Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 24, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI Short Notes
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST - offline/online games such as Rummy - games of chance or skill? - Entry 6 in Schedule III to the CGST Act taking actionable claims out of the purview of supply of goods or services would clearly apply to games of skill and only games of chance such as lottery, betting and gambling would be taxable. - HC
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Principles of natural justice - ex-parte assessment order - evasion of tax - petitioner did not replied to the show cause notice - The appellate authority has examined each and every document submitted by the petitioner as well as the documents recovered by the Special Investigation Branch. - WP rejected - HC
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Presence of Advocate during investigation proceedings - presence at visible but not audible distance during interrogation - Permission granted - We also permit videography of the said petitioner’s statement, at the cost of the petitioner. A copy of the said videography shall be handed over to the petitioner after show cause notice is issued to the petitioner - HC
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Availment of ITC - WCS taken for structure on which machineries are fixed to earth - ITC in respect of foundation and support structure in respect of ETP and Transformer is blocked in terms of Section 17(5) - Steel [TMT bar] being procured by the applicant company and used while taking works contract services for making the said foundation to fix machineries to earth is eligible subject to findings recorded in para 19 onwards. - AAR
Income Tax
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Current Repairs - ‘Nature & Treatment’ of expense
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Reopening of assessment u/s 147 - reasons to believe that income had escaped tax - According to the AO he was satisfied that there was insider trading amongst two family members by which the income which had become chargeable to tax was not shown and had escaped the assessment requiring to exercise powers for reopening of the assessment. There was a strong foundation for invoking reassessment. - Reopening sustained - HC
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Reopening of assessment u/s 147 - old and new provisions - When the reassessment notice issued under the unamended provision is directed to be treated and deemed to have been as notice under section 148A(b) of the Act, the scope of words in sub-clause (c), “consider the reply of the assessee furnished, if any, in response to the show-cause notice referred to in clause (b)” could be construed and applied accordingly. The show cause notice referred to in clause (b) could be equated with show cause notice issued under the unamended section 148 of the Act. - HC
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Validity of Reopening of assessment - Since there was a scope of AO for the scrutiny assessment at the time of scrutiny assessment, which is still in the grey area as to whether the aspect of cash withdrawal, he could not be noticed because of want of required material available to that but, to despite the scrutiny assessment which had undertaken. We are of the opinion that the re-assessment shall continue. However, by way of interim relief, the opportunity to be given to the petitioner for producing before the officer concerned all the requisite material. - Let the final assessment order will not be passed without permission of this Court. - HC
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Penalty u/s 271(1)(c) - defective notice u/s 274 - The notice does not delete the appropriate words and in the assessment order as well as in the penalty order, both limbs have been pressed against the assessee. Therefore, we would hold that the notice was issued in a mechanical manner and hence, not sustainable in the eye of law. - No penalty - AT
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Penalty levied u/s 221 - default on the part of assessee or deeming the assessee to be an assessee on default - Failure to collect tax u/s 206C while selling timber - Since matter is already being send back to the file of the AO for considering the declaration Form no. 27C, the penalty levied for default in making payment u/s 221of the Act cannot be sustained on the principle that when the foundation goes, the super-structure falls - AT
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Disallowance of salary expenses - AO has not recorded in the assessment order whether any reply or confirmation was received from such person and vaguely noted that some of the notices were returned back. AO has not specified as to whom such notices were sent and the name of the persons whose notices were returned back. - Additions deleted - AT
Customs
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Revocation of Customs Broker License - the authorization referred to in Regulation 10 (a) of CBLR, 2018 need not be necessarily from the importer. However, it cannot be any person who is not connected with the importer from the facts of the case. It is reasonable established that Shri Mukesh who is believed to have passed on the documents to M/s SPG Global Logistics clearing and forwarding agent who have in turn passed on the documents to the appellant customs broker - thus, the appellants have no reasons to doubt the genuineness of the importer or the documents - violation of Rule 10 (a) of CBLR, 2018, if any, is only procedural one - AT
IBC
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Initiation of CIRP - Requirement of issuance of notice to the creditors before admission of the application - Since the statutory Scheme does not contain any obligation of issuing notice to the creditors by the Corporate Applicant, any objector appearing at the time of hearing has to be heard and the objection may be noted by the Adjudicating Authority and thereafter the appropriate decision can be taken - the mere fact that no notice was issued to the creditors or any opportunity was given to the objectors before proceeding to hear, the Corporate Applicant, cannot be held to vitiate any procedure or violating the principles of natural justice, more so when objectors were heard by the Adjudicating Authority. - AT
Service Tax
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Place of provision of services - Levy of Service tax on international ocean freight - There is no necessity to declare the impugned notifications as ultra vires as there is no proper machinery provided under the impugned notifications issued under Section 68(2) of the Finance Act, 1994 to shift the burden to pay service tax on the petitioners as the petitioners are not either the recipients of the taxable service by way of transportation goods by a vessel from a space outside India up to the customs stations of clearance in India. They are not liable to tax as things stand - HC
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Grant of interest on the amount which was sanctioned as refund - Power of tribunal to grant interest - Refund of amount includes amount deposited with the Registrar of High Court - calculation of relevant period for which interest is to be paid - such right to claim interest not only emanates from the statutory provision of Section 11BB of the Central Excise Act but also pursuant to the orders passed by this Court in the writ petition filed by the respondent/assessee before this Court - Revenue appeal dismissed - HC
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Validity of dropping of demand - As such there was no way that Commissioner could have confirmed a lesser amount than the amount paid by the appellants. Moreover, the appellants have paid 100% tax under VCES 2013; the payment was not rejected by designated authority and in terms of section 109 of VCES 2013, the assessee is not entitled for any refund. Under the circumstances appropriation of duty is an empty formality. - AT
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Refund claim on account of excess deposit of Service Tax on account of unutilized Cenvat Credit - Closure of business due to death of the proprietor - the fact of closure of business leading to non-utilization thereof, cannot deprive the deceased of their accrued interests in law and following judicial discipline and precedent decisions, the appeal is allowed with consequential relief. - AT
Central Excise
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Place of removal - valuation of goods - inclusion of recovered freight charges from their EPD (Project Division) by way of debit notes, in the assessable value - In absence of any such evidence showing transportation of the goods to the premises of EPD Division, the entire premise on which the case is based has to fail on factual basis. - AT
VAT
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Condonation of delay in filing the application for refund - Length of delay is not matter, acceptability of the explanation is the only criterion - A Court knows that refusal to condone delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the Court is always deliberate. The words “sufficient cause” under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice. - HC
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Levy of tax - Direct Export Sales - Sales in the Course of Export - There are substance in the submission of learned counsel for petitioner that due to the prevalence of the Covid- 19 pandemic, he could not file Forms ‘H’ and other relevant material to establish that in deed he made exports sales. - Matter restored back for reconsideration - HC
Case Laws:
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GST
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2023 (5) TMI 927
Refund of ITC - Denial on the ground that the petitioner was merely facilitating and arranging services and thus, qualified as an intermediary within the meaning of Section 2(13) of the Integrated Goods and Services Tax Act, 2017 - zero rated supply - place of supply - HELD THAT:- Although the Adjudicating Authority has interpreted the Agreement, we find that there is insufficient analysis of the actual work performed by the petitioner. There is no material to relate the remuneration to the sales figure on empirical basis. The Adjudicating Authority has merely referred to a portion of Clause 2.4 of the Agreement, which provides that Netgear Technologies (India) Pvt. Ltd. would perform reconciliation of that year s sale, as a direct result of the service provider s activity and would reasonably approve the cost incurred by the service provider in fulfilling its duties under the Agreement. The same does not, absent any other material, indicate that the remuneration is based on the sales achieved. The question whether an entity is an intermediary will have to be determined on the basis of actual work performed. It is deemed apposite to set aside the impugned order as well as the Order-in-Original dated 10.01.2020 and remand the matter to the Adjudicating Authority to decide afresh after examining the actual work performed by the petitioner. It would be open for the Adjudicating Authority to call for any information that it considers relevant for the said purpose including, invoices raised by the petitioner, as well as the reconciliation statement of the sales as referred in the Order-in-Original. Petition disposed off.
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2023 (5) TMI 926
Classification of services - offline/online games such as Rummy - to be classified under SAC 998439 or not - games of chance or skill? - Concept of res extra commercium - Concept of GST and Definition of Business under GST - concept of supply. Whether offline/online games such as Rummy which are mainly/preponderantly/substantially based on skill and not on chance, whether played with/without stakes tantamount to gambling or betting as contemplated in Entry 6 of Schedule III of the Goods and Services Act, 2017? HELD THAT:- Based on the jurisprudence [ 1958 (4) TMI 42 - SUPREME COURT] , the words gambling , game of chance , game of skill have developed meanings in judicial parlance. Therefore, applying the principle of nomen-juris, the words should be construed in their legal sense, instead of general parlance. While gambling or game of chance have been held to involve chance as a predominant element, on the other hand game of skill has an exercise of skill which can control the chance. The element of chance cannot be completely overruled in any case but what is to be seen is the predominant element. In a game of rummy, certain amount of skill is required because the fall of the cards has to be memorised and the building up of rummy requires considerable skill in holding and discarding cards. Therefore, a game of rummy is a game of skill as held in Satyanarayana [ 1967 (11) TMI 109 - Supreme Court ]. It is concluded as under: There is a distinct difference between games of skill and games of chance; games such as rummy, etc. as was discussed in several decisions and particularized in the Division Bench decision of this Court in ALL INDIA GAMING FEDERATION AND ORS. VERSUS STATE OF KARNATAKA AND ORS. [ 2022 (2) TMI 1368 - KARNATAKA HIGH COURT] , whether played online or physical, with or without stakes would be games of skill and test of predominance would apply; the said judgment is a total and complete answer not only to the various contentions urged by the respondents but also covers the issues / questions that arise for consideration in the instant petitions - It was held in the said case that The provisions of Sections 2, 3, 6, 8 9 of the Karnataka Police (Amendment) Act 2021 i.e., Karnataka Act No. 28 of 2021 are declared to be ultra vires the Constitution of India in their entirety and accordingly are struck down. Though Section 2(17) of the CGST Act recognises even wagering contracts as included in the term business, but that in itself would not mean that lottery, betting and gambling are the same as games of skill. The meaning of the terms lottery, betting and gambling as contemplated in Entry 6 of Schedule III of the CGST Act should be construed nomen juris in the light of the decisions of the Hon ble Supreme Court, this Court and other High Courts which do not include games of skill. Entry 6 in Schedule III to the CGST Act taking actionable claims out of the purview of supply of goods or services would clearly apply to games of skill and only games of chance such as lottery, betting and gambling would be taxable. Taxation of games of skill is outside the scope of the term supply in view of Section 7(2) of the CGST Act, 2017 read with Schedule III of the Act. A game of chance whether played with stakes is gambling; A game of skill whether played with stakes or without stakes is not gambling; A game of mixed chance and skill is gambling, if it is substantially and preponderantly a game of chance and not of skill; A game of mixed chance and skill is not gambling, if it is substantially and preponderantly a game of skill and not of chance; Rummy is substantially and preponderantly a game of skill and not of chance; Rummy whether played with stakes or without stakes is not gambling; There is no difference between offline/physical Rummy and Online/Electronic/Digital Rummy and both are substantially and preponderantly games of skill and not of chance; Online/Electronic/Digital Rummy whether played with stakes or without stakes is not gambling; Other Online/Electronic/Digital games which are also substantially and preponderantly games of skill and not of chance are also not gambling; The expressions, Betting and Gambling having become nomen juris, the same are applicable for the purpose of GST also and consequently, the said words, Betting and Gambling contained in Entry 6 of Schedule III to the CGST Act are not applicable to Online/Electronic/Digital Rummy, whether played with stakes or without stakes as well as to any other Online/Electronic/Digital games which are also substantially and preponderantly games of skill; The subject Online/Electronic/Digital Rummy game and other Online/Electronic/Digital games played on the Petitioners platforms are not taxable as Betting and Gambling as contended by the respondents under the CGST Act and Rules or under the impugned show cause notice issued by the respondents. The impugned Show Cause Notice dated 23.09.2022 issued by the respondents to the petitioners is illegal, arbitrary and without jurisdiction or authority of law and deserves to be quashed - Petition allowed.
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2023 (5) TMI 925
Principles of natural justice - ex-parte assessment order - evasion of tax - demand of CGST, SGST, interest and penalty - HELD THAT:- Loose papers were in respect of duty chart of the employees. There was no detail of inward supply and outward supply in the loose paper and, therefore, the appellate authority was of the view that because of these loose papers, no solid conclusion can be drawn. The petitioner had accepted before the appellate authority that in the financial year concerned, he had received the taxable amount Rs. 43,75,059.46/- on which, he had paid Rs. 3,70,229/- each for State G.S.T. and Central G.S.T. From the entries, as found in the diary recovered by the Special Investigation Branch, it was noticed that the petitioner had received much more advance than it was shown in the returns. From the documents recovered from the resort by the Special Investigation Branch, it was noticed that the petitioner had received Rs.17,95,000/-, whereas in the return he has shown advance of Rs. 3,73,983.05/- only. The appellate authority had assessed the tax amount of Rs. 1,80,000/- each for State G.S.T. and Central G.S.T., penalty amount of Rs. 3,60,000/- and interest amount of Rs. 3,19,320/- total amount of Rs. 10,39,320/- liability against the petitioner. Against the assessed amount of Rs.48,96,000/-, the Appellate Authority has reduced amount of Rs 38,56,680/- - there are no substance in the submission of the learned counsel for the petitioner that the assessment order is based on presumption. The appellate authority has examined each and every document submitted by the petitioner as well as the documents recovered by the Special Investigation Branch. There are no error in the impugned order - petition dismissed.
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2023 (5) TMI 924
Maintainability of petition - availability of alternative remedy of appeal - non-constitution of the Tribunal - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed. Petition disposed off.
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2023 (5) TMI 923
Seeking direction to Respondents their subordinates, servants and agents to forthwith permit recording of voluntary statements of the Petitioner under Section 70 of the Maharashtra Goods and Service Tax Act, 2017 under the presence of Advocate at visible but not audible distance during interrogation - HELD THAT:- Considering the aforesaid and having regard to the orders annexed to the petition from Exhibit-D to Exhibit-K , we allow the petition and as such, permit the petitioner s Advocate to remain present at the time of recording of the petitioner s statement at a visible, but not at an audible distance. We also permit videography of the said petitioner s statement, at the cost of the petitioner. A copy of the said videography shall be handed over to the petitioner after show cause notice is issued to the petitioner. Petition allowed.
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2023 (5) TMI 922
Presence of Advocate during investigation proceedings - Seeking direction to Respondents their subordinates, servants and agents to forthwith permit recording of voluntary statements of the Petitioner under Section 70 of the Maharashtra Goods and Service Tax Act, 2017 under the presence of Advocate at visible but not audible distance during interrogation - HELD THAT:- Considering the aforesaid and having regard to the orders annexed to the petition from Exhibit-E to Exhibit-L , we allow the petition and as such, permit the petitioner s Advocate to remain present at the time of recording of the petitioner s statement at a visible, but not at an audible distance. We also permit videography of the said petitioner s statement, at the cost of the petitioner. A copy of the said videography shall be handed over to the petitioner after show cause notice is issued to the petitioner. Petition allowed.
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2023 (5) TMI 921
Cancellation of the Registration Certificate - failure to file Goods and Services Tax monthly returns for a continuous period of six months - HELD THAT:- In identical circumstances, this Court, in the case of TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT] has held that Since, no useful will be served by not allowing persons like the petitioners to revive their registration and integrate them back into the main stream, the impugned orders are liable to be quashed and with few safeguards - these petitioners deserve a chance and therefore should be allowed to revive their registration so that they can proceed to regularize the defaults. The authorities acting under the Act may impose penalty with the gravity of lapses committed by these petitioners by issuing notice. If required, the Central Government and the State Government may also suitably amend the Rules to levy penalty so that it acts as a deterrent on others from adopting casual approach. This Court feels that the benefit extended by this Court in the earlier orders referred to above in Suguna Cutpiece Centre's case, may be extended to the Petitioner - Petition disposed off.
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2023 (5) TMI 920
Availment of ITC - WCS taken for structure on which machineries are fixed to earth by foundation and services taken for setting up plant ie MS steel structure along with roof which has been created mainly to protect machineries being supported by the said foundation - Steel [TMT bar] being procured by the applicant company and used while taking works contract services for making the said foundation to fix machineries to earth. HELD THAT:- On examining the contention of the applicant, read with the certificate of the chartered engineer, a bare look at the photographs provided by the applicant when seen in conjunction to what is mentioned in section 17 ibid, which deals with apportionment of credit and blocked credits, we find that the law is unambiguous as far as ITC is concerned in respect of the P M. ITC is not available in respect of works contract services when supplied for construction of an immovable property. Further, ITC is not available for goods, services or both received for construction of an immovable property even when used in the course or furtherance of business. However, the sub-clauses specifically exclude in both the cases, plant and machinery. Sand Mill and Spray Dryer - HELD THAT:- On going through the two photographs, it is found that claim of ITC by the applicant in so far as the foundation and structural support for the Sand mill Spray dryer is covered by the explanation 2 to Section 17(5) and hence, the applicant is eligible for the ITC provided it is not capitalized. However, the eligibility is only in respect of the foundation and the structural support. The photograph reveals a structure/shed, erected on the left side of the Sand mill and spray dryer. This structure/shed would clearly fall within the ambit of civil structure and stands excluded from the expression 'plant and machinery'. Hence, the ITC in respect of this structure/shed is blocked in terms of section 17(5) of the CGST, 2017. HAG (Hot Air Generating machine and equipment] - HELD THAT:- On going through the photograph, it is found that claim of ITC by the applicant in so far as the foundation and structural support in respect of the HAG is concerned is covered by the explanation 2 to Section 17(5) and the applicant is eligible for the ITC provided it is not capitalized. However, the eligibility is only in respect of the foundation and the structural support for the HAG machine only. The photograph clearly depicts that there is a roof overhead the machine. This roof and its supports would clearly fall within the ambit of civil structure and stands excluded from the expression 'plant and machinery'. Hence, the ITC in respect of this structure/shed [ie roof and its supports] is blocked in terms of section 17(5) of the CGST, 2017. ETP [Effluent Treatment Plant] - HELD THAT:- On going through the four photographs, it is found that these are basically tanks which are civil structure. Now in terms of the discussion, expression 'plant and machinery' excludes civil structure. Therefore, when the ETP itself has been held to be a civil structure, the question of allowing ITC in respect of its foundation and structural support does not arise. Therefore the applicant is not eligible for the ITC in respect of the foundation made to install the ETP [effluent treatment plant]. The view as expressed is substantiated by the ruling in the case of 2019 (7) TMI 1736 - AUTHORITY FOR ADVANCE RULING, HARYANA , wherein it was held that it is clear that plant and machinery means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but with some exclusions as above. In the present case the applicant admits that the Sewage Treatment Plant is attached with the civil structure of the building. Thus, it is clear that it is a part of the civil structure of the building and part of the building so constructed. Therefore the applicant's contention that the Sewage Treatment Plant is covered under the definition of plant and machinery is rejected - thus, the analogy of the water treatment plant, sewage treatment plant is applicable even to ETP. Transformer - HELD THAT:- Following the ratio of the ruling in the case of IN RE: M/S. TARUN REALTORS PVT. LTD. [ 2020 (3) TMI 981 - APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA ], it is held that the applicant is not eligible for ITC on works contract services taken for making foundation structure on which DG set is fixed to earth by foundation.
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Income Tax
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2023 (5) TMI 919
Reopening of assessment - Deemed dividend - addition u/s 2(22)(e) - change of opinion - information received from the Deputy Commissioner of Income Tax, Company Circle V(1) constituted new information - HC [ 2018 (10) TMI 373 - MADRAS HIGH COURT] decided substantial question of law in favour of revenue - HELD THAT:- Appeal admitted - List immediately after summer vacations. Deemed dividend addition u/s 2(22)(e) - Addition on account of income from house property as per the provisions of Section 22 read with Section 23 and Addition u/s 40A - HC [ 2019 (1) TMI 1017 - MADHYA PRADESH HIGH COURT] held assessee being not a member/shareholder of the concerned company the loan/advance received from such company is not deemed dividend u/s 2(22)(e) - payments made to specified persons on rates more that fair market rates - As per HC no substantial question of law arises for consideration - Revenue appeal dismissed - HELD THAT:- In terms of Circular No. 17/2019 dated 08.08.2019 issued by Government of India, Ministry of Finance, Department of Revenue, Central Board Direct Taxes, Judicial Section, since the amount of tax involved is low, we are not inclined to interfere with the impugned order. SLP dismissed.
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2023 (5) TMI 918
Reopening of assessment u/s 147 - reasons to believe that income had escaped tax - subjective satisfaction - Bogus LTCG - Sale of shares of two companies was by the promoters, who was the family members - HELD THAT:- AO found that there was likelihood of the acts and instance of insider trading by the said assessee. The beneficiaries, it was noticed, were the promoters group consisting of family member. The assessee Smt. Paru M. Jaykrishna calculated the long term capital gain and on such transfer, claimed exemption u/s 10(38) - petitioner assessee, it was prima facie found to have earned income to the tune indicated which was chargeable to tax but the same was not shown in the return of income. When on the basis of the above operating facts, the AO harboured reasons to believe that the assessment of the petitioner was required to be reopened, it could be said to be well justified. AO could be said to have formed his opinion on the basis of cogent facts suggesting possibility of escapement of income, though to be probed further in the competent proceedings. Sale of shares of two companies was by the promoters, who was the family members. According to the AO he was satisfied that there was insider trading amongst two family members by which the income which had become chargeable to tax was not shown and had escaped the assessment requiring to exercise powers for reopening of the assessment. There was a strong foundation for invoking reassessment. Challenge to the impugned notice u/s 148 issued by the AO to the petitioner to reopen the assessment in respect of the AY stands merit less. Decided against assessee.
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2023 (5) TMI 917
Assessment u/s 153A - completed assessment/unabated assessment in absence of any incriminating material - HELD THAT:- The decision of Saumya Construction [ 2016 (7) TMI 911 - GUJARAT HIGH COURT] as quoted held that the case of completed assessment/unabated assessment in absence of any incriminating material will not permit making of addition by the AO and that the AO has no jurisdiction to reopen the completed assessment. Supreme court confirmed the view taken by the Delhi High court in Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and of this Court in Saumya Construction (supra) laying down the law that no addition can be made in respect of completed assessment in absence of any incriminating material. The supreme court in laying down the proposition considered the object and purpose of insertion of section 153A of the Act. In view of the above decision of the supreme court in Abhisar Buildwell P. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] wherein held that no addition can be made in respect of completed/ unabated assessment in absence of any incriminating material. There is no gainsaying that the issue sought to be raised and the substantial questions of law ought to be put forth in that context, are answered.
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2023 (5) TMI 916
Reopening of assessment u/s 147 - Validity of order u/s 148A - Scope of new provision section 148A - interpreting the provision of the Act before its amendment - non- attending objection raised against reopening - old notice was treated under the new provisions to be the notice u/s 148A(b) - HELD THAT:- The position which unfolds in this case is that the petitioner assessee had filed its objections to the notice for reassessment u/s 148 unamended issued to him, however, the AO never attended to the objections dated 12.10.2022 and left it undecided. Old notice dated 30.6.2021 was treated under the new provisions to be the notice under section 148A(b) at this stage the petitioner was deprived of opportunity to put forth his case against the proposed reopening of the assessment. According to the petitioner assessee, the notice was never subsequently served on him and he did not receive it and only knew about passing of the order u/s 148A(d) from the portal. When the petitioner is deprived of opportunity of defending his case and consideration of his reply to the notice for reopening, the request that the objections which was filed in response to the notice under unamended provisions may be considered by the Assessing Officer to be the reply to notice under section 148A(b) of the Act, is reasonable. It would sub-serve the purpose of compliance of natural justice and giving a fair treatment to assessee to put forth its case and avail the reasonable opportunity of being heard which the statute expressly contemplates for the assessee. It is in tune with provisions of section 148 of the Act. When the reassessment notice issued under the unamended provision is directed to be treated and deemed to have been as notice under section 148A(b) of the Act, the scope of words in sub-clause (c), consider the reply of the assessee furnished, if any, in response to the show-cause notice referred to in clause (b) could be construed and applied accordingly. The show cause notice referred to in clause (b) could be equated with show cause notice issued under the unamended section 148 of the Act. Similarly, reply of the assessee furnished could be equated with the reply-cum-objections to the reasons supplied alongwith the notice under the old regime. Petitioner submitted its reply-cumobjections and they remained undecided. In the circumstances, it would be therefore trite that the Assessing Officer while exercising his powers under and within the ambit available to him as per section 148A of the Act, considers the reply-cum-objections of the petitioner treating it to be the reply in response to notice under section 148A(b) of the Act. This would rule out the possibility of occurrence of prejudice to the assessee. Order:- The proceedings of the case are remanded to the competent Assessing Officer. The competent Assessing Officer shall decide afresh the notice under section 148A(b) after considering the reply-cum-objections submitted by the petitioner to previous notice issued under Section 148 under the old regime provisions relating to reassessment, whereby the assessment of the petitioner for the Assessment Year 2016-17 was sought to be reopened. The reply-cum-objections of the petitioner shall be treated by the Assessing Officer as response to the notice issued under Section 148A (b).
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2023 (5) TMI 915
Validity of Reopening of assessment - AO observed cash withdrawals reported in STR appeared to be non-genuine and hence issued the notice on the ground that the income has escaped assessment for not having taxed as per the provision of the I.T.Act - HELD THAT:- We could noticed that the regular assessment has been already carried out, certain queries were raised by the AO. Scrutiny assessment had taken place under Section 143(3) which eventually resulted into Assessing Officer passing an order. After the same was over, at the behest of the DDIT investigation on the issue of the cash withdrawal, the objections raised against the issuance of notice for reassessment for the very year had been challenged. AO while disposing of the same as noted the aspect of scrutiny assessment and also dropping of the proceedings for the A.Y.2013- 14 and 2014-15 on the ground that the aspect of cash withdrawal was not at any point of time examining by Assessing Officer, though the books of account and other material had been placed, has continued the proceedings and issued the notice u/s. 148 of the I.T.Act. Since there was a scope of AO for the scrutiny assessment at the time of scrutiny assessment, which is still in the grey area as to whether the aspect of cash withdrawal, he could not be noticed because of want of required material available to that but, to despite the scrutiny assessment which had undertaken. We are of the opinion that the re-assessment shall continue. However, by way of interim relief, the opportunity to be given to the petitioner for producing before the officer concerned all the requisite material. Let the final assessment order will not be passed without permission of this Court. The petitioner shall continue to co-operate. None of the findings and observations shall prejudice the rights of the parties before the Assessing Officer.
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2023 (5) TMI 914
Addition u/s 41(1) - additions in respect of six parties on the ground that as per the Limitation Act, the parties do not have legal remedy to enforce the outstanding demand and therefore the right to recovery of the said amount has become time-barred by limitation - HELD THAT:- Since the assessee did not file any details whatsoever in support of the fact that the liability has been taken over by the bank and also did not file details of pending litigation before DRT in respect of recovery of the aforesaid amount by the banks, relief was not granted to the assessee by Ld. CIT(Appeals) with respect to the ground of appeal. In our considered view, we are principally in agreement with the contention of the assessee that if this liability has been taken over by the bank and the assessee is liable to pay such amount to the bank, then it is not a fit case for invocation of section 41(1). At the same time, if the assessee has not filed any supporting documents to show that this liability has been taken over by the banks and has also not filed any details before Ld. CIT(Appeals) regarding the recovery proceedings pending before DRT, in the interest of justice, this issue is being restored to the file of Ld. CIT(Appeals) to examine the records afresh to ascertain whether the assessee is liable to pay the aforesaid amounts the banks. The assessee may also file necessary supporting documents to substantiate that this amount is still liable to be paid to the banks and the recovery proceedings are pending before DRT. Disallowance of bad debts - write off with respect to international debtors - HELD THAT:- Matter is being set aside to the file of Ld. CIT(Appeals) only with a view to confirm whether the aforesaid amount has been reflected in the computation of income by the assessee in any of the earlier years in view of the decision of Khyati Realtors supra - we are in agreement with the counsel for the assessee that no such disallowance is called for only on the basis whether the assessee has written of debt in excess of 10% of international debtors in view of RBI regulations. We are also in agreement with the argument for the counsel of the assessee that such a write-off of debts cannot be disturbed on the basis that the assessee had claimed deduction u/s 80 HHC with respect to the export proceeds offered to tax in any of the earlier previous years - issue is being restored to the file of Ld. CIT(Appeals) only to confirm whether the income with respect to which assessee has claimed write off of bad debts has been offered to tax by the assessee in any of the previous years in light of the decision of Khyati Realtors Khyati [ 2022 (8) TMI 1141 - SUPREME COURT] . Write-off with respect to domestic debtors - We are in agreement with the argument of assessee that so far as trade advances are concerned which have been given during the course of business of the assessee, there is no scope for offering the same in the computation of income in any of the previous years. We are also in agreement with the arguments put forward by the Ld. DR (who is in appeal before us with respect of the balance amounts deleted by Ld. CIT(Appeals)) that it needs to be ascertained whether the assessee had offered the aforesaid amount in the computation of income in any of the previous years in light of the decision of honourable Supreme Court in the case of Khyati Realtors supra . Write off of bad debts with respect to domestic debtors is restored to the file of assessing officer only with a view to confirm whether the amount has been reflected in the computation of income by the assessee in any of the earlier previous years so as to be eligible to claim right of of such such amounts u/s 36(1)(vii) read with 36(2)(va) of the Act. Accordingly, this issue is being restored to the file of assessing officer with the aforesaid directions. Disallowance u/s 14A - HELD THAT:- Assessee agreed that in the interest of justice, the disallowance may be restricted to the exempted income earned by the assessee during the impugned year under consideration. Accordingly, looking at the facts of instant case, the disallowance under section 14A is restricted to the amount of exempt income earned by the assessee. Additional depreciation in respect of windmill u/s 32(1)(ii) - assessee claimed additional depreciation @20% on 20 windmills installed and commissioned during the year under consideration - additional depreciation denied as assessee is not engaged in the business of production or manufacture of article and thing as contemplated u/s 32(1)(ii) - CIT-A deleted addition - HELD THAT:- We observe that in the case of S.Srinivasaraghavan [ 2022 (5) TMI 1066 - MADRAS HIGH COURT] held that generation of electricity by windmill should be equated to term manufacturing or production of article or thing , and, therefore, assessee was entitled to claim additional depreciation on windmill installed as per provision of section 32(1)(iia) The aforesaid decision was followed in assessee s own case for assessment year 2006-07 in DCIT v. Vishal Export Overseas Ltd [ 2022 (8) TMI 88 - ITAT AHMEDABAD] , wherein held that activity of generating electricity by windmill would be manufacturing in nature, thus, assessee would be eligible to claim additional depreciation with respect to windmill installed during relevant year. CIT(Appeals) has not erred in fact and law allowing the appeal of the assessee on this issue. Additions u/s 40(a)(ia) on the basis of observations made in the Tax Audit Report in Form 3CD - Scope of second proviso to section 40(a)(ia) - HELD THAT:- We observe that in the case of Ansal Land Mark Township (P.) Ltd [ 2015 (9) TMI 79 - DELHI HIGH COURT] held that second proviso to section 40(a)(ia) is declaratory and curative and it has retrospective effect from 1-4-2005.Therefore, where assessee made interest payments without deducting tax at source under section 194J, since payee had filed return and offered sum received from assessee to tax, impugned disallowance made under section 40(a)(ia) deserved to be deleted. Also in Esaote India (NS) Ltd [ 2018 (8) TMI 1183 - ITAT AHMEDABAD] it was held that second proviso to section 40(a)(ia) has retrospective effect from 1-4-2005 and therefore, where recipient/deductee had already paid tax on impugned amount of interest under section 194A received from assessee by filing return of income, such interest payment could not be disallowed in assessee's hands under section 40(a)(ia). We are in agreement with the counsel for the assessee that there is no requirement to deduct tax at source on interest payments to banking institutions. Loss on sale of the Hateshwari shares - AO in the impugned assessment order considered that assessee included capital loss on sale of Hateshwari shares as business loss and as per the provisions of section 71(3) of the Act, such loss cannot be set off against income under the heads - HELD THAT:- As assessee submitted before us that apparently on a perusal of the return of income or the Investment Schedule to the Balance Sheet, there is no such item appearing in the assessee s records. Accordingly, in the interest of justice request that the issue may be restored to the file of AO for re-examination accepted. Computation of total loss wrongly taken - HELD THAT:- The computation should begin with the correct figure of loss as per return of income. Apparently, the assessing officer has taken the amount of depreciation of ₹ 1.7 crores instead of amount of total loss of the ₹ 147.48 crores. Accordingly, the counsel for this is submitted that the matter may be set aside to the file of the AO for carrying out the necessary rectification. Addition u/s 68 - Unsecured loans with respect to 3 parties, being the director and promoter of the group -confirmation was signed by the authorised signatory and not the parties themselves - HELD THAT:- On going through the contents of the order passed by Ld. CIT(Appeals), we observe that there is no infirmity in the facts recorded by Ld. CIT(Appeals) and has correctly allowed the appeal of the assessee on this issue by observing that in instant facts all the three ingredients viz identity, genuineness and creditworthiness of the parties was not doubted by the assessing officer and the only reason for confirming the addition in the hands of the assessee was that the confirmation was signed by the authorised signatory and not the parties themselves. In the case of Neotech Education Foundation [ 2023 (1) TMI 671 - GUJARAT HIGH COURT] held that where assessee received loan for purchase of land for construction of an educational campus, in view of fact that though initial burden of proof was not discharged at level of AO but assessee produced relevant documents to prove identity and creditworthiness of creditor and genuineness of transaction before Commissioner (Appeals) and, further, transaction was made through proper banking channel, impugned addition made under section 68 on account of said loan amount received by assessee was unjustified. Accordingly Department s appeal is dismissed. Unexplained cash deposit in Kalupur commercial cooperative bank - AO rejected the reconciliation and details submitted by the assessee on the ground that assessee cannot have cash in hand or cannot withdraw cash from bank for its import-export businesses - CIT-A deleted addition - HELD THAT:- CIT-A correctly held in view of reconciliation of cash deposit out of cash in hand available and as evidenced by audited cash book as well as withdrawal from bank account, the A.O. cannot reject such explanation on the presumption that appellant cannot have such cash in hand in the business of Import Export of Agri. Commodities. In normal business activities, cash is withdrawn from bank to meet out daily expenses or specific expenses but at the same time surplus cash is deposited or such cash withdrawn if not used is re-deposited. Therefore, except the withdrawal of cash duly accounted for in cash book and audited bank accounts, no other conclusive proof can be given by appellant. see case of Moongipa Investment Ltd. [ 2011 (8) TMI 1067 - ITAT DELHI] as squarely applicable to the facts of appellants. It is therefore, such addition is neither justified nor sustainable in law. Decided against revenue.
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2023 (5) TMI 913
Penalty u/s 271(1)(c) - Whether assessee furnished inaccurate particulars of income and concealed his income? - defective notice u/s 274 - mandation of specification of charge - curable defect u/s 292BB - HELD THAT:- The penalty could be levied only for a specific charge. Furnishing of inaccurate particulars of income would arise in a situation where the assessee has not disclosed the particulars correctly or the particulars disclosed by the assessee are found to be incorrect whereas concealment of particulars of income would mean that the assessee has concealed the income and has not reflected certain income, at all, in its return of income. For each of the addition, Ld. AO has to specify as to which limb was applicable to the facts of the case and it could not be left to mere presumption or guess work of the assessee. Framing of specific charges is sine-qua-non for levy of penalty since the assessee must be put to allegations for which the penalty was being levied. In the absence of such a specific charge, the penalty would be bad in law and the same is not a curable defect u/s 292BB. This position has been settled in numerous binding judicial precedents. Considering the same, we would have no hesitation in holding that these two charges are quite different charges and carry different connotation / meaning. The non-framing of specific charge would make the notice defective. It did not specify the ground under which the penalty is proposed. The notice does not delete the appropriate words and in the assessment order as well as in the penalty order, both limbs have been pressed against the assessee. Therefore, we would hold that the notice was issued in a mechanical manner and hence, not sustainable in the eye of law. We would hold that there was failure on the part of Ld. AO to frame specific charge against the assessee and accordingly, the penalty would not be sustainable in the eyes of law. By deleting the impugned penalty, we allow the appeal.
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2023 (5) TMI 912
Failure to collect tax u/s 206C while selling timber - non-collection of TCS u/s 206C while selling timber being 1% of total sales - non-consideration/omission on the part of Ld. CIT(A) not to consider Form no. 27C (Declaration form from purchasers filed as per section 206C(1A) - as per AR CIT(A) erred in not admitting and considering the additional evidence i.e. declaration Form No. 27C [refer Rule 37C of the Income Tax Rules - HELD THAT:- Before us, the assessee claims to have filed Form 27 as prescribed under sub-section (1A) of section 206C of the Act, which exempts him from collecting the tax at source and his grievance is that the Ld. CIT(A) has not considered it. We do not countenance this action of Ld. CIT(A). It is true that assessee did not collect tax at source (TCS) while effecting sales of timber. But he has provided the Form 27 given by the buyers which is as per sub-section (1A) of section 206C of the Act. Therefore, it need to be examined as per law by Ld CIT(A). Whether there is any period of limitation/time given in the statute for filing of Form 27 as the law stood at the relevant period in these appeals? - We note that sub-section (1B) of section 206C of the Act, is not properly worded/drafted and in this regard we note that the time limit mentioned in section 206C(1B) of the Act is on or before the 7th day of the month next following the month in which the declaration is furnished to him . The impugned order is set-aside and issue restored to AO, who shall examine the Form No. 27C declaration filed by the assessee as to the correctness of the same; and meanwhile the declaration Form No. 27C to be forwarded to the Ld. PCIT/Ld. CIT in accordance to law and examined as to whether it fulfill the condition given in Rule 37C [declaration verified and countersigned by the Chartered Accountant stating that the buyers of timber from the assessee had duly paid the taxes on the same - Decided in favour of assessee for statistical purposes. Penalty levied u/s 221 - default on the part of assessee or deeming the assessee to be an assessee on default in making payment of tax collected as TCS u/s 206C - HELD THAT:- Since we have already set aside the orders passed u/s 206C(1)/206C(7) of the Act pertaining to the assessee for AY. 2010-11 and AY. 2014-14 back to the file of the AO for considering the declaration Form no. 27C, the penalty levied for default in making payment u/s 221of the Act cannot be sustained on the principle that when the foundation goes, the super-structure falls. Therefore, the same are set aside.
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2023 (5) TMI 911
Addition u/s 43B - Disallowance in the intimation issued u/s 143(1) - unpaid tax liability on account of GST as disallowed by the Auditor in form 3CD u/s 43B - HELD THAT:- Admittedly, the assessee did not file the Audited Financial statement before the Ld.CIT(A). Undisputed fact is this that the assessee has furnished the necessary item of profit loss account in the return filed online along with the tax audit report. However, based on tax audit report, the disallowance was made under the provision of section 143(1) of the Act. CIT(A), before rejecting the claim of the assessee should have referred the details furnished by the assessee in the income tax return before reaching to the conclusion that there was no detailed furnished by the assessee whether the amount of GST was routed through P L account - in the interest of justice and fair play, we are inclined to give one more opportunity to the assessee to furnish the necessary details - matter is set aside to the file of the AO for fresh adjudication as per the provision of law. Decided in favour of assessee for the statistical purposes.
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2023 (5) TMI 910
Deduction u/s 80P(2)(a)(i) - reasons given by the CIT(A) to deny the claim of deduction u/s 80P was that the assessee society did not file its return of income within the due time as prescribed u/s 139(1) of the Act; and had filed the same only in response to notice u/s 148 - HELD THAT:- We note that the Hon ble jurisdictional High Court had an occasion to examining this precise issue in respect of claim of deduction under section 80P of the Act wherein the issue of filing of return belatedly beyond the period stipulated in section 139(1) or section 139(4) of the Act as the case may be, as well as section 142(1) or section 148 of the Act as the case may be was considered at length by even considering section 80A(5)/80AC of the Act and the Hon ble Kerala High Court (DB) decided the same in the case of Chirakkal Service Co-operative Bank Ltd.[ 2016 (4) TMI 826 - KERALA HIGH COURT] wherein it has held that the return filed by the assessee beyond the period stipulated u/s 139(1) or 139(4) of the Act was u/s 142(1) or section 148 of the Act need to be accepted by the AO and acted upon in accordance to law. Thus reasons given by Ld. CIT(A) about the omission on the part of assessee in filing the return of income u/s 139(1)/142(1)/148 of the Act cannot be a ground for these AY s before us. Other reason given by the Ld. CIT(A) to deny the claim of deduction under section 80P of the Act claim was that the assessee society cannot be termed as Primary Agricultural Credit Society [PACS] even though, there was a certificate of the Registrar of Co-operative Societies - We note that the AO/Ld. CIT(A) had no benefit of the decision rendered in the case of Malvilayi Service Co-operative Bank Ltd ( 2021 (1) TMI 488 - SUPREME COURT] - Therefore, in the interest of justice and equity, the issue of claim for deduction u/s 80P(2)(a)(i) of the Act is restored back to file of AO who is directed to examine afresh the claim of assessee in the light of the Hon ble Apex Court decision in Malvilayi Service Co-operative Bank Ltd (supra). Therefore, the impugned order of Ld. CIT(A) is set aside, and issue is restored back to the file of the AO. Appeals of the assessee are allowed for statistical purposes.
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2023 (5) TMI 909
Revision u/s 263 - As per CIT-A no question was raised by the AO for exempt income from sale of script u/s 10(38) - HELD THAT:- Admittedly, the case was selected under scrutiny on account of exemption claimed on the purchase and sale of the scripts u/s10(38) - But the AO has not verified the exempt income from sale of script of Lifeline Drugs Pharma Ltd and TVS motors u/s 10(38) - case of the assessee was selected under complete scrutiny, but the AO has not verified the source of investment in immovable property and interest income/ interest expense. Accordingly, we hold that the verification has not been done by the AO during the assessment proceedings with respect to exempt income on sale of script of Lifeline Drugs Pharma Ltd and TVS motors u/s 10(38) of the Act, purchase of immovable property, and interest income/expense. It is a settled position of law that non-verification of the AO renders the assessment order as erroneous in so far prejudicial to the interest of revenue. See MALABAR INDUSTRIAL CO. LTD. case [ 2000 (2) TMI 10 - SUPREME COURT] . No infirmity in the order framed u/s 263 - Decided against assessee.
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2023 (5) TMI 908
Addition of share premium receipt u/s 56(2)(viib) - valuation report submitted by the assessee company was not substantiated by the assessee company - CIT-A deleted the addition - HELD THAT:- Assessee has used recognized discounted cash flow method. This is duly recognized method as per section 56(2)(viib) of the Act read with rule 11UA of the Income Tax Rules. AO has rejected this method by comparing the subsequent performance with the projections by claiming that this was not correct. CIT(A) noted that the AO s rejection of the DCA value on the basis of variation between the projections used for arriving at the DCF valuation and the subsequent performance is not correct. CIT(A) has passed a well reasoned order and rightly relied upon the order of Cinestaan Entertainment (P) Ltd. [ 2019 (6) TMI 1367 - ITAT DELHI] . Accordingly, we do not find any infirmity in the order of the Ld. CIT(A), hence we uphold the same. Disallowance of ESOP expenses by relying on case of Biocon Ltd . [ 2013 (8) TMI 629 - ITAT BANGALORE] - CIT-A deleted addition - HELD THAT:- We find that this issue is squarely covered by the decision of Lemon Tree Hotels [ 2015 (11) TMI 404 - DELHI HIGH COURT] and New Delhi Television Ltd. [ 2016 (7) TMI 1486 - DELHI HIGH COURT] wherein it has been held that expenditure under ESOP is an allowable expense. Hence, we find that the Ld. CIT(A) has passed a correct order and we do not need to interference on our part. Accordingly, this appeal by the Revenue is dismissed.
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2023 (5) TMI 907
Disallowance of commission payment - AO disallowed commission payment by taking a view that the assessee has failed to furnish evidence with regard to nature of work of business provided by those persons - HELD THAT:- CIT(A) confirmed the action of AO without giving any other reasoning. As before the AO the assessee furnished complete address of the persons, their PAN and amount of commission paid. The AO issued notice to such persons. AO has not specified to whom such notice was send or which notice was returned unserved. Before us assessee vehemently submitted that the AO issued notice u/s 133(6) only to two persons on test check basis, both responded and filed their reply. Both the commission agents has also filed their confirmation of commission. AO has not doubted the payment of commission to all 13 parties. The disallowance was paid only for want of evidence. AO has not investigated the matter except sending notice to two parties, who ultimately responded and filed their reply confirming the receipt of commission. No adverse material was brought on record even against such person, therefore, in absence of any adverse evidence - No justification of disallowance of commission payment - Decided in favour of assessee. Disallowance of salary expenses - HELD THAT:- Assessee furnished the name of six persons, alongwith their details of salary and their PAN numbers. AO vaguely recorded that he has sent notices under section 133(6) to some of the employee and some of them not responded to such notices. Two of the employees has filed reply to the notice issued by the AO admitting that they are employed with assessee and receiving salary. AO has not recorded in the assessment order whether any reply or confirmation was received from such person and vaguely noted that some of the notices were returned back. AO has not specified as to whom such notices were sent and the name of the persons whose notices were returned back. In absence of bringing any adverse evidence, AO was not justified in making disallowance of salary expenses. Decided in favour of assessee.
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2023 (5) TMI 885
Settlement applications u/s 245C (1) - qualitative difference between assessment proceedings pursuant to returns filed under Section 139 of the Act and pursuant to a notice u/s 148 - as concluded there was no case existing, thus the applications for settlement of case(s) u/s 245C was not maintainable - whether the case relating to the petitioners existed on that date? HELD THAT:- The expression any proceeding for assessment under this Act as used in Clause (b) of Section 245A of the Act, would now require to be construed in wider terms. Explanation (i) to Clause (b) of Section 245A clarified that the proceedings for assessment or reassessment or re-computation u/s 147 of the Act would commence only from the date on which the notice under Section 148 of the Act is issued. Thus, it is erroneous to suggest that proceedings for reassessment or re-computation would be considered as pending even though the period for framing an assessment pursuant to the returns filed u/s 139 of the Act or in response to a notice issued u/s 142 of the Act, had expired and no notice had been issued u/s 148. The legislative history of Section 245A of the Act clearly indicates that the proceedings for assessment, re-assessment and re-computation under section 148 of the Act, prior to issuance of notice under Section 148 of the Act, were excluded from the scope of the definition of the term case . Such proceedings have been included by virtue of the Finance Act, 2015 albeit on certain conditions being satisfied as noted hereinbefore. In Commissioner of Income Tax v. Income Tax Settlement Commission decided on 20.11.2012 [ 2012 (11) TMI 766 - DELHI HIGH COURT] a Coordinate Bench of this Court had explained the qualitative difference between assessment proceedings pursuant to returns filed u/s 139 and pursuant to a notice u/s 148 - In respect of assessment proceedings u/s 143 AO has the jurisdiction to examine the returns and pass an assessment order within a period of two years from the end of the relevant assessment years. However, in cases where income has escaped the assessment, the same can be reopened only upto a specified period and subject to certain conditions being satisfied. However, the possibility that proceedings for assessment, reassessment or re-computation of income may be initiated under Section 147 of the Act, after an assessment has been framed or the period of framing assessment has lapsed, cannot be construed to mean that a case is pending under Clause (b) of Section 245A We find no merit in the contention that the literal interpretation of the provision is contrary to the legislative intent. On the contrary, retaining the Explanation to Section 245A of the Act (and subsequently amending it) serves the intended purpose of sufficiently explaining the scope of Section 245A of the Act. There is no ambiguity in Section 245A of the Act that makes it necessary or apposite for the court to discard the literal interpretation of the language of Section 245A of the Act. Petition dismissed.
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Customs
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2023 (5) TMI 906
Confiscation alongwith penalty - Smuggling - shoes and cigarettes of foreign origin camouflaged with nearly 420 kgs of ginger - contraband item - non-mention of the sub clause of section 112 of the Customs Act - opportunity of cross-examination of the accused not provided - violation of principles of natural justice - HELD THAT:- The fact of smuggling of contraband goods is not in dispute, it is also an admitted position that the accused appellant had in fact gone to Custom House at late evening hours, allegedly to check up on the seizure of the vehicle and seek its release show, stated to be prompted at the behest of a friend whose even primary details like name, age, telephone number, residential address, place of work profession etc. and other basic information details like nature of business carried out, the accused appellant could provide. The plea of the appellant that statement of co-accused cannot be, the sole basis of imposition of penalty is the proposition that would vary with the facts and circumstances of the case. In fact the honourable Supreme Court in the case of NARESH J. SUKHAWANI VERSUS UNION OF INDIA [ 1995 (11) TMI 106 - SUPREME COURT] had held that the statement of co-accused when not retracted, was substantive piece of evidence. In the present case, as a matter of fact, the prompt and forthwith identification of the accused Sri Praveen Kumar Gupta, by the driver, co-accused clearly connects, the appellant to the contravention concerning smuggling of seized goods of foreign origin. The statement under section 108 of the Customs Act recorded by Customs Officers is material piece of evidence and this incriminating material incriminating the accused as well as the co-accused can certainly be used against them as substantive evidence. In so far as the plea of non-mention of the sub clause of section 112 of the Customs Act is concerned with, it is found that while the sub-clause ordinarily ought to have been spelled, however it is not an omission of such proportions as could result in non-imposition of any penalty as long as the nature of offence is discernible from the charges levied. On the plea of imposition of penalty on the basis of sole evidence of the statement of co-accused the Hon ble High Court of Allahabad in the case of PRAVEEN DUMAR SARAOGI VERSUS UNION OF INDIA [ 2014 (2) TMI 643 - ALLAHABAD HIGH COURT] had categorically held that the statement of co-Customs accused recorded under section 108 of the Customs Act can be used against the co-accused of the same case. The voluntary statements of the accused as well as a co-accused bind them and the fact that the said statements were not retracted at any point in time, subsequently clearly lends complete credence to their evidentiary value. Under the circumstances, failure of an opportunity to cross examine cannot be considered as violative of principles of natural justice, the Hon ble Supreme Court in the case of SURJEET SINGH CHHABRA VERSUS UNION OF INDIA [ 1996 (10) TMI 106 - SUPREME COURT] have upheld this this proposition. There are no reason to interfere with the orders of the Commissioner (Appeals) which is upheld. The appeal filed by the appellant is dismissed.
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2023 (5) TMI 905
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - it is submitted that Commissioner has conveniently ignored the facts stated in the show cause notice to the effect that the appellants have undertaken work only after obtaining Know Your Customer (KYC) documents provided by M/s SPG Global Logistics - HELD THAT:- It is apparent that the entire proceedings were initiated on the basis of a complaint dated 02.11.2022, filed by Shri Mohinder Kumar Kakkar, Proprietor of M/s Soshine International. The appellants claim that they have received the authorization and Know Your Customer (KYC) documents from Shri Gautham Kumar Singh of M/s SPG Global Logistics, the clearing forwarding agents. Shri Gautham Kumar Singh in his statement dated 05.04.2011, accepted that they have earlier cleared consignments through the appellants; he received the Know Your Customer (KYC) documents of M/s Soshine International through Shri Mukesh Kathpal and have handed over to the same to the appellants. Shri Mukesh Kathpal, in his statement dated 05.04.2021, stated that he has imported 5 consignments in the name of M/s Soshine International; he knows Shri Mukesh Kakkar for 4-5 years; he handed over the Know Your Customer (KYC) documents of Soshine International to Shri Gautham Kumar Singh of M/s SPG Global Logistics. The story of Shri Mohinder Kumar is not acceptable for the reason that he accepts that he handed over the documents to Shri Mukesh. He did not deny knowing shri Mukesh. After about a year he lodges a complaint that someone used his company s name and Know Your Customer (KYC) for imports. We find as held by Inquiry Officer that financial dispute or any other reason could be the cause of the complaint. Moreover, when the bills of entry have been filed by the appellant, in the name of M/s Soshine International, department did not either notice or object that there was no proper authorization by the importer; no case was made out against the consignments in question regarding under valuation, misdeclaration etc. It is not the case of the department that the documents are forged or fraudulently obtained. These factors themselves would mitigate the omission on the part of the appellants in not obtaining the authorization from the importer himself. There are no loss or injury as occurred by such act. It is found that, as held by the enquiry officer, authorization need not be necessarily from the importer himself; it can be through any person. CESTAT in the case of DAKOR CLEARING SHIPPING P. LTD. VERSUS COMMR. OF CUS. (GENERAL) , MUMBAI [ 2016 (1) TMI 625 - CESTAT MUMBAI] held that there is no restriction on the CHA to accept the authorization of a client through the trusted intermediary. Thus there were no serious consequences of violation of provisions of Regulation 10 (a) of Regulation 17 Customs Broker Licensing Regulation, 2018. Moreover, the documents are said to have been supplied by the clearing and forwarding agency M/s SPG Global Logistics. From the records of the case, there is no whisper as to whether the clearing and forwarding agency obtained any authorization from the importer and if not so whether they were also proceeded against. Therefore, the authorization referred to in Regulation 10 (a) of CBLR, 2018 need not be necessarily from the importer. However, it cannot be any person who is not connected with the importer from the facts of the case. It is reasonable established that Shri Mukesh who is believed to have passed on the documents to M/s SPG Global Logistics clearing and forwarding agent who have in turn passed on the documents to the appellant customs broker - thus, the appellants have no reasons to doubt the genuineness of the importer or the documents - violation of Rule 10 (a) of CBLR, 2018, if any, is only procedural one, looking in to the fact that no offence case, such as undervaluation, misdeclaration etc under Customs Act, 1962, was made out against the consignments in question and it is not also alleged that the Know Your Customer (KYC) documents are forged or fraudulently obtained. Learned authorized representative relies upon WELCOME AIR EXPRESS PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS (AIRPORT ADMINISTRATION) [ 2022 (5) TMI 211 - CALCUTTA HIGH COURT] , however, the facts of the case are not comparable. In that case Hon ble High Court held that revocation of license of the customs broker is valid for non-verification of antecedents of the exporter. In the instant case the antecedents of the importer are not in question. Though there is some procedural infirmity committed by the appellant customs broker and there is no serious violation of Regulation 10 (a) of CBLR, 2018 in spirit; but no case is made out by the Revenue for revocation of license in terms of Regulation 17 of CBLR, 2018 - imposition of a token penalty would suffice, in the facts and circumstances of the case. The revocation of customs broker license of the appellant and forfeiture of security deposit set aside - penalty imposed to Rs. 5,000/- reduced - appeal allowed in part.
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2023 (5) TMI 904
Requirement of license to import of old and used Digital Multifunction Printer before 28.02.2013 - enhancement of value on the basis of Chartered Engineer s Certificate without any corroborative evidence - HELD THAT:- The issue has already been settled by this Tribunal in the case of COMMISSIONER OF CUSTOMS (PORT) , KOLKATA VERSUS BHAWANI ENTERPRISES [ 2017 (11) TMI 974 - CESTAT KOLKATA] where it was held that We agree with Commissioner (Appeal) s findings that (i) mere enhancement of value on the basis of C.E. certificate cannot be a ground for treating declared value as mis-declared unless there is other corroborative evidence. (ii) except enhancement on the basis of C.E. s Certificate, there is no other material on record to inform that declared value was mis-declared. As in the case of Bhawani Enterprises for earlier import of identical goods, it was held that there was no restriction of import of the subject goods, it is held that no specific license is required for import of the impugned goods. It is further found that for enhancement of value, the Chartered Engineer s Certificate cannot be relied upon unless there is corroborative evidence. There are no infirmity in the impugned order, accordingly, the same is upheld - appeal of Revenue dismissed.
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2023 (5) TMI 903
Smuggling - 5,700 kg. cut betel nut alleged illegally imported, to be of third country origin - basis of impugned seizure under Section 110 of the Customs Act 1962 has to be on a reasonable belief that the goods are smuggled, of foreign origin and therefore liable for seizure - failure to establish foreign origin of seized goods - onus to prove on Department - provisional release of seized goods - penalty - HELD THAT:- From the facts of the case, it appears that this belief is largely based on this specific information with the authorities, it may have been further strengthened by non-production of transport documents at the time of interdiction of vehicle. Cut betel nuts are non-notified goods and therefore in terms of Section 123 of the Customs Act the onus to prove foreign origin and smuggled nature of the goods is on the department. The appellants have discharged their share of burden by presenting to the department an invoice No. 133, dated 13th March, 2016 - There is nothing expressly indicated in the order appealed to confirm the existence of a reasonable belief. Be it, the seizure may be on an alleged specific information, but beyond the point of seizure by police and the goods being handed over to the Customs department and the supply of documents of purchase of goods through M/s Shree Shai Systems, in turn from Customs auction at Forsebganj accounting for the entire 5700 kgs by way of cut uncut betel nuts the appellants have discharged there initial onus. There is no shred of evidence to establish or even state that the goods were smuggled. Having lent a credence to the goods to be procured out of Customs auction, it is for the department to affirmatively negate the same. There is no word in the order in respect of the various unanswered questions framed by the Commissioner, as to the investigations in regard to those primary questions. Moreover, smuggled character of goods is to be led and established by positive evidence and cannot be assumed on the basis of some unanswered probabilities as to non-supply of carriage documents or that of long storage or the character of the goods. It is observed from the investigations undertaken, that the department has thus miserably failed in establishing the foreign origin of the seized, confiscated and provisionally released cut betel nuts. There being no shred of any positive piece of evidence led by the revenue, to establish the smuggled nature of the goods, being non notified goods, the onus is on the department to establish smuggled foreign origin of the cut betel nuts. The appellants have discharged their burden on the basis of invoice tendered and related procurement source. Moreover, it is not the case of the department that the goods were not procured in auction by the supplier Shri Arvind Kumar Shahee. The department not being able to discharge the onus cast upon them to establish the smuggled character of the goods, the confirmation of sale to the appellants by Shri Arvind Kumar Shahee picking up the betel nuts in the departmental auction, the order in appeal is set aside and the appeals allowed.
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Corporate Laws
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2023 (5) TMI 902
Oppression and mismanagement - Illegal transfer of shares - ostensible intention (of two sons of Company's founder) to divide the Company into two parts through a scheme of demerger to distribute the proceeds between themselves leaving out the daughter from the sharing - wrongful cessation of the offices of Managing Director and Director held by A-1 and R-9 - seeking interim relief for appointing a Special Officer in R-1 Company to make an inventory of all books and accounts and take possession of all books and record of the Company - HELD THAT:- The Appellants have been reiterating the prayers made in the original CP No. 42/KB/2016 even though in the later applications prayer about reinstatement of A-1 and R-9 as Managing Director and Director has also been added. Thus it is seen that in the company applications filed after the status quo order dated 3.5.2016, clarificatory order dated 18.8.2016 and NCLT order dated 1.10.2019 for the appointment of a Special Officer, the issue of violation of these orders has also been regularly raised by the Appellants. The order dated 1.10.2019 passed by NCLT, which pertained mainly to the appointment of Special Officer to investigate into the affairs of the Company and also supervise the conduct of business by holding meetings of the board of directors periodically was appealed before NCLAT in [ 2021 (1) TMI 766 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI ], and that the NCLAT dismissed the appeal in view of the fact that 'the Report of the Special Officer will give a true and fair picture of the state of affairs of the R-1 Company . This order of the NCLAT was challenged in ARUN GUPTA ANR VERSUS SOUTH EASTERN CARRIERS LIMITED ORS. [ 2021 (4) TMI 1359 - SUPREME COURT] before the Hon ble Supreme Court of India. The appointment of Special Officer was upheld by the Hon ble Supreme Court and it was, therefore, not only desirable but necessary that the Special Officer submit his report regarding the affairs and management of the R-1 Company before the NCLT. It is noted by us that no such report is placed on record to show that the Special Officer could conduct any investigation or enquiry in the affairs of the Company and thereafter submit a report - eventually A-1 and R-9 were removed from office basically on the ground that they did not attend any of the four board meetings held on 14.7.2016, 26.10.2016, 19.1.2017 and 5.4.2017, though the hurdles being placed in their way of attending the board meetings was being regularly brought to the notice of the NCLT. It is not clear why the NCLT chose not to consider these prayers and give its findings in the Impugned Order. Thus the conclusion that A-1 and R-9 did not attend even one meeting in the past 12 months and were, therefore, presumed to vacate office under section 167(1)(b) of the Companies Act does not appear to be correctly arrived at after considering the rival contentions. In the interest of justice and in view of multiple allegations of oppression and mismanagement raised by the Appellants, matter remanded to NCLT, Kolkata for decision afresh - appeal allowed.
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Insolvency & Bankruptcy
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2023 (5) TMI 901
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - time limitation - delay of 5 days in filing the appeal - appellant submitted that the inadvertent delay of 5 days in filing the appeal had been caused due to the additional time needed to obtain legal advice, collate documents and connect with counsel during the festive season. Whether the appeal was instituted within limitation? HELD THAT:- In its impugned order, NCLAT observed that the appeal was lodged through the e-portal on 10 October 2022, which was the 46th day after the order of the NCLT. It observed that while Section 61(2) of the IBC prescribes a 30-day deadline for preferring an appeal against an order of the adjudicating authority, the appellate tribunal can condone a delay of upto 15 days, if sufficient cause is shown. Furthermore, it held that the ingredients of Section 61 of the IBC do not visualize that an aggrieved person has to wait till he is in receipt of a certified copy of the impugned order before preferring an appeal. The NCLAT held that even according to the version of the appellants, the period of 30 days would end on 4 October 2022 while the appeal was filed on 10 October 2022. It noted that 10 days (from 26 August 2022 to 4 September 2022) were spent prior to the application for a certified copy and between 15 September 2022 and 4 October 2022 another period of 20 days elapsed - the NCLAT concluded that the appeal was barred by limitation on the ground that it was instituted on the 46th day following the order of the NCLT, exceeding the outer limit of 45 days that was permissible under Section 61 of the IBC. The dispute in the appeal arises over the period of limitation applicable for filing an appeal against an order of the NCLT under the IBC. The IBC is a complete code. Section 238 of the IBC provides that the Code shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. Relevant provisions of the IBC, Limitation Act 1963, NCLAT Rules 2016 and administrative orders are extracted below and are referred to, in turn. It is evident that on the one hand, Rule 22 of the NCLAT Rules 2016 requires the presentation of an appeal at the filing counter in the prescribed mode, but on the other, NCLAT also envisages e-filing of appeals. This is made evident in the SOP dated 3 January 2021 which mandates the filing of a physical copy of an appeal as per the procedure prescribed in the NCLAT Rules 2016, while referring to the procedure for the hearing of cases through the virtual mode, using the e-filing portal. The subsequent order dated 21 October 2022 acknowledges that there was an absence of clarity in regard to the period with reference to which limitation would commence - The power of condoning a delay of up to 15 days beyond the original period of 30 days lies within the discretionary power of the NCLAT. The appeal was instituted within the outer limit of 45 days. In the present case, the application for a certified copy was sent from Delhi to Chennai on 2 September 2022, which was received on 5 September 2022, within the period of limitation of 30 days specified in Section 61(2) - In the present case, the appellant exercised due diligence and applied for a certified copy upon pronouncement of the order in terms of Rule 22(2) of the NCLT Rules 2016. The certified copy was provided to the appellant on 15 September 2022. Hence, the period of 10 days between 5 September 2022 and 15 September 2022 taken by the court to provide a certified copy of the order ought to be excluded when determining the period of limitation under Section 61(2) of the IBC. Thus, the NCLAT was in error in dismissing the appeal on the ground of limitation. The explanation which was advanced by the appellant for condoning the period of 5 days (beyond the period of 30 days stipulated for the filing of an appeal) was sufficient and the delay should have been condoned within the four corners of the statute. Appeal allowed.
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2023 (5) TMI 900
Initiation of CIRP - Admission of application u/s 10 - issuance of notice to the creditors to give a hearing or opportunity of hearing to the creditors before admission of Section 10 Application - opportunity to the creditor to file Section 65 Application (if section 10 application filed with fraudulent intent) - termination of Lease Agreement in favour of the Corporate Applicant prior to admission of Section 10 Application - effect of moratorium to assets, which were earlier leased by the Lessor to the Corporate Applicant - entitlement to claim possession of the aircrafts and export the aircrafts as per the Lease Agreement on termination of lease agreement. Whether in a Section 10 Application filed by a Corporate Applicant, it is necessary to issue notice to the creditors to give a hearing or opportunity of hearing to the creditors before admission of Section 10 Application? - HELD THAT:- The present is a case where Application under Section 10 was filed on 02.05.2022 and on 04.05.2022 it came for hearing. The learned Counsel for the Appellant had appeared and was head by the Adjudicating Authority. The Adjudicating Authority however took a view that it was open for the objector to file an Application under Section 65 even after admission of Section 10 Application. Since the statutory Scheme does not contain any obligation of issuing notice to the creditors by the Corporate Applicant, any objector appearing at the time of hearing has to be heard and the objection may be noted by the Adjudicating Authority and thereafter the appropriate decision can be taken - the mere fact that no notice was issued to the creditors or any opportunity was given to the objectors before proceeding to hear, the Corporate Applicant, cannot be held to vitiate any procedure or violating the principles of natural justice, more so when objectors were heard by the Adjudicating Authority. Whether at the time of hearing of Section 10 Application, if some of the creditors appear and object admission of Section 10 Application alleging that Application has been filed fraudulently with malicious intent, Adjudicating Authority is required to first give opportunity to the creditor to file Section 65 Application and decide the said Application before proceeding to admit Section 10 Application? - HELD THAT:- here was sufficient material before the Adjudicating Authority to come to the conclusion that Application under Section 10 filed by the Corporate Applicant was fraudulent and with malicious intent. The Adjudicating Authority in its impugned order has captured the particulars of financial debt and operational debt - It is not the case of the Appellant that Corporate Applicant has not defaulted any payment of lease rentals to the Appellant(s). Non-payment of lease rentals is admitted fact and has been made basis of cancellation of Lease Agreement by the Lessors, which took place immediately after presentation of the Application under Section 10 on 02.05.2023. On the strength of the oral objections which were raised before the Adjudicating Authority on behalf of the Appellant as well as other, which has also been raised in this Appeal, no conclusion can be derived at this stage that Application filed by the Corporate Applicant was fraudulent with malicious intent - Adjudicating Authority has given liberty to the Appellant to file an application under Section 65. It is open for the Appellant to file Section 65 Application with appropriate pleadings and materials and in the event of such Application has been filed, the Adjudicating Authority shall consider the Application in accordance with law without being influenced by any observations made in this order. Whether Lessors having terminated Lease Agreement in favour of the Corporate Applicant prior to admission of Section 10 Application, the moratorium as directed by order dated 10 May, 2023 cannot be said to be applicable to the assets, which were earlier leased by the Lessor to the Corporate Applicant? - Whether the Appellant having terminated the Lease Agreement in favour of the Corporate Applicant prior to admission, is entitled to claim possession of the aircrafts and export the aircrafts as per the Lease Agreement? - HELD THAT:- These Appeal(s) have been filed against the order admitting Application under Section 10 and the issues which are sought to be raised in this Appeal have not yet been considered by the Adjudicating Authority. When the Adjudicating Authority has not adverted to the aforesaid issues, where the CIRP is pending, the ends of justice will be served by granting liberty to the Appellant(s) or to the IRP to make appropriate Application before the Adjudicating Authority under Section 60, sub-section (5) of the Code. In event any such Application is filed under Section 60, sub-section (5), the Adjudicating Authority shall take appropriate decision in accordance with law - the issues, which have been raised and noted in this paragraph need no consideration at this stage. The order dated 10.05.2023 admitting Section 10 Application is upheld - appeal disposed off.
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2023 (5) TMI 897
Condonation of delay in filing appeal - sufficient reasons for delay provided or not - Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues (or not) - Operational Creditors - application filed u/s 9 of IBC dismissed on the ground that the Corporate Debtor has already paid the Principal Amount and the Petition under Section 9 is not maintainable in respect of interest. Whether there is a sufficient cause assigned by the Applicant/Appellant for the purpose of Condonation of Delay or not? - HELD THAT:- Admittedly, the Impugned Order was received by the Appellant within two/three days of its passing. The Appellant was having about 25 days if not more for the purpose of engaging the Counsel and filing of Appeal but he has made a lame excuse that he belongs to Orrisa and the Counsel was to be engaged at Chennai, therefore, the prescribed period of 30 days had expired and even the Appeal has been filed on the last day of 15th day, therefore, the Appellant is asking for Condonation of 15 days which is the extended period provided in Section 61(2) proviso. The cause shown by the Applicant/Appellant is not satisfying, as it does not fall within the ambit of sufficient cause, therefore, there are no merit in this Application and the same is hereby dismissed.
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Service Tax
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2023 (5) TMI 899
Place of provision of services - Levy of Service tax on international ocean freight when both the service provider and service recipient are located outside India - Constitutional validity of Notification No.28/12-ST dated 20.6.2012, Notification Nos.1/2017-ST, 02/2017-ST 03/2017-ST, all dated 12.01.2017 and Section 66C(2) of Chapter V of the Finance Act, 1994 (as amended) - clarification of the Board in Para 4 4.1 of the Circular No.206/4/2017 Service Tax, dated 13.04.2017 - ultra vires provision of the Constitution or not - POPOS rules - evy of tax on goods are imported on CIF basis - levy of service tax in case of FOB - Reverse charge mechanism. HELD THAT:- Service tax initially became payable by steamer agents on ocean freight with effect from 22.01.2017 in view of the amendment by Notification No.1/2017-ST dated 12.01.2017. Later, by the impugned Notification No.15/2017-ST dated 13.04.2017, the burden was shifted on the importer - Thus, the intention of the Government was to shift burden of tax on the steamer agents and later on the importers vide impugned Notification No.15/2017-ST dated 13.04.2017 with effect from 23.04.2017, wherein, an Explanation V to Notification No.30/2012-ST dated 20.06.2012 was inserted. It impacted the second Category II of Writ Petitioners namely the importers . There were further amendments to the Explanations to vide Notification No.03/2017-ST, dated 12.01.2017 and Notification No.15/2017-ST, dated 13.04.2017. Rule 8B was inserted to the Point of Taxation Rules, 2011, after Rule 8A vide impugned Notification No.14/2017-ST dated 13.04.2017. It came into force on 23.04.2017 with retrospective effect from 22.01.2017 - the purpose of the insertion of Rule 8B of the Point of Taxation Rules, 2011 with retrospective effect from 22.1.2017 was to fix the rate of tax, value of taxable service and rate of exchange as the date of bill of lading of goods in the vessel at the port of export. The impugned Notification No.14/2017-ST dated 13.04.2017 was intended to enable the Department to levy and collect service tax on the steamer agents and also the importers at the prevailing rate for the respective period. The amendment was in compliance with the requirement of Section 67(A) of the Act. Thus, not only the importer but also the steamer agents were liable to pay tax at the rate and value from 22.01.2017. There are no merits in the challenge to it. The value of incidence of such intermediate services availed by the Shipping Liners will be passed on by the Shipping Liners to the Foreign Shippers and eventually to the importers. This value gets taxed in the case of CIF Contract. In the case of FOB contracts, the importers have to in any event include the value under Section 14 of the Customs Act, 1962. Thus, to tax, the overseas freight twice is also uncalled. In case of CIF transaction, the value of ocean freight is not available with the importer as the ocean freight is paid by the overseas supplier. The value of a CIF contract is indivisible. The impugned notifications also have the propensity of spiraling the import value of the goods - In CIF contracts, the value of sea transportation service is not made available either to the importers or the steamer agents. There is also no privity of contract between the importers and the Overseas Shipping Liner in CIF contracts nor does an Indian importer make any payment for such ocean freight to the Overseas Shipping Liners and its ancillary service provider who services are engaged enroute. The service tax cannot be demanded from these petitioners as neither the steamer agents nor the importers in India are the recipient of service. They are not liable to pay tax. The other impugned notifications which were issued as a consequence of withdrawal of the exemption under Mega Exemption Notification No.25/2012-ST dated 20.6.2012 vide Notification No.1/2017-ST dated 12.1.2017 with effect from 22.1.2017, vide Notification No.1/2017-ST dated 12.1.2017 with effect from 22.1.2017 also cannot be challenged as challenge to the latter notification has to fail - The, Central Government had devised a mechanism, whereby, apart from those activities which were specifically excluded from the definition of service in Section 65B(44) of the Finance Act, 1994, few services were placed in the negative list in Section 66D of the Finance Act, 1994 while few services were specifically exempted with effect from 01.07.2012 under Mega Exemption Notification No.25/2012-ST dated 20.06.2012 with effect from 01.07.2012. The other collateral notifications which have been challenged in these writ petitions are merely incidental and only consequential to withdrawal of exemption in Mega Exemption Notification No.25/2012- ST dated 20.06.2012 vide impugned No.1/2017-ST dated 12.01.2017 with effect from 22.01.2017. They have been issued with a view to implement the changes on account of withdrawal of exemption under impugned No.1/2017-ST dated 12.01.2017 with effect from 22.01.2017. There is a flaw in the above Notification No.03/2017-ST dated 12.01.2017 and Notification No.15/2017-ST dated 13.04.2017. It is the foreign liner who engages the service of various other persons in the course of transport of service. It is the foreign shipping liner who receives service who can be taxed and not the importers or the steamer agents although by virtue of the above two notifications, the person liable to pay tax has been also declared as the person who complies with Sections 29, 30 or 38 read with Section 148 of the Customs Act, 1962 (52 of 1962) with respect to such goods between 22.01.2017 and 22.04.2017 and thereafter the importer as defined under Clause (26) of Section 2 of the Customs Act, 1962 of such goods between 23.04.2017 and 30.06.2017 - the demand are incapable of being enforced in view of the above defects pointed out in the amendment to Notification No.30/2012- ST dated 20.06.2012 issued under Section 68(2) of the Finance Act, 1994 vide the impugned Notification No.3/2017, dated 12.01.2017 under the scheme of the Act, the Rules made thereunder and the Notifications issued - there is no scope for shifting the burden on these two categories of writ petitioners to pay service tax as things stand. Therefore, these collateral notifications which have been challenged need not be declared ultra vires as such. Thus, neither of the Category of writ petitioners are liable to pay tax in view of defect in Notification No.3/2017-ST dated 12.01.2017 w.e.f. 22.01.2017 and Notification No.15/2017, dated 13.04.2017. While amending Notification No.30/2012-ST dated 20.06.2012 vide Notification No.3/2017-ST dated 12.01.2017 w.e.f. 22.01.2017 and Notification No.15/2017, dated 13.04.2017 and the burden was shifted on these writ petitioners by virtue of the amendment to the provisions of Service Tax Rules, 1994 vide Notification No.02/2017-ST dated 12.01.2017 w.e.f. 22.01.2017 and later by Notification No.16/2017 dated 13.04.2017 w.e.f. 23.04.2017, the demand of service tax on these petitioners cannot be countenanced for the foregoing reasons - The impugned notifications had a very short life with effect from 22.01.2017 upto 30.06.2017. With effect from 01.07.2017, the respective Goods and Service Tax Act, 2017 (GST Act, 2017) came into force and subsumed several indirect taxes including Chapter V of the Finance Act, 1994. In KUSUM INGOTS ALLOYS LTD. VERSUS UNION OF INDIA [ 2004 (4) TMI 342 - SUPREME COURT ], it was held that an order passed on writ petition questioning the constitutionality of a Parliamentary Act whether interim or final keeping in view the provisions contained in Clause (2) of Article 226 of the Constitution of India, will have effect throughout the territory of India subject of course to the applicability of the Act. If that be so, the notices which have been challenged by the category II writ petitioner in Table 5 are also liable to be quashed. However, we would not go that far to hold all the notifications challenged as ultra-vires. Category I Writ Petitioners have also challenged the vires of para 4 and 4.1 of Circular No.206/4/2017-ST dated 12.4.2017 in W.P.No.14643 of 2017 as null and void and ultravires the various provisions of the Constitution and ultra vires Section 83 of the Finance Act, 1994, Section 37B of the Central Excise Act, 1994 as made applicable to Finance Act, 1994 as well as Notification No.26/2012-ST dated 20.06.2012. There is no necessity to declare the impugned notifications as ultra vires as there is no proper machinery provided under the impugned notifications issued under Section 68(2) of the Finance Act, 1994 to shift the burden to pay service tax on the petitioners as the petitioners are not either the recipients of the taxable service by way of transportation goods by a vessel from a space outside India up to the customs stations of clearance in India. They are not liable to tax as things stand - Challenge to Notification No.01/2017-ST dated 12.01.2017 has to fail in the light of the decision of the Hon ble Supreme Court in Kasinka Trading vs. Union of India , [ 1994 (10) TMI 64 - SUPREME COURT ] . The challenges to other notifications are unnecessary. As far as refunds are concerned in Table No.6, the petitioners shall file refund applications within a period of 30 days from the date of receipt of a copy of this order, if such refund applications have not been already filed. Such refund applications shall be disposed of in accordance with the decision of the Hon ble Supreme Court in Mafatlal Industries Private Limited vs. Union of India , [ 1996 (12) TMI 50 - SUPREME COURT] within a period of 60 days thereafter. Petition disposed off.
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2023 (5) TMI 896
Grant of interest on the amount which was sanctioned as refund - Power of tribunal to grant interest - Refund of amount includes amount deposited with the Registrar of High Court - calculation of relevant period for which interest is to be paid. - HELD THAT:- There may not be any necessity to examine the effect of the CESTAT Procedure dated 17th July 2009 qua the order passed by the learned Tribunal dated 14th December, 2020 as the period during which the orders were reserved by the Tribunal would fall during which lockdown was imposed and the Hon'ble Supreme Court had also extended the period of limitation under various statutes. Therefore, on the said ground, the order passed by the learned Tribunal cannot be held to be non est in law. That apart, no such substantial question of law has been suggested by the revenue in this appeal. Having steered clear of this issue, now we need to consider as to whether the learned Tribunal was justified in granting interest at the rate of 10%. If the Assistant Commissioner of Central Excise is empowered to grant interest, it goes without saying that such power was enure in favour of the appellate authority namely, the Commissioner of Central Excise as well as the Tribunal which will test the correctness of the order passed by the Commissioner and also this Court, in exercise of power under Section 260A of the Income Tax Act. Therefore, there is sufficient power vested with the Tribunal considering the facts and circumstances of the case to grant interest. However, in this case the facts are exceptional and peculiar. More particularly, because of the earlier round of litigation before this Court - such right to claim interest not only emanates from the statutory provision of Section 11BB of the Central Excise Act but also pursuant to the orders passed by this Court in the writ petition filed by the respondent/assessee before this Court. Quantum of interest at the rate of 10% - HELD THAT:- The total interest which was sanctioned and refunded to the respondent/assessee is Rs. 59,85,338/-. If that be so, then the present appeal will be hit by the monetary limit fixed by the CBIC in its Circular dated 22nd August, 2019 which fixed the monetary limit of Rs. 1 crore for the revenue to pursue appeals before this Court against the order passed by the Tribunal. Therefore, on that score also the revenue is liable to be non suited. That apart there is nothing on record to indicate that the case on hand would fall within any one of the exception which have been curved out in the circular issued by the CBIC. There is no question of law arising for consideration in this appeal - Appeal dismissed.
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2023 (5) TMI 895
CENVAT Credit - credit in respect of services received prior to registration - HELD THAT:- In terms of Rule 4A(1) of Service Tax Rules, 1994 the invoice or the challan shall be serially numbered and shall contain the name, address and registration number of such person (i.e. provider of the services); name and address of the person receiving taxable service; description and value of taxable service provided or agreed to be provided and the service tax payable thereon. It is found that as submitted by the appellants, there is no requirement to indicate in the invoice, the registration number of the receiver, who avails Cenvat credit, i.e. in the instant case of the appellants. It is also found that proviso to Rule 9(1) of Cenvat Credit Rules provides that even if the duty paying documents (i.e. the invoice, bill or challan issued by the person who is providing taxable service to taxable output service provider such as the appellant) does not contain all particulars but contain the details of duty or service tax paid or payable, description of the goods or taxable service, assessable value, (central excise or service tax registration number of the person issuing the invoice, as the case may be), name and address of the factory or warehouse or premises of first or second stage dealers or provider of output service, credit may be allowed. To this extent, there is force in the argument of the appellants. The Tribunal Mumbai in the case of TATA BUSINESS SUPPORT SERVICES LTD. VERSUS COMMR. OF S.T. -VII, MUMBAI [ 2019 (8) TMI 1647 - CESTAT MUMBAI] observed that The sweeping assertion of non-existence merely owing to non-registration is not dissimilar to the symbolic discountenancing by Pontius Pilate that relegated him to a mere footnote in history. In the absence of express articulation of lack of satisfaction, Rule 9 of Cenvat Credit Rules, 2004 does not come to the assistance of Revenue. The impugned order is not sustainable and is liable to be set aside - Appeal allowed.
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2023 (5) TMI 894
Non-payment of service tax - GTA Service incurred in connection with export of goods - levy of penalty under Section 78 of Finance Act.1994 Rule 15(3) of the Cenvat Credit Rules 2004 - extended period of limitation - reverse charge mechanism - applicability of N/N. 18/2009-ST dated 7/07/2009 N/N. 31/2012-ST dated 28/06/2012 - HELD THAT:- It is seen that the service availment for export purposes is not disputed and it is only the procedural conditions prescribed in the notification that the appellants could not adhere to. They have candidly submitted to the fact of there being unaware of the requirements as set out in the notification. The two conditions that the exporter could not fulfill at the material time, relate to filing of information in form EXP-1 and filing of the required return in form EXP-2 about the fact of availment of the exemption. The said conditions are prescribed vide clause (a) and clause (c) of the impugned notifications. The CBEC vide Circular No. 334/13/2009-TRU dated 6th July, 2009, while dealing with Exemption Scheme under Notification no 18/2009-ST dated 7.07.2009 had prescribed requisite procedure for availing of the said benefit. It is evident that the impugned conditions for non-fulfillment of which credit is denied are clearly procedural in nature. Thus failure on the part of the appellant is only by way of certain procedural inconsistencies/deficiencies. It is settled law that a substantial exemption notification benefit cannot be denied on the ground of failure to comply with certain procedural conditions prescribed. The fact of export not in dispute, technicalities of procedures cannot stand in the way of availment of otherwise admissible substantive benefit. The procedure prescribed in the impugned notification are for the purpose of verification of the claims. Since there is no dispute about the rendering of services for export and which is exempted, it is clear that the appellant is rightly eligible for availing the benefit of the notification. Further, it is very clear from the CBEC s circular, that the conditions not fulfilled in the present matter were merely procedural and not mandatory, required for availment of the benefit. Under the circumstances the fact of receiving service for transport of goods by road for export and making payment for such service is not the least being in dispute, the substantial benefit of a notification should not be denied on account of technical lapses as held by the Hon ble High Court, Bombay in the case of UNION OF INDIA VERSUS FARHEEN TEXTURISERS AND OTHERS [ 2010 (7) TMI 982 - BOMBAY HIGH COURT] . To similar effect is the order of the Hon ble High Court, Allahabad in the case of COMMR. OF CUS. C. EX. VERSUS J.S. GUPTA AND SONS [ 2015 (7) TMI 379 - ALLAHABAD HIGH COURT] , holding the condonable nature of procedural conditions. Also it is settled law that in case of exports a liberal approach may be called for when the fact of such rendering of service for export is not in dispute so as not to render exports noncompetitive in the global trade. There are no merit in the order passed by learned Commissioner (Appeals). The same is therefore set aside, and the appeal allowed.
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2023 (5) TMI 893
Validity of dropping of demand - respondent have filed the declaration under VCES 2013; VCES-2 has been issued to the respondent on payment of 100% tax dues for the period 01.04.2008 to 31.03.2013 - HELD THAT:- From the records of the case that the adjudicating authority records finding to the effect that the respondent filed a declaration under VCES-2013 on 18.11.2013 and VCES-2 (acknowledgement of declaration) was issued to them on 18.11.2013; the respondent claim that they did not receive any VCES-3; no order for rejection also has been received. Commissioner has observed that as the audit of the records of the respondent was conducted on 21, 21 and 24 June, 2013, the respondent was eligible for opting for VCES as no enquiry, investigation or audit has been initiated were pending against them as on 01.03.2013; they have made payment of 100% tax dues on 21.11.2013; the Designated Authority did not issue VCES-3 within 7 working days from the date of furnishing of details of payment of tax dues in full under sub-Section (vii) of section 107 of the Act. Commissioner rightly held that under the circumstances that he did not have any other option, but to accept the declaration of the respondent. As the respondent discharged service tax liability under VCES 2013, they shall get immunity from penalty, interest and other proceedings and, therefore, the SCN was dropped. Adjudicating authority further finds that as the demand raised for the period 01.01.2013 to 31.03.2013 also stands paid by the respondents, the demand is liable to be dropped. The adjudicating authority has correctly held that as 100% service tax stands paid by the respondent under VCES, the proceedings initiated vide above SCN do not survive. The SCN was issued demanding service tax of Rs. 6,67,48,423/- whereas the appellants have paid on their own account Rs. 12,09,58,530/- plus Rs. 3,58,86,886/-. As such there was no way that Commissioner could have confirmed a lesser amount than the amount paid by the appellants. Moreover, the appellants have paid 100% tax under VCES 2013; the payment was not rejected by designated authority and in terms of section 109 of VCES 2013, the assessee is not entitled for any refund. Under the circumstances appropriation of duty is an empty formality. Appeal of Revenue rejected.
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2023 (5) TMI 892
Refund claim on account of excess deposit of Service Tax on account of unutilized Cenvat Credit - Closure of business due to death of the proprietor - Intellectual Property Rights Service - Rule 5 / Rule 5B of Cenvat Credit Rules 2002 - order for refund even if there is no production and there is no clearance of finished goods - entitlement for refund even if it goes out of Movat Scheme or the Company is closed. HELD THAT:- This Tribunal had an occasion to consider the two contrary viewpoints in the case of CCE, HYDERABAD VERSUS APEX DRUGS INTERMEDIATES LTD. [ 2010 (8) TMI 913 - CESTAT BANGALORE] , after debating the same, it came to the conclusion that Rule 5 of the Cenvat Credit Rules did not prohibit the grant of such credit refund when for any reason accumulated credit was not utilizable. The assessee in the present case has ceased to be a manufacturer upon surrender of the licence and so the credit available remains unutilizable. Following the judgement of the Hon ble Karnataka High Court in UNION OF INDIA VERSUS SLOVAK INDIA TRADING CO. PVT. LTD. [ 2006 (7) TMI 9 - KARNATAKA HIGH COURT] , the Tribunal had dismissed the appeal filed by the department and allowed the refund. To similar effect is the Tribunal s decision in the case of COMMR. OF C. EX. CUS. (APPEALS), TIRUPATI VERSUS KORES (INDIA) LTD. [ 2008 (8) TMI 588 - CESTAT, BANGALORE] , allowing refund of Cenvat Credit lying with the assessee upon closure of the factory. In view of the fact that right to availment of Cenvat Credit is a vested right as held in EICHER MOTORS LTD. VERSUS UNION OF INDIA [ 1999 (1) TMI 34 - SUPREME COURT] , which accrues to a manufacturer, the fact of closure of business leading to non-utilization thereof, cannot deprive the deceased of their accrued interests in law and following judicial discipline and precedent decisions, the appeal is allowed with consequential relief.
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2023 (5) TMI 891
CENVAT Credit - availment and distribution of credit - Input services - insurance services - car hiring service - hotel services and air travel services - HELD THAT:- From the facts it is clear that the present show cause notice is in continuation of the show cause notices issued earlier and as noted also in the order of the original authority. Appeal against confirmation of the first three show cause notices was considered by the Tribunal M/S ULTRATECH CEMENT LTD. VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, MUMBAI EAST [ 2019 (3) TMI 2026 - CESTAT MUMBAI ] Tribunal has observed that The above disputed services were used/utilized by the appellant for accomplishing the business purpose of ultimate manufacture of final products, removed from the factory on payment of appropriate Central Excise duty. All the disputed services are falling under the definition of input service for taking of Cenvat Credit of service tax amount paid thereon. The issue with regard to consideration of the disputed services as defined Input Service is no more res integra in view of the decisions relied upon by the Ld. Advocate for the appellant. Therefore, as per the settled principal of law, denial of Cenvat Credit on this ground also is not sustainable. As the appeal in respect of the first three show cause notices have been allowed, these proceedings which are sequel to the earlier proceedings need also to be considered in the light of the above order and allowed. Appeal allowed.
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Central Excise
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2023 (5) TMI 890
Place of removal - valuation of goods - inclusion of recovered freight charges from their EPD (Project Division) by way of debit notes, in the assessable value - Department s contention is that EPD (Project Division) in the place of removal and hence the freight charges recovered from the factory to the place of removal is to be included in the transaction value. What is the place of Removal in the present case? HELD THAT:- From the perusal of the invoices, it is quite evident that the goods were directly dispatched by the appellant from their factory to the site of the ultimate customer - The manner of preparation of invoice has been recognized by the Board by way of Circular No. 96/7/1995 dated 13,02.1995, clarifying in respect of the admissibility of Modvat Credit to the consignee holding that The duplicate copy of the manufacturer s invoice under Rule 52A will serve as cover for transport and for availment of Modvat by the end user. Undisputedly the goods are directly dispatched from the factory premises of the appellant to the project site. Further the invoice also shows that the insurance against it has been paid by the customer for transportation of the goods and has been borne by the customer and not by the appellant. Freight also is shown to have been paid separately over and above the invoice value - No evidence has been produced by the Revenue at any time of proceedings to show that the goods were cleared by the appellant from their factory to EPD Chennai and thereafter from Chennai to the project site. In absence of any such evidence showing transportation of the goods to the premises of EPD Division, the entire premise on which the case is based has to fail on factual basis. In the case of COMMNR. OF CENTRAL EXCISE, NAGPUR VERSUS M/S. ISPAT INDUSTRIES LTD. [ 2015 (4) TMI 73 - SUPREME COURT] after considering Rule 5 and Rule 7 of Central Excise Rules, 2002, Hon ble Supreme Court has held that Tribunal has correctly arrived at a categorical finding that the respondent is not responsible to pay the cost of transport from the place of removal to the place of delivery i.e. from the factory gate to the depot separately. In terms of Rule 5 of the Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000, such a cost of transport which is also separately shows, is not includable in the valuation for the purpose of excise duty. In the case of BATHINDA INDUSTRIAL GASES PVT LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, CUSTOMS, EXCISE BHOPAL [ 2022 (12) TMI 48 - CESTAT NEW DELHI] it was held that The freight charges are not includible in the assessable value of liquid CO 2 those being separately charged in the invoices and the gas was sold at the time of clearance from the factory of the appellant. The authorities below are held to have wrongly confirmed the duty demand against the appellant on the basis of inclusion of freight charges in assessable value. There are no merits in the impugned order - appeal allowed.
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CST, VAT & Sales Tax
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2023 (5) TMI 898
Benefit of Concessional rate of tax denied - rejection of claim of the appellant for production of Form-C declaration - appellant s case is that the assessment was an ex parte assessment and Form-C declaration could not be produced - HELD THAT:- The decision of the authorities below in refusing to accept Form-C declaration is contrary to the settled legal principles. One of the earliest decisions on the said point is a Full Bench judgment of the High Court of Madras in the case of State of Tamil Nadu vs. Arulmurugan reported in [ 1982 (11) TMI 143 - MADRAS HIGH COURT ], where it was held that The fact that he subsequently produced the C forms cannot in any way justify the assessee's contention that necessary opportunity had not been granted to the assessee for the production of the C forms. There is no error of law in the conclusion arrived at by the Tribunal. The above decision was taken note of by the Hon ble Supreme Court in the case of STATE OF ANDHRA PRADESH VERSUS HYDERABAD ASBESTOS CEMENT PRODUCTION LTD. [ 1994 (4) TMI 302 - SUPREME COURT ] wherein it was held that the appellate authority has sufficient power to receive Form C declaration even at the appellate stage. Thus, the stand taken by the authorities namely, the assessing officer, the appellate authority, revisional authority and the reviewing authority are contrary to law. The writ petition is allowed, the order passed by the authorities are set aside and the matter is remanded back to the assessing officer.
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2023 (5) TMI 889
Liability to pay Entertainment Tax - sharing of Revenue - proprietor has the ultimate control in the transmission of programs, which he receives from a satellite and through the Local Cable Operators (LCO), broadcasts to the subscribers - constitutional issue raised by the petitioner with reference to the 101st Amendment of the Constitution of India - power to levy and collect the tax as per the enactment, after the 101st amendment - HELD THAT:- A similar provision defining Proprietor was available in the Delhi enactment. The Division Bench which considered the matter in Siti Cable Networks Limited [ 2017 (3) TMI 627 - DELHI HIGH COURT ] also proceeded on the basis that the definition of the word Proprietor covers both the MSO and the LCO. It was held that the expression in the manner prescribed in Section 7, the charging section, which requires the tax to be collected by the proprietor and paid to the Government in the manner prescribed , and the definition of the word prescribed in Section 2(n); makes inevitable a reference to Rule 26, which also refers to the proprietor of a cable television network. It was thus held that where an MSO provides cable service directly to the subscribers, it would fall under the definition of the proprietor and if it is given through an LCO; then LCO would fall under such definition. The LCO as per clause 9.6 is interdicted from, (i) transmitting or retransmitting, interpolating any signals, not transmitted by the MSO, (ii) inserting any commercial or advertisement or information on any signal transmitted by the MSO, (iii) interfering in any way with the signals of the MSO or using any equipment for decoding, receiving, recording or using a counterfeit set-top box, (iv) altering or tampering the Hardware and (v) using any Hardware not supplied by the MSO. There shall also be no connection provided by the LCO to any entity for retransmission of the TV signals (Clause 9.7) and the LCO is also prohibited from recording and retransmitting and from blocking, adding or substituting the TV signals transmitted by the MSO - It was on similar provisions that the Hon ble Supreme Court in paragraph 36 of Purvi Communication (P) Ltd. [ 2005 (3) TMI 438 - SUPREME COURT ] found the respondent therein, an MSO, to have a direct and proximate nexus with the entertainments provided by them through the cable TV network and found them to be liable as the taxable person, liable to pay tax on the gross receipts obtained from the viewers; the subscribers. The Act of 1948 in the State of Bihar, by which the State, through its Commercial Tax Officers collect entertainment tax inter alia from the proprietors of cable television networks cannot survive the 101st Amendment, since the field of taxation available to the State under the amended Entry 62 of List II is confined to those levied and collected by the local self-government institutions. The tax for the period prior to the amendment, though levied on the taxable event occurring, cannot also be collected since there is no transition provision available under the 101st Amendment making such collection of entertainment tax permissible for one year or by way of a repeal; by an enactment, consistent with the amendment, with a saving clause for continuance of the levy and collection under the old Act as it was never repealed. The impugned orders are hence set aside, only on the ground of the authorities under the Act of 1948 having been denuded of the power to levy and collect the tax as per the enactment, after the 101st amendment. The State also is denuded of the power to make an enactment in the nature of the Bihar Entertainment Tax Act, 1948 after the 101st Amendment. The repeal and the saving clause provided under the BGST Act does not inure to the benefit of the State since the enactment and the levy made by it cannot be sustained after the 101st amendment - Petition allowed.
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2023 (5) TMI 888
Condonation of delay in filing the application for refund - Refund of Excess Tax - time limitation - application rejected as the same is not made within 180 days. HELD THAT:- There is no dispute that vide assessment order dated 06.07.2016 and amount of Rs. 75,59,265/- (Rupees Seventy Five Lakh Fifty Nine Thousand Two Hundred Sixty Five Only) has been held to be payable as refund to the petitioner. There is also no dispute that the statute prescribes the procedure which is to be followed by the department in addressing the refunds. The provisions of the statute read with the Rules thus give power to the authorities to consider such application beyond limitation on such grounds and reasons mentioned as may be applicable. However, in the impugned order dated 29.08.2019 passed by the Superintendent of Taxes, Guwahati, Unit-A, there is no reference to any such grounds or reasons which are stated to have been furnished by the petitioner. It is not the submission of the respondent Department that no such grounds as contended by the petitioner, had been furnished before the Superintendent of Taxes for consideration of the application which was filed beyond limitation, explaining the circumstances under which the delay had occurred. In the opinion of this Court, where the first authority namely the Superintendent of Taxes, Guwahati, Unit-A in his order did not refer to any of the grounds submitted in explaining the delay that had occurred by the petitioner, perhaps there was no occasion for the revisional authority to consider the grounds and render a finding as to whether the same is sufficient or insufficient. Such power under the Act and the Rules is not bestowed upon the revisional authority. Rather it is the assessing authority who is conferred with the powers to grant or reject refund applications beyond the period prescribed upon such consideration of the grounds and reasons mentioned. In the facts and circumstances of the case, it is seen that there is no denial by the respondent department that grounds and reasons were furnished before the assessing authority. Rather From the impugned order dated 25.02.2021 passed by the Revisional authority, it is seen that certain explanations were furnished by the petitioner explaining the delay that had occurred. As such, it is evident that the assessing authority who was required to consider the explanations furnished explaining the delay that had occurred in filing any application for refund did not consider such grounds as the same is not discernable from the impugned order dated 29.08.2019 passed by the respondent No. 4. The apex Court in N Balakrishnan Vs M. Krishnamurthy, [ 1998 (9) TMI 602 - SUPREME COURT ] had considered the words sufficient cause . The Apex court held that the primary function of the Court is to adjudicate the dispute between the parties and to advance substantial justice. The time-limit fixed for approaching the Court in different situations is not because on the expiry of such time a bad cause would transform into a good cause. Rules or limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Condonation of delay is a matter of discretion of the Court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is not matter, acceptability of the explanation is the only criterion - A Court knows that refusal to condone delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the Court is always deliberate. The words sufficient cause under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice. This Court is of the view that as per the statute it is the assessing authority namely the Superintendent of Taxes, Guwahati, Unit-A, respondent No. 4, who is at the first instance required to consider the grounds furnished by the assessee and render its finding as to whether the same are sufficient explanations for the delay that had occurred. The said authority must also keep in mind that the refund which the petitioner has sought for has already been determined by an adjudicatory process by way of assessment order dated 06.07.2016 passed by the Superintendent of Taxes. Matter is remanded back to the respondent No. 4 to re-decide the issue within a period of four week from the date of receipt of certified copy of this order - Petition allowed by way of remand.
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2023 (5) TMI 887
Levy of tax - Direct Export Sales - Sales in the Course of Export - exempted under Section 5(1) and Section 5(3) respectively of the CST Act, 1956 - levy of tax on the only ground that the H forms and other related evidences were filed after passing of the Assessment Order as being contrary to the proviso to Rule 12(7) r/w Rule 12(10) of the CST (R T) Rules, 1957. Whether there are merits to consider the Writ Petition or not? - HELD THAT:- Admittedly the petitioner has not furnished Forms H and other connected evidence showing that he made Export Sales and Sales in the Course of Export before the assessment order was passed by the 2nd respondent. His submission is that due to the prevalence of Covid- 19 pandemic situations wherein a general ban was imposed by the Central and State Governments restricting the movements of the public, he could not submit the Forms before the 2nd respondent - In this context a perusal of the copy of original Assessment order filed along with the material papers shows, the impugned order was passed by 2nd respondent on 3.11.2020, It is an admitted fact that since March, 2020, the Covid-19 pandemic was in force and thereby the Central and State Governments restricted the movements of the general public. Learned Government Pleader has not disputed this fact and hence we can take Judicial notice of the same. There are substance in the submission of learned counsel for petitioner that due to the prevalence of the Covid- 19 pandemic, he could not file Forms H and other relevant material to establish that in deed he made exports sales. In Raj Trading Company Vs. State of Punjab [2 2013 (9) TMI 980 - PUNJAB AND HARYANA HIGH COURT ] in similar circumstances, the High Court of Punjab also having observed that the petitioner therein was in possession of H Form by the date of original assessment order and appellate order showing prima facie that the goods were exported out of the country, directed the appellate authority for adjudication of the matter afresh with respect to the forms H and C relied upon by the appellant. The Revised Assessment Order dated 09.03.2023 passed by the 1st respondent is set aside to the extent of the said authority refusing to accept the Forms H and other relevant material produced under section 5(1) and 5 (3) of CGST Act with a direction to consider those materials produced by the petitioner and afford an opportunity of hearing to the petitioner to establish the genuinety of those documents and after affording an opportunity of hearing to both parties, pass an appropriate order on merits afresh expeditiously. Petition allowed.
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Indian Laws
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2023 (5) TMI 886
Appointment of a Sole Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996. Contracts expressed in the name of the President of India - HELD THAT:- A contract entered into in the name of the President of India, cannot and will not create an immunity against the application of any statutory prescription imposing conditions on parties to an agreement, when the Government chooses to enter into a contract. We are unable to trace any immunity arising out of Article 299, to support the contention that for contracts expressed to be made by the President of India, the ineligibility of appointment as an arbitrator as contemplated under Section 12(5) of the Act, read with Schedule VII, will be inapplicable - there are no hesitation in rejecting the submission of the learned ASG that the contracts entered into by the Union of India in the name of the President of India are immune from provisions that protect against conflict of interest of a party to a contract, under Section 12(5) of the Act. Conflict of the Arbitration Clause with Section 12(5) read with paragraph 1 of the Seventh Schedule of the Act - HELD THAT:- In Perkins [ 2019 (11) TMI 1154 - SUPREME COURT ], this Court held that any person who has an interest in the outcome of the dispute would be ineligible to be an arbitrator. Naturally, such a person should not have the power to appoint a sole arbitrator. the arbitration clause which authorises the Secretary, Ministry of Home Affairs, whose relationship with Union of India is that of an employee, to nominate an officer of the Ministry of Law and Justice to act as a Sole Arbitrator, clearly falls within the expressly ineligible category provided in Paragraph 1 of Schedule VII, read with Section 12(5) of the Act. As the grounds of challenge to the appointment of an arbitrator under Section 12(5) of the Act operate notwithstanding any prior agreement to the contrary, we cannot give effect to the appointment of an officer of the Ministry of Law and Justice as an arbitrator. The submission of the learned ASG in favour of such an appointment is therefore rejected. Reliance on the decision in Central Organisation of Railway Electrifications - HELD THAT:- In Central Organisation of Railway Electrifications this Court has held that As held in Voestalpine Schienen GmbH [Voestalpine Schienen GmbH v. DMRC, [ 2017 (2) TMI 1239 - SUPREME COURT ], the very reason for empanelling the retired railway officers is to ensure that the technical aspects of the dispute are suitably resolved by utilising their expertise when they act as arbitrators. Merely because the panel of the arbitrators are the retired employees who have worked in the Railways, it does not make them ineligible to act as the arbitrators. In contrast, the arbitration clause in the present case enables a serving employee of the Union of India, a party to the contract, to nominate a serving employee of the Union of India as the Sole Arbitrator. Such an authorisation is clearly distinct from the arbitration clause in Voestalpine Schienen GmbH and Central Organisation of Railway Electrifications, and is in conflict with Section 12(5) of the Act. Ms. Justice Indu Malhotra, a former judge of this Court appointed as the Sole Arbitrator to adjudicate upon the disputes arising under and in connection with the Conditions of Tender entered into between the parties, subject to the mandatory disclosures under the amended Section 12 of the Arbitration and Conciliation Act, 1996 - the present application under Section 11(6) of the Arbitration and Conciliation Act, 1996 is allowed.
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