TMI Tax Updates - e-Newsletter
May 6, 2023

Case Laws in this Newsletter:

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

Articles

1. ITC can be claimed during revocation of cancelled GST registration

   By: Bimal jain

2. GST APPELLATE TRIBUNAL - PRINCIPAL BENCH AND STATE BENCHES

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Advisory for Timely Filing of GST Returns

Notifications

Customs

1. 33/2023 - dated 4-5-2023 - Cus (NT)

Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Supersession of the Notification No. 29/2023-Customs(N.T.), dated 20th April, 2023

2. 01/2023 - dated 4-5-2023 - CVD

Seeks to impose countervailing duty on imports of Saturated Fatty Alcohols of Carbon Chain length C10 to C18 and their blends originating in or exported from Indonesia Malaysia and Thailand for a period of 5 Years.

GST - States

3. 09/2023-State Tax - dated 24-4-2023 - Mizoram SGST

Extension of limitation under Section 168A of CGST Act

4. 08/2023-State Tax - dated 24-4-2023 - Mizoram SGST

Amnesty to GSTR-10 non-filers

5. 07/2023-State Tax - dated 24-4-2023 - Mizoram SGST

Rationalisation of late fee for GSTR-9 and Amnesty to GSTR-9 non-filers

6. 06/2023-State Tax - dated 24-4-2023 - Mizoram SGST

Amnesty scheme for deemed withdrawal of assessment orders issued under Section 62

7. 03/2023-State Tax - dated 24-4-2023 - Mizoram SGST

Extension of time limit for application for revocation of cancellation of registration

Money Laundering

8. S. O. 2119 (E) - dated 4-5-2023 - PMLA

Notifies Aadhaar authentication service of the Unique Identification Authority of India under section 11A of the Prevention of Money-laundering Act, 2002

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD/TPD/P/CIR/2023/65 - dated 5-5-2023

Testing Framework for the Information Technology (IT) systems of the Market Infrastructure Institutions (MIIs)

2. SEBI/HO/DDHS/DDHS_Div1/P/CIR/2023/66 - dated 4-5-2023

Additional requirements for the issuers of transition bonds

GST

3. Instruction No. 01/2023 - dated 4-5-2023

Guidelines for Special All-India Drive against fake registrations

Highlights / Catch Notes

Income Tax

• Supreme Court: Income Taxable in India Only for Indian Operations u/s 9(1), Not Fully Supported by DTAA Article 7.

  Case-Laws - SC : Income taxable in India - Income attributable to the operations carried out in India - Article 7 of DTAA with USA, may not really go to the rescue of the Revenue for the reason that in the contracting state, the entire income derived by the respondents, namely, USD/EURO 3 will be taxable. This is why Section 9(1) confines the taxable income to that proportion which is attributable to the operations carried out in India. - SC
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• Court Quashes Order Against Company Directors u/s 179 of Income Tax Act for Lack of Consideration.

  Case-Laws - HC : Liability of directors of private company - validity of order u/s 179 - The order which has been passed by the authority is without dealing with the basic elements of Section 179 of the Income Tax Act and the same being suffering from the vice of non-application of mind, we may deem it proper to quash the same, of course with liberty to the respondent authority to pass a fresh order - HC
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• Company Succession Without Member or Asset Change: Revaluation Not Taxable as Real Profit Under Current Tax Laws.

  Case-Laws - HC : Capital gains - Firm is succeeded by a company with no change either in the number of members or in the value of assets - Transfer by way of distribution of assets - the amount of revaluation of the land and building which was credited to the current accounts of the partners which was treated as loans to new companies - valuation of the assessee at market value, which was higher than the cost, resulted in the imaginary or notional potential profit out of itself and not any real profit or income which can be taxed. - HC
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• Assessee Fails to Justify Share Capital and Premium; Section 68 Addition Upheld Due to Lack of Evidence.

  Case-Laws - AT : Addition u/s 68 - share capital and share premium received - The assessee had sufficient opportunity to place the facts and also to explain the nature and source of alleged share capital and share premium by placing material evidence on record. However, the assessee miserably failed on this count. - AT
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• Doubtful Transaction: Unexplained Cash Credit u/s 68 Due to Lack of Business Activity or Expansion Plans.

  Case-Laws - AT : Unexplained cash credit u/s 68 - Genuineness of the transaction is in serious doubt because why some private limited companies would invest a huge sum into the share capital of a company having no regular business activity and no concrete plan for any expansion. - The assessee has failed to discharge its onus to explain the genuineness of the transaction - Additions confirmed - AT
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• Assessment Order Rectification Invalid: Issued After 4-Year Limit u/s 154; Ambiguities Favor Assessee.

  Case-Laws - AT : Validity of rectification order as barred by limitation - AO made additions after 4 years while passing rectification order u/s 154 - even if there be any ambiguity or doubt in drafting the assessment-order, it has to be resolved in favour of assessee and the revenue cannot take advantage of it for the simple reason that the AO, who is an officer of revenue, has drafted assessment-order. - AT
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• Assessing Officer's Role in Guiding Non-Residents on Foreign Income Not Subject to Indian Taxation.

  Case-Laws - AT : Duty of AO to Guide the Assessee - Considering the specific facts on record that the assessee is non resident the amount which the ld. AO has taxed is earned and sourced outside India does not confer the income tax on the said income which does not accrue or arise in India and levy of income tax on such income is does not arise. It is the duty of the ld. AO to guide the assessee who are complying voluntarily based on the email addressed to him and it should not be intention the ld. AO to tax the income which is not chargeable to tax in India. - AT
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Customs

• Appellant Seeks Refund of Excess Duty Paid Due to EDI System Error Under Notification No. 50/2017-Cus.

  Case-Laws - AT : Refund the excess duty paid - the appellant has paid the excess amount because of an error in EDI system whereby the benefit of Notification No. 50/2017-Cus., was not appended and the same was brought to the notice of the authorities concerned vide letter dated 23.01.2018 alongwith the claim for refund of the amount wrongly paid. In the facts of the case, the authority is duty bound to refund such amount as was ascertained by virtue of the reassessment. - AT
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• Customs Duty Concession Granted: Export Obligation Fulfilled, Bond and Guarantee Canceled, per Notification No. 64/2008-Cus.

  Case-Laws - AT : EPCG Scheme - Concessional rate of Customs duty - The Department has cancelled bond and bank guarantee after satisfying that the Export Obligation was fulfilled and EODC was produced and the Appellant has satisfied all the conditions of the Notification or the licence. Hence, both DGFT and Customs Department has come to the conclusion that the Appellant has fulfilled all the conditions of the Notification or the Licence. - they are eligible for concessional rate of duty as specified in Notification No. 64/2008-Cus - AT
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• Exemption Denied: Imported Silver Conductor Paste Must Be Consumed On-Site to Qualify for Duty Exemption.

  Case-Laws - AT : Exemption from CVD - imports of silver conductor paste - The Notification clearly hold that the exemption is only available if the goods are consumed within the factory of production. In the instant case the goods are imported and, therefore this condition is not satisfied. For this reason the benefit of notifications cannot be extended. - AT
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Corporate Law

• Supreme Court Overrules High Court: Section 140(5) Proceedings Against Auditors Continue Despite Resignation.

  Case-Laws - SC : Prosecution proceedings against the Auditor of the company - The High Court has materially erred in holding that on resignation of auditors – BSR & Deloitte and on appoint of new auditors, application under section 140(5) shall not be maintainable. Consequently, the High Court has erred in setting aside the order(s) passed by the NCLT/NCLAT by which the NCLT/NCLAT held that despite the resignation of the auditors, enquiry/proceedings under Section 140(5) shall be maintainable and/or continued. - SC
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• Special Court Summons Under Companies Act: Section 436 Overrides Criminal Procedure Code for Company Offences.

  Case-Laws - HC : Offence under Companies Act, 2013 - Jurisdiction - cognizance was taken by the Special Court and summons were issued - when the enacting part of the Section is clear, its scope cannot be cut down or enlarged by resort of non-obstante clause. Thus, it could safely be held that the provisions of Section 436 of the Companies Act will have over riding effect over the provisons of Code of Criminal Procedure, whenever an offence specified under the Companies Act is to be tried by Special Court. - HC
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• Court Clears Former Directors of Liability for 2014 Financial Reporting Defaults After Resignations in 1995 and 1998.

  Case-Laws - HC : Prosecution proceedings against the Director - Non-submission of financial statement within the stipulated time with registrar of companies - Admittedly, petitioners resigned w.e.f. 19.04.1995 and 05.05.1998. Much thereafter, alleged defaults have been committed. - petitioners made out their case for interference. Once, they resigned in the years 1995 and 1998, then they cannot be fastened with any liability for a period of 2014. - HC
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• NCLT New Delhi's decision to strike off company with significant assets deemed legally unsustainable by Appellate Tribunal.

  Case-Laws - AT : Restoration of the name of the Company - The Appellant Company is having substantial movable as well as immovable assets, therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, the order passed by the National Company Law Tribunal (New Delhi, Bench-II) as well as Registrar of Companies, NCT of Delhi & Haryana is not sustainable in law. - AT
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Indian Laws

• Supreme Court Affirms High Court: No Arbitration for Disputes Beyond Original License Agreement's Clause, Section 8 Inapplicable.

  Case-Laws - SC : Rejection of applications under Section 8 of the Arbitration and Conciliation Act, 1996 - There being no doubt about non-existence of arbitration agreement in relation to the entire subject-matter of the suit, and when the substantive reliefs claimed in the suits fall outside the arbitration clause in the original licence agreement, the view taken by the High Court does not appear to be suffering from any infirmity or against any principle laid down by this Court. - SC
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• Consumer Seeks Compensation for Faulty Haircut Service at Hotel Salon; NCDRC to Decide Based on Evidence Submitted.

  Case-Laws - SC : Consumer Protection - Fault in giving service of hair cut - saloon of the Hotel ITC Maurya - The respondent (complainent) if she has material to substantiate her claim may be given an opportunity to produce the same. Once deficiency in service is proved then the respondent is entitled to be suitably compensated under different heads admissible under law. Question is on what basis and how much. Let this quantification be left to the wisdom of the NCDRC based upon material if any that may be placed before it by the respondent - SC
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IBC

• CIRP Resolution Plan Approved Without Objections; No Basis for Authority to Challenge CoC Decision per Sections 30(2) & 31.

  Case-Laws - AT : Approval of Resolution Plan - CIRP - no pleading as to how the resolution plan goes against the requirement of Section 30(2) and Section 31 of the Code and hence there is no reason for the Adjudicating Authority to have interfered with the decision of the CoC in approving the resolution plan. - AT
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Service Tax

• CBEC Clarifies No Service Tax for Free Premises Use Under Mandap Keeper Service Category; No Charges, No Tax.

  Case-Laws - AT : Levy of Service Tax - Mandap Keeper Service - Complementary Service / Free of charge service - CBEC has clarified that in case of no charges/ rental is being paid i.e., the premises are given out free of cost to hold such function, there would be no service tax liability as the premises are given free of cost - No demand - AT
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• Corporate Guarantee Without Fees Not Taxable Service u/s 65B(44.

  Case-Laws - AT : Demand of service tax - providing services without consideration (free) to its associate companies - activity of giving corporate guarantee - The Show Cause Notice itself recites that the appellant has given the corporate guarantee on behalf of their group companies but has not charged any commission or interest or fees for providing the said corporate guarantee. - the question of the activity of extending corporate guarantee by the appellant to its associate companies cannot be called as service in terms of above provision in section 65 B (44) of the Act. - AT
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Central Excise

• Aswini Homeo Arnica Hair Oil remains classified as a 'medicament' under Chapter 30, not a 'cosmetic' under Chapter 33.

  Case-Laws - SC : Classification of goods - Aswini Homeo Arnica Hair Oil - AHAHO, merits classification as ‘medicament’ under Chapter 30 and not as ‘cosmetic or toilet preparations’ under Chapter 33 of the First Schedule to the Central Excise Tariff Act, 1985; and the change in tariff structure by way of amendment brought about in the year 2012 did not justify any re-look at the classification of the product in question. - SC
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• Appellants used dummy entities to evade duty and wrongfully claim SSI exemption; extended limitation period u/s 11A(1) applied.

  Case-Laws - AT : SSI Exemption - clubbing of the clearance of various entities which were found to be dummy - The appellants namely, have in fact suppressed their turnover under the cover of corporate veil to avail the exemption under notification no 8/2003-CE dated 01.03.2003, knowingly. Hence their intention to evade payment of duty by resorting to suppression, misstatement is established beyond doubt accordingly the extended period of limitation as provided by proviso to section 11A (1) is correctly invoked for demanding the duty in the impugned order - AT
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VAT

• 10-Year Delay Voids Cess Notice; Navi Mumbai Commissioner Can Proceed with 2014 Notice for 2012-2013 Period.

  Case-Laws - HC : Delay of 10 years for adjudicating the case - Liability of cess on bringing goods within the limits of Navi Mumbai Municipal Corporation - since the Commissioner failed to complete the assessment for the relevant years within a period of ten years of issuing the initial notice in Form-H, the notice dated 24.09.2019 is quashed. Since the period of ten years from issuance of notice in Form-H on 30.10.2014 for the year 01.04.2012 to 31.03.2013 is yet to expire, it is held that the Commissioner is free to proceed to complete the assessment expeditiously and in accordance with law. - HC
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Case Laws:

• GST

• 2023 (5) TMI 228
  Classification of services - rate of GST - Reimbursement of bonus - same GST rate as applicable for their main service of Canteen Service also for bonus reimbursement or not - taxable at 5% or 18%? - HELD THAT:- A combined reading of Section 15 and definition of consideration in the CGST/TGST Act, 2017 reveals that all payments made in respect of a supply constitutes the value of supply on which tax shall be levied under the charging section i.e., Section 9 according to the rates applicable in the notifications issued under the Act. If the applicant does not retain a portion of the Lump Sum amount received for payment of bonus in the form of commission then the entire bonus amount shall be included in the taxable value pertaining to the canteen services as the bonus is also paid by the service recipient in relation to the canteen services provided by the applicant to the recipient. Therefore the consideration received by the applicant as the value of supply including the amounts received in the name of bonus will be chargeable to tax at the rate of 2.5% under each of CGST - It is 5% on the entire bonus amount if no commission is taken/deducted, in the capacity as an intermediary, from the amount transferred by the service recipient. The applicant s point of view is that, they are taking the bonus consideration from service recipient which is meant to be paid to their employees, by acting as an intermediary, because of which they are issuing Invoice, for the bonus amount to be received, with GST Rate of 18%. If the applicant retains a portion of the Lump Sum amount received for payment of bonus, which is received from their service recipient to pay the same to their employees, in the form of commission then he is liable to pay GST at the rate applicable to Intermediary services on the commission retained and rest of the amount, after excluding the commission from the bonus, shall be included in the taxable value pertaining to the canteen services as the bonus is also paid by the service recipient in relation to the canteen services provided by the applicant to the recipient - It is 18% on the commission if he takes/deducts commission on the bonus amount as an intermediary and 5% on the rest of the bonus amount.

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• Income Tax

• 2023 (5) TMI 229
  Validity of Revision order u/s 263 - Order issued manually which does not bear the signature of the authority passing the order - no Document Identification Number (DIN) has been mentioned in the body of the impugned order which was in violation of Circular No.19 of 2019 of CBDT - HELD THAT:- A perusal of the copy of show-cause notice reveals that it does not bear DIN. Similarly the impugned order does not bear DIN. Therefore, in view of two decisions TATA MEDICAL CENTRE TRUST [ 2022 (7) TMI 1334 - ITAT KOLKATA] AND SMT. SUNITA AGARWAL [ 2022 (11) TMI 1348 - ITAT KOLKATA] the impugned order is not sustainable and it is quashed. As an undisputed fact that the impugned order u/s. 263 of the Act has been issued manually which does not bear the signature of the authority passing the order. From the perusal of the entire order, in its body, there is no reference to the fact of this order issued manually without a DIN for which the written approval of Chief Commissioner/Director General of Income-tax was required to be obtained in the prescribed format in terms of the CBDT circular. We also note that in terms of para 4 of the CBDT circular, such a lapse renders this impugned order as invalid and deemed to have never been issued. It is also important to note about the binding nature of CBDT circular on the Income-tax Authorities for which gainful guidance is taken from the decision in the case of CIT v. Hero Cycles [ 1997 (8) TMI 6 - SUPREME COURT] wherein it was held that circulars bind the ITO but will not bind the appellate authority or the Tribunal or the Court or even the assessee. Commissioner did not generate DIN either in the notice or in the impugned order, therefore, the impugned order is quashed and appeal of the assessee is allowed.

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• 2023 (5) TMI 227
  Income taxable in India - Income attributable to the operations carried out in India - Assessee is into business of providing electronic global distribution services to Airlines through what is known as Computerized Reservation System - In order to market and distribute the CRS services to travel agents in India, the respondents have appointed Indian entities and have entered into distribution agreements with them - Assailing the Judgment of the High Court, as argued learned Additional Solicitor General that the attribution of only 15% of the revenue as income accruing /arising in India within the meaning of Section 9(1)(i) read with Article 7 of the Treaty, was completely wrong. HELD THAT:- Under Explanation 1(a), what is reasonably attributable to the operations carried out in India alone can be taken to be the income of the business deemed to arise or accrue in India. What portion of the income can be reasonably attributed to the operations carried out in India is obviously a question of fact. On this question of fact, the Tribunal has taken into account relevant factors. Additional Solicitor General referred to Article 7 of the Convention between the Government of the United States of America and the Government of the Republic of India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income which is called in popular parlance as Double Taxation Avoidance Agreement . The above Article may not really go to the rescue of the Revenue for the reason that in the contracting state, the entire income derived by the respondents, namely, USD/EURO 3 will be taxable. This is why Section 9(1) confines the taxable income to that proportion which is attributable to the operations carried out in India. Therefore, we are of the view that the impugned order(s) of the High Court do not call for interference. Insofar as the second issue, namely, the question of permanent establishment is concerned, we are not going into the same, as we have concurred with the High Court on the first issue.

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• 2023 (5) TMI 226
  Liability of directors of private company - order u/s 179 made against the petitioner for pending tax dues of Pvt. Ltd.company - as argued no efforts undertaken to recover money from the Company itself and further non-recovery of said dues are not attributable to any gross neglect, misfeasance or breach of duty by the petitioner in the affairs of the Company and as such, impugned notice is vague, reflecting no such condition precedent - HELD THAT:- There is no discussion on the elements which are basic in nature for invoking jurisdiction under Section 179 of the Income Tax Act, there is no subjective satisfaction on such and additionally the notice itself is found to be vague and as such, apparently, it appears that the action is not sustainable in view of the settled proposition of law. The order which has been passed by the authority is without dealing with the basic elements of Section 179 of the Income Tax Act and the same being suffering from the vice of non-application of mind, we may deem it proper to quash the same, of course with liberty to the respondent authority to pass a fresh order after issuing proper notice to the petitioner which must indicate briefly the steps to be taken by the department to recover the tax dues from the private limited company in default and its failure to recover is possible to be attributed to the petitioner. We may also deem it proper to quote the proposition of law laid down by the Hon ble Apex Court on the issue of proper notice being noticed while initiating the step. We hereby allowed the petition by quashing and setting aside the notice as well as order passed by the respondent authority and while allowing the petition we reserve liberty for respondent by observing that it shall be open for the respondent to issue fresh notice for the purpose of proceedings against the petitioner under Section 179 of the Income Tax Act and shall pass a fresh order in accordance with law on the subject in question, if it deems fit.

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• 2023 (5) TMI 225
  Reopening of assessment u/s 147 - Undisclosed capital gains - Firm is succeeded by a company with no change either in the number of members or in the value of assets - Transfer by way of distribution of assets - case of the revenue is that the amount of revaluation of the land and building which was credited to the current accounts of the partners which was treated as loans to new companies amounted to accrual of consideration or benefit to the partners which was a transfer and therefore the firm is liable to pay tax on long term capital gain and short term capital gain - whether Tribunal erred in holding that the reassessment was a change of opinion without noting the facts that the AOnever raised any direct question regarding why it should not be held that the conversion of land and building by the assessee from stock-in-trade to capital asset followed by revaluation of land and building should not be taken as an accounting technique adopted to evade tax liability? - Tribunal held that there was change of opinion involved in the reopening the case of the assessee HELD THAT:- On facts it has been established that revaluation of the fixed assets did not give rise to any profit to the partnership firm and there is no accrual of benefits in the hands of the partners and if that be so can there be any tax liability in the hands of the firm as well as in the hands of the partners. The learned tribunal after noting the accounting treatment followed by the assessee on facts found that no profit allotment on account of revaluation has accrued or arisen to the assessee firm and the revaluation of fixed asset did not give any profit to the firm and the revaluation was done so that the value of the fixed assets in the balance sheet would match the market price and the object behind such revaluation is to avail loans from banks and financial institutions by showing market price of the fixed assets in the balance sheet. Thus, in our view, the learned tribunal rightly rejected the contention raised by the revenue and also rightly noted the decision of Sanjeev Woolen Mills Versus Commissioner of Income Tax [ 2005 (11) TMI 26 - SUPREME COURT] wherein it was held that valuation of the assessee at market value, which was higher than the cost, resulted in the imaginary or notional potential profit out of itself and not any real profit or income which can be taxed. As decided in Ram Krishanan Kulwant Rai Holdings Private Limited. [ 2019 (8) TMI 58 - MADRAS HIGH COURT] court found that the CIT(A) did not take into consideration the legal issue involved i.e. when the firm is succeeded by a company with no change either in the number of members or in the value of assets with no dissolution of the firm and no distribution of the assets with change in legal status alone, whether there is transfer as contemplated under Section 2(47) and Section 45(4) of the Act. The legal position having been well settled that when vesting takes place, it vests in the company as they exist. Therefore, unless and until the first condition of transfer by way of distribution of assets is satisfied, Section 45(4) of the Act will not be attracted. Therefore, in the facts and circumstances of the case, we find that there is no transfer by way of distribution of assets. We are of the definite view that the learned tribunal rightly dismissed the appeal filed by the revenue.

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• 2023 (5) TMI 224
  Reopening of assessment u/s 147 - Capital gain - Petitioner has sought exemption in respect of the entirety of the amount, capital gain arising out of transfer of shares received by it and has not offered the interest thereupon to tax - HELD THAT:- In the impugned order Assessing authority has rightly concluded that there is no capital gains that arises from the transaction since the entire transaction was a buyout of shares by virtue of order of the Apex Court. The officer, in this regard refers to the statement of the Apex Court that the transaction does not amount to shares being transferred inter vivos, nor can the payment for the shares be treated as deemed dividend . Thus the clear inference that the officer has arrived at, is that there can be no instance of capital gain tax nor any levy u/s 2 (22) (e) of the Act dealing with deemed dividend. On the liability to interest on the sum of Rs.18.62 Crores, it is a timing difference, and the officer prima facie believes that the interest must be taxed in AY 2019-20 relatable to the year when the order was passed by the Apex Court on the ground of accrual. The petitioner would suggest that the receipt had been delayed and it only after a few years that the amounts had been received, such submission involves the appreciation of facts and are best considered by the authorities. Argument of petitioner to the effect that the taxability of the receipt has not been put to it in the show-cause notice is also devoid of merit, since the assessing authority has raised these issues specifically in the penultimate paragraph of the Annexure to notice u/s 148A(b). A notice u/s 148A(b) is not expected to be as detailed as order of assessment and it would suffice that the issue on the basis of which the re-assessment is proposed is outlined broadly therein. It is for the assessee/petitioner to respond on all aspects of the matter and seek clarifications, where it so requires.

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• 2023 (5) TMI 223
  Disallowance on account of freight and exchange variation etc. on import and export of consignment of Rubber Process Oil by treating it as fine and penalty - Addition u/s 37(1) on the ground that assessee had imported the product which is prohibited by law, hence such expenses claimed by the assessee are not allowable - HELD THAT:- Rubber process oil imported by the assessee was freely importable as on the date of placing the order and also as on the date of the cargo reaching the sea-port in India. Since the customs authorities were not releasing the rubber process oil imported by the assessee and was further required for testing the samples by Central Research Chemical Laboratory as the samples under test does not match with aromatic oil mentioned in IS 15078:2001 and to avoid contesting the matter further the assessee chose to re-export the rubber process oil without incurring further demurrage charges and to avoid any further litigation the consignment was re-exported and also incurred huge loss on such re-export. All these goes to show that the expenses incurred by the assessee, for import of rubber process oil, loss on price fluctuation, freight and retention charges cannot be said that these expenses were incurred for infraction of law. These expenses were incurred in the course of carrying on business of the assessee and they are allowable as deduction u/s 37(1). We direct the AO to delete the following expenses Loss on price fluctuation, Freight and Detention charges. Expenses incurred towards customs joining fee and customs penalty it is evident from the computation of income for the assessment year 2014-15 furnished by the assessee That the assessee itself has disallowed while computing the loss from business and, therefore, the said expenses cannot be disallowed once again. Thus we direct the AO to delete the disallowance u/s 37(1) while computing the income of the assessee. Ground raised by the assessee is allowed.

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• 2023 (5) TMI 222
  Delay in filing the first appeals ranging from minimum of 1973 days to maximum of 2881 days - whether such a long delay deserves condonation? - HELD THAT:- As it is relevant to note the judgment of the Hon ble High Court of Bombay in Vijay Vishin Meghani Vs. DCIT Anr [ 2017 (10) TMI 248 - BOMBAY HIGH COURT] held that none should be deprived of an adjudication on merits unless it is found that the litigant deliberately delayed the filing of appeal. Similar to the cases under consideration, in that case too, delay of 2881 days crept in due to improper legal advice. Hon ble Supreme Court in Anil Kumar Nehru [ 2019 (1) TMI 1075 - SC ORDER] held that : `It is a matter of record that on the identical issue raised by the appellant in respect of earlier assessment, the appeal is pending before the High Court. In these circumstances, the High Court should not have taken such a technical view of dismissing the appeal in the instant case on the ground of delay, when it has to decide the question of law between the parties in any case in respect of earlier assessment year. We are confronted with a situation in which the question of law involved in the present set of appeals has already been decided in favour of the assessee. Under these circumstances, we condone the delay crept before the ld. CIT(A). Levy of fee u/s.234E - intimation u/s 200A - TDS returns for the respective quarters were filed belatedly - imposition of fee for the period prior to 01-06-2015 - HELD THAT:- Section 200A deals with processing of statements of tax deducted at source. Clause (c) of section 200A(1) was inserted by the Finance Act, 2015 w.e.f. 01-06-2015 providing for the levy of fee u/s.234E of the Act. In that view of the matter, such fee u/s.234E can be levied only for the default committed after 01-06-2015 and not prior to that. In Olari Little Flower Kuries Pvt. Ltd. Vs. Union of India and others [ 2022 (2) TMI 1061 - KERALAHIGH COURT] has affirmed the non-imposition of fee for the period prior to 01-06-2015. Similar view has been taken in Jiji Varghese [ 2022 (3) TMI 1291 - KERALA HIGH COURT] holding that no interest u/s 234E can be imposed for the periods of the respective A.Ys. prior to June 1, 2015 - Decided in favour of assessee.

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• 2023 (5) TMI 221
  Addition u/s 68 - unexplained share capital and share premium - primary onus to prove - HELD THAT:- Equity shares have been allotted by both the assessee companies to four share subscribers of which two namely Dreamz Pbc Web Length Pvt. Ltd. and Dreamz Wealth Consultancy Pvt. Ltd. which prima facie seems to be group companies CIT(A) has deleted the additions considering the replies filed by the assessee. Before moving further, since Rs. 9 lakh each has been received by M/s. Dreamz Life Care Nursing Diagnostic Centre Pvt. Ltd. from its two sister concerns we find no justification in the action of ld. AO making the said addition since they are group companies and the investments have been made at the face value of Rs. 10/- without paying any premium and transactions carried out through banking channel and it can be safely concluded that the assessee has been able to explain the said sum of Rs. 18 lakh received from its two sister concerns for the business purposes which, thus, do not call for any addition u/s 68 of the Act and to this extent, we confirm the finding of ld. CIT(A). Addition made u/s 68 of the Act regarding share capital and share premium received from received from two concerns namely M/s. Blossom Vinimay Pvt. Ltd. and M/s. Baliraja Distributors Pvt. Ltd. - As we notice that sufficient opportunities were granted to the assessee and except filing the financial statement, he was unable to discharge its onus to explain the nature and source of the alleged sum received against issue of equity shares Section 68 of the Act is invoked if any sum is found credited in the books of an assessee for which the assessee either does not offer any explanation about the nature and source thereof or the explanation offered by him is not found to be satisfactory in the opinion of the AO. In the given case, though the assessee has given the explanation by filing the financial statements of the share applicants but they are in itself not sufficient to satisfy ld. AO as well as ld. CIT(A) and even we are also not satisfied with the nature and source of the alleged credit. Before us the assessee has even not filed the audited financial statement of the assessee company. Merely proving the identity of the share subscribers and to some extent creditworthiness by making the investment from accumulated reserve and surplus cannot suffice the purpose. To cross the hurdle of provisions of Section 68 which requires that the explanation if any filed by the assessee regarding nature and source should be sufficient to satisfy ld. AO and since the Tribunal is the last fact-finding body, the assessee had sufficient opportunity to place the facts and also to explain the nature and source of alleged share capital and share premium by placing material evidence on record. However, the assessee miserably failed on this count. We, thus, find merit in the exhaustive working of ld. AO who after having provided sufficient opportunity to the assessee came to a conclusion that the assessee companies failed to discharge the primary onus casted upon it to prove the genuineness of the transaction of equity share capital and share premium received from two share subscribers who are not having any regular business, having meagre income and failing to prove the genuineness of the said transaction. We, partly reverse the finding of ld. CIT(A) and confirm the addition made u/s 68 in the case of the assessee. Decided against assessee partly.

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• 2023 (5) TMI 220
  Penalty u/s 271(1)(c) - furnishing inaccurate particulars of income - capital gain on account of the applicability of section 50C - HELD THAT:- As regards the capital gain on account of the applicability of section 50C of the Act, the assessee has already showed the income in response to the notice issued u/s. 148 - assessee also emphasized that the difference is less then 10 % as changed in the law and even though the assessee has paid the tax and now in accordance in the change in price range the assessee should get the benefit at least in the levy of penalty based on the decision of CIT Vs. Vatika Township [ 2014 (9) TMI 576 - SUPREME COURT] beneficial provision should be read liberally. The bench also noted that decision relied upon by the lower authority are having the different facts and are not applicable to the facts of this case. As regards the balance addition made on account of the meager amount and on account of difference of opinion only. As referring to case of CIT Vs. Reliance Petroproducts Private Limited [ 2010 (3) TMI 80 - SUPREME COURT] we vacate the levy of penalty u/s. 271(1)(c) of the Act - Appeal of the assessee is allowed.

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• 2023 (5) TMI 219
  Revision u/s 263 by CIT - claim of rent expenses - HELD THAT:- We find the assessee explained that it has multiple offices and warehouses in multiple cities and all these offices and warehouses were obtained on rental from third parties on which assessee had deducted TDS u/s. 194I - As noted that the assessee furnished copies of rental contracts in soft copy format - it is also contended all these rental agreements were produced for verification during the course of scrutiny proceedings and the AO made verification, but due to multiple number of contracts, the AO did not refer the same in the record. It is pertinent to note that the AO verified the deduction of TDS on rental expenses and found nothing adverse to the details submitted in the soft copy format in Annexure-4 and also in respect of TDS of all quarters. Having entire details regarding the rent expenses vide Annexure-4, the Pr. CIT did not venture to examine the same, but however, simply directed the AO to conduct inquiries, in our opinion, is not justified as when the details are submitted in response to the show cause notice u/s. 263 - it is incumbent upon the Pr. CIT to examine such details and give specific direction. The order of Pr. CIT in revising the order of AO in respect of allowance of deduction under rent expenses is not maintainable for the reason the order of AO cannot be held to be erroneous, thus, it is not prejudicial to the interest of Revenue. Freight outward expenses - We note that a provision is made by an assessee as obligation to pay as a result of past event. To meet the said expenditure the assessee can make provision to settle the obligation basing on a reasonable estimation of amount to meet that payment of obligation. In the present case,we find no details of payment were furnished before us. Therefore, we find force in the arguments of DR in supporting the order of Pr. CIT in restoring the said issue to the file of AO for his fresh verification. No infirmity in the order of Pr. CIT in revising the original assessment order as erroneous and prejudicial to the interest of Revenue to the extent of freight outward expenses - Accordingly, the order of Pr. CIT is upheld in this aspect. Appeal of assessee is partly allowed.

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• 2023 (5) TMI 218
  Unexplained cash credit u/s 68 - identity and creditworthiness of the share applicants and genuineness of the transaction not proved - HELD THAT:- Section 68 of the Act is invoked if any sum is found credited in the books of an assessee for which the assessee either does not offer any explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of the AO. In the given case, though the assessee has given the explanation by filing the financial statements of the share applicants but they are in itself not sufficient to satisfy ld. AO as well as ld. CIT(A) and even we are also not satisfied with the nature and source of the alleged credit. Genuineness of the transaction is in serious doubt because why some private limited companies would invest a huge sum into the share capital of a company having no regular business activity and no concrete plan for any expansion. The assessee has failed to discharge its onus to explain the genuineness of the transaction as to why the share applicants have paid a share premium of Rs. 190/- on the equity shares having face value of Rs. 10/- of a company which has poor track record of earning profits as well as poor turnover. Where the assessee has failed to discharge its primary onus casted upon it to explain the genuineness of the transaction and the explanations offered by the assessee are not sufficient to prove the genuineness of the receipt of share capital and share premium, we are not inclined to make any interference in the well-reasoned finding of ld. CIT(A) confirming the addition made u/s 68 - effective grounds of appeal raised by the assessee are dismissed.

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• 2023 (5) TMI 217
  Capital gain computation - Deduction u/s 54 - Disallowing the cost of improvement made to the building in 1992 - CIT(A) confirming the action of AO in not allowing the benefit of cost of improvement as claimed by assessee - HELD THAT:- It can be appreciated from the order of ld. AO that he has specifically mentioned that with respect to cost of improvement of the property, the assessee has provided the valuation report and based upon the same value of land at Rs. 17,40,000/- and value of building at Rs. 1,10,000/-, total Rs. 18,50,000/- is accepted and based upon the half share of assessee, the same was taken at Rs. 9,25,000/-. There appears to be no justification in accepting the cost of improvement provided by the valuer for improvements done during 1982 whereby 685 sq. ft. was added on the 2nd floor. It is quite unreasonable to expect production of bills and invoices as assessee along with brother has inherited the property, in 2009 on the death of their father. Thus, this ground no. 1 and 2 are allowed with direction to the Ld. AO to take into consideration the cost of improvements mentioned in the valuation report. Deduction u/s 54 - AO committed basic error in combining the share of both brothers and proportionately calculating the share of the assessee in context to the share left with the assessee in furtherance of Joint Development Agreement with builder. AO while giving the benefit of Section 54 considered the fact that as per the sale deed 67.5% ownership rights have been transferred to the builder for Rs. 5,50,00,000/- and what remained with the assessee is 33.5% and accordingly proportionate value of 32.5% being the cost of new property u/s 54 was arrived at 2,64,81,481/- What Ld. AO missed was the fact that the assessee on the basis of agreement with the builder had got entire basement, entire ground floor, 1/4th portion of entire stilt area including space for parking, space for one utility with common WC also in the new construction. The 32.5% undivided, indivisible and impartibly ownership rights in the said plot of measuring 300 square yards was the share in the land alone. Which was not transferred and was retained in favor of the assessee while the two brothers jointly sold 67.5% of the land. Cost of new property however is not the cost of share in the plot alone but all the other constructed and covered area received by the assessee. Thus, for the purpose of Section 54 of the Act, mere value of 32.5% ownership rights on the proportionate basis of share consideration of Rs. 5,50,00,000/- is not correct and the cost of new property has to be assumed to be Rs. Rs. 3,57,50,000/- being the value of interests and share of the assessee in the new construction, as per the collaboration agreement and the sale deed terms. Thus, the bench is inclined to sustain the ground no. 3. Appeal of assessee allowed.

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• 2023 (5) TMI 216
  Penalty u/s 271(1)c) - assessee company has gone under liquidation - whether liquidation proceedings have over riding effect over the claim of the revenue - HELD THAT:- The record shows corporate Insolvency Resolution Process is pending before NCLT after order dated 14.11.2017. In assessee s own case Hon ble Supreme Court while deciding Civil Appeal [ 2020 (7) TMI 760 - SC ORDER] disposed of the appeals without adjudicating anything on merits. Thus, in the light of provisions of Insolvency and Bankruptcy Code, 2016 and the aforesaid orders in the case of assessee, the claim of revenue arising out of the proceedings under the Act have become infructuous. In the light of aforesaid, the appeal and cross objection are dismissed being infructuous.

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• 2023 (5) TMI 215
  Reopening of assessment u/s 147 - assessee was one of the beneficiary of Client Code Modification (CCM) by some broker - reason to suspect v/s reason to believe - HELD THAT:- We find that the reasons recorded by the ld AO for reopening of the assessment in the instant case are very vague without having any live link to form a reasonable belief that the income of the assessee had escaped assessment. The reasons recorded and the assessment order only talk about modus operandi how the client code modification facility could be misused by some broker. Nowhere, neither the assessee nor its brokers were even impleaded in the said reasons. The reasons recorded only gives way to reason to suspect and not reason to believe . The very same issue was even subject matter of adjudication of this tribunal in the case of Stratagem Portfolio (P) Ltd [ 2020 (9) TMI 813 - ITAT DELHI] as held there is no material to infer that such client code modification has been done with malafide purpose of shifting of the profit or evasion of the tax. There is no material before the Assessing Officer to form such a belief that income had escaped due to such client code modification and thus there is no live link between the material before the Assessing Officer and inference made. Thus, we have no hesitation in quashing the reassessment proceedings as they are not sustainable in the eyes of law. Decided in favour of assessee.

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• 2023 (5) TMI 214
  Exemption from income tax - status of the assessee - local authority or Artificial Juridical Person - SCN as why assessment be not completed in the status of Artificial Juridical Person in view of the amendment in provisions of section 10(20) wherein assessee cannot be treated as a Local Authority - HELD THAT:- From Hon ble Jurisdictional High Court case M/S. N.S. COMMITTEE [ 2018 (1) TMI 1712 - ALLAHABAD HIGH COURT] we hold that the issue in dispute stands squarely covered by the said decision. The impugned disputes have been accepted by the ld. AO in A.Y. 2017-18 in assessee s own case accepting the stand of the assessee. Similarly CIT(A) also had accepted the stand of the assessee for the A.Y. 2015-16 and 2016-17 on identical facts and circumstances, which had attained finality as no appeals were preferred by the revenue before us for those years. We hold the assessee to be a local authority and its receipts are not chargeable to tax in the facts and circumstances of the instant case. Accordingly, the grounds raised by the assessee are allowed.

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• 2023 (5) TMI 213
  Revision u/s 263 - treatment of VAT remission as not eligible for deduction u/s 80IE - HELD THAT:- For CIT while invoking the provision of section 263, both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. We find that the issue in the present case relating to allowability of claim of deduction u/s 80IE of the Act is covered by the judicial precedent referred above. Accordingly, in respect of issue raised by the ld. PCIT in respect of VAT Remission in the revisionary proceedings, no action u/s 263 of the Act is justifiable which in our considered view cannot be sustained by respectfully following the decision of the Hon ble Supreme Court Meghalaya Steels Ltd [ 2016 (3) TMI 375 - SUPREME COURT] as well as Hon ble Jurisdictional High Court Meghalaya Steels Ltd [ 2010 (9) TMI 679 - GAUHATI HIGH COURT] We, therefore, quash the impugned order u/s 263 of the Act and allow the grounds raised by the assessee.

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• 2023 (5) TMI 212
  Reopening of assessment u/s 147 - Disallowance of deduction u/s 80P(2)(d) in respect of income earned from deposits kept with the co-operative banks i.e. the Nationalized banks - HELD THAT:- Reassessment proceedings cannot be sustained, firstly, due to the reason that reassessment proceeding are based on mere change of opinion , secondly, no disclosure of full and true material facts by the assessee before the assessing officer, has not been substantiated by the Assessing officer, thirdly, there being no internal or external material to trigger the reopening of assessment or for recording the reasons to believe that income escaped assessment, the action is a kind of review of assessment already completed, for which the AO is not permitted. Hence, the reassessment proceeding u/s 147 is quashed as void ab initio. The ground of the appeal of the assessee are accordingly allowed. Deduction u/s 80P(2)(d) for interest from other than cooperative bank i.e nationalized bank - Interest from short term deposits with scheduled bank has been held as eligible by the Tribunal Shri Laxmi Narayan NagriSahkari Pat Sansthan Maryadait [ 2015 (8) TMI 1085 - ITAT PUNE ] and Gunja Samabay Krishi Unnayan Samity Ltd. [ 2023 (1) TMI 783 - CALCUTTA HIGH COURT ] under section 80P(2)(a)(i) of the Act and not under the section 80P(2)(d) - We are of the view that the Ld. CIT(A) has not adjudicated the issue in dispute of eligibility of deduction of interest from scheduled bank u/s 80P(2)(d), therefore the assessee should be given one more opportunity to appear before the Ld CIT(A) so that he can give his finding on the matter. We feel it appropriate to restore this issue back to the file of the Ld. CIT(A) for deciding after providing adequate opportunity of being heard to the assessee. Ground of appeal of the assessee is accordingly allowed for statistical purposes. Penalty u/s 272A - non-compliance on the part of the assessee for various notices issued u/s 142(1) - HELD THAT:- Assessee could not comply with the issue of notices due to the reason that the authorized representative of assessee was occupied in regulatory compliance on some occasions and on one occasion, he could not respond due to medical emergency. In our opinion, the assessee should not be penalized for any bonafide non-compliance on the part of the authorized representative of the assessee. The assessee has duly explained the reasons for non-compliance. In our opinion, the failure in compliance to the notices is not deliberate on the part of the assessee - We direct to delete the penalty levied u/s 272A of the Act by the AO. Addition of other receipts shown under the head income from other sources - HELD THAT:- Ultimately in the assessment order, the Assessing Officer has assessed income u/s 56 of the Act in respect of interest earned from deposits with bank and after reducing the corresponding expenses he made addition - Therefore, no addition has been made by the Assessing Officer in respect of other receipts and therefore, the ground No. 2 raised by the assessee being infructuous, same is rejected.

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• 2023 (5) TMI 211
  Penalty u/s. 271(1)(c) - Non specification of clear charge - revised returns filled in response to notice issued u/s. 153A - HELD THAT:- There is no dispute that in response to notice issued u/s. 153A of the Act, the Assessee had filed revised returns of income declaring more income than what was declared in the original returns of income. It is further observed, in the course of assessment proceedings, AO made thorough verification of the returns of income and ultimately accepted the income declared by the Assessee. AO has not mentioned the exact charge for which he intends to impose penalty u/s. 271(1)(c) of the Act. Even, in the show cause notice issued u/s. 274 read with sec. 271 AO has not specified under which limb he intended to impose penalty. AO has not established on record that either there is concealment of income or furnishing of inaccurate particulars of income by the Assessee. This is so because, neither he has referred to any incriminating material found as a result of search indicating concealment of income by the Assessee nor there is any adverse inference drawn by the AO in the assessment orders resulting in variation in income declared by the Assessee. Thus, in our view, the Revenue has failed to establish either concealment of income or filing of inaccurate particulars of income by the Assessee - Decided in favour of assessee.

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• 2023 (5) TMI 210
  Validity of rectification order as barred by limitation - AO made additions after 4 years while passing rectification order u/s 154 - HELD THAT:- On perusal of the show-cause notice u/s 154 dated 30.11.2016 and the final order u/s 154 dated 07.05.2018 we find that the show-cause notice as well as final order talk of rectification of intimation dated 10.04.2014 and not of assessment-order dated 31.03.2014. Thus, viewed from 10.04.2014, the rectification-order dated 07.05.2018 is within the 4 years time-limit prescribed in section 154(7) and there would be no illegality. Therefore, to ascertain correct state of affairs, we confronted the Ld. AR about the details of intimation dated 10.04.2014 but the Ld. AR could not spell out satisfactorily. Hence, in absence of clear details coming before us, we are not satisfied with the claim projected by assessee in this ground; resultantly we dismiss this ground. Quantum of disallowance - AO has rightly made an addition @ .5% of the total expenditure AND mention of 5% by AO in the assessment-order is a mistake - HELD THAT: - Fi rstly we observe that before making the impugned disallowance, the AO show-caused the assessee to make a reasonable amount of disallowance. Thus, the thrust of AO was on amount and that too reasonable . Secondly , we observe that there was a disallowance of Rs. 3,00,000/- of similar nature in AY 2012-13, which is very close to Rs. 2,68,197/- and far distant from Rs. 26,83,197/-. This shows that the reasonable amount of disallowance could be Rs. 2,68,197/- only. Ld. DR is not able to place any cogent evidence before us to demonstrate that the AO wanted to make disallowance as high as 5%. Lastly, we are of the view that even if there be any ambiguity or doubt in drafting the assessment-order, it has to be resolved in favour of assessee and the revenue cannot take advantage of it for the simple reason that the AO, who is an officer of revenue, has drafted assessment-order. There was no mistake in the quantum of disallowance made by AO in assessment-order. Consequently, we quash further addition made in rectification-order. The assessee succeeds in this ground.

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• 2023 (5) TMI 209
  Rectification of mistake u/s 154 - Income chargeable to tax in India - period of stay in India - entire income of the appellant accrued, earned and received outside India (i.e., Kenya) - whether appellant being a non-resident as per section 5 of the Act, is not liable to pay tax on income earned outside India? - Whether CIT (A) and Ld. AO has erred in not appreciating the undisputed fact that the Appellant was not required to pay taxes in India, and the income disclosed by the Appellant was clearly a mistake visible on the record, making it eligible for rectification? - Failure to file revised return - AO dismissed the rectification application filed by the assessee on ground that the assessee has not disputed that the adjustment made u/s 143(1) HELD THAT:- The Bench noted it would be two technical for non-resident Indian to go into the intricacy of Indian income tax once the assessee has fairly moved an application u/s 154 of the Act. The ld. AO should have guided the non-resident and have passed the order on merits. CIT(A) has dismissed the appeal of the assessee only on the reason that the scope of section 154 of the Act is very limited and have not entertained the appeal of the assessee on merits considering the oral all fact and peculiarity of the case. Considering the specific facts on record that the assessee is non resident the amount which the ld. AO has taxed is earned and sourced outside India does not confer the income tax on the said income which does not accrue or arise in India and levy of income tax on such income is does not arise. It is the duty of the ld. AO to guide the assessee who are complying voluntarily based on the email addressed to him and it should not be intention the ld. AO to tax the income which is not chargeable to tax in India. Since, we have considered the arguments of the ld. DR that the issue on merits that whether the income shown on head salary is in fact received outside India is not decided under the order in dispute before us i.e. u/s 154 of the Act. We direct the ld. AO to call for the details of the salary from the assessee and determined the fact as to whether considering the facts and circumstances of the case and salary income is chargeable to tax into or not. At the same time assessee is directed to place all the relevant material to decide about the taxability or otherwise of the income that he has earned. In terms of these observations, the appeal of the assessee is allowed for statistical purpose.

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• 2023 (5) TMI 208
  Exemption u/s 11 - assessee s income from running of non recognized courses by Women Training Institute ( WTI ) computed is not education within the meaning of section 2(15) - HELD THAT:- The income from unrecognized courses has been declared in the return (for AY 2012- 13) on which tax has also been paid. It is also not disputed by the Ld. CIT(A) and in fact following the decision [ 2016 (8) TMI 1588 - DELHI HIGH COURT] in the assessee s own case, he has directed the Ld. AO to grant exemption under section 11 along with consequential benefits. CIT(A) denied the assessee refund of tax paid on the said income declared by the assessee in its return filed on 27.09.2012 solely on the basis of Hon ble Supreme Court s decision in Shelly Products Another [ 2003 (5) TMI 4 - SUPREME COURT] - To say the least the Ld. CIT(A) misapplied the decision (supra) of the Hon ble Supreme Court to the facts of the assessee s case in which facts were altogether different - CIT-A misdirected himself in denying the assessee s claim of refund of taxes paid by it relatable to the impugned income exempt under section 11 of the Act. Needless to say that Article 265 of the Constitution mandates that no tax shall be levied or collected except by authority of law. If tax has been paid in excess, same has to be refunded to the assessee. Accordingly, we set aside the order of the CIT(A) in so far it relates to the issue of denial of refund of tax paid on the returned income and direct the Ld. AO to grant refund in accordance with law.Appeal of the assessee is allowed.

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• Customs

• 2023 (5) TMI 207
  Smuggling - Seeking release of goods - Hublot Big Bang watch marking 142651 and Bvlgari Serpenti watch - the Revenue has not released the goods to the petitioner as yet (as ordered by the court) - HELD THAT:- Mr Harpreet Singh, learned counsel appearing for the Revenue, submits that the Revenue has preferred a Revision Petition before the Revisional Authorities, which is pending. He submits that in view of the pendency of the said proceedings, the goods in question have not been released. However, he has been unable to point out any provision in the Customs Act, which entitles the Revenue to retain the goods after the concerned party has paid the redemption fine as well as the penalty as determined. Merely because the Revenue seeks to challenge the order passed by the Appellate Authority is no ground for non-compliance of the said orders. The respondents are directed to handover the goods in question to the petitioner (within a period of two working days) as there are no justification for the respondent to withhold the release of the said goods - petition allowed.

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• 2023 (5) TMI 206
  Refund the excess duty paid - rejection on the ground of time limitation - refund claim has been filed beyond one year from the date of reassessment dated 24.02.2018 - Section 27 of the Customs Act - HELD THAT:- The authorities actually reassessed the bill of entry on 24.02.2018 and found that the appellant had paid excess duty of Rs. 3,84,921/-, it was therefore obligatory on the part of the authority to refund the said excess amount recovered from the appellant in terms of the prayer made by them for reassessment as well as refund of excess duty amount. The judgement cited by the learned Counsel for the appellant in Wolkem India Ltd., vs. Commissioner of Customs, Tuticorin [[ 2019 (8) TMI 1044 - CESTAT CHENNAI] ] wherein on similar facts a contention was raised that in view of deletion of words in pursuance of an order of assessment in Section 27 of the Customs Act, 1962 with effect from 08.04.2011, the production of assessment order was not necessary, the Tribunal upheld the contention observing that nowhere in Section 27 it has been prescribed that the claimant should obtain either an order of assessment or reassessment as a condition precedent for claiming refund, particularly post 2011 amendment, that condition having been done away with. The letter dated 23.01.2018 whereby the prayer for reassessment and refund of excess duty paid was made has to be treated as the date on which the refund claim has been made and therefore the same is within the period of limitation of one year as prescribed under Section 27 of the Customs Act. After the amendment in 2011, it is no longer necessary for an assessment or reassessment order to be made and the refund can be considered under the provisions of Section 27 of the Act. Here, the appellant has paid the excess amount because of an error in EDI system whereby the benefit of Notification No. 50/2017-Cus., was not appended and the same was brought to the notice of the authorities concerned vide letter dated 23.01.2018 alongwith the claim for refund of the amount wrongly paid. In the facts of the case, the authority is duty bound to refund such amount as was ascertained by virtue of the reassessment. The authorities below have wrongly arrived at the decision that the refund claim was made by the appellant on 29.04.2019 and the same was barred by time, being beyond the period of one year from the date of reassessment on 24.02.2018. Appeal allowed.

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• 2023 (5) TMI 205
  EPCG Scheme - Concessional rate of Customs duty - condition No.8 in the condition sheet to the EPCG licenses clearly specified the place of installation of the imported pipes to be Jajpur or Barbil, whereas the pipelines were installed outside these approved premises - extended period of limitation - suppression of facts or not - HELD THAT:- The Appellant has set up and integrated Iron Ore Pellets manufacturing facility consisting of beneficiation plant at Barbil, Odisha and pellets making facility at Jajpur, Odisha. The two Plants are located at a distance of 217 Kms. In the beneficiation Plant, at Barbil, the raw ore fines were processed and impurities were removed and converted into a concentrate. It is transported in a slurry form to the Pellet manufacturing Plant at Jajpur through pipeline. The pipes required for transporting the concentrate were imported under EPCG Scheme - the notification requires the imported capital goods are to be installed in the factory or premises of the EPCG license holder. The Notification does not mention that the installation has to be made within the Central Excise Registered factory. The word premises mentioned in the Notification is wide enough to cover the entire stretch where the pipelines were installed in this case. It is an integrated factory to manufacture Iron Ore Pellets from raw material. The EODCs were issued by the DGFT only after satisfying themselves that all the conditions specified in the Licence have been fulfilled. We also find that after issue of EODC, the Custom Department cancelled the Bond and bank guarantee executed by the Appellant. The Department has cancelled bond and bank guarantee after satisfying that the Export Obligation was fulfilled and EODC was produced and the Appellant has satisfied all the conditions of the Notification or the licence. Hence, both DGFT and Customs Department has come to the conclusion that the Appellant has fulfilled all the conditions of the Notification or the Licence. Extended period of limitation - Suppression of facts or not - HELD THAT:- There is no suppression involved in this case. Consequently the demand confirmed in the OIO as well as penalties imposed are not sustainable on the ground of limitation also. However, on merits itself it is held that the demand of customs duty and the interest and penalty demanded in the OIO are not sustainable. Accordingly, the OIO set aside on merits and the appeal filed by the Appellant are allowed. The Appellant has installed the pipelines within the factory or premises of the assesse and hence, they are eligible for concessional rate of duty as specified in Notification No. 64/2008-Cus. dated 09/05/2008 - Appeal allowed.

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• 2023 (5) TMI 183
  Exemption from CVD - Denial of the benefit of the Notification No. 12/2012-CE - imports of silver conductor paste - benefit of the said Notification has been denied in the impugned order holding that the silver conductor paste is a consumable item and not a part - HELD THAT:- The Notification clearly hold that the exemption is only available if the goods are consumed within the factory of production. In the instant case the goods are imported and, therefore this condition is not satisfied. For this reason the benefit of notifications cannot be extended. It is noticed that learned Authorised Representative relied on this decision of Devilog Systems (I) Ltd. vs. Collector of Central Excise, Bangalore [ 1996 (10) TMI 195 - CEGAT, NEW DELHI ]. In the said case distinction between the part and consumable has been made holding that The value of parts without which the machine cannot function as such has to be included in the assessable value of the machine. There may be accessories which are not necessary for the functioning of the machine but which enable the machine to provide scope for additional functions and which are not compulsorily sold to all buyers of the machine and are sold only at the option of the buyers. Such parts cannot be regarded as integral part of the machine and their value cannot be added to the assessable value of the machine. Thus, it is apparent that the goods imported by the appellant are not in the nature of parts - there are no merits in the appeal - appeal dismissed.

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• Corporate Laws

• 2023 (5) TMI 204
  Prosecution proceedings against the Auditor of the company - High Court proceeded to hold that the petition filed by the Union of India under Section 140(5) of the Act, 2013 has been satisfied by the subsequent resignation of the auditor and therefore the petition under Section 140(5) of the Act, 2013 filed by the Union of India is no longer maintainable - Constitutional Validity of Section 140(5) of Companies Act, 2013 - direction under Section 212(14) assailed on the ground that issuance of the direction to prosecute within 30 hours of receipt of the IFIN SFIO Report demonstrates non-application of mind - assailed also on the ground that the IFIN SFIO Report was an incomplete report as investigation had not been completed and therefore Section 212(14) direction was incompetent HELD THAT:- Section 140(5) of the Act, 2013 titled as Removal, Resignation of Auditor and Giving of Special Notice appears in Chapter X of the Act which is titled as Audit and Auditors . Therefore, Chapter X is a special provision under the new Act with respect of Audit and Auditors . It cannot be disputed that the auditor plays a very important role so far as the affairs of any company are concerned and therefore he should be independent and above board. Companies Act, 2013 is the result of the culmination of detailed study after taking into consideration the Parliamentary Standing Committee on Finance Report as well as the recommendations of the Standing Committee by introducing Companies Bill, 2009 and Companies Bill, 2011. When the earlier Companies Bill, 2009 was introduced, it was a culmination of the growing corporate economy and past experiences of corporate fiascos too and one of the suggestions were to provide for stricter accountability for auditors. It is required to be noted that Section 143 of the Act deals with the powers and duties of the auditors. Sub-section (12) of Section 143 specifically provides that in the event that the auditor has reason to believe that an offence of fraud is being or has been committed in the company, the auditor shall report the matter to the Central Government. The detailed procedure is provided under the Rules issued in this regard. Therefore, a statutory duty is cast upon the auditor to report the matter to the Central Government about the offence of fraud being committed in a company. To see that the auditor is not holding any post in the company and he acts independently, Section 144 of the Act provides that the auditor cannot provide certain services including the management services - the prohibition and restriction created under Section 144 of the Act is primarily to protect the interest of the company in question and other stakeholders such as lenders and investors and the public at large. Keeping in mind the aforesaid provisions and the underlying public policy in the backdrop, Section 140(5) of the Act, 2013 is required to be interpreted and/or considered. Section 140(1) of the Act provides for the procedure to remove an auditor by the company before the expiry of his term; section 140(2) and (3) of the Act deal with resignation of auditors and Section 140(4) of the Act deals with giving of special notice at an AGM for appointment of an auditor other than the retiring auditor and the process in that regard. However, Section 140(5) of the Act empowers the Tribunal (NCLT), either suo motu or on an application made to it by the Central Government or by any person concerned, to take action against the auditor who has acted in a fraudulent manner or is abetting or colluding in fraud with the management of a company - the powers under the first proviso to Section 140(5) can be said to be interim or pro tem measure to prevent an existing auditor from continuing and substitute him with an auditor based on a prima facie satisfaction that a fraud has been perpetrated and when circumstances warrant the substitution. Such an order can be said to be an interim order akin to a temporary suspension during the pendency of the detailed enquiry as provided in Section 140(5) of the Act and before any final order is passed by the Tribunal. By the impugned judgment and order, though the High Court has upheld the vires of Section 140(5) of the Act, 2013, however, the High Court has held that once the auditor resigns as an auditor or is no more an auditor on his resignation, thereafter Section 140(5) proceedings are no longer maintainable as the petition filed by the Union of India under section 140(5) has been satisfied by the subsequent resignation of the auditor. The view taken by the High Court is absolutely erroneous and is unsustainable. Subsequent resignation of an auditor after the application is filed under section 140(5) by itself shall not terminate the proceedings under section 140(5). Resignation and/or removal of an auditor cannot be said to be an end of the proceedings under section 140(5). The second proviso to section 140(5) of the Act, 2013 is a substantive provision, though it is by way of a proviso, and the same shall operate and/or depend upon the final order to be passed by the Tribunal in the first part of section 140(5). If the interpretation given by the High Court that on subsequent resignation and/or discontinuance of an auditor, proceedings under section 140(5) stand terminated and/or the petition under section 140(5) by the Central Government is no longer maintainable is accepted, in that case, second proviso to section 140(5) would become nugatory and in no case there shall be any action under the second proviso to section 140(5) - on true interpretation and scheme of Section 140(5) of the Act, 2013, once the enquiry/proceedings is/are initiated under first part of section 140(5) of the Act, either suo motu by the Tribunal or on an application made to it by the Central Government or by any person concerned, it must come to its logical end and irrespective of the fact whether during such enquiry/proceedings the auditor has resigned or not, there must be a final order to be passed by the Tribunal on whether such an auditor has, in fact, directly or indirectly, acted in a fraudulent manner or not. Direction to the company to change its auditor as provided in the first part of section 140(5) is only a consequence to the finding recorded by the Tribunal that the auditor has, directly or indirectly, acted in a fraudulent manner. The High Court has materially erred in holding that on resignation of auditors BSR Deloitte and on appoint of new auditors, application under section 140(5) shall not be maintainable. Consequently, the High Court has erred in setting aside the order(s) passed by the NCLT/NCLAT by which the NCLT/NCLAT held that despite the resignation of the auditors, enquiry/proceedings under Section 140(5) shall be maintainable and/or continued. Vires of Section 140(5) of the Act - HELD THAT:- Auditors play very important role in the affairs of the company and therefore they have to act in the larger public interest and all other stakeholders including investors etc. Chapter X of the Act specifically for the Audit and Auditors looking to the importance of the auditors. Therefore, section 140(5) cannot be said to be discriminatory and/or violative of Article 14 of the Constitution of India. Section 140(5) of the Act has been enacted with the specific object and purpose as referred to hereinabove and the same has been enacted after due deliberations and taking into consideration the recommendations of the Standing Committee as well as the respective stakeholders. Therefore, taking into consideration the object and purpose for which section 140(5) of the Act is enacted, the same cannot be said to be arbitrary, excessive and violative of Article 14 of the Constitution of India and/or violative of fundamental rights guaranteed under Article 19(1)(g) of the Constitution of India, as alleged. Thus, challenge to the constitutional validity of section 140(5) of the Companies Act, 2013 fails and it is observed and held that section 140(5) is neither discriminatory, arbitrary and/or violative of Articles 14, 19(1)(g) of the Constitution of India, as alleged. The impugned judgment and order passed by the High Court quashing and setting aside the application/proceedings under section 140(5) on the ground that as the auditors have resigned and therefore thereafter the same is not maintainable is hereby quashed and set aside - the impugned judgment and order passed by the High Court quashing and setting aside the NCLT order holding that even after the resignation of the auditors, the proceedings under section 140(5) shall be maintainable is hereby quashed and set aside. Appeal allowed.

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• 2023 (5) TMI 203
  Offence under Companies Act, 2013 - Jurisdiction - cognizance was taken by the Special Court and summons were issued -Erroneous allegations of giving false evidence before National Company Law Tribunal, Indore Bench under Section 193, 196, 120-B/34 of IPC and under Section 449 of the Companies Act, 2013 - submission of false information before the National Company Law Tribunal, Indore Bench - HELD THAT:- From bare reading of Section 435 of the Companies Act, it is evident that for the purpose of providing speedy trial of the offences under the Companies Act, the Central Government by notification may establish or designate as many special Courts as necessary and in that context IX Additional District and Sessions Judge, Gwalior has been designated as Special Court under the Companies Act vide notification dated 18.05.2016 issued by Industry and Corporate Forum. Section 436 of the Companies Act starts with a non obstante clause Notwithstanding anything contained in the Code of Criminal Procedure which gives an overrding effect over the provisions of Act mention in the non obstante clause. It is trite to say that accept of provisions or act mentioned in the non-obstante clause, the enactment following it will have its full operation or that the provisions embrazed in the non-obstante clause will not be an impediment for the operation of the enactment, thus, a non-obstante clause may be used as a legislative device to modify the ambit of the provision of law mentioned in the non-obstante clause or override it in specified circumstances. Therefore, when the enacting part of the Section is clear, its scope cannot be cut down or enlarged by resort of non-obstante clause. Thus, it could safely be held that the provisions of Section 436 of the Companies Act will have over riding effect over the provisons of Code of Criminal Procedure, whenever an offence specified under the Companies Act is to be tried by Special Court. Admittedly, Section 449 which deals with punishment for giving false evidence is an offence under the Companies Act, it is to be tried by Special Courts established/notified by the Central Government as per Section 435 of the Companies Act. Maintainability of the complaint at the behest of complainant/respondent - HELD THAT:- Section 439 (2) of the Companies Act is very much clear. Section 449(2) lays down about the exception for the Courts taking cognizance upon complaint in writing made by the Registrar, a share holder or a member of the Company or a person authorized by the Central Government in that behalf. Thus, it is clear that any of the person mention in the Section can maintain the complaint and the complainant/respondent being one of the Directors (shareholders/members) of the accused/petitioner company could maintain the complaint. The petitioner is partly allowed and disposed of.

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• 2023 (5) TMI 202
  Prosecution proceedings against the Director - Non-submission of financial statement within the stipulated time with registrar of companies - not having registered office capable of receiving and acknowledging the communication - AGM has not been held and its proceedings has not been forwarded to Registrar - non-submission of 3 copies of Balance Sheet and Profit and Loss A/c with the Registrar - non-submission of annual return and holding of annual general meeting in the relevant year. HELD THAT:- This is a case where admittedly petitioners worked as Directors of the Company between the period 30th September, 1992 till 19.04.1995 and 05.05.1998 and then resigned. In 2015, under the mistaken belief, complaint was filed against present petitioners also for alleged non-compliance of Section 12 of Act, 2013 for which penalty is provided under Section 12 (8) of the Act, 2013 - Admittedly, alleged non-compliance is for the period 2014 where some defaults on the part of the Company are made. Admittedly, petitioners resigned w.e.f. 19.04.1995 and 05.05.1998. Much thereafter, alleged defaults have been committed. Considering the submission and going through the documents appended thereto as well as the reply filed by the respondent, it appears that petitioners made out their case for interference. Once, t hey resigned in the years 1995 and 1998, then they cannot be fastened with any liability for a period of 2014. Petition allowed.

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• 2023 (5) TMI 201
  Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC), NCT of Delhi and Haryana - Company is not carrying on any business or operation for two immediately preceding financial years and has not made any application within such period for obtaining the status of Dormant Company under Section 455 of the Companies Act, 2013 - Section 252 of Companies Act - HELD THAT:- The Company has Commercial Property bearing Plot No. B-235, Sector 16, Noida which was allotted by New Okhla Industrial Development Authority (NOIDA) for the purpose of Auto Parts Shop Repair Workshop Motor Garage and the Company was paying electricity bill regularly from July, 2017 to September, 2020. Further, the Respondent No. 1/Registrar of Companies in his reply before the NCLT has stated that it has no objection if the name of the Company is restored on proving by the Company that it was carrying on business or was in operation and the Company be also directed to file financial statements up to date with appropriate filing and additional fees. The Appellant Company is having substantial movable as well as immovable assets, therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, the order passed by the National Company Law Tribunal (New Delhi, Bench-II) as well as Registrar of Companies, NCT of Delhi Haryana is not sustainable in law. The name of the Company is directed to be restored to the Register of Companies subject to the compliances imposed - appeal allowed.

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• Insolvency & Bankruptcy

• 2023 (5) TMI 200
  Condonation of delay in filing appeal - Appeal was filed presumably on 10.09.2022 i.e. after the period of 45th days from the date of receipt of the Impugned Order on 27.07.2022 - Because of the sudden rise of corona cases in Delhi and Kolkata, the Appellants were restrained from travelling and thus, could not complete the required process in time and that is the reason for delay in filing of the present appeal. HELD THAT:- The impugned order was passed on 18.07.2022 and the instant Appeal was filed on 13.09.2022 with delay of about 54 days. The Appellant applied for certified copy of the order on 26.07.2022 and received on 27.07.2022 even if the time consumed obtaining certified copy of the order is excluded, the Appeal has been filed beyond the limitation period. This Tribunal has power to condone the delay is only of 15 days. The Counsel for the Appellant sought to contend that the Limitation will start running when the Order is communicated to the Appellant. The said submission cannot be accepted. The Order was passed on the Application filed by the Resolution Professional and from the date when the order was pronounced, limitation shall start running. There is no ground to condone the delay. In view of the judgment of V. Nagarajan Vs. SKS Ispat and Power Limited Another [[ 2021 (10) TMI 941 - SUPREME COURT] ], the instant appeal is time barred in as much as it has been filed beyond the period of limitation. Application dismsissed.

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• 2023 (5) TMI 199
  Approval of Resolution Plan - Resolution Plan can be challenged on the ground that it discriminates between the operational creditors who are similarly placed, and also discriminates between the operational creditors and the financial creditors in respect of payments under the approved resolution plan - Appellant can raise the issue of admission of reduced amount of his claim, at a much belated stage, after the approval of resolution plan, or not? - HELD THAT:- After the RP had finally informed the Appellant vide email dated 02.09.2020 that only an amount of Rs.1,13,63,918/- was admitted, the Appellant did not take any further action about either preferring an appeal before the Adjudicating Authority on the matter of admission of reduced claim, nor took up the matter with the RP, and it is therefore logical and safe to presume that he accepted the admission of his claim at Rs.1,13,63,918/- - Once the resolution plan has been approved vide the Impugned Order the issue of any claim could not be agitated or brought up at this late stage. The Judgement of the Hon ble Supreme Court in the matter of Jaypee Kingston Boulevard Apartments Welfare Association Ors. [[ 2021 (3) TMI 1143 - SUPREME COURT] ] is followed, where it was held that once the Appellant did not challenge the admission of a reduced amount against the submitted claim, the same cannot be challenged after approval of the resolution plan. Allocation of payments to various classes of creditors - HELD THAT:- It is seen that the resolution plan proposed payments to the operational creditors including Appellant as NIL , which was in accordance with the liquidation value of the corporate debtor. Thus the payments to operational creditors in the approved resolution plan is in consonance with Section 30(2)(b) of the IBC, and hence, it has been correctly approved by the CoC by the Adjudicating Authority and does not require any interference. Discrimination in payments inter se between the financial creditors and operational creditors - HELD THAT:- Reliance placed in the judgment of Hon ble Supreme Court in the matter of Pratap Technocrats (P) Ltd. Ors. Vs. Monitoring Committee of Reliance Infratel Limited Anr. [[ 2021 (8) TMI 553 - SUPREME COURT] ], wherein it is held that the Section 30(2)(b) is to be looked into with regard to the payments to operational creditors - the judgement make it quite clear that the CoC has to adequately balance the interest of all the stakeholders including the operational creditors and the NCLT/NCLAT have to only see whether the resolution plan meets with the requirements of Section 30(2) and Section 31 of the Code and there is no residual jurisdiction to examine the business decision of the CoC - This has clearly been done in the present case by the CoC and the Adjudicating Authority while approving the resolution plan. It is also noted that in the grounds stated by the Appellant in the appeal there is no pleading as to how the resolution plan goes against the requirement of Section 30(2) and Section 31 of the Code and hence there is no reason for the Adjudicating Authority to have interfered with the decision of the CoC in approving the resolution plan. There are no reason why the resolution plan approved by the Impugned Order should be interfered with - appeal dismissed.

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• Service Tax

• 2023 (5) TMI 198
  Classification of services - activity of construction of office buildings, erection of cell phone towers and other connected civil structures for M/s. BSNL, Tiruchirappalli, Airport Authority of India and M/s. Life Insurance Corporation of India - construction of school buildings for the State Public Works Department - construction service under Section 65(30a) of the Finance Act, 1994 with effect from 10.09.2004, under commercial or industrial construction service under Section 65(25b) of the Finance Act with effect from 16.06.2005 and under works contract service under Section 65(105)(zzzza) of the Finance Act with effect from 01.06.2007 - liability to pay Service Tax towards the cleaning activity provided by them during the period from 2005-06 to 2008-09 - extended period of limitation - penalty. HELD THAT:- The issue of taxability of composite contracts before 01.06.2007 has been considered by the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] , which ratio has been followed by the Chennai Bench of the CESTAT in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] - In the case of M/s. Real Value Promoters Pvt. Ltd., it has been held that demand of Service Tax under construction service and commercial or industrial construction service in respect of composite contracts up to 01.06.2007 is not sustainable. The appellant has admitted that the services rendered by them are taxable under works contract service with effect from 01.06.2007 in the grounds-of-appeal and also before the lower authority. As the activities undertaken by the appellant were in the nature of works contract, the demands raised under construction service and commercial or industrial construction service till 31.05.2007 are not sustainable - the appellant is required to pay Service Tax of Rs.1,82,467/- towards works contract service during the period from June 2007 to March 2008 (as detailed in Annexure-IV-A to the Show Cause Notice) and Rs.8,50,546/- towards works contract service during the period from April 2008 to March 2009 (as detailed in Annexure-V to the Show Cause Notice). Cleaning activity - HELD THAT:- The appellant is liable to pay Service tax of Rs.14,531/- towards cleaning activity provided by them during the period from 2005-06 to 2008-09, which is not disputed. Extended period of limitation - HELD THAT:- Though the appellant has taken registration in 2004, they have not paid Service Tax on the considerations received for the services rendered to M/s. BSNL, Airport Authority of India and M/s. LIC. The non-payment of Service Tax by the appellant has been detected and investigated by the Anti-evasion Unit of the Commissionerate and as such, the extended period has been rightly invoked in this case. Penalty - HELD THAT:- The appellant is liable to pay penalty of Rs.5,000/-, as imposed under Section 77 of the Finance Act, 1994 and penalty equivalent to the amount of Service Tax payable towards works contract service and cleaning activity, under Section 78 of the Act. The demand of Service Tax from October 2004 up to 31.05.2007 under construction service and commercial or industrial construction service are required to be set aside. However, the demand of Service Tax under works contract service with effect from 01.06.2007 is held to be payable under the provisions of Section 73(1) of the Finance Act, 1994, along with applicable interest under Section 75 of the Finance Act, 1994 - Appeal allowed in part.

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• 2023 (5) TMI 197
  Levy of Service Tax - Mandap Keeper Service - Complementary Service / Free of charge service - business of running and operating luxury hotel and was duly registered with jurisdictional service tax authorities - Circular No. 96/7/2007 dated 23.08.2007 - HELD THAT:- The respondent has not charged separate consideration for providing the conference hall which was provided to the respondent as complementary service. Further, the analysis of the break-up of the corporate billing as provided by the respondent it is clear that no separate consideration was received for provision of conference facilities. Further, through Circular No. 332/82/97-TRU dated 24 September 1997 it was clarified that in case of no charges/ rental is being paid i.e., the premises are given out free of cost to hold such function, there would be no service tax liability as the premises are given free of cost - In the case of Dukes Retreat Ltd. [[ 2017 (5) TMI 465 - CESTAT MUMBAI] ], the division bench of this Tribunal in identical facts held that the assessee is not liable to pay service tax on complementary services of conference hall. There is no infirmity in the impugned order - Appeal dismissed.

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• 2023 (5) TMI 196
  CENVAT Credit - input service distribution - credit has been distributed without registering itself as input service distributor - HELD THAT:- This Tribunal in the appellant s own case for the previous period has allowed the cenvat credit and the Revenue had filed appeal before the Hon ble High Court of Punjab and Haryana against the said decision but subsequently withdrew their appeal from the Hon ble High Court on monetary grounds. This issue has been considered by the Hon ble Karnataka High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE SERVICE TAX AND CUSTOMS BANGALURU-II, VERSUS M/S. HINDUJA GLOBAL SOLUTIONS LTD., [ 2022 (4) TMI 71 - KARNATAKA HIGH COURT] and the Hon ble High Court of Karnataka after considering the decision of the Hon ble Gujarat High Court in case of COMMISSIONER OF CENTRAL EXCISE VERSUS DASHION LTD [ 2016 (2) TMI 183 - GUJARAT HIGH COURT] and the decision of the Hon ble High Court of Rajasthan in the case of COMMISSIONER CENTRAL EXCISE COMMISSIONERATE, JAIPUR VERSUS NATIONAL ENGINEERING INDUSTRIES LTD. [ 2016 (5) TMI 12 - RAJASTHAN HIGH COURT] and the Circular of Central Board of Excise and Customs dated 16.02.2018 accepting the judgement of the High Court of Gujarat and Rajasthan, has held that the availment based on invoices issued by input service distributor prior to registration under Service Tax (Registration of Special Category of Persons) Rules, 2005 is only procedural irregularity and hence the denial of credit is bad in law. The impugned order is not sustainable in law - Appeal allowed.

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• 2023 (5) TMI 195
  Classification of services - works contract service or erection, commissioning or installation services? - demand confirmed under a category not proposed in the show cause notice - HELD THAT:- A Division Bench of the Tribunal in M/s Gurjar Construction as Commissioner of Central Excise, Jaipur II [ 2019 (5) TMI 717 - CESTAT NEW DELHI ] examined such a position and after placing reliance on the decisions of the Supreme Court in Hindustan Polymers Company Ltd. Vs Collector of Central Excise, Guntur [ 1996 (12) TMI 84 - SUPREME COURT ] and Reckitt Colman of India Ltd Vs Collector of Central Excise [ 1996 (10) TMI 100 - SUPREME COURT ] observed that a demand made under a particular category cannot be sustained under a different category. It is not possible to sustain the impugned order dated 08.06.2017 passed by the Commissioner - appeal allowed.

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• 2023 (5) TMI 194
  Exemption from payment of service tax - appellant is having a sector specific Special Economic Zone (SEZ), where they develop/ construct various commercial and residential building and other related infrastructural activities - import of services under reverse charge mechanism - benefit of N/N. 9/2009-ST dated 03.03.2009, 15/2009-ST dated 20.05.2009 and 17/2011-ST dated 01.03.2011 - HELD THAT:- Since the issues raised at this juncture by the learned Authorized Representative have the bearing ultimately on availment of benefit of notifications dated 03.03.2009 and 20.05.2009, the matter should be looked into afresh by the original authority. For consideration of the benefit of exemption, it is also required to analyse the notification no. 17/2011-ST dated 01.03.2011 inasmuch as Section 66A was first time brought into the purview of exemption on the said date. Since, the period involved in the present dispute relates to the prior period, the Original Authority should specifically record the observation as to whether benefit of 66A would be available to the appellant or otherwise. The Original Authority should also examine the other ground urged by the appellant in the grounds of appeals annexed to the appeal memorandum. The submissions made before the Tribunal will also be conveyed by the appellant at the time of adjudication of the matter afresh. Appeal allowed by way of remand.

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• 2023 (5) TMI 193
  Classification of services - providing services without consideration (free) to its associate companies - Banking and other Financial Services? - activity of giving corporate guarantee - period 2010-11 to 2014-15 - HELD THAT:- The analysis of the definition of BOFS alongwith its taxability helps us to conclude that this definition is a comprehensive one instead of it being the inclusive one. It also clarifies that under service of BOFS only such persons can be made liable to service tax who can be classified in the category of being called as Banking/ non-banking Company, Financial Institutions, any other body corporate or a commercial concern. Above all, the definition carves out the list of category of the persons who would be excisable to tax under the category. Also the services provided by such persons which alone would be excisable to such taxes as have been comprehensively and specifically listed out as is apparent from the use of words namely / means in the said definition under section 65 (12) of the Finance Act. The present appellant do not fall under any of such categories/ lists, as there is no denial to the fact that appellant is not in business of financing, it is neither a banking nor a non-banking financial institute. Nor it is any other body corporate or commercial concern which is into the business of extending financial supports. This fact is sufficient for us to hold that appellant cannot be covered under the category of such persons who would be excisable to tax under the category of BOFS). The Show Cause Notice itself recites that the appellant has given the corporate guarantee on behalf of their group companies but has not charged any commission or interest or fees for providing the said corporate guarantee. Same is also apparent from the letter given by the Syndicate Bank from where was issued the impugned corporate guarantee that the loanee company has undertaken that no commission is paid by them to their corporate guarantor. Thus, it becomes clear that there is no element of consideration involved in the present case applying the definition of service - the question of the activity of extending corporate guarantee by the appellant to its associate companies cannot be called as service in terms of above provision in section 65 B (44) of the Act. The Larger Bench of this Tribunal in the case of M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) ] where it was held that Value of free supplies by service recipient do not comprise the gross amount charged under Notification No. 15/2004-ST, including the Explanation thereto as introduced by Notification No. 4/2005-ST. There are no reason to differ from this decision - appeal allowed.

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• 2023 (5) TMI 192
  Levy of Service tax - ocean cargo / air cargo freight income, as received by appellant as marked up charges - Business Auxiliary service or not - Brokerage and special commission/incentive - penalty - Extended period of limitation. Ocean cargo / air cargo freight income, as received by appellant as marked up charges - Business Auxiliary service or not - HELD THAT:- The issue has been addressed in the decisions of this Tribunal itself specifically in the case of DHL Logistics (P) Ltd. vs. Commissioner of Service Tax, Mumbai [ 2017 (8) TMI 600 - CESTAT MUMBAI ]. It has been held that the freight rebate is a revenue stream generated out of trading of the space in the airline incentives. Unless the space is booked by the appellant specifically for a client the components of the Business Auxiliary Service do not come into play. In the instant case, there is no such allegation and the appellants are booking the space for their own trading activities. In these circumstances demand of service tax under BAS cannot be sustained and the same is set aside. Brokerage and special commission/incentive - to be an income received in the activity of trading of freight space in various shipping lines, or not - HELD THAT:- Reliance placed in the case of Karam Freight Movers [ 2017 (3) TMI 785 - CESTAT NEW DELHI ] where it was held that The surplus earned by the respondent arising out of purchase and sale of purchase and sale of space and not by acting for client who has space or not on a vessel. It cannot be considered that the respondents are engaged in promoting or marketing the services of any client. - demand do not sustain. Penalty - Extended period of limitation - HELD THAT:- It is observed to be an apparent fact that the appellant was otherwise discharging the liability for providing the chargeable services and was admittedly filing the regular ST-3 returns. Once it is held that there was no liability upon the appellant to be discharged as far as the markup charges are concerned there remains no reason with the Department to invoke the extended period of limitation while issuing the impugned Show Cause Notice. For want of intention to evade duty there can be imposed no penalty upon the appellant. Appeal allowed.

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• Central Excise

• 2023 (5) TMI 191
  Classification of goods - Aswini Homeo Arnica Hair Oil - to be classified as medicament under Tariff Item 3003 90 14 or as Hair oil (cosmetic) under Tariff Item 3305 90 19? - whether because of amendment of the entries in the said Chapters 30 and 33 in the year 2012, classification of the product in question required re-examination, even though the same was classified as medicament under the said Chapter 30 since the year 1994? - demand of differential duty alongwith interest and penalty - HELD THAT:- The case of Alpine Industries [ 2003 (1) TMI 103 - SUPREME COURT ] essentially related to the question of classification of the product Lip Salve , manufactured in accordance with the defence services specifications and supplied entirely to military personnel, as a medicament under Chapter 30 or as a preparation for care of skin under Chapter 33. This Court, while dealing with common parlance theory, held that the entries are not to be understood in their scientific or technical sense, but by their popular meaning for the purpose of interpretation. In Sunny Industries [ 2003 (3) TMI 102 - SUPREME COURT ], this Court was dealing with the question whether Ad-Vitamin Massage Oil Forte was still classifiable as patent and proprietary medicine even after the change of tariff description after 1985 Budget. This Court dismissed the appeal of the assessee as the product in question was oil, used for massage to take care of the skin, and not to cure the skin and hence, was classifiable under cosmetics and not under medicaments . In Sharma Chemicals [ 2003 (4) TMI 102 - SUPREME COURT ], this Court was concerned with the issue as to whether the product Banphool Oil could be classified under as Ayurvedic medicament or as perfumed hair oil. This Court held that mere fact that a product is sold across the counter and not under a doctor s prescription, does not ipso facto lead to the conclusion that it is not a medicament. In the case Meghdoot [ 2004 (10) TMI 93 - SUPREME COURT ], while dealing with the question of classification of six items namely Bhringraj Tail, Trifla Brahmi Tail, Neem Herbal Sat, Sat Reetha, Meghdoot Herbal Sat, Meghdoot Herbal Powder and following the decision in BPL Pharmaceuticals [ 1995 (5) TMI 98 - SUPREME COURT ], this Court classified the items under the heading of medicaments and held that items which may be sold under names bearing a cosmetic connotation but would remain medicines based on the composition of the items. As regards the question as to whether the product in question, AHAHO, merits classification as medicament under Chapter 30 or as cosmetic or toilet preparations under Chapter 33, the inquiry shall be directed towards a couple of tests taken together, being the common/commercial parlance test i.e., how the product is understood commonly, including by the persons dealing in the same and by the end-users; and the ingredients test i.e., whether the ingredients used in the product are found mentioned in authoritative textbooks. It appears from the facts of the present case and the observations occurring in the said case of Bakson Homeo Pharmacy [ 2000 (8) TMI 777 - CEGAT, NEW DELHI ] that all the ingredients of the product involved in the present case (AHAHO) were equally the ingredients of the product under consideration therein, namely, Arnica Montana, Cantharis, Pilocarpine, Cinchona. As noticed from the relevant pages of Materia Medica placed before us, in the Homeopathic terminology, Cinchona Officinalis is also termed as China Officinalis; and Pilocarpine is essentially isolated from Jaborandi. The similar product involved in Bakson Homeo Pharmacy was said to be containing the ingredients Arnica Mont, Jaborandi, Cantharis and China, apart from other ingredients. It is also apparent in the present case that the stand of the Department to classify the product in question as cosmetic under Chapter 33 is essentially based on the distinct entry Hair Oil occurring therein; and it appears that the expression Hair Oil occurring on the label of the product has been taken as decisive by them. For what has been discussed hereinabove, it would also follow as a natural corollary that the expression Hair Oil occurring on the label of the product is only indicating the medium through which Homeopathic medicines comprising the product are to be applied. We are unable to accept the submissions and the efforts on the part of the appellant to take the product in question to Chapter 33 merely because of its label carrying the expression Hair Oil while ignoring the preceding significant expressions Homeo and Arnica . Whether re-look at classification of the product in question justified? - HELD THAT:- There had been no justification in the Department seeking to re-open the settled position in relation to the product in question merely with reference to certain changes made in Chapter 30 and Chapter 33, which had essentially broadened their ambit and scope and provided modified marginal notes and tariff entries with detailed specifications. These changes had otherwise no impact, so far as the product of the respondent, AHAHO, is concerned - there had been no justification for making any attempt to re-classify the product in question with reference to the amendments brought about in Chapters 30 and 33 in the year 2012. Thus, AHAHO, merits classification as medicament under Chapter 30 and not as cosmetic or toilet preparations under Chapter 33 of the First Schedule to the Central Excise Tariff Act, 1985; and the change in tariff structure by way of amendment brought about in the year 2012 did not justify any re-look at the classification of the product in question. Appeal dismissed.

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• 2023 (5) TMI 190
  CENVAT Credit - inputs - invoices not in the name of Petitioner but in the name of the General Manager - goods covered under the invoices were never received in the factory premises of the petitioner - duty paid on the compressors but not received in the factory of the Petitioner - time limitation for issuance of SCN. - Revenue contended that, the case of the petitioner was kept in call book, as per circular (R-1), the delay of 10 years cannot be taken as a ground to quash the show cause notice HELD THAT:- Issue in the present case is squarely covered in favour of the petitioner keeping in view the decision rendered in GPI Textiles Ltd. s case [ 2018 (9) TMI 25 - PUNJAB HARYANA HIGH COURT] . Since, no interim stay has been granted by Hon ble the Supreme Court, the present petition is allowed and the impugned show cause notice dated 24.02.2009 (P-1) is set aside.

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• 2023 (5) TMI 189
  Captive Consumption - sterile water for injection was captively consumed - benefit of N/N. 67/95-CE dated 16.03.1995 as amended by notification no. 16/2003-CE dated 01.03.2003 - HELD THAT:- In the show cause notice, the charge made by the revenue was the Sterile Water cleared in the combi pack along with Rabipur vaccines is classifiable under chapter heading no. CETH 28510010 as bulk drugs and the same was liable to duty - the vaccine cannot be administered without sterile water therefore the sterile water is also considered to be the vaccine which attracts only the nil rate of duty under CETH 3002. From the Note 3, it is clear that when the goods are cleared in sets consisting of two or more separate constituents in that case if the product is included to be mixed whether to obtain a product of Section VI or Section VII are to be classified in the heading prior to that product. In the present case, after mixing of the vaccine powder with sterile water, it is clearly intended to be administered as vaccine therefore, entire combi pack shall be correctly classified under the Central Excise Tariff Heading No. 3002 which is meant for vaccine. The condition from (a) to (c) given in Note 3, is clearly satisfied in as much as all the constituents of combi pack are used altogether at the time of administering the vaccine to the human body. Being combi pack it is presented together and since the Rabipur vaccine powder cannot be used without mixing of sterile water, it is undoubtedly complementary to each other - Note 3 of Section VI there is absolutely no doubt that the sterile water cleared in a combi pack with vaccine and syringe will also fall under CETH 3002 which is a vaccine. When this be so, then the entire combi pack attracts nil rate of duty under CETH 3002. On this basis, the demand is not sustainable. Even if it is assumed that the sterile water is used captively for manufacture of vaccine in such case also the sterile water is not liable to duty on the ground that from June 1998 till 24 February 2005, the distilled or conductivity water and water of similar purity used within the factory of production was attracting nil rate of duty and from 24th February 2005 to 30 December 2006, the said product was exempted under notification 3/2005-CE dated 24.02.2005 when used within the factory of production therefore even if the contention of the review order of the revenue is considered even then the product was not liable to duty. Appeal allowed.

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• 2023 (5) TMI 188
  Revenue neutrality - Process amounting to manufacture - repacking of bulk packages of imported STPP into retail pack of 40/50 Kgs. in HDPP bags - excisable under Chapter sub-heading No. 28353100 of Central Excise Tariff Act, 1985 or not - Extended period of limitation - HELD THAT:- There is no dispute that all the goods on which the duty was demanded have been imported duly duty paid including CVD/SAD. In such case, if at all there is any duty liability of repacked goods or alleged clandestine removal or sales under dealer invoice or repacking job work, in all these cases, the appellant were entitled for the Cenvat credit in respect of the goods imported/ purchased by them. If on reconciliation it is found that duty is payable on the goods being deemed manufactured in terms of Chapter note 9 to note 28, in all such cases it prima-facie appears that the appellant is entitled for Cenvat credit on the goods procured and if such Cenvat credit is sufficient to adjust against the demand of output then the entire case is Revenue neutral and in such case, no further demand can be raised. However, this reconciliation exercise has not been conducted therefore in our considered view the matter needs to be reconsidered on this issue. The respondent is required to submit reconciliation showing co-relation between the procurement and Cenvat involved therein and the sale of the goods involving duty payable thereon. After verifying these details, the Adjudicating Authority shall pass a fresh order keeping in mind the observation. Matter remanded to the Adjudicating Authority for passing a fresh order within a period of two months from the date of this order - appeal allowed by way of remand.

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• 2023 (5) TMI 187
  CENVAT Credit - input services - Business Auxiliary Services - Banking Financial Services - Commission on sales - Security Services - Stock Brocks - place of removal - period from January 2005 to November 2007 - HELD THAT:- There are force in the submission of the Ld.Counsel. On a careful reading of the definition of input service, it can be observed that it was never the intent of the legislature to give it a restricted meaning. Master Circular was issued clarifying the procedural issues relating to Service Tax being Circular No.97/8/2007- S.T. dated 23-Aug-2007 holding that This circular aims to consolidate the procedural issues relating to service tax, including those relating to availment and utilization of Cenvat credit. This circular supersedes all previous circulars/clarifications/instructions issued on these subjects. It is, however, clarified that this circular is intended only to clarify the scope of the Act and the rules, and therefore, in the event of any inadvertent inconsistency or contradiction between this circular and the provisions of the Act or the rules, the latter shall prevail. It is, therefore, clear that for a manufacture/consignor, the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition. In case of a factory gate sale, sale from a non-duty paid warehouse, or from a duty paid depot (from where the excisable goods are sold, after their clearance from the factory), the determination of the place of removal does not pose much problem - In such cases, the credit of the eservice tax paid on the transportation up to such place of sale would be admissible if it can be established by the claimant of such credit that the sale and the transfer of property in goods (in terms of the definition as under Section 2 of the Central Excise Act, 1944 as also in terms of the provisions under the Sale of Goods Act, 1930) occurred at the said place. There are no reason to interfere with the order of the Commissioner(Appeals) - appeal of Revenue dismissed.

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• 2023 (5) TMI 186
  SSI Exemption - clubbing of the clearance of various entities which were found to be dummy - persons involved in the manufacture and clearance of goods - lifting of Corporate veil - appellants are contesting the issue solely on the ground that there was no financial flowback and hence the clubbing cannot be done - N/N. 8/2003-CE dated 01.03.2003 - Extended period of limitation - penalty - HELD THAT:- From the statements and various documentary evidences referred in the impugned order, the fact that the appellants namely M/s Vijaylakshmi Co through its proprietor was engaged in the supply of the gymnasium equipments to M/s Telebrands and in order to keep his turnover below the exemption limits as per the Notification No 8/2003-CE had floated/ used the names of the proprietary concerns created/ operated in the name of his family members and employees. In fact if the corporate veil is lifted we are firmly of the view that M/s Vijaylakshmi Co through its proprietor Shri G Nandgopal was person responsible for manufacture and clearance of the gymnasium equipments manufactured and cleared from these units - From the facts as stated in the statement of Shri Prakash Pandya proprietor of M/s Balarajeshwar Co and Shri P Subbaraju of M/s Ganesh Enterprises it is evident that M/s Ganesh Enterprise was nothing a front/ dummy created and used by Shri Prakash Pandya proprietor of M/s Balarajeshwar Co, to suppress his turnover and claim the exemption under notification No 8/2003-CE dated 01.03.2003. Documentary evidences relied in the impugned order also suggest the same. Whether the financial flow-back has to be established before the clearance of the various units can be clubbed? - HELD THAT:- The issue involved in the present case is not of the clubbing of clearance of distinct manufacturing units, but is the case wherein persons involved in manufacture and clearance of the goods is found to be one. Instead of treating as case of clubbing, the present case is a case where in the corporate veil needs to be lifted to determine who is the person involved in the manufacture and clearance of the goods, in the name of various units which may be dummy or otherwise. If on lifting the corporate view it is found that the same person is undertaking the manufacture and clearance of goods by utilizing the name of various entities, the clearances made in the name of various entities are to be treated as clearances made by that person. In the case of CALCUTTA CHROMOTYPE LTD. VERSUS COLLECTOR OF C. EX., CALCUTTA [ 1998 (3) TMI 138 - SUPREME COURT] , Hon ble Supreme Court held that It is, however, difficult to lay down any broad principle to hold as to when corporate veil should be lifted or if on doing that, could it be said that the assessee and the buyer are related persons. That will depend upon the facts and circumstances of each case and it will have to be seen who is calling the shots in both the assessee and the buyer. When it is the same person the authorities can certainly fall back on the third proviso to clause (a) of Section 4(1) of the Act, to arrive at the value of the excisable goods. It cannot be that when the same person incorporates two companies of which one is the manufacturer of excisable goods and other is the buyer of those goods, the two companies being separate legal entities, the Excise authorities are barred from probing anything further to find out who is the person behind these two companies. It is difficult to accept such a narrow interpretation. True that shareholdings in a company can change but that is the very purpose to lift the veil to find out if the two companies are associated with each other. Hon ble Bombay High Court has in the case of M/S. SUNSUK INDUSTRIES, AND M/S. SHANDAR PRODUCTS, VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI -IV, [ 2018 (5) TMI 780 - BOMBAY HIGH COURT] held that even in the reply of the appellants in both the appeals to the show cause notice, this factual allegation is not disputed. Therefore, it was rightly held that the clearances are required to be aggregated in terms of the Notification No. 1/93-C.E. The appellants namely M/s Vijaylakshmi and Co and M/s Balarajeshwar Co, have in fact suppressed their turnover under the cover of corporate veil to avail the exemption under notification no 8/2003-CE dated 01.03.2003, knowingly. Hence their intention to evade payment of duty by resorting to suppression, misstatement is established beyond doubt accordingly the extended period of limitation as provided by proviso to section 11A (1) is correctly invoked for demanding the duty in the impugned order - Existence of the ingredients as per the proviso to Section 11A (1) is a question of fact and needs to be determined on the basis of the facts of each case. Extended period of Limitation - penalty - HELD THAT:- As the ingredients as per proviso to section 11 A (1) are present in the case for invoking extended period of limitation, the natural consequence is imposition of penalty as per Section 11AC as has been held by the Hon ble Supreme Court in the case of UNION OF INDIA VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS AND COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VERSUS M/S. LANCO INDUSTRIES LTD. [ 2009 (5) TMI 15 - SUPREME COURT] - As the penalty equivalent to the duty sought to be evaded has been imposed on the appellants namely M/s Vijaylakshmi Co and M/s Balrajeshwar Co, under Section 11AC of Central Excise Act, 1944, imposition of the same penalties on Shri G Nandgopal proprietor of M/s Vijaylakshmi Co and Shri Prakash Pandya proprietor of M/s Balrajeshwar Co., under Ruel 26 of the Central Excise Rule, 2002 cannot be justified. The said penalties imposed under Rule 26 are thus set aside. The appellants have actively participated and abetted the act of Shri G Nandgopal and Shri Prakash Pandya leading to evasion of the central excise duty the penalties imposed on them under Rule 26 of the Central Excise Rules, 2002 is also justified. Further the quantum of penalty imposed also is not very excessive but is reasonable looking into the gravity of offence perpetuated, in their name. Appeal allowed in part.

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• 2023 (5) TMI 185
  CENVAT Credit - input service - miscellaneous constructions, fabrication and erection of pipes, supply and installation of CGI shed in DG yard - HELD THAT:- It is noticed that the services received by the appellant from M/s Sunanda Agri Marketing, are in the nature of fabrication and erection of pipes fittings and the services received from M/s Friends Traders, are in the nature of repair and maintenance in the factory premises. The appellants have specifically pleaded that the said services were essentially required for modernization, renovation or repairs of within factory premises. They are not a part of in execution of works contract or construction services as envisaged under Section 66E (b) of the Finance Act, 1944. It s an admitted position that the said services are used for repair/renovation of and within the factory premises and were not a part of construction or execution of a works contract as in the nature for construction of civil structures and buildings. Admissibility of CENVAT Credit is now a settled proposition in law. As the appellants have availed the input service tax credit for repair, maintenance and modernization and fabrication erection of pipe fittings at their factory premises, it is amply clear that the aforesaid credit is admissible to them and are not hit by exclusion clause of Rule 2 (1)(ii)(A) of the Cenvat Credit Rules, 2004. Appeal allowed.

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• 2023 (5) TMI 184
  Abatement of appeal subsequent to finalization of the resolution plan by the NCLAT, New Delhi - HELD THAT:- Hon ble Supreme Court in the case of GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT] has categorically held all the dues including the statutory does owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued. It is found from the date of approval of the Resolution Plan by the NCLAT, the Appeal filed by the Appellant has abated and this Tribunal has become functus officio in the matters relating to this Appeal. Further it is also settled that the impugned Order-in-Appeal has got merged in the order of the NCLAT approving the Resolution Plan. The Appeal stands abated as per Rule 22 of the CESTAT Procedure Rules, 1982 w.e.f. the date of approval of the Resolution Plan by the NCLAT, i.e., 05.09.2019. Appeal disposed off.

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• 2023 (5) TMI 182
  Non-discharge of duty liability on gold jewellery sold by them after affixing certain characters on the product - improper interpretation of brand name - HELD THAT:- It would appear from the facts and circumstances that the adjudicating authority was doubtlessly compelled by the insistence of the noticee for disposal of the dispute but that is no defence for not considering the judicial precedent referred to by the noticee in response to the show cause notice. The decision of the Tribunal in COMMR. OF C. EX., RAIPUR VERSUS ANOPCHAND TRILOKCHAND JEWELLERS P. LTD. [ 2017 (2) TMI 1301 - CESTAT NEW DELHI] , despite having been admitted by the Hon ble Supreme Court, cannot, in the absence of disposal thereof or any stay pending such disposal, be ignored by adjudicating authorities merely for that reason. It is not open to the adjudicating authority to describe the decision of the Tribunal as flawed merely from challenge mounted, even if on such lines, before the Hon ble Supreme Court. The response of Larger Bench of the Tribunal to the reference would find suitable fitment within the issues for appellate resolution before the Division Bench. The true perspective of the decision of the Larger Bench would be available only then. In the absence of such closure, it did not behave the adjudicating authority to proceed without awaiting that. The matter remanded back to the original authority for decision on merit.

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• CST, VAT & Sales Tax

• 2023 (5) TMI 181
  Delay of 10 years for adjudicating the case - Liability of cess on bringing goods within the limits of Navi Mumbai Municipal Corporation - Section 152A of Maharashtra Municipal Corporations Act, 1949 - Dealer failed to produce relevant documents in support of the returns as filed - HELD THAT:- It is not in dispute that the petitioner-Company is a dealer as defined by Section 2(16A) of the Act of 1949. Section 152A of the Act of 1949 empowers the Corporation to levy cess on the entry of goods specified in Schedule-A at the rates prescribed in the said Schedule. Section 152B indicates the manner in which incidence of cess occurs. The turnover from the first day of April of the financial year in which the Municipal Corporation decides to levy the cess is required to be taken into account. Section 152J prescribes for the production and inspection of accounts and documents as well as search of premises, seizure of books of accounts and goods, etc. Under Section 152K the Commissioner has the powers of a Civil Court. It may be noted that by virtue of Maharashtra Act XLII of 2017 Chapter XI-A and Sections 152A to 152O of the Act of 1949 have been deleted with effect from 01.07.2017. On the Commissioner being satisfied with the returns furnished by a registered dealer for the relevant period he is required to assess the amount of cess due from the dealer on the basis of such returns. Under Rule 25(3) of the Rules of 1996, if the Commissioner is not satisfied with the returns furnished by a registered dealer and he thinks it necessary to require the presence of the dealer or the production of further evidence, he is required to serve on such dealer a notice requiring the dealer to attend and produce or cause to be produced all evidence on which the dealer relies in support of its returns or to produce such evidence specified in the notice - Under Rule 25(11) of the Rules of 1996 the Commissioner is required to issue notice in Form-H to a dealer to show cause why it should not be so assessed. The date for compliance with notice cannot be earlier than fifteen days from the date of service thereof. Once it is shown that sufficient opportunity was given to a dealer to produce evidence on which he relies, the assessment is required to be completed either on the basis of the evidence produced by the dealer or on failure to produce such evidence, to the best of the judgment of the Commissioner. Both the contingencies namely, production of evidence as well as failure to comply with the terms of notice in Form-H, have thus been taken care of - There is no justification indicated by the Municipal Corporation for the failure on the part of the Commissioner to assess the amount of cess due from the Dealer to the best of the Commissioner s judgment at least from 21.08.2013 till the reminder in Form-H was issued on 24.09.2019. It is necessary for the Municipal Commissioner to complete the assessment under Rule 25(3) of the Rules of 1996 either on the date specified in the notice issued in Form-H or as soon as may be thereafter on the basis of evidence produced by a registered dealer. On failure of a registered dealer to comply with the terms of notice issued under Rule 25(3) of the Rules of 1996, the Commissioner has to assess to the best of his judgment the amount of cess due under Rule 25(4) of the Rules of 1996. Since assessment has to be undertaken at any time within three years from the end of the year in which the relevant period occurs as per Rule 25(5) of the Rules of 1996 if a dealer does not furnish any returns or on failure to apply for registration under Rule 25(7) of the Rules of 1996, it becomes clear that though there is no outer period fixed for completing such assessment, the same has to be completed within reasonable period. In the facts of the present case, the assessment has not been completed for a period of almost ten years from issuance of the initial notice in Form-H - the failure to complete the process of assessment under Rule 25(3) and (4) of the Rules of 1996 for a period of more than ten years from the date of issuance of the initial notice in Form-H would render the process of assessment liable to be quashed on the ground of unreasonableness and failure to complete the assessment for no justifiable reason. On that basis the assessment for the period from 01.04.2008 to 31.03.2009, 01.04.2009 to 31.03.2010, 01.04.2010 to 31.03.2011, 01.04.2011 to 31.03.2012 has not been completed within the aforesaid period of ten years which we have found to be reasonable period for completion of assessment. It is held that since the Commissioner failed to complete the assessment for the relevant years within a period of ten years of issuing the initial notice in Form-H, the notice dated 24.09.2019 is quashed. Since the period of ten years from issuance of notice in Form-H on 30.10.2014 for the year 01.04.2012 to 31.03.2013 is yet to expire, it is held that the Commissioner is free to proceed to complete the assessment expeditiously and in accordance with law. Petition dismissed.

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• 2023 (5) TMI 180
  Refund of entry tax recovered by the State from the Petitioners - Constitutional validity of the Goa Tax on Entry of Goods Act, 2000 - want of legislative competence - contravention of Articles 14, 19(1)(g), 265, 301 and 304(a) of the Constitution of India - Petitioners challenge the impugned Act on the ground that the same purports to relate to Entry 52 of List II of the Seventh Schedule to the Constitution of India but, in pith and substance, relates to entries in List I and consequently, beyond the legislative competence of the State legislature. HELD THAT:- The argument, based upon the local area and the consequent effect upon the legislative competence of the State, additionally stands answered by the decision of the Division Bench of this Court in Hindustan National Glass Industries Limited [[ 2019 (3) TMI 969 - BOMBAY HIGH COURT] ]. The Division Bench, in paragraphs 62, 63, 64, 65, 66, 67, and 70, has dealt with this issue and answered the same against the Petitioners and favouring the State. The Division Bench has relied, inter alia, on the State of Kerala and ors. vs. Fr. William Fernandez and ors [[ 2017 (10) TMI 491 - SUPREME COURT] ], in which the contention based upon such legislations being beyond the legislative competence of the State under Entry 52, List II of the Seventh Schedule, was rejected. Having regard to the decision of the Constitution Bench in Fr. William Fernandez and ors, and Hindustan National Glass Industries Ltd., and by following the reasoning therein - Petition dismissed.

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• 2023 (5) TMI 175
  Refund of entry tax recovered by the State from the Petitioners - constitutional validity of Sections 2(g), 2(m), and Section 3 of the Goa Tax on Entry of Goods Act, 2000 as being ultra vires Articles 14, 19(1)(g), 265, 301 and 304(a) of the Constitution of India - HELD THAT:- The scheme of the impugned Act and the charging section stipulate that there shall be a levy and collection of tax on the entry of goods into the State of Goa into a local area for consumption, use or sale therein. Schedule I lists the goods taxable under Section 3(1) of the impugned Act - Section 3(2) of the impugned Act makes it obligatory for the dealer and manufacturers to pay the tax. Section 3(3) of the impugned Act provides certain exemptions from the levy of entry tax for the dealer alone regarding goods on which tax has been paid or becomes payable. Schedule II, read with Section 3(4), provides a general exemption on entry tax for certain goods. Recently, in OCL India Ltd. vs State of Orissa and ors. [ 2022 (11) TMI 287 - SUPREME COURT ], the Hon ble Supreme Court considered the scope of interpretation of local area occurring under Entry 52 of List II of the Seventh Schedule to the Constitution. This was in the context of the Orissa Entry Tax Act, 1999, which defined local area to include industrial townships, including areas within the industrial township constituted under Section 4 of the Orissa Municipal Act, 1950, subjecting goods entering into such areas to entry tax - The Court held that reliance upon Diamond Sugar Mills Ltd. vs State of Uttar Pradesh [ 1960 (12) TMI 83 - SUPREME COURT] was misplaced because, in that decision, the Apex Court had to deal with a different set of facts. The levy on sugarcane imposed by the State of U.P. was on the incidence of entry into factory premises. The Court, therefore, correctly concluded that factory premises per se could not constitute a local area. Further, the Hon ble Supreme Court held that it is also a cardinal rule of interpretation that words of a taxing statute should be read in their ordinary, natural, and grammatical meaning. Further, in construing the words in a constitutional enactment that confers legislative power, a liberal construction should be placed upon them to have effect in their widest amplitude. The object of the levy, i.e., entry tax, is the regulation of entry of goods in a regular area for consumption, i.e., manufacture, use or sale. There is no dispute that entry of goods into an industrial area or estate is for their use for manufacturing or processing or the purposes of their delivery as their ultimate destination, i.e. for consumption, use or sale within that area. It could even be that the goods enter within the industrial area or estate as the ultimate point of destination for their use. In any case, the levy would be attracted because the incidence is the entry into the local area. The limited surviving challenges in this Petition based upon the alleged violation of Articles 14, 301 and 304 or the entire State being declared as a local area and, consequently, the legislation being ultra vires for such reasons cannot be accepted - Petition dismissed.

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• Indian Laws

• 2023 (5) TMI 179
  Rejection of applications under Section 8 of the Arbitration and Conciliation Act, 1996 - reference of dispute to arbitration of a Sole Arbitrator if mutually agreed - tripartite agreement - dispute beyond the scope of agreement - whether the parties were required to be referred to arbitration by allowing the applications moved by the appellant under Section 8 of the Act of 1996? - HELD THAT:- In the case of Sukanya Holdings [ 2003 (4) TMI 435 - SUPREME COURT ], while dealing with the question of applicability of Section 8 of the Act, as then existing, this Court underscored the requirements of correlation of subject-matter of the suit and subject-matter of the arbitration agreement and, inter alia, held that the suit should be in respect of a matter which the parties have agreed to refer and which comes within the ambit of arbitration agreement. Where, however, a suit is commenced as to a matter which lies outside the arbitration agreement and is also between some of the parties who are not parties to the arbitration agreement, there is no question of application of Section 8. The words a matter indicate that the entire subject-matter of the suit should be subject to arbitration agreement. As explained by this Court in Ameet Lalchand Shah [ 2018 (5) TMI 680 - SUPREME COURT ], the amendment to Section 8 after the aforesaid decision in Sukanya Holdings could be seen in the background of the recommendations of 246th Law Commission Report in which, inter alia, it was observed that as per the proposed amendment, judicial authority would not refer the parties to arbitration only if it finds that there does not exist an arbitration agreement or that it is null and void. If the judicial authority is of the opinion that prima facie the arbitration agreement exists, it would refer the dispute to arbitration and leave the existence of arbitration agreement to be finally determined by the Arbitral Tribunal. All the relevant aspects of the matter came up for fuller exposition by a 3-Judge Bench of this Court in the case of Vidya Drolia [ 2020 (12) TMI 1227 - SUPREME COURT ]. In the said case, basically, the reference came to be made to the bench of three judges when the ratio expressed in the case of Himangi Enterprises v. Kamaljeet Singh Ahluwalia [ 2017 (10) TMI 566 - SUPREME COURT] , to the effect that landlord-tenant disputes governed by the provisions of the Transfer of Property Act, 1882 were not arbitrable, was doubted. In the case of Oil and Natural Gas Corporation [ 2022 (4) TMI 1350 - SUPREME COURT ], another 3-Judge Bench of this Court essentially dealt with the group companies doctrine and application of alter ego principle in arbitration making a party not assenting to a contract containing arbitration clause to be nevertheless bound by the clause if that party is alter ego of an entity who is a party to the arbitration agreement. In the case of Intercontinental Hotels Group [ 2020 (12) TMI 1227 - SUPREME COURT ], the Court has essentially proceeded on the enunciation in Vidya Drolia (supra) even while accepting the requirement of constituting larger bench to settle the jurisprudence of the implication of non-stamping or under-stamping on the arbitration agreement. This Court, however, provided that until decision by the larger bench, the matters at pre-appointment stage be not kept pending. Not much of dilation is required in that regard. The submissions made by the appellant with reference to the amendment of Section 8 of the Act of 1996 and the later decisions of this Court in interpretation of the amended Section 8 do not inure to the benefit of the appellant. This is for the simple reason that no such conjunction can be provided to the original licence agreement dated 07.04.2005 and the tripartite agreement involving the Bank dated 06.07.2006 and 23.01.2008, whereby the arbitration clause could be held applicable to the tripartite agreement too. This is apart from the fact that in the frame of the suit and various other reliefs claimed, involving subsequent purchasers too and the allegations of fraud, the dispute cannot be said to be arbitrable at all. The present one cannot be said to be a case involving any doubt about non-existence of arbitration agreement in relation to the dispute in question. There being no doubt about non-existence of arbitration agreement in relation to the entire subject-matter of the suit, and when the substantive reliefs claimed in the suits fall outside the arbitration clause in the original licence agreement, the view taken by the High Court does not appear to be suffering from any infirmity or against any principle laid down by this Court. On the facts and in the circumstances of the present case and in the nature of transactions as also the nature of reliefs claimed in the suit, the view taken by the Commercial Court and the High Court in declining the prayer of the appellant for reference to arbitration cannot be faulted - Appeal dismissed.

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• 2023 (5) TMI 178
  Fault in giving service of hair cut - saloon of the Hotel ITC Maurya - Consumer Protection - hair cut was not done according to the instructions of appellant - whether there was a deficiency in service or not would be a question of fact? - Correctness of compensation awarded by National Consumer Disputes Redressal Commission [the NCDRC] - HELD THAT:- The NCDRC, based upon the evidence led which included the affidavits, photographs, CCTV footage, whatsapp chats and other material on record, came to the conclusion that there was deficiency in service. We are not inclined to interfere with the said finding regarding deficiency in service as the same is based upon appreciation of evidence and thus would be a pure question of fact. On account of such deficiency in service, what would be an adequate compensation taking into consideration the various claims made by the respondent, either under different heads or a lumpsum amount? - HELD THAT:- From a perusal of the impugned order of the NCDRC we do not find reference to or discussion on any material evidence to quantify the compensation - In this respect, this Court repeatedly requested the respondent, who was appearing in person, to refer to the material which she had placed before the NCDRC with respect to her present job at the time when she undertook the hair styling on 12.04.2018. This Court also required her to produce the material regarding her advertising and modelling assignments in the past or for which she had entered into a contract or agreement for the present and future with any of the brands to show her expected loss. The respondent utterly failed to demonstrate from the record filed before the NCDRC or before this Court regarding the above queries. In the absence of any material with regard to her existing job, the emoluments received by her, any past, present or future assignments in modeling which the respondent was likely to get or even the interview letter for which the respondent alleges she had gone to the saloon to make herself presentable, it would be difficult to quantify or assess the compensation under these heads. What could be quantified was compensation under the head of pain, suffering and trauma. However, amount of Rs. 2 Crores would be extremely excessive and disproportionate - This Court, therefore, is of the view that the NCDRC fell in error by awarding compensation to the tune of Rs.2 crores without there being any material to substantiate and support the same or which could have helped the NCDRC to quantify the compensation. The respondent if she has material to substantiate her claim may be given an opportunity to produce the same. Once deficiency in service is proved then the respondent is entitled to be suitably compensated under different heads admissible under law. Question is on what basis and how much. Let this quantification be left to the wisdom of the NCDRC based upon material if any that may be placed before it by the respondent - the order of NCDRC awarding Rs.2 crores as compensation for loss of income, mental breakdown and trauma and pain and suffering is set aside - matter remitted to the NCDRC to give an opportunity to the respondent to lead evidence with respect to her claim of Rs.3 crores. In case such evidence is led then adequate right of rebuttal be given to the appellant. Appeal allowed.

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• 2023 (5) TMI 177
  Seeking compliance of order of HC dated 1.12.2022 in the Contempt application filed u/s 12 of the Contempt of Courts Act for punishing the Opposite Party for willful disobedience of the judgment and order passed by this Court - HELD THAT:- Prima facie, a case has been made out for punishing the opposite party for willful disobedience of the judgment and order passed in the aforesaid writ petition. No notice is issued to the opposite party at this stage. The opposite party is granted three months further time to comply with the order dated 01.12.2022 passed by this Court in Writ Petition [ 2022 (12) TMI 1404 - ALLAHABAD HIGH COURT] from the date of production of a certified copy of this order. The applicant shall supply a duly stamped registered envelope addressed to the opposite party and another self-addressed envelope to the office within two weeks from today. The office shall send a copy of this order along with the self-addressed envelope of the applicant with a copy of contempt application to the opposite party within one week thereafter and keep a record thereof. The opposite party shall comply with the directions of the writ court and intimate the applicant the order through the self-addressed envelope within a week thereafter.

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• 2023 (5) TMI 176
  Seeking grant of anticipatory bail - petitioner has absented himself willfully despite the undertaking given by his wife and his counsel before the trial Court - HELD THAT:- This Court is sanguine of the fact that in the other connected petitions the interim protection has been granted in the light of the various orders passed by this Court as well as by the Apex Court. Since, in the present case the petitioner has absented himself willfully despite the undertaking given by his wife and his counsel before the trial Court. To meet the ends of justice and keeping in view the orders passed in the cases of other co-accused in various petitions, which are still pending for final hearing, the petitioner is directed to surrender before the trial Court within a period of one week from today and apply for regular bail. Application disposed off.

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