Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 8, 2023
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
Notifications
Highlights / Catch Notes
GST
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Locus standi to file application for Advance Ruling application - applicant is a recipient of services - Seeking ruling on payment of upfront lease premium - exempt from GST or not - Section 95(c) the term “applicant” has been defined to mean any person registered or desirous of obtaining registration under the Act - If that be the case, it will be well within the jurisdiction of the AAR to consider the application on merits rather than rejecting the same on the ground of lack of locus standi - HC
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Rejection of request for amendment of the GSTR-1 Form for the financial year 2017-2018 - appropriate directions have to be issued in the case on hand so that the appellant would be entitled to avail the credit which he is legitimately entitled to - respondent are directed to permit the appellant to file corrected GSTR-1 Form manually - HC
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Liability to pay tax under GST registration - applicant provides accommodation to pilgrims who visit the Ambaji Temple - On being asked whether the rooms of Nandini Ashram which they were renting to pilgrims is located in the precincts of the Ambaji Temple, he informed that it was not within the boundary of the temple. Going by the definition of precinct as mentioned above, it is emphatically clear that the applicant is not eligible for the benefit of Sr. No. 13 of the notification. - AAR
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Supply of pure services as a Sub-contractor to another contractor of the SMC - Architectural Consultancy Service provided by the applicant to Surat Municipal Corporation for construction of SMIMER Hospital & College Campus - The main contractor if exempt would not lead automatically to a sub-contractor providing service to the main contractor being exempt - AAR
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Classification of services - pure services or not - Architectural Consultancy Service provided by the applicant to Surat Municipal Corporation for construction of SMIMER Hospital & College Campus - The supply of drawings, samples, physical models etc can by no stretch of imagination be termed as supply of goods. Thus, the service rendered by the applicant is a ‘pure service’ not involving any supply of goods. - AAR
Income Tax
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Characterization of gain on sale of property - nature of transaction - transfer of capital assets or transfer of stock in trade - ITAT has without examining any of the relevant factors confirmed that the transaction was transfer of stock in trade. - The High Court has also failed to appreciate that even in the event of acceptance of claim made by the assessee, the differential amount on account of reduction in sale consideration of development rights was to be assessed in the current year as either capital gain or business income. - Matter restored back to ITAT - SC
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Exemption u/s 10(23C)(vi) - Commissioner was of the opinion that the activity of the respondent-assessee cannot be said to be solely for imparting the education and, therefore, not entitled to the benefit/exemption under Section 10(23C)(vi) - CIT(A) observed that, assessee is indulging into the profit which was found to be 67.81% without depreciation and 44.48% with depreciation - Order of HC allowed the exemption quashed - SC
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Income Declaration Scheme - The amount deposited by the petitioner under the IDS could not have been forfeited and have neither been refunded nor adjusted. This is not a case where one would say that the petitioner had failed to make the payment within the time prescribed under the DTVSV Act which would result in denying the benefit of the said Scheme to the petitioner but in our opinion, this is a simple case where the money which was lying in the corpus of the revenue had simply to be adjusted by way of a mathematical exercise and benefit accorded to the petitioner under the DTVSV Act. - HC
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Reopening of assessment u/s 147 - reason to believe - the onus would be on the AO to provide reasons to disbelieve the bank statements and supporting documents for reopening the assessment. That in our view has not been spelled out and therefore, the reassessment sought to be initiated deserves to be stalled. - AO has acted in excess of the limit of his jurisdiction to reopen the assessment - HC
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Suppression of receipts - Income from the additional works - since the customers have directly made the payments to the contractors for the additional works carried on by them and either the receipts or payments have not been passed through the assessee’s books of account, it cannot be considered as a turnover of the assessee. - AT
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Assessment of trust - anonymous donations made u/s 115BBC - AO had conducted due verifications and enquiry at his end but has failed to point out anything constructive leading to the conclusion that the donations in question were anonymous. - CIT(A) rightly deleted the additions - AT
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Revision u/s 263 by CIT - AO has failed to apply proper and correct section of Income Tax Act to the “Investment in the Undisclosed Stock”. The undisclosed investment in the unaccounted stock needs to be taxed separately as Income of the assessee as per the deeming provision of the Act. - the Assessment Order is erroneous and prejudicial to the interest of the revenue. - AT
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Attribution of profit to PE qua the offshore supply of plants and equipments - Attribution of profit to PE qua the offshore supply of plants and equipments - Additions made by AO deleted - AO directed to attribute 1% of the receipts from offshore supply of equipment as profit of the PE and accordingly compute the income of the assessee. - AT
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Penalty u/s 272A(2)(k) - delay in filling E-TDS - No valid reason has been given by the assessee for the delay in filling the Quarterly statements. - Assessee has claimed that no loss to revenue has been caused. However, it does not mean that assessee is allowed to skip the provision of filling the quarterly statements. - Penalty confirmed - AT
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Assessment order u/s.143(3) r.w.s.144C(13) on a non-existing entity - amalgamation of company - The assessment order, referring only to the name of the amalgamating company without any reference to the name of the amalgamated company, which was passed after due communication of the amalgamation, in our considered opinion, suffers from illegality and is incapable of countenance. - AT
Customs
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Burden of proof in case of Smuggling Activity - This discharge of burden of proof, in our opinion, can only happen in cases where there is a reasonable possibility of the accused being innocent. In the present case at hand, the petitioner herein was caught with the impugned goods within the customs area. In such a scenario, where the impugned goods are found on the person of the accused and within the customs area, any chance of the accused being innocent becomes an impossibility, since the illegal act is caught in the heat of the crime - SC
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Redetermination of the assessable value of the goods imported - accepting the lowest of the contemporaneous import value of identically described goods - it is seen that all the doubts raised by the revenue were communicated to the appellant before the final decision was taken. - There are no error in the impugned order rejecting the declared value and accepting the lowest of the contemporaneous import value of identically described goods falling under the identical heading imported at roughly the same time - AT
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Determination of effective date and time of implementation of Notification No. 93/2017-Cus. dated 21.12.2017 enhancing Customs duty - Re-assessment of duty post completion of self-assessment and out of charge order, on the basis of Notification No. 93/2017-Cus. published subsequent to such completion of assessment, is contrary to the provision of law. - AT
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Levy of penalty u/s 112(a) on the Customs Broker/appellant - Later, on further analysis of the sample by the Department, different composition of the goods was found which resulted in denying the benefit of the said notification. In these circumstances, there are no ground to impose penalty on the Customs Broker who has no knowledge about the outcome of the said chemical analysis conducted by the Department. - AT
Corporate Law
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Claim against Official Liquidator representing company subsequent to the order of winding up - the liability on account of the property tax and water tax claimed by the respondent No. 1 to the extent rejected by the appellant OL has been a post-liquidation liability, which the OL was obliged to discharge, in view of omission in the sale notice and then, in view of the operation of Rule 338 of the Rules of 1959 - SC
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Seeking grant of anticipatory bail - Money Laundering - collection of huge amounts and after collecting these amounts floating of various companies numbering more than 100 - Considering the fact that investigation of the case is complete; nothing more is to be recovered from the petitioner; undisputedly the petitioner fully cooperated with the investigating agency; apart from the undertaking given before this Court to the effect that the petitioner is ready and wiling to join the investigation, if any; and also keeping in view the education, antecedents and character of the present petitioner, the petitioner is not likely to flee from the course of justice - Relief granted - HC
IBC
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Initiation of CIRP - NCLT admitted the application - Operational Creditors - The tone and tenor of these protracted correspondences clearly manifest existence of dispute prior to the date of Section 8 demand notice on 16.09.2019 - these disputes were raised much before the issue of the issue of Demand Notice. For such disputed operational debt, Section 9 proceeding under IBC cannot be initiated at the instance of the Operational Creditor. - AT
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Initiation of CIRP - NCLT admitted the application - when the Corporate Debtor has frozen their liability, subsequent raising the issue of rate differences and attendant reconciliation, to our mind becomes redundant and therefore does not appeal to us to be genuine. - The operational debt had crystallized well ahead of the stoppage of the containers. That being the case, by no logical process, can the stoppage of shipments be held to be a pre-existing dispute, rather it was the outcome of a debt remaining unpaid. - AT
Service Tax
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Simultaneous proceedings at different locations - In the impugned order the Commissioner has rightly observed that action has already been initiated in Visakhapatnam and no further action is warranted in their Kolkata Unit. Accordingly, the Commissioner has rightly dropped the proceedings initiated against the Respondent in the impugned order. - AT
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Classification of services - manpower supply services or Business Auxiliary Service (BAS) - The tenor of the contract clearly indicate that the Agreement entered into by the appellant’s is a “Labour Supply Contract” and so the services rendered would fall under “Manpower Recruitment or Supply Agency” service - demand of tax upheld. - AT
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Refund of excess tax paid - rejection on the ground of time limitation - only under specific circumstances like “unconstitutionality, illegal levy, mistake of law’’ etc., a person can take recourse to writ jurisdiction or Contracts Act etc., where the limitation under Section 11B would not be applicable - thus, the refund in this case would squarely be covered by Section 11B as made applicable by Section 83 of Finance Act and therefore if the refund was not filed within the time period prescribed from the relevant date, the refund itself becomes non maintenable irrespective of the merit of the case. - AT
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Partial rejection of claim for refund of tax - The impugned order has not adduced any reason for not extending the benefit that the clarification circular of the Central Board of Excise & Customs (CBEC) considered appropriate for refunds pertaining to the period of dispute - the rejection of refund claim is set aside - AT
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Non-payment of service tax on the input services - removal of input as such from the factory - requirement of reversal of CENVAT Credit as per the provisions of sub-rule (5) of Rule 3 of CCR - Rule 3(5) of the Rules only talks about the Cenvat credit taken on inputs or capital goods. It does not refer to the Cenvat on input service - Demand set aside - AT
VAT
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Adjustment of Refund with the dues - application for the Amnesty Scheme was under consideration - serious prejudice has also been caused to the Petitioner by the Respondent Authorities in not putting the Petitioner to notice of the adjustment that was effected pursuant to the Refund Adjustment Order - matter restored back - HC
Case Laws:
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GST
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2023 (5) TMI 289
Interest on refund - stand of the respondents is that as per Section 56 of the Haryana Goods Service Tax Act, 2017 interest is payable to the applicant only when the tax amount is ordered to be refunded under sub section (5) of Section 54 is not refunded within 60 days from the date of receipt of the application - HELD THAT:- In the present case, since the amount was refunded to the petitioner on the very next day after issuing acknowledgement in Form RFD-02. Hence, there was no delay in issuing refund to the petitioner. As per respondents, payment of refund has been made after following the guidelines issued by CBEC circular No. 17.17.2017-GST and the moment the petitioner gave his application manually with earlier ARN after reversing input tax credit in the electronic credit ledger on 11.04.2019 and intimated the same to the proper officer. The proper officer issued acknowledgement in form RFD-02 on the same date and on the very next day i.e. 12.04.2019 refund was issued. The payment has been made as per the procedure given in the circular No. 94/13/2019-GST dated 28.03.2019 which covers the payment of refund. Hence, there is no delay on the part of the respondents in making payment of refund. The present writ petition is dismissed as the amount was refunded to the petitioner on the very next day after issuing acknowledgement in Form RFD-02.
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2023 (5) TMI 288
Locus standi to file application for Advance Ruling application - applicant is a recipient of services - Seeking ruling on payment of upfront lease premium - exempt from GST or not - rejection on the ground that the appellants have no locus standi to file such an application - HELD THAT:- The AAR in the order impugned in the writ petition has made a slight attempt to go into the aspect as to who is the applicant before the AAR seeking an advance ruling and concluded that the appellants being recipients of service is not entitled to maintain an application before the AAR. Under the provisions of the Central Goods and Services Tax Act, 2017, in Section 95(c) the term applicant has been defined to mean any person registered or desirous of obtaining registration under the Act. Thus, in our view, the said term has been defined in the most widest possible manner to include any person registered or desirous of obtaining a registration under the Act. Undoubtedly, the appellants are registered under the provisions of the Act. Section 97 of the Act deals with application for advance ruling - The application filed by the appellants would fall under clause (b), Section 97(2) as the appellants seek for a ruling as regards applicability of an exemption notification no.12/2017- CGST (Rate) dated 28th June, 2017. If that be the case, it will be well within the jurisdiction of the AAR to consider the application on merits rather than rejecting the same on the ground of lack of locus standi - the appellants clearly fall within the definition of applicant as defined under Section 95(c) of the Act, therefore, the application filed by the appellants before the AAR has to decided on merits. In the case of M/s. Gayatri Projects Limited anr. Vs. The Assistant Commissioner of State Tax, Durgapur Charge Ors. [[ 2023 (1) TMI 333 - CALCUTTA HIGH COURT] ], this Court had taken note of Section 95(c) and held that the Act defines applicant to mean any person registered or desirous of obtaining registration under the Act and in the said case, the appellants being registered dealers under the provisions of the Act would fall within the definition of applicant as defined under Section 95( c) of the Act, though the appellants therein were not parties to the proceedings before the AAR. The matter is remanded back to the West Bengal Authority for Advance Ruling to decide the application on merits and in accordance with law - appeal allowed by way of remand.
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2023 (5) TMI 287
Rejection of request for amendment of the GSTR-1 Form for the financial year 2017-2018 - rejection on the ground that such amendment can be done only on the due date of filing of Form GSTR-1 of March 2019 - HELD THAT:- In the instant case, guidance provided by two judgments of the Division Bench, one is of the Jharkhand High Court and the other one is of the High Court of Orissa. In the case of M/s. Mahalaxmi Infra Contract Ltd. Vs. Goods and Services Tax Council through the Secretary, Central Board of Indirect Taxes and Customs, New Delhi [ 2022 (11) TMI 323 - JHARKHAND HIGH COURT] , the Court considered an identical issue and granted relief to the assessee, holding that interest of justice would be served if the petitioner is allowed to make the necessary correction in GSTR-1 form for January 2019. Such correction, if does not entail technical difficulties by the GSTN, may be allowed to be made online by GSTN by opening the portal for a limited period upon due communication to the petitioner and respondent no.5 and 6 as it would reflect corresponding correction in their GSTR-2A form for the relevant period. Identical issue was also considered by the High Court of Orissa in the case of M/s. Y. B. Construction Pvt. Ltd., Bhubaneswar vs. Union of India Ors. [ 2023 (3) TMI 111 - ORISSA HIGH COURT] where it was held that assesses should not be prejudiced from availing credit that they are otherwise legitimately entitled to. The error committed by the petitioner is an inadvertent human error and the petitioner should be in a position to rectify the same, particularly in the absence of an effective, enabling mechanism under statute. Thus, appropriate directions have to be issued in the case on hand so that the appellant would be entitled to avail the credit which he is legitimately entitled to - respondent are directed to permit the appellant to file corrected GSTR-1 Form manually and the appropriate authority of the respondent department is directed to receive the forms manually and requisite details shall be uploaded in the web portal of the department within a period of six weeks from the date of such manual forms are submitted - appeal allowed.
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2023 (5) TMI 286
Requirement of GST registration - liability to pay tax under GST registration - applicant provides accommodation to pilgrims who visit the Ambaji Temple - registered trust under the Bombay Charitable Trust Act - HELD THAT:- In terms of Sr. No. I of the notification No. 12/2017-CT( Rate), services by an entity registered under section 12AA of the Income Tax Act, 1961, by way of charitable activities is exempted. The applicant claims that he falls within the ambit of a similar serial number 1 and 14 of notification No. 9/2017-IT (Rate) which as is mentioned is pari materia to the serial number mentioned above. However, the notification defines 'charitable activities' to include (i) public health, (ii) advancement of religion spirituality, yoga (iii) advancement of educational programmes or skill development and (iv) preservation of environment including watershed, forests and wildlife. The applicant, is a registered trust under the Bombay Charitable Trust Act. They hold 12AA certificate issued by the Income Tax Authorities and in terms of the trust deed, as per applicant, they provide accommodation to the pilgrims who visit the Ambaji Temple for which they charge room rent @ Rs. 1000/- per day. However, there is nothing on record to substantiate the claim that all the accommodation granted are to the pilgrims visiting the Ambaji Temple. Applicability of serial number 13(b) of N/N. 9/2017-IT (Rate) - HELD THAT:- The exemption is for the activity of renting of precincts of a religious place meant for general public, which is,- (a) owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income-tax Act. 1961 or (b) a trust or an institution registered under sub-clause (v) of clause (23C) of section It) of the Income-tax Act or (c) a body or an authority covered under clause (23BBA) of section 10 of the said Income-tax Act - Further, as per the proviso, the exemption is not applicable in respect of three situations, wherein one of the situations is renting of rooms where charges are one thousand rupees or more per day. The authorized representative of the applicant during the course of personal hearing held on 23.3.2023, was specifically asked as to whether the Nandini Ashram, was owned by the trust managing the Ambaji Temple, to which he answered in negative. On being further asked whether the rooms of Nandini Ashram which they were renting to pilgrims is located in the precincts of the Ambaji Temple, he informed that it was not within the boundary of the temple. Going by the definition of precinct as mentioned above, it is emphatically clear that the applicant is not eligible for the benefit of Sr. No. 13 of the notification. Whether they are liable to pay tax? - HELD THAT:- In terms of Sr. No. 14 of the notification No. 12/2017-CT (Rate), services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff below one thousand rupees per day or equivalent was exempted. However, in terms of notification No. 4/2022-CT (Rate) effective from 18.7.2022, serial number 14 and the entries relating thereto were omitted - the applicant is leviable to GST at the rate of 12%. Whether the applicant is liable for GST registration? - HELD THAT:- In terms of section 22 of the CGST Act, 2017, every supplier shall be liable to be registered from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees.
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2023 (5) TMI 285
Classification of services - pure services or not - Architectural Consultancy Service provided by the applicant to Surat Municipal Corporation for construction of SMIMER Hospital College Campus - exemption under entry no. 3 of notification No. 12/2017-Central (Rate) dated 28.6.2017 - HELD THAT:- supply goods along with services in the form of providing of various physical models of the medical college block, hospital block and residential campus; that various samples of the hardware materials, sanitary items, electrical items, various knobs, handles and all sample of ELV system, all are required to be supplied in the form of samples; that they also supply series of drawings in form of hard copy (print outs) and multiple tender books/documents The supply of drawings, samples, physical models etc can by no stretch of imagination be termed as supply of goods. Thus, the service rendered by the applicant is a pure service not involving any supply of goods. The pure services [excluding works contract service or other composite supplies involving supply of any goods] provided to the local authority [i.e. in this case to the SMC] by way of any activity in relation to a function entrusted to a Municipality under article 243 W of the Constitution of India is exempt from GST. Having said so the supply by the applicant to SMC being a pure service meets the criterion set out vide Sr. No. 3 of notification No. 12/2017-CT(Rate), dated 28.6.2017, and hence, the supply is exempt from GST. Exemption in relation to Pure Service - pure services provided by a sub contractor of the applicant. - HELD THAT:- We find that [a] the applicant before us is seeking a ruling on behalf of his sub-contractor and is hence is not the supplier of the service in the case wherein the supply is provided by the sub-contractor and [b] that the ruling sought by the applicant is not for admissibility of input tax credit in respect of supply received by the applicant from his sub-contractor. This being the factual matrix, we find that the applicant before us has no locus standi in seeking a ruling in the facts of the present case. In view of the foregoing, we refuse to answer this portion of the second question. Supply of pure services as a Sub-contractor to another contractor of the SMC - whether he as a sub-contractor can avail the exemption provided the exemption is available to the direct contractor of SMC? - HELD THAT:- The Apex Court in Dilip Kumar and Company, [ 2018 (7) TMI 1826 - SUPREME COURT ], has already held that exemption notifications are to be interpreted strictly the burden of proving applicability would be on the assessee to show that his case comes within the ambit of the conditions specified in the exemption notification. In the preceding paragraphs, while examining the applicability of the GST on the supply by the applicant we have already held that 3 conditions need to be satisfied - The fact that in the hypothetical situation of the applicant being a sub- contractor when he has provided the services/supply to the main contractor and not to the Central Government, State Government or Union Territory or Local authority or a Governmental authority or a Governmental entity directly would clearly take him out from the ambit of exemption provided vide Sr. No. 3 of the notification No. 12/2017-CT(Rate). The main contractor if exempt would not lead automatically to a sub-contractor providing service to the main contractor being exempt as has been held by the AAR in the case of M V Infra Services P Ltd [ 2020 (3) TMI 70 - AUTHORITY FOR ADVANCE RULING, KARNATAKA] If the entry number 3 of the notification No. 12/2017-Central (Rate) dated 28.6.2017 is not applicable to the applicant then accordingly the services provided by the applicant will be taxed under which HSN/SAC code and the rate of tax thereof? - HELD THAT:- Since it is already held that the supply made by the applicant would fall within the ambit of Sr. No. 3 of notification No. 12/2017-CT(Rate), this question becomes infructuous.
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2023 (5) TMI 231
Locus standi to file application - petitioner s application before the advance ruling authority has been rejected inter alia, on the ground of its locus standi - appealable order - HELD THAT:- The impugned order is an appealable order before the appellate authority for Advance Ruling under Section 100 of the WBGST Act, 2017 and in view of the availability of alternative remedy, this writ petition is not entertained and any relief cannot be granted to the petitioner except granting liberty to the petitioner to file the appeal against the aforesaid impugned order before the appellate authority in accordance with law, within 30 days from date and if such appeal is filed before the appellate authority, the same shall be considered on merit without raising the issue of limitation. Petition disposed off.
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Income Tax
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2023 (5) TMI 284
Characterization of gain on sale of property - nature of transaction - transfer of capital assets or transfer of stock in trade - as argued transaction related to transfer of stock in trade and that the assessee had shown stock in trade/inventories year after year in its balance sheets and its contention was accepted by the Assessing Officer and twice the assessments were completed u/s 143(3) - ITAT concluded that what was sold by the assessee was part of its inventory and not a capital asset also confirmed by HC - HELD THAT:- From the order passed by the ITAT, it appears that the ITAT has without examining any of the relevant factors confirmed that the transaction was transfer of stock in trade. ITAT has not considered the relevant aspects/relevant factors while considering the transaction in question as stock in trade and has not considered the relevant aspects as above which as such were required to be considered by the ITAT, the matter is required to be remanded to the ITAT to consider the appeal afresh in light of the observations made here-in-above and to take into consideration the relevant factors while considering the transaction as stock in trade or as sale of capital assets or business transaction. The High Court has also failed to appreciate that even in the event of acceptance of claim made by the assessee, including the assertion was shown in the tax return in the earlier AY i.e., 2008-09, the differential amount on account of reduction in sale consideration of development rights was to be assessed in the current year as either capital gain or business income. The present appeal succeeds in part. The impugned judgment and order passed by the High Court and that of the ITAT are hereby quashed and set aside and the matter is remitted back to the ITAT to consider the appeal afresh in accordance with law and on its own merits, while taking into consideration the observations made here-in-above and to take an appropriate decision on whether the transaction in question is the sale of capital assets or sale of stock in trade and other aspects referred here-in-above. It is observed that we have not expressed anything on merits in favour of either of the parties. It is ultimately for the ITAT to take an appropriate decision in accordance with law and on its own merits as above.
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2023 (5) TMI 283
Exemption u/s 10(23C)(vi) - Commissioner was of the opinion that the activity of the respondent-assessee cannot be said to be solely for imparting the education and, therefore, not entitled to the benefit/exemption under Section 10(23C)(vi) - HC allowed exemption - HELD THAT:- In the recent decision of this Court in the case of New Noble Educational Society [ 2022 (10) TMI 855 - SUPREME COURT] it is specifically observed and held by the three-Judge Bench of this Court that for claiming the benefit/exemption u/s 10(23C)(iii)(ab) which is para materia to Section 10(23C)(vi) the activity of the assessee must be be solely for educational purposes and if ultimately it is found that the activity is for profits the assessee is not entitled to the exemption u/s 10(23C)(vi) of the Act. Applying the law laid down by this Court in the case of New Noble Educational Society (supra) the impugned judgment and order passed by the High Court is unsustainable. It is required to be noted that taking into consideration the entire material on record, in fact, the Commissioner, while considering the application of the assessee for grant of exemption u/s 10(23C)(vi) specifically observed and held that the activity of the assessee cannot be said to be solely for imparting the education and that the assessee is indulging into the profit which was found to be 67.81% without depreciation and 44.48% with depreciation. The finding of fact recorded by the Commissioner, as such, not been upset by the High Court in the impugned judgment and order. The present Appeal succeeds. The impugned judgment and order passed by the High Court deserves to be quashed and set aside and is, accordingly, quashed and set.
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2023 (5) TMI 282
Income Declaration Scheme - Declaration of undisclosed income - petitioner had deposited an amount under the IDS but had not deposited the entire amount which was otherwise calculated in terms of the said Scheme - HELD THAT:- Failure on the part of the petitioner to pay the tax in its entirety in respect of the declaration made under section 183 would be deemed to have never been made under the IDS. The issue as to whether the partial amount that was deposited by a declarant would get forfeited in almost similar circumstances came up for consideration before the Apex Court in Hemalatha Gargya Vs. Commissioner of Income Tax, A.P. Anr. [ 2002 (11) TMI 6 - SUPREME COURT ] held that the time limits prescribed under the VDIS were mandatory and thus could not be extended on any equitable consideration, it nevertheless directed the refund or adjustment of the amount so deposited under the Scheme. The Andhra Pradesh High Court in Patchala Seetharamaiah Vs. Commissioner of Income-tax and Anr. [ 1999 (9) TMI 62 - ANDHRA PRADESH HIGH COURT ] while considering the provisions of the VDIS held that retention of any amount paid under the Scheme would be impermissible under Article 265 of the Constitution of India, if the amounts paid under the Scheme in terms of the declaration was held to be non-est as per the Scheme. As it appears that as on the last date specified, i.e., 30th October 2021, the petitioner had admittedly not paid the entire amount in terms of revised Form-3, dated 27th September 2021. However, the entire case of the petitioner is that if an amount of Rs. 3,48,752/- which was deposited and was lying with the respondents in terms of the IDS, were to be adjusted against the revised Form-3 under the Scheme of the DTVSV Act, then the petitioner s claim under the said Scheme could not be rejected. The amount deposited by the petitioner under the IDS could not have been forfeited and have neither been refunded nor adjusted. This is not a case where one would say that the petitioner had failed to make the payment within the time prescribed under the DTVSV Act which would result in denying the benefit of the said Scheme to the petitioner but in our opinion, this is a simple case where the money which was lying in the corpus of the revenue had simply to be adjusted by way of a mathematical exercise and benefit accorded to the petitioner under the DTVSV Act. We allow this petition and direct the respondents to issue a fresh Form-3, after giving to the petitioner credit of the amount paid under the IDS and the balance amount, if any, be refunded
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2023 (5) TMI 281
Reopening of assessment u/s 147 - reason to believe - whether Petitioner has failed to fully and truly disclose material facts in the original assessment? - Whether department had to only make out a prima facie case on the basis of which the Department could reopen the case and the sufficiency and correctness of the material was not a thing to be considered at this stage? - HELD THAT:- We find that the jurisdictional conditions for invoking section 147 148 are not satisfied as there is no failure to disclose material facts fully and truly. It is not in dispute that by the letter the Petitioner have submitted all the particulars along with supporting documents to the Respondent No. 1. Hence the reasons to believe and a presumption based on the statement of Shri Bhanwarlal Jain (a third party) in the course of a search, that the loans of the entities were bogus or accommodation entries was clearly dispelled. Moreover, the specific provisions of S. 153C would prevail over the general provisions of section 147 in the case of search on 3rd party. Once the Petitioner provided the bank statements and details of parties as sought for, the AO must necessarily carefully examine the material and then give particulars and reason/s to believe otherwise, whilst rejecting the objections, more so, when there is an assessment order u/s 143(3). This process would be in tune with the principles of shifting of onus under the evidence act. The criteria for reopening of assessment after a period of four years are no longer res integra in view of the judgement of this Court in the case of Ananta Landmark P. Ltd v Dy. CIT [ 2021 (10) TMI 71 - BOMBAY HIGH COURT] wherein this Court held where primary facts necessary for assessment are fully and truly disclosed the AO is not entitled to reopen the assessment on a change of opinion. It is held that while considering the material on record, one view is conclusively taken by AO, it would not be open for the AO to reopen the assessment based on the very same material and take another view. Petitioner has by production of bank statements and supporting documents shown that the reasonable belief of the AO was unfounded and consequently the presumption that the Petitioner was one of the beneficiary of the accommodation entries based on the statement of the third party was disproved. Consequently, the onus would be on the AO to provide reasons to disbelieve the bank statements and supporting documents for reopening the assessment. That in our view has not been spelled out and therefore, the reassessment sought to be initiated deserves to be stalled. There is no tangible material mentioned in the recorded reasons to conclude that income had escaped assessment, so also the nature of information is also not disclosed.AO has acted in excess of the limit of his jurisdiction to reopen the assessment in the exercise of powers under section 147 read with section 148 - Decided in favour of assessee.
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2023 (5) TMI 280
Reopning of assessment u/s 147 - bogus LTCG - assessee claimed to have purchased shares of the penny stock scrips which was sold and LTCG was claimed which was denied it will be treated as unexplained investment/income from other sources and not a capital gain - HELD THAT:- We find nothing to indicate failure to disclose any material fact. Upon examining the order u/s 143(3) we find that the AO has considered these very transactions and added to the total income on which the Petitioner has already paid the tax. We find no substance in the AO s reason to believe that income chargeable to tax has escaped assessment in as much as there is no mention of any tangible material that led to his conclusion. The entire process is triggered on a change of opinion as to the calculation of tax payable by the assessee. As stated hereinabove, it is evident that bald assertions of the transaction being an accommodation entry made in collusion connivance with the entry provider are used to re-open the assessment. It is well settled judicial principal that, the true test of income chargeable to tax escaping assessment is whether there exists fresh tangible material on the basis of which appropriate conclusion is reached. In the absence of such material the reassessment proceedings would be invalid. This principle has been upheld by the Apex Court as well as the jurisdictional High Courts in various rulings. Furthermore, this Court has held that reconsideration of the material available at the time of original assessment proceedings tantamount to change of opinion and therefore invalid. Decided in favour of assessee.
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2023 (5) TMI 279
Reopening of assessment u/s 147 - Reason to believe - change of opinion - reopenig beyong period of four years - HELD THAT:- The criteria for reopening of assessment after a period of four years are no longer res integra in view of the judgement of this Court in the case of Ananta Landmark P. Ltd v Dy. CIT [ 2021 (10) TMI 71 - BOMBAY HIGH COURT ] wherein this Court held that where assessment was not sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but was a case wherein assessment was sought to be reopened on account of change of opinion of AO the reopening was not justified. In the present case, the Respondent No. 1 has relied upon the same information available from the assessment records there was no new tangible material available on record to conclude that income had escaped assessment. In our view it is clearly a change of opinion . Besides a perusal of the ITAT order dated 11th January 2022 evinces that the same contentions are rejected by the ITAT and have attained finality in favour of the Petitioner. AO ought to have considered the order passed by the ITAT and could not feign ignorance as late as on 16th March 2022 especially when the revenue (respondent/s) was a party to the proceeding. Even the reply filed on 13th June 2022 is silent on the effect of the ITAT order. It essentially states that the Petitioner has failed to disclose material facts fully and truly in the original assessment. Decided in favour of assessee.
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2023 (5) TMI 278
Bogus purchases - addition to the extent of 12.5% - Tribunal upheld the view of the CIT(A) to treat the purchases from ten parties as bogus and also upheld the view expressed by the CIT(A) to sustain the addition to the extent of 12.5% of the amount of the disputed purchases - HELD THAT:- In a case involving a similar issue, even this Court RAM BUILDERS, [ 2022 (7) TMI 1091 - BOMBAY HIGH COURT] had dismissed the appeal filed by the revenue on the ground that if the entire amount of purchases were to be held as non-genuine purchases, then it would not be possible to justify as to how the works allotted to the assessee for execution by the semi Government Agencies, could be completed. Even in the present case the Appellant is a contractor, who had been allotted a subcontract for carrying out civil works of road and buildings repairs for which various types of building materials are stated to have been purchased from several suppliers including the ten suppliers, who are alleged to have been providing accommodation entries. It is not denied that the works allotted had been completed for the concerned agency, which would have been otherwise impossible, if the entire purchases made by the Appellant were to be held as non-genuine. In our opinion the order passed by the Tribunal warrants no interference. No substantial questions of law
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2023 (5) TMI 277
Suppression of receipts - Income from the additional works - Estimation of profit @ 8% by the Ld. CIT(A) as against the estimation of profit made by the Ld. AO @ 12.5% - only contention of the Revenue is that since the additional works are carried out through the employees of the assessee, therefore the Revenue considered it as diversion of turnover of the assessee - HELD THAT:- We find from the arguments put forth by the Ld. AR as well as the material placed before us, there are two different agreements entered into by various customers ie., one for the sale of flat and another agreement is for carrying out the additional works. It is also clearly demonstrated and established by the Ld. AR that the customers have directly made the payments to the contractors as per the additional works agreement. We find that since the customers have directly made the payments to the contractors for the additional works carried on by them and either the receipts or payments have not been passed through the assessee s books of account, it cannot be considered as a turnover of the assessee. Therefore, considering the above facts and circumstances of the case, in our considered view, we are inclined to delete the addition made by the Ld. CIT(A) on the differential amount sold by the assessee and direct the Ld. AO to delete the addition partially sustained by the Ld. CIT(A).
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2023 (5) TMI 276
Reopening of assessment u/s 147 - Income Tax Officer, Ward-1, Panipat jurisdiction over the assessee issuing the notice - HELD THAT:- Delhi Bench of the Tribunal considered similar situation in the case of Hari Dass Singla Vs. ITO [ 2022 (6) TMI 1348 - ITAT DELHI] wherein the Tribunal following the co-ordinate bench decision in the case of Mukesh Kumar Vs. ITO [ 2015 (6) TMI 1142 - ITAT, DELHI] decided the issue in favour of the assessee holding that notice issued by the AO being without jurisdiction has no legal sanctity. Notice issued u/s 148 by the Income Tax Officer, Ward-1, Panipat, since had no jurisdiction over the assessee when the notice was issued the notice is bad in law and consequently the re-assessment framed u/s 143(3) r.w.s. 147 pursuant to such notice by the DCIT, Central Circle, Karnal, is void ab initio. Therefore, the re-assessment order passed under section 143(3) read with section 147 of the Act is hereby quashed. Decided in favour of assessee.
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2023 (5) TMI 275
Disallowance of agricultural income - AO considering that the holding of the land cannot procure agriculture income and therefore rejected the agricultural income claimed by the assessee - HELD THAT:- CIT(A) in his order has estimated the agricultural income and has granted partial relief to the extent of Rs. 2 lakhs - CIT (A) has rightly considered the fact in the instant case and we find no reason to interfere in the order of the Ld. CIT(A) on this ground. This ground raised by the Revenue is dismissed. Disallowance of interest on borrowed capital u/s. 24(b) - DR submitted that the assessee has wrongly claimed the interest U/s. 24(b) and hence the AO has rightly disallowed the same - DR further submitted that the interest payments were for the purpose of mortgage loan taken by the assessee which is not eligible for deduction u/s. 24(b) - HELD THAT:- We find from the assessment order that the AO has not considered the reply of the assessee stating that it was a wrong claim made while filing the return of income claiming it to be an interest U/s. 24(b) - we find that the assessee has taken mortgage loan for the purpose of money lending business and has admitted interest income with respect to the money lending activities. The Ld. AO ought to have disallowed the claim u/s. 24(b) of the Act but allowed the claim as a business expenditure since the interest income is offered by the assessee. CIT(A) has rightly considered the facts of the case and has allowed the same. Therefore, in our considered view there is no need to interfere in the order of the CIT(A) on this issue and the thus this Ground raised by the Revenue is dismissed. Suppression of interest - DR argued that the assessee has not charged any interest from various borrowers and therefore, the Ld. AO has rightly concluded the interest being suppressed by the assessee as his business income for the AY under consideration - HELD THAT:- As find from the order of the AO the assessee has admitted interest voluntarily being the difference in the computation by the assessee on the interest receipts after netting interest admitted in the return of income - AO has not substantiated his assuming of interest at 18% as the prevailing rate. Neither the Ld AO conducted any enquiry with the borrowers. We find that Ld CIT(A) has adopted interest @12% as claimed by the assessees, but has failed to consider the assessee s computation and his voluntary admission - We therefore do not concur with the revised computation and direct the Ld. AO to adopt the amount voluntarily admitted by the assessee - Accordingly, this ground raised by the Revenue is partly allowed for statistical purposes. Unexplained cash deposits in the bank accounts of the assessee - DR submitted that the assessee has made cash deposits into the multiple bank accounts - HELD THAT:- The undisputed fact in the instant case is that the assessee is into money lending business through his GPA holder and has frequently made cash deposits and withdrawals into the bank accounts. Assessee has also declared interest income from the money lending business during the earlier assessment years which were also not disputed by the Revenue. From the table as mentioned in the Ld. CIT(A) order, we find that the assessee is regularly making cumulative cash deposits out of the taxed income until the AY 2016-17. We find that no details are provided regarding the cash deposits made during the impugned assessment year where the Ld. CIT(A) erred in treating the cash deposits made during the AY 2016-17 and considered it as available for depositing during the impugned assessment year. These cash deposits pertains to AY 2016-17 and cannot be considered for telescoping during the impugned AY. Therefore, we are not in agreement with the conclusions drawn by the Ld. CIT(A) and consequently set-aside the order of the Ld. CIT(A) on this ground and allow the grounds raised by the Revenue.
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2023 (5) TMI 274
Assessment of trust - Deduction u/s 57(iv) - interest received on compensation by the assessee from Govt. of Rajasthan in respect of compulsory acquisition of land - whether Income of the trust is inclusive of all the income and no separate deduction is allowable while determining the income u/s 11? - HELD THAT:- We have perused the provisions of Section 56(2)(viii) which provides that income by way of interest received on compensation or on enhanced compensation would be treated as income u/s 56(1) as income from other sources and provisions of Section 57(iv) provides that in the case of income of the nature referred to in clause (viii) of sub-section (2) of section 56, a deduction of a sum equal to fifty per cent of such income would be allowed and no deduction shall be allowed under any other clause of this section. It is apparently clear from perusal of the provisions of section that the interest received by the assessee on compensation is taxable under the head income from other source and while computing the income of the assessee a deduction has to be allowed 50% and no other deduction shall be provided under any other clause of this Section but there is no bar in claiming exemption of compensation income u/s 11 of the Act as the section specifically provides that under this section which is 57 of the Act no other deduction shall be allowed. Besides the case of the assessee finds supports from couple of decisions namely DIT(E) Vs. Jasabai Foundation [ 2015 (4) TMI 305 - BOMBAY HIGH COURT] wherein it has been held that income which the assessee trust has not included by virtue of section 10 could not be considered under section 11. The underlying facts in this case are that the dividend income which was claimed as exempt u/s 10(33) of the Act. According to the AO the said income formed a part of income from trust property and therefore can only be claimed to be exempt u/s 11 of the Act if applied for charity and not u/s 10(33) of the Act. On this basis the AO disallowed the exemption u/s 10(33). The order of the AO was confirmed by ld CIT(A) but tribunal seta side the same. The Hon ble High Court on appeal upheld the order of the tribunal. In ACIT Vs Saurashtra Trust [ 2006 (10) TMI 381 - ITAT MUMBAI] wherein it has been held that in the case of the trust income should be classified under various heads such as house property, capital gain and other sources and held that the assessee would be entitled to deductions on account of income computed under each head. Therefore we do not find any infirmity in the order of Ld. CIT(A) and accordingly the appeal of the revenue is dismissed.
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2023 (5) TMI 273
Assessment of trust - anonymous donations made u/s 115BBC - assessee trust is a charitable organization registered u/s 12AA - HELD THAT:- We find that sub-Section (3) to Section 115BBC of the Act specifically defines an anonymous donation as any voluntary contribution referred to in sub-clause (iia) of clause (24) of section 2, where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescrible - no other particulars have been prescribed under this proviso. The assessee in the present case has duly complied with the requisites by maintaining the records of the donors in the form of their names and addresses thereby not making them anonymous donations and resultantly not attracting the rigours of the Section 115BBC - AO had conducted due verifications and enquiry at his end but has failed to point out anything constructive leading to the conclusion that the donations in question were anonymous. CIT(A) has passed a reasoned order after considering all the elements and ingredients involved in the present case and hence no reason to interfere with the observation and findings of the CIT(A) and uphold the same. Accordingly, the sole ground of appeal raised by the revenue is dismissed.
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2023 (5) TMI 272
Revision u/s 263 by CIT - AO failed to apply the correct provision - undisclosed investment in the unaccounted stock - Addition of income declared during the source of survey on account of excess stock and Disallowance on account alleged cash payments in violation of Section 40A(3) - HELD THAT:- Excess stock was found during the survey - It is an admitted fact by the partner of the assessee firm that the said excess stock was not recorded in the books of the firm. In the statement the partner of the firm in question number 3 has admitted that the books are written up to 19/12/2014 i.e. up to the date of the survey. The partner has admitted in answer to question number 17 that the excess stock of 1058.686 grams in fine weight of Gold and 1060.825 grams of silver was not recorded in the books. In this case it is a fact that there was unaccounted stock, means the assessee had used its unaccounted money to purchase the said stock. The said stock is outside its purchase register. It means it is unexplained investment . The AO had erroneously not verified this aspect. Section 69B, 69A, 69 has introduced a deeming provision. The AO has failed to verify this aspect of the impugned excess stock declared during the survey. Therefore, the assessment order is erroneous and prejudicial to the interest of the revenue. If the Pr.CIT/CIT is of the opinion that inquiry required to be made in a particular case has not been made the assessment order will be deemed to be erroneous and prejudicial to the interest of the revenue. In this case the AO has failed to apply proper and correct section of Income Tax Act to the Investment in the Undisclosed Stock . The undisclosed investment in the unaccounted stock needs to be taxed separately as Income of the assessee as per the deeming provision of the Act. The tax liability is calculated as per section 115BBE of the Act. Hon ble Madras High Court in the case of SVS Oil Mills[ 2019 (5) TMI 1392 - MADRAS HIGH COURT] has upheld the addition of excess stock found during survey u/s 69B.The AO has failed to verify this aspect. Hence, we are of the opinion that the Assessment Order is erroneous and prejudicial to the interest of the revenue. This is not the case where two plausible views are possible and the AO has adopted one plausible view. Hence, the order u/s 263 is upheld qua the investment in the undisclosed stock . CIT observed that the Assessee has made URD purchases in cash - The assessee had submitted before the AO that the assessee has accepted old gold ornaments and given the new ornaments. Assessee had submitted this fact before the AO during the Assessment Proceedings u/s 143(3) r.w.s. 263. AO had not made any addition on this issue in the order u/s 143(3) r.w.s. 263. Assessee has filed copies of the bills raised by the assessee for the so called URD purchases before the ITAT. As observed that the assessee had accepted old ornaments and then converted them into new ornaments by adding some gold. Thus, the assessee has not made any actual purchases. Therefore, the order u/s 263 qua URD Purchases is annulled. Decided in favour of assessee in part.
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2023 (5) TMI 271
Foreign Tax Credit ( FTC ) - claim of the assessee was declined purely on the basis that Form No.67 was required to be filed online before due date of filing of return of income - contention of the assessee is that it is well settled for requirement of furnishing Form No.67 is directory in nature and he should not be made to suffer when he is entitled for Foreign Tax Credit merely because Form No.67 could not be filed - HELD THAT:- As assessee that Form No.67 could not be uploaded alongwith revised return of income as the system did not open for accepting the same. We are unable to sustain this finding of Ld.CIT(A) as the Co-ordinate Bench of the Tribunal after examining the law and relying upon the judgement of Engineering Analysis Centre of Excellence (P.) Ltd.[ 2021 (3) TMI 138 - SUPREME COURT] has allowed FTC. Therefore, we hereby direct the AO to allow benefit of Foreign Trade Credit to the assessee in accordance with law, after condoning the delay in filing of Form No.67. Ground raised by the assessee are hence, allowed for statistical purposes.
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2023 (5) TMI 270
Deduction u/s 80P - assessee has claimed deduction of interest from staff welfare fund and interest income from staff loan and also had earned miscellaneous income which represent amounts received from members for giving various services - HELD THAT:- We viewed that income derived from such transactions are eligible for deduction u/s 80P(2)(a)(i) and the interest income earned by the assessee from staff welfare fund and miscellaneous income earned from various services provided to its members are beneficial to the members of the assessee. Therefore, we hold that assessee is eligible for claim deduction u/s 80P(2)(a)(i) - Accordingly, the grounds raised by the assessee are allowed and set aside the order passed by the CIT(A). We also direct the AO to delete the addition made against the assessee in terms of assessment order passed u/s 143(3) of the Act. Appeal of the assessee is allowed.
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2023 (5) TMI 269
Attribution of profit to PE qua the offshore supply of plants and equipments - AO and DRP have held that offshore supply of equipment, being integrally connected to the service and installing activity undertaken by the PE in India, assessee s income has to be computed u/s 44BB - HELD THAT:- Undisputedly, in the past assessment years the AO has taken a consistent approach of attributing 1% of the receipts from offshore supplies as profits of the PE in India. Thus, in terms of Article 7(6), profits attributable to the PE have been consistently computed by adopting a particular method. In the impugned assessment year, AO has made a departure by discarding the earlier method and adopting a new method of computing profit u/s 44BB - While doing so, the AO, as it appears, has not taken note of the method of determination of profit attributable to the PE adopted in the past assessment years. DRP has completely ignored the submissions of the assessee and has proceeded to accept the view of the Assessing Officer without saying how the factual position is different from the past assessment years. Thus, it is manifest, both the AO and learned DRP have failed to provide any good and sufficient reason while departing from the methodology adopted by the department in respect of attribution of profit to the PE on receipts from offshore supply of equipment in past assessment years. Therefore, the decision of the departmental authorities militate against the specific provision contained under Article 7(6) of the tax treaty. The decision taken by the departmental authorities in computing profit of the assessee under section 44BB of the Act is unsustainable, as, it is not consistent with the position taken on the issue in past assessment years. Therefore, while deleting the addition made by the AO, we direct him to attribute 1% of the receipts from offshore supply of equipment as profit of the PE and accordingly compute the income of the assessee.
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2023 (5) TMI 268
TP Adjustment - Comparable selection - HELD THAT:- SG Analytics Pvt, Ltd - We find that the assessee company is into identification of customers, communication of the customers, market research, liaison, and reporting activities. The comparable is also doing research in financial market for their clients, financial research services to help clients and make the clients to make strategic decisions. Data management and analytics are of the basic parameters to be considered in the market research which will help the client to take prudent commercial decisions in augmenting the profits. The comparable is also offering marketing analytics, customer analytics, research analytics, sale analytics and other analytics which is akin to the functions of the assessee. RPA involves planning, implementing management and operating which is also similar to the function of the assessee which involves planning in identification of the customer and operating and management of the orders and provision of support services to get orders further principle. Both companies involves in providing primary and secondary research and also providing end to end support for their clients. Hence, we hold that the comparable has been rightly selected. Majestic Research Service Solutions Ltd - As seen that there was no mergers/acquisitions in the instant year as contended by the assessee. In fact there was only divestment of shareholdings which has no impact in the instant year's P L account. And, the assessee company's contentions appear to be irrelevant and baseless as far as selection of the company as comparable is concerned. On the issue of rejection by the TPO in the subsequent year we hold that the facts have been examined on year to year basis. During the instant year we find that the comparable is not beyond any filters applied and matches the FAR analysis. We need to look into and examine whether the comparable in question can be considered as right comparable which can be included TP Study for the year before us based on the functions, assets and risks. It is unnecessary to comment without examining the FAR of the subsequent year as to whether this comparable can be included in the current year or not. As the facts pertaining to the instant year are concern we find that Majestic can be considered as a right comparable. Axis My India Limited - The comparable has revenues from Printing of Magazines Periodicals of 17%, from Advertisement of 72% and from Market research and public polling of 11%. Thus, we find the maximum revenue are from advertisement and periodicals. The complete segmental financial of the comparable company are not available. Further, we find that this company is functionally dissimilar as it is engaged in the business of printing custom-made government transactional documents, Railway Reservation Tickets, Electricity Bills, LPG gas bills, envelopes etc. the comparable also undertakes contracts of printing of electricity bill together with customer specific data as provided by the issuer of the bills. Hence, we hereby hold that owing to the dissimilarity in the functions this company be excluded from the comparables. Appeal of the assessee is allowed.
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2023 (5) TMI 256
Penalty u/s 272A(2)(k) - delay in filling E-TDS - In order JCIT has specifically mentioned that the assessee has not given any reason for the delay in filling the quarterly statements - HELD THAT:- As decided in Raja Harpal Singh Inter College [ 2016 (5) TMI 1109 - ALLAHABAD HIGH COURT] as observed that timely filling of e-TDS returns helps department to process the returns whose tax has been deducted. E-TDS statements not only increases the reach of the department but also leads to creation of an audit trail that can be utilized as an effective tool against detection of tax evasion. Therefore, Hon ble High Court observed that stringent action is required against such defaults. The Hon ble High Court upheld the Penalty Order. No order of Jurisdictional Hon ble High Court has been brought to our notice. In this case no valid reason has been given by the assessee for the delay in filling the Quarterly statements. Therefore, it means there is no valid reason for the delay. The assessee in the statement of facts submitted to the CIT(A) has claimed that no loss to revenue has been caused. However, it does not mean that assessee is allowed to skip the provision of filling the quarterly statements. As per the Income Tax Act, assessee was duty bound to file the Quarterly statements within the statutory time limit mentioned in the Act. It is an admitted fact that the assessee has failed to file the quarterly statements within the statutory time. Therefore, respectfully, following the decision above we uphold the Penalty Order u/s 272A(2)(k) of the Act. We are of the opinion that sufficient opportunity was granted by the ld.CIT(A) and the Joint Commissioner of Income tax but the assessee failed to avail such opportunity. Accordingly, we dismiss the appeal of the assessee.
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2023 (5) TMI 255
Revision u/s 263 - TP Adjustment - Domestic Transfer Pricing u/s 92BA(i) as assessee had made purchases from its related party - Pr. CIT held that the assessment order passed u/s 143(3) as erroneous and prejudicial to the interest of Revenue for the only reason that the Assessing Officer failed to refer the specified domestic transactions to the TPO for determining the Arm s Length Price - HELD THAT:- It is observed that sub clause (i) of section 92BA has been repealed vide Finance Act, 2017 with effect from 1.04.2017. This Amendment to sub clause (i) of section 92BA was made even prior to completion of assessment under section 143(3) of the Act by the Assessing Officer on 22.09.2017 and for that matter even prior to passing of the order by the ld. Pr. CIT under section 263 of the Act. In the case on hand admittedly the order under section 143(3) of the Act has been revised solely on the ground that the Assessing Officer has not referred to the TPO to determine the Arm s Length Price of the specified domestic transactions. Since the provision of sub clause (i) of clause 92BA itself stood omitted at the time when the order was passed by the ld. Pr. CIT, in the light of the above judgements and also the decision of the Hon ble Supreme Court in the case of General Finance Company[ 2002 (9) TMI 3 - SUPREME COURT] the impugned order of the ld. Pr. CIT passed under section 263 cannot be sustained and the same is hereby quashed. The ground raised by the assessee is allowed.
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2023 (5) TMI 254
Assessment order u/s.143(3) r.w.s.144C(13) on a non-existing entity - assessment order in name of the amalgamating company - HELD THAT:- As seen that the return was filed by the assessee in the name of the amalgamating company as the scheme of amalgamation was not approved till then. As soon as the amalgamation got approved by the NCLT on 1.3.2017, the assessee intimated this fact to the AO on 11.4.2017 in the assessment proceedings for the A.Y. 2017-18 and on 27.10.2017 in the proceedings for the year under consideration. Even though the assessee, in its letters addressed to the AO/DRP, represented itself as LOAI (amalgamating company) now merged with LAIP (amalgamated company), but the factum of amalgamation was duly brought to the notice of the authorities. Despite that, the assessment order was passed thereafter on 10.11.2017 in the name of the `amalgamating company (formerly known as erstwhile name of the amalgamating company, namely, TAIP), rather than the amalgamated company or the amalgamated company (formerly known as amalgamating company). The AO ought to have correctly passed order in the name of 'LAIP' or 'LAIP (formerly known as LOAI) . The assessment order, referring only to the name of the amalgamating company without any reference to the name of the amalgamated company, which was passed after due communication of the amalgamation, in our considered opinion, suffers from illegality and is incapable of countenance. We, therefore, hold that the facts of the case are governed by Maruti (SC) [ 2019 (7) TMI 1449 - SUPREME COURT] and the consequential assessment order is liable to be set-aside. Appeal allowed.
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2023 (5) TMI 253
Addition u/s 68 r.w.s 115BBE - assessee has taken unsecured loans from Shri Gaurav Arora and Smt. Aanchal Gupta - HELD THAT:- The bank statement of Smt Aanchal Gupta show that the amount of Rs. 50 lakhs was transferred through RTGS/NEFT from the account of Shri Harish Kumar, who is the father of Smt. Aanchal Gupta. Thereafter, the said amount was transferred to the account of the assessee. A careful perusal of the bank statement shows that Aanchal Gupta was receiving money from her father and thereafter, the amount was transferred to the account of the assessee. Similarly, in the case of Gaurav Arora, substantial amounts were received by him through banking channels, which is evident from the bank accounts. A careful perusal of the index of the Paper Book filed by the assessee shows that the bank statements were not before the AO. AO took a contrary view. Though the bank statements were before the ld. CIT(A), but the ld. CIT(A) has not called for remand report from the Assessing Officer, but simply admitted the additional evidences. Denial of natural justice goes to the root of the matter. Therefore, in the interest of justice and fair play, we restore the issue to the file of the AO.
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2023 (5) TMI 252
Addition u/s 69B - Unexplained jewellery found during the course of search - HELD THAT:- As relying on case of Ashok Chaddha [ 2011 (7) TMI 142 - DELHI HIGH COURT ] withdrawals made month after month cannot be brushed aside lightly and which are evident from 202 to 204 of the paper book and it can be seen that the withdrawals are enormous and needless to mention the returned income of the assessee - The withdrawals and the returned income speak volumes about the richness of the family. Considering in particular the wealth tax returns viz-a-viz the jewellery found. We do not find any merit in the impugned addition made by the AO we accordingly direct the AO to delete the entire addition - Decided in favour of assessee. Six paintings found at the residence of the assessee - paintings were found at the time of search which were got valued by the department from two different valuers - AO adopted the valuation made by the yellow flute whereas the CIT(A) directed the AO to adopt the valuation of Delhi Art Gallery - HELD THAT:- We find that the DVO has also not pointed out any defect in the valuation report filed by the assessee nor there is any evidence on record to show that the AO has examined the valuation of the assessee. It can be seen from the two DVO s report that both the valuer of the department have valued the painting differently. This show that the opinion of the experts can also differ on the same set of facts In our considered opinion if the paintings are purchased in the year 2004 then the value cannot be added in the year under consideration more over even the department valuers have not expressed any reservations on the year of purchase shown by the valuer of the assessee, we do not find any reason to take any adverse view on that. The status of the family have already been explained while adjudicating ground No.1 (supra) - no merits in the impugned addition - Decided in favour of assessee. Addition u/s.69B of seized wrist watches - The status of the family, the returned income and the withdrawals have been discussed by us while adjudicating ground No.1 of assesse s appeal in detail wherein reference has been made to the judgment of the Hon ble High court of Delhi of Ashok Chaddha (supra). For our detailed discussion there in considering the status and the richness of the family we do not find any merit in the impugned addition of Rs. 1.50 lacs and the AO is directed to delete the same.
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Benami Property
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2023 (5) TMI 267
Hindu Undivided Family - Rejection of plaint under Order VII Rule 11 D of the Code of Civil Procedure - rejection of plaint sought on the ground that from plain reading of the plaint, it will appear that the suit property is purchased in the name of defendant, namely, Anpurna Devi (original petitioner), the suit is barred by the provision of Benami Transactions (Prohibition) Act, 1988 as well as barred under Hindu Law and the plaintiffs have got no cause of action. HELD THAT:- Sub-section 3 of Section 4 will not be applicable where the person in whose name the property is held is co-parcener in any Hindu Undivided Family and property is held for the bona fide of the co-parceners in the family. It is the case of the defendant that she was also a co-parcener. It is settled principle of law that a female member is never considered as co-parcener in a Hindu Undivided Family. In the case of NAND KISHORE MEHRA VERSUS SUSHILA MEHRA [ 1995 (7) TMI 64 - SUPREME COURT ], the Hon ble Supreme Court has held that if the property is standing in the name of wife, the provision under Section 4 will not be applicable because it is saved under Section 3 of the said Act. However, it may be mentioned that the claim of the plaintiffs is that the property is the joint family acquisition. In view of the aforesaid settled principle of law, even after the property is purchased by the husband in the name of the wife the onus/burden is on the husband to draw that the property was purchased not for the benefit of the wife. Further, the question whether the property is self-acquired property or joint family property is purely a question of fact and that cannot be agitated in Order VII Rule 11 of the Code of Civil Procedure. The plaintiffs have asserted for permanent injunction for restraining the defendant from alienating the suit property especially by defendant, namely, Anpurna Devi (original petitioner). It is, therefore, obvious that the plaint could not have been rejected as prayed by the defendant under the provision of Order VII Rule 11 of the Code of Civil Procedure especially with regard to first relief regarding the declaration of joint family property. This Court, therefore, does not find that the lower Court below has committed error of jurisdiction and illegality in passing the impugned order - this Civil Revision application is dismissed.
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2023 (5) TMI 266
Cancellation of gift deed in respect of the suit schedule property - perpetual Injunction restraining respondents from interfering with the suit schedule property - suit claim is barred under Section 4 of The Benami Transactions (Prohibition) Act, 1988 or not? - HELD THAT:- It is to be seen whether the suit claim of respondent No.1 falls within the purview of Section 4 of the Act. As per the entire averments of the plaint, it is manifest that respondent No.1 has purchased the suit schedule property in the name of his mother and subsequently, she executed registered release deed in favour of the respondent No.1-plaintiff on 24.07.2013 severing her rights over the suit schedule property and declared him as the beneficiary and the rightful owner, as all the charges, taxes were borne by him and paid entire sale consideration in respect of the same. In view of the said pleadings, it can be said that the contention of learned counsel for the petitioner that the suit claim is barred under Section 4 of the Act is not tenable. The suit claim is not barred under Section 4 of the Act. Therefore, the plaint cannot be rejected under Order VII Rule 11 (d) read with Section 151 of C.P.C. - the Civil Revision Petition is dismissed.
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Customs
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2023 (5) TMI 265
Burden of proof in case of Smuggling Activity - Right of an accused under the Customs Act, 1962 to settle the dispute as per provisions contained under chapter XIV A of the Customs Act - personal liberty under Article 21 of the Constitution of India - Smuggling of high value goods - watches - baggage rules - burden to prove - conflict between the two sets of High Court judgments - HELD THAT:- Section 123 of the Customs Act 1962, states that if an accused is caught by the authorities in the act of smuggling goods, the burden of proof, which originally vests with the prosecution, is reversed, and the same is transferred from the prosecution to the defense. In simpler terms, this would mean that in such cases, it is the accused who is tasked with proving his innocence, rather than the prosecution proving the accused person s guilt - This discharge of burden of proof, in our opinion, can only happen in cases where there is a reasonable possibility of the accused being innocent. In the present case at hand, the petitioner herein was caught with the impugned goods within the customs area. In such a scenario, where the impugned goods are found on the person of the accused and within the customs area, any chance of the accused being innocent becomes an impossibility, since the illegal act is caught in the heat of the crime. Since the discharge of burden proof, rather, the question of burden of proof itself becomes redundant in cases of seizures within the customs area, by default, the provision that mandates such a task also becomes redundant - While the conflict between the two sets of High Court judgments has been brought to an end, certain other issues flowing from the said interpretation, in our opinion, must also be clarified. Judgment rendered by the High Court of Bombay in the SURESH L. RAHEJA [ 2010 (10) TMI 726 - BOMBAY HIGH COURT] expounds the correction position of law, and we concur and approve the same. Whether any person who importing the impugned goods at the instance of another person, is a smuggler, and as such, the Settlement Commission cannot be approached in such cases? - HELD THAT:- In the case of Tata Teleservices (Maharashtra) Ltd vs Union Of India [ 2005 (7) TMI 113 - HIGH COURT OF JUDICATURE AT BOMBAY ] , the High Court of Judicature at Bombay, while deciding on a similar issue,by relying on the Constitution Bench judgment of this court in the case of LILA VATI BAI VERSUS STATE OF BOMBAY [ 1957 (3) TMI 58 - SUPREME COURT] , gave the phrase or otherwise , as mentioned in Section 127 B of the Act, an expansive interpretation, and held that the jurisdiction of the Settlement Commission can be invoked by a person who has committed smuggling, fraud or deliberate mis-declaration - Further, the abovementioned judgment of the Bombay high court was impugned in the Supreme Court by way of an appeal, and the same was dismissed by this Court vide order dated 03.08.2011, further fortifying the judgment of the High Court. The contention of the petitioner that any person who importing the impugned goods at the instance of another person, is a smuggler, and as such, the Settlement Commission cannot be approached in such cases, is rejected. Since a show cause notice has already been issued, no direction is that regard is warranted. If an application of settlement is filed by the petitioner, the same shall be dealt with by the Settlement Commission on its own merits and in accordance with law and the procedure prescribed u/s 127H of the Customs Act. However, we deem it appropriate to observe that, if at all, the Settlement Commission would deem fit, it can always seek further report from the Commission (Investigation) appointed within the Settlement Commission even after issuance of the show cause notice for this one time opportunity of settlement - petition disposed off. Whether a settlement remedy under Section 127B of the Customs Act, 1962, would be available for the seized goods, which are specified under Section 123 of the said Act - in the attending facts, the exercise of powers under Article 32 of the Constitution of India be appropriate? - HELD THAT:- The scheme of the act involves the imposition of customs duty, confiscation of goods and consequences of skirting or attempting to skirt the same in the form of varied penal consequences, including imprisonment. This follows the purpose of the Act, as noted by this Court in Ambalal [ 2010 (12) TMI 16 - SUPREME COURT ] , which is to sternly and expeditiously deal with goods smuggled into India in contravention of the prohibitions within the law. On a plain reading of Sections 127B and 123, it is evident that the proviso to Section 127B(1) specifies certain categories of goods are barred from the jurisdiction of the settlement commission. These include goods mentioned under Section 123 and goods relating to the NDPS Act. Therefore, recourse under Section 127B cannot be made if any of the above goods are involved 23.Even without any controversy about the origin of the goods, Section 127B of the Act would not apply for settlement in respect of the goods enumerated under Section 123 as this goes against the statutory scheme of penal consequences for committing certain offences such as for evading duty, as alleged in the present case, under Section 135 - Hence, the contention of the Petitioner that the legislative intent is for settlement of all cases cannot be accepted. In the present case, the recovery from the Petitioner was on crossing the green channel at the Delhi airport on 05.10.2022, wherein the officers of the Investigating Agency apprehended him with dutiable goods, including watches of admitted foreign origin. Watches is one of the categories of goods mentioned in Section 123 of the Act. Since there is a recovery of goods to which Section 123 applies, the same is a bar for the Petitioner to approach the Settlement Commission. The matter is fit to be remitted to the adjudicating authorities to take appropriate action, as per law. Petitions disposed off.
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2023 (5) TMI 264
Absolute confiscation or option of redemption fine - smuggled gold and foreign (Thai) currency - prohibited goods or not - burden to prove - HELD THAT:- In the present case, the Commissioner (Appeals) has held that the gold is not a prohibited item, it should be offered for redemption in terms of Section 125 of the Act. The Tribunal has recorded that the respondents had brought impugned Gold from Bangkok to Gaya International Airport without declaring the same to Customs Authorities and there was nothing to explain as to how the Customs authorities posted at Gaya International Airport could not detect such huge quantity of gold being removed from Gaya International Airport by passengers on their arrival and there was no explanation as to how the respondents procured gold before they were intercepted at Mughalsarai Railway Station and the Tribunal has dismissed the Appeals for the aforesaid reason and has affirmed the order passed by the Commissioner (Appeals) holding that the import of gold was not prohibited under the Foreign Trade Policy or any other law and, therefore, there is no sufficient ground for absolute confiscation of the gold. Nothing was placed before this Court to challenge the finding of the Commissioner (Appeals), which was upheld by the Tribunal, that Gold is not a prohibited item, and nothing was placed before this Court to establish that this finding of the Commissioner (Appeals) was wrong or erroneous - Even if the goods in question had been brought into India without following the conditions prescribed therefore and those fall within the category of prohibited condition, Section 125 of the Act provides that the Adjudicating Officer may give to the owner of such goods an option to pay fine in lieu of confiscation. Section 128 A of the Act confers powers on the Commissioner (Appeals) to pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against. In the present case, the Commissioner (Appeals) has modified the order of absolute confiscation by imposing penalty in lieu thereof, which was well within his power as per Section 128 A. The Tribunal has affirmed the order of the Commissioner (Appeals). This Court dismissed the further Appeal filed by the Department, finding no illegality in the judgment passed by the Tribunal - the order passed by this Court refusing to interfere with the aforesaid order passed by the Tribunal does not suffer from any error, much less from an error apparent on the face of the record - Review application dismissed.
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2023 (5) TMI 263
Seeking waiver of any pre-deposit under Section 129E of the Customs Act, 1962 for maintaining an appeal - Penalty u/s 112(b)(i) of the Customs Act - Constitutional validity of Sections 86, 87, 88, 94 97 of the Finance Act, 2022 - HELD THAT:- The penalty has been imposed on the petitioner solely on the basis of a string of statements recorded in the said proceedings. Considering the financial status of the petitioner as well as the manner in which the penalty had been imposed, the insistence on pre-deposit would effectively render the petitioner s remedy of an appeal before the learned CESTAT, illusory - it is considered apposite to direct the learned CESTAT to consider the petitioner s appeal on merits, without insisting on any pre-deposit. Petition is disposed off.
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2023 (5) TMI 262
Redetermination of the assessable value of the goods imported - Polyester Knitted Fabric - Rejection of declared value - accepting the lowest of the contemporaneous import value of identically described goods - HELD THAT:- In the instant case it is seen that the proceeding subsection 17(4) have culminated into the OIO dated 08.03.21. It is seen that before this order which is a speaking order the appellant has been provided opportunity of personal hearing. The NIDB data based on which re-assessment was done has been provided to the appellant. In this circumstances, the objections raised by the appellant do not hold ground. The decision in the case of SIGMA POWER PRODUCTS PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS (PORT) OTHERS [ 2017 (3) TMI 497 - CALCUTTA HIGH COURT] relied by the appellant is of no avail as in the instant case the re-assessment itself was done by a speaking order. In the instant case it is seen that all the doubts raised by the revenue were communicated to the appellant before the final decision was taken. The requirement of Rule, 12(2) of the CVR, 2007 is satisfied in the instant case. Moreover, there is no record of any request be made by the appellant for intimation in writing of ground of doubting the truth or accuracy of the value declared by the appellant. It is also noticed that the products has been described as Polyester Knitted Fabrics in all these entries. The quantity imported by the appellant is 21540 kgs. and the quantity imported against bill of entries No. 2198984 dated 1.01.2021 and 2198928 dated 01.01.2021 is 23905 kg. and 24265 kg., is comparable. All the imports were made from China. In this background, we find that the imports are comparable in all respects. There are no error in the impugned order rejecting the declared value and accepting the lowest of the contemporaneous import value of identically described goods falling under the identical heading imported at roughly the same time - appeal dismissed.
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2023 (5) TMI 261
Determination of effective date and time of implementation of Notification No. 93/2017-Cus. dated 21.12.2017 enhancing Customs duty - Desi Chick Peas - HELD THAT:- After going through both the provisions in Section 25(1) (4) of Customs Act, it can only be stated that by virtue of the those provisions the legislation had empowered the Central Government to vary the Customs duty, to its satisfaction, when circumstance so demands and while Section 8A of the Customs Traffic Act prescribes or increase of import duties, Section 25 prescribes for exemption from application of import duties, on certain articles, when it is expedient to do so on public interest or to meet the circumstances. Apart from these thin line distinction, what remains in common is the standing of the Central Government to enter into the legislative domain through a delegated authority, vested on it by the Parliament and it is in respect of this position/standing of the Central Government s law making power. Both the notifications issued under Section 25 of the Customs Act and Section 8A of the Customs Tariff Act stand on similar footings for being delegated legislation for not being an Act or Regulation as has defined in the General Clauses Act, for which fraction of time could have been ignored and Section 5(3) of the General Clauses Act, 1897 would not be applied to these notifications, as otherwise contrary is expressed by way of insertion of deeming provisions in Regulation 4(2) of Regulation 2018, and in enabling provision of Section 46 of the Customs Act, while Section 15(1)(a), 17 Section 46(1) and 47(2)(a) Constitute one composite scheme. Re-assessment of duty post completion of self-assessment and out of charge order, on the basis of Notification No. 93/2017-Cus. published subsequent to such completion of assessment, is contrary to the provision of law. Appeal allowed.
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2023 (5) TMI 259
Levy of penalty u/s 112(a) of the Customs Act on the Customs Broker/appellant - import of Calcium Nitrate with Boron and Nitro Phosphate with Potash through New Mangalore Port by claiming concessional rate of BCD in terms of Notification No.12/2012-Cus dt. 17/03/2012 - denial of benefit of notification - whether appellant had any role whatsoever in claiming exemption notification by the importer on the basis of the certificate and fair interpretation of the notification? - HELD THAT:- The issue relates to claiming exemption Notification No.12/2012-Cus on the import of fertiliser by the importer M/s. Yara Fertilisers India Pvt. Ltd., on the basis of chemical test report furnished at the time of assessment of the Bill of Entry. Later, on further analysis of the sample by the Department, different composition of the goods was found which resulted in denying the benefit of the said notification. In these circumstances, there are no ground to impose penalty on the Customs Broker who has no knowledge about the outcome of the said chemical analysis conducted by the Department. In similar circumstances involving the same parties pertaining to different Bill of Entry, the learned Commissioner(Appeals) by a detailed order even though confirmed the demand of differential duty, set aside the penalty against the Customs Broker - there are no merit in the impugned order imposing penalty on the Customs Broker for advancing the claim of inapplicable notification by the importer - appeal allowed.
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2023 (5) TMI 258
Refund of Antidumping duty - Appellant had wrongly typed the adjudication No. as 108 which should have been correctly typed as - /08 - HELD THAT:- The appeal number, file number, date of order, authority passing the order and the party being same, error in typing out a wrong appeal number would not have any impact on the decision rendered by this Tribunal in respect of the said order and, therefore, there is no requirement of agitating the same matter again before this Forum. Now coming to the legality of the order subsequently passed through an addendum/corrigendum appropriating the amount paid by the Appellant towards Antidumping duty etc., it can be said that the said order is passed without authority of the law since it is a settled principle of law, as has been affirmed by the Hon'ble Supreme Court in the case of STATE BANK OF INDIA ORS VERSUS S.N. GOYAL [ 2008 (5) TMI 649 - SUPREME COURT] and HARI SINGH MANN VERSUS HARBHAJAN SINGH BAJWA [ 2000 (11) TMI 1221 - SUPREME COURT] and in many other decisions, that the court becomes functus officio the movement an official order disposing of case is signed and such an order cannot be altered except to the extent of correcting a clerical or grammatical error while a Quasi-Judicial Authority will become functus officio only when its order is pronounced, or published/notified or communicated (put in the course of transmission) to the party concerned. Such invalid order passed subsequent to the order signed, pronounced and communicated has to be set aside - Appeal allowed.
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2023 (5) TMI 230
Levy of penalty u/s 112 of the Customs Act, 1962 - Smuggling - Seizure of Gold Bars - HELD THAT:- Considering that the petitioner has a remedy of appeal before the Customs Excise and Service Tax Appellate Tribunal, it is not considered apposite to examine the petitioner s challenge to the impugned order in this petition. However, given the manner in which the penalty has been computed and the financial condition of the petitioner, we consider it apposite to direct the Tribunal to consider the petitioner s appeal without any pre-deposit. It is clarified that this Court has not expressed any opinion on the merits of the impugned order and the Tribunal shall consider the petitioner s appeal on merits uninfluenced by any observations made in this order. Petition disposed off.
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Corporate Laws
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2023 (5) TMI 257
Claim against Official Liquidator representing company subsequent to the order of winding up - Demand of property tax and water tax from the appellant in relation to the company in liquidation from the date of order of winding up and until the date of confirmation of sale of assets to the auction purchaser - HELD THAT:- On perusal of the contents of the sale notice dated 09.05.2003 in the present case and the relevant terms and conditions of sale of the assets of the company in liquidation. It is evident that expansive technical expressions were used in the present case by the appellant OL in the terms and conditions of the sale that the same would be on as is where is whatever there is basis and then, further disclaimer was stated that the appellant OL was not providing any guarantee as to the quality, quantity or specification of the assets sold. Such stipulations and disclaimers were definitely putting the purchasers to notice to get themselves acquainted with what the property is (the nature and extent); where the property is (the locational attributes); and whatever there is (quantity and condition of the property) - All such stipulations were essentially pertaining to the physical properties/attributes of the assets in question but, the significant omission in those terms and conditions had been to make it obligatory on the bidder/purchaser to make himself aware about encumbrances, liens and claims attached to the assets in question. This omission strikes at the very root of the case of the appellant. In UT Chandigarh Administration [ 2009 (3) TMI 862 - SUPREME COURT ], this Court dealt with the consumer complaints of respondents filed to contend that the appellant was not legally entitled to claim balance of premium or annual rent, for having failed to provide basic amenities at the residential and commercial sites auctioned by way of advertisement. This Court allowed the appeals as the purchaser was not a consumer with reference to public auction of existing sites. It has rightly been argued on behalf of the contesting respondents, with reference to Section 100 of the Act of 1882 and the decision of this Court in AI Champdany Ltd. [ 2009 (2) TMI 470 - SUPREME COURT] , that in absence of any statutory provision, the auction purchaser without notice of any charge could not be made liable for the arrears of tax in question during the post-liquidation period. The provisions of the M.P. Act of 1956 were not creating any such encumbrance or charge on the property which would attach to the property for all times and under all circumstances nor they could be said to constitute any encumbrances which diminish the value of the property. In contrast, they would only qualify as expenses for preserving, realising or getting in the assets of the company and thus, shall have to be paid in priority and before any other payment in the course of distribution of the assets of the company or value thereof. The Company Court and then the Division Bench of the High Court have rightly underscored the faults on the part of the appellant OL and have rightly held that the liability on account of the property tax and water tax claimed by the respondent No. 1 to the extent rejected by the appellant OL has been a post-liquidation liability, which the OL was obliged to discharge, in view of omission in the sale notice and then, in view of the operation of Rule 338 of the Rules of 1959 - Appeal dismissed.
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2023 (5) TMI 251
Seeking grant of anticipatory bail - Money Laundering - collection of huge amounts and after collecting these amounts floating of various companies numbering more than 100 in which said Mukesh Modi or his relatives were the Directors and the Co-operative society advanced loans to the said companies which were never repaid and thus the amount collected from innocent investors was siphoned off. HELD THAT:- Although right to seek anticipatory bail is not a fundamental right, yet an individual is having a right to life and liberty, as granted by Article 21 of the Constitution of India. However, the said right can very well be curtailed by the procedure established by law. The normal procedure for curtailing the liberty of a person accused in an offence is that the accused can be arrested even without warrants from the court. Same is the situation under the new Companies Act as well and the authorized officer/designated officer can arrest a person even without warrants issued from a Court. However, to ensure that an innocent person is not unduly harassed by taking him into custody, the Courts have been conferred a special power under Section 438 CrPC. But this power has to be exercised sparingly by the courts, keeping in view the mitigating circumstances showing the ex facie innocence of the accused vis-a-vis the allegations leveled against him and further, that in case the accused is granted protection, the investigation of the case would not be unduly hampered. In the present case, the petitioner was not apprehending his arrest so far as the investigation was over. The apprehension has arisen only from the impugned order issued by the Court for non-bailable offences. The petitioner is seeking protection against his arrest so as to appear before the trial court to face further proceedings in accordance with law. Hence, on its own facts, the present case stands on an altogether different footing. It is trite that grant of anticipatory bail, at the stage of investigation may frustrate the investigating agency in interrogating the accused and in collecting the useful information and also the materials which might have been concealed and grant of anticipatory bail, particularly in economic offences would definitely hamper the effective investigation. Admittedly, the investigation of the present case is already complete and no further recovery is to be made from the petitioner. In that eventuality, it would not be justified to put the petitioner put that bars as no useful purpose would be served. The Supreme Court in Siddharth vs. State of Uttar Pradesh Ors. [ 2021 (8) TMI 977 - SUPREME COURT ] while observing that it is not essential in every case involving cognizable non-bailable offence to take the accused into custody at the time of filing of filing of charge-sheet especially where the accused have cooperated throughout the investigation, held that If the Investigating Officer has no reason to believe that the accused will abscond or disobey summons and has, in fact, throughout cooperated with the investigation we fail to appreciate why there should be a compulsion on the officer to arrest the accused. Considering the fact that investigation of the case is complete; nothing more is to be recovered from the petitioner; undisputedly the petitioner fully cooperated with the investigating agency; apart from the undertaking given before this Court to the effect that the petitioner is ready and wiling to join the investigation, if any; and also keeping in view the education, antecedents and character of the present petitioner, the petitioner is not likely to flee from the course of justice since there is nothing on record to suggest that if the petitioner is granted concession of anticipatory bail, he would influence any witness in the case; and that admittedly, the petitioner has already left the company much before the start of investigation, this Court is of the considered view that the petitioner deserves to be granted the concession of anticipatory bail, at this stage. The petitioner shall be released on bail, at this stage, by the trial court on his furnishing bail bonds/sureties to its satisfaction - Petition allowed.
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2023 (5) TMI 250
Illegal possession of the Office cum-guest house since the year 1987 - contention of the learned counsel for the applicant is that no offence against the applicant is disclosed and the present prosecution has been instituted with malafide intentions for the purposes of harassment - Section 452 of the Companies Act, 2013 - HELD THAT:- From the perusal of material on record and looking into the facts of the case at this stage it cannot be said that no offence is made out against the applicant. All the submissions made at the bar relates to the highly disputed question of facts, which cannot be adjudicated upon by this Court under Section 482 Cr.P.C. At this stage only prima facie case is to be seen in the light of the law laid down by Supreme Court in cases of M/s Neeharika Infrastructure PVT Ltd. Vs State of Maharashtra, AIR 2021 SC 1918, R.P. Kapur Vs. State of Punjab, [ 2021 (4) TMI 1244 - SUPREME COURT ], State of Haryana Vs. Bhajan Lal, [ 1990 (11) TMI 386 - SUPREME COURT ], State of Bihar Vs. P.P.Sharma, [ 1991 (4) TMI 365 - SUPREME COURT ], lastly Zandu Pharmaceutical Works Ltd. Vs. Mohd. Saraful Haq and another [ 2004 (11) TMI 519 - SUPREME COURT ], State of M.P. Vs Awadh Kishore Gupta and others [ 2003 (11) TMI 584 - SUPREME COURT ], and Dr. Monica Kumar and Another Vs State of UP and Others, [ 2008 (5) TMI 687 - SUPREME COURT ] . The disputed defence of the accused cannot be considered at this stage. Moreover, the applicant has got a right of discharge under Section 239 or 227/228 Cr.P.C. or 245 Cr.P.C. as the case may be, before the court below and he is free to take all the submissions in the said discharge application before the trial court. The application has no force and is accordingly dismissed.
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Insolvency & Bankruptcy
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2023 (5) TMI 249
Initiation of CIRP - NCLT admitted the application - Operational Creditors - dispute with respect to supply of materials and failure of completion of work order on time by the Operational Creditor - pre-existing disputes or not - service of notice of dispute beyond 10 days - HELD THAT:- With regard to an Operational Creditor, the existence of dispute and its communication to the Operational Creditor is therefore statutorily provided for in Section 8. In the present case, it is an undisputed fact that the demand notice was issued by the Operational Creditor on 16.09.2019 and notice of dispute was raised by the Corporate Debtor on 07.11.2019 but beyond the prescribed period of ten days. Perusal of the impugned order makes it clear that the Adjudicating Authority simply relied on the email dated 09.01.2019 to come to the conclusion that there was debt and default and admitted the Section 9 petition. The satisfaction of the Adjudicating Authority is sans consideration of the reply to the demand notice and the voluminous exchange of correspondences which has taken place between the two parties relating to supplies, delay in completion of project, pendency of risk and cost account of BHEL and LD related issues. The tone and tenor of these protracted correspondences clearly manifest existence of dispute prior to the date of Section 8 demand notice on 16.09.2019 - these disputes were raised much before the issue of the issue of Demand Notice. For such disputed operational debt, Section 9 proceeding under IBC cannot be initiated at the instance of the Operational Creditor. Though there is no need to enter into final adjudication with regard to existence of dispute between the parties regarding operational debt, but the contents of these emails/ letters/minutes of meetings ought to have been factorized to arrive at a finding whether the defence taken by the Corporate Debtor is moonshine defence unsupported by evidence. Surprisingly none of these emails and letters establishing the existence of pre-existing disputes between the parties have been taken into cognisance by the Adjudicating Authority. These being pertinent factors for consideration, to our mind the Adjudicating Authority has committed an error in side-stepping these aspects and admitting Section 9 application - Where operational creditor seeks to initiate insolvency process against a Corporate Debtor, it can only be done in clear cases where no real dispute exists between the two parties which is, however, not so borne out given the facts of the present case. The Adjudicating Authority committed serious error in admitting Section 9 application in the facts of the present case. We thus allow this appeal and set aside the impugned order initiating CIRP of the Corporate Debtor and all other orders issued pursuant to the impugned order. The Corporate Debtor is released from the rigours of CIRP and is allowed to function independently through its board of directors with immediate effect. The Resolution Professional shall however be paid his fees/expenses by the Operational Creditor - Appeal disposed off.
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2023 (5) TMI 248
Initiation of CIRP - NCLT admitted the application - Operational Creditors - serious pre-existing disputes between the Corporate Debtor and the Operational Creditor on account of discrepancies in invoices, and levy of bogus charges and overcharging - operational debt exceeds the threshold limit and is an undisputed debt or not - HELD THAT:- Issue decided in the case of Hon ble Supreme Court in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT ] for the Adjudicating Authority while examining an application under Section 9, it was held that the adjudicating authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or reject the application, as the case may be, depending upon the factors mentioned in Section 9(5) of the Act. More importantly, the Corporate Debtor cannot absolve himself from the fact that liability has been admitted but payments not made. It is noticed that emails were exchanged between the two parties between 11.11.2019 to 11.01.2020 at pages 182-191 of APB wherein the Corporate Debtor had been given more than one opportunity to clear the outstanding liabilities of more than USD 2,00,000. However, no payment of arrears was forthcoming - the Adjudicating Authority has committed no error in taking cognizance of the Corporate Debtor s admission of failure to pay the operational dues on account of bad financial position and conditions beyond their control. This admission by the Corporate Debtor to our mind validates the contention of the Operational Creditor that the Corporate Debtor has admitted on several occasions that there was a debt due and payable and that there was also a default in making the payment. Whether there was any pre-existing dispute which was raised prior to the issue of demand notice by the Operational Creditor on 16.12.2020? - HELD THAT:- It is relevant to note at this stage that the demand notice under Section 8 was issued 16.12.2020. As no reply to the demand notice was received within 10 days nor any payment was made by the Corporate Debtor, the Respondent No.1 had filed the Section 9 application before the Adjudicating Authority. It is pertinent to note that the reply to the demand notice was filed by the Corporate Debtor on 06.04.2021 by which time the hearing on Section 9 application had already commenced, the first hearing having taken place on 04.03.2021 - the Operational Creditor conveniently avoided reconciliation of accounts as they knew fully well that there were no dues beyond the threshold limit which could trigger CIRP. It has therefore been stated that the Operational Creditor has been trying to use the IBC for the purpose of recovery of money and the Adjudicating Authority has acted like a debt recovery forum having ignored the presence of long-standing dispute between the parties. It is noticed that no material has been placed on record by the Corporate Debtor to show that they had categorically rejected the outstanding dues claimed by the Operational Creditor prior to issue of demand notice. Present is a case where the accounts were frozen in terms of SoA prepared by the Corporate Debtor and sent to the Operational Creditor by email on 16.07.2018. In such circumstances, when the Corporate Debtor has frozen their liability, subsequent raising the issue of rate differences and attendant reconciliation, to our mind becomes redundant and therefore does not appeal to us to be genuine. When the Corporate Debtor had admittedly prepared the SoA showing an outstanding liability of over USD 2,00,000 and it was frozen after mutual agreement, raising the issue of reconciliation of accounts as a ground of dispute clearly lacks substance and credibility. Illegal stopping of containers/shipments by the Operational Creditor which resulted in their loss of clients and business - HELD THAT:- It was pointed out that these shipments cannot be viewed to be a ground for pre-existing dispute as the Operational Creditor had agreed to move the shipments only after receipt of payment to meet the existing debt of over USD 3,00,000. From the facts available on record, it is convincing that the operational debt had crystallized well ahead of the stoppage of the containers. That being the case, by no logical process, can the stoppage of shipments be held to be a pre-existing dispute, rather it was the outcome of a debt remaining unpaid. There are no illegality in the impugned order of the Adjudicating Authority admitting the Section 9 application. There is no merit in the appeal - appeal dismissed.
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Service Tax
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2023 (5) TMI 247
Simultaneous proceedings at different locations - Proceedings initiated against the respondents at second location were dropped - It is alleged that Adjudicating Authority failed to verify whether the unit of the Respondent located at Visakhapatnam and Kolkata are one or the same are different - failure to verify whether the services rendered by the Respondent in their Visakhapatnam unit were similar to the services said to be rendered by them at Kolkata - HELD THAT:- Visakhapatnam Service Tax Commissionerate has initiated separate action against the Respondent at their Visakhapatnam unit for non payment of appropriate service tax there . The said litigation has attained finality vide the above said Final Order of the Tribunal. The copy of the Adjudication Order No 12/2009 (PVR) dated 07/05/2009 has also been communicated to their Head Office in Kolkata. Form the above, it is observed that Departmental action has already been initiated to demand Service Tax against the Respondent at Visakhapatnam separately for the services rendered by their branch unit at Visakhapatnam. In the impugned order the Commissioner has rightly observed that action has already been initiated in Visakhapatnam and no further action is warranted in their Kolkata Unit. Accordingly, the Commissioner has rightly dropped the proceedings initiated against the Respondent in the impugned order. No further action is warranted in their Head Office at Kolkata - the impugned order by the Commissioner upheld - appeal of Revenue dismissed.
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2023 (5) TMI 246
Classification of services - composite works contract service or not - construction service / commercial or industrial construction service / works contract service and towards cleaning activity provided by the appellant - liability of service tax on cleaning activity - period from April 2005 to March 2009 - 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.7,94,122/-, as indicated in the letter extracted hereinabove, towards works contract service during the period from 01.06.2007 to March 2009 and towards the cleaning activity undertaken by them during the period from April 2005 to March 2009. Extended period of limitation - HELD THAT:- The appellant has not taken registration, and have not paid Service Tax on the considerations received for the services rendered to M/s. BSNL, CPWD, National Institute of Technology, etc. 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. Thus, the demand of Service Tax from April 2005 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 - 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 - appeal allowed in part.
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2023 (5) TMI 245
Classification of services - manpower supply services or Business Auxiliary Service (BAS) - unloading of raw materials and other materials, loading of finished goods as required by the management and housekeeping in and around the factory, maintenance of garden and canteen and maintenance of machineries and other equipment - applicability of N/N. 8/2005-ST dated 01.03.2005 - penalties - HELD THAT:- The contractor shall provide to his personnel, at his own cost, uniforms, shoes, monsoon wear, and any other essential equipment and tools such as brooms, scrubbers, detergent etc. as may be required to provide proper packing, loading/unloading, cleaning and maintenance and the contractor is required to pay to his employees all dues as per the provisions of the Payment of Wages Act 1936 and the wages paid should not be less than the Minimum Wages Act. The contractor is responsible for deducting and remitting provident fund and ESI contributions and also for payment of bonus and other dues, and also shall require to maintain records and registers, obtain any license or registration required by law for supply of workmen/labour - All these conditions will indicate that the consideration paid for the services is depending upon the number of people deployed in the factory of M/s. Godrej by the appellant. The service charges paid are computed on the basis of the wages paid by the appellant plus pre-determined commission. Even the scrutiny of the bill raised by the appellant indicates that the charges are on the basis of number of workmen deployed. The tenor of the contract clearly indicate that the Agreement entered into by the appellant s with M/s. Godrej Household Products Ltd., Karaikal, is a Labour Supply Contract and so the services rendered would fall under Manpower Recruitment or Supply Agency service - demand of tax upheld. The appellant s reliance on the decisions rendered by the Tribunal in the case of DIVYA ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE, MANGALORE [ 2009 (12) TMI 155 - CESTAT, BANGALORE] and RITESH ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2009 (10) TMI 182 - CESTAT, BANGALORE] are not applicable to the facts of the case as the contracts involved there in were for execution of work on piece rate basis. Penalty - HELD THAT:- M/s. Godrej is computing the service charges payable to the appellants on the basis of sum total of wages paid to the workers employed plus cost of uniform, shoes, monsoon wear, detergents etc. According to the agreement, the appellant was paid service charges of Rs.7/- per manpower for 8 hours shift. On these peculiar facts of this case, computation of tax should be with reference to the service charges paid to the appellant. Considering the appellant being a small entrepreneur and there was confusion as to the classification of many services under various clauses of Section 67 of the Finance Act, 1994, penalties imposed are set aside. The demand of service tax on the service charges paid to the appellant is upheld and penalties imposed are set aside - appeal allowed in part.
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2023 (5) TMI 244
Refund of excess tax paid - rejection on the ground of time limitation - it is claimed that excess service tax was paid under mistake of law - whether in the facts of the case, the refund was hit by the time bar as prescribed under Section 11B of Central Excise Act as made applicable to service tax by Section 83 of Finance Act 1994 or otherwise - HELD THAT:- It is an admitted fact that refund has been filed beyond the limitation prescribed under Section 11B as made applicable to service tax. Therefore, the only question is whether there is a provision under the Central Excise law or Finance Act to waive the limitation, within Section 11B, in case the payment of service tax has been made under mistake of law. In the instant case, the appellants were admittedly providing taxable services to M/s HPCL and were raising invoices and paying service tax also from time to time. However, during the period March 2015 to January 2016, M/s HPCL did not honour some of the invoices and appellants did not get any payment. It is also an admitted fact that the appellants, suo-moto, took credit of excess tax paid and since they could not use such credit, they preferred a refund application. What is therefore apparent is that the appellants were providing services, which were otherwise chargeable to service tax as per Finance Act 1994. Non receipt of payment on account of any commercial dispute cannot make such services as exempt services or an activity not amounting to service under the statutory provisions, on which no service tax can be levied or collected - There is also no denial that there was no mistake of law in the sense that the tax was leviable on the categories of services being provided by them and the fact that they have provided such services irrespective of whether they have received the payment or not for some reason. The only ground is that they had not completed the service and hence at that stage at which they paid service tax, they were not liable to pay but they paid. They are not disputing non provision of service nor they are disputing that such services were not attracting service tax. In the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] , Hon ble Supreme Court has inter alia, observed and held that unless there is any refund becoming due on account of unconstitutionality of the statutory provisions or on account of mistake of law or if it is patently illegal levy , the refund to any amount paid as service tax or otherwise would required to be preferred in accordance with the provisions under Section 11B of the Central Excise Act. The constitutional validity under Section 11B was also upheld. Thus, only under specific circumstances like unconstitutionality, illegal levy, mistake of law etc., a person can take recourse to writ jurisdiction or Contracts Act etc., where the limitation under Section 11B would not be applicable - thus, the refund in this case would squarely be covered by Section 11B as made applicable by Section 83 of Finance Act and therefore if the refund was not filed within the time period prescribed from the relevant date, the refund itself becomes non maintenable irrespective of the merit of the case. The order of Commissioner of Central Tax(Appeals) is liable to be upheld on the grounds of limitation itself and appeal filed by the Appellant is liable to be dismissed. As regards other observations of the Original Authority, rejecting the refund claim, it is observed that the Original Authority has denied the claim on account of limitations under Section 11B itself, and in addition, has also made certain other observations like lack of jurisdiction, lack of merit, prone to unjust enrichment whereas Commissioner (Appeals) has rejected the appeals of the appellant, only on the ground of limitation under Section 11B. It is apparent that once the Original Authority as well as Appellate Authority has rejected the appeal on ground of limitation itself assuming the jurisdiction under the statute in Finance Act 1994, the other observations and grounds given in the Order-in-Original becomes superfluous and thus infructuous. Appeal dismissed.
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2023 (5) TMI 243
Levy of Service tax - incentives received based on the turnover generated (by the Advertising Agency from a third party) - consideration received by the Appellant from the Media in respect of the same services, or not - HELD THAT:- The very issue as to whether the incentives received by the Advertising Agency from a third party i.e., Media as incentive is liable for Service Tax payment or not has been gone into in a considerable detail by the Tribunal in the case of GREY WORLDWIDE (I) PVT LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [ 2014 (9) TMI 180 - CESTAT MUMBAI] where it was held that the confirmation of service tax demand on these amounts, i.e. volume discounts, rate difference and amounts written back cannot be sustained in law. Appeal allowed.
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2023 (5) TMI 242
Partial rejection of claim for refund of tax - documentary evidence in support of technical testing and analysis was not available - supplier not listed in the contract between appellant and the buyer overseas for not having been filed within 60 days from the end of the quarter in which exports had been effected - HELD THAT:- The present dispute relates to refund claimed by application dated 8th August 2008 in relation to exports effected before April 2008 that should, under the prevailing procedure, have been filed by end of May 2008. By amendment of November 2008, claims were permitted to be filed within six months from the last date of the quarter in which the exports took place and, considering the difficulties expressed by the trade, Central Board of Excise Customs (CBEC) clarified in March 2009 that the new deadlines would be applicable to exports of the last quarter of the financial year preceding the amendment also, subject to such applications having been filed. That the reimbursement scheme, which at the time of effecting the exports requiring claims to be filed within two months from closure of the relevant quarter and, since then, extended to six months from closure of the relevant quarter, enabled the appellant, thereby, to seek relief thereon till 30th September 2008 in relation to exports effected till 31st March 2008 is a reasonable deduction - The impugned order has also not adduced any reason for not extending the benefit that the clarification circular of the Central Board of Excise Customs (CBEC) considered appropriate for refunds pertaining to the period of dispute. Non-compliance with serial no. 3 in the Schedule to the notification prescribing the manner of reimbursement - HELD THAT:- The sole condition is that a written agreement between the buyer and the seller should stipulate testing and analysis' of the export goods. As pointed out by Learned Counsel, there is no restriction on the number of, or location at which, tests are to be carried out. The precaution of carrying out such tests before shipment, to minimise the risk of non-acceptance of cargo before loading on outbound conveyance, is not beyond the scope of the eligible service in the impugned notification; nor has it been attributed to any activity other than in relation to the export goods. The denial of refund on such a rigorous consideration is not in accordance with the spirit of reimbursement designed as a policy instrument. There are no reason to sustain the impugned order - the rejection of refund claim is set aside - appeal allowed.
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2023 (5) TMI 241
Non-payment of service tax on the input services - removal of input as such from the factory - requirement of reversal of CENVAT Credit as per the provisions of sub-rule (5) of Rule 3 of CCR - HELD THAT:- On careful examination of the said statutory provision, it transpires that no identical provisions has been provided for reversal of Cenvat credit in respect of the input services. Since, the legislative intent behind the said rule is not to insist for reversal of Cenvat credit on service tax amount, in case where the inputs are removed as such, the action taken by the department in confirming the cenvat demand in the present case shall not stand judicial scrutiny. In an identical case, the Hon ble Punjab and Harayana High Court in the case of COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH VERSUS PUNJAB STEELS [ 2010 (7) TMI 252 - PUNJAB AND HARYANA HIGH COURT] has held that in absence of any statutory provisions, creating the embargo for reversal of Cenvat credit oninput services, the department cannot insist for reversal of such credit from the assesse. This court finds that the view as expressed by the Tribunal is strictly in conformity with the Rules. Rule 2(k) of the Rules defines input , whereas Rule 2(l) defines input service , meaning thereby both the terms have been defined independently. Rule 3 defines the term Cenvat credit , which includes duty paid under various enactments and also the service tax leviable under Section 66 of the Finance Act, 1994. Rule 3(5) of the Rules only talks about the Cenvat credit taken on inputs or capital goods. It does not refer to the Cenvat on input service, whereas Rule 5, on which reliance is sought to be placed by the Revenue, specifically talks about the Cenvat credit on any input or input Service used in the manufacture of final product. This rule pertains to refund in case of exports, which stands altogether on different footings. The CBEC vide instruction dated 07.12.2015 in order to bring uniformity in the practice of assessment has issued the minutes of the Tariff conference conveying the said statutory provision in line with the judgment delivered by the Hon ble Punjab and Harayana High Court in the case of Punjab Steels. There are no merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellant holding that the they are required to reverse to Cenvat credit of service tax paid on input services for the purpose of sub-rule (5) of Rule 3, ibid, in the eventuality, when the inputs are removed as such. Appeal allowed.
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2023 (5) TMI 240
Valuation - inclusion of reimbursable expenses in the assessable value or not - Rule 5(1) of Service Tax (Determination of Value) rules, 2006 - HELD THAT:- The said issue came up before the Hon ble Delhi High Court in the case of INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. [ 2012 (12) TMI 150 - DELHI HIGH COURT] , wherein the Hon ble High Court has declared Rule 5(1) of the said Rules is ultra vires - The re-imbursable expenses are not includible in the assessable value in terms of Rule 5(1) of Service Tax (Determination of Value) Rules, 2006. CENVAT Credit on the services tax of paid reimbursable expenses - HELD THAT:- It is not a case of the Department that the appellant was availing inadmissible CENVAT Credit. The reimbursable expenses are not includible in the taxable value of the service provided by the Appellant. Therefore, the impugned orders are set aside - Appeal allowed.
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Central Excise
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2023 (5) TMI 260
CENVAT Credit - clearance of both dutiable and exempted goods - non-maintenance of separate records - applicability of notification issued under section 5A of Central Excise Act, 1944 - non-conformity with notification no. 6/2006-Central Excise dated 1st March 2006 - HELD THAT:- The proceedings for denial of credit under rule 6 of CENVAT Credit Rules, 2004 was instituted, and confirmed, for non-conformity with notification no. 6/2006-Central Excise dated 1st March 2006 and, while conceding eligibility for exemption in accordance with notification no. 46/2008-Central Excise dated 14th August 2008, it was held that the additional entry made thereby in notification no. 6/2006-Central Excise dated 1st March 2006 came to be incorporated in the exclusions in rule 6(5)(vii) of CENVAT Credit Rules, 2004 only from 2010 onwards. Implicit in this conclusion is that the appellant could not have cleared finished goods without payment of duty only after 14th August 2008 and not prior to that. There is no doubt that the period of dispute is from 7th July 2009 to 28th February 2010 and by that time serial no. 91A, specific to power projects such as that of M/s Coastal Gujarat Power Ltd, had been inserted in notification no. 6/2006-Central Excise dated 1st March 2006 in addition to the existing serial no. 91 pertaining to award of project by international competitive bidding procedure but that does not erase existing eligibility. Much of the argument of both sides has revolved around the nature of the incorporation effected in rule 6(5)(vii) of CENVAT Credit Rules, 2004 from 27th February 2010 after which, it is common ground, the entitlement for retention of CENVAT credit is unquestioned. According to the appellant, it is clarificatory and, therefore, accords retrospective eligibility while it is the contention of Learned Authorised Representative that, being additional inclusion, the incorporation has prospective effect - In THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX AND THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S FOSROC CHEMICALS (INDIA) PVT LTD AND OTHERS [ 2014 (9) TMI 633 - KARNATAKA HIGH COURT] , the Hon ble High Court of Karnataka, taking note of the intent of coverage of export extending to goods supplied to both unit in, and developer of, special economic zones (SEZ) in Special Economic Zones Act, 2005 and the exclusion provided in rule 6(5)(vii) of CENVAT Credit Rules, 2004, held that the said amendment has to be construed as retrospective in nature and the benefit of Rule 6(6)(i) as amended in 2008 has to be extended to the goods cleared to a developer of a Special Economic Zone for their authorized operations. The entitlement of the appellant to exemption at serial no. 91 of notification no. 6/2006-Central Excise dated 1st March, 2006 for which the Tribunal had directed production of evidence thereto and, thereby, to the exclusion from reversal contemplated in rule 6 of CENVAT Credit Rules, 2004 needs to be examined on the basis of facts now made available. It is from the acknowledgement of import substitution , implicit in the privilege of exemption from duties of central excise, enabling exclusion from reversal that this conclusion is arrived. The matter remanded back to the original authority for consideration of all submissions - appeal allowed by way of remand.
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2023 (5) TMI 239
Levy of Excise Duty - process amounting to manufacture or not - folded yarn/doubled yarn/ply yarn was made out of single yarn stage - intermediate stage of production - ex-parte order - opportunity of personal hearing not provided - It is the case of the Appellant that cotton yarn in straight reel hank falling under heading 52.03 of the Schedule to the Central Excise Tariff Act, 1985 was exempted from payment of Central Excise duty - HELD THAT:- The Department had demanded duty on the cotton yarn in view of the Chapter Note I to Chapter 52 of CETA, 1985 on the ground that products covered under Heading No. 52.03, sizing, beaming, warping, winding or reeling or any one or more of these processes for conversion of any form of the said products into another form of such product amounted to manufacture and on the ground that since the stage in which it was actually removed by the said assessee i.e. straight reel hank cotton yarn exempted from duty of excise, therefore the duty was not leviable since final product is exempted vide Notification No. 187/83 dated 09.07.1983. Undisputedly Cotton Yarn in straight reel hank falling under heading NO. 52.03 of the Schedule to the Central Excise Tariff Act, 1985 was exempted from payment of Central Excise duty. There is also no dispute in the present case that the Appellants had cleared the cotton yarn in straight reel hank and prima facie it is found that their case is covered by the judgment of this Tribunal in the case of ARATI COTTON MILLS VERSUS COMMISSIONER OF C. EX., CALCUTTA-II [ 2000 (9) TMI 536 - CEGAT, KOLKATA] , wherein the Tribunal held The identical definition which was already in existence under Section 2(f) was considered by the Bench and it was held that conversion of one stage of yarn into another will not amount to manufacture. It is also seen that hank yarn is obtained as a result of continuous process of manufacture in which the winding of bobbin is only an intermediary process. As such we do not find any reasons to take a different view than the one taken by the Tribunal In the earlier decisions - The facts of the present case are squarely covered by the aforesaid decision of the Tribunal. The impugned order cannot be sustained and is accordingly set aside - Appeal allowed.
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2023 (5) TMI 238
Compounded levy scheme - demand on the basis of fixation of Annual Capacity of Production of the Re-rolling Mill as 1106.820 Mt for the year 1997- 98, 1998-99, 1999-2000 in terms of Rule 3(1) of the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997 - demand of differential Excise Duty, interest and penalty - HELD THAT:- When the ACP Scheme was introduced w.e.f. 01/09/1997, the Appellant has not exercised any option either under 96ZP(1) or under 96 ZP(3). They exercised the option for the first time only on 11/01/1999 to avail the scheme under 96ZP(3). As this option cannot be exercised in the middle of a financial year, the option exercised by them will be applicable only for the financial year 1999-2000. Thus, for the period from 01.09.1997 to 31.03.1999 the Appellant automatically falls under the provisions of Rule 96ZP(1) of the erstwhile Central Excise Rules, 1944. The Appellant has not paid the duty as per the ACP fixed by the Commissioner for the years 1997-1998 and 1998-1999. The Appellant s contention is that they have not opted for payment of duty under 96ZP(3) and hence they are liable to pay duty under Rule 96ZP(1) only. Once their request for payment of duty under 96 ZP(1) is accepted, they are eligible to pay duty on the basis of actual production in terms of the provisions of Section 3A(4) of the Central Excise Rules, 1944. Their actual production is much less than the capacity determined by the Commissioner and they have paid duty as per the actual production and hence the differential duty demanded is not sustainable. As per the provision of Rule 3(A), when an assessee claims that their actual production is lower than the ACP determined by the Commissioner, then the Commissioner has to determine the actual production and re-determine the amount of duty payable on the basis of such actual production. This re-determination has to be done by the Commissioner based on the evidence produced by the assessee to show that their actual production is much less than the ACP fixed. However, in the present case, the Appellant has not submitted any evidence before the Commissioner for re-determination of the ACP and fixing of the duty based on actual production. In the absence of any redetermination done by the Commissioner, the ACP fixed by the Commissioner @ 1106.82 MT per annum remains and the assessee needs to pay duty as per ACP fixed. In the instant case, the assessee has paid duty based on actual production and not on the basis of ACP fixed. Hence, the differential duty demanded and confirmed by the Impugned Order is sustainable. Accordingly, the demand of duty confirmed in the Impugned Order is upheld. Interest and penalty - HELD THAT:- The Hon ble Supreme Court in the case of M/S. SHREE BHAGWATI STEEL ROLLING MILLS VERSUS COMMISSIONER OF CENTRAL EXCISE ANOTHER [ 2015 (11) TMI 1172 - SUPREME COURT ] held that the provisions of interest and penalty under Rule 96ZP of the Central Excise Rules, 1944 as ultra vires - the demand of interest and penalty in the Impugned Order is not sustainable. The demand of duty confirmed in the impugned order upheld and the interest and penalty demanded in the said Order set aside - appeal allowed in part.
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2023 (5) TMI 237
Liability to pay excise duty from PLA as against the duty paid from accumulated Cenvat credit when the appellant have defaulted the monthly payment of duty beyond prescribed time limit, in terms of Rule 8(3A) of Central Excise Rules, 2002 - constitutional validity of Rule 8(3A) of Central Excise Rules, 2002 - HELD THAT:- In the present case demand of excise duty was made despite the appellant have paid the excise duty from accumulated Cenvat credit. The demand was raised invoking Rule 8(3A) of Central Excise Rules, 2002 which restricts the payment from Cenvat credit in case the assessee defaults monthly duty payment beyond prescribed time-limit. The Hon ble Gujarat High Court in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT] held the Rule 8(3A) as ultra vires. Thus, it is clear that appellant is not barred from making payment of excise duty from accumulated Cenvat credit therefore demand once again from PLA cannot be made - appeal allowed.
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2023 (5) TMI 236
Eligibility to avail credit of duties of central excise - components and parts cleared to the appellant for erection and commissioning of capital goods in the refinery of the appellant at Ambalamugal, Kochi - HELD THAT:- The decision of the Hon ble Supreme Court, in CCE, INDORE VERSUS VIRDI BROTHERS ORS. [ 2006 (12) TMI 3 - SUPREME COURT] and continuing the stand in several others in disputes on excisability of equipment, assembled on-site for embedding in the earth, under Central Excise Act, 1944, has held such, being immoveable property, to be excluded from the ambit of goods intended by section 3 of Central Excise Act, 1944 and, therefore, not amounting to manufacture. The circular cited in the orders of the lower authorities, and referred to by Learned Authorized Representative, also issued under section 37B of Central Excise Act, 1944 identifies facets of manufacture of goods that crystallize duty liability under Central Excise Act, 1944; it does not address anything beyond uniformity of approach, in the light of judicial exclusion of activity as manufacture, to dutiability of on-site erection and certainly not to the scheme of CENVAT credit in such situations. The context of the cited decision and the circulars is, thus, limited to dutiability of such assembled equipment. There is no allegation that the goods procured for the erection of the oxygen plant and the boiler at the refinery of the appellant have not been subjected to duties of central excise or that they were not utilized in the erection of capital goods to be used for manufacture of excisable goods. Intuitively, eligibility for taking credit of duty liability discharged on these goods received in the factory is not to be denied. The error that lower authorities have fallen into is in entertaining the conviction that capital goods has a connotation which, upon embedding in the earth , is excluded from the ambit of Central Excise Act, 1944. Indeed, the statute, concerned with taxability on manufacture of goods , does not acknowledge capital goods at all and it is common knowledge that capital , as appellation, has more to do with accounting treatment than manufacture - As duty discharged on capital goods , in the manner defined for the purposes of CENVAT Credit Rules, 2004, is entitled to be availed as credit, and as it is not capital goods in the form conceptualized by the lower authorities that is required to have discharged duty liability to be eligible but the parts thereof deployed for such assembly and installation, there is no valid ground for recovery of such credit. The notice has not made any other proposition for ineligibility to avail such credit - the impugned order does not sustain - Appeal allowed.
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CST, VAT & Sales Tax
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2023 (5) TMI 235
Adjustment of Refund with the dues - statutory refund pertaining to the year 2011-2012 available to the Petitioner was adjusted towards the statutory dues payable by the Petitioner for the year 2010-2011 purportedly without notice - HELD THAT:- By communication dated 12 April 2019, Petitioner had informed the Respondent Authorities that it was desirous of availing the benefit of the Amnesty Scheme and therefore, it had withdrawn the intimation made in Form-314 of its intention to file an appeal against the order for the year 2010-2011 and had also requested that refund of Rs. 10,69,89,606/- for the year 2011-2012 be kept on hold till filing of its application under the Amnesty Scheme. It is not in dispute that against the said communication there was no response from the Respondent Authorities. The Petitioner filed an application under the Amnesty Scheme on 13 May 2019 by making a payment of Rs. 8,46,84,821/-. No objection to the communication dated 12 April 2019 or any response to the fact of the request made by the Petitioner to keep the refund on hold was communicated to the Petitioner by the Respondent Authorities. The Defect Notice and the Refund Adjustment Order are apart only by a day and this could not have provided sufficient opportunity to the Petitioner even to seek redressal of his grievance from the Authorities. Even while the Authorities had not responded to the communication dated 12 April 2019 of the Petitioner, whereby the Petitioner had requested the Authorities to keep the refund amount on hold as they were in the process of filing an application under the Amnesty Scheme, the Respondent Authorities, in our view, could not have, while the application for the Amnesty Scheme was under consideration in the absence of any response to the erstwhile Petitioner's communication dated 12 April 2019 gone ahead without any notice to the Petitioner and adjusted the refund amount for the year 2011-2012 against the dues for the year 2010-2011 and that too when the Petitioner had already filed the application under the Amnesty Scheme which was accepted by the Respondent Authorities alongwith the payment of Rs. 8,46,84,821/-under the said scheme. Non communication of any stand with respect to the Petitioner's communication dated 12 April 2019 to keep the refund for the year 2011-2012 on hold led the Petitioner to believe that the request to keep the refund on hold was accepted. And based on this belief Petitioner went ahead and took an irretrievable decision including filing of the application dated 13 May 2019 under the Amnesty Scheme - serious prejudice has also been caused to the Petitioner by the Respondent Authorities in not putting the Petitioner to notice of the adjustment that was effected pursuant to the Refund Adjustment Order. In the face of such objectives of the Amnesty Scheme, the State cannot submit in its affidavit or the AGP cannot be heard to be arguing that just because of the communication dated 12 April 2019 pursuant to which the Petitioner withdrew the intimation to file an appeal in respect of the year 2010-2011 where the dues were Rs. 14,00,74,890/-, that the said amount became available for recovery from 12 April 2019. In our view, such an approach by the State clearly militates against the objectives of the Amnesty Scheme - in view of the breach of the principles of natural justice, the Defect Notice dated 22 May 2019 and the Refund Adjustment Order dated 23 May 2019 are set aside and the matter remanded back to the Respondent Authorities, to consider the refund application dated 13 May 2019 after giving an opportunity of hearing and after considering the submissions of the Petitioner pass a reasoned order in accordance with law - petition allowed by way of remand.
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2023 (5) TMI 234
Levy of penalty u/s 53 of the TVAT Act, 2004 - it is the contention of the petitioner that in the absence of a prescribed format as per Section 53(1) of the Act, 2004, the petitioner could not be made liable for penalty on failure to submit the audited report within the prescribed time - absence of notice before imposition of penalty - violation of principles of natural justice - HELD THAT:- The penalty imposed upon the petitioner for violation of Section 53(1) of the TVAT Act, 2004 suffers from lack of proper notice and absence of reasonable opportunity of being heard, as is required under Section 53(3) of the Act, 2004. A perusal of the assessment order clearly shows that the proceedings were initiated under Section 31(1) of the TVAT Act, 2004, but no separate notice was issued under section 53(1) of the Act, 2004 before imposition of penalty. Without going into the other issue of absence of prescribed format for submission of audited return in terms of Section 53(1) of the Act, 2004, the impugned penalty imposed upon the petitioner amounting to Rs. 2,73,800.30 vide order dated 30.03.2022 (Annexure 3 to the writ petition) is quashed. However, it is made clear that except the penalty part, the rest of the assessment order remains intact - Petition allowed.
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Indian Laws
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2023 (5) TMI 233
Cancellation of bail granted to petitioner - High Court observed that the mere fact that the charge-sheet had been filed could not be considered as a change in circumstances - HELD THAT:- After the charge-sheet was submitted before the competent Court under Section 173 of the Code of Criminal Procedure 1973, the appellant moved for bail afresh. The order passed by the Trial Judge granting bail on the ground that the charge-sheet had been submitted and that the other accused were on bail was eminently fair and reasonable. The order of the High Court directing that the appellant be arrested immediately and seeking an explanation from the Second Additional Sessions Judge was wholly disproportionate and was not warranted. Such orders of the High Court produce a chilling effect on the District judiciary. The members of the district judiciary cannot be placed in a sense of fear if they were to exercise the jurisdiction lawfully entrusted to them for granting bail in appropriate cases. The order of the Trial Judge does not indicate that he had applied the wrong principles of law. Quite to the contrary, the exercise of the discretion to grant bail, having due regard to the nature of the offence, the fact that other accused had been granted bail and the charge-sheet had been submitted, was appropriate. The appellant was in custody from 29 June 2022 till 16 August 2022, when he was granted bail by the Trial Court. As a result of the cancellation of bail by the High Court on 2 December 2022, he was taken into custody until he was released in pursuance of the order of this Court dated 24 February 2023 granting bail - the impugned order of the High Court dated 2 December 2022 is set aside. The application for cancellation of bail shall accordingly stand dismissed.
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2023 (5) TMI 232
Continuation of protection granted to petitioner - HELD THAT:- The protection granted to the petitioner by order dated 13.01.2023 deserves to be continued. Accordingly, the said order dated 13.01.2023 is made absolute while further providing that it shall be required of the petitioner to fully cooperate with the investigation and to abide by the terms and conditions as may be imposed by the Trial Court. Petition disposed off.
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