Show Original Films, Sound Recordings, Radio and Television Programmes Etc., classifiable under SAC 997332 or not - Correctness of impugned order - confusion in the issue. Appellant sought advance ruling on the services relating to Distribution of films to Theatres. But contrary to this, they have claimed at para IV (e) of Grounds of Appeal that the Appellant had never sought classification of the transaction between the Distributor and the Exhibitor. HELD THAT:- The Appellant has contradicted and confused the issue. Under the circumstances, analysis of clauses of the actual contract or agreement entered into by the Appellant with the service recipients assumes utmost importance. The Appellant have not furnished any contract or agreement entered into by them for provision of services. Therefore, in the absence of the actual agreements, it is not possible to decide the correct classification. The lower Authority have discussed the issue in detail, along with provisions of SAC 997332 and 999614 and have countered the arguments put forth by the Appellant and have given a ruling that the Classification of the Licensing Services of distribution of rights to exhibit the films by the distributor to the exhibitor are classifiable under SAC 999614 . Under the circumstances, it is found that the ruling given by the Lower Authority is just and proper and it is not considered necessary to interfere with the same. Accordingly, the Advance Ruling is upheld.

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• 2024 (4) TMI 845
  SEZ unit - requirement to pay tax under reverse charge mechanism on specified services - N/N. 10/2017-IT(Rate) dated 28.6.2017 as amended from time to time - HELD THAT:- Under N/N. 37/2017-CT, a unit in DTA can supply services to a unit in SEZ without payment of IGST subject to furnishing of LUT to the jurisdictional Commissioner. On a similar issue, wherein clarification was sought , as to whether the SEZ unit is liable to pay GST in respect of legal services, sponsorship services etc received by an SEZ unit in IFSC, Gandhinagar, from a unit in DTA, which are chargeable to GST under RCM, Tax Research Unit, CBIC, New Delhi, clarified a unit in SEZ or the SEZ developer can procure such services, where they are required to pay GST under reverse charge, without payment of integrated tax provided the actual recipient, i.e. unit in SEZ or SEZ developer, furnishes a Letter of Undertaking in place of a bond as specified in condition no. (i) in para 1 of notification No. 37/2017-CT. The actual recipient of service is the deemed supplier/registered person for the purpose of fulfilling other conditions in para / of the notification ibid including the manner of furnishing of Letter of Undertaking. There is no denying the fact that the aforementioned clarification was given to a specific SEZ unit and is not a circular. However, we find that there is no bar in borrowing the rationale of the aforementioned clarification. Hence, the applicant, an SEZ unit, can procure the services mentioned supra, for use in authorized operations without payment of IGST provided the applicant, furnishes a LET or bond as specified in condition (i) of para 1 of notification No. 37/2017-CT. The applicant, an SEZ unit, is not required to pay GST under RCM on specified services in accordance with notification No. 10/2017-IT(Rate) dated 28.6.2017 as amended from time to time, subject to furnishing a LUT or bond as specified in condition (i) of para 1 of notification No. 37/2017-CT.

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• 2024 (4) TMI 844
  SEZ unit - liability pay tax under reverse charge mechanism on services received from advocate by virtue of Notification No. 10/2017-Integrated tax Rate (as amended time to time) - HELD THAT:- Under N/N. 37/2017-CT, a unit in DTA can supply services to a unit in SEZ without payment of IGST subject to furnishing of LUT to the jurisdictional Commissioner. On a similar issue, wherein clarification was sought, as to whether the SEZ unit is liable to pay GST in respect of legal services, sponsorship services etc received by an SEZ unit in IFSC, Gandhinagar, from a unit in DTA, which are chargeable to GST under RCM, Tax Research Unit, CBIC, New Delhi, clarified It is, therefore clarified that a unit in SEZ or the SEZ developer can procure such services, where they are required to pay GST under reverse charge, without payment of integrated tax provided the actual recipient, i.e. unit in SEZ or SEZ developer, furnishes a Letter of Undertaking in place of a bond as specified in condition no. (i) in para 1 of notification No. 37/2017-CT. The actual recipient of service is the deemed supplier/registered person for the purpose of fulfilling other conditions in para 1 of the notification ibid including the manner of furnishing of Letter of Undertaking. There is no denying the fact that the aforementioned clarification was given to a specific SEZ unit and is not a circular. However, we find that there is no bar in borrowing the rationale of the aforementioned clarification. Hence, we find that the applicant, an SEZ unit, can procure the services mentioned supra, for use in authorized operations without payment of IGST provided the applicant, furnishes a LUT or bond as specified in condition (i) of para 1 of notification No. 37/2017-CT. The applicant, an SEZ unit, is not required to pay GST under RCM on specified services in accordance with notification No. 10/2017-IT(Rate) dated 28.6.2017 as amended from time to time, subject to furnishing a LUT or bond as specified in condition (i) of para 1 of notification No. 37/2017-CT.

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• 2024 (4) TMI 843
  Classification of services - activity of insulating of bare M.S. Pipes provided by the customers on job work basis by using PU Foam and PE Film/HDPE jackets owned by the applicant - classifiable under clause (iv) of Sr. No. 26 or under Sr. No. 27 of notification No. 11/2017-CT (Rate) dated 28.6.2017 or not - HELD THAT:- The CBIC has already clarified the issue with its Circular No. 126/45/2019-GST dated 22.11.2019. Consequent to insertion of entry 26(id) under heading 9988 of notification No. 11/201 7-CT (Rate), ibid, which prescribes 12% GST for all services by way of job work, doubts were raised that this insertion may lead to a situation rendering the entry at item 26(iv) dealing with manufacturing services on physical inputs owned by others redundant. Tax Research Unit of CBIC vide its aforementioned circular clarified that there is a clear demarcation between entries at items 26(id) 26(iv); that item (id) covers only job work services as defined u/s 2(68), ibid ie services by way of treatment or processing undertaken by a person on goods belonging to another registered person. What this means is that the process may or may not result in manufacture. Further circular states that Sr. No. 26(iv) specifically excludes services covered under entry (id) therefore covers only such services which are carried out on physical inputs (goods) which are owned by persons other than those registered under CGST Act. The activity undertaken by the applicant of coating of M.S. pipes falls within SAC code 998873. Thus, even on this ground the averment that the activity would fall within the ambit of SAC code 9989 is ruled out. This was reiterated in the case of COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS M/S RATAN MELTING WIRE INDUSTRIES [ 2008 (10) TMI 5 - SUPREME COURT] wherein the Hon ble SC held that circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes. Thus, dutifully, following the clarification issued by the circular dated 22.11.2019, issued by CBIC, we find that in respect of services by way of treatment or processing undertaken by the applicant on goods belonging to another registered person, the same would be classified under 26(id) of notification no. 11/2017-CT(Rate), ibid, under the heading 9988. Likewise, for services by way of treatment of processing undertaken by the applicant on physical inputs which are owned by persons other than those registered under CGST Act, would be classified under 26(iv) of notification no. 11/2017-CT(Rate), ibid, under the heading 9988. Thus, the activity of insulating of bare M.S. Pipes provided by the registered customers on job work basis by using PU Foam and PE Film/HDPE jackets owned by the applicant would be classifiable under clause (id) of Sr. No. 26 of notification No. 11/2017-CT (Rate) dated 28.6.2017. Further, it would be classifiable under clause (iv) of Sr. No. 26 of notification No. 11/2017-CT (Rate) dated 28.6.2017 in respect of similar service provided on goods belonging to unregistered persons.

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• 2024 (4) TMI 842
  Exemption from GST - exempt supplies or not - contract (excluding works contract service or other composite supplies involving supply of any goods) - supply of Teachers and Lecturers to BBMP schools and colleges on outsourcing basis - bills can be raised to BBMP without CGST and SGST - taxability under GST for supply of teachers/Lecturers to the schools of BBMP on outsourced basis - HELD THAT:- The impugned services are being supplied to the BBMP, a division in the Bruhat Bengaluru Mahanagara Palike which is Bangalore City Corporation, established under Karnataka Municipal Act 1976 and now working under The Bruhat Bengaluru Mahanagara Palike Act 2020. The constitution of BBMP is a municipality by virtue of Article 243 Q of the Constitution of India and thus to be considered as Municipality as defined under Article 243 P of the Constitution of India. Thus it qualifies to be a Local Authority as defined under Section 2(69) of the CGST Act 2017. The impugned services of supply of teachers/lecturers is meant for imparting education to the students and hence it is part of promotion of educational aspects. Thus the impugned services are provided by way of an activity in relation to the function of promotion of educational aspects entrusted to the Municipality (BBMP) under article 243W of the Constitution. The service of supply of teachers/lecturers to schools/colleges run by BBMP, on outsource basis is covered under pure services being provided to a local authority (BBMP) by way of an activity in relation to a function Promoting educational aspects entrusted to a Municipality under article 243W of the Constitution of India and hence are exempted in terms of entry number 3 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.

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• 2024 (4) TMI 841
  Exemption from GST - supply of services (subscription of Clinical Key) to the All India Institute of Medical Sciences (AIIMS) - Governmental Authority or not - Seeking the rate of tax/ exemption on the supplies under Clinical Key subscription product supplied to specified customers (educational institutions) - taxability of supply of services (subscription of Clinical Key) to other educational institutions. Whether the supply of services (subscription of Clinical Key) to the All India Institute of Medical Sciences (AIIMS) is exempt from GST under Entry No. 69 (b) (v) of the Notification No. 9/2017-IT (Rate) dated 28 June 2017? - HELD THAT:- The customer, with the Clinical Key subscription, gets online access to a medical centric database with a search facility. The website also has a browser facility for navigation of the content that is supplied in electronic form. There is no human intervention from the applicant s side as the user himself navigates through the contents and access whatever that is available in the subscribed database - Entry 69(b)(v) read with second proviso and definition of educational institution implies that the supply of online educational journals or periodicals to institutions providing M(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; is exempted from IGST unconditionally. Whether the services provided by the applicant qualifies to be that of supply of online educational journals or periodicals; and whether AIIMS qualifies to be an institution providing education as a part of the curriculum for obtaining qualification recognized by law? - HELD THAT:- In the instant case, the service recipient is AIIMS, established in 1956 by the All-India Institute of Medical Sciences Act, 1956 ( the AIIMS Act ) as, an Institute body corporate and approved as the autonomous university by both the National Medical Commission (NMC) and the University Grants Commission (UGC). AIIMS provide both undergraduate and post graduate degrees in medical and para medical fields on its own and thus gets covered under an institution providing services by way of education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force. The applicant provides online access and retrieval services to a systematically organized clinical / medical database with one of the constituents of database being journals or periodicals. One constituent part of database alone cannot define the whole. Given the composite nature of contract and supply involving several constituents detailed above, the supply by the applicant does not qualify as supply of online educational journals or periodicals - thus, the supply of services by the applicant to AIIMS is not covered under exemption in terms of Entry No. 69(b)(v) of the Notification No. 9/2017-IT(Rate) dtd 28.6.2017 as amended. Whether the Applicant or AIIMS needs to discharge the GST liability (i)for the period up to 30 September 2023 and (ii) for the period after 01 October 2023? - HELD THAT:- Section 14 of IGST Act, the applicant intends to know whether the applicant (being the supplier) or AIIMS (recipient of service) is liable to discharge GST. In terms of the said Section, GST is liable to be paid by the person, located in non-taxable territory, on supply of OIDAR services to a non-taxable online recipient (NTOR) located in taxable territory. The phrase Non-taxable Online Recipient (NTOR) is defined in Section 2(16) of IGST Act, 2017 and was amended w.e.f 01.10.2023. Section 14 of IGST Act, the applicant intends to know whether the applicant (being the supplier) or AIIMS (recipient of service) is liable to discharge GST. In terms of the said Section, GST is liable to be paid by the person, located in non-taxable territory, on supply of OIDAR services to a non-taxable online recipient (NTOR) located in taxable territory. The phrase Non-taxable Online Recipient (NTOR) is defined in Section 2(16) of IGST Act, 2017 and was amended w.e.f 01.10.2023. For the period w.e.f 1.10.2023, it is clear that any unregistered person receiving OIDAR services, located in taxable territory is considered as NTOR. It is an admitted fact in that AIIMS has obtained GST Registration. Hence AIIMS being a GST registered recipient of OIDAR services, is liable to discharge GST liability from 1.10.2023. The condition that the services are received in relation to any purpose other than commerce, industry or any other business or profession is not satisfied as the service recipient viz., AIIMS, as an institution, is into the business of providing medical and para-medical courses both at the undergraduate and postgraduate levels and awards its own degrees and thus the said services are received in relation to the business. Thus AIIMS does not satisfy the definition of NTOR in terms of Section 2(16). The provider of the OIDAR services is located outside India and the recipient of the said service i.e. AIIMS is located in India as a matter of fact. Section 13(12) of the IGST Act stipulates that the place of supply OIDAR services shall be the location of the recipient of services and in the instant case the place of supply is in India as the recipient AIIMS is located in India. Thus all the conditions of import of service are satisfied and hence the receipt of OIDAR services by AIIMS amounts to import of services. Therefore AIIMS, being a person located in the taxable territory other than non-taxable online recipient, is liable to discharge GST on OIDAR services for the period upto 30.09.2023, in terms of Sl.No.l of Notification 10/2017-Integrated Tax (Rate) dated 28.06.2017. Whether the supply of services (subscription of Clinical Key) to other educational institutions is exempt from GST under Entry No. 69 (b) (v) of the Notification No. 9/2017-IT (Rate) dated 28 June 2017? - HELD THAT:- The exemption under Entry No. 69 (b) (v) of the Notification No. 9/2017-IT (Rate) dated 28 June 2017 is applicable only on supply of online educational journals or periodicals , whereas the applicant providing services of subscription of Clinical key are providing services by way of online access and retrieval services to a systematically organized clinical / medical database, and not covered under subject entry of the Notification.

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• Income Tax

• 2024 (4) TMI 840
  Validity of Faceless assessment u/s 144 r.w.s.144B - Gross non-compliance with the procedure contemplated u/s 144B - HELD THAT:- Whether the proceeding is traceable to Section 144B(1)(xi) i.e., show cause notice or 144B(1)(xvi) of the Act i.e., draft assessment order, it was submitted that this must be treated as a proceeding u/s 144(2)(1)(xi). Assuming it to be so, the absence of any proceeding u/s 144B(1)(xvi) of the Act, i.e., a draft assessment order having been passed the impugned order of assessment cannot be sustained. It may be relevant to note that this Court in [ 2023 (9) TMI 1460 - MADRAS HIGH COURT] had held that it is impermissible to combine show cause notice and draft assessment order and failure to issue draft assessment order would vitiate the proceeding. Thus, the impugned order of assessment is set aside inasmuch there is a gross non-compliance with the procedure contemplated under Section 144B - liberty is granted to the appropriate Authority to proceed from the stage of Section 144B(1)(xi)(i) of the Act, by treating the proceeding as one traceable under Section 144B(1)(xi) and complete the assessment in compliance with the procedure laid down in Section 144B.

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• 2024 (4) TMI 839
  Validity of reopening of assessment u/s 147 - shorter period to reply to notice - effectively only six working days were given to reply and hence Petitioner was unable to file a reply - as argued that if Petitioner is given an opportunity to reply to the notice u/s 148A(b) she is confident that she will be able to satisfy the AO that the notice u/s 148A(b) will have to be dropped - HELD THAT:- Considering the facts and circumstances of the case that Petitioner is a Public Trust and running a school, in our view, Petitioner should be given an opportunity to reply to the notice. In the circumstances, without expressing any opinion on the merits of the matter, we hereby quash and set aside the impugned order passed u/s 148A(d) of the Act and remand the matter for de novo consideration. The consequent notice dated 25th March 2022 u/s 148 of the Act also hereby quashed and set aside. Within four weeks of this order being uploaded, Petitioner shall reply to the notice issued u/s 148A(b) - To the reply, Petitioner may also annex documents which have to be taken into account while deciding the matter.

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• 2024 (4) TMI 838
  Penalty u/s 271(1)(c) - charge was not made specific - concealing income or furnishing inaccurate particulars - return of income was filed only in response to notice u/s 148 - as alleged assessee has concealed particulars of income by not filing the return of income and provided inaccurate particulars during the assessment by not proving the authenticity of the expenses and not disclosing the income - HELD THAT:- No doubt the assessee has submitted before us many judicial precedents wherein where there is an ad hoc disallowance of the expenditure; it is held that penalty cannot be levied. Though this cannot be a universal principle. We find that had the case is that the assessee is unable to substantiate the amount of expenditure; the learned assessing officer should have disallowed 100 % percent of such expenditure by giving a sufficient reason. By disallowing 50% and allowing 50% of that expenditure, the learned assessing officer is also not clear whether the assessee has concealed income or has furnished inaccurate particulars of income. In the assessment order the charge is not specific. In the penalty order, twin charges are invoked for the levy of the penalty. When there is no specific charge raised by the AO at the time of assessment as well as in the notice and assessee has not been confronted with the same specific charge for furnishing reply before the assessing officer, AO levying a penalty on both the charges, without proving that both the charges apply, is not proper. The various judicial precedents cited before us are also support the case of the assessee that in case of ad hoc disallowance penalty u/s 271(1)(c) does not survive unless there are specific reasons. Accordingly, we reverse the order of the lower authorities and direct the learned assessing officer to delete the penalty u/s 271(1)(c) - Decided in favour of assessee.

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• 2024 (4) TMI 837
  Reopening of assessment v/s assessment u/s 153C - reliance placed by the Ld. AO on the seized material - AR argued that since th AO has acted based on the seized documents in the premises of the searched party, the assessment ought to have been framed u/s. 153C - HELD THAT:- In the instant case, AO has relied upon the agreement of sale (unregistered) dated 6/1/2016 which was seized by the search party. Relying on such information and the seized material, the Ld.AO initiated the proceedings u/s. 147 of the Act. Even though in the order of the Ld. AO, in para 5, the Ld. AO has mentioned about the material available on record for a belief that was formulated for reopening of proceedings u/s. 147 of the Act. No detailed discussion was found in the order of the Ld. AO regarding the material available on record for a belief that was formed enabling the Ld.AO warranting reopening of proceedings u/s. 147 of the Act. The Ld. AO has fully relied on the seized agreement of sale dated 6/1/2016. We find merit in the argument of the AR that section 153C of the Act overrides section 139, 147, 148 and 151 of the Act. Decision of the jurisdictional Coordinate Bench of the Tribunal at Visakhapatnam in the case of Smt. Samanthapudi Lavanya vs. ACIT [ 2021 (5) TMI 26 - ITAT VISAKHAPATNAM] wherein the Tribunal by relying on various High Court decisions has held that in the absence of any fresh information collected by the Ld. AO or no information has come to the notice of the Ld. AO in the normal course other than the information collected during the course of search from the search person, the Ld. AO ought to have made the assessment u/s. 153C of the Act and not u/s. 147. AO in the instant case ought to have resorted to make the assessment u/s. 153C of the Act whereby heavy reliance placed by the Ld. AO on the seized material. Further, the Ld. AO has not recorded about any information that has come to the notice of the Ld. AO and has solely relied on the seized documents from the premises of the searched person. We are therefore inclined to quash the assessment order as void-ab-initio and thereby allow the Ground No.2 raised by the assessee.

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• 2024 (4) TMI 836
  Addition u/s 68 - enhancement of income u/s 56(2)(viib) - funds received in the form of share premium through undisclosed sources - identity of investors and creditworthiness of the investors and genuineness of the transaction not proved - CIT enhancing the income of the assessee u/s 56 (2)(viib) - HELD THAT:- As decided in DAYALU IRON STEEL PVT. LTD [ 2022 (7) TMI 625 - ITAT DELHI] he authorities below without verifying the veracity of the documents from the publically available data on the web site of MCA IT Department. Once the assessee provided the names, addresses and Pan, particulars and ROC details of the investors. The Ld. A.O ought to have made further enquiry. Once the assessee furnishes the documents to prove the identity, creditworthiness and genuineness of the transaction. The same cannot be denied in the absence of material contrary brought by the Assessing Officer. The present case, the assessee has substantially provided materials to prove the genuineness of the share holders apart from giving the Pan Card, name and ROC details. CIT(A) has erred in confirming the addition u/s 68 of the Act on account of unexplained share premium and share capital. The ratio laid down in the aforesaid decision of the Tribunal squarely applies to the facts of the present captioned appeals. Enhancement made by the Ld. CIT(A) u/s 251(1) r.w.s. 56(2) (viib) - AO substituted fair market value determined by the assessee through his own valuation - Assessees have submitted the Valuation Report duly signed by the auditor by following NAV/DCF Method as required under Rule 11UA(2) of the Rules - As per relevant provisions of Rule 11UA of the Rules, fair market value of unquoted equity shares for the purposes of sub-clause (i) of clause (a) of Explanation to clause (viib) of sub-section (2) of section 56 shall be determined under clause (a) or clause (b), at the option of the assessee. The Assessees having the choice to opt for one of the methods enumerated in the above provision and the appellant has chosen to opt for clause (b) in most of the abovementioned cases for valuation of unquoted equity shares and based on the same, the value of the share had been computed. Accordingly, the new shares were issued and allotted to the investors during the captioned assessment year. During the assessment proceedings, computation of Fair Market Value of shares as per Rule 11UA(2) was submitted before the Ld.AO to justify that the shares issued by the appellants were at Fair Market Value (FMV) which was computed in accordance with Rule 11UA(2) of the Income Tax Rules, 1962. But the AO has not given any reasoning for rejecting the valuation of shares nor have they furnished any material to the contrary which justified the rejection of the valuation of shares. When the statute provides for a particular procedure, the authority has to follow the same and cannot be permitted to act in contravention of the same. It has been hitherto an uncontroverted legal position that where a statute requires to do a certain thing in a certain way, the thing must be done in that way only. Other methods or modes of performance are impliedly and necessarily forbidden. The aforesaid settled legal proposition is based on legal maxim Expressio unis est exclusio alterius , meaning thereby that if a statute provides for a thing to be done in particular manner, then it has to be done in that manner and in no other and following other course is not permissible. Thus as Assessees have issued the shares at fair market value computed in accordance with Rule 11UA of the Rules and no fault has been found in the method applied by the assessees and thus the enhancement of the income by Ld.CIT(A) u/s 56(2)(viib) of the Act on protective basis is purely based on conjectures which has no basis in law and is liable to be deleted. Further, as the assessee has provided document to prove the identity, creditworthiness and the genuineness of the transaction of each shareholder, which has not been controverted by the Department and in the absence of any contrary material on record to disprove the same in our considered opinion, the addition of income made under section 68 of the Act as well as the enhancement of income u/s 56(2)(viib) of the Act is bad in law accordingly, the additions/enhancement made by the A.O/CIT(A) are hereby deleted. Decided in favour of assessee.

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• 2024 (4) TMI 835
  Reopening of assessment of assessee trust - denial of exemption u/s. 11 on the ground of Trust as violates provisions of Sec. 13(1)(c) - failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of assessment in respect of rental income received on let out of premise which is clearly evident from Form No.10B filed by the assessee for all assessment years, where, the assessee has not disclosed the details with regard to income or properties of the Trust was made or continued to be made available for the use of any such persons during the previous year referred to u/s. 13(3) of the Act. HELD THAT:- Re-opening of assessments for AYs 2012-13 to 2014-15 is bad in law and are liable to be quashed, because, the assessments have been re-opened without there being any allegation as to failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment year and for that assessment years. The Ld.CIT(A) without appreciating relevant facts simply upheld re-opening of assessment. For AYs 2015-16 2016-17 assessments have been re-opened for these two assessment years on the basis of fresh tangible material which suggest escapement of income on account of under assessment rental income and said escapement of income was noticed during the course of survey conducted u/s. 133 of the Act. In our considered view, new tangible materials found during the course of survey constitute a fresh material and as per said material, there is escapement of income. The AO has formed reasonable belief of escapement of income and thus, in our considered view, re-opening of assessments for AYs 2015-16 2016-17 are valid. Denial of exemption u/s. 11 - Charitable activity u/s 2(15) - The assessee objects and activity of running Kalyanamandapam is incidental to the attainment of main objects, and is covered by provisions of Sec. 11(4) of the Act. Since, the assessee Trust is maintaining separate books of accounts for the activity of running of Kalyanamandapam and said activity is in the nature of attainment of main objects, in our considered view, provisions of Sec. 11(4A) of the Act, is not applicable to the assessee, and thus, the AO and the Ld.CIT(A) erred in rejecting exemption u/s. 11 of the Act. Thus, we reversed the findings of the Ld.CIT(A) on this issue and direct the AO to allow the benefit of exemption u/s. 11 of the Act, to the assessee for the AY 2012-13 to 2018-19. Addition towards difference between the rental income received by the assessee from M/s.CFD, a partnership firm and rental income received by the partnership firm, M/s.CFD from three tenants - Assessee has filed financial statement of partnership firm to prove that the firm has spent huge amount for re-construction/renovating the building from time to time since 1975 onwards and if you consider the amount of money spent by the partnership firm to make the schedule of property for let out, in our considered view, the rent received by the partnership firm from three tenants is commensurate with what was let-out by the partnership firm. Assessee has also filed relevant evidences to prove that the prevailing market rate of rent for all these assessment years is comparable with Fair Market Value of the property as per municipal authorities, where the municipal authorities have determined the Fair Market Value of the property for the purpose of municipal taxes which is lesser than the amount of rent received by the assessee from the partnership firm. As it was not the case of the AO that the prevailing market rate of rent for similar kind of property for these assessment years is higher than the rent received by the assessee from the partnership firm. In fact, the AO has not made any attempt to find out the fair market rent of the property in the adjoining areas during relevant period. But, the AO simply took rent received by the partnership firm and compared with rent received by the assessee from the partnership firm and held that rent received by the assessee from partnership firm is lesser than the fair market rent only on the ground that partnership firm is related to the assessee as per the provisions of Sec. 13(3) of the Act. In our considered view, provisions of Sec. 13(1)(c) r.w.s.13(2) of the Act will come into operation only in a case where any Trust or Institution allows the income or property of a Trust to the benefit of persons referred to u/s. 13(3) of the Act, without any adequate consideration or compensation. In case, said property has been allowed to use by any person by paying consideration or compensation which is commensurate with prevailing market rent, then provisions of Sec. 13(1)(c) r.w.s13(2) of the Act, cannot be applied. Therefore, we are of the considered view that the AO and the Ld.CIT(A) are completely erred in invoking provisions of Sec. 13(1)(c) r.w.s.13(2) of the Act, and made additions towards difference between rental income. Disallowance of depreciation on fixed assets the cost of which has been claimed as application of income - Since, the assessee Trust is a registered u/s. 12AA of the Act, and also claiming exemption u/s. 11 of the Act, in our considered view, depreciation on fixed assets should be allowed as application of income up to AY 2014-15. Thus, we direct the AO to delete additions made towards disallowance of depreciation on fixed assets for AYs 2012- 13 to 2014-15. In so far as AYs 2015-16 to 2018-19, the law has been amended by the Finance Act, 2014 to provisions of Sec. 11(6) of the Act and as per said provisions, where any income required to applied or accumulated or set part for application, then, for such purpose, the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as application of income under this section in the same or in any other previous year. From the amendment provisions of Sec. 11(6) of the Act, by the Finance Act, 2014, which is applicable from AY 2015-16 onwards, depreciation on fixed assets cannot be allowed as application of income, in case, the cost of acquisition of said fixed assets has been allowed as application of income in the same year or in any earlier year. Thus, we are inclined to uphold the findings of the Ld.CIT(A) for AYs 2015-16 to 2018-19 and reject ground taken by the assessee.

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• 2024 (4) TMI 834
  Disallowance of set off - sale of equity shares (STT) - short-term capital gains (STCG) on sale of derivatives and short-term capital loss (STCL) - difference in rate of taxation - determining the tax liability without setting off of STCG loss taxable at the rate of 15% against the STCG on sale of derivatives taxable at the rate of 30% u/s 70(2) - HELD THAT:- In the case of VEMF-A, LP [ 2017 (4) TMI 721 - ITAT MUMBAI] wherein on identical issue and similar fact the ITAT has decided the issue in favour of the assessee. It is clearly held that under the provisions of section 70(2), STCL arising from any asset can be set off against STCG arising from any other asset under a similar computation made irrespective of different rate of tax. Therefore, the issue in appeal in the case of the assessee is squarely covered by the decision of the ITAT. Thus, we allow the appeal of the assessee. In the result, the appeal of the assessee is allowed.

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• Customs

• 2024 (4) TMI 833
  Infraction of the principle of natural justice - demand passed without considering the written submissions of the petitioner - SCN was kept in call book for 14 years - HELD THAT:- No mistake, much less any mistake apparent on record was pointed out by the Learned Advocate for the applicant inasmuch as this Court has given the cogent reasons while allowing the Special Civil Application and at that point of time it was not pointed out by the applicant that the show cause notice was never transferred to the call book. This Court has perused the documents on record wherein it is revealed that it is undisputed fact that the issue involved in the show cause notice was for the year 2003 and on 28-12-2017, the petitioner made detailed reply along with the submissions by relying upon the decision in case of SIDDHI VINAYAK SYNTEX PVT LTD. VERSUS VERSUS UNION OF INDIA 2 [ 2017 (3) TMI 1534 - GUJARAT HIGH COURT] . In such circumstances, it was held by the Court that the show cause notice was kept in abeyance for more than 14 years. Therefore, in absence of any material on record to justify the submissions made, the application is not entertained and is accordingly dismissed.

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• 2024 (4) TMI 832
  Misdeclaration of classification - confiscation - Penalty u/s 112 (a) - children building/constructable robot toys in CKD condition with individual box packing and are electronic toys - drones - Teaching Aid s in schools - classified under CTH-90230010 - Seeking for re- export the goods to Qatar - huge demurrage charges and goods - HELD THAT:- In the present case, the appellant has produced sufficient evidence to substantiate that the goods are imported for the purpose of demonstration in schools. Hence, the goods imported from Sl. No. 1 to 3 may not be classifiable as toys under CTH 9503 as held by the Adjudication Authority and the Appellant Authority. Further, the adjudication authority s finding that since the quantity imported is 30 nos. each they cannot be for demonstrational purpose is not tenable, since the quantity imported cannot have a bearing on the classification of the imported goods. Since there is no other classification confirmed, the goods from S.No. 1 to 3 can be classified under 9023 as declared by the importer. Further in the absence of any restriction to import the goods falling under CTH 9023, the said goods are also not liable for confiscation. Violation of importing restricted goods - Import of Litebee wing-Nano Drone Components kits - Re-export of goods - HELD THAT: We find as regards the import of drone at Serial No. 4, as per the DGFT Notification No. 54/2015 -2020 dated 09.02.2022, import of drone is prohibited and even if it is permitted to import it is subject to approval from DGFT. Drone in CBU, SKD or CKD form is permitted to be imported only by education institutions recognised by Central or State Governments. In the present appeal , though the appellant is involved in activity related to supporting education institutions, appellant is not an educational institution recognised by Central or State Governments. Moreover, import of drone is prohibited due to security reasons. Thus, drone imported by the appellant cannot be allowed to be released for home consumption even on payment of redemption fine and penalty. Since, violation of importing restricted goods is admitted, confiscation of drone ( Serial No. 4 ) is upheld. However, considering the delay, a lenient view can be taken for redemption of the same for re-export to Qatar as requested by the appellant. Thus, appeal is partially allowed directing release of the goods at serial number 1 to 3 at para 2 supra as per the declaration made by the appellant for home consumption. Regarding drone (Sl. No. 4 ) order of confiscation is upheld. However, the appellant is permitted to redeem the drones having declared value of Rs. 2 ,68,943 /- for re-export to Qatar on payment of reduced redemption fine of Rs. 25,000/- and Penalty of Rs. 10 ,000/-. In the result the appeal is partially allowed as per the above terms.

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• 2024 (4) TMI 831
  Levy of penalty for abetment - Fraudulent export of substandard goods by description in the shipping bills filed by the exporter - Value for undue DEPB benefit - Subletting CHA license - Liability of a Customs Broker - license used for monetary consideration - signing of blank shipping bills and allowing license to be used - consignments of inferior quality of fabrics after mis-declaring the goods as Ladies nightwear - value rejected u/s 14 of the Customs Act - Penalty - Misrepresentation as the employees of the CHA - HELD THAT:- The appellants in the present appeals do not dispute any of the facts that have been part of the impugned order except to state that there is no evidence to show that they were aware of the fact that the goods were of inferior quality and they had knowledge of the undue benefit that the exporter was availing by mis-declaring the goods and the value. They also stated that remittances were received without any proof of the same. The exporter had not disputed the alleged offence nor had contested the alleged offence of misdeclaration of goods and value. Shri Surendran (Appellant 1) having arranged containers and advising them to ensure factory sealing so that it is not opened at ICD Bangalore; arranging a CHA and getting the blank shipping bills signed by the CHA admittedly for monetary consideration; getting a letter from the exporter not to export substandard goods and charging unusually high price for containers, all goes to prove the mala fide intention behind these exports. Moreover, the same team has worked for similar exports at Hyderabad ICD, thus, without doubt all the circumstantial evidences clearly prove their involvement in mis-declaring goods and value for undue DEPB benefit. Shri Ashok Shukla (Appellant 2) also admits having sublet his license for monetary consideration, signing of blank shipping bills and allowing his license to be used without knowing the exporter and what for it is being used goes to prove that he is not clean in his intentions. Both the appellants have also admittedly misrepresented to the customs about their employees and enabled them to get the ID cards from the customs by misrepresenting that they were the employees of the CHA. Therefore, the admitted facts do not provide any immunity to the appellants. The reliance placed on the decision of the Hon ble High court in the case of Rajeev Khatri Vs. Commissioner of Customs (Export) [ 2023 (7) TMI 218 - DELHI HIGH COURT] is not applicable in the facts of the present case where none of the statements and the irregularities committed by them have not been retracted. Abet means instigating, conspiring, intentionally aiding the acts of commission or omission that render the goods liable for confiscation. The facts discussed above clearly spell out the commissions and omissions of both the Appellants where the goods were made liable for confiscation. The notice clearly alleges the penalty to be levied un/s 114 of the Customs Act, 1962 and though, the Commissioner in the penultimate order had not specified Section 114; from para 59 to 61 of the impugned order it is clearly held that penalty is imposed u/s 114 for violation of the provisions u/s 113 and the Foreign Exchange Regulation Act, 1947. DEPB licenses were cancelled and the DEPB credit of Rs.98,54,987/- is denied, and the exporter having penalised, it would be fair to reduce the penalty to Rs.5,00,000/- on each of the Appellants. Accordingly, the penalty stands reduced to Rs.5,00,000/- (Rupees Five Lakhs Only) on Appellant 1 (Shri Surendran) and Rs.5,00,000/- (Rupees Five Lakhs Only ) on Appellant 2 (Shri Ashok Shukla). Appeals are partially allowed on above terms.

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• 2024 (4) TMI 830
  Classification of imported goods - Imports aluminium shelving for Mushroom - Benefit of exemption - appellant classifying the said goods under CTH 84369900 at nil rate of duty - Department proposed the goods to be classified under CTH 76109010 - Penalty - Whether the goods imported can be called as machine or mechanical appliances covered under chapter 84 or are more precisely specifically classifiable as the aluminum structures of chapter 76 - HELD THAT:- From the general rule of interpretation, as discussed, it is clear that the goods have to be classified to the more appropriate category instead of being covered under the generic category. Chapter 76 is generic to all aluminium structures but chapter 84 is specific for any machine/ device of any metal which is used for agriculture purpose. There can be no denial that growing mushroom is an agricultural or horticultural activity and the product imported is crucial and specific for the said activity that the product is specifically designed part of mushroom growing apparatus. Chapter 76 is all about anything made of aluminium. On the contrary chapter 84 is about mechanical appliances of whatsoever metal but specific for agricultural use. There is no denial to the fact that the aluminium shelving in question is not known to the common trade parlance as a mere aluminium structure but is specifically known as Mushroom growing rack. Hence, we hold that the goods under question as imported by appellant (mushroom shelving) are classifiable under CTH 84369977. Appellant is held to have rightly classified the same under CTH 84369900. The decisions relied upon by the Department in the case of Saraswati Sugar Mills [ 2011 (8) TMI 4 - SUPREME COURT] is about captive use of iron and steel structures in the sugar mill and the question adjudicated therein is whether or not these structures could be called as capital goods to entitle the assessee credit of duty paid on those goods. Similarly the extract that China Customs is classifying this product under CTH 7610 is also not that relevant, as the said observations are not binding on the Indian Customs or on the Indian importers. The agricultural equipments are otherwise eligible for duty benefits in Indian scenario. Hence we hold that the appellant has rightly claimed the duty exemption while importing a product which is exclusively for the purpose of agriculture and which otherwise is a mechanical device. With these findings the order under challenge is hereby set aside and the appeal is hereby allowed.

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• 2024 (4) TMI 829
  Revocation of the Customs Broker Licence - forfeiture of the full amount of security deposit - confiscation - Penalty in exercise of powers vested under Regulation 18 of the Customs Brokers Licensing Regulations, 2018 (CBLR) - Goods imported being edible oil - HELD THAT:- In the instant case, the goods imported being edible oil were brought into India in Bangladeshi tankers having been given permission for entry by the Proper Officer of Customs. It is on record that samples of imported goods were drawn, goods assessed and duty paid thereon. The imported oil was transferred to India tankers, which were taken up for verification of the nature of the edible oil and subsequently seized. The tankers, therefore, bringing oil into India were reportedly not available when DRI officers visited the spot. The Indian trucks were parked in private parking place where trucks loaded with export cargo were parked in an unorganised manner depending upon the availability of space that the trucks loaded with imported oil could manouvre and that is said to be the reason for not being instantly able to take out the vehicle from the jumbled up trucks, trailers and tankers. Also, it is not at all the case that eventually the tankers could not be produced for consideration and sampling by the officers undertaken and anything contrary came to notice. When the lot of export cargo blocking the movement, were cleared, the subject tankers were said to be brought to the area in front of the Customs Office for needful. Further, it cannot be denied, that the tankers loaded with imported oil could not move without Bills of Entry and other import documents which were still lying with the Customs authorities for want of out of charge. We therefore find it highly unjustified to initiate such harsh action without plausible assessment of the ground realities. Further, it is not that inquiry was initiated against the appellants alone. Also, there is no specific charge of mens rea. Therefore, under the circumstances bona fide s of the Customs Broker could not be doubted, merely on the basis of obligation of a Customs Broker, simpliciter. Further, the importers have readily joined the investigations and admittedly the duty as assessed had been duly paid by the importers, before even the cause of this action was initiated. Moreover, nothing wrong with the consignment imported was detected by the authorities as a result of their enquiry. Further, it is also on record that the goods as well as the vehicles after enquiry were instantly allowed release (though provisionally) to the owners and no penal provisions u/s 112 of the Act were invoked. We therefore are of the view that there was absolutely no justification to subject the Customs Broker to action as aforesaid under the provisions of CBLR, 2018 and take recourse to punitive action like revocation of the Customs Broker License, forfeiture of their security deposit besides imposition of penalty on the appellants. The charges levelled by the department are therefore unsustainable and without even a fig leaf of credence. Thus, the impugned order is set aside, with all consequential benefits to the appellants as accruable, in law. The Customs Broker License of the appellant is directed to be restored forthwith. In the result, the appeal succeeds and is thereby allowed, with consequential relief as per law.

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• Insolvency & Bankruptcy

• 2024 (4) TMI 828
  Release of assets (machines) seized by the Customs Authorities before initiation of CIRP - violation of principles of natural justice - HELD THAT:- On looking into the order of the Adjudicating Authority, it is clear that the order contains only direction to release the goods to the Customs Department without giving any reason and without even adverting to the facts, which were mentioned by the Applicant himself in the Application. The order of Adjudicating Authority, which does not give any reason for allowing the Application, deserves to be set aside on this ground alone. The statutory provision of Section 126 is clear and it does not need any interpretative exercise to know the legislative intendment. The option of paying the redemption fine given under the order dated 03.12.2020 has not been availed of, which is an admitted fact. The submission, which has been pressed by the learned Counsel for the Respondent is that since the period of 120 days did not expire and the CIRP commenced, the vesting of goods in Central Government shall not take place. Vesting of goods under Section 126, sub-section (1) is not dependent on exercise of option to pay the redemption fine. The payment of redemption fine and redeeming the goods is a benefit, which is provided by the statute, which option can be availed after the confiscation of the goods - In the present case, it is not the case of RP that any option was exercised for payment of redemption of fine. In the entire pleading of the Application, there is no claim of exercise of any option. Thus, the argument of Shri Rishav Banerjee that there shall be no vesting till the period for exercising the option comes to an end, has no relevance in the present case. More so, even CIRP commenced against the Corporate Debtor on 30.12.2020, it was always open for the RP, who was entitled to represent the Corporate Debtor to exercise option and redeem the goods by payment of redemption fine. The contention of the Respondent that even though, it has neither exercised the option of payment redemption fine nor redeemed the goods, but sill they continued to be owner of the goods cannot be accepted. The vesting of goods is on confiscation by the Central Government by provision of Section 126, sub-section (1) and the option to pay redemption fine and redeeming the goods, is only a benefit given to the Corporate Debtor, which however, shall not arrest the vesting of the goods as contemplated by Section 126, sub-section (1) - the submission of learned Counsel for the Respondent is not accepted in the present case that till the option for payment of redemption fine is not exercised within 120 days, the goods continued to vest in the Corporate Debtor. The order of the Adjudicating Authority impugned in the Appeal is unsustainable and deserve to be set-aside - Appeal allowed.

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• 2024 (4) TMI 827
  Bench Reconstitution and Order Pronouncement - W hether an order reserved by a bench could be pronounced by a reconstituted bench without considering a subsequent application that called for a re-hearing based on new developments. - Admission of section 7 application - challenge to proceedings in SARFAESI Act initiated by Financial Creditor - HELD THAT:- In exercise of appellate jurisdiction, the Appellate Court can take all decision, which could have been passed by Adjudicating Authority while deciding Section 7 Application. In the present case, sequence of events and facts as noticed above shows that subsequent Application filed in November 2023, i.e., IA No.5177 of 2023, the Applicant prayed for rehearing of the matter on account of subsequent events, that is an order passed by Debt Recovery Tribunal dated 05.10.2023 and on which Application notices were issued by the existing Court-III and orders were reserved. For the purpose of this case, the issue as to whether the plea raised in IA No.5177 of 2023, ought to be allowed or not, need not be perused. But when these facts were brought before the Special Bench on 22.03.2024, on which date the case was listed for pronouncement, the Adjudicating Authority ought to have awaited the orders in IA No.5177 of 2023. It is well settled that although lis between the parties have to be decided on the date when proceedings were initiated, but subsequent events can very well be taken into consideration by Adjudicating Authority. There was no fetter on the jurisdiction of the Adjudicating Authority in deferring the pronouncement and awaiting the orders passed in IA No.5177 of 2023. Thus, on this ground alone the order dated 22.03.2024 deserved to be set aside - The Bench, which has delivered the order on 22.03.2024, i.e., Special Bench, which is no more available at Mumbai Bench, ends of justice will be served in directing for hearing of Company Petition afresh before the regular Court-III of the Mumbai Bench. appeal allowed.

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• 2024 (4) TMI 826
  Admission of Section 7 Application of the Financial Creditor - commission of default or not - Corporate Debtor / Guarantor failed to fulfil obligations - existence of debt and default or not - HELD THAT:- Admittedly, in the instant case on hand, the Loans, were given by the Financial Creditor / Bank to the Principal Borrower (Coastal Energen Private Limited) and the Corporate Debtor (Fossil Logistics Private Limited), is the Corporate Guarantor, for the Loans, availed by the Coastal Energen Private Limited, as against the Coastal Energen Private Limited / Principal Borrower, an Application for initiating CIRP, was filed by the 1st Respondent / Bank, before the Adjudicating Authority / Tribunal, and an Order of Admission, was passed on 04.02.2022 and later, as against the above Order, the Company Appeal filed by the Shareholder Cum Investor, before this Appellate Tribunal, came to be dismissed. In the present Appeal on hand, before this Tribunal, although, a plea, is taken by the Appellant, that Corporate Insolvency Resolution Process, cannot be initiated against the Guarantor, if CIRP, against the Principal Borrower, was already initiated by the same Financial Creditor, for the same set of Claim / Default, this Tribunal, unhesitatingly points out that the Liability of the Corporate Debtor / Guarantor, is coextensive and that the Corporate Debtor, having executed a Deed of Guarantee dated 05.07.2016, to and in favour of the 1st Respondent / Bank (Financial Creditor), is bound to act, as per terms and conditions of the Guarantee. In reality, the Corporate Debtor / Guarantor, having not repaid the obligations of the Principal Borrower (M/s. Coastal Energen Private Ltd.) in Law, is deemed to have committed Default. In the instant Appeal, as per Clause 22 of the Deed of Guarantee, dated 05.07.2016, executed by the Corporate Debtor / Corporate Guarantor (Fossil Logistics Private Ltd.) and the SBICAP Trustee Company Ltd., the Respondent / Corporate Debtor (Corporate Guarantor), in unequivocal terms, had guaranteed to discharge and fulfill the obligations of the Guarantee - it cannot be brushed aside that Clause 3 5 of the Deed of Guarantee, dated 05.07.2016, unerringly, mentions that the Guarantor (Corporate Debtor), shall Indemnify, and keep indemnified the Secured Parties Viz. 1st Respondent / Bank, against Losses, Damages, Costs, Claims, and Expenses, whatsoever which the Secured Parties, would suffer. As on date, there is no embargo, under the I B Code, 2016, to initiate simultaneous / independent proceedings, under Section 7 of the I B Code, 2016, by a Financial Creditor, against the Principal Borrower and the Corporate Debtor / Guarantor, in the considered opinion of this Tribunal. The Impugned Order of the Adjudicating Authority / Tribunal, in admitting the Section 7 Application of the 1st Respondent / Bank, for initiating Corporate Insolvency Resolution Process, against the Corporate Debtor (Guarantor), is perfectly in order - Accordingly, the instant Appeal sans merits and it fails. Appeal dismissed.

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• 2024 (4) TMI 825
  Rejection of application by the impugned order - Secured creditors or not - It is submitted that the NOIDA Authority was treated as an Operational Creditor and an amount of Rs.10 Crore was earmarked in the plan - HELD THAT:- NOIDA Authority was the lease holder and the records of lease were already with the Resolution Professional being record of the Corporate Debtor, therefore, the claim has to be reflected by the Resolution Professional in the Information Memorandum. In view of the judgment of this Tribunal in MR. ANIL MATTA VERSUS GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY AND ATUL MITTAL (RESOLUTION PROFESSIONAL OF ZEAL DEVELOPERS PVT. LTD.) VERSUS NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY [ 2024 (4) TMI 439 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] as well as judgment of Hon ble Supreme Court in GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY VERSUS PRABHJIT SINGH SONI ANR. [ 2024 (2) TMI 681 - SUPREME COURT] , the Appellant is clearly a Secured Operational Creditor - the order of the Adjudicating Authority rejecting the application of NOIDA Authority is unsustainable. The order dated 22.12.2023 is set aside. It is held that the Appellant as Secured Operational Creditor. The Adjudicating Authority may proceed accordingly in accordance with law. Appeal allowed.

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• Service Tax

• 2024 (4) TMI 824
  Disallowance of Cenvat credit of service tax paid on medical insurance of the employees and their families - reversal of Cenvat credit under Rule 6(3) wrongly calculated - Short payment of interest on late paid service tax on services received from an Associated Enterprise from outside India - Non payment of service tax on certain imported services - levy of Service tax on legal fee paid - penalties. Disallowance of Cenvat credit of service tax paid on medical insurance of the employees and their families - denial of credit on the ground that the appellant was unable to provide the breakup - HELD THAT:- The break-up was available in the SCN itself and the entire period was before 1.4.2011. Therefore, as per the findings of the Commissioner, this demand cannot be sustained. Demand of Rs. 1,15,14,385/- for the period 2008-2009 to 2010-2011 on the ground that the reversal of Cenvat credit under Rule 6(3) was wrongly calculated - HELD THAT:- The Commissioner committed an illegality in denying the benefit merely because this position had not been pointed out during audit. His second reasoning cannot also be accepted. If the appellant had not fulfilled the conditions of the exemptions and was not entitled to the exemption from service tax for the services which it had rendered to the SEZ units and for that reason they were not exempted, the question of any reversal under Rule 6(3) does not arise. The very basis for the SCN and the Commissioner to say that reversal has to be done as per Rule 6(3) was that the output services were exempted. When the audit was conducted and all the records were available with the department and the invoices of the recipient of the exempted services and the amounts received from them were examined, if the Commissioner doubts that the receivers of service were SEZs, he must have some basis to say so. Nothing to the effect is coming out of the order - it is found proper to remand this part of the demand to the Commissioner with a direction to examine the invoices and record if the exempted services in question were rendered to units in SEZ or not and accordingly, re-calculate the demand, if any. Short payment of interest on late paid service tax on services received from an Associated Enterprise from outside India - HELD THAT:- In the absence of any stipulation to the contrary, all laws are presumed to be only prospective and not retrospective because men are expected to arrange their affairs as the law is and are not required to anticipate what the law is likely to be and arrange their affairs accordingly. Of course, nothing prevents any legislation being given retrospective effect but in the absence of any such stipulation, all laws should be treated as having only prospective effect - the amendment dated 10.5.2008 was only prospective and it does not apply to services rendered and accounted for prior to this date. Therefore, for the past transactions, the liability to pay service tax fell on the appellant only in August 2008 when it paid its Associated Enterprise and interest was correctly calculated and paid from August 2008. No interest was payable from 10.5.2008 to August 2008. The demand on this head needs to be set aside. Non payment of service tax on certain imported services - HELD THAT:- The question is if there is a service provider and service recipient relationship and if there was a taxable service and consideration was paid for it. Indisputably, the appellant was enjoying the service of professional indemnity insurance and it was the service recipient. The insurance was not being provided by its parent company but by the insurance company abroad which is the service provider. For this service, the appellant paid an amount as consideration. However, since the insurance was taken by the parent company covering the appellant also, the premium was also paid by the parent company and the appellant reimbursed to its parent company its share of the premium. Therefore, looking at the total transaction, we find in favour of the Revenue and against the appellant on this count. The appellant is liable to pay service tax on this service. As far as the dispute regarding calculation is concerned, we find it proper to remand the matter to the Commissioner to consider the submissions made by the appellant and determine the amount of service tax payable. Service tax on legal fee paid- Rs. 8,185/- - HELD THAT:- The case of the appellant is that legal service was not covered under Support Service for Business of Commerce under section 65(104c). Service tax on legal service was introduced only from 1.9.2009. It had paid the amounts for the period August 2008 to September 2008 when it was not taxable. The department has incorrectly considered it as a service rendered during 2009-2010 - Since this issue requires verification of facts, it is found that this also needs to be remanded to the Commissioner for verification of facts and determining the service tax payable, if any. Penalties - HELD THAT:- As it is already found in favour of the appellant with respect to most demands, all penalties under section 80 of the Finance Act set aside. Appeal allowed in part, partly rejected and partly remanded.

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• 2024 (4) TMI 823
  Levy of service tax - Amounts received by the appellant from Priyadarshini Gas Seva [PGS] - Legal Consultancy service (Reverse Charge Mechanism [RCM]) - Renting of immovable property service (from 2009-2010 to 2011-2012) - Miscellaneous income (other than negative list service) - Director s remuneration under reverse charge - Extended period of limitation and penalty under section 78. Amounts received by the appellant from Priyadarshini Gas Seva [PGS] - HELD THAT:- There are no essential requirements for levying service tax in this demand, viz., a service recipient, a service provider, a service (or which is not in the negative list) and a consideration for such service. Indisputably, PGS is a unit of the appellant. There is nothing unusual about a unit transferring profits to its parent company. Merely because an amount has been transferred, it does not prove that it was a consideration, for a service (not under negative list) rendered by the parent company to its unit. The Commissioner s finding is that when PGS was established, the appellant had negotiated with IOC to get PGS distributorship of gas. Therefore, according to the Commissioner, the appellant had rendered a service and what was paid was a consideration for it. There is nothing unusual about a parent company negotiating on behalf of one of its units. Such negotiation does not become a taxable service. Even according to the Commissioner, the negotiation had taken place in 1984-1986 at a time when there was no levy of service tax at all. The demand under this head needs to be set aside and is set aside. Legal Consultancy service - Reverse Charge Mechanism [RCM] - HELD THAT:- Service tax is to be paid on the consideration paid for a service which was a taxable service (up to 2012) or for service not under negative list (after 2012). It is not, as wrongly held by the Commissioner, on the expenditure booked by the assessee. Under the head Legal Consultancy Service, the appellant had booked some amounts of which to the extent they represented payments made for the legal services, it had paid service tax. Rest of the amounts booked under this head in the appellant s books of accounts were also paid to the lawyers either for the court fee or towards reimbursements of travel expenses. Reimbursements are clearly not a consideration for a service but a compensation for what was incurred by one which was to be borne by another. In this case, they are the court fee and travel expenses. No service tax can be levied on such amounts. The demand of Rs. 1,26,820/- on the amounts paid towards court fees and reimbursements of travel expenses cannot be sustained and needs to be set aside. Renting of immovable property service (from 2009-2010 to 2011-2012) - HELD THAT:- The taxable service in dispute is the renting of immovable property which clearly did not include renting of residential accommodation. The appellant agrees to have received the amounts and submits that some part of the income was towards rent on residences provided to its employees. The Commissioner, unable to ascertain the facts from the records, confirmed the demand on the entire income. Unless the Commissioner could establish that what was received was a consideration for rendering a taxable service, he should not have confirmed the demand. The demand of Rs. 4,26,217/- under this head needs to be set aside. Miscellaneous income (other than negative list service) - HELD THAT:- The Commissioner appears to have lost sight of the fact that service tax is not a tax on income but is tax on the provision of taxable service (before 2012) and provision of a service which is not under negative list (after 2012). Neither before 2012 nor after this date was service tax a tax on income. If an income is received which was not accounted for in the service tax returns, it is open to the department to investigate if that income was a consideration for rendering a taxable service or, as the case may be, for rendering a service which is not in the negative list. Neither before nor after 2012 was service tax payable on income. If the investigation by the department shows that the income was a consideration on which service tax was payable, it can be levied. If the department cannot find any evidence to this effect, as is the case here, no service tax can be charged. The Commissioner s logic that, since the appellant is not a manufacturer but a service provider and has earned an income, it must be for rendering a service not under negative list, is fallacious - The demand of Rs. 13,55,398/- on this head needs to be set aside and is set aside. Director s remuneration under reverse charge - HELD THAT:- The case of the appellant is that it paid the amounts to its full time Directors who are its employees. Unless any contrary evidence can be brought on record by the Revenue, this must be accepted and if so, any service rendered by the Directors to the appellant and amounts which the appellant paid as compensation are clearly excluded from the scope of service tax by section 65 (44) (b) of the Act - The demand on this head needs to be set aside and is set aside. Extended period of limitation - penalty under section 78 - HELD THAT:- The Central Excise officer has, evidently, not done his job of scrutinising the returns, calling for records and ascertaining if the service tax was correctly paid and later, the audit discovered the incorrect self-assessment by the appellant. This does not prove that the appellant had an intention to evade but only proves that the Central Excise officer under the Commissioner had not done scrutinised the returns as he was required to. Nothing in the entire impugned order establishes intent or adduces any evidence to establish intent - It is held in favour of the appellant and against the Revenue on the questions of extended period of limitation and the penalty under section 78. Appeal allowed in part.

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• 2024 (4) TMI 822
  Short payment of service tax - outdoor catering services - under-valuation of taxable services - in-flight catering services to International and Domestic airlines - bundled services - HELD THAT:- For an activity to be called as outdoor catering, there has to be the preparation of food, supply of food and serving of the food. Apparently and admittedly, the activity of the respondent herein is that they are providing/supplying food to various airlines alongwith the responsibility of packing and handling of food, loading in transportation thereof alongwith the requisite equipments and of providing the laundry services. This admitted fact is sufficient shown that there is no activity of serving the food, the Hon ble Supreme Court in the case of TAMIL NADU KALYANA MANDAPAM ASSN. VERSUS UNION OF INDIA [ 2004 (4) TMI 1 - SUPREME COURT] has held that a tax on services rendered by outdoor caterers is in pith and substance a tax on services and not a tax on sale of goods or on hire purchase activities. Even Bombay High Court in the case of NARANG HOTELS AND RESORTS PVT. LTD. VERSUS STATE OF MAHARASHTRA AND OTHERS [ 2003 (10) TMI 620 - BOMBAY HIGH COURT] has held that the sale by a flight kitchen of eatable or goods is complete when the goods are loaded in the supply unit and despatched when the supplied food is served simultaneously it is outdoor catering else it is merely sale of goods more so in the case when invoice shows it as a separate element. Thus it is clear that the issue involved in the present case is no more res-integra that supply of F B per se is not the outdoor catering service . It rather amounts to sale of F B. The Adjudicating Authority has considered most of the above said decisions while dropping the demand proposed by the impugned show cause notice. There are no infirmity in the order, the same is hereby upheld - appeal dismissed.

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• 2024 (4) TMI 821
  Demand of differential service tax - Valuation - non-inclusion on reimbursable expenses incurred by the appellant in taxable services - pure agent services - HELD THAT:- The appellant is only pure agent and all the expenses for transportation, loading and un-loading etc. paid by the appellant were reimbursed from the Principal on actual basis. In that circumstances, the appellant is not required to include the reimbursable expenses in their taxable services. Moreover, the present issue whether the reimbursable expenses are includable in the taxable value or not, has been examined by this Tribunal in the case of M/s Ganga Carrier Private Limited [ 2023 (9) TMI 809 - CESTAT KOLKATA ], wherein this Tribunal has observed all the reimbursement expenses have been included in the consideration with effect from 14/05/2015. Hence while calculating service tax, the service provider has to include all the expenses whatever he incurred for rendering service, w.e.f.14.04.2015 only and not before that period. The dispute in the present appeal pertains to the period from 2000-01 (October) to 2004-05 (September) and hence, the substitution brought in the definition of Consideration vide Finance Act, 2015 would not be applicable for the period in the present appeal. As this Tribunal has already been held that the reimbursable expenses are not includible in the taxable value of services, therefore, it is held that the reimbursable expenses in this case, are also not includable in the taxable value of service. Therefore, we hold that the appellant has correctly paid the service tax during the impugned period. Thus, no demand of differential service tax is sustainable against the appellant - there are no merit in the impugned order and the same is set aside - appeal allowed.

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• 2024 (4) TMI 820
  Non-payment of Service Tax - works contract services - amounts obtained from Form 26 AS (Income Tax Department) for the Financial Year 2015-16 - HELD THAT:- Since the activity of providing WCS is not covered under negative list mentioned in section 66D of the Finance Act (impugned period being subsequent to 01.07.2012), the activity is taxable - The activity is liable to tax. But with an abatement as is given in Notification No.11/2014 dated 11th July, 2014 since the construction of additional building amounts to execution of original works. In the present case the said taxable service is provided to M/s. Garrison Engineers which admittedly is government authority under Military Engineering Service (MES) As has also been appreciated by Commissioner (Appeals) in para 11.4 of the order under challenge. The onus was on Revenue to prove that service is rendered for commerce purposes. The service is construction of additional building for the government authority. There appears no profit motive with the recipient (M/s. Garrison Engineers). The Notification No.25/2012 dated 20.06.2012 the entry No.12 (c) exempts such services from tax liability if given to Government Department. The demand of service tax even on the amount of Rs.5,72,590/- is also liable to be set aside. The order under challenge is therefore not sustainable. The same is hereby set aside - appeal allowed.

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• Central Excise

• 2024 (4) TMI 819
  Refund of Excess duty, claimed pursuant to finalisation of provisional assessments - duty burden has already been passed on to the ultimate consumer at the time of clearance of goods or not - principles of unjust enrichment - HELD THAT:- In the respondent s own case PRINCIPAL COMMISSIONER OF CENTRAL TAX VERSUS M/S. VIKRANT TYRES LTD, [PRESENTLY KNOWN AS JK TYRES AND INDUSTRIES PLANT-I] [ 2021 (10) TMI 586 - KARNATAKA HIGH COURT] , the Hon ble High Court Karnataka considering more or less similar arguments and scrutiny of the claims from the angle of applicability of unjust enrichment and the refund sanctioned by the Revenue to the respondent from time to time, held that The authorities have admitted that the credit notes were issued by the assessee to their dealer representing various discounts which have been actually passed on, in accordance with marketing circulars/policies. It is also observed that on verification of sample depot invoices at the time of completion of provisional assessment, that the assessee has not issued any cenvatable invoice from the depot which are prescribed document for availment of cenvat credit under Cenvat Credit Rules, 2004. Thus, it cannot be held that the assessee has not subjected to the test of unjust enrichment. The said judgment of the Hon ble High Court is binding on all concerned being the judgment of the jurisdictional High Court in view of the judgment of the Larger Bench of the Tribunal in J.K. TYRE INDUSTRIES LTD. VERSUS ASST. COMMR. OF C. EX., MYSORE [ 2016 (11) TMI 911 - CESTAT BANGALORE] . Besides, the aforesaid judgment of the Hon ble Karnataka High Court has been accepted by the Revenue. The impugned order of Learned Commissioner(Appeals) is upheld and the Revenue s appeals being devoid of merit are dismissed.

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• 2024 (4) TMI 818
  Invocation of Extended period of Limitation - denial of N/N.12/2012-CE dated 17.03.2012 - Solar Inverters - Combiner Box / Array Guard - PV Logs and parts - HELD THAT:- In the present case, the appellant has challenged the confirmation of demand invoking extended period of limitation advancing the argument that all the facts have been disclosed to the Department through their ER-1 Returns and hence suppression of facts cannot be invoked against them. It is found that the appellants are engaged in the manufacture of parts of Solar Power Generating System viz. Solar Inverters, Combiner Box / Array Guard and PV Logs. But on going through one of the sample ER-1 return, filed with the Department, for the period February 2014, it is found that under the heading Description of Goods , the item is mentioned as power , ELE , Solar . Thus, there is no correct declaration of the description of the goods mentioned in the ER-1 Returns which have been manufactured and cleared by them by raising invoices mentioning a different description. The mis-declaration of the description of the goods would invite extended period of limitation in view of the judgment of the Hon ble Supreme Court in the case of COMMR. OF CEN. EXC. AHMEDABAD VERSUS URMIN PRODUCTS P. LTD. AND OTHERS [ 2023 (10) TMI 1112 - SUPREME COURT] . The order of the learned Commissioner denying the benefit of exemption under Notification No.12/2012-CE dated 17.03.2012 and confirming the demand invoking extended period has been upheld. However, even though the appellant had deposited the amount in August 2014, which has been appropriated in the impugned order passed in February 2016, the interest liability has not been calculated and mentioned in the order; therefore, the reduction of penalty to 25% as per Section 11AC(1)(c) could not have been availed by the appellant. Thus, the appellant be given a fair chance by communicating the quantum of interest payable and in the event the appellant discharges the interest amount within 30 days from the date of communication of the amount, the benefit of reduced penalty of 25% under Section 11AC(1)(c) may be extended. Appeal disposed off.

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• 2024 (4) TMI 817
  CENVAT credit of service tax paid - goods transport agency [GTA] service availed for outward transportation of goods on Free on Road [FOR] destination basis from the factory gate or depot of the appellant to the premises of the customers - place of removal - rules 2(l) of the CENVAT Credit Rules, 2004 - HELD THAT:- It is clear from rule 2(l) of the 2004 Rules that w.e.f. 01.03.2008, input service means any service used by a manufacturer, directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal - The word place of removal , therefore, assume importance. According to the appellant, the place of removal will be the premises of the buyers as the sale is on FOR destination basis, while according to the department the place of removal would be the factory gate of the appellant. The input service would mean any service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal and place of removal would be a depot or any other place of premises from where the excisable goods are to be sold after the clearance from the factory - prior to 11.07.2014 it was section 4(3)(c) of the Central Excise Act that defined place of removal and w.e.f. 11.07.2014 rule 2(qa) of the 2004 Rules itself defines place of removal . A perusal of the aforesaid judgment of the Supreme Court in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT] would indicate that the Supreme Court did not lay down the principles for ascertaining the place of removal in the context of admissibility of CENVAT credit on GTA services and the judgment only dealt with the change brought about by the amendment made in rule 2(l) of the 2004 Rules on 01.03.2008. In COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [ 2015 (4) TMI 857 - SUPREME COURT] , the Supreme Court noticed that the place of removal becomes a determinative factor for the purpose of valuation and it has to be seen at what point of time sale is effected, namely whether it is on the factory gate or a later point of time when the delivery of goods is effected to the buyer at the premises of the buyer. The Supreme Court observed that the charges which are to be added have to be upto the stage of transfer of the ownership in as much as once the ownership in goods stands transferred to the buyer, any expenditure incurred, thereafter, has to be on the account of the buyer and cannot be a component which would be included while ascertaining the valuation of goods. It is not possible to accept the contention of the learned authorised representative of the department that sale value is included in the case of FOR sale, but it cannot be presumed that it will also result in availment of CENVAT credit since place of removal was not defined in the 2004 Rules till 11.07.2014. Prior to 11.07.2014, place of removal was defined in section 4(3)(c) of the Central Excise Act, which definition would be applicable to the 2004 Rules by virtue of rule 2(t) of the 2004 Rules. With effect from 11.07.2014, place of removal has been defined in the 2004 Rules. Thus, it has to be held that the appellant would be entitled to avail CENVAT credit of the service tax paid on GTA service from the factory or the depot of the appellant to the premises of the buyers since the sales are on FOR basis. The order passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside. The appellant would be entitled to avail CENVAT credit - appeal allowed.

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• 2024 (4) TMI 816
  CENVAT Credit - common input services used for the exempted goods, namely electricity cleared from the manufactory of the Appellant - CENVAT Credit availed on common input services used for exempted services alleged to be Trading of goods, but claimed to have cleared inputs as such - Extended period of limitation - Interest - penalty. Whether the computation of demand of the amount of Rs.97,01,260/- on account of CENVAT Credit availed on common input services used for the exempted goods, namely electricity cleared from the manufactory of the Appellant is correct? - HELD THAT:- The Appellant in this case has been paying the amount of CENVAT Credit as was arrived by them by application of the formula prescribed under Rule 6 (3A) of the CENVAT Credit Rules in terms of the option exercised by them - the appellant has never submitted data of the electricity duly certified by the Chartered Accountant despite having many opportunities, which finds mention in the findings of the adjudicating authority. However, the issue whether the figures taken by the Department standalone Balance-sheet pertaining to Godawari Power and Ispat Ltd, do not require verification at the original stage. In view of the emphatic submissions made, this matter requires reconsideration at the original stage and needs to be remanded. Whether the demand of the amount of Rs 83,62,788/- on account of CENVAT Credit availed on common input services used for exempted services alleged to be Trading of goods, but claimed to have cleared inputs as such is correct? - HELD THAT:- The profit earned out of such clearances, alleged to be trading, and common use of the input services has not been controverted in any manner by the ld. Counsel of the appellant. Therefore, these are triggers to decide this issue as to whether the clearances by earn of substantial profit would remain within the ambit of inputs cleared as such under Rule 3(5) or would it be tantamount to the trading of the goods , besides use of common input services. The appellant has reversed the Cenvat Credit on these goods which they had traded. In view of the said factual position, it is directed that the amount so reversed is liable to be appropriated against the demand. Accordingly this matter remanded to the original authority to recalculate the differential demand taking due note of the CENVAT credit which is already reversed. Whether the aforesaid demands are correct and justified in involving the extended period of limitation? - suppression of facts or not - HELD THAT:- It is settled principle in law that existence of ingredients leading to invocation of extended period of limitation is a question of the fact and the facts of the case in hand will determine whether the extended period of limitation could have been invoked, unlike the question of law where the determination can be made on the basis of the available judicial precedents - the appellant succeeded in suppressing critical information from scrutiny. Hence the extended period is rightly invokable in the case. Penalty - HELD THAT:- Since it is established, that appellant had suppressed the material facts and misstated with intent to evade payment of amount of Cenvat credit, the penalty under Section 11AC shall be natural consequence as has been held by Hon ble Supreme Court in case of UNION OF INDIA VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS AND COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VERSUS M/S. LANCO INDUSTRIES LTD. [ 2009 (5) TMI 15 - SUPREME COURT ]. The Apex court held the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. Interest liability for delayed payment of amount of CENVAT credit - HELD THAT:- The interest liability for delayed payment of amount of CENVAT credit also cannot be disputed. Appellant has not paid the amount, payable by them as per admitted position under Rule 6 (3A) on the exempted goods cleared by them by the due date and hence demand of interest on the delayed payment is justified. The appeal is allowed partially and also by way of remand.

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• CST, VAT & Sales Tax

• 2024 (4) TMI 815
  Seeking grant of anticipatory bail - bailable offence or not - failure to make payment of tax - wilful attempt to evade any tax or payment of any tax - Section 74(2) of the MVAT Act - HELD THAT:- Under Section 76 of the MVAT the offences under that Act were bailable. Therefore, question of grant or refusal of anticipatory bail would arise only if Sections 406 and 420 of the I.P.C. are made applicable in the present case. The F.I.R. and the investigation carried out so far reveals that, there was evasion of tax or non payment of tax to the tune of Rs. 1,47,56,486/-; as mentioned earlier. There is no dispute that this amounts to an offence U/s. 74(2) of the MVAT. The main question is, whether in this background, simultaneously, the applicant can be prosecuted for commission of the offence punishable under sections 420 and 406 of the I.P.C. as well, or as to whether there is a bar in conducting investigation and prosecution for the offences under the I.P.C. in this case. Thus, the ratio of the Division Bench Judgment in the case of G.S. Oils Ltd. s [ 2012 (10) TMI 1274 - BOMBAY HIGH COURT ] is squarely applicable to the present facts of the case. The said Judgment in G.S. Oils Ltd. s case specifically refers to the I.P.C. offences U/s. 406 and 420, as well as, to Section 74(2) of the MVAT. In this view of the matter, it is not necessary to refer to the ratio in Gagan Sharma s case [ 2018 (10) TMI 1832 - BOMBAY HIGH COURT ] which was in respect of a different statute altogether. In this particular case, investigation and the prosecution under both the enactments i.e. the MVAT and the I.P.C. can go on simultaneously. The ingredients of section 74(2) of the MVAT, as well as, Sections 420 and 406 of the I.P.C. are clearly made out. Evasion of the tax is of a huge amount. There is no acceptable justification offered by the applicant. His custodial interrogation is necessary to trace all these transactions. Besides this, the offence is quite grave and serious; considering the amount involved. In this view of the matter, no protection U/s. 438 of the Cr.p.c. can be granted to the applicant. The Application is rejected.

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• 2024 (4) TMI 814
  Recovery of alleged outstanding dues of unpaid tax amounts - Section 29 of APVAT Act, 2005 - Appeal was dismissed for default due to the petitioner s repeated non-appearance despite being granted several adjournments. - HELD THAT:- Considering the submissions advanced, it is evident from the appellate order dated 19.07.2023 that the appeal is of the year 2015 and inspite of several adjournments, the petitioner was not turning up for hearing and consequently, the appeal was dismissed for default against which application for restoration of appeal filed recently is pending. To provide opportunity of hearing to the petitioner on the merits of the application, and if allowed by the appellate authority, to provide opportunity of hearing on merits of the appeal, it is considered to be in the interest of justice, by moulding the relief, to direct the respondent No.4 to consider and decide the petitioner s application for restoration (Ex. P4) within a period of six weeks from the date of a copy of this order is produced before the said authority and if the appeal is restored, to decide the same also expeditiously and till such time, any coercive action, pursuant to the notices for recovery of outstanding dues towards the alleged unpaid tax amounts, deserves to be stayed, subject to the condition that the petitioner deposits 25% of the disputed amount, additionally. The Writ Petition is disposed of finally.

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• 2024 (4) TMI 813
  Benefit of Exemption from CST - stock transfer or inter-state sale - Whether the movement of goods in the instant case is only a stock transfer to the branches and liable to be exempted under Section 6A of the CST Act 1956 or the transaction is an interstate sale under Section 3(a) of the CST Act and liable for tax under CST Act 1956? - HELD THAT:- The impugned order shows that the works orders sent by the HO contain the details of individual customer companies and item wise description of the rubber sheets with specific design and quantity which manifests that rubber sheets are being tailor-made to suit the needs of the individual customers. The invoices are also raised on customers. It may be true that the finished goods are dispatched to the different branches. However, that fact is insignificant because in the entire process the branches are acting only as conduits between the manufacturing unit and customers. Where once movement of goods from one state to another state takes place on account of sale or purchase, the transaction assumes the character of inter-state sales in terms of Section 3(a) of CST Act, 1956. The judgment in SAHNEY STEEL AND PRESS WORKS LTD. AND ANOTHER VERSUS COMMERCIAL TAX OFFICER AND OTHERS [ 1985 (9) TMI 313 - SUPREME COURT] squarely apply to the case on hand. In the instant case also the movement of goods shall be regarded as inter-state sales rather than mere stock transfer - the argument of the petitioner in this regard, cannot be countenanced. The other contention of the petitioner is concerned, as rightly submitted by learned Government Pleader, the 2nd respondent has exercised his power under Section 9(2) of CST Act, r/w Section 20 (2) of APGST Act but not under Section 6A(3) of CST Act. There are no merits in the petitioner s case and accordingly the Writ Petition is dismissed.

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• 2024 (4) TMI 812
  Entitlement for issuance of C-Forms post the introduction of G.S.T. regime for natural gas - entitlement for the refund of the amount already collected at full rate. Issuance of C-Forms Post G.S.T. Regime - HELD THAT:- In CARPO POWER LIMITED VERSUS STATE OF HARYANA AND OTHERS [ 2018 (4) TMI 146 - PUNJAB AND HARYANA HIGH COURT] , before the Hon ble Punjab and Haryana High Court, the issue was the challenge made by a Petitioner for being refused to be issued C-Forms for the natural gas purchased in an inter-state trade for generation of electricity from Gujarat to Haryana. The question before the Court whether after the amendment of the C.S.T. Act, the petitioner is entitled to be issued `C Forms in respect of the natural gas purchased in inter-state sale or not. The Hon ble Court came up to a conclusion on a combined reading of Section 2 (52) and 9 (2) of the C.G.S.T. Act, the inter-state sale of natural gas continues to be governed under the C.S.T. Act. Thereafter, it was held that since Section 8 of the CST Act, the Rule 12 of the CST (R T) Rules and Form- C have not undergone any amendment, the Department cannot put any restriction on the usage of C forms only in view of the amendment of definition of goods in the CST Act. In TATA STEEL LIMITED, JAMSHEDPUR AND OTHERS VERSUS STATE OF JHARKHAND AND OTHERS [ 2019 (9) TMI 524 - JHARKHAND HIGH COURT] , a prayer was sought to direct issuance of C-Forms with respect to an inter-state purchase. A Division Bench of the High Court of Jharkhand, made an exhaustive analysis on the aspect of issuance of these statutory forms in light of the increasing litigation for the grant and denial of the same. On a combined reading of the C.S.T Act, 1956 and the C.S.T. (Registration and Turnover) Rules, 1957, it was opined that the C-Forms have to be given to the registered dealer when the goods in respect of which the C-Form is used, are included in the registration certificate; when necessary, application amount is paid and when there is compliance to the rules prescribed. Furthermore, the Court also observed that with every state power , there vests a duty and with every duty , a right flows to the assessee /applicant of the C-Form. Thereafter, it was also noted that there are certain does and do nots for the state while grant or refusal of the same. Receipt of C-Forms After Assessment - HELD THAT:- A C-Form is essentially issued by the seller of goods to the buyer for the purpose of effecting a reduction on the rate of tax - The role of Respondent No. 3, who is the seller within the State of Andhra Pradesh is that he works as an agent of the Government to collect the tax from the buyer. The buyer who purchases such goods from Andhra Pradesh, uses them as a raw material in manufacturing the final product in the other State is to have a concessional rate of tax of 2% under CST Act on submission of statutory C-Forms. It is not out of place to mention that the statutory C-Forms can be submitted even after completion of the assessment by the seller. The claim cannot be rejected on the score that C-Forms were presented after the assessment. The only obligation on the part of the seller is to prove sufficient case for the late submission of C-Forms. Refund of the Tax Deposited - HELD THAT:- The Petitioner is entitled to have concessional rate of tax @ 2% on the purchases made from the Respondent No. 3. The reason for non-submission of statutory C-Forms at relevant point of time is due to the confusion created on the advent of GST regime, which came into force from 01.07.2017. The Authorities clarified about the position on reference to the judgment of Punjab Haryana High Court, which was confirmed by the Hon ble Apex Court. Thereafter, the Petitioner made their efforts for submission of C-Forms to get refund. Record further shows that the Petitioner submitted C-Forms to Respondent No. 2, which was returned with an endorsement directing them to submit the C-Forms through Respondent No. 3 and then have credit notes from Respondent No. 3, for refund of the amount - Be that as it may, during the pendency of the present petition, Respondent No. 3 has submitted C-Forms which were rejected by the Department stating that they have paid the full tax on the score that they could not get C-Forms. Petitioner having paid the full tax is entitled to the eligible refund. The Respondent Nos. 2 and 4 are directed to forthwith process the refund claim of the Petitioner for the years 2017-18 and 2018-19 based on statutory C-Forms of the Petitioner and upon scrutinising the genuineness of C-Forms in accordance with law and pass appropriate orders on merits within a period of four weeks of the receipt of a copy of this Order - Petition allowed.

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