TMI Tax Updates - e-Newsletter
May 9, 2024

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. TIMELINE FOR REFUND UNDER SECTION 38(3) OF THE DELHI VALUE ADDED TAX, 2004

   By: DR.MARIAPPAN GOVINDARAJAN

2. PRE-DEPOSIT & STAY OF DEMAND

   By: Dr. Sanjiv Agarwal

News

1. Sixteenth Finance Commission (XVIFC) invites suggestions/views from general public, institutions and organisations on issues related to its terms of reference

2. CCI approves acquisition of additional shares in Sikkim Urja Limited (formerly Teesta Urja Limited) by Greenko Energies Private Limited

3. 5th Joint Group of Customs (JGC) meeting between India and Bhutan was held on 6th-7th May, 2024 in Leh, Ladakh

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/MIRSD-PoD-2/P/CIR/2024/38 - dated 7-5-2024

Periodic reporting format for Investment Advisers

FEMA

2. 05 - dated 8-5-2024

Margin for Derivative Contracts

Customs

3. 04/2024 - dated 7-5-2024

Amendments to the All Industry Rates of Duty Drawback effective from 03.05.2024

Highlights / Catch Notes

GST

• Court Orders Tax Authorities to Correct Overreach in Provisional Bank Account Attachments Beyond Statutory Limits.

  Case-Laws - HC : Provisional attachment of bank account - Expiry of one year from the date of the order of attachment - The court noted that despite the statutory provision clearly specifying the expiry of provisional attachment after one year, such errors by revenue authorities in allowing attachments to continue beyond the prescribed period were becoming common. The court highlighted the unnecessary burden placed on petitioners who are compelled to approach the court for relief due to the revenue authorities' failure to adhere to statutory timelines. - Consequently, the High court directed the Central Board of Indirect Taxes and Customs to take corrective and necessary action to prevent similar errors in the future. Additionally, recognizing the similarity of issues under both the Central Act and the State Act, the court directed the learned Additional Chief Standing Counsel for the State to communicate the order to the Commissioner, Commercial Tax, for notice and remedial action.
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• Petitioner's challenge dismissed; partial relief granted for appeal within 30 days upon pre-deposit under TNGST Act 2017.

  Case-Laws - HC : Challenge to summary order passed against the petitioner u/s 74 - The court rejected the petitioner's claim of not being granted a personal hearing, stating that the petitioner was indeed given opportunities for personal hearing, which they did not avail themselves of. The court also noted that the impugned order considered the replies filed by the petitioner. - However, the court acknowledged the petitioner's partial relief by permitting them to file a statutory appeal before the Appellate Authority within 30 days, subject to pre-depositing the amount as contemplated under Section 107 of the TNGST Act, 2017.
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• Petitioner Given Chance to Correct Tax Turnover Error After Failing to File Annual Return, Court Rules for Justice.

  Case-Laws - HC : Rejection of rectification petition - turnover of the petitioner was erroneously reported in the GSTR 1 return - The High Court acknowledges the petitioner's claim regarding the erroneous turnover reported in the GSTR 1 return. Since the petitioner did not file the annual return for the relevant assessment period, the error was not rectified. The High Court finds that the tax liability primarily arose due to the turnover reported in the GSTR 1 return. Considering the interest of justice, the High Court deems it necessary to provide the petitioner with an opportunity to establish the correct turnover amount.
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• Hostels Taxed Under GST: AAR Rules No Exemption for Hostel Accommodations Due to Commercial Nature of Services.

  Case-Laws - AAR : Exemption from GST - Hostel accommodation - residential dwelling for use as residence services or not - The AAR found that the hostel did not qualify as a "residential dwelling." It emphasized the commercial nature of the hostel's operations, noting that the accommodations provided, including ancillary services like food and housekeeping, are more akin to those offered by commercial hotels rather than private residences. - The AAR ruled that the hostel accommodations do not meet the criteria for GST exemption as outlined in the relevant exemption notifications. It was determined that the services provided by the hostel are taxable, as the property does not qualify as a residential dwelling used for residence.
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Income Tax

• High Court Rules Reassessment Void Due to Lack of Full Disclosure Evidence for Extended Period Use.

  Case-Laws - HC : Reopening of assessment u/s 147 - The High Court noted that the extended period of six years for reassessment could only be invoked under specific circumstances, one of which is the failure to disclose all material facts. - The Court observed that while the Assessing Officer had invoked the extended period of limitation for reassessment, there was no finding in the reasons furnished for reassessment that the petitioner had failed to disclose fully and truly all material facts necessary for assessment. Without such a finding, the Court held that the entire proceeding would be void and a nullity.
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• Court Rules in Favor of EOU: Section 10B Not Applicable, Notices Invalid, Losses Can Offset Other Income.

  Case-Laws - HC : Set-off of losses against income from other sources u/s 70 - Applicability of provision of section 10B - petitioner had the status of EOU for a period of 5 years - The High Court upheld the petitioner's contention that Section 10B was not applicable to them as they were a 100% EOU. - The Court, after considering submissions and legal precedents, ruled in favor of the petitioner, declaring the notices and orders as invalid. The Court affirmed the petitioner's right to set off losses under Section 70 and upheld their interpretation of the law.
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• Appellate Tribunal Upholds Legitimacy of Unexplained Gifts, Citing Assessee's Evidence of Identity and Creditworthiness.

  Case-Laws - AT : Addition u/s 68 - unexplained gifts received from family members - The Appellate Tribunal found that the assessee had provided sufficient evidence to establish the identity, creditworthiness, and genuineness of the gift transactions. Documents such as gift deeds, income tax returns, and bank statements were submitted, demonstrating the legitimacy of the gifts from close family members. Moreover, the Tribunal noted the absence of any contrary evidence presented by the Revenue to challenge the submissions made by the assessee.
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• Tribunal Directs Reassessment of Unexplained Cash After Misunderstanding in Initial Review by CIT(A.

  Case-Laws - AT : Rectification u/s 154 - The Assessee filed a rectification application, which was dismissed by the CIT(A) based on the assumption of Tribunal's adjudication on the issue. - The Appellate Tribunal concluded that the CIT(A) had erroneously assumed that the issue of unexplained cash was adjudicated upon by the Tribunal. The Tribunal emphasized that the Tribunal's decision focused solely on the jewellery aspect, without any discussion on the unexplained cash addition. - CIT(A) directed for fresh consideration.
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• Compensation from restrictive covenants deemed non-taxable capital receipt, not profits in lieu of salary.

  Case-Laws - AT : Nature of receipt - Profits in lieu of salary or capital receipt - Receipt on termination of employment - Taxability u/s 17(3)(iii) - The Tribunal considered precedents and legal principles regarding the taxability of receipts after cessation of employment. It observed that compensation attributable to a restrictive covenant is generally treated as a capital receipt. Based on this, and considering the terms of the agreement, the Tribunal held that the amount received by the assessee was a capital receipt and not taxable under section 17(3)(iii).
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• Tribunal Overturns Denial of Section 80G Approval, Emphasizes Procedural Timelines as Directory, Not Mandatory.

  Case-Laws - AT : Rejection of the application for final approval u/s. 80G on technical grounds - Period of limitation - The Tribunal examined various precedents and CBDT circulars to determine the applicability of the extended timeline to the appellant's case. It noted that the circulars extended the due date for filing Form No. 10AB for registration under Section 12A of the Act to September 30, 2023. The Tribunal reasoned that since the appellant filed its application within the extended timeline, the rejection by the Commissioner was unwarranted. - Additionally, the Tribunal referred to decisions by other benches and observed that the timeline prescribed under clause (iii) of the first proviso to Section 80G(5) should be treated as directory, not mandatory. It emphasized that procedural provisions should serve the cause of justice and not hinder it.
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• Mauritius-based company wins tax dispute in India; Tribunal validates TRC, grants exemption on pre-2017 capital gains.

  Case-Laws - AT : Taxability of income in India - Proof of residence - assessee is a non-resident corporate entity incorporated under laws of Mauritius - The Tribunal held that the documentary evidence (TRC, Global Business License) supports the claim under Article 13(4) of the DTAA. The AO did not conclusively prove that control and management were outside Mauritius. The SEBI’s recognition of the assessee as a Foreign Venture Capital Investor and continuous investment activity in India strengthen the claim of genuine business operations. The Tribunal highlighted the sanctity of the TRC and previous rulings that support its acceptance as proof of residence and entitlement to treaty benefits. - The Tribunal directed the deletion of additions made by the AO, asserting the assessee’s entitlement to exemption under Article 13(4) of the India-Mauritius DTAA for LTCG derived from shares acquired before April 1, 2017.
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• Unsigned Tax Assessment Orders Deemed Invalid; Signature by Assessing Officer is Essential for Legal Validity.

  Case-Laws - AT : Validity of unsigned order - Final assessment order not signed by the AO - DR submitted that the additions made in the draft assessment order and the final assessment order are the same and as the draft assessment order has been duly signed by the AO - The ITAT Mumbai held that the unsigned assessment order was indeed invalid. It emphasized that signing the assessment order by the Assessing Officer is not merely a procedural formality but a mandatory requirement. The Tribunal rejected the Department's argument that the unsigned order did not prejudice the assessee, stating that signing the order is integral to its completion and authenticity. Additionally, it clarified that Section 292B of the Act does not grant immunity from non-compliance with statutory provisions.
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• Notice Invalidated Due to Lack of Approval; Assessment Order u/s 147 Quashed as Void from Outset.

  Case-Laws - AT : Validity of reopening of assessment - no approval was taken U/s 151 - The tribunal found that the notice issued under section 148/143(3) lacked proper approval under section 151 of the Act. Citing precedent, it concluded that such a deficiency rendered the notice illegal and void-ab-initio. Consequently, the assessment order passed under section 147 of the Act was quashed.
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Customs

• Revocation of Anti-Dumping Duties on PTA Imports Criticized for Skipping Sunset Review, Violating Trade Laws.

  Case-Laws - HC : Revocation of ADD imposed on Purified Terephthalic Acid (PTA) - Absence of any recommendation by the Designated Authority (DA) - Sunset review - exported from the People’s Republic of China, Iran, Indonesia, Malaysia, Taiwan, Korea RP and Thailand - The court noted that the revocation of ADD should have been preceded by a review process that assesses the continued need for such duties. The unilateral revocation by the government, bypassing this review, was not in compliance with the stipulated legal frameworks. - The court recognized the need to balance the interests of the domestic manufacturers and the downstream users. However, it stressed that any change in ADD, especially its revocation, must follow the legal procedures to ensure fairness and adherence to trade laws.
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Benami Property

• Court Stays Summoning Order Due to Lack of Grounds in Benami Transaction Case; Interim Relief Granted Pending Review.

  Case-Laws - HC : Benami transaction - possession of a significant amount of cash - Validity of summoning order - The High Court found merit in the applicant's arguments, emphasizing the lack of sufficient grounds for prosecution under Section 53 of the PBPT Act. It noted the absence of allegations regarding the intention to defeat legal provisions or evade dues in the complaint, rendering the summoning order devoid of legal basis. Emphasizing the seriousness of summoning an accused, the Court granted interim relief, staying further proceedings pending full consideration of the matter.
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Indian Laws

• Auction Sale Voided Due to Bank's Non-Compliance with Notice Requirements Under Security Interest Rules 2002.

  Case-Laws - SC : Bonafide purchasers - Auction sale held in favour of appellant - sale challenged on the ground that the Bank had not followed the statutory procedure prescribed under the Security Interest (Enforcement) Rules, 2002 - Issuance and service of mandatory notices to the borrower as required under Rules 8(6) and 8(7). - Despite being bonafide purchasers for value, the court upholds the decision to set aside the sale due to the bank's non-compliance with statutory provisions. The status of the appellants as tenants is restored, allowing the borrower to evict them in accordance with the law.
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IBC

• Tribunal Confirms Adequate Evidence for CIRP Under IBC; Respondent Proves Debt and Default; Notice Properly Served.

  Case-Laws - AT : Admissibility of CIRP u/s 9 of the IBC - The Appellate Tribunal found that there was sufficient evidence to support the admission of CIRP proceedings. The Respondent had established the existence of debt and default, meeting the requirements under Section 9 of the Code. - The Tribunal examined the evidence presented and concluded that the demand notice was properly served, based on the presumption of service when sent to the correct address via registered post. The Appellant's challenge on this ground was deemed unsustainable.
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Service Tax

• Service tax applicable on deputed employees; extended limitation period not justified due to lack of fact suppression evidence.

  Case-Laws - AT : Levy of service tax - Employees were deputed to the assessee - receiving services from the overseas company FFECJ through Dispatch Agreement and Secondment Agreement in deployment of qualified and skilled employees during the said period - The Tribunal noted that the employees deputed to the respondent were under its control and direction, with no employer-employee relationship maintained with the overseas company during the assignment period. They upheld the Revenue’s contention regarding the taxability of the services. However, they ruled against the validity of invoking the extended period of limitation, finding no substantial evidence of suppression of facts by the respondent.
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• Inbound Tours Taxed, Outbound Tours Exempt as Export Services: Tribunal Clarifies Service Tax Rules for Tour Operators.

  Case-Laws - AT : Levy of Service Tax with respect to Tour Operator’s Service - The Tribunal differentiated between inbound and outbound tours, determining that while inbound tours were taxable, outbound tours were considered an export of service and thus not liable for service tax. The decision was supported by the definition of "tour operator" in the Finance Act and previous tribunal rulings.
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• Hospitals under RSBY can exclude medicine costs from taxable amount, boosting health service affordability.

  Case-Laws - AT : Eligibility for deduction of cost of medicines incurred for providing health services - The Appellate Tribunal, after considering the submissions and evidence presented by the appellant, found merit in their argument. They upheld the view that since hospitals purchase medicines to provide them to patients under the RSBY health scheme, the cost of medicines should not be included in the taxable amount.
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• Service Tax Refund Denied: Tribunal Upholds Original Self-Assessment, No Modifications Allowed in Refund Proceedings.

  Case-Laws - AT : Refund of Service tax paid - time limitation - The Appellate Tribunal examined the submissions and found that the appellant had self-assessed and paid service tax without claiming the benefit of an exemption notification. Since neither the Central Excise officer modified the assessment nor was the self-assessment appealed against before the Commissioner (Appeals), the assessment remained unchanged. - The Tribunal concluded that refund proceedings cannot modify assessments, whether self-assessed or not. They emphasized that refund proceedings are akin to execution proceedings and should follow the assessment made, without altering it. Therefore, the Tribunal upheld the impugned order, rejecting the appellant's appeal.
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• Notice Period Payments Not Taxable as Services, CESTAT Rules; Aligns with Previous Judgments on Employment Termination.

  Case-Laws - AT : Taxability of notice period recovery / pay - Declared Service or not - Department was of the opinion that the said amount is towards agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act - In a significant ruling by the CESTAT New Delhi, the Tribunal set aside the demand for service tax on notice period payments made by employees. The Tribunal's decision hinged on the interpretation that such payments do not constitute a 'Declared Service' under the existing legal framework of the Finance Act. This judgement aligns with previous rulings that have similarly found that compensations related to premature termination of employment are not taxable services.
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Central Excise

• Tribunal Rules on Unutilized Cenvat Credit: No Interest Due, Extended Period Unjustified.

  Case-Laws - AT : Levy of interest on irregular/excess Cenvat Credit availed but not utilised - The Tribunal acknowledged the inadvertent nature of the appellant's actions and noted that the irregularly availed Cenvat credit had been promptly reversed upon audit notification. - Since the appellant had reversed the credit before the issuance of the show cause notice and no motive to evade tax was established, the extended period was deemed unjustifiable, and the appeal was allowed with consequential relief.
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Case Laws:

• GST

• 2024 (5) TMI 406
  Provisional attachment of bank account - HELD THAT:- The cause of action does not appear to exist, insofar as the revenue authorities have realised that provisional attachment order dated 16.2.2023 does not survive. It appears to be a common mistake being caused by revenue authorities where provisional attachment orders may never continue for more than one year are allowed to exist beyond that end date. Such error on the part of the revenue authorities leaves the assessee with no option but to approach this Court for effective direction on the revenue authorities to actually lift the provisional attachment. In face of the statutory provision being unequivocally clear, the revenue authorities when called upon by this Court, take a stand as has been noted in the present facts. Thus, the provisional attachment orders are actually lifted only upon the revenue authorities being questioned about the illegality of their action, by this Court. Once the statutory law admits of no doubt and the revenue authorities do offer correction to the error committed by them upon being pointed out by this Court, it is found that such litigation whenever it arises to be wholly avoidable - petition disposed off.

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• 2024 (5) TMI 405
  Cancellation of GST registration of petitioner - time limitation - HELD THAT:- In the present case, the facts are similar to one in SURENDRA BAHADUR SINGH VERSUS STATE OF U.P. THRU. PRIN. SECY. COMMERCIAL TAX (GST) LKO. AND 2 OTHERS [ 2023 (8) TMI 1262 - ALLAHABAD HIGH COURT] , wherein the appeal was barred by time under Section 107 of the Act. However, the Division Bench in Surendra Bahadur Singh s case took into consideration the original order and set aside the same being non-reasoned and allowed the petitioner therein to file reply to the show cause notice. The orders impugned herein are liable to be set aside. Accordingly, the order in original dated May 13, 2020 and the appellate order dated April 3, 2024 are quashed and set aside - the writ petition is allowed.

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• 2024 (5) TMI 404
  Refund claim - non-availability of proper / correct bank account details of the taxpayers - Rule 97A of the CGST Rules, 2017 - HELD THAT:- While it is observed that such a dispute should never have arisen before this Court and the respondent-authorities ought to have addressed the grievance efficiently, in real time as may not require present petition to be filed by the petitioner, needlessly, at the same time in view of further fact that at present the refund has been paid out, the cause of action brought by the petitioner does not survive. The writ petition is dismissed as infructuous.

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• 2024 (5) TMI 403
  Maintainability of petition - availability of alternative remedy - Violation of principles of natural justice - no opportunity of personal hearing was granted - SCN does not provide any date, place and time of hearing despite the same being mandatory procedure. Availability of alternative remedy of appeal - HELD THAT:- The Court thereafter observed that the stand taken by the respondents that the petitioner has alternative remedy of appeal under Section 107 of the Act cannot be accepted. Insofar as it is settled law that availability of alternative remedy, is not a complete bar to entertain a writ petition under Article 226 of the Constitution of India and has referred to exceptions that have been carved out to alternative remedy by the Hon ble Supreme Court with regard to three cases i.e. (i) where there is complete lack of jurisdiction in the officer or authority to take the action or to pass the order impugned; or (ii) where vires of an Act, Rules, Notification or any of its provisions has been challenged; or (iii) where an order prejudicial to the writ petitioner has been passed in total violation of principles of natural justice. Opportunity of personal hearing - HELD THAT:- The action taken against the petitioner under Section 74(9) of the Act does not provide for personal hearing to be given to the concerned person chargeable with tax or penalty. It only states that the proper officer shall after considering the representation, if any, made by the person chargeable with tax determine the amount of tax, interest and penalty due from such person and issue an order. It has been argued that sub-clauses of Section 75 of the Act relate to the procedure to be followed by the Officer after remand of the matter by the appellate authority or tribunal or the court and sub-section (4) should be read in that context and it requires that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty or where an adverse decision is contemplated against such person - the petitioner has also argued that Section 75(4) of the Act would be otiose as if this Court comes to the conclusion that the argument raised by the learned counsel for the State-respondents is liable to be accepted as Section 74(1) of the Act also contemplates issuance of a notice and calling for a reply. This Court having considered the submissions made by the learned counsel for the parties has gone through the leading judgment in the case of BHARAT MINT AND ALLIED CHEMICALS VERSUS COMMISSIONER COMMERCIAL TAX AND 2 OTHERS [ 2022 (3) TMI 492 - ALLAHABAD HIGH COURT] and find that the said judgment although has read into the language of Section 75(4) of the Act and the right of personal hearing, it has not mentioned any causes omissus on the part of the legislature reading into the statute words like personal hearing as the Act itself only states that an opportunity of hearing shall be given. Order is reserved - Till pronouncement of the judgement, the impugned orders passed by the assessing authority shall remain stayed.

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• 2024 (5) TMI 402
  Challenge to summary order passed against the petitioner under Section 74 of the Tamil Nadu Value Added Tax Act, 2017 - petitioner has not enclosed the copy of the detailed order passed against the petitioner on the same day - opportunity of personal hearing not provided - violation of principles of natural justice - HELD THAT:- As per the decision of the Hon ble Supreme Court in the case of Assistant Commissioner (CT) LTU, Kakinadu and others Vs. Glaxo Smith Kline Consumer Health Care Limited [ 2020 (5) TMI 149 - SUPREME COURT] , this Writ Petition, at this distant point of time, is not maintainable. In any event, the fact remains that the petitioner has initiated proceedings for rectifying the returns filed under Section 139 of the Income Tax Act, 1961. However, the petitioner has not secured any order from the Assessing Officer to rectify the return filed by him for the relevant Assessment Year, based on which, the impugned assessment order has been passed under the provisions of the TNGST Act, 2017. The case of the petitioner that no personal hearing was given to the petitioner also cannot be countenanced as the petitioner was indeed given an opportunity of being hearing by issuance of a personal hearing notices dated 22.11.2022 and 19.12.2022 before the impugned order dated 30.12.2022 was passed. It appears that the petitioner however did not opt to appear before the respondent before the impugned order was passed. The impugned order however considered the reply filed by the petitioner on 19.11.2022 and 12.12.2022. In any event, the fact remains that the petitioner has still not obtained any order under Section 154 of the Income Tax Act, 1961 rectifying the return filed by him under Section 139 of the Income Tax Act, 1961. Therefore, even if the petitioner had participated in the proceedings for personal hearing, it would have been merely an empty formality - a partial relief can be granted to the petitioner by permitting the petitioner to file a statutory appeal before the Appellate Authority i.e., Deputy Commissioner-ST (Appeal), Madurai, Tirunelveli Division, under Section 107 of the TNGST Act, 2017, within a period of 30 days from the date of receipt of a copy of this order, subject to the petitioner pre-depositing the amount as is contemplated under Section 107 of the TNGST Act, 2017 along with the proposed appeal. The writ petition is disposed off.

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• 2024 (5) TMI 401
  Liability to pay the differential GST amount (being the difference between GST and VAT) for each the works contract / composite supply executed by the petitioner - works contract - HELD THAT:- The issue involved in the present writ petitions would fall under category KVAT regime as is enunciated in SRI CHANDRASHEKARAIAH, M/S. GOVINDE GOWDA AND SONS, M/S. D.K. CONSTRUCTIONS, M/S. SRI AYYAPPA CONSTRUCTIONS, M/S. ANNAPOORNESHWARI CONSTRUCTIONS, M/S. BHOOMIKA BUILDERS, VERSUS THE STATE OF KARNATAKA, THE UNION OF INDIA, THE GOODS AND SERVICES TAX COUNCIL, PRINCIPAL COMMISSIONER OF CENTRAL TAX, COMMISSIONER OF COMMERCIAL TAXES, CAUVERY NEERAVARI NIGAMA LIMITED, AND OTHER [ 2023 (6) TMI 93 - KARNATAKA HIGH COURT] where it was held that I find considerable force in the submission made by the learned Senior counsel for the petitioners that the tax component is an independent component which the petitioners do not retain as a profit and is a statutory payment to be made. When there is a concluded contract and rate has been fixed in KVAT regime for the work contract as per schedule rate, petitioners cannot be directed to pay the Goods and Service Tax for the work that they have completed and received payment. SCN in respect of the writ petitioners are without any basis - Petition allowed.

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• 2024 (5) TMI 400
  Rejection of rectification petition - turnover of the petitioner was erroneously reported in the GSTR 1 return - petitioner states that the correct turnover was reported in the GSTR 3B return and the entire tax liability is on account of an inadvertent error committed while filing the GSTR 1 return - HELD THAT:- The petitioner s reply dated 05.02.2024 has been placed on record. In such reply, the petitioner asserted that the correct turnover was Rs. 92,28,895/- and not Rs. 9,22,89,895/- as wrongly reported in the GSTR 1 return. Since the petitioner did not file the annual return for the relevant assessment period, it appears that the petitioner did not rectify this error in the annual return. A tax liability of Rs. 1,48,20,834/- was imposed on the petitioner under the impugned assessment order. Prima facie , it appears that such tax liability had arisen only on account of the turnover reported in the GSTR 1 return. The interest of justice warrants that the petitioner be provided an opportunity to establish that the genuine turnover was only Rs. 92,28,895/- and not Rs. 9,22,89,895/-. Solely for such reason, the impugned order calls for interference - the impugned order dated 20.12.2023 is quashed and the matter is remanded for reconsideration. Petition disposed off by way of remand.

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• 2024 (5) TMI 399
  Exemption from GST - residential dwelling for use as residence services or not - hostel accommodation being provided by the applicant to students and working women - eligibility for GST exemption in terms of Entry No. 12 of Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 - HELD THAT:- It is clear that the purpose and objective of the notification is nothing but to avoid taxing residential properties taken on rent by family or individuals and the benefit of exemption is not extended to the premises which do not qualify as residential dwelling for use as residence. Further, unless the twin conditions of renting of residential dwelling for use as residence, being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms. In effect, the place rented out is neither a residential dwelling nor being rented out for use as residence - Hence, it is clear that hostel accommodation is not equivalent to residential accommodation and hence the services supplied by the applicant would not be eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-C.T. (Rate), dated 28-6-2017 and under the identical Notification under the TNGST Act, 2017, and also under Entry 13 of Exemption Notification No. 9/2017-I.T. (Rate), dated 28-6-2017, as amended. Requirement for registration - HELD THAT:- The applicant s service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-C.T. (Rate), dated 28-6-2017 as amended, the applicant is very much be required to take registration under the GST Enactments, as the arrangement between the applicant and the hostel occupants is liable to be classified as transaction in the course of furtherance of business and hence, as per Section 7(1)(a) of CGST Act, 2017 read with Entry No. 2(b) of the Second Schedule to the CGST Act, the said transaction constitutes supply - the applicant is required to get themselves registered in the State of Tamil Nadu, if their aggregate turnover in a financial year exceeds twenty lakh rupees. Classification of service - providing hostel accommodation - rate of tax - HELD THAT:- The hotels are meant for a temporary stay (2-5 days) and have lot of facilities and staff, but hostels are used for a longer period and have basic facilities with minimal staff required by the inmates to stay at a reasonable rate. Therefore, hostel services cannot be equated to a hotel accommodation and hotel GST rates cannot be applied to a hostel. Therefore, supply of hostel accommodation services (Tariff Heading 9963) is taxable @ 9% CGST + 9% SGST under Sl. No. 7(vi) of the above Notification [Sl. No. 7(ix) as per original notification]. Taxability - composite supply or not - activity of supply of in-house food to the inmates of the hostel amounts to providing services in a composite manner and the hostel accommodation services provided by the applicant, being the principal supply - HELD THAT:- In the event of the hostel accommodation being an exempt activity, whether the incidental activity of supply of in-house food to the inmates of the hostel would also be exempt being in the nature of a composite exempt supply - As per Section 8 of the CGST Act, 2017, for a Composite supply, the tax rate on the principal supply will be treated as the tax rate on the given composite supply. Since the applicant provides a number of services in a composite manner, the hostel accommodation services provided by the applicant, being the principal supply, which is taxable @ 18%, will be tax rate for the composite supply provided by them.

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• Income Tax

• 2024 (5) TMI 398
  Action on the complaint of the petitioner sent through speed post - Request for necessary investigation may be done against private respondents - Writ of Mandamus - as per HC [ 2020 (2) TMI 842 - ALLAHABAD HIGH COURT] the present writ petition is liable to be dismissed on the ground of concealment of facts in respect of the filing of the earlier writ petitions - HELD THAT:- Having heard learned senior counsel for the petitioner on merits, we see no reason to interfere with the impugned order(s). The special leave petitions are, accordingly, disposed of.

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• 2024 (5) TMI 397
  Validity of reassessment proceedings in name of a non-existing company - notice issued after scheme of amalgamation as approved by the High Court - as decided by HC [ 2023 (3) TMI 1483 - BOMBAY HIGH COURT] stand of the Revenue that the reassessment proceedings could be initiated for a period prior to the specified date as per the scheme of amalgamation even against a non-existent entity, is an argument which is clearly untenable - HELD THAT:- We are not inclined to interfere with the impugned judgment and hence, the special leave petition is dismissed. Pending applications, if any, shall stand disposed of.

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• 2024 (5) TMI 396
  Reopening of assessment u/s 147 - validity of order passed by the first respondent overruling the objection of the petitioner against the reopening of the assessment that was completed earlier on 28.12.2018 - HELD THAT:- Although the petitioner has not produced any documents to substantiate that the petitioner had enclosed the copy of the order of the Special Tahsildar, Stamps prior to passing of the assessment order u/s 143(3) the fact remains that the reasons furnished by the respondents indicate that the differential value for an amount of Rs. 22,11,500/- was omitted to be considered indicating that the information was available either in the Form of order of the Special Tahsildar dated 02.04.2018 or in the Form of an endorsement in the sale deed, which would have been produced for inspection before the re-assessment was completed on 28.12.2018. The words used in the two communications dated 08.11.2011 and on 02.08.2021 by the jurisdictional AO make it clear that the information was available. However, it was not noticed by the AO. The petitioner has made out a case for interfering with the impugned order - Accordingly, the impugned order passed by the first respondent overruling the objection of the petitioner against the re-opening of the assessment that was completed earlier on 28.12.2018 vide impugned notice issued u/s 148 is set aside.

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• 2024 (5) TMI 395
  Set-off of losses against income from other sources u/s 70 - Applicability of provision of section 10B - petitioner had the status of EOU for a period of 5 years - as submitted even though Section 70 would be applicable, when an assessee files a declaration, then Section 10B could not be invoked automatically - HELD THAT:- Admittedly, petitioner is 100% EOU had the permission till up to 20.03.2013. Petitioner has also made an application for renewal of its status 02 months before expiry of enquiry for the relevant assessment years, namely, 2008-09, 2009-10 petitioner was having the 100% EOU status and whereby the declaration filed by the petitioner with Income Tax Office, Circle-1, Raichur, claiming that the provisions of Section 10B are not applicable to the petitioner Company was within the scope of the petitioner Company inasmuch as even though Section 70 of the Act was made applicable to the petitioner, it was the choice of the petitioner to seek for non-application of Section 10B by filing a declaration. Said position of law is not in dispute in view of the judgment of the Division Bench of this Court in Karle International (P) Ltd . [ 2020 (9) TMI 968 - KARNATAKA HIGH COURT] as held it is equally well settled legal proposition that where the assessee does not want the benefit of deduction from the taxable income, the same cannot be thirst upon it. There is no provision which makes compulsory on the part of income tax officer to make deduction in all cases. As the assessee has not filed any audit report in Form-56G which is a mandatory requirement for claiming deduction under Section 10B of the Act. Therefore, the deduction u/s 10B of the Act cannot be thirst upon the assessee. Thus the petitioner has chosen to file declaration for the relevant assessment years before the jurisdictional Income Tax Officer seeking that the Section 10B would not be applicable to the assessee. WP allowed.

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• 2024 (5) TMI 394
  LTCG - deduction u/s 54 - entire amount of long-term capital gains earned from the sale of original assets was not invested - CIT(A) granted partial relief to the assessee by observing that the assessee has made only partial investment in the new house property and therefore is entitled to relief u/s 54 of the Act only limited to the payment made for the new flat as per the purchase deed - HELD THAT:- There is no material available on record to show that the assessee was put to notice or was granted the opportunity of hearing by the learned CIT(A) before arriving at the aforesaid conclusion. Accordingly, we deem it appropriate to restore this issue to the file of the jurisdictional AO for de novo adjudication after consideration of the details as may be furnished by the assessee. The assessee is directed to file her submission along with all the necessary supporting documents in respect of her claim u/s 54 of the Act before the AO. Accordingly, the impugned order passed by the learned CIT(A) is set aside and the grounds raised by the assessee are allowed for statistical purposes.

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• 2024 (5) TMI 393
  Exemption u/s 80P(2)(a)(i) or u/s 80P(2)(d) - interest income earned from Nationalised banks/cooperative banks - HELD THAT:- We find this issue is no more res integra by virtue of several decisions of the Tribunal as well as the decision of Sai Prerana Gramin Bigarsheti Sahakari Pat Sanstha Maryadit [ 2019 (7) TMI 1582 - ITAT PUNE] allowing deduction u/s. 80P. As relying on M/S. RATNATRAY GRAMIN BIGAR SHETI SAH. PAT SANSTHA MARYADIT [ 2018 (12) TMI 1926 - ITAT PUNE] as following TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITED case [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] the interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, we direct the Assessing Officer to allow the exemption u/s. 80P(2)(a)(i) and section 80P(2)(d) of the Act. Thus, the grounds of appeal filed by the assessee stand allowed.

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• 2024 (5) TMI 392
  Addition u/s 68 - unexplained gifts received from family members - proof to justify the sources of gifts rendered - Onus to prove - CIT(A) deleted addition on the basis that the AO has made huge additions but has not made any reference with regard to identity, creditworthiness, and genuineness of the gift givers - Also AO has not made any effort to rebut the submissions made by the assessee and has made additions without giving any reasons for the same - HELD THAT:- Gift received from assessee s real brother - From the perusal of the gift deed entered we find that the donor is the younger brother of the assessee and out of natural love and affection gave Rs. 97,35,000 as a gift to the assessee. From the perusal of the ITR acknowledgement of assessee s brother, he has earned a total income of Rs. 37,48,84,100 during the year under consideration. Therefore, we are of the considered view that Mr. Sunil B. Dalal had sufficient creditworthiness to gift to the assessee. AO has also not disputed the creditworthiness of Mr. Sunil B. Dalal. Further, in view of the fact that the donor/gift giver is the younger brother of the assessee, the genuineness of the transaction cannot also be doubted. Gift received from assessee s mother - Nothing has been brought on record to doubt the genuineness of the transaction of grant of gift by a mother to her son. The fact that the assessee s mother had a total income of Rs. 1,21,100, as per her return of income for the assessment year 2020-21, also supports the claim of the assessee that the gift of Rs. 1,50,000 was out of her past savings along with the current year income. Therefore, we find no basis for doubting either the genuineness of the transaction or the creditworthiness of the donor. Gift received from assessee s real sister - From the perusal of the copy of the ITR acknowledgement and statement of income for the assessment year 2020-21, assessee sister had an interest income of Rs. 8,45,318, which resulted in a total income of Rs. 7,74,920 as per her return of income. Thus, creditworthiness of sister cannot be doubted to give a gift of Rs. 1,50,000 to the assessee. Further, in the absence of any contrary material being brought on record by the Revenue, the genuineness of the gift of Rs. 1,50,000 to the assessee by his sister cannot also be doubted. Gift received from HUF - karta of the HUF is Assessee s father - we find that B.M. Dalal HUF had cash in hand of Rs. 10,28,953. From the capital account of B.M. Dalal HUF, we find that the HUF earned commission and brokerage of Rs. 1,26,830 and long-term capital gains of Rs. 1,40,000 during the year under consideration. Therefore, in view of the aforesaid, we are of the considered opinion that the creditworthiness of B.M. Dalal HUF has been sufficiently proved. Further, in the absence of any contrary material being brought on record by the Revenue, the genuineness of the gift to the assessee by his father s HUF cannot also be doubted. Thus AO has not brought any material on record to controvert the submissions made by the assessee. Therefore, CIT(A) rightly deleted the addition made by the AO. Decided in favour of assessee.

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• 2024 (5) TMI 391
  Rectification u/s 154 - The Assessee filed a rectification application, which was dismissed by the CIT(A) based on the assumption of Tribunal s adjudication on the issue. - Whether the issue of unexplained cash addition was not at all entered into by the coordinate Bench while deciding the appeal ? - HELD THAT:- As observed above, while reproducing the order of coordinate Bench in the misc. application, it comes up that the specific observation was made at the time of disposal of misc. application that the Bench has not disputed the findings of learned CIT(A) on this issue. This observation is categorical finding with regard to the fact that findings of learned CIT(A) qua the unexplained cash additionin para 5.5 remains untouched. This finding being not challenged by the Revenue and being not adverse to the assessee, was certainly not required to be determined in the appeal of the assessee. Merely because there was a ground mentioning composite figure of Rs. 2,37,08,076/-, it cannot be said that the coordinate Bench had adjudicated upon the issue of unexplained cash also. Thus, order of learned CIT(A) in dismissing the application u/s 154 of the Act is not justified. Accordingly, the appeal is allowed and the issue on merit is restored to the file of learned CIT(A) to decide the application of the assessee afresh in the light of aforesaid observations of this Bench. Appeal of the assessee is allowed for statistical purposes.

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• 2024 (5) TMI 390
  Rectification application filed u/s 154 - Mismatch in the amount of depreciation - Assessee ha been allowed lesser depreciation for which it was entitled - HELD THAT:- The assessee before the revenue authority and before us contended that deprecation in books of account is of Rs. 6,23,97,846/- only which was added back while computing business income as per the Act. This amount can be verified from audited financial statement of the assessee available on record, where the profit and loss account and fixed asset schedule is available. We have also perused the ITR of the assessee filed in form ITR-6 and note that in Profit and loss account reported in ITR-6 in schedule Part A- P L the assessee shown depreciation amount at Rs. 6,65,43,786/-only. Hence, there is mismatch in the amount of depreciation as per books reported at 2 different places which not been verified by the authority. Therefore, in our considered view that there is mismatch in the amount of depreciation which needs to be looked into and same needs to be rectified after verification. Additional depreciation - We find that the assessee before the revenue authority and before us stated that in the immediate previous assessment year, it acquired plant Machinery which was eligible for additional depreciation. However, the plant machinery in previous assessment year was put to use for less than 180 days therefore the assessee claimed only 50% of such additional claim in the immediate previous year and remaining 50% claimed in the year under consideration. The claim made in previous assessment year for 50% amount has been allowed therefore remaining 50% should also be allowed in the year under consideration. The lower authority without verifying the veracity of assessee s claim rejected the rectification application 154 of the Act. In our considered opinion, the claim of the assessee needs to be verified as it appears to us there is a mistake in the order of the information generated under section 143(1) of the Act and needs to be rectified under the provisions of section 154 of the Act. Additional claim made by the assessee for the gratuity on payment basis - can the assessee make fresh claim in application filed under section 154? - We find support and guidance from the judgement of Promod R Aggarwal [ 2023 (10) TMI 1142 - BOMBAY HIGH COURT] - the claim made by the assessee in the application filed under section 154 of the Act is required to be looked into by the AO on merit as per the provisions of law. Hence, the grounds of appeal of the assessee are allowed for the statistical purposes.

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• 2024 (5) TMI 389
  Nature of receipt - Taxability u/s 17(3)(iii) - compensation received under Non-Competition Agreement on termination of job (employment) - payment under the profits in lieu of salary or capital receipt - Payment by erstwhile employer of the assessee on termination of service - DR submitted that after cessation of employment, assessee entered into an agreement Deed full and complete release and agreement of trade secrets and confidentiality and received the sum - Assessee claimed that amount as not taxable as it was a capital receipt given to him as ex-gratia by Coca Cola India Inc. on executing a non-disclosure and release agreement after cessation of his services. HELD THAT:- As per ratio of judgment in Guffic Chem Private Limited [ 2011 (3) TMI 6 - SUPREME COURT] it is well settled that compensation attributable to a negative/restrictive covenant is capital receipt. According to judgment of Mrs. Tara Sinha [ 2017 (8) TMI 731 - DELHI HIGH COURT] a non compete fee under Non-Competition Agreement is not chargeable to income tax. In view of above said material fact especially assessee employee having received sum as per Deed of full and complete release and agreement on trade secrets and confidentiality containing non compete clause as per above said well settled principles of law being capital receipt is not taxable - Assesse appeal allowed.

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• 2024 (5) TMI 388
  Rejection of the application for final approval u/s. 80G on technical grounds - applicant was required to file application in Form No. 10AB on or before 30.09.2022, which it failed to submit - CIT(E) was of the view that the date of commencement of activities in the case of the assessee should also be six months prior to the date of filing of From 10AB - HELD THAT:- As decided in the case of CIT-1982 Charitable Trust [ 2024 (3) TMI 1201 - ITAT CHENNAI] while passing the order the Tribunal held that the Timeline prescribed under clause (iii) of first proviso to section 80G(5) should be treated as directory and not mandatory, hence, once timeline prescribed for filing Form No.10A for recognition under section 12A had been extended up to 30.09.2023, same may be treated as extended for forms namely Form No.10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to section 80G also. In the case of Anudip Foundation for Social Welfare[ 2024 (3) TMI 1202 - ITAT KOLKATA] Tribunal has held that where assessee had been granted provisional approval under clause (iv) to first to section 80G(5), application nor final approval under clause (iii) to first proviso to section 80G(5) could not be rejected on ground that institution had already commenced its activities even prior to grant of provisional registration. Since in the instant facts, as it evident from the various dates mentioned above, the assessee / Applicant Trust had filed application for grant of final approval u/s 80G(5) of the Act within a period of six months from date of grant of provisional registration on 06.04.2023 (whereas date of grant of provisional approval u/s 80G(5) of the Act was 30.03.2023 and as noted by us in the preceding paragraph, the assessee could have filed application for grant of approval on or before 30.09.2023) i.e. within a period of six months from date of grant of provisional registration which stands further extended to 30.06.2024 vide Circular No. 7/2024 dated 25.04.2024. Accordingly, we are of the considered view that Ld. CIT(E) erred in summarily dismissing the application of grant for final approval u/s 80G(5)(iii) of the Act for reasons cited. Accordingly matter is restored to the file of Ld. CIT(E) for de-novo consideration.

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• 2024 (5) TMI 387
  Taxability of income in India - Validated by a Tax Residency Certificate (TRC) - Proof of residence - assessee s claim of benefit under Article 13(4) of the India-Mauritius DTAA - Long Term Capital Gain arising from sale of shares of certain Indian companies - assessee is a non-resident corporate entity incorporated under laws of Mauritius - AO concluded that the assessee was controlled and managed from outside and does not have any commercial substance or real economic activity in Mauritius - Whether assessee being a shell/conduit company is not entitled to avail benefits under India-Mauritius DTAA? HELD THAT:- Since, the capital gain is derived from shares acquired prior to 01.04.2017, they are not taxable in terms with Article 13(4) India Mauritius Tax Treaty. In our view, the AO has failed to establish on record that the assessee is a shell/conduit company through proper evidence. Therefore, in our view, assessee remains entitled to treaty benefits. DRP has referred to the LOB clause under Article-27A of the India Mauritius Tax Treaty. In our view, the reference to Article 27A is totally irrelevant as the assessee has not claimed any benefit under Article 13(3B) of India Mauritius Tax Treaty. Even assuming for the sake of argument that Article 27A gets attracted, however, the Department has failed to demonstrate the fulfilment of conditions of shell/conduit company as per Article 27A of the tax treaty. We may further observe, the directions issued by learned Dispute Resolution Panel leaves a lot to be desired. Thus we are of the view that the assessee, being entitled to claim exemption under Article 13(4) of India- Mauritius Treaty, the addition made is unsustainable. Accordingly, the Assessing Officer is directed to delete it.

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• 2024 (5) TMI 386
  Validity of unsigned order - Final assessment order not signed by the AO - DR submitted that the additions made in the draft assessment order and the final assessment order are the same and as the draft assessment order has been duly signed by the AO and the additions made therein have been confirmed by DRP no prejudice is caused to the assessee if the final assessment order is not signed by the AO - HELD THAT:- The Board has issued instructions from time-to-time laying down the procedures for signing of the notices and the assessment orders. Sub-section (2) of section 282A of the Act explains the connotation of expression authentication . Thus, signing of document and authentication of document carry different meaning. Signing of document denotes committing to the document, whereas, authentication of document relates to genuineness of origin of document. If signing and authentication would mean the same, then there was no need for the Legislature to lay down the requirement of signing the documents, viz., notices, orders, etc., in sub-section (1) and explain the purpose of authentication in sub-section (2) of section 282A of the Act. If argument of the Revenue is accepted, then the provisions of sub-section (1) of section 282A would become redundant. Revenue has tried to take shelter under section 292B of the Act. The said section cures the procedural defects or omissions. The section does not grant immunity from non-compliance of statutory provisions. Non-signing of an assessment order is not a procedural flaw that can be cured subsequently. The order is complete only when it is signed and released. The date on which the order is signed by the AO is the date of order. If the Revenue s contention is accepted and the AO is allowed to sign the assessment order now considering it to be procedural deficiency, still the order would suffer from the defect of limitation and would be without jurisdiction. In the case of Vijay Corporation [ 2012 (4) TMI 353 - ITAT MUMBAI] co-ordinate Bench in a case where the assessment order served on the assessee was not signed by the AO held that requirement of signature of the Assessing Officer is a legal requirement. The omission to sign the order of assessment cannot be cured by relying on the provisions of section 292B of the Act and held the order invalid. Ergo, in facts of the case and documents on record, we hold the unsigned impugned assessment order served on the assessee invalid and quash the same. Decided in favour of assessee.

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• 2024 (5) TMI 385
  Validity of reopening of assessment - no approval was taken U/s 151 - HELD THAT:- On perusal of the recorded reason, it reveals that the ld. AO has not taken any approval u/s 151 of the Act from higher authorities. Whether the mistake is curable U/s 292B? - The reply is against the revenue.Issuance of notice without approval has been rendered illegal due to breach of mandatory condition of the sanction on satisfaction of higher authority under proviso to Section 151of the Act. Considering this, we set aside the impugned appeal order. See M/S DHADDA EXPORTS VERSUS INCOME TAX OFFICER, WARD 1 (1) , JAIPUR [ 2015 (4) TMI 304 - RAJASTHAN HIGH COURT] - Assessee appeal allowed.

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• Benami Property

• 2024 (5) TMI 384
  Benami transaction - The applicant was found in possession of a significant amount of cash during an income tax raid - whether the bare ingredients of the offence under Section 53 read with Section 3 of PBPT Act were satisfied in the present case? - applicant submit that the applicant is an innocent person and has been falsely implicated in the present case due to enmity - whether sufficient ground for proceeding exists in the case or not? - HELD THAT:- Prosecution under Section 53 of PBPT Act can be initiated only in a case where the alleged transaction is either a Benami transaction pertaining to a Benami property or has been entered in order to defeat the provisions of any law or avoid payment of statutory dues or avoid payment to creditor whereas the complaint filed against the applicant does not make any whisper in this regard. In the absence of any allegation to the effect that the alleged transaction was entered by the applicant in order to defeat the provisions of any law or avoid payment of statutory dues or avoid payment to creditor, prosecution under Section 53 of PBPT Act could not have been initiated against the applicant, thus, the impugned summoning order dated 27.02.2024 fails on this count also. It is also observed here that from the perusal of impugned summoning order dated 27.02.2024 it is evident that the learned trial court has not even applied its mind to the fact that whether the bare ingredients of the offence under Section 53 read with Section 3 of PBPT Act were satisfied in the present case or not. Further, this Court is of the view that summoning an accused is a very serious matter and the summoning order has to be passed after considering the legal aspects and material available on record in this regard Hon ble Supreme Court of India has held that the order of issuance of process is not an empty formality. The Magistrate is required to apply his mind as to whether sufficient ground for proceeding exists in the case or not in the cases of Lalankumar Singh [ 2022 (10) TMI 1135 - SUPREME COURT] , Pepsi Foods Ltd. [ 1997 (11) TMI 518 - SUPREME COURT] , Mehmood UL Rehman [ 2015 (3) TMI 1349 - SUPREME COURT] After going through the facts and circumstances of the case, this Court finds that learned trial court has not applied its judicial mind while summoning the applicant and has completely relied on the averments made in the complaint dated 27.02.2024 and also the order of summoning is a non-speaking order, therefore, in the opinion of this Court, the applicant has made out a case for interim relief. The matter requires consideration on fact and law both. Learned Counsel for the opposite party Nos.1 and 2 prays for and is granted four weeks time to file the counter affidavit. Two weeks time thereafter shall be available to learned Counsel for the applicant for filing rejoinder affidavit.Accordingly, list/put up this case on 30.08.2024.

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• Customs

• 2024 (5) TMI 383
  Revocation of ADD imposed on Purified Terephthalic Acid - Absence of any recommendation by the Designated Authority (DA) - Sunset review - exported from the People s Republic of China, Iran, Indonesia, Malaysia, Taiwan, Korea RP and Thailand - levy without initiating sunset review - by N/N. 03/2020-Customs (ADD) dated February, 2, 2020 issued by respondent No. 1 Union of India, Ministry of Finance, Department of Revenue, Government of India, N/N. 28/2016-Customs (ADD) dated 5th July, 2016 and Notification No. 28/2019 Customs (ADD) dated 24th July, 2019 are rescinded. HELD THAT:- The issue raised in this petition with regard to revocation of ADD on subject goods during the five years without initiating sunset review is no more res integra in view of decision of this Court in similar facts in case of Realstrips Limited and others [ 2022 (9) TMI 1171 - GUJARAT HIGH COURT] , wherein in case of levy of countervailing duty under the Act having pari-materia provisions for levy of ADD, this Court after considering the case laws cited by both the sides answered the question that rescinding the notifications of levy of countervailing duty was irregular and illegal exercise and such notification rescinding the countervailing duty could not have been issued when the exercise in law is required to be undertaken pursuant to the commencement of process of sunset review not completed in that case, whereas in the facts of the case, sunset review was never initiated. The contention raised on behalf of the respondents are considered by this Court in the aforesaid decision of Realstrips Limited and others in detail however, the specific contention raised by respondent No. 3 in the affidavit in reply to justify the revocation of ADD on the subject products is concerned, the respondent No. 3 has only narrated the factors which may be considered for taking a decision by the Central Government to revoke the ADD, however, as held by the aforesaid decision of Realstrips Limited and others, the Central Government could not have issued the notification rescinding the ADD in absence of any recommendatory exercise conducted by the Designated Authority and without waiting for such recommendation of the Designated Authority in accordance with the prescribed procedure in the Rules. Therefore, the impugned notification issued by the Central Government is without power in the manner in which it is issued in absence of any recommendation by the Designated Authority. Therefore, the procedure prescribed as per the provisions of the Act and the Rules could not be considered as directory as the same would reduce the entire scheme of levy of ADD as futile exercise to be carried out by treating such procedure as optional, more particularly, when the Designated Authority has recommended for continuation of ADD on the subject product and based upon such final recommendation, Notification No. 28/2019 dated 24th July, 2019 was issued by the Central Government for continuation of the ADD on the subject product to be imported from Thailand and Korea RP. So far as other subject countries are concerned, Notification No. 28/2016 was very much in existence for levy of ADD and the Designated Authority was required to conduct sunset review for making recommendation as to continue to levy ADD on the other subject countries such as China PR, Iran, Indonesia, Malaysia and Taiwan after completion of five years. As the facts of the present case are similar to the facts which were before the Court in case of Realstrips Limited and others. Adopting the same reasonings and result of the discussion made therein, the present petition is allowed in terms of the following orders and directions: (i) The Notification No. 3/2020-Customs (ADD) dated February 2, 2020 issued by respondent No. 1 rescinding the anti-dumping duty on subject goods is hereby quashed and set aside. (ii) Respondent no. 2 shall immediately proceed to initiate Sunset review process in relation to the continuance or otherwise of the ADD already levied as per Notification No. 28/2019 Customs (ADD) dated 24th July, 2019. So far as Notification No. 28/2016-Customs (ADD) dated 5th July, 2016, the period of five years is over during the pendency of this petition. (iii) The provisions of the Act and the rules so far as sunset review in case of Notification No. 28/2019 Customs (ADD) is concerned, same shall be complied with and completed in accordance with the statutory provisions and rules for determining about the continuation or recurrence of injury to domestic industry in respect of the product in question. (iv) As the No. 3/2020-Customs (ADD) dated February 2, 2020 is set aside, the original Notification No. 28/2019 Customs (ADD) dated 24th July, 2019 shall revive and ADD shall become leviable on the product in question. (v) Respondent no. 2 after initiation of sunset review shall comply with the Rules 23 and 24 of the Rules and shall recommend to the Central Government for its continuance or withdrawal of ADD on subject goods. Since the review process is yet to commence, respondent no. 2 Designated Authority shall issue notification of initiation of sunset review and thereafter complete the same as per Rules 23(2) and (3) of the Rules. However, in the interregnum i.e. from the date of Notification No. 3/2020 dated February 2, 2020 till respondent no. 2 takes appropriate decision after final findings notification is issued by the respondent No. 1, levy of ADD shall continue on the subject goods till 19.07.2024. Petition disposed off.

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• Insolvency & Bankruptcy

• 2024 (5) TMI 382
  Doctrine of subrogation - Allowing recourse to the Financial Creditors against the Personal Guarantors of Asian Colour Coated Ispat Limited - Resolution Plan approved - it was held by NCLAT that commercial wisdom of the CoC has been given supremacy and no grounds exist for the Adjudicating Authority or Appellate Tribunal to interfere - HELD THAT:- There are no error in the NCLAT - appeal dismissed.

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• 2024 (5) TMI 381
  Validity of Resolution Plan - classification as made in Resolution Plan between payment to employees, is discriminatory and violative of provisions of Section 30, sub- section (2) of the Code or not - it was held by NCLAT that The distribution to the employees, whose liquidation value was NIL falls within the commercial wisdom of the CoC and the said clause of Resolution Plan cannot be impugned on the said ground, nor the said proposal for payment is violative of Section 30, sub-section (2) (b) of the Code. HELD THAT:- There are no substantial question of law arises in this Appeal - appeal dismissed.

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• 2024 (5) TMI 380
  Admissibility of CIRP u/s 9 of the IBC - petition filed without delivery of a demand notice under Section 8 of the IBC - Appellant is liable to pay the outstanding dues to the Operational Creditor or not - existence of debt or not - time limitation - HELD THAT:- There is no tripartite agreement on record which could have guided the mode and responsibilities of payment. Without any agreement in place, in the facts of the instant case, the responsibility to repay the outstanding dues remains on the Appellant. As the IBC proceedings are self-contained which govern the course of action in such situations, the Appellant cannot take refuge of Section 230 Indian Contract Act, 1872 that the agent cannot personally enforce, nor be bound by, contracts on behalf of principal and pass on its liability to VIL. Validity or otherwise of the service of Demand notice - HELD THAT:- Demand notice dated 31.07.2018 was sent by registered post on 01.08.2018 to the registered address of the Corporate Debtor, which was not replied to by the Corporate Debtor. Some documentary evidence is available on record, which includes the details of the India Post and the postal receipt, which indicate that the demand notice has been issued, even though the addresses are not fully legible and correct in the receipt and acknowledgement. This will not make any material difference as both parties have been dealing in business for long and were continuously exchanging lot of emails - Furthermore, the Applicant never disputed the address on which the demand notice was issued to the Corporate Debtor. But it has merely questioned the failure of proof of the service of the statutory demand notice, which appears to be spurious granted and unsustainable. The Adjudicating Authority has clearly brought out that as per records, the date of default is 12.12.2015. The TMPL acknowledged the debt and paid certain invoices and also facilitated in barter arrangement in the year 2017. Later on, there is an admission of liability by way of emails dated 21.07.2017 and again on 18.09.2017, which amounts to the admission of liability. Since there is an admission of liability on 18.09.2017, their cannot be any question of claims to be time barred as the period of limitation starts afresh from the date of admission of 18.09.2017. There is a clear admission with respect to the unpaid invoices / outstanding dues by the Corporate Debtor, with no dispute or denial of any kind. It is clearly brought out that there is a debt in terms of Section 5(21) of the Code and that there is also a default in terms of Section 3(12) of the Code and also the debt is within the period of limitation and there is no dispute raised at any point of time. Therefore, the Adjudicating Authority has rightly come to the conclusion that it satisfies the requirement for admission under Section 9 for Corporate Insolvency Resolution Process. There are no error in the orders of the Adjudicating Authority - appeal dismissed.

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• Service Tax

• 2024 (5) TMI 379
  Territorial Jurisdiction - impugned proceeding has been initiated by the Officer located at Tirunelveli in respect of the dispute that had arisen in Chennai in respect of the rental income received by the petitioner from renting of the property - HELD THAT:- Considering the fact that the petitioner has already paid the disputed tax and considering the fact that the petitioner is raising fundamental issue, which goes to the root of the issue, a reprieve is given to the petitioner by quashing the impugned order and by remitting the case back to the respondent to pass fresh orders on merits and in accordance with law within a period of 90 days from the date of receipt of a copy of this order, subject to the petitioner filing a detailed reply to the show cause notice. Considering the fact that the petitioner has already paid the tax, the order attaching the bank account of the petitioner with the concerned bank shall stand vacated. The petitioner is directed to co-operate with the respondent. The writ petition is allowed.

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• 2024 (5) TMI 378
  Levy of service tax - service received by the respondent/Assessee received in India, provided by nonresident/ person located outside India - reverse charge mechanism - HELD THAT:- The issue is no longer res integra . The same is decided by the Supreme Court in the case of C.S.T. DELHI VERSUS M/S. SOJITZ CORPORATION [ 2022 (11) TMI 48 - SUPREME COURT] where the levy of service tax was set aside. The writ petition is disposed of.

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• 2024 (5) TMI 377
  Levy of service tax on purported receipt of service charges - Erection, Commissioning and Installation Service - period from 01.04.2010 to 31.03.2011 - HELD THAT:- The appellant had not received the consideration for the services rendered to M/s. JSW Steels Ltd., for an amount of Rs.14,10,405/- as the Cheque was never encashed by the appellant. As no amount was received by the appellant, the liability of Service Tax cannot be fastened to them. The impugned order is set aside - appeal allowed.

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• 2024 (5) TMI 376
  Levy of service tax - Business Auxiliary Services - appellant are purchasing SIM Cards/Recharge coupons from BSNL on full payment of the Purchase consideration and selling these SIM Cards/ Recharge coupons to its customers on a Principal to Principal basis on a profit Margin - HELD THAT:- It is found that the commission received by the appellant are for sale of SIM Cards and other products of BSNL. It is also found that the service tax has already been paid by the BSNL on the products sold by the appellant. This issue is no more res integra and has been settled by the various decisions of the Tribunal as relied upon by the appellant in the case of COMMISSIONER OF CGST AND CENTRAL EXCISE VERSUS M/S RAMA SALES AND SERVICES [ 2018 (3) TMI 556 - ALLAHABAD HIGH COURT] , the Hon ble Allahabad High Court held that purchase and sale of SIM Cards by franshisee/distributors appointed by telecom companies not leviable to Service Tax under category of Business Auxiliary Service especially when such companies already discharged service tax on gross amount of Such SIM cards and charging any further service tax on same amount would lead to double taxation. Revenue relied upon the decisions of the Hon ble Apex Court in the case of IDEA MOBILE COMMUNICATION LTD. VERSUS CCE. C., COCHIN [ 2011 (8) TMI 3 - SUPREME COURT] . It is pertinent to mention that this judgment of the Hon ble Apex Court was considered by the Tribunal in the case of COMMISSIONER VERSUS DAYA SHANKAR KAILASH CHAND [ 2015 (8) TMI 1007 - ALLAHABAD HIGH COURT] and it was observed by the Tribunal that the issue involved in the said case before the Supreme Court was different than the issue involved in the present case. The impugned order is not sustainable in law and the same is set aside - Appeal allowed.

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• 2024 (5) TMI 374
  CENVAT Credit - services provided by Container Corporation of India Ltd. during the period from June, 2015 to March, 2016 on GTA Service - liability of Service Tax on amounts paid to East Central Railways. CENVAT Credit - GTA Services - HELD THAT:- The Appellant exported its final products i.e. Carbon Black from JNPT, Mumbai via ICD Kanpur in respect of which M/s Container Corporation of India Ltd. charged GTA Services from ICD Kanpur to JNPT, Mumbai - the issue is no more res integra and is squarely covered by the judgement of Hon ble Gujarat High Court in the case of CENTRAL EXCISE VERSUS INDUCTOTHERM INDIA P LTD [ 2014 (3) TMI 921 - GUJARAT HIGH COURT] . Hon ble High Court while considering the issue of admissibility of Cenvat credit of Service Tax paid on Cargo Services, held that any service availed by the Exporter, until the goods left India from the port, shall be considered as services used in relation to clearance of final products upto the place of removal - it is the Appellant and not the Container Corporation of India Ltd. who continued to remain owner of the goods till the goods are exported. Therefore, the place of removal would be JNPT Mumbai and not ICD Kanpur. The Appellant has rightly availed Cenvat credit on Service Tax paid on GTA from ICD Kanpur to JNPT, Mumbai - demand on account of Cenvat credit amounting to Rs.98,765/- alongwith interest is set aside, penalty of Rs.49,383/- imposed under Rule 15(2) of Cenvat Credit Rules is also set aside. Liability of Service Tax on amounts paid to East Central Railways - HELD THAT:- The railway crossing in question is used not only by the Appellant but also by residents of the colonies and also by industries situated in the adjoining areas. That in the aforesaid background, during the period 2014-15 2015-16, Appellant paid an amount of Rs.14,22,468/- and Rs.14,61,966/-respectively to East Central Railways as recovery of wages of two gate keepers of railway crossing. As the charges were not in respect of any service provided by Railways to Appellant, hence neither Railways charged service tax on the same, nor Appellant paid service tax under reverse charge mechanism - East Central Railway has not provided any service to the Appellant under the category of Business Support Services as alleged by the Department and Railways was performing statutory obligation by way of constructing a railway crossing and posting of two gatemen. The payment made by the Appellant to the Railways during the period 2014-15 to 2015-16 does not attract any Service Tax liability and the Appellant was not required to discharge Service Tax under reverse charge mechanism. Thus, the demand of Rs.6,76,049/- alongwith interest and penalty of Rs.3,38,025/- is set aside. The impugned order is set aside - appeal allowed.

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• 2024 (5) TMI 373
  Refund claim for service tax paid on specified services used in relation to authorized operations in the SEZ unit - rejection of refund on the ground that wrong address being mentioned in the invoices and the input services have not been consumed in the SEZ unit - refund sanctioning authority held that the input services have not been consumed in the SEZ unit, merely on account of raising of invoices by the service providers on the registered office of the company instead of its SEZ unit - N/N. 12/2013-ST dated 01.03.2013 - HELD THAT:- The respondent has brought on record the fact that the registered office of the company does not carry out any operation and it is merely a liasoning office and has been established only for the purpose of correspondence with vendors etc and in compliance with provisions of the Companies Act and no commercial activity is being undertaken from this office and also, no GST registration is obtained for this office by the respondent. All the input services have been consumed in the SEZ unit located in Gurugram, Haryana, which is further cleared from the declarations issued by the service providers specifically stating that the input services in question have been provided by them to the SEZ unit and the same have been consumed in the SEZ unit only. This issue is no more res integra as the same has been decided by various courts in a plethora of decisions consistently holding that the Cenvat Credit cannot be denied pertaining to certain input service invoices which are addressed to unregistered premises of the respondent. In this regard, reference made to the decision of the Hon ble Allahabad High Court in the case of M/S CYQUATOR MEDIA SERVICES P. LTD. VERSUS UNION OF INDIA THRU ITS SECY. 2 OTHERS [ 2017 (12) TMI 775 - ALLAHABAD HIGH COURT] wherein Hon ble High Court while deciding a similar issue has held that if all the information as stipulated in Rule 4A of Service Tax Rules is mentioned on the invoice, the Cenvat Credit cannot be denied. Further it is found that the receipt and the use of input services by the respondent have not been questioned by the Department and the issue relates only to validity of invoices which were issued to the wrong address, which is not registered with the Service Tax - it is a settled law that substantial benefit cannot be denied merely on a procedural infraction. There are no infirmity in the impugned order and the same is upheld - the respondent is entitled to refund of service tax paid on input services used in relation to authorized operations in their SEZ unit situated in Gurugram, Haryana. The appeal of Revenue dismissed.

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• 2024 (5) TMI 372
  Levy of service tax - Employees were deputed to the assessee - receiving services from the overseas company FFECJ through Dispatch Agreement and Secondment Agreement in deployment of qualified and skilled employees during the said period - extended period of limitation. The Revenue s argument is that the facts of the present case are similar to the facts decided by the Hon ble Supreme Court in Northern Operating Systems Pvt. Ltd. s case [ 2022 (5) TMI 967 - SUPREME COURT ]; hence applying the ratio laid down in the said case, the service tax demand confirmed by the adjudicating authority be restored. On the other hand, the respondent argued that the Dispatch Agreement and Secondment Agreement are different in the present case to the one decided by the Hon ble Supreme Court; hence ratio of the Supreme Court judgment is not applicable to the present case. HELD THAT:- In the sample Secondment Agreement and the Dispatch Agreement between the respondent and FFECJ reveals that these agreements terms and conditions are more or less similar to the one referred to in para 3 of the judgment of the Hon ble Supreme Court in Northern Operating Systems Pvt. Ltd. In the present case also, the respondent was in need of personnel for facilitating the business operations in India and the overseas company which has such personnel who possesses the requisite qualification and skilled employees itself desired to employ such persons on exclusive basis and the overseas company has duly consented to depute such personnel. The deputed personnel while under employment with the respondent was not in any way subjected to any kind of instruction or control or direction or supervision of the overseas company and they would report only to respondent s management - The remuneration to be paid by the respondent to dispatched personnel as laid down at Article 5 comprising of Monthly salary in India; Monthly Salary in Japan; Bonus in Japan and any other allowance paid / cost incurred for the dispatched personnel during the employment period. Further it is agreed that in respect of monthly salary in India and monthly salary in Japan and bonus in Japan on the request of the dispatched personnel as his home country is Japan and for administrative convenience, respondent company to request overseas company to make such payments in Japan which shall be reimbursed by the respondent on actual cost basis. In the Secondment Agreement, the dispatched personnel agrees with all the conditions settled between the respondent and the overseas company under the dispatch agreement. A careful reading of the Dispatch Agreement along with the Secondment Agreement and also the contract of the employment, letter of employment etc., there are no substantial difference from the facts stated in the judgment of Hon ble Supreme Court in Northern Operating Systems Pvt. Ltd. s case - it was held in the said case that it is held that the assessee was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service, or a taxable service, for the two different periods in question (in relation to which show cause notices were issued). Their Lordships on the issue of invocation of extended period of limitation decided in favour of the assessee. The impugned order is set aside and the matter is remanded to the adjudicating authority to compute the liability of the service tax payable with interest for the normal period of limitation - appeal disposed off by way of remand.

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• 2024 (5) TMI 371
  Non-payment of service tax - Business Auxiliary Service - activity of using Galileo CRS system - Tour Operator s Service - services of domestic and international hotel bookings - Banking and Other Financial Service - activity of sale/purchase of foreign exchange by the appellant - extended period of limitation. Service Tax with respect to Business Auxiliary Services allegedly rendered to M/s. GIPL - HELD THAT:- What is important to notice is that for an activity to qualify as promotional , the person before whom the promotional activity is undertaken should be able to use the services. The passenger cannot directly use the CRS software provided by the Company to book an airline ticket. It cannot, therefore, be said that a travel agent is promoting any activity before the passenger. It has also been held that mere selection of software for exercising of a choice would not result in any promotional activity. The department is opined to have failed to point out any activity undertaken by an Air Travel Agent that promotes the business of the CRS companies - the demand of service tax on the amount of incentives received by appellant from GIPL/ITQPL under Business Auxiliary Service has wrongly been confirmed. The same is hereby set aside. Service Tax with respect to Tour Operator s Service - HELD THAT:- In view of the statutory definition of tour , considered in the context of the legal position demarcating the limits of the application and reach of provisions of the Act, it is clear that a journey from one place to another beyond the territorial limits of India, even if amounting to an activity comprised within the ambit of the definition of tour operator , would not amount to a taxable service under the provisions of the Act. On the aforesaid analysis we conclude that the consideration received for operating and arranging outbound tours, even if falling within the scope of the amended definition of tour operator ; (provided by the assessees and consumed by their tourist customers beyond Indian territory), is not liable to levy and collection of Service Tax, under provisions of the Act - This issue is otherwise no more res integra as stands decided by the Larger Bench of this Tribunal in M/S COX KINGS INDIA LTD., M/S TRAVEL CORPORATION OF INDIA LTD. AND M/S SWAGATAM TOURS PVT. LIMITED VERSUS CST, NEW DELHI [ 2013 (12) TMI 1024 - CESTAT NEW DELHI] where it was held that Planning and scheduling of outbound tours may not be components of services provided to tourists, would amount to an incidental activity undertaken as a prelude to providing tours and thus the service if at all provided is to the service provider itself. Nevertheless, since organizing and/or arranging of outbound tours are components of the service provided to tourists and these are the primary and substantive purposes of the service provided and consumed, the composite activity of planning, scheduling, organizing or arranging tours falls within the scope of the taxable service defined in Section 65(115) of the Act. - thus, tax demand of Rs.6,54,828/- on outbound tours has wrongly been confirmed. Service tax on the amount received for Eurail passes for the travelers - HELD THAT:- The said service charges collected by the appellant from the tourist is leviable to Service Tax under Tour Operator s Service . It is apparent that appellant is merely re-selling Eurail passes and is in no way concerned for arranging tours in Europe by Eurail. Appellant is merely purchasing such passes from other Indian tour operators and reselling them to the tourists. They are earning small amount on resale of such passes as commission. Selling Eurail passes is merely selling a commodity or a service and there is no general service tax levy on resale of services. Further in the light of above discussion about definition of tour operator , the present activity does not get covered. Hence the demand on this count is not sustainable. The order under challenge is set aside to this extent. The service tax on account of allegedly rendering the Banking and other Financial Services in respect of sale/purchase of foreign exchange - HELD THAT:- The demand on this count has already been dropped except for Rs.2,037/-. It is observed that the foreign currency has been received by the appellant while planning, scheduling, organizing, etc., the outbound tours. It cannot be ruled out that receiving consideration in convertible foreign exchange facilitates and encourage inflow of currency into India and simultaneously avoid outflow of Indian currency i.e. the purpose is to augment foreign exchange earnings. There are no evidence on record which may show that the appellant was dealing with sale and purchase of foreign exchange directly except that the foreign exchange dealer from whom the passenger purchases the foreign exchange adds a profit on the foreign currency sale rate and reimburses the same to the appellant - That entry Banking and other Financial Services under the amended Finance Act, 2008 in no way covers the said transaction of the appellant. The only entry could be under (a) (iv), (vii) or under (b) of Section 66(12) of the Act. However, the appellant states that they are not having any license for brokerage in foreign exchange and they are not carrying out any such activity. Therefore, neither under (a) (iv) or under (a) (ix) or under (b), there is a case for bringing the impugned transaction under the category of Banking and other Financial Services. The demand is therefore liable to be set aside. Invocation of extended period for issuing show cause notice - HELD THAT:- The activities as that of using CRS of GPIL/ITQPL etc. was under consideration and at the relevant point of time had the contradictory decisions. So is true as far as the activity of Tour Operator s Services is concerned. During the relevant time the decisions were in favour of the assessee-appellant. The said confusion about the nature of the impugned activities/services is sufficient to hold that appellant did not take service tax registration on the bona fide ground. There are nothing on record which may prove a positive act on the part of the appellant about mala fide intent to evade the payment of duty - the confirmation of demand for the period beyond the normal period is liable to be set aside as the extended period is not invokable in the given set of circumstances. The order confirming the demand on service tax on inbound tours and domestic tours under Tour Operator s Services is upheld, however, for the normal period. Rest of the demand is held to be non-sustainable - Appeal allowed in part.

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• 2024 (5) TMI 370
  Eligibility for deduction of cost of medicines incurred for providing health services - N/N. 12/2003-ST dated 20.06.2003 - HELD THAT:- The decision of larger bench relied upon by the Commissioner (Appeals) in the case of M/s Aggarwal Colour Advance Photo System has been set aside by the Hon ble Madhya Pradesh High Court vide its order dated 13.03.2020 [ 2020 (4) TMI 799 - MADHYA PRADESH HIGH COURT] where it was held that in goods, the tax on such sale or purchase of goods is leviable. In this view of the matter, after the 46th Amendment, there is no question of dominant nature test applying in photography service and the works contract, which is covered by Clause (29A) of Article 366 of the Constitution where the element of goods can be separated, such contracts can be subjected to sales tax by the States under Entry 54 of List II of Schedule II. Once that is so, value of photographic paper and consumables cannot be included in the value of photography service for the purposes of imposition of service tax. From the decision of Hon ble High Court it is quite evident that the benefit of exemption under Notification No 12/2003-ST cannot be denied just for the reason that the value of goods consumed in providing the taxable services is not separately indicated in the invoice, or no separate invoice for the sale of such goods have been made. The appellant hospital admittedly consuming the medicines and other consumables for providing the health services to its client. The only reason recorded in the impugned order for denying the said benefit is non production of sale bills showing sale of the medicines which were actually consumed in providing the health services. Commissioner (Appeal) has based his order on decision of larger bench of tribunal referred above. However as this decision has been set aside by the Hon ble High Court reliance placed on the said decision cannot be upheld. The he impugned order is set aside, Order-in-Original passed by Deputy Commissioner has been restored - appeal allowed.

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• 2024 (5) TMI 369
  Refund of Service tax paid - time limitation - application rejected as not filed within one year from the payment of the service tax as laid down in section 11B of CEA - HELD THAT:- The nature of assessment and refunds were examined by the Supreme Court in Priya Blue Industries vs Commissioner of Customs (Prev) [ 2004 (9) TMI 105 - SUPREME COURT] which was a Customs case and Collector of Central Excise vs Flock (India) Pvt. Ltd. [ 2000 (8) TMI 88 - SUPREME COURT] which was a central excise case. In both judgments, the Supreme Court held that refund can only be sanctioned in pursuance of the assessment not such as to have the effect of changing the assessment. After these judgments, there have been changes in the law and self-assessments were introduced. The question which arose is if there was only self-assessment and no re- assessment by the officer, if the refund could be sanctioned contrary to the self assessment. This was answered by a larger bench of Supreme Court in negative in ITC Ltd. vs Commissioner of Central Excise, Kolkata IV [ 2019 (9) TMI 802 - SUPREME COURT] . It has been held that all assessments, including self-assessments are appealable and unless the assessment is modified, no refund could be sanctioned so as to change the assessment. The reason for this is the refund proceedings are in the nature of execution proceedings and they cannot be used to re-determine the liabilities - Thus, it was held that through refund proceedings, the assessment (including self-assessment) cannot be modified. Through ITC Ltd., a batch of matters were disposed of. The discussion in this judgment was largely based on the provisions of Customs Act but the principle laid down was clear that refund proceedings are only in the nature of execution proceedings and cannot change the assessment. The legal position is loud and clear. Refund proceedings are in the nature of execution proceedings and they cannot modify an assessment including self-assessment. Refund can only be sanctioned or denied as per the assessment- be it self-assessment by the assessee or the best judgment assessment by the officer. This legal position will not and cannot vary depending on which side it favours. The law laid down in ITC Ltd. and BT (India) Pvt. Ltd. applies whether the claimant will get refund as a result or will be denied refund as a result. In neither case can the refund, which is in the nature of an execution proceeding be used to alter the assessment. Thus, the order of the Larger bench of this Tribunal in Balaji Warehouse interpreting the applicability of ITC Ltd. to service tax matters relied upon by the appellant has been clearly overturned by the High Court of Delhi in BT (India) Pvt. Ltd. Clearly, ITC Ltd. applies to service tax matters also. Since the appellant had self-assessed service tax without applying the notification and the assessment has not been modified, it cannot be modified now in the refund proceedings. As per the self-assessment, the appellant was not entitled to the refund. The impugned order is upheld - appeal dismissed.

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• 2024 (5) TMI 368
  Levy of service tax - notice period recovery - Declared Service or not - Department was of the opinion that the said amount is towards agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act - HELD THAT:- The employer cannot be said to have rendered any service per se much less taxable service and has merely facilitated the exit of the employee upon imposition of cost upon him for the sudden exit. Definition in clause (e) of Section 66E is not attracted to the scenario at hand. The employer has not tolerated any act of the employee but has permitted a sudden exit upon being compensated by the employee in this regard in form of Notice pay, in lieu of sudden termination. In any case this act however, does not give rise to the rendition of service either by the employer or employee. The decision relied upon by the appellant the Principal Bench in M/S RAJASTHAN RAJYA VIDHYUT PRASARAN NIGAM LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX, CUSTOMS AND CENTRAL EXCISE, JODHPUR I [ 2022 (1) TMI 909 - CESTAT NEW DELHI] is perused wherein it has been held compensation for failure under a cannot is NOT consideration for service under the contract and also following the law laid down by Madras High Court in GE T D INDIA LIMITED (FORMERLY ALSTOM T D INDIA LIMITED) VERSUS DEPUTY COMMISSIONER OF CENTRAL EXCISE [ 2020 (1) TMI 1096 - MADRAS HIGH COURT] that Notice pay, in lieu of termination, however, does not give rise to the rendition of service either by the employer or the employee, the impugned order upholding confirmation of a demand of service tax on the notice pay received/recovered by the appellant from its employees for premature resignation cannot be sustained and needs to be set aside. The amount from employee received by appellant, the employer, in lieu of notice period is wrongly held to be an amount towards rendering the Declared Service - the order under challenge is hereby set aside - Appeal allowed.

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• Central Excise

• 2024 (5) TMI 375
  Suppression of production and clandestine removal of excisable goods without payment of duty - demand confirmed on the basis of certain loose sheets/documents recovered from the trading firm located in the same premises where the appellant-company is also located - demand also based on statements recorded from the Director Shri Amit Agrawal - corroborative evidences or not - Penalty imposed on Shri Amit Agrawal, Director - HELD THAT:- The installed capacity of the unit was 6,000 M.T. only. As per the records, the appellant has produced 5377.140 M.T. of the goods and cleared the same on payment of duty. There is no evidence brought on record to show any increase in the installed capacity of the unit during the material period. There is no evidence available regarding excess consumption of electricity or procurement of raw material or utilization of labour to produce excess goods clandestinely. If the excess production of 1365.257 M.T. is added, then that would amount to production of 6742.397 M.T. (5377.140 M.T. + 1365.257 M.T.) by the appellant during a period of 11 months, whereas the installed capacity of the unit itself is only 6,000 M.T. per annum. The adjudicating authority has not given any finding as to how it is possible to produce excess quantity beyond the installed capacity. Thus, the demand has been confirmed much beyond the installed capacity of the unit without adducing any evidence in support of clandestine manufacture and clearance. The entire allegation is based on certain loose sheets / documents recovered during the course of search. The clandestine removal has not been corroborated with any other evidence. The burden of proving clandestine removal with positive, tangible and cogent evidence is on the Department, to establish that the appellant has manufactured and clandestinely cleared the goods. For the purpose of establishing clandestine clearance, there must be documentary evidence, to support the said allegation. The entire demand in this case has been made only on the basis of some loose sheets and the statement of Shri Amit Kumar Agrawal. Oral statements being secondary evidence, cannot prevail over documentary evidences. There is no shortage or excess of raw material or finished goods found at the time of search in the factory of the appellant. No parallel invoice was found during the course of search operations. There is no verification done at the customer s end regarding receipt of the clandestinely manufactured and cleared goods.In the absence of any such evidence, the allegation of clandestine removal cannot be substantiated only on the ground of assumptions and presumptions. In the entire records of proceedings, there is no evidence to indicate that there was clandestine manufacturing. There is no independent tangible evidence on record of any clandestine purchases or receipt of the raw materials required for the manufacturing of the alleged quantity of finished goods for its clandestine removal from the factory - There is also no cogent evidence of disproportionate and unaccounted receipt and consumption of the basic raw materials and packing material, required for manufacturing alleged quantity of unaccounted finished goods. There are no tangible proof of unauthorized payment for procuring such unaccounted raw material and packing material - thus, the unaccounted production in the factory of the appellant-company has not been established. There is no corroborative evidence brought on record to substantiate the allegation of clandestine manufacture and clearance of finished goods by the appellant. In the absence of such corroborative evidence, the demand of central excise duty confirmed in the impugned order is not sustainable. In view of the above discussions and the decisions, the demand of Rs.56,52,591/- confirmed in the impugned order, on the basis of the loose sheets/documents found in the trading firm is not sustainable. and hence we set aside the same. As the demand itself is not sustainable, the question of demanding interest and imposing penalty on the appellant does not arise. Penalty imposed on Shri Amit Agrawal, Director - HELD THAT:- It is observed that a Statement dated 26.02.2009 was recorded from him by showing 5000 pages of loose sheets after conclusion of search operation at 9.15 pm on 26.02.2009. and it cannot be considered as a certificate of correctness of each and every transaction appearing in loose sheets. Hence, the statement given by him cannot be considered as an admission of his guilt. Since the offence alleged to have been committed by the appellant company is not established, it is held that imposition of penalty on the basis of the same allegation is not sustainable. In the absence of any evidence to show specific role played by a Director and his active involvement, in the commission of the offence, penalty cannot be imposed under Rule 26 of the Central Excise Rules, 2002. The allegations of clandestine removal and clearance of goods without payment of duty has not been established - the role of the Director in the alleged clandestine manufacture and clearance of the goods is not established - no penalty is imposable on him under Rule 26 of the Central Excise Rules, 2002. Accordingly, the same is set aside. The impugned order is set aside - appeal allowed.

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• 2024 (5) TMI 367
  Interest on delayed refund - scope and ambit of Section 11 B and 11 BB of the Central Excise Act, 1944 and Section 35 F and 35 FF of the Central Excise Act, 1944 - HELD THAT:- The issues raised in the present appeal is covered by the judgments in the case of THE PRINCIPAL COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX VERSUS M/S GREEN VALLIEY INDUSTRIES PVT LTD [ 2023 (7) TMI 1176 - MEGHALAYA HIGH COURT] and COMMISSIONER OF CENTRAL EXCISE, PANCHKULA VERSUS M/S RIBA TEXTILES LIMITED [ 2022 (3) TMI 693 - PUNJAB HARYANA HIGH COURT] where it was held that On such basis, the Tribunal found that the deposit had not been made on account of any duty or interest which would attract the implied bar under Section 11B of the Act. It was a possible view taken on the set of facts that presented themselves before the Tribunal and, in this appellate jurisdiction, such interpretation does not call for any interference. The appeal sans merit and is hereby dismissed.

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• 2024 (5) TMI 366
  Levy of interest on irregular/excess Cenvat Credit availed but not utilised - invocation of extended period of limitation - levy of equal penalty - HELD THAT:- The issue of leviability of interest on irregularly availed Cenvat Credit is no more res integra in view of the Hon ble High Court of Karnataka s decision in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT ], wherein it was held Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise. The invocation of extended period on irregularly availed Cenvat Credit and excess credit is settled in view of this Tribunal s decision in the Appellants own case [ 2023 (11) TMI 467 - CESTAT CHENNAI] in Final Order No. 41026/2023 dated 09.11.2023 wherein this Tribunal held that the appellant though have taken credit irregularly or wrongly in the books it was never utilized. So, it is not justified to attribute any motive to evade tax to the conduct of the appellant. Even irregularly availed CENVAT Credit has been reversed by the appellant on being pointed out much before the issuance of the Show Cause Notice. As such, invoking extended period is not justified in this appeal. It is found that the appellant though have taken credit merely in the books, it was never utilised. So, it is not justified to attribute any motive to evade tax to the conduct of the appellant. Even irregularly availed Cenvat credit has been reversed by the appellant on being pointed out much before the issuance of the Show Cause Notice. As such, invoking the extended period is not justified in this appeal. Thus, interest is not leviable on the irregular availment of credit and excess credit and also that extended period of limitation is not invokable - the impugned order is set aside - appeal allowed.

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• 2024 (5) TMI 365
  Benefit of SSI exemption as per N/N. 8/2003-CE dated 01.03.2003 denied - evidence regarding manufacture and trading activities were produced by the appellant or not - refund claim of duty paid on denial of exemption - time limitation - HELD THAT:- The order of the Ld.Commissioner(Appeals) is not sustainable as the Ld.Commissioner(Appeals) has not considered the documents recovered during the course of investigation and merely held that the appellant has failed to produce the evidence regarding the quantum of manufacturing and trading during the impugned period. As the order of Ld.Commissioner(Appeals) is without any basis, therefore, the order passed by the Ld.Commissioner(Appeals) is set aside and the order of the adjudicating authority is affirmed dropping the proceedings against the appellant which was passed after verification of the records produced by the appellant during the course of adjudication as well as thereafter. Therefore, the appellant is entitled for benefit of SSI exemption Notification No.8/2003-CE dated 01.03.2003 - the appellant is not liable to pay any duty. Refund claim - HELD THAT:- As no demand is sustainable against the appellant and the refund claim has been filed by the appellant within 1(one) month of the order of dropping the proceedings against the appellant by the adjudicating authority, the refund claim filed by the appellant is within time and the appellant is entitled for the said refund claim. Appeal allowed.

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• Indian Laws

• 2024 (5) TMI 364
  Right of the Bonafide purchasers - Auction sale held in favour of appellant - sale challenged on the ground that the Bank had not followed the statutory procedure prescribed under the Security Interest (Enforcement) Rules, 2002 - notice as required under Rules 8(6) and 8(7) had neither been issued nor served upon the borrower - HELD THAT:- In view of the concurrent finding based on the admission by the Bank that mandatory notice of 30 days was not given to the Borrower before holding the auction/sale, the setting aside of the auction/sale cannot be faulted with. The same has to be approved - Once the sale is set aside, the status of the appellants as owners would automatically revert to that of tenants. The status of possession at best could have been altered from that of an owner to that of tenants but Bank would not have any right to claim actual physical possession from the appellants nor would the appellants be under any obligation to handover physical possession to the Bank. The DRT fell in error on the said issue. Therefore, the direction issued by the DRT that the Bank will first take possession and thereafter refund the auction money with interest applicable to fixed deposits, is not a correct direction. The entire controversy has arisen because of the Bank not following the prescribed mandatory procedure for conducting the auction sale and, therefore, the Bank must suffer and should be put to terms for unnecessarily creating litigation. As of date the dues of the Bank have been fully discharged and an additional amount of the auction money is lying with the Bank since 2009. This amount is to be returned to the appellants. In such facts and circumstances of the case, the award of interest on the auction money at the rate applicable to fixed deposits is not a correct view. The rate of interest deserves to be enhanced. Thus, the setting aside of the auction sale is affirmed - status of the appellants as tenants shall stand restored leaving it open for the borrower as owner of the property to evict the appellants in accordance to law - entire auction/sale money lying with the Bank (R-1 2) shall be returned to the appellants along with compound interest @12 per cent per annum to be calculated from the date of deposit till the date of payment - Borrower Respondent nos.3 and 4 and the Bank Respondent nos.1 and 2, would streamline their accounts and the Bank upon settlement of the same will issue a No Dues Certificate to the Borrower. The impugned order is modified - appeal disposed off.

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