TMI Tax Updates - e-Newsletter
April 30, 2022

Case Laws in this Newsletter:

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

Articles

1. BONAFIDE MISTAKES Vs.PENALTY UNDER SECTION 74.

   By: Sadanand Bulbule

News

1. Auction for Sale (Re-issue) of (i) ‘5.74% GS 2026’, (ii) ‘GoI Floating Rate Bond 2028’, and (iii) ‘6.67%GS 2035’ (iV) ‘6.99% GS 2051’

2. DRI seizes 4 bags containing opiate derivative/heroin with 395 kg at Piplav Port, Gujarat

3. Core Industries grow by 10.4% during FY 2021-22; steel, cement and natural gas lead the way

Notifications

Customs

1. G.S.R. 322 (E) - dated 28-4-2022 - ADD

Corrigendum - Notification No. 68/2021-Customs (ADD), dated the 6th December, 2021

2. 36/2022 - dated 28-4-2022 - Cus (NT)

Rate of Foreign Exchange - Norwegian Kroner - Seeks to amend Notification No. 34/2022-CUSTOMS (N.T.), dated 21st April, 2022

3. 02/2022 - dated 28-4-2022 - CVD

Seeks to impose countervailing duty on imports of Copper Tubes and Pipes originating in or exported from Malaysia, Thailand and Vietnam

GST - States

4. 2/2022 – State Tax(Rate) - dated 22-4-2022 - Jharkhand SGST

Seeks to provide for a concessional rate on intra state supply of bricks conditional to not availing the ITC

5. 1/2022 – State Tax (Rate) - dated 22-4-2022 - Jharkhand SGST

Seeks to ament Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017

IBC

6. IBBI/2022-23/GN/REG082 - dated 28-4-2022 - IBC

Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2022

Income Tax

7. 47/2022 - dated 28-4-2022 - IT

Exemption from income tax to specified income arising to a body or authority or Board or Trust or Commission - U/s 10(46) of IT Act 1961 - Central Government notifies, Tamilnadu Construction Workers Welfare Board a Board constituted by the state Government of Tamil Nadu

Circulars / Instructions / Orders

Income Tax

1. F. No. 225/101/2021-ITA-II - dated 23-4-2022

Revised Instruction for constitution and functioning of 'Local Committees to deal with Taxpayers' Grievances from High-Pitched Scrutiny Assessment'

GST - States

2. 15/2021-GST - dated 10-3-2022

Standard Operating Procedure (SOP) for implementation of the provision of extension of time limit to apply for revocation of cancellation of registration under section 30 of the DGST Act, 2017 and rule 23 of the DGST Rules, 2017

3. 18/2021-GST - dated 10-2-2022

GST on service supplied by restaurants through e-commerce operators

4. 17/2021-GST - dated 31-1-2022

Clarification on certain refund related issues

Highlights / Catch Notes

GST

• GST Portal Enhancements: GSTR-1 and IFF Functionalities Improved for Streamlined Filing Experience.

  News : GSTR-1/IFF enhancements deployed on GST Portal - Certain changes have now been implemented, and are available on the GST Portal
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• Incentives from IIUL to Applicant Classified as Marketing Service Payment, Not Trade Discount.

  Case-Laws - AAR : Trade Discount or not - Incentive received - Since some amount, in the form of incentives, is flowing from IIUL to the applicant, in the absence of supply of goods between the concerned persons it appears that IIUL is paying consideration (in the form of incentives) to the applicant for receiving marketing services which would augment the sale of Intel products in the country. Therefore, the said amounts received by the applicant cannot be considered as Trade Discounts received. - AAR
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• Section 13(8) IGST Act: Marketing Services Classified as Intermediary; Place of Supply is Maharashtra, India.

  Case-Laws - AAR : Classification of services - Marketing Services - the applicant is an intermediary. As per the provisions of Section 13 (8) of the IGST Act, 2017, it is found that the place of supply in subject case of the applicant as an intermediary would be the location of the supplier of services i.e. the location of the applicant which is located in the State of Maharashtra, India. - AAR
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• Local Authority Services Like Fire Services Not Business Activities, Exempt from GST. Staff Quarters Covered Separately Under 3(vi)(c).

  Case-Laws - AAR : Classification of supply - composite supply of works contract service - As per explanation to Serial No 3(vi) of said NT, 'business' shall not include any activity or transaction undertaken by a local authority in which they are engaged as public authorities. We note that fire services is a matter listed in twelfth schedule of our Constitution and thereby a function of the Municipal Corporation. Thereby this activity undertaken by Surat Municipal Corporation out of the purview of business, as described at sr no 3(vi)(a) of Said NT. Also, supply of Staff Quarters is covered at 3(vi)(c) of said NT. - AAR
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• GST Clarification: State Government Activities Not Business; School Buildings and Staff Quarters Classified Under Serial No. 3(vi.

  Case-Laws - AAR : Classification of composite supply - works contract service - Explanation to Serial No 3(vi) of said NT, 'business' shall not include any activity or transaction undertaken by the State Government in which they are engaged as public authorities. Thereby, this activity undertaken by GoG out of the purview of business, as described at sr no 3(vi)(a) of Said NT. Also, School building is a structure meant for use as an educational establishment as described at entry at Sr no 3(vi)(b)(i) of said NT; and supply of Staff Quarters is covered at 3(vi)(c) of said NT. - AAR
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• Fabricating and mounting tankers on owner-provided chassis classified as service under Heading 9988, taxed at 18% GST.

  Case-Laws - AAR : Classification of supply - supply of services or not - activity of fabricating and mounting Tankers, Tippers, etc. on the chassis provided by the owner of such chassis i.e. bus body building - it is found that subject supply merits to be classified at Heading 9988 ‘Manufacturing services on physical inputs (goods) owned by others’ and precisely at Service code (Tariff) 998882 ‘other transport equipment manufacturing services’. - Taxable @18% of GST - AAR
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• GST Not Applicable on Employer's Canteen Charges Collected from Employees Under Factories Act, 1948.

  Case-Laws - AAR : Taxability of supply - outward supply or not - recovery of amount from employee on account of third party canteen service provided by assessee, which is obligatory under section 46 of Factories Act, 1948 - GST, at the hands of the Cadmach, is not leviable on the amount representing the employees portion of canteen charges, which is collected by Cadmach and paid to the Canteen service provider. - AAR
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• ITC on GST for canteen facilities blocked u/s 17(5)(b)(i) CGST Act; not blocked for large-capacity vehicles.

  Case-Laws - AAR : Input Tax Credit - ITC on GST paid on canteen facility is blocked credit under Section 17 (5)(b)(i) CGST Act and inadmissible to M/s Emcure - ITC on motor vehicle for transportation of persons having approved seating capacity of more than 13 persons is not blocked credit vide Section 17(5) CGST Act. - AAR
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• GST Classification of Transformers in Wind Generators: Step Up/Step Down Models Taxed at 18.

  Case-Laws - AAR : Classification of goods - specially designed Transformers for Wind Operated Electricity Generators which are meant to perform dual function of Step Down and Step Up manufactured by Suzlon and supplied to the customers of Suzlon as a part of Wind Operated Electricity Generator - Suzlon’s submission in this regard that transformers are placed in nacelle/ tower at para 6 is not correct. - Liable to GST @18% - AAR
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Income Tax

• Share Exchanges Between Funds Not Considered Transfers for Capital Gains Tax in Specified Countries and Territories.

  Notifications : Capital Gains - Certain Transactions not regarded as transfer - original fund to the resulting fund - share or unit or interest held by him in the original fund in consideration for the share or unit or interest in the resultant fund - Central Government notifies countries and specified territories - Notification
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• High Court Upholds Exemption 11: Corpus Funds for Revenue Expenditure Qualify as Income Application u/s 11(1)(d.

  Case-Laws - HC : Exemption 11 - utilization of corpus fund towards revenue expenditure as application of income under Section 11(1)(d) - exemption on corpus donation is allowed on purchase of land, as it is a purchase of capital asset. - concurrent finding of the CIT(A) and the ITAT sustained - HC
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• National Faceless Assessment Orders Under Scrutiny for Tight Deadlines and Pressure on Assessees and Officers.

  Case-Laws - HC : Validity of National Faceless Assessment orders - Both the Assessees and the Assessing Officers are under tremendous pressure to meet deadlines as the Show Cause Notices itself are being issued at the fag end of the limitation. Therefore, the assessment procedure needs to be strengthened by giving adequate time both to the assessees and the Assessing Officer who are assigned to pass Assessment Order under the National Faceless Assessment Regime. - HC
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• Technical Error in Filing: Buyer Exempt from Late Fee u/s 234E Due to PAN Mix-Up in TDS Payment.

  Case-Laws - AT : Levy of late filing fee u/s. 234E - Due to certain technical error committed (incorrect interchanging of PAN numbers of buyer and seller in online filing of Statement 26QB), the seller could not get credit of TDS and later, on the advise of Revenue authorities again the buyer (the assessee) paid the TDS again amount along-with interest for late deposit. - Once the assessee has initially deposited TDS and furnished Statement in Form 26QB within time, but committed a technical error while depositing TDS resulting in non-grant of TDS to transferor, compelling it to again deposit TDS along-with interest for late deposit, then, in the interests of justice and considering the fact that no loss is caused to the Revenue, the assessee cannot be saddled with levy of late filing fee u/s 234E of the Act, taking a judicious view of the matter. - AT
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• Assessment Reopening Needs Assessing Officer's Belief of Escaped Income u/s 147 of Income Tax Act.

  Case-Laws - AT : Reopening of assessment u/s 147 - The requirement of section 147 of the Act is the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment. Assessing Officer’s reason to believe is sine-qua-non for reopening assessment. It is not the reason to believe of PCIT or any other authority which matters when it comes to the provisions of section 147 of the Act. - AT
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Customs

• Balli, Goa Gains New Inland Container Depot Status for Enhanced Customs Operations and Cargo Handling.

  Notifications : Inland Container Depots for loading and unloading of goods - Additional port in Balli, Goa notified - Notification
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• Anti-Dumping Duty Imposed on Chinese DCC Imports for 5 Years to Protect Domestic Industries from Unfair Pricing.

  Notifications : Anti-dumping duty on imports of of “N, N’ – Dicyclohexyl Carbodiimide (DCC)” originating in or exported from China PR imposed for a period of five years - Notification
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• EPCG Scheme: Importers Shouldn't Be Penalized for Delays in EODC Due to Public Authorities' Actions.

  Case-Laws - HC : Export Promotion Capital Goods (EPCG) Scheme - fulfilment of Export Obligation or not - A condition which is dependent on action by public authorities over which an assessee/importer has no control and, delay on the part of a public authority cannot result in denial of the benefit extended in larger public interest. Thus, the delay in obtaining Export Obligation Discharge Certificate (EODC) cannot result in denial of benefit under the EPCG Scheme, which itself has been formulated to promote export and earn foreign exchange. - HC
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Corporate Law

• Amendments to Companies Rules 2022: Rule 3 Exempts Certain Cases from Charge Registration Requirement, Streamlining Company Law Processes.

  Notifications : Rule 3 - Registration of creation or modification of charge - Rule 3 shall not be applicable in certain cases - Companies (Registration of Charges) Amendment Rules, 2022. - Notification
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SEBI

• SEBI Amends Capital and Disclosure Regulations to Improve Transparency in Share Allocation for Non-Institutional Investors.

  Notifications : Effective date of certain Amendments - An issue made through book building process / Allotment, the allocation in the non-institutional investors - Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2022 - Notification
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Case Laws:

• GST

• 2022 (4) TMI 1346
  Seeking Grant of Bail - appellant is a salaried Director of the company - payment of Rs. 200 crore as a condition of bail - payment through the assets of the Company - HELD THAT:- What is most material is that no notice has been issued to the Company under Section 74 of the GST Act, 2017 which could have resulted in quantification of the amount. Thus on the one hand the charge sheet has been filed but on the other hand no process for quantification of the amount has taken place. The proceedings commenced in October, 2021. The appellant has been charged in the third charge sheet filed. Thus, obviously investigation is over. The bail is granted to the appellant on terms and conditions to the satisfaction of the trial Court - appeal disposed off.

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• 2022 (4) TMI 1345
  Rejection of refund claim - time limitation - relevant date - explanation (2) of Section 54 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- The information available before this Court, in clear and vivid terms, reveals that seeking refund of the amount for the period, commencing from April, 2018 to March, 2019, the petitioner herein made an application on 13.03.2021 and there is absolutely no dispute with regard to either submission of the said claim or the receipt of the same by the respondent-authorities. It is also not in dispute that the petitioner herein filed a detailed reply on 02.04.2021 in response to the show cause notice dated 26.03.2021. A reading of the said reply shows that the petitioner herein also referred to the orders of the Hon ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER] . A perusal of the order under challenge shows that as per the provisions of the statute, in order to get entitlement for refund of the period from April, 2018 to March, 2019, one should have filed an application on or before 19.05.2020. But in the present case, the petitioner herein filed such application on 13.03.2021. It is very much apparent from the order of the Hon ble Apex Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER] , that while computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 is liable to be excluded. In view of the said order of the Hon ble Supreme Court and if the said period is excluded from computation of the period of limitation, the entire claim of the petitioner herein is liable to be accepted. The matter is remanded to the said extent for consideration and for passing appropriate orders by taking into consideration the directions of the Hon ble Supreme Court in the order in the Suo Motu Writ Petition - Petition allowed.

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• 2022 (4) TMI 1344
  Trade Discount or not - Incentive received from Intel inside US LLC under Intel Approved Component Supplier Program (IACSP) - If not considered as Trade Discount then whether it is consideration for any supply or not? - export of service or not - HELD THAT:- The applicant purchases the goods from the distributors and is not receiving discounts from the said distributors. Therefore, there is no supply of goods or services or both from IIUL to the applicant, no sale transaction of goods in the instant case between the applicant and IIUL and hence, the incentives received by the applicant from IIUL will not be covered under the provision of Section 15 (3). There is no way that the said incentives can be treated as Trade Discount given by IIUL to the applicant because the supply of goods in respect of which the incentives are purported to be given are rendered by the distributors and not by IIUL - thus, the Incentive received from Intel Inside US LLC under Intel Approved Component Supplier Program (IACSP) cannot be considered as Trade Discount. If the incentives received by them are not considered as Trade Discount then whether it is consideration for any supply? - HELD THAT:- It is seen that IIUL has appointed various distributors to sell the company s products in India and the applicant is not a distributor. If the distributors had given Trade Discounts to the applicant, maybe such a case could have been covered under Section 15 (3) of the GST Act, 2017. There is no such discount or incentive received by the applicant from the distributors from whom the impugned goods are being purchased for further sale down the line. The only reason for the applicant to receive incentives in the subject case appears to be for increasing the business of IIUL and therefore there appears to be a supply of services in the subject case since there is no supply of goods at all between the applicant and IIUL. Since some amount, in the form of incentives, is flowing from IIUL to the applicant, in the absence of supply of goods between the concerned persons it appears that IIUL is paying consideration (in the form of incentives) to the applicant for receiving marketing services which would augment the sale of Intel products in the country. Therefore, the said amounts received by the applicant cannot be considered as Trade Discounts received. Export of service or not - HELD THAT:- In the instant case, the marketing services are provided in respect of goods which are made physically available by the recipient of services (i.e IIUL, through its distributors) to the supplier of marketing services (i.e. the applicant), in order to provide the services. Therefore, as per Section 13 (3) (a), the place of provision of services is the location of the supplier of services i.e the applicant, which is in India - the impugned supply does not qualify as export of services.

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• 2022 (4) TMI 1343
  Classification of services - Marketing Services agreed to be provided by the Applicant under Marketing Services Agreement - covered under supply of Support Services falling under HSN Code 9985 or as Intermediary Services classifiable under HSN Code 9961/9962? - HELD THAT:- Since the applicant acts as a conduit between GTRS and customers in India, it therefore appears that the applicant is acting as an intermediary in the subject case. The Applicant has not categorically mentioned whether they are arranging or facilitating supply of goods or services or both but has definitely stated that they connect GTRS with the customers and prospective customers in India. By connecting the customers/prospective customers with GTRS, the applicant is actually arranging or facilitating the supply of goods or services or both, between two or more persons - Since the applicant is satisfying all the conditions of an intermediary, there are no hesitation in holding that, the applicant is an intermediary. As per the provisions of Section 13 (8) of the IGST Act, 2017, it is found that the place of supply in subject case of the applicant as an intermediary would be the location of the supplier of services i.e. the location of the applicant which is located in the State of Maharashtra, India. As the place of supply of intermediary services to GTRS is location of applicant in India and consequently condition of export of services as per Section 2 (6) of IGST Act is not satisfied - question is answered in the negative.

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• 2022 (4) TMI 1342
  Classification of supply - composite supply of works contract service - Construction of Fire Station And Staff Quarters for the Surat Municipal Corporation - whether activity merits classification at Serial Number 3(vi)(a) of Notification Number 11/2017 Central Tax(Rate) dated : 28.06.2017 (hereinafter referred to as the said NT), as amended from time to time and last amended by Notification Number 21/2012-Central Tax(Rate) dated 31.12.2021 w.e.f. 01.01.2022? - HELD THAT:- For subject to find entry at 3(vi)(a) of said NT, the following criteria is to be satisfied: a. Supply shall be Composite supply of Works Contract. b. Service Recipient shall be Central/State Government, the Union Territory, a local authority, a Government Authority or a Government Entity. c. The Civil Structure/ Original Works must be predominantly meant for use other than for commerce, industry or any other business or profession. The subject contract is for the construction of immovable property wherein transfer of property in goods is involved in the execution of subject contract. It is held that subject supply is works contract service. The supply comprises supply of the following: A type Fire station; A type Admin building; B type building; C type officers quarters; site development works; VDS roads; compound wall; watchman and Pump room. The subject supply is a composite supply of works contract service. Thus, the service recipient is Surat Municipal Corporation, which is held is a local authority. As per explanation to Serial No 3(vi) of said NT, business shall not include any activity or transaction undertaken by a local authority in which they are engaged as public authorities. We note that fire services is a matter listed in twelfth schedule of our Constitution and thereby a function of the Municipal Corporation. Thereby this activity undertaken by Surat Municipal Corporation out of the purview of business, as described at sr no 3(vi)(a) of Said NT. Also, supply of Staff Quarters is covered at 3(vi)(c) of said NT. A fire station will be used for fire services function as envisaged in schedule twelfth of our Constitution and cannot be considered a commercial building - The subject Supply merits entry at Sr No. 3(vi)(a) of said NT.

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• 2022 (4) TMI 1341
  Classification of composite supply - works contract service by way of construction of Construction of New Adarsh Nivashi Shala (Kumar) / School Hostel (324 Bed ) / Staff Quarters and Kumar Chhatralay for the Road and Building Department in the Government of Gujarat - merits classification at Serial Number 3(vi)(a) and (b) of N/N. 11/2017 Central Tax(Rate) dated : 28.06.2017, as amended from time to time and last amended by N/N. 21/2012-Central Tax(Rate) dated : 31.12.2021 w.e.f. 01.01.2022 or not - HELD THAT:- The subject contract is for the construction of immovable property wherein transfer of property in goods is involved in the execution of subject contract. The subject supply is Works Contract Service. The Supply comprises supply of school building, school hostel, college hostel, Principal s bungalow and staff quarters. The subject supply is a composite supply of works contract service. Thus, the service recipient is Government of Gujarat (GoG). Explanation to Serial No 3(vi) of said NT, business shall not include any activity or transaction undertaken by the State Government in which they are engaged as public authorities. Thereby, this activity undertaken by GoG out of the purview of business, as described at sr no 3(vi)(a) of Said NT. Also, School building is a structure meant for use as an educational establishment as described at entry at Sr no 3(vi)(b)(i) of said NT; and supply of Staff Quarters is covered at 3(vi)(c) of said NT. It is noted that Revenue submits that said civil structure may be used for commerce or business. It is held that a School building will be used by State Government for education and cannot be considered a commercial building. Further, with the explanation of term business incorporated into Sr no 3(vi) of said NT as discussed and nothing of contrary vide a specific intelligence report submitted by Revenue that the structure supplied is for business/ commerce purpose, there are no merit in Revenue s submission. The subject Supply merits entry at Sr. No. 3(vi) of said NT.

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• 2022 (4) TMI 1340
  Classification of supply - supply of services or not - activity of fabricating and mounting Tankers, Tippers, etc. on the chassis provided by the owner of such chassis i.e. bus body building - applicable accounting code of such services as per the Scheme of Classification of Services - applicable rate of GST - HELD THAT:- Schedule II(3) CGST Act reads as, any treatment or process which is applied to another person s goods is a supply of service. Therefore bus body building on customer owned chassis is supply of service - Section 2(68) CGST Act defines Job work as any treatment or process undertaken by a person on goods belonging to another registered person. Therefore bus body building on chassis owned by GST registered customer is Job work and finds entry at Sr no 26(ic) to Notification 11/2017-CT(R) - And bus body building on chassis owned by un-registered customer is Manufacturing services on physical inputs (goods) owned by others, other than those registered under CGST Act which finds entry at Sr no. 26(iv) to Notification 11/2017- CT( R). As per the Scheme of Classification of services, it is found that subject supply merits to be classified at Heading 9988 Manufacturing services on physical inputs (goods) owned by others and precisely at Service code (Tariff) 998882 other transport equipment manufacturing services .

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• 2022 (4) TMI 1339
  Supply or not - subsidized deduction made by the Applicant from the employees who are availing food in the factory/corporate office - levy of GST - HELD THAT:- M/s Cadila has arranged a canteen for its employees, which is run by a Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by M/s. Cadila whereas the remaining part is borne by its employees. The said employees portion canteen charges is collected by M/s. Cadila and paid to the Canteen Service Provider. M/s. Cadila submitted that it does not retain with itself any profit margin in this activity of collecting employees portion of canteen charges. This canteen service facility provided by M/s Cadila to its employees cannot be accorded to be an activity made in the course or furtherance of business to deem it a Supply by M/s Cadila to its employees - GST, at the hands of the M/s Cadila, is not leviable on the amount representing the employees portion of canteen charges, which is collected by M/s Cadila and paid to the Canteen service provider.

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• 2022 (4) TMI 1338
  Maintainability of Advance Ruling Application - Calculation of GST - Whether tax is to be calculated on tender price or inclusive of tender price? - HELD THAT:- It is found that vide the Tender to this work order, said work was to be completed within 9 months from the date of written order to commence. M/s Royal received the work order to commence on 1-12-20, thereby time limit of 9 month is completed on 1-9-21. M/s Royal has not brought on record that said Work order/ tender for which Ruling is sought, the Supply is being undertaken. It is noted that subject Advance Ruling application was filed on 20-1-22, thereby the said activity, as submitted by M/s Royal is neither an ongoing nor a proposed activity as on date of filing subject application. As per Section 95(a) CGST Act, Advance Ruling is a decision provided to an applicant in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. The Question raised by M/s Royal does not fall under the gamut of said Section 95(a) CGST Act. The subject Application is thereby non-maintainable as per Section 95(a) CGST Act and hereby rejected.

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• 2022 (4) TMI 1337
  Taxability of supply - outward supply or not - recovery of amount from employee on account of third party canteen service provided by assessee, which is obligatory under section 46 of Factories Act, 1948 - HELD THAT:- Cadmach has arranged a canteen for its employees, which is run by a Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by Cadmach whereas the remaining part is borne by its employees. The said employees portion canteen charges is collected by Cadmach and paid to the Canteen Service Provider. Cadmach submitted that it does not retain with itself any profit margin in this activity of collecting employees portion of canteen charges. This canteen service facility provided by Cadmach to its employees cannot be accorded as an activity made in the course or furtherance of business, to deem it a Supply by Cadmach to its employees. GST, at the hands of the Cadmach, is not leviable on the amount representing the employees portion of canteen charges, which is collected by Cadmach and paid to the Canteen service provider.

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• 2022 (4) TMI 1336
  Maintainability of Advance Ruling application - Transfer closing balance of ITC from present GSTIN to existing GSTIN - merger of present GSTIN to existing GSTIN - transfer of all business assets and liabilities to the said existing GST registration - additional liability towards payment of Tax or reversal of ITC will arise on the Applicant on account of merger of its GSTIN with GSTIN or not - HELD THAT:- With the Hon ble High Court in JSW ENERGY LIMITED VERSUS UNION OF INDIA AND ORS. [ 2019 (6) TMI 717 - BOMBAY HIGH COURT] , this Authority finds it legal and proper to pass Rulings, as per section 95(a), on matters as stipulated in section 97(2)(b). It is overreach and encroachment to Rule on matters beyond our statutory and functional jurisdiction as defined in Section 97(2) CGST Act. For to pass Rulings on those matters pertaining to GST scheme of law, beyond the jurisdiction carved in Section 97(2) CGST Act is not proper and legal. For if the submission of Shri Vaja is to be favoured upon by us, issues such as validity of a Notification/ constitutionality or legality of a Notification etal would also have to be admissible as maintainability of AAR Application. There are no reason to substitute the phrase CGST Rules for the word Notification referred to in section 97(2)(b). There are no merit in this submission and it is held that AAR has its carved out functional jurisdiction to pass Rulings as per Section 97(2). The subject Application non maintainable and hereby rejected.

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• 2022 (4) TMI 1335
  Levy of GST - recoveries made by the Applicant from the employees for providing canteen facility to its employees - free of cost bus transport facilities provided by the Applicant to its employees - Exemption under the Sl. No. 15 of N/N. 12/2017 Central Tax (Rate) dated 28 June 2017 - Admissibility of input tax credit for the GST charged/paid to the vendors on procurement of such services in terms of Sec 16 of CGST Act - HELD THAT:- M/s. Emcure has arranged a canteen for its employees, which is run by a Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by M/s. Emcure whereas the remaining part is borne by its employees. The said employees portion canteen charges is collected by M/s. Emcure and paid to the Canteen Service Provider. M/s. Emcure submitted that it does not retain with itself any profit margin in this activity of collecting employees portion of canteen charges. Further, it is found that M/s. Emcure has arranged free of cost transportation facility to its employees in Non-AC buses, which is provided by third party vendor, as a part of its HR policy and this facility is as per employment arrangement with its employees. It cannot be accorded that these activities provided by M/s Encure to its employees to be an activities made in the course or furtherance of business to deem it a Supply by M/s. Emcure to its employees. Input Tax Credit - HELD THAT:- Section 17(5)(b)(i) sub-clause ending with a colon and followed by a provisio which ends with a semi colon is to be read as independent sub-clause, independent of sub clause Section 17(5)(b)(iii) and its proviso [of subclause iii]. Thereby, the provisio to section 17(5)(b)(iii) is not connected to the sub-clause of Section 17(5)(b)(i) and cannot be read into it. ITC on GST paid on canteen facility is blocked credit under Section 17 (5)(b)(i) CGST Act and inadmissible to M/s Emcure - ITC on motor vehicle for transportation of persons having approved seating capacity of more than 13 persons is not blocked credit vide Section 17(5) CGST Act. Thereby, hiring of bus of approved seating capacity of more than 13 persons do not falls under blocked credit as provided under Section 17 (5)(b)(i) CGST Act.

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• 2022 (4) TMI 1334
  Maintainability of Advance Ruling application - Works Contract or not - supply made by NEC under the AFC project - composite supply or not - supply would qualify as an original works meant predominantly for use other than for commerce, industry, or any other business or profession, thereby attracting GST rate of 12% provided in the Not. No. 24/2017-CT (Rate) dtd. 21-9-17 - classification under 8470 or SAC 9954? - maintenance and management services post service would qualify as Composite Supply or not - HELD THAT:- Section 103(1) CGST Act, stipulates that Advance Ruling shall be binding only on the applicant who had sought it and on the concerned officer/jurisdictional officer in respect of the applicant. Now, NEC Technologies Pvt. Ltd. is the supplier of service and our Ruling cannot be binding on the supplier of service M/s NEC Technologies Pvt. Ltd., who is a GST registered person in Delhi with GST 07AACCN3496J1Z4. SSDCL is not the supplier of service to seek the Service code (Tariff)/ GST Rate/ nature of service supplied by NEC Technologies Pvt. Ltd. The Advance Ruling is sought by SSDCL to determine the SAC, and GST Tax rate liability supplied by NEC Technologies Pvt. Ltd. to SSDClL. Shri Shah during hearing insisted that the subject application is maintainable and has, thereby, failed to appreciate the statutory provisions of Chapter XVII- Section 95, 97 and 103 CGST Act. Application dismissed as being non-maintainable.

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• 2022 (4) TMI 1333
  Classification of goods - specially designed Transformers for Wind Operated Electricity Generators which are meant to perform dual function of Step Down and Step Up manufactured by Suzlon and supplied to the customers of Suzlon as a part of Wind Operated Electricity Generator - to be treated as part of Wind Operated Electricity Generator or not - falls under Sr.No. 234 in Schedule-I to Notification No. 01/2017-Central Tax (Rate) dated 28th June, 2017 read with Notification No. 1/2017- State Tax(Rate) dated 30th June, 2017 or not - liable to Central GST at the rate of 2.5% along with Gujarat State GST at the rate of 2.5% up to 30th September, 2021 and 6% each towards CGST and SGST with effect from 1st October, 2021? Whether Transformers are part of WOEG to determine entry at sr no 201A of schedule II of said Notification? - HELD THAT:- What is forthcoming is that Transformers connect/link the WOEG to distribution network. Nothing on record substantiates that Transformers are inalienable part of WOEG. Transformer could have been considered a part of WOEG if WOEG cannot function without it. But the fact is WOEG is able to generate electricity with the kinetic energy of the wind by itself. The very acronym WOEG stands for Wind operated electricity generator. Whereas, transformers for WOEG is installed on the ground adjoining to WOEG to make the electrical energy generated by WOEG usable for consumption or distribution purpose. It is noted that the transformers are neither placed in nacelle nor tower but on the ground beside the WOEG. Suzlon s submission in this regard that transformers are placed in nacelle/ tower at para 6 is not correct. WOEG and transformer inclusive devices to form a wind power system/ wind generating system/ project. But WOEG per se is capable of generating electricity with wind. Now if a specially designed transformer with step down function is designed to rotate the blades/fan in WOEG that does not make it a part of WOEG, but makes the transformer per se a dual function transformer with step up and step down function - the word used in the said Notification is WOEG, which is generator per se. WOEG generates electricity per se and to include the aspects of transmission, distribution and supply of electricity for which Transformer is requisite is to add extra words WOEG system to a clearly worded Notification with the words WOEG and not WOEG system . GST Rate on Transformers - HELD THAT:- Suzlon, Vadodara ( the applicant) is supplying Transformers directly to recipients, on Principal to Principal basis and the invoices produced are not bill to ship with reference to Transformers supplied. Also that there is no tripartite agreement between Suzlon Daman, Suzlon Vadodara (applicant) and Malaiamman (recipient). Also that Suzlon Daman has no contract/ sub contract entered with the applicant for supply of transformers to Malaiamman. Further, the phrase Bill to Ship to is misleading and incorrect with respect to Transformers, as the bill to by Suzlon the applicant was not to Suzlon Daman but to Mailaiamman at Erode and Ship to was directly by Suzlon the applicant to Malaiamman at Tuticorin. Transformers are not part of WOEG and are leviable to CGST @ 9% vide Sr. No. 375 of Schedule-III of Notification No. 1/2017-CT (Rate) dated 28-6-2017.

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• Income Tax

• 2022 (4) TMI 1332
  Assessment u/s 153A - Addition primarily on the ground that the petitioner had failed to file reply to the show cause notice issued by the respondent No.1 on 22 nd March, 2022 around midnight - HELD THAT:- This Court is of the view that time of one and a half days given by the respondent-Revenue to the petitioner to respond to the notice dated 22nd March, 2022 in the peculiar facts of the present case was not sufficient. It is pertinent to mention that the show cause notice dated 22nd March 2022 runs into 92 pages and is accompanied by the deposition of certain individuals which were not provided to the petitioner prior thereto. Consequently, in the peculiar facts of the present case, the impugned assessment order dated 31st March 2022 is set aside. Petitioner is directed to file its response to the show cause notice dated 22nd March 2022 within three weeks. Respondent is directed to pass an assessment order within four weeks thereafter by way of a reasoned order in accordance with law.

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• 2022 (4) TMI 1331
  TP Adjustment - comparable selection - ITAT has erred in excluding M/s Eclerx Services Pvt. Ltd, TCS E-Serve Ltd, BNR Udyog Ltd. and Excel Infoways Ltd as comparables for determining arm s length price in the case of the respondent - HELD THAT:- It is settled law that exclusion or inclusion of one or other comparable would by itself not constitute a question of law unless it is shown that there are important functional dissimilarities or vital material facts which go to the root of profitability or where other material circumstances are involved - See WSP CONSULTANTS INDIA PVT. LTD. [ 2017 (11) TMI 464 - DELHI HIGH COURT] and M/S BECTON DICKINSON INDIA PVT. LTD. [ 2018 (4) TMI 573 - DELHI HIGH COURT] Thus reasoning is factual and discloses the functional and other reasons to elucidate, dissimilarities between the four entities and the Respondent/Assessee. Keeping in view the aforesaid factual background, which is neither doubted nor challenged on the ground of perversity, we do not find any substantial question of law for consideration in this appeal.

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• 2022 (4) TMI 1330
  TP Adjustment - comparable selection - ITAT rejecting Persistent Systems Ltd., E-Infochips Banlagore Ltd., Infinite Data Systems Pvt. Ltd. and Zylog Systems Ltd. as comparables - HELD THAT:- It would be incorrect to state that the ITAT did not take into account the relevant facts while excluding the aforesaid four companies as comparables. It is also pertinent to mention that in the assessee s own case, this Court has dismissed appellant s appeal [ 2017 (5) TMI 1483 - DELHI HIGH COURT] raising similar grievance. Consequently, this Court does not find any substantial question of law arising on this aspect and therefore declines to frame any question.

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• 2022 (4) TMI 1329
  Exemption 11 - utilization of corpus fund towards revenue expenditure as application of income under Section 11(1)(d) - HELD THAT:- A perusal of the paper book reveals that both CIT(A) and ITAT have set aside the assessment order on the ground that Rs. 19 crore cannot be added as additional income of the Trust since exemption on corpus donation is allowed on purchase of land, as it is a purchase of capital asset. This Court also finds that there is no ground of appeal either before the ITAT or before this Court challenging the concurrent finding of the CIT(A) and the ITAT that the substance of the transaction was that the corpus fund had been utilised for a purchase of a capital asset. This Court is further in agreement with the findings of the CIT(A) and ITAT that the substance of the transaction must prevail over the form and, if required, the Appellant must examine the nature of the transaction. In fact, this approach is commended by the Allahabad High Court in Sri Dwarkadheesh Charitable Trust [ 1974 (4) TMI 31 - ALLAHABAD HIGH COURT] which has been quoted by the appellant in the present appeal. No substantial question of law

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• 2022 (4) TMI 1328
  Exemption u/s 10 (23C) (vi) - Exemption denied as Petitioner had collected fees under the head Placement and Training from the students which was not in conformity with the fees prescribed - According to the Petitioner, the fees collected for Placement and Training are part and parcel of the educational activities for which the fees structure has also been prescribed by the AICTE and Industry Department of the Government of Odisha - CCIT rejected the prayer of the Petitioner on the ground that the Petitioner-Trust did not exist solely for educational purposes - HELD THAT:- The essential purpose of the Trust is to run both institutions on non-profit basis. That essential object does not appear to have changed. Secondly, the explanation offered for the incidental expenses as part of the imparting of training appears to be a plausible one. Too narrow a view could not have been taken of the purposes for which the expenses were incurred even if they were not strictly for educational purposes. They were for purposes incidental to the imparting of training and did not take away from the character of the institutions, which were essentially being run on a non-profit basis. Consequently, the Court is of the view that neither the collection of the amount towards placement and training nor its utilisation by the Petitioner can be said to be in a manner that is not solely for educational purposes. There appears to be a sufficient nexus demonstrated by the Petitioner between the expenditure incurred on the incidental activities of providing food, lodging and transport and other facilities to the trainers, the trainees and the staff etc. and the object for which the Petitioner s institutions are operating. This cannot be completely separated from the essential activity of imparting education and training. Consequently, the Court sets aside the impugned order of the CCIT and directs that an exemption will be granted to the petitioner from payment of tax under Section 10 (23C) (vi) of the Act for the FY 2008-09, the consequential orders shall be passed within a period of 4 weeks.

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• 2022 (4) TMI 1327
  Reopening of assessment u/s 147 - notice issued under Section 142(1) Assessing Officer had called upon Petitioner to give details of payments made to the persons covered by section 40A(2)(b) - HELD THAT:- It is settled law as held by this Court in Aroni Commercials Ltd. [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] , that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. The issues have been subject of consideration before the AO during the original assessment proceedings. There can be no doubt in the present facts, the very issue of incentives to the senior executives and the difference in the VAT turnover was a subject matter of consideration by the Assessing Officer during the original assessment proceedings. It would therefore, follow that the re-opening of the assessment by the impugned notice is merely on the basis of change of opinion from that held earlier during the course of assessment proceedings. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment.

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• 2022 (4) TMI 1326
  Exemption u/s 10(23C)(vi) (via) - CIT(Exemption) declined to grant such approval taking the view that the Trust is not existing solely for the educational purpose - HELD THAT:- We take notice of the fact that the impugned order is an appealable order under Section 253(1)(f) of the Act, 1961. The appeal would lay before the Income Tax Appellate Tribunal. We relegate the writ applicant to avail the alternative remedy of statutory appeal before the Tribunal. We may clarify that the writ application was filed in the Registry of this High Court some time in the year 2020 i.e. during the lockdown period of pandemic. The Registry notified it for admission today before this Court. In such circumstances, if the issue of limitation arise before the Tribunal, the Tribunal may consider accordingly.

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• 2022 (4) TMI 1325
  Reopening of assessment u/s 147 - Change of opinion - value of unsold flats for two projects which has not been offered to tax under the head Income from house property - HELD THAT:- On identical reasons were recorded for A.Y.2016-17 and this Court was pleased to pass the order [ 2022 (1) TMI 1234 - BOMBAY HIGH COURT] that assessment order in this case has been passed on 20th December, 2019 and the query on this issue has been raised on 19th October, 2019 and replied by petitioner vide its letter dated 14th November, 2019 and 12th December 2019. Therefore, the Assessing Officer had benefit of the judgment of the Delhi High Court relied upon by the Assessing Officer wanting to re-open the assessment but still did not find anything wrong in the case made out by petitioner and proceeded to pass the assessment order. Market value being more than the agreement value and applicability of Section 43CA(1) - As held by this Court in Aaroni Commercials Ltd . [ 2014 (2) TMI 659 - BOMBAY HIGH COURT ] once a query is raised during assessment proceedings and assessee has replied to it, it follows that the query raised was a subject matter of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. In this case, during the original assessment proceedings, a notice dated 19th October 2019 was issued under Section 142(1) of the Act by which petitioner was called upon to furnish copies of Index II(s) of three flats sold during the year. Petitioner responded by its letter dated 14th November 2019 and provided copies of Index II of flats sold during the year. Therefore, it is abundantly clear that the second issue relating to nine flats out of the twelve flats mentioned in the reasons for reopening was a subject of consideration of the Assessing Officer while completing the assessment. There can be no doubt in the present facts that the subject matter of the market value of nine flats as against the agreement value was a subject matter of consideration by the Assessing Officer. It would, therefore, follow that the reopening of the assessment for this reason is merely on the basis of change of opinion of the Assessing Officer. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. - Decided in favour of assessee.

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• 2022 (4) TMI 1324
  Validity of assessment - Non issuance of notice under Section 143(2) - HELD THAT:- The Supreme Court in Commissioner of Income-Tax vs. Laxman Das Khandelwal [ 2019 (8) TMI 660 - SUPREME COURT] has clearly stated that the scope of Section 292BB is to make service of notice having certain infirmities to be proper and valid. However, the section does not save complete absence of notice. For section 292BB to apply, the notice must have emanated from the Department. It is only the infirmities in the manner of service of notice that the section seeks to cure. In fact, a Division Bench of this Court in Pr.Commissioner of Income-tax Vs. Shri Jai Shiv Shankar Traders (P.) Ltd. [ 2015 (10) TMI 1765 - DELHI HIGH COURT] has categorically held that the failure of the AO, in re-assessment proceedings, to issue notice under Section 143(2) of the Act, prior to finalising the re-assessment order, cannot be condoned by referring to Section 292BB of the Act. On the basis of admitted fact that notice under Section 143(2) of the Act was not issued within the period of six months prescribed for the purpose, jurisdiction assumed by the Assessing Officer under Section 143(3) of the Act was assumed erroneously. Appeal of assessee allowed.

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• 2022 (4) TMI 1323
  Reopening of assessment u/s 147 - scope of mandatory procedure prescribed u/s 148A - relation between Relaxation Act, 2020 and Finance Act, 2021 - enhanced/reduced time limit specified in Section 149 - initiation of reassessment proceedings prior to coming into force of the Finance Act, 2021 - substitution made by the Finance Act, 2021 - legality and validity of only the Explanations to the two Notifications, being Notification No.20/2021 dated 31st March, 2021 and Notification No.38/2021 dated 27th April, 2021, issued by Central Government in exercise of powers vested under Section 3(1) of Relaxation Act, 2020 - reformative changes to Sections 147 to 151 - income escaping assessment - onset of Covid-19 pandemic followed by nationwide lockdown in March, 2020 - Relaxation of certain provision of specified Act - HELD THAT:- As relying on case MON MOHAN KOHLI VERSUS ASSISTANT COMMISSIONER OF INCOME TAX ANR. [ 2021 (12) TMI 664 - DELHI HIGH COURT] we find merit in the submission that the judgment squarely covers the issue arising in the present writ petition. We hereby quash the impugned Notice dated 25.04.2021, issued by Respondent No.1 under Section 148 of the Income Tax Act, 1961, for the Assessment Year 2015-16 (Annexure-A1 to the memo of the writ petition). Keeping in view the fact that the Division Bench in the aforementioned judgment has declared Explanations A(a)(ii)/A(b) in the Notification No. 20/2021 dated 31.03.2021 and Notification No. 38/2021 dated 27.04.2021 as ultra vires, the relief sought by the Petitioner herein, in prayer (b) stands redressed and no further orders are required to be passed.

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• 2022 (4) TMI 1322
  Validity of National Faceless Assessment orders - petitioners have challenged the impugned Assessment Orders primarily on the ground that the assessment by the National Faceless Assessment Centre is contrary to the Board circular in Circular No. 225/61/2021/ITA-II dated 10.06.2021 - HELD THAT:- It is evident that the Assessing Officers hardly get enough time to go through the case file to pass a proper and well-settled considered Assessment Order. Instances of order being passed without proper consideration of all the facts are increasing and results in mechanical orders which prone to challenge under Article 226 of the Constitution of India. Both the Assessees and the Assessing Officers are under tremendous pressure to meet deadlines as the Show Cause Notices itself are being issued at the fag end of the limitation. Therefore, the assessment procedure needs to be strengthened by giving adequate time both to the assessees and the Assessing Officer who are assigned to pass Assessment Order under the National Faceless Assessment Regime. This needs to be addressed by the authorities who are implementing the Faceless Assessment. This may be suitably addressed by the authorities and the system is strengthened so that both the assessees and the Assessing Officer get adequate time in the assessment proceedings. Considering the fact that the impugned Assessment Orders have been passed without any discussion, these Writ Petitions are allowed by remitting the case back to the National Faceless Assessment Centre to pass a fresh order within a period of sixty days based on the reply filed by the petitioners even though the petitioners had filed statutory appeal under Section 246A of the Income Tax Act, 1961 before the Appellate Commissioner. The respondents are directed to fix a hearing through video conferencing and also instruct the Administrator of the Web Portal to permit the petitioners time to file additional reply/representations, if any, before fresh orders passed.

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• 2022 (4) TMI 1321
  Addition solely on the statement given by the appellant under Section 132(4) - search/seizure proceedings - whether the Tribunal in law and fact is entitled to rely on the statement by the assessee on 22.06.1998 and /or whether the assessee by referring to the judgments relied on in Kailashben Manharlal Chokshi [ 2008 (9) TMI 525 - GUJARAT HIGH COURT] and M.Narayanan and Bros. Cases [ 2011 (7) TMI 245 - MADRAS HIGH COURT] could be allowed to contend that the statement in Annexure-C should completely be excluded and additions made by the Assessment Officer are reversed? - HELD THAT:- We have perused the effect order given, statements and retracted statements of the assessee, evidentiary value given by the tribunal and the inescapable conclusion that could be drawn in respect of each one of the additions now confirmed by the Tribunal. The findings recorded cannot and could not be said as completely unavailable and illegal. As noted supra, due evidenciary value is given and no other material is placed by the assessee before the tribunal in spite of observation made by this Court to erase the impact of statement in Annexure-C. Unless and until illegality or infirmity is made out against the findings recorded by the tribunal, this Court if considers the substantial questions exclusively by referring to the judgments on which the assessee is relying upon, would virtually be disturbing what has been already recorded as a relevant circumstance by this Court in Annexure-I judgment between the parties. We are convinced that the grounds raised are not available in the circumstances of this case, the assessee failed to demonstrate existence of question of law against any of the findings confirmed by the Tribunal. Further with the affirmation of the findings by the Tribunal, the concurrent view taken by the Commissioner and the Tribunal is also kept in mind, we see no reason to interfere with the order under appeal. Excepting the answered ground, no other ground is urged by the assessee. - Decided in favour of revenue.

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• 2022 (4) TMI 1320
  Rectification u/s 154 - Addition by invoking Sec 43B in respect of Service tax which has never been debited to profit and loss account - three amounts were incurred in the previous year but were not paid before the due date of submission of return of income - HELD THAT:- Since for two amounts the assessee itself had added back such expenditure to its income and this fact was available with the CPC through computation of income, therefore, the finding of CPC and learned CIT(A) that these amounts were not mistake apparent from the record is not correct. As regards the amount of service tax which has been mentioned in the audit report as not paid before the due date of furnishing of return of income. We find that the auditor had mentioned that this amount was not routed through the profit loss account and therefore, in my opinion this amount was not required to be added u/s 43B - CIT(A) has simply not allowed the appeal of the assessee by holding that section 143(1)(a)(iv) provides that disallowance of expenditure can be made as indicated in the audit report as CPC while processing u/s 143(1) must have captured the data from the audit report filed by the assessee. CIT(A) has further recorded a finding that such amount was debited to the profit loss account which fact is partly correct and partly incorrect. The assessee itself in the computation of income had added back two amounts which were required to be added u/s 43B of the Act and the third item was not required to be added u/s 43B as the same was not routed through profit loss account. All these facts were available with the CPC and learned CIT(A) therefore, this is a mistake apparent from the record which is rectifiable u/s 154 of the Act and keeping in view these facts, reverse the order of learned CIT(A) and delete the addition. - Decided in favour of assessee.

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• 2022 (4) TMI 1319
  Validity of reason of scrutiny selection - limited scrutiny v/s complete scrutiny - assessee s case was selected for complete scrutiny under CASS and notice u/s 143(2) of the Act was issued, served on the assessee and assessment order u/s 143(3) r.w.s. 144B of the Act was passed - As submitted that the assessee s field of working is erroneously stated as real estate, whereas, the assessee is in the business of rural water scheme, which lacks the jurisdiction for scrutiny - HELD THAT:- We find that the assessee s case was selected for complete scrutiny. Therefore, we do not find any infirmity in the order passed by the Ld.CIT(A) on this ground and accordingly, the ground raised by the assessee is dismissed.. Addition u/s 68 - unexplained cash credits - HELD THAT:- Admittedly, the assessee has filed PAN, Aadhar numbers and bank details of the creditors except two creditors i.e. Sri A.Nageswar Rao for an amount of Rs. 2,00,000/- and Sri Bommala Srinivasa Rao for an amount of Rs. 2,00,000/-. Therefore, all the transactions are explained except the above said two transactions for an amount of Rs. 4,00,000/-. But the Ld.CIT(A) as well as the AO simply ignored the bank statement and passed erroneous order. Therefore, we are of the view that except these two transactions, the remaining transactions are proved by the assessee. Therefore, we confirm the transactions of Sri A.Nageswar Rao and Sri Bommala Srinivasa Rao for an amount of Rs. 4,00,000/- (two lakhs each). For remaining amount, the assessee has explained the genuineness of the transactions and credit worthiness of the creditors. Therefore, we direct the AO to delete the addition made by the AO for other loan transactions for an amount of Rs. 29,32,906/-. - Decided partly in favour of assessee.

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• 2022 (4) TMI 1318
  Disallowance of interest u/s 36(1)(iii) - assessee has submitted that the aforesaid sale got forfeited since Kadam did not pay the balance amount and the property in question was later sold to third party - Whether amount due from Kadamb was not outstanding sale price but loans advances so that interest was incurred for non-business purposes and as such it was not admissible? - HELD THAT:- The assessee has not placed on record any agreement for sale entered with Kadam or any further correspondences in support of his averments. While, in principle, we are in agreement with Ld. Counsel for the assessee that if no amount has been advanced to Kadam, then merely on basis of mistakenly showing the above sum under the head loans and advances instead of trade receivables section 36(1)(iii) of the Act cannot be invoked. In absence of supporting documents, we are inclined, in the interests of justice, to restore the file to AO to verify whether in the present case, the assessee has in fact, not advanced any money to Kadam as asserted and the sum merely represents a mere journal entry, which has been incorrectly reflected under the head loan and advances , while it should have been accounted for as Trade Receivables . And if that be the case, then in our view, no disallowance of interest u/s 36(1)(iii) of the Act is called for, merely on account of mistaken accounting treatment, when on facts, no advance has been given. Appeal of assessee allowed.

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• 2022 (4) TMI 1317
  Deduction u/s 10(37) - assessee received enhanced compensation - HELD THAT:- Section 10(37) of the Act provides for exemption when there is compulsory acquisition of agricultural land which is located in an urban area. One of the conditions for application of 10(37) is that the land should have been used for agricultural purposes 2 years immediately preceding the date of transfer. The assessee was unable to substantiate the use of the land for agricultural purpose that was compulsorily acquired and, in the circumstances, we are of the view that the deduction under section 10(37) of the Act was rightly refused by the Revenue authorities. Deduction u/s 54 - There is no dispute that the assessee purchased new property but the deduction under section 54 of the Act is available only when the long-term capital gain is available from the transfer of any residential house. According to the AO, the assessee did not establish there was residential house which was compulsorily acquired by BMRCL. Besides the above, the Revenue authorities also took the view that under section 45(5)(b) of the Act, additional compensation / enhanced compensation is taxable in the year in which the same is received by an assessee. According to the Revenue authorities, deduction under section 54 of the Act cannot be claimed on enhanced compensation and such deduction can be claimed only when capital gain arises out of original compensation received by an assessee. In our opinion, this reason given by the Revenue authorities is not acceptable because section 45(5)(b) of the Act only mentions that enhanced compensation is chargeable to tax in the year in which the same is received by the assessee and the taxability is under the head capital gains . Once an income is assessed under the head capital gains , the assessee is entitled to claim as a consequence any deduction that is permissible in law while computing capital gain. Therefore, this reason given by the Revenue authorities in our view is not acceptable. Whether there existed a residential house in the property that was compulsorily acquired by the BMRCL? - We find that the RTC at page 74A of the assessee s Paper Book clearly shows existence of a house. The BBMP has issued a khata and that clearly shows that the land of 7 guntas or 8164 sq.ft. acquired by the BMRCL included 800 sq.ft. of built-up area RCC. As we have already said this has been described as house in the RTC. It is just clear from the evidence on record that there was a house that was in existence on the property that was acquired and therefore the assessee is entitled for deduction under section 54 of the Act. We, however, find that none of these document evidence was filed by the assessee before the lower authorities. We also find that the CIT(A) has not given any categoric finding with regard to claim of the assessee for deduction under section 54 of the Act. In these circumstances, we are of the view that the issue has to be set aside to the AO for examination of the claim of the assessee under section 54 in the light of the evidence that has been filed before the Tribunal. We are of the view that the additional evidence filed by the assessee and the Paper Book filed before the Tribunal are all necessary and required for the purpose of proper adjudication of the issue involved in the appeal and hence they are admitted as additional evidence. The issue is remanded to the AO for consideration afresh after affording the assessee opportunity of being heard. Appeal of the assessee is treated as allowed for statistical purposes.

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• 2022 (4) TMI 1316
  Ex-parte assessment order passed u/s 144 read with section 147 - addition on account of trading in penny stock - Appeal at 8th time before this tribunal - HELD THAT:- As the assessee was not co-operative before the Assessing Officer even after providing six opportunities, therefore, the Assessing Officer was constrained to pass best judgement assessment. Even before the Ld. CIT(A) the assessee has not produced any details or evidences to substantiate her claim. However, the Ld. CIT(A) has passed a very detailed order running into 41 pages and thereby confirmed the addition. Even before us the assessee has simply raised general grounds without any material or evidence. In the absence of the same and having given seven opportunities, the assessee has not shown any interest in proceeding the matter further. We, therefore, see no reasons to interfere with the orders of the Lower Authorities and confirm the addition made by the Assessing Officer. Thus, the grounds of appeal are liable to be rejected and appeal is dismissed.

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• 2022 (4) TMI 1315
  Unexplained cash credits u/s 68 r.w.s. 115BBE - Assessee submitted it as agricultural income - HELD THAT:- The assessee has given no reason as to why he could not able to produce the basic documents required by the Assessing Officer for allowing the claim of agricultural income by the assessee. It was, in the above circumstances, the learned CIT(A) has held that the agricultural income for the AYs 2014-15 to 2015-16 is around Rs. 4 to 7 lakhs, but during this AY 2016-17 the assessee has shown agricultural income of Rs. 23,90,000/-. The assessee has not explained how this much boom in the agricultural income and nature of crop cultivated by him. In the absence of any details furnished by the assessee, the learned CIT(A) estimated the average agricultural income as Rs. 5.6 lakhs which is reasonably allowable and he accordingly confirmed the remaining Rs. 18.3 lakhs as the unexplained credit under Section 68 of the Act. In the assessee s case that the assessee is non-cooperative with the Assessing Officer in spite of seven opportunities given to him by the Assessing Officer. The assessee has also not furnished the bills, bank statements even before the learned CIT(A) in spite of enough opportunities given by the learned CIT(A). Further, the present appeal is filed before the Tribunal with a delay of 101 days; so, taking into account the overall lethargic attitude of the assessee, we deem it fit to impose a cost of Rs. 10,000/- on the assessee payable to the Prime Minister s National Relief Fund within a period of four weeks from the date of receipt of this order. Thereafter, on production of the official receipt, the learned Assessing Officer can entertain the additional evidences placed before the Tribunal and, after affording opportunity to the assessee, the learned Assessing Officer is directed to pass appropriate assessment order in accordance with law. To this extent, this appeal of the assessee is allowed.

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• 2022 (4) TMI 1314
  Levy of penalty u/s 271(1)(c) - Non specification of clear charge - defective notice u/s 274 - whether the penalty under Section 271(1)(c) of the Act has been levied for concealment of income or for furnishing of inaccurate particulars of income? - HELD THAT:- We find that Hon ble Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] after considering the decision in the case of CIT vs. Manjunatha Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] CIT vs. SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] has held that penalty under Section 271(l)(c) was not leviable when the notice issued by Assessing Officer did not specify as to whether the proceedings were initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income. We accordingly set aside the levy of penalty levied by Assessing Officer and that was confirmed by the learned Commissioner of Income-Tax (Appeals). Thus, the appeal of the Assessee is allowed.

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• 2022 (4) TMI 1313
  Levy of late filing fee u/s. 234E - Fee for default in furnishing TDS Statement - appellant, as a buyer, has first deposited entire TDS u/s 194IA and thereupon filed prescribed Form 26QB-cumchallan before due date on 24-11-2014, but inadvertently committed an error therein of depositing this TDS using PAN of the seller instead of PAN of the appellant (as the buyer) - HELD THAT:- Assessee had initially deposited the entire TDS in respect of purchase of immovable property on 24-11-2014 u/s 194-IA of the Act i.e. within the due date from purchase of immovable property. Due to certain technical error committed (incorrect interchanging of PAN numbers of buyer and seller in online filing of Statement 26QB), the seller could not get credit of TDS and later, on the advise of Revenue authorities again the buyer (the assessee) paid the TDS again amount along-with interest for late deposit. CIT(A) did not take into consideration the peculiar facts and circumstances of the instant case, where the assessee had initially deposited TDS u/s 194-IA of the Act on purchase of immovable within due date on 24-11-2014. Due to a technical error, since the seller could not get credit of TDS deposited in the initial deposit, on the advise of Revenue Authorities, the assessee had again deposited TDS along with late filing interest Rs. 46,977/- payable for 14 months on 16-12-2015. Ld. CIT(A) also did not appreciate that had the assessee at the time of initial deposit of TDS mentioned the correct PAN numbers i.e. had the assessee not committed the aforesaid technical error, there would have been no question of levy of interest u/s 234E of the Act. The Ld. CIT(A) also did not take cognizance of the fact that in the facts of the case, there was no loss caused to the Revenue. In the case of CIT v. Gujarat Oil and Allied Industries Ltd. [ 1992 (9) TMI 67 - GUJARAT HIGH COURT] took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income-tax Officer or before the appellate authority by assigning sufficient cause. In view of various authorities cited above, we are of the considered view that Ld. CIT(A) did not consider the facts and attendant circumstances of the case while upholding levy of penalty u/s 235E of the Act. Once the assessee has initially deposited TDS and furnished Statement in Form 26QB within time, but committed a technical error while depositing TDS resulting in non-grant of TDS to transferor, compelling it to again deposit TDS along-with interest for late deposit, then, in the interests of justice and considering the fact that no loss is caused to the Revenue, the assessee cannot be saddled with levy of late filing fee u/s 234E of the Act, taking a judicious view of the matter. In result, we hold that Ld. CIT(A) has erred in law and in facts in upholding levy of penalty u/s 234E - Appeal of assessee allowed.

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• 2022 (4) TMI 1312
  Revision u/s 263 - assessment proceedings u/s 153A - exemption of income u/s 10(38) - HELD THAT:- We are unable to discern from the record that the Assessing Officer had subjected to the claim of the appellant for exemption u/s 10(38) and took a plausible view nor could the appellant demonstrate with evidence before us. Therefore, in the present case non-examination of the claim by the Assessing Officer renders the assessment order erroneous and prejudicial to the interests of the Revenue. Accordingly, we uphold the order of revision passed by the ld. CIT (Central) u/s 263 of the Act. Thus, we do not find any merit in the grounds of appeal no.1 to 8 raised by the assessee herein. Assessing Officer had no jurisdiction to pass the assessment order, as no opportunity was offered by the Commissioner of Income Tax- II, Nashik while passing the order u/s 127 - It is trite law that an assessee is barred from raising contention that no opportunity was given to the assessee while transferring the jurisdiction of the case u/s 127 from Jalgaon to Nashik as the order of the transfer of case u/s 127 was within the knowledge of the assessee during the course of assessment proceedings and still the assessee had chosen not to participate in the matter of jurisdiction of the Assessing Officer to whom the case has been transferred. The assessee cannot be allowed latter to challenge the jurisdiction of the Assessing Officer as held by the Hon ble Supreme Court in the case of Pannalal Binjraj vs. Union of India [ 1956 (12) TMI 1 - SUPREME COURT] AND SHIVABHAI KHODABHAI PATEL VERSUS COMMISSIONER OF INCOME-TAX [ 1999 (12) TMI 31 - GUJARAT HIGH COURT] - the objection raised by the assessee challenging the transfer of jurisdiction of the case does not stand the test of the law. Thus, this contention is devoid of any merit and, accordingly, we dismiss the same. Assessment u/s 153A - contention raised by the appellant that the information received from the Investigation Wing of the Department does not form part of the incriminating material, therefore, non-consideration of such incriminating material at the time of framing the assessment u/s 143(3) does not give jurisdiction to the Commissioner to exercise the power of revision, this contention has also no legs to stand for the reason that undisputedly the assessment was made pursuant to notice u/s 153A are abated with regular assessment proceedings and any information which had come to knowledge and possession of the Assessing Officer should be considered at the time of framing of assessment. The case laws relied upon have no application to the facts of the present case or those cases are in relation to unabated regular assessment proceedings. Thus, we do not find any merit in this contention raised during the course of hearing before us. Thus, the grounds of appeal raised by the assessee stand dismissed.

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• 2022 (4) TMI 1311
  Penalty u/s 271(1)(c) - penalty proceedings u/s 271(1)(c) was initiated on the basis of an order of assessment r.w.s. 147 of the Act, wherein the returned income has been accepted without any addition - HELD THAT:- We are unable to persuade, as to how in the absence of any addition to the returned income, the conclusion of either concealment of income or furnishing of inaccurate particulars of such income could prudently be drawn. Since the return of income in response to notice u/s 148 was accepted indifferently, there remain no scope for alleging against the assessee, as both concealment of income or furnishing of inaccurate particulars of such fails, consequently the jurisdiction. Therefore, in view of the aforesaid discussion, the issue herein on both legal as well on merits stands concluded in favour of the assessee and nothing contrary has been shown to us in the present facts which would warrant our taking a view different from Hon ble Karnataka High Court in the case of S Chandrashekar Vs ACIT [ 2017 (2) TMI 1127 - KARNATAKA HIGH COURT] Since the provision of section 271(1)(c) is calamitous, albeit commercial, consequences, the provision is mandatory and brooks no trifling or dilution therewith, as a result we are of the considered view that, having regard to the fact that in the instant case the SCN dt. 15/03/2014 issued u/s 274 r.w.s. 271(1)(c) of the Act without specifying any limb or charge vis- -vis absence of any default on account of acceptance of return indifferently, is invalid and untenable in the eyes of law, consequently the penalty imposed u/s 271(1)(c) of the Act is bad in law and hence same is quashed accordingly - Decided in favour of assessee.

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• 2022 (4) TMI 1310
  Addition u/s 68 - interest free loan taken by the assessee - creditworthiness remains unproved to the satisfaction of the AO - HELD THAT:- As could be seen that the assessee has furnished various documentary evidences before lower authorities to establish the primary requirements of Sec.68. These documents have been listed in preceding para 5.2 and the copies of these documents have been placed on record. It could be seen that the assessee has received advances from Shri P. Ravi through banking channels on various dates. The assessee has even repaid amount of Rs. 5 Lacs to the lender during the year, lender has filed copy of PAN Card, confirmation letter and its bank statements. It could be seen that there are no cash deposits in the bank account of lender before advancing the amount to the assessee. The credits to assessee have been sourced by lender out of banking channels only. Similarly, the transactions with Abhishek Mundhra HUF are through banking channels. The copy of PAN and confirmation letter is on record. The loan has been partly satisfied in the subsequent year by repayment and transfer entries. The copy of Income Tax Return and bank statement is also on record. No cash transactions have been observed in the account of lender before transfer of money to the assessee. The last entity Mundhra Bullion Private Ltd. has confirmed the transactions. The transactions are through banking channels only. The copy of PAN and Income Tax return of the lender is on record. The perusal of bank statement would reveal that there are no immediate cash deposits and the payments to the assessee have been sourced out of banking channels only. On the basis of all these documents, it could be well said that the assessee had duly discharged the onus of establishing the identity of the lenders, their respective creditworthiness as well as genuineness of the transactions. So far as the allegations of Ld. AO that the loans are interest free is concerned, the circumstances under which the loans were obtained by the assessee was duly explained before lower authorities and the same has already been enumerated in preceding para 5.1. Therefore, the impugned additions, in our considered opinion, has rightly been deleted by Ld. CIT(A). Accordingly, the impugned order could not be faulted with. The revenue has relied on the decision of Hon ble Supreme Court in the case of Pr.CIT Vs. NRA Iron Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] which is completely on different facts. In that case, the assessee had received share capital / premium and as per field enquiries, the investor entities were found to be non-existent entities. The primary onus as casted u/s 68 could not be discharged by the assessee and the entire transactions were held to be bogus and lacked credibility. The facts of the case before us are totally different wherein the entities have filed confirmation letters and filed requisite documents as required under law. The investor entities have appeared before Ld. AO in response to summons and confirmed the transactions. Therefore, the ratio of cited decision is not applicable here. - Decided against revenue.

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• 2022 (4) TMI 1309
  Difference in the rent receipt as appearing in the form 26AS received and as declared by the assessee in its return of income - HELD THAT:- Before the ld. CIT(A), the assessee had clearly given the documentary evidences that the property was jointly owned and the rent income which has been received by the assessee for a sum aggregating to Rs. 15,56,136/-, out of which Rs. 6,00,000/- has been paid to other owner, Sri Vallabha Investment Ltd.. It is undisputed fact that the said party had shown it as a rental income in its return of income which is evident from its computation of income. The assessee might have received the rent entirely for the said assessment year but has paid the part of the rent to other co-owner who has also declared it as its income; therefore, we do not find any reason for sustaining the addition on account of difference of rent; firstly, the assessee had shown rental income of Rs. 9,56,136/- and the other owner has also shown rental income of Rs. 6,00,000/-, thus there was no difference in the rental income and accordingly, the addition is deleted. Addition being cash deposited in his bank account - nature of unexplained deposits in terms of section 69A of the Income Tax Act, 1961 - HELD THAT:- CIT(A) has deleted the credits for which the source was explained. However, the other cash deposits are concerned the same has been confirmed. Before us, ld. counsel had given the cash flow statement duly supported by the bank statement wherein he has shown that assessee had huge withdrawals during the year itself and day-to-day cash flow chart have also been filed which is appearing at pages 56 to 63 of the paper book. From bare perusal of the same, it cannot be disputed that assessee had availability of cash in the form of withdrawals and the same is shown in the cash flow statement filed before the ld. CIT(A). Thus we do not find any reason to sustain the addition. Accordingly, the same is also deleted.

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• 2022 (4) TMI 1308
  Allowability of claim of advances written off - only grievance of the revenue is that assessee had not offered any income in terms of section 36(2) of the Act in earlier years and hence, the said claim when written off, is not allowed as deduction under section 36(1)(vii) - HELD THAT:- Once a trade advance was given in the normal course of business of the assessee and that the said trade advance becomes irrecoverable and consequently, when the same was written off by the assessee as irrecoverable, the same would only be a business loss for the assessee allowable as deduction under section 28 of the Act and provisions of section 36(2) r.w.s. 36(1)(vii) would not come into operation. Hence, we direct the Assessing Officer to grant deduction on account of trade advances written off. Accordingly, the ground raised by the assessee in this regard are allowed.

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• 2022 (4) TMI 1307
  Reopening of assessment u/s 147 - assessment has been reopened after expiry of four years from the end of the relevant assessment year - claim of deduction u/s.80IA (4)(iii) - HELD THAT:- A perusal of the reasons for reopening reveal that assessment has been reopened as the assessee allegedly made inaccurate claim of deduction u/s.80IA - The assessee has furnished a copy of original scrutiny assessment order dated 30/03/2013 passed u/s. 143(3) - While framing the assessment u/s. 143(3) of the Act, the AO had examined assessee s claim of deduction u/s. 80IA (4)(iii). AO after examining the claim threadbare, restricted the deduction to Rs. 58,73,29,724/- as against Rs. 157,57,61,492/- claimed by the assessee in its return of income. In the reasons for reopening there is not even a single averment by the AO that the assessee has failed to disclose truly and fully all material facts necessary for the assessment. Similarly, in the entire reassessment order there is no finding/observation by the Assessing Officer that assessment has been reopened beyond the period of four years because of assessee s failure to disclose fully and truly all material facts necessary for the assessment. Therefore, in our considered view the validity of reassessment proceedings are liable to fail on this account itself. Assessment has been reopened on the basis of audit objection - A perusal of the reasons for reopening reveal that the Assessing Officer while recording reasons has time and again referred to Audit scrutiny . In other words, what can be inferred from the manner in which reasons for reopening have been recorded is that the objections raised by the audit team triggered reopening of assessment. The requirement of the law is that it should be Assessing Officer s own reasons and not borrowed reasons which should form basis of reopening the assessment. Therefore, in the absence of Assessing Officer s own reason to believe that the income chargeable to tax has escaped assessment, the reassessment proceedings are bad in law. A perusal of reasons in the present case clearly indicate that it is not the belief of the Assessing Officer which has ignited the process of reopening but the observations in Audit scrutiny that has formed basis of reopening. Thus,with reference to reopening on audit objection, we find merit in second contention of the assessee as well. Assessment has been reopened on the basis of change of opinion - A perusal of reasons reveal that while recording reasons the audit objections were weighing heavy on the mind of Assessing Officer, therefore, time and again the Assessing Officer has used the expression Audit scrutiny , thus, it was not Assessing Officer s own conviction or belief that income chargeable to tax has escaped assessment. Even if it is assumed that the reasons for reopening were recorded by the Assessing Officer out of his own belief even then the reopening is not sustainable as it is the result of change of opinion . While giving reply to the audit objection the Assessing Officer was convinced that the assessment made u/s. 143(3) of the Act was justified. The Assessing Officer in his reply to audit objections has defended the view taken in assessment order - AO changed his opinion and recorded reasons for reopening on re-appreciation of the documents already record. There is nothing on record to suggest that there was any new incrimination material that had come to the knowledge of the AO after scrutiny assessment. Thus, reopening of assessment is unsustainable on account of change of opinion . There are catena of judgments wherein it has been held that re-opening of assessment on the basis of change of opinion is unsustainable. It amounts to review by the Assessing Officer which is not permissible under the Act. The requirement of section 147 of the Act is the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment. Assessing Officer s reason to believe is sine-qua-non for reopening assessment. It is not the reason to believe of PCIT or any other authority which matters when it comes to the provisions of section 147 of the Act. DR has placed reliance on various decisions to buttress his arguments. We have examined the same. We find that either those decisions are distinguishable on facts or the ratio laid down in the said judgments does not support the case of Revenue. We are in agreement with the findings of CIT(A) in holding reassessment proceedings u/s.147 of the Act as bad in law. Consequently, the impugned order is upheld and the appeal by the Revenue is dismissed.

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• Customs

• 2022 (4) TMI 1306
  Jurisdiction - power of DRI to issue SCN - Seizure of two containers on the ground of being overweighed - HELD THAT:- The very same show cause notice and the Order in Original impugned in the present writ application was a subject matter of challenge before this High Court in M/S SJS INTERNATIONAL VERSUS UNION OF INDIA [ 2021 (12) TMI 1339 - GUJARAT HIGH COURT] , where it was held that The initiation of the action on the part of the DRI on an intelligence of is severally questioned when the proper officer has already held in favour of the assessee classifying the item of export under a different head. The action of the respondent authority of issuance of the show cause notice dated 09.02.2018 is interfered with. The show cause notice in the present form is quashed and set aside with all consequential actions - application disposed off.

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• 2022 (4) TMI 1305
  Export Promotion Capital Goods (EPCG) Scheme - fulfilment of Export Obligation or not - import of machinery with nil rate of BCD - HELD THAT:- There can be no dispute about the fact that, the Appellant had discharged their Export Obligation, as would be evident from the Redemption Certificate issued on 27.10.2021. The production of Export Obligation Discharge Certificate (EODC) in terms of EPCG scheme is necessary for the importers to claim benefit under the said Scheme and delay in producing the Export Obligation Discharge Certificate (EODC) cannot result in denial of the benefit, more so, when the assessee/importer has admittedly discharged the Export Obligation and has also furnished the requisite documents before the appropriate authority for issuance of Export Obligation Discharge Certificate (EODC). A condition which is dependent on action by public authorities over which an assessee/importer has no control and, delay on the part of a public authority cannot result in denial of the benefit extended in larger public interest. Thus, the delay in obtaining Export Obligation Discharge Certificate (EODC) cannot result in denial of benefit under the EPCG Scheme, which itself has been formulated to promote export and earn foreign exchange. In the present case, the Appellant has discharged their Export Obligation and the same is also evident from the Redemption Letter dated 27.10.2021 and that, the delay in obtaining the same from ADGFT ought not result in denial of the benefit under EPCG Scheme. The Appellant/Writ Petitioner is permitted to produce the documents in support of their claim to demonstrate that, their export obligation has been discharged, within a period of eight weeks from the date of receipt of a copy of this judgment - Appeal allowed.

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• Insolvency & Bankruptcy

• 2022 (4) TMI 1304
  Withdrawal of CIRP application - settlement took place between the parties for completion of the housing project - Section 12A of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Taking into consideration the salient features of the undertaking given on affidavit by the Promoter, Shri Kashi Nath Shukla and the fact that there are only seven out of the 452 homebuyers, who opposed the Settlement Plan, it is found that it will rather be in the interest of the homebuyers that the appellant/promoter is permitted to complete the project as undertaken by him. It is pertinent to note that he has agreed that the cost of the flat will not be escalated. He has also given the time line within which the project would be completed. Not only this, but he has also undertaken to refund the amount paid by the seven objectors, if they so desire. He has further agreed that there shall be a team of 5 persons, 2 from the homebuyer s side and 2 from the management side and that the entire process shall be monitored by the IRP. There is every possibility that if the CIRP is permitted, the cost that the homebuyers will have to pay, would be much higher, inasmuch as the offer made by the resolution applicants could be after taking into consideration the price of escalation, etc. As against this, the Promoter has filed a specific undertaking specifying therein that the cost of the flat would not be escalated and that he would honour the BBA signed by the previous management. Appeal allowed - decided in favor of appellant.

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• 2022 (4) TMI 1303
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The corporate debtor has admitted that the principal amount due is Rs. 35,44,350/- which is more than the threshold limit at the relevant point of time. The last payment was made on 30th December 2017. Thus, the debt is payable in fact and in law. The interest @ 18% on the principal amount has not been mentioned in any invoice by the operational creditor and hence is not liable to be paid - It is seen from the records that notice of default under Section 8 has been delivered and an affidavit under Section 9(3)(b) of IBC has also been filed. It is noted that the application filed u/s 9 is complete and complies with the requirements of the relevant provisions of IBC, 2016 read with Rules and Regulations made thereunder. The outstanding amount is more than the threshold limit of Rs. 1,00,000/-. There does not exist any dispute within the meaning of provisions of Section 8 9 of IBC, 2016. Application admitted - moratorium declared.

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• 2022 (4) TMI 1302
  Maintainability of application - Mere claim of interest - initiation of CIRP - Operational Creditors - Whether the Application under Section 9 of IBC can be continued for mere claim of interest? - HELD THAT:- It can be seen that an application under Section 9 of IBC is principally for taking the Corporate Debtor into CIRP which has become an insolvent. Failure of the Corporate Debtor discharging the debt is a pre-condition for initiation of CIRP against it. If there is an agreement for payment of interest on the debt, the same can be considered while allowing the claim for the principal amount. But when the Corporate Debtor discharges the debt, it would be showing that it is not an insolvent. Hence, declaring the Corporate Debtor as insolvent by ordering CIRP only because of the default in paying of interest which is not agreed upon, would be against the spirit of IBC. The Operational Creditor would nevertheless have the right to claim and recover interest if it is permitted under any other law, by moving an appropriate forum. NCLT does not decide the amount that is due to the Operational Creditor. The only test to admit an application under section 7 IBC is whether a debt above the threshold limit is due and whether the Corporate Debtor has defaulted in repayment. When by the date of admission the operational debt in terms of Section 5 (21), which does not include interest, stands discharged, the interest alone which remains under the claim amount, does not qualify for an operational debt, for the default of which alone CIRP can be ordered. NCLT is not a forum for recovery so as to decide the due amount. When admittedly the principal amount is paid, operational debt ceases to be in existence and consequently application under section 9 becomes invalid. Recently NCLAT while adjudicating an appeal filed in the matter of RAJESH KEDIA EX-DIRECTOR OF AJANTA PAPER AND GENERAL PRODUCTS LTD. VERSUS PHOENIX ARC PRIVATE LIMITED, MR. RAJESH KUMAR MITTAL, IRP FOR AJANTA PAPER AND GENERAL PRODUCTS LTD. [ 2022 (4) TMI 528 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ], has held that the quantum of debt is not to be considered at the stage of admission of a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The only requirement for admitting a petition under Section 7 of IBC is that the minimum outstanding debt should be more than the threshold amount provided for Under the IBC. The actual amount of Claim is to be ascertained by the Resolution Professional after collating the Claims and their verification, which comes at a later stage. Considering the clarity of the law which settled that an application under Section 9 of IBC cannot be maintained or continued for a mere claim of interest, this application is liable to be dismissed - Application dismissed.

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• 2022 (4) TMI 1301
  Liquidation of Corporate Debtor - section 33(2) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- In the 15th meeting of the CoC, in absence of any resolution plan, it was resolved by the members of CoC that as there are no possible ways for revival of corporate debtor. Therefore, the CoC with 100% voting share recommended for liquidation of the Corporate Debtor and to appoint Mr. the present RP Mr. Shravan Kumar Vishnoi as liquidator. Liquidation of the Corporate Debtor is ordered - application allowed.

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• Service Tax

• 2022 (4) TMI 1300
  Refund of CENVAT Credit - input services - Business Support Services - Health Insurance - Event Management Services - Rental Charges on accommodation provided to employees - Rent of cafeteria - out of pocket expenses incurred on Chartered Accountant Service - Management Business Consultant Service - denial on the ground of nexus can be discussed at the stage of refund, or not - power of the departmental officers to traverse beyond the directions in the remand order. Whether the issue of nexus cannot be discussed at the stage of refund? - Business Support Services - Health Insurance - Event Management Services - Rental Charges on accommodation provided to employees - rent of cafeteria was denied - out of pocket expenses incurred on Chartered Accountant Service - Management Business Consultant Service - denial on account of nexus - HELD THAT:- The appellants have a prima facie case in their favour inasmuch as the issue of nexus cannot be raised at the point of grant of refund. Nexus cannot be discussed and credit cannot be denied while deciding refund under Rule 5 of CENVAT Credit Rules - except for Health Insurance, the nexus of other services to the output services have been decided. Therefore, the appellants are eligible for the credit and consequential benefit of refund. Health Insurance Service - HELD THAT:- It is found that the Authorized Representative has submitted that w.e.f. 1st April, 2011, Health/ Medical Insurance has been specifically excluded from the definition of Input Service in CENVAT Credit Rules, 2004 and the same has been upheld in the cases of BHARAT FRITZ WERNER LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH WEST COMMISSIONERATE [ 2019 (6) TMI 67 - CESTAT BANGALORE] . Therefore, the credit of Rs. 2,38,404/- availed by the appellants is not admissible to them. Also, the appellants have wrongly availed CENVAT credit even when the invoices were not available with them. Learned Counsel for the appellants has fairly conceded that this credit of Rs. 4,65,712/- availed by them and claimed for refund is not admissible to them. Hence, the appellants are not entitle to the refund of Rs. 4,65,712/-. Also, the appellants have availed CENVAT credit of Rs. 11,354/- on the strength of invoices which are not addressed to the company. During the course of argument, learned Counsel for the appellants submits that the refund of this amount was not granted on the ground that the invoice was not on the name of the registered premises of the company but was in the name of the company. However, no evidence to this effect has been produced by the learned Counsel. Hence, this credit is also not admissible to the appellants. The appellants have also submitted that a refund of Rs. 200/- was denied on no specific grounds and there appear to be a calculation error. In the result, I hold that refund of a total of Rs. 7,15,470/- (Rs. 2,38,404 + Rs. 4,65,712+Rs. 11354) is not admissible to the appellants. Refund of CENVAT credit in terms of N/N.27/2012 - HELD THAT:- The appellants have relied upon the cases of COMMR. OF C. EX., MYSORE VERSUS CHAMUNDI TEXTILES (SILK MILLS) LTD. [ 2010 (4) TMI 450 - CESTAT, BANGALORE] , FINE CARE BIO-SYSTEMS VERSUS COMMISSIONER OF C. EX., AHMEDABAD [ 2010 (6) TMI 231 - CESTAT, AHMEDABAD] , AMDOCS BUSINESS SERVICES PVT. LTD. VERSUS COMMISSIONER OF C. EX., PUNE [ 2013 (9) TMI 31 - CESTAT MUMBAI] . However, it is found that the impugned case is factually different from the above cases - In the above cases, the refunds under question were under Notification No.05/2006 whereas the refund in the impugned case is as per Notification No.27/2012. The appellant claimed that initially, they have filed refund claim under Notification No.5/2006 however on the insistence of the Department they have filed the same under Notification No.27/2012. Scope of remand order - HELD THAT:- In the facts of the present case, it is found that in the second round of litigation, the original authority has traversed beyond the scope of the remand order, which they are not entitled to - the original authority could not have decided the other way as no appeal was filed against the said OIA No.36 40/2017 dated 13.01.2017 by the Department - there is force in the argument of the appellants. To this extent, the impugned orders are not sustainable as both the OIAs in the first round attained finality as the Department has not appealed against the same. It is not free for the original authority to traverse beyond the remand order and to reject the refunds. It is not correct on the part of the appellate authority such blatantly wrong and perverse orders. Without going into the merits, the appellants succeed on this count alone. Accordingly, the appellants are eligible for refund on this count. Appeal allowed in part.

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• 2022 (4) TMI 1299
  Refund of Service tax paid under authority of law - changed circumstances of the phasing out of service tax with effect from 1 st July 2017 - HELD THAT:- The obligation to discharge tax under Finance Act, 1994 crystallized on 5th July 2017 in relation to the services provided between 6th June 2017 and 30th June 2017 as determined under Rule 3 of Point of Taxation Rules, 2011 to be the date in invoices pertaining to the taxable transaction or, in case of continuous supply of service, to be the date of each episode envisaged in the contract. As the impugned services were taxable under Finance Act, 1994 in accordance with the statutory powers, tax was rightly discharged. It was the difficulties faced by their customers in availment of credit of such tax in July 2017 that prompted them to cancel these invoices and issue fresh invoices after discharging tax under the new statute. While it is appreciated that tax has been paid twice on the very same transaction, the discharge of liability in accordance with the Finance Act, 1994 which was the prevailing statue precludes entitlement for refund. The ground of equity pleaded on behalf of the appellant does not advance their case for refund of tax paid in accordance with a constitutionally valid levy. Appeal dismissed.

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• CST, VAT & Sales Tax

• 2022 (4) TMI 1298
  Refund of admitted tax - eligibility of refund to non-registered dealers - time limitation - HELD THAT:- It is pertinent to mention at this stage that this Court on similar facts in the petitioner s own case, M/S. WS RETAIL SERVICES PRIVATE LIMITED VERSUS THE STATE OF JHARKHAND, THROUGH THE SECRETARY, FINANCE DEPARTMENT, RANCHI, THE COMMISSIONER OF COMMERCIAL TAXES, RANCHI, JOINT COMMISSIONER OF COMMERCIAL TAXES (ADMIN) , RANCHI [ 2021 (2) TMI 972 - JHARKHAND HIGH COURT] has held that the rejection of claim for refund only on the ground that there is no provisions under the JVAT Act, 2005 for entertaining such a claim is not sustainable in law. It is undisputed that in the present case the limitation period for even Financial Year 2015-16 has also expired and no assessment has been carried out. As a corollary, no demand notice in terms of such assessment has been issued. Therefore, in the light of Section 39 of the JVAT Act, the limitation period having expired, assessment would be impermissible in respect of Financial Years 2014-15 and 2015-16. It was open to the Respondent to conduct an assessment in terms of Section 38 of the JVAT Act and make good the stand it has taken in its counter affidavit as regards the intra-state nature of transactions. Having not done so, it cannot be allowed to take advantage of its own wrong. Matter is remitted to the Respondent No. 3-Joint Commissioner of State Tax (Admin), Ranchi Division, Ranchi / Joint Commissioner of State Tax (Admin), Jamshedpur Division, Jamshedpur to consider the claim of refund of the petitioner in accordance with law within a period of six weeks from today - Petition allowed.

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