TMI Tax Updates - e-Newsletter
June 10, 2023

Case Laws in this Newsletter:

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

Articles

1. Amnesty Scheme - Advance Authorization & EPCG License

   By: Sandeep Saini

2. Vehicle expenses allowed as expense to the Company when vehicle is used by Director employees

   By: Bimal jain

3. No penalty leviable when income assessed shown in income tax return

   By: Bimal jain

News

1. E-Invoice Verifier App by GSTN - Advisory

2. Network Planning Group under PM GatiShakti recommends a Roadways project in Tripura at its 49th Session

3. Union Commerce and Industry Minister Shri Piyush Goyal interacts with 15 Ambassadors from African region for strengthening Trade and Investment ties with India

Notifications

Customs

1. 06/2023 - dated 9-6-2023 - ADD

Anti-Dumping duty imposed on Stainless-Steel Seamless Tubes and Pipes originating in or exported from China PR - change the name of the producer viz. “Zhejiang Tsingshan Steel Pipe Co., Ltd.” to “Tsingshan Steel Pipe Co., Ltd”, in pursuance of DGTR recommendation - Seeks to amend notification No. 31/2022-Customs (ADD) dated 20.12.2022.

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/84 - dated 8-6-2023

Upstreaming of clients’ funds by Stock Brokers (SBs) / Clearing Members (CMs) to Clearing Corporations (CCs)

2. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/71 - dated 17-5-2023

Master Circular for Stock Brokers

Customs

3. 15/2023 - dated 7-6-2023

Mandatory additional qualifiers in import/export declarations in respect of certain products wef 1.7.2023

4. Public Notice : 46/2023 - dated 25-5-2023

Clarification about applicability of Plastic Waste Management Rules, 2016, as amended from time to time, on imported goods-reg

5. Public Notice No. 40 /2023 - dated 1-5-2023

Changes introduced vide Finance Act 2023 in the Customs Tariff w.e.f, 01.05.2023- reg.

6. Public Notice No. 39/2023 - dated 28-4-2023

Issues related to port charges for DPD-CFS containers-reg

Highlights / Catch Notes

GST

• Is a Special Economic Zone a Foreign Territory for GST? Legal Debate Under Gujarat and Central GST Acts.

  Case-Laws - HC : Territorial Jurisdiction - SEZ is a foreign territory or not? - Evasion of GST - Proceedings initiated u/s 67 r.w.s 70(1) of GGST Act, 2017 and CGST Act, 2017 - This is an attempt on the part of petitioners by filing these kind of petitions to thwart and delay the legal proceedings which are initiated by respondent authorities and as such this move of petitioners appears to be an abuse of process of law looking to the manner in which the irregularities alleged to have been committed. - HC
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• Court Upholds Provisional Attachment of Bank Accounts Over Alleged Wrongful Input Tax Credit Use Under GST Act Section 74.

  Case-Laws - HC : Provisional Attachment of Bank Accounts of petitioner - availment of wrongful input tax credit - A detailed circumstance which are pointed out by an respondent / Revenue authority in its affidavit-in-reply as mentioned hereinbefore including the detail show-cause notice and the steps which are taken u/s 74 of the Act, as indicated above, i.e. on 15.03.2023 as well as 16.03.2023, exercising extraordinary equitable jurisdiction is refrained. - HC
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• High Court Orders Reconsideration of Tax Credit Refund Under Advanced Authorization Scheme; Rule 96(10) CGST Rules Involved.

  Case-Laws - HC : Export - availing benefit under the Advanced Authorization Scheme ‘without payment of integrated tax’ - Seeking refund or restoration of the credit for this amount in its Electronic Credit Ledger - contravention of Rule 96(10) of the CGST Rules, 2017 - the Deputy Commissioner of Central Tax directed to reconsider the petitioner’s request for re-credit in accordance with law - HC
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• High Court Quashes CGST and SGST Demand Notice for Undeclared Godown Due to Natural Justice Violation; New Notice Allowed.

  Case-Laws - HC : Levy of CGST and SGST with interest and penalty - demand on the ground that the petitioner had not declared its godown as an additional place of business - HC quashed the notice on the ground of violation of the principles of natural justice - However, the State-respondents are at liberty to issue a fresh notice upon the petitioner herein.
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Income Tax

• Deferral on Revising Exceptions to Monetary Limits for Appeals u/s 158AB; Aims to Avoid Repetitive Appeals.

  Circulars : Revision of exceptions to monetary limits for filing appeals deferred under provisions of Section 158AB [Where measures are taken to avoid repetitive appeals in a situation, the identical question of law is pending before High Courts or Supreme Court.] - Circular
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• Arbitrage and jobbing losses in securities can offset gains from other segments; Section 73 explanation doesn't apply.

  Case-Laws - AT : Treatment of Losses as Speculative Losses - adjustment of loss under arbitrage transactions - The loss of one segment has to be allowed to be set-off against the other segment. In the case of the assessee, the entire transaction of purchase and sale of securities constitutes arbitrage & jobbing transactions as a whole and hence, these transactions are outside the purview of the speculative transaction. The explanation to Sec.73 would not apply to the case of the assessee - AT
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• PCIT Can't Revise AO's Limited Scrutiny Findings on High Sea Sales u/s 263 of Income Tax Act.

  Case-Laws - AT : Revision u/s 263 - selection of the case under limited scrutiny - expansion scope of limited scrutiny - As per CIT high sea sales is speculative transaction and therefore disallowance of loss arising therefrom against the non speculative business income - AO cannot go beyond reasons for of limited scrutiny and thus, it would not be open to the PCIT to pass revisionary order u/s 263 on other aspects and remit matter to AO for fresh assessment. - AT
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• Section 14A and Rule 8D: No Exempt Income Recorded, Directed Additions Deleted Due to Zero Average Investment Value.

  Case-Laws - AT : Disallowance u/s.14A r.w.r. 8D - whether exempt income during the year under consideration? - there is no opening and closing balances of mutual fund. Meaning thereby, the investments, on which the assessee had earned exempt income, were not only made during the year under consideration, but also sold during the year under consideration. That being the case, the average value of investment as on the 1st day of the financial year and at the year end is nil. - Additions directed to be deleted - AT
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• Traffic Violation Fee Allowable as Business Expense u/s 37(1) of Income Tax Act.

  Case-Laws - AT : Payment made towards traffic rule violation - whether revenue expenditure u/s 37(1) - whether such payments made were for an offence or is prohibited by law? - payment of compounding fee for violation of provision under the Motor Vehicles Act, 1988 and Rules thereunder - such expenditure is allowable as business expenditure under section 37(1) - AT
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• Tax Deduction Claim Dispute: Assessee Challenges Denial Due to E-Filing Portal Glitches and Missing Form 10CCB.

  Case-Laws - AT : Deduction u/s 80-IA - non-filing of Form 10CCB along with return of income - due to the technical glitches, Form 10CCB could not be uploaded on e-filing portal of the Income Tax Department - The reasons for non-filing of Form 10CCB along with return of income was on account of reasons beyond the control of the assessee and should not act as a bar to the allowability to the claim of deduction under section 80-IA. - AT
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• Appeal TDS Credit Adjustments: Section 143(1) Orders Can Be Challenged Before Commissioner of Income Tax (Appeals.

  Case-Laws - AT : Appealable orders before Commissioner (Appeals) - Non-granting of TDS credit in order passed u/s 143 (1) - even otherwise, appeal lies before the Ld. CIT(Appeals) against the adjustments to the TDS credit made by the AO u/s 143 (1) - AT
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• No Penalty for Delayed Tax Audit: Financial Hardship and Legal Issues Cited as Reasonable Cause u/s 273B.

  Case-Laws - AT : Penalty u/s 271B - delay filing of tax audit report contravening section 44AB - In factual matrix the assessee was suffering a financial exigency with legal battel. - This is a sufficient reason for delay in filing the tax audit report before the authority which follow the Section 273B of the Act. - No penalty - AT
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• Penalty for Failing to Sign Unauthorized Consent Letter Deleted; "Reasonable Cause" Considered u/s 273B.

  Case-Laws - AT : Penalty u/s 271(1)(b) - failure to sign on the so called "Consent Letter" which is not an authorized form notified by the Government - In the context of section 273B of the Act, the expression "reasonable cause" has been explained to mean a cause which prevents a man of ordinary prudence and average intelligence, acting under normal circumstances, without negligence or inaction or want of bona fide. - Levy of penalty deleted - AT
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• Income Tax Act: Penalty u/s 271(1)(c) annulled due to non-specific notice on concealment vs. inaccurate particulars.

  Case-Laws - AT : Penalty u/s 271(1)(c) - Non-striking of the limb in the notice - In the case in hand on behalf of the Ld. DR an attempt was made to defend the notices submitting that there are allegations of both concealment and of furnishing inaccurate particulars, then in that case it was all the more necessary to identify and convey to the assessee under the notice as to which particular set of allegations he needs to defend. - Order of CIT(A) setting aside the order and deleting the penalty confirmed - AT
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• Assessing Officer to Verify Income Attribution for Business Connection or PE in India for 2015-16 Tax Year.

  Case-Laws - AT : Income deemed to accrue or arise in India - business connection in India - Permanent Establishment (PE) in India - As assessee submits that during the assessment year under consideration i.e. AY 2015-16 also if the attribution rate to the alleged PE is considered at 15% of gross booking fees since India related expenses are more than the attributed gross booking fees to the PE in India it would extinguish the assessment as no further income would be taxable in India. - AO directed to check the correctness of the figures before giving effect to this order. - AT
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Customs

• Supreme Court Rules on Advance Authorization Scheme: Refunds and Input Credit Procedures Post-Cosmo Films Judgment.

  Circulars : Advance Authorization scheme - violation of pre-import condition - Permission to claim of refund or input credit - Detailed procedure and directions issued - Implementation of Hon'ble Supreme Court direction in judgment dated 28.04.2023 [UOI and others vs. Cosmo Films Ltd.] - Circular
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• Customs Delay in Re-export: Goods Deteriorate, Incur Demurrage; Chief Commissioner to Investigate and Hold Officials Accountable.

  Case-Laws - AT : Commissioner (Appeals) allowed the re-export of goods - Customs authorities below did not release the goods for re-export thereby allowing the goods to further deteriorate in quality and in addition incurring huge demurrage due to lapse of considerable time for no fault of the respondent. - It is deemed appropriate to direct the Chief Commissioner of Customs, Delhi to hold necessary inquiry into the matter regarding the delay caused in not allowing the re-export of the goods and take appropriate action against the errant officials - AT
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• Customs Act Section 14: Notional Commission Excluded in Valuation of Propane from High Seas Sales per GATT Guidelines.

  Case-Laws - AT : Valuation of import of goods - Additions of 2% Notional Commission on High Seas Sale - Purchased goods / Propane on High Seas Sale basis from various Public Sector undertaking like IOCL, BPCL, and HPCL. - on the basis of GATT guidelines and Section 14 of the Customs Act was amended in 2007, any inclusion of notional charges seems to have lost its relevance and only actual cost incurred by the buyer is required to be considered. - AT
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FEMA

• Banks Allowed to Facilitate Non-Deliverable Derivative Contracts for Better INR Market and Risk Management Under FEMA Guidelines.

  Circulars : Risk Management and Inter-Bank Dealings - Non-deliverable derivative contracts (NDDCs) - With a view to developing the onshore INR NDDC market and providing residents the flexibility to efficiently design their hedging programmes, banks are permitted to allow certain transactions - Cash settled in INR - INR or any foreign currency - Circular
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Indian Laws

• Court Denies Petitioner's Request to Introduce New Evidence and Cross-Examine in Cheque Dishonor Case.

  Case-Laws - HC : Dishonour of Cheque - application seeking permission to produce on record documents and to cross-examine the complainant - it is the case of the complainant that by way of cross-examination now the petitioner wants to set up altogether a new defence. The defence in the trial court is that the cheques were stolen whereas, from the application now it appears that the petitioner wants to make out a defence that the amount of the cheque is already paid and on that aspect he wants to examine the respondent No. 2. - Prayer not allowed - Petition dismissed - HC
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SEBI

• SEBI Mandates RTAs to Digitize Investor Service Requests and Complaints for Greater Transparency and Efficiency in Two Phases.

  Circulars : Online processing of investor service requests and complaints by RTAs - digitization of the process in two phases and provide a mechanism for the investor to lodge service requests and complaints online and thereafter track the status and obtain periodical updates - Applicable to the RTAs which deal in folios of listed companies - Circular
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• SEBI Sets Investment Limits for Mutual Funds in Repo Transactions on Corporate Debt Securities to Safeguard Investors.

  Circulars : Participation of Mutual funds in repo transactions on Corporate Debt Securities - determination of investment limits for single issuer, group issuer and sector level limits. - Circular issued to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
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Service Tax

• Order Passed Ex Parte Void Due to Improper Service of Show Cause Notice; Violates Natural Justice Principles.

  Case-Laws - AT : Service of SCN - SCN not sent at proper address - The department was fully aware that the appellant is not residing and not available in the address - After the Show Cause Notice was returned, the department paste and affix the Show Cause Notice at the same address - The Show Cause Notice was not issued to the appellant and also that the order has been passed exparte. - Clear violation of principles of natural justice is established - the demand cannot sustain and requires to be set aside - AT
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• Demand Set Aside Due to No Change in Services; Extended Limitation Period Invalid in Subsequent Notices.

  Case-Laws - AT : Invocation of extended period of limitation. - The Appellant had been providing same services as was alleged in the earlier Show Cause Notice dated 22.05.2015 which was adjudicated in favour of the Appellant for the earlier period. It is not the case of the Department that there was any change in the nature of services provided by the Appellant and thus when the first Show Cause Notice was issued invoking extended period of limitation, it cannot be alleged that the Appellant has suppressed facts while issuing demand notices for subsequent period. - Demand set aside - AT
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• Court Rejects Tax Department's Claim on Service Portion Tax for Rs. 40.25 Crore u/r 6(4A) & 6(4B.

  Case-Laws - AT : Adjustment of Advance tax paid (service portion) - Apportionment of advance received towards supply of goods and supply of services - Rule 6(4A) and 6(4B) of the Service Tax Rules, 1994 - There is no rationale in contention of the department that the whole of 2nd installment of Rs. 40.25 crore should be considered towards service portion and is liable to service tax @10.3%. Demand is merely presumptive with no corroborative evidence and cannot be sustained. - AT
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• Evaluation of Refund Claim on Time of Supply for Exports Under CGST Section 12 and IGST Section 16.

  Case-Laws - AT : Refund claim - provision of time of supply of goods is applicable u/s 12 of CGST Act, 2017 for export of goods during the period of October to December 2017 or not - applicability of Section 16 of the IGST Act, GST in India on exports - The observation made by the Commissioner (Appeal) in respect of the provisions of Section 173 of CGST, are in respect of the repeal of notification 41/2012-ST without even referring to the Section1 74 (2) ibid, cannot impact the rights accrued to the appellant prior to such repeal - AT
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Central Excise

• Interest Demand Set Aside: No Revenue Loss from Unused Cenvat Credit u/r 14 and Section 11AB.

  Case-Laws - AT : Levy of interest under Rule 14 of the Cenvat Credit Rules, 2004 (CCR) read with Section 11AB of the Central Excise Act, 1944 - amount of Cenvat credit taken inadvertently but not utilized - In the present case, since the Appellant had sufficient credit balances, there would be no loss of Revenue to the exchequer. - Demand of interest set aside - AT
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• Mega Power Project Goods Exempt from Duty Under International Competitive Bidding; Certification Confirms Nil Duty Rate.

  Case-Laws - AT : Benefit of exemption - Mega Power Project - goods supplied against International Competitive Bidding will be charged at nil rate of duty - The appellant has supplied the goods for Mega Power Project to be executed by M/s BHEL and certificate to that effect that has been received. - Benefit of exemption allowed - AT
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Case Laws:

• GST

• 2023 (6) TMI 407
  Seeking prayer for three-month moratorium of the payment to be made in terms of the order dated December 7, 2021 as modified on March 23, 2022 - it was held by Meghalaya High Court that Upon the first default of the petitioning assessee in making the payment in terms of this order and without further reference to this Court or other authority, it will be open to the Department to take immediate appropriate steps in accordance with law and the petitioning assessee will be deemed to be in default of the entire amount then due. HELD THAT:- No case is made out to interfere with the impugned judgment and order passed by the High Court - SLP dismissed.

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• 2023 (6) TMI 406
  Territorial Jurisdiction - SEZ is a foreign territory or not? - bone of contention of petitioners is that business premises of petitioners is situated in Special Economic Zone and as such, to be treated as foreign territory and not subjected to provisions whereby respondent authorities, i.e. State authorities No.4, 5 and 6 have no jurisdiction to carry out any search proceedings at the premises of the petitioners. HELD THAT:- Reading of provisions of Section 22 of the SEZ Act would suggest that any officer or agency who is authorized by Central Government may carry out search or seizure or investigation or inspection in the special economic zone or units situated therein and it also suggests that authorized officer of Central Government is empowered to carryout such process without any prior approval or intimation. So, moment authorization is reflecting, such measure can be undertaken against special economic zone or unit. Section 6 of the GGST Act in this context is also relevant to the issue which deals with authorization of the officer of Central Tax as proper officer in certain circumstances - A close perusal of provisions of Section 6 indicates that respondent authorities are empowered to carry out proceedings in SEZ. Their jurisdiction is unquestionable as Central Government has already authorized those officers by virtue of notification dated 5.8.2016. Sub-section (2) of Section 6 of GGST Act indicates that where any proper officer issues an order under this Act, he is also issuing an order under CGST Act as authorized by Act or under intimation to jurisdictional officer of Central Government and as such it appears that respondents are empowered to carry out search proceedings in SEZ. Therefore, it cannot said that they were acting without the authority of law or jurisdiction. Further, by virtue of circular dated 5.7.2017, functions of proper officers under CGST Act are also defined. Hence, once Central Government has notified the functions of proper officers, said functions shall also be applicable to be carried out by the officers under CGST Act and hence it cannot be said that there was any lack of authority on the part of respondents, as contended. Additionally, provisions of IGST Act, 2017 are applicable to whole of India and undisputedly, petitioner has got its registration under IGST Act, which is precisely mentioned in paragraph 4.6 of the petition. Provision contained under Section 7 of IGST Act, determines inter-State supply and sub-section (5) indicates that supply of goods or services of both, to or by a SEZ unit shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce and therefore, petitioner appears to be under mistaken belief that once business of petitioner is carried out through and within SEZ, they are outside the purview of authority of respondents and hence these SEZ units are not exempted from any investigation or inspection. In addition to this, uncontroverted facts which are stated in the affidavit and volume of such would also be one of the considerations which cannot be ignored while exercising equitable jurisdiction and once authorities are empowered, there is hardly any reason for this Court to intercept this process which is going against the petitioners right from March 2023 - when the conduct on the part of petitioners is also such in this peculiar background of facts, even otherwise we are not inclined to exercise our extraordinary equitable jurisdiction and conjoint reading of the provisions coupled with factual backgrounds, this is not a fit case in which we may allow the petitioners to invoke extraordinary jurisdiction. This is an attempt on the part of petitioners by filing these kind of petitions to thwart and delay the legal proceedings which are initiated by respondent authorities and as such this move of petitioners appears to be an abuse of process of law looking to the manner in which the irregularities alleged to have been committed. Such attempt on the part of petitioners deserves to be dealt with firmly so that litigants may not take disadvantage of situation by bringing such kind of litigation. Record has indicated that after issuance of notice, petitioners appear to have started not cooperating and have indicated to wait for orders from the Court. This conduct on the part of petitioners is not appreciable and as such we find it proper to impose costs upon the petitioners to have adopted such course of action. Petition dismissed with costs.

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• 2023 (6) TMI 405
  Provisional Attachment of Bank Accounts of petitioner - availment of wrongful input tax credit - violation of principles of natural justice - HELD THAT:- The authority has come to a particular conclusion after satisfied itself on the basis of material which has already been produced by the petitioner and found that action is necessitated in the interest of revenue and as such when the decision is taken on 17.06.2022 on the basis of material on record and the information which has been received, the action cannot be said to be either perverse or impermissible in law more particular when the proceedings are already set into motion. The proceedings in the form of show-cause notice of tax ascertained being payable by the petitioner under Section 74 of the Act has already been initiated and for that purpose, on 15.03.2023, a specific notice in form GST DRC-01 is already issued against the petitioner under Rule 142(1) of the Rules and from the summary of the said show-cause notice, it is quite clear that when the statutory function is being undertaken by respondent authority and when there are no allegation of specific mala fides the function of the authority, in view of settled position of law, cannot be usurped by the High Court in exercise of extraordinary equitable jurisdiction when a satisfaction is arrived at by an authority that interest of revenue deserves to be protected hence we are of the clear opinion that in the absence of any material or patent illegality such satisfaction cannot be disturbed or substituted for the sake of substitution and we have satisfied ourselves that background of fact is such where the process cannot be intercepted when it has already commenced. That be so, no case is made out to call for any interference under Article 226 of the Constitution of India. There are few judgements by Hon ble Apex Court on the issue of exercise of extraordinary jurisdiction as to whether High Court can usurp the discretion of an authority or not - In case of D.N.Jeevaraj versus Chief Secretary, Government of Karnataka and others [ 2015 (11) TMI 1798 - SUPREME COURT ] , the Hon ble Apex Court has propounded on the issue that By taking over the functions of the BDA in this regard, the High Court has given a complete go-bye to the procedural requirements and has mandated a particular course of action to be taken by the BDA. It is quite possible that if the BDA is allowed to exercise its discretion it may not necessarily direct forfeiture of the lease but that was sought to be pre- empted by the direction given by the High Court which, in our opinion, acted beyond its jurisdiction in this regard. When the substantial justice is pitted against technical consideration, the Court would like to give predominance to the substantial justice. Hence, when the authority is out to take a step in the interest of revenue and to protect the same, this Court would not like to exercise its extraordinary jurisdiction in this peculiar background of facts and one additional circumstance which has been brought to the notice by virtue of further affidavit in which the show-cause notice dated 15.03.2023 is already issued along with 16.03.2023 steps which are attached along with further affidavit, there are no reason to entertain the petition in any form and as such the attachment which has been ordered by an authority does not deserve to be interfered with. Yet another decision which has been tried to be relief upon is the decision in the case of Vinodkumar Murlidhar Chechani Proprietor of M/s Chechani Trading Co. [ 2021 (1) TMI 795 - GUJARAT HIGH COURT ] in which no doubt the Hon ble Co-ordinate Bench has propounded the proposition on the issue of exercise of jurisdiction under Section 83 of the Act by the authority but as said earlier that facts on hand are peculiar in nature and it is settled position of law that whenever there is a change of facts even one additional fact may make a world of difference in applying the principles laid down by in any decision. Now coming to the decision which is in the case of Vinodkumar Murlidhar Chechani Proprietor of M/s Chechani Trading Co. [ 2021 (1) TMI 795 - GUJARAT HIGH COURT ] it is observed that it is clearly mentioned in middle of paragraph 43 that in the case on hand, we do not propose to interfere with the investigation already undertaken by the department. Ultimately, if sufficient material surfaces indicating the involvement of the writ-applicant in some bogus transaction, the next step in the process can always be a show-cause notice under Section 73 or Section 74 the Act and while taking steps of attachment the grey area which has been indicated by the petitioner the Revenue or the authority concerned needs to apply its mind before the power is sought to be exercised . Now if these observations are taken note of including paragraphs 44 and 47 of the said decision, it is opined that the background of present facts on hand is such where this decision is of no assistance to the petitioner and, in view of the fact that a detailed circumstance which are pointed out by an respondent authority in its affidavit-in-reply as mentioned hereinbefore including the detail show-cause notice and the steps which are taken under Section 74 of the Act, as indicated above, i.e. on 15.03.2023 as well as 16.03.2023, exercising extraordinary equitable jurisdiction is refrained. On being conscious about the well defined proposition on exercise of extraordinary jurisdiction propounded by catena of decisions hence keeping the same in mind, the satisfaction which has been arrived at while initiating step against the petitioner, is not diluted/substituted. This is not a fit case in which we may exercise our extraordinary jurisdiction. Accordingly, petition being meritless deserves to be dismissed. Petition dismissed.

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• 2023 (6) TMI 404
  Export - availing benefit under the Advanced Authorization Scheme without payment of integrated tax - Seeking refund or restoration of the credit for this amount in its Electronic Credit Ledger - contravention of Rule 96(10) of the CGST Rules, 2017 - change of statutory provisions - demand of interest as well - HELD THAT:- Because of the change in statutory provisions, the petitioner s prayer for re-credit to the Electronic Credit Ledger a sum of Rs.52,44,57,242/- could be re-considered and that there must be appropriate direction to the proper officer viz., the Depty Commissioner of Central Tax, North West Division, Bengaluru West Commissionerate Bengaluru in this regard. The third respondent has rejected the petitioner s applications for refund only on the ground that there is contravention of Rule 96(10) of the CGST Rules, 2017. It remains indisputable that the petitioner, upon realizing that it could not have claimed refund under Section 16(3)(b) of the IGST Act, 2017 and after repatriating refund permitted in a sum of Rs.40,31,13,682/- along with interest, has filed applications under Section 16 of the IGST Act, 2017. The provisions of Section 16(3)(a) of the IGST Act as it stood at the relevant time enabled a registered person making a Zero-Rated Supply, as in the case of the petitioner, eligible to claim refund without payment of integrated tax subject to conditions mentioned therein. The third respondent should have considered the indisputable fact of refund, later repatriation of refund and filing of separate applications for refund later under section 16(3)(a) of the IGST Act. On this limited ground the impugned orders as per Annexure-K series cannot be sustained and the petitioner must succeed on this score lest it be an impediment for the proper officer - - the Deputy Commissioner of Central Tax, North West Division, Bengaluru West Commissionerate Bengaluru - to reconsider the petitioner s request for re-credit in accordance with law and in the light of the fact that the petitioner has repatriated the amount that is credited to him along with interest and that there is a direction by this Court as part of this order to consider recrediting a sum of Rs.52,44,57,242/- to the petitioner s Electronic credit ledger - the petitioner would be eligible for personal hearing and must also be at liberty to file a detailed statement enclosing a certified copy of this order. Interest - HELD THAT:- The petitioner s prayer for interest that would be admissible is contingent upon the consideration of the application for refund and because this is contingent, the question of interest must also be considered by the Deputy Commissioner of Central Taxes, North West Division, Bengaluru West Commissionerate, Bengaluru and is left open for consideration strictly in accordance with the law. The impugned Annexure-K series dated 22.04.2022 are quashed restoring the petitioner s application dated 15.03.2023 for reconsideration by the Deputy Commissioner of Central Taxes, North West Division, Bengaluru West Commissionerate Bengaluru for reconsideration after due personal hearing to the petitioner - Petition allowed in part.

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• 2023 (6) TMI 403
  Levy of CGST and SGST with interest and penalty - demand on the ground that the petitioner had not declared its godown as an additional place of business - HELD THAT:- This Court is of the opinion that the impugned order dated 09.03.2021 is liable to be set aside since, the same was not issued on the ground of violation of the principles of natural justice. Accordingly, the same is set aside. However, the State-respondents are at liberty to issue a fresh notice upon the petitioner herein. On receipt of the same, the petitioner shall submit his explanation in accordance with the law. Petition allowed.

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• Income Tax

• 2023 (6) TMI 402
  Reassess the income on abandoned Permanent Account Number (PAN) as issued wrongly to the Petitioner as company instead of a Partnership Firm - HELD THAT:- Respondent No. 1 has failed to make averments in their reply to the Petition, with regard to the status of the wrong PAN in their records. Respondent No. 1 ought to have indicated in their reply whether or not the Petitioner has filed any return of income on the wrong PAN since issued and as to when they stopped filing return of income under the wrong PAN as they possess this information. This exercise, in our view, could have enabled the department to issue the notice to the registered email address of the assessee and sent an alert on the registered mobile number and prevented the consequences. Respondent No. 1 has admittedly failed to follow up after the 30 days time period that expired pursuant to the issuance of the notice on 31st March 2021. In our view, this whole process could have been avoided had the Respondent No. 1 taken the steps in May 2021, that he took on 25th March 2022 or at least after 27th November 2021 when notice u/s 142(1) was issued. It was the duty of the Respondent No. 1 to have verified whether the wrong PAN was registered on the e-filing portal, which was the last return of income filed under the wrong PAN and the address and telephone number registered under the wrong PAN. Lastly, having met the CA and the partner, he could have extended the time and guided the Petitioner to file written response/submission on before 31st March 2022 in the office of the ITO and accepted a copy of the same by hand delivery considered it and then passed such orders as he deemed fit after due application of mind and law. Petitioner has filed their audited returns and also claimed to have paid their taxes for the relevant AY 2015-16 2016-17 but under the correct PAN. Petitioner ought to have taken all necessary steps to cancel and or surrender the wrong PAN which they failed to do. Both parties are at fault as mentioned hereinabove.

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• 2023 (6) TMI 401
  Disallowance u/s 14A r.w.r. 8D - suo-motu disallowance made by assessee - Necessity of recording satisfaction - HELD THAT:- AO, without recording any objective satisfaction as to why said disallowance was not acceptable, straightway applied Rule 8D(2) which run contrary to statutory provisions of Sec.14A r.w.r.8D(2). Before applying the said rule, it was incumbent upon Ld. AO to record an objective satisfaction rejecting the computations made by the assessee. In the absence of such an exercise, the additional disallowance made by Ld. AO could not be sustained in law. This ground stand allowed. Treatment of Losses as Speculative Losses - adjustment of loss under arbitrage transactions - HELD THAT:- One of the eligible transactions includes trading in derivatives because of systematic technological changes introduced by stock exchanges. Trading business of the assessee constitutes only profit / loss in arbitrage / jobbing which are normal business transactions for the assessee. Under Arbitrage transaction, the assessee makes riskless profit by exploiting the price differentials on the same instrument or on the similar assets by trading on different exchanges. Under these transactions, when there is loss in one market, there will be profit in another market or segment or vice versa. Hence the loss in cash market is arbitrage loss the profit in F O segment is also the very same arbitrage profit and vice-versa, which has arisen on the arbitrage / jobbing transactions carried on by the assessee. These two types of transactions, in our opinion, are the two sides of the same coin and could not be treated separately. The loss of one segment has to be allowed to be set-off against the other segment. In the case of the assessee, the entire transaction of purchase and sale of securities constitutes arbitrage jobbing transactions as a whole and hence, these transactions are outside the purview of the speculative transaction. The explanation to Sec.73 would not apply to the case of the assessee in view of specific exclusions of the arbitrage/jobbing transactions from the purview of speculative transaction u/s 43(5) - AO is directed to re-compute the income of the assessee. This ground of appeal stand allowed.

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• 2023 (6) TMI 400
  Revision u/s 263 - selection of the case under limited scrutiny - expansion scope of limited scrutiny - As per CIT high sea sales is speculative transaction and therefore disallowance of loss arising therefrom against the non speculative business income - HELD THAT:- As it is evident that the issue for which the PCIT issued the show cause notice was entirely different than the issues of selection of the case under limited scrutiny by the assessing officer. The Board in its circular mentioned the procedure for converting the limited scrutiny case into full-fledged scrutiny. From the perusal of the above said circular, it is abundantly clear that the conditions, which are sine qua non were non existence, the AO did not have to make a request to convert a limited scrutiny case into full-fledged scrutiny. On similar facts, the coordinate bench, Amritsar in the case of Paradise Rubber Industries [ 2021 (10) TMI 444 - ITAT AMRITSAR] has held that revisionary jurisdiction shall not be invoked by the Pr. CIT to look into the issues which were not within the purview of limited scrutiny. AO cannot go beyond reasons for of limited scrutiny and thus, it would not be open to the PCIT to pass revisionary order u/s 263 on other aspects and remit matter to AO for fresh assessment. Assessee appeal allowed.

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• 2023 (6) TMI 399
  Disallowance of purchase of sugarcane, as prior period expenses - Fair Market Price of the sugar - CIT(A) while deleting the addition has given a finding that the assessee operates in the agriculture sector and deals in seasonal crop and the price of which is controlled by the Government - HELD THAT:- As given a finding that the actual Fair Market Price of the sugar was decided on 05.12.2007 which was much after the completion of sugar season of 2006-07 and the payments made thereafter cannot be considered to be prior period expenses more so when the genuineness of the payments to the farmers has not been doubted by the Revenue. Before us, Revenue has not pointed out to any fallacy in the findings of the CIT(A). In such a situation, we find no reason to interfere with the order of the CIT(A) and thus this ground raised by the Revenue is dismissed. Disallowance of sugarcane advance which was written off as not recoverable and was debited to Profit Loss account - CIT-A deleted the addition - HELD THAT:- CIT(A), while deleting the addition, has given a finding that the aforesaid amount represented advances given by the assessee to members but which have never been debited to the Profit Loss account as a charge against the profit in earlier years and therefore it cannot be added as income. Before us, no fallacy in the finding of the CIT(A) have been pointed out by the Revenue. In such a situation, we find no reason to interfere with the order of the CIT(A) and thus this ground of appeal raised by the Revenue is also dismissed.

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• 2023 (6) TMI 398
  Penalty u/s 271B - Addition of total sales/turnover/gross receipts of the assessee which belongs to the Principal Dealer - assessee s contention that the assessee was merely working as a commission agent for M/s. Anika Bajaj and have made bookings for the principal outlet - HELD THAT:- It is for the AO or CIT (A) to make adequate inquiries from the Principal Outlet M/s. Anika Bajaj to find out whether the assessee was working as an agent for it or not. Once the assessee had categorically stated that the assessee was working for the main outlet on commission, then the consideration received for sale cannot be considered as turnover of the assessee or receipt of the assessment. Assessee has filed supporting document like form 26AS (which shows assessee was regularly receiving commission payment from the Principal Outlet and Letter of appointment issued appointing assessee as commission agent in M/s. Anika Bajaj which clearly shows that the assessee was carrying its agency business for and on behalf of M/s. Anika Bajaj). Since the gross turnover for the period under consideration was less than Rs. 1.00 crore, hence the accounts are not required to be audited as per section 44AB - Hence penalty imposed by the lower authorities was without any basis. Appeal of assessee allowed.

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• 2023 (6) TMI 397
  Deduction u/s.80P - interest income earned from the deposits kept with Nationalised bank - HELD THAT:- This issue is decided in favour of the assessee by the Tribunal in several cases including the assessee s own case for the immediately preceding assessment year 2013-14 [ 2021 (12) TMI 1259 - ITAT PUNE] Relevant discussion has been made granting deduction u/s 80P(2)(a)(i) on account of interest received from the deposits kept with Bank of Baroda in the form of Fixed deposit. Such decision has not been modified of reversed in any manner - Grant deduction u/s 80P on the interest income earned from Bank of Baroda allowed - Appeal of assessee allowed.

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• 2023 (6) TMI 396
  Disallowance u/s.14A r.w.r. 8D - whether exempt income during the year under consideration? - HELD THAT:- For computing disallowance under Rule 8D(2)(iii), only the investments yielding exempt income during the year under consideration can form part of average value of investment. Since, the strategic investments made by the assessee have not yielded any exempt income during the year, they cannot form part of the average value of investment for computing the disallowance under Rule 8D(2)(iii). So far as investments in mutual fund are concerned, from the materials on record, including the financial statements of the assessee, it is observed that there is no opening and closing balances of mutual fund. Meaning thereby, the investments, on which the assessee had earned exempt income, were not only made during the year under consideration, but also sold during the year under consideration. That being the case, the average value of investment as on the 1st day of the financial year and at the year end is nil. Computation mechanism provided in Rule 8D(2)(iii) would fail, as it is not possible to compute the disallowance in absence of average value of investment. This is the view expressed by the coordinate bench while deciding identical issue in assessee s own case in assessment year 2011- 12 In view of the aforesaid, [ 2020 (1) TMI 403 - ITAT DELHI] we direct the AO to delete the disallowance made over and above the suo motu disallowance made by the Assessee. Capitalisation of license fee - revenue v/s capital expenditure - HELD THAT:- Facts of the present case appears to be similar to the facts involved in the case of CIT Vs Bharti Hexacom Ltd. (Delhi) [ 2013 (12) TMI 1115 - DELHI HIGH COURT] we, therefore, restored this issue to the file of the AO to be decided in accordance with the findings given by the Hon ble Jurisdictional High Court in the case of Bharti Hexacom Ltd. [ 2013 (12) TMI 1115 - DELHI HIGH COURT] and if any expenditure on account of licence fee was payable up to 31.07.1999, it should be treated as capital expenditure and the licence fee on revenue sharing basis after 01.08.1999 should be treated as revenue in nature. Disallowance of TDS credit - whether TDS credit relates to future income? - HELD THAT:- Even after disallowing the TDS credit claimed by the assessee, the Assessing Officer has added the corresponding amount to the income of the assessee. Once, certain amount claimed as TDS credit is disallowed, assessee s claim of pre-paid taxes to that extent gets reduced. No need for making any further addition of the corresponding amount to the income of the assessee as it amounts to addition of the same amount twice. In view of the aforesaid, we direct the Assessing Officer to factually verify assessee s claim and in case, the assessee has not been given credit of TDS in the computation of income, the addition of the same amount made to the income of the assessee should be deleted - Decided in favour of assessee.

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• 2023 (6) TMI 395
  Levy of penalty u/s 272A(2)(c) - non-compliance of notice issued u/s 133(6) - HELD THAT:- We find that CIT(A) had noted that the show cause notice could only be sent through e-mail. There was non-compliance to the notice issued u/s 133(6) in spite of the fact that the notice having been served on the assessee. We understand that if an e-mail address is updated on the Income Tax Portal on 29.03.2019, then the subsequent communications by the Income Tax Authorities would automatically uploaded on the system and send to the updated new e-mail address of the appellant assessee. As further, assessee had done last login on 12th April, 2023 at 11.58 AM on the updated e-mail address which shows that he has not done any communication of the Income Tax proceedings taken by the Income Tax Department against him by way of notice issued u/s 133(6) - Thus, the contention of the assessee, that assessee has not been served the notice u/s 133(6) is factually incorrect. Assessee s request that the quantum appeal of penalty u/s 272A(2)(c) may be limited to the period excluding the Covid period exempted by the Apex Court is justified. Accordingly, AO is directed to levy of penalty u/s 272A(2)(c) for the period of 30.07.2019 to 14.04.2020, in the light of the Hon ble Apex Court judgment delivered on miscellaneous application [ 2022 (1) TMI 385 - SC ORDER] whereby their Lordship has extended period of limitation for any such appeal application or proceedings from 15.03.2020 till 14.03.2021. Penalty levied u/s 272A(2)(c) is restricted for the period from 30.07.2019 to 14.03.2020. According, the AO is directed to recompute the penalty amount for the period restricted as above. Appeal of the assessee stand allowed.

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• 2023 (6) TMI 394
  Tax Residency of assessee - tax resident of USA or India - levy tax at maximum marginal rate instead of applicable rate as per DTAA on interest income - HELD THAT:- Even as on date of this hearing, copy of Tax Residency Certificate is not available with the assessee, so as to able to validate that the assessee is a tax resident of USA. We are of the considered view, CIT(Appeals) has correctly observed that copy of US Passport containing details of travel into India and departure from India by itself, is not enough to confirm / demonstrate that the assessee was a tax resident of USA during the impugned year under consideration. Accordingly, matter is being restored to the file of CIT(Appeals) in order to allow the assessee to provide supporting documents to validate that the assessee was a tax resident of USA during the impugned year under consideration and hence eligible for beneficial rate of tax on interest income under the India USA Tax Treaty. Appeal of the assessee is allowed for statistical purposes.

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• 2023 (6) TMI 393
  Penalty u/s 271(1)(c) - disallowance of non-compete fee claimed as revenue expenditure - HELD THAT:- It is a fact on record that the assessee has disclosed all material facts relating to payment of non-compete fee and the Assessing Officer was conscious of assessee s claim. Assessee cannot be accused of furnishing inaccurate particulars of income. It is relevant to observe, penalty imposed u/s 271(1)(c) under identical facts and circumstances in assessee s own case in assessment year 2002-03 was deleted by the first appellate authority and the Tribunal upheld the decision of the first appellate authority in deleting the penalty. No valid reason to interfere with the decision of FAA - Accordingly, we uphold the deletion of penalty imposed u/s 271(1)(c) of the Act in both the assessment years under dispute. Decided in favour of assessee. Nature of expenses - payment made towards non-compete fee - revenue or capital expenditure? - HELD THAT:- We find that this is a recurring dispute between the parties from assessment years 1999-2000 onwards and has been consistently decided against the assessee, even by the Tribunal. As per assessee s appeal for assessment years 2004-05 to 2007- 08 [ 2023 (4) TMI 740 - ITAT DELHI] we uphold the decision of learned first appellate authority. Grounds raised are dismissed. Expenditure on unviable contracts - Disallowance towards provision made for reimbursement of sales tax and miscellaneous claims - HELD THAT:- In the assessment order, the AO has made specific allegation that the assessee has not furnished any evidence, either regarding the actual claim made by Salute Water House Pvt. Ltd., nor any evidence of the payment made. Similarly, in respect of payment alleged to have been made to Brindawan Beverages, Bareilly, the assessee has itself shown it as provision. Further, the Assessing Officer has made a categorical observation that no evidence has been furnished to demonstrate that the expenses were actually incurred by the assessee. The factual position remained unaltered before learned Commissioner (Appeals). Even, on perusal of written submission furnished before the Assessing Officer placed in the paper-book, we find, except quoting some facts and figures relating to certain expenses, some of which, have been classified as provision, no evidence has been furnished by the assessee to substantiate the fact that expenditure was actually incurred during the year. Ground dismissed. Payment made towards traffic rule violation - whether revenue expenditure u/s 37(1) - whether such payments made were for an offence or is prohibited by law? - HELD THAT:- The aforesaid issue has been decided in case of DCIT Vs. Bharat C Gandhi [ 2011 (3) TMI 278 - ITAT, MUMBAI] while dealing with identical issue of payment of compounding fee for violation of provision under the Motor Vehicles Act, 1988 and Rules thereunder has held that such expenditure is allowable as business expenditure under section 37(1) of the Act. Thus, following the decision of the Coordinate Bench (supra), we delete the disallowance. Ground no. 4 is allowed. Disallowance of expenditure incurred on Ice Boxes - HELD THAT:- We find that while considering identical nature of dispute in assessee s own case in assessment years 2004-05 to 2007-08 [ 2023 (4) TMI 740 - ITAT DELHI] Tribunal, following its earlier decisions, has decided the issue against the assessee. Thus we uphold the disallowance. This ground is dismissed. Disallowance of processing charges - HELD THAT:- As relying on own case [ 2023 (4) TMI 740 - ITAT DELHI] in assessment years 2004-05 to 2007-08 we restore the issue to the Assessing Officer with a similar directions. Needless to mention, before deciding the issue, the assessee must be provided due and reasonable opportunity of being heard. TDS u/s 195 - Disallowance u/s 40(a)(ia) - payments made towards purchase of software without deducting tax at source (TDS) - Commissioner (Appeals) concluded that what the assessee has purchased is a copyrighted article and not the copyright, thus the payment made is not in the nature of royalty so as to require deduction of tax at source u/s 195 - HELD THAT:- The issue now stands squarely settled in favour of the assessee by the decision of the Hon ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] - we uphold the decision of learned Commissioner (Appeals) on the issue. Ground raised is dismissed.

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• 2023 (6) TMI 392
  Deduction u/s 80-IA - non-filing of Form 10CCB along with return of income - due to the technical glitches, Form 10CCB could not be uploaded on e-filing portal of the Income Tax Department - HELD THAT:- Assessee first contacted e-filing helpdesk for resolving the issue since the issue was related to non-acceptance of Form 10CCB by the e-filing system of the Income Tax Department. The assessee was suggested to approach e-filing helpdesk of the Income Tax Department. E-filing helpdesk required a formal e-mail from the assessee in respect of the above issue and requested for a few days time for resolution thereof. Finally, the above referred technical glitches were resolved and the said Form 10CCB was filed on 11.11.2019 with a delay of eleven days. The reasons for non-filing of Form 10CCB along with return of income was on account of reasons beyond the control of the assessee and should not act as a bar to the allowability to the claim of deduction under section 80-IA. Bangalore Bench of the Tribunal in the case of Jitendra Kumar Nahata [ 2022 (5) TMI 852 - ITAT BANGALORE] held that when return has been filed within the specified due date u/s 139(1) of the Act and the tax auditor has also certified the deduction in Form 3CD, only for want of non-filing of Form 10CCB within the due date is not fatal to the said claim. Appeal filed by the assessee is allowed.

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• 2023 (6) TMI 391
  Deduction u/s 80P(2)(a)(i) - claim of deduction denied for the reason that assessee was primarily dealing with non-members - HELD THAT:- In the light of the judgment in the case of Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT ] it is clear that only profits attributable to non-members alone would not be entitled to deduction under section 80P(2)(a)(i) of the Act. Thereby meaning proportionate deduction is to be allowed in respect of the income arising out of business with the members of the assessee society. In the light of the above said judgment restore the issue to the AO to determine the proportionate deduction under section 80P(2)(a)(i) of the Act with regard to the income earned from the assessee s dealings with its regular members. Interest income received from Cooperative Banks / Scheduled Banks - whether it is income from business or income from other sources? - HELD THAT:- Assessee is not entitled to the claim of deduction either under section 80P(2)(a)(i) or 80P(2)(d) of the Act.Judgment of the Hon ble jurisdictional High Court in the case of Totagars Co-operative Sale Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT ] relied upon. Appeal filed by the assessee is partly allowed for statistical purposes.

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• 2023 (6) TMI 390
  Penalty u/s 271(1)(c) - addition as made as income from other sources - assessee had taken loans and advances from various parties and AO had made addition of interest calculated @ 0.5% on the aggregate amount of loan - HELD THAT:- The addition has been made on purely at the estimate basis. It is a settled position that on the addition made on estimate basis, no penalty u/s 271(1)(c) of the Act is leviable as for levying of penalty u/s 271(1)(c) AO has to clearly prove that assessee has concealed his income or has furnished inaccurate particulars of income. Considering the undisputed fact that addition on which the penalty has been levied is on estimate basis, we are of the view that AO was not justified in leving of penalty u/s 271(1)(c) of the Act. Decided in favour of assessee.

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• 2023 (6) TMI 389
  Allowability of interest paid on borrowed funds u/s.36(1)(iii) - alternatively allowability of interest u/s.37 - HELD THAT:- It is incorrect on the part of the CIT(A) to say that no evidences were furnished by the assessee to prove the financial sickness of these four parties. The financial statements of these four parties are reflected clearly. Assessee company in its notes on accounts in Schedule 14 had duly stated that the loans given by it includes Rs.15204.62 Lakhs given to companies having negative net worth and Rs.25.25 lakhs given to a company where legal action has been initiated for recovering the loan and accordingly no provision has been made as against these loans. This fact is also qualified by the statutory auditor in his statutory audit report stating that - subject to this non-provision of doubtful advances, financial statements of the assessee company is true and fair. Reliance placed by the ld.AR on the decision of Sarabhai Holdings (P) Ltd [ 2008 (10) TMI 12 - SUPREME COURT] squarely supports the case of the assessee. We hold that assessee was duly justified in not charging interest in respect of these four parties during the year under consideration. Hence, AO is hereby directed to delete the disallowance of interest on proportionate basis in respect of loans given to these four parties. Remaining loans outstanding from parties we find that the total loan outstanding of these parties worked out to Rs.10.75 Crores. In this regard on perusal of the balance sheet of the assessee company, we find that assessee has got own funds Rs.58.02 Crores (Rs.61.60 Rs.8.58 Crores), which would cover the interest free advances given to the aforesaid parties. Hence, by placing reliance on the decision of Reliance Utilities and Power Ltd . [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] we direct the ld. AO to delete the interest disallowance made in respect of advances given to parties listed in Sr.No.7,8,11,12,13,16, 17 18 of the table above.

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• 2023 (6) TMI 388
  Disallowance u/s 43B - non-payment of outstanding amount of ESI, PF, CGST and SGST not paid before the due date of filing of return of income - HELD THAT:- Section 43B cannot be invoked for the above stated payments and, therefore, we find merit in the contention of assessee for the inadvertent mistake committed by the tax auditor by reporting the detail of expenses payable as on March, 2017 on which provisions of Section 43B of the Act can be invoked have been wrongly reported in the column 26(i)(B)(b) in Form 3CB attached to the tax audit report, which is meant for those payments which fall under the provisions of Section 43B of the Act and are not deposited before the due date of filing of return. Considering the fact that on the alleged sum provisions of Section 43B of the Act are not applicable as they have been paid before the due date of filing u/s 139(1) of the Act, the said disallowance deserves to be deleted. Allow the ground raised by the assessee and thus delete the addition. Decided in favour of assessee. Disallowance employees contribution made towards PF - Though the assessee has claimed that wages were disbursed in the month of May and June, 2017 i.e., subsequent month for which wages were payable and thus claimed that due dates were subsequent to the months of payments and thus there is no delay - HELD THAT:- No merit in this contention of the assessee as the liability to pay PF /ESI fall due on the basis of month for which salary is payable. Now, considering the month for which wages are payable the due date for depositing the said sum was 15/06/2017 and 15/07/2017. However, the payment has been made on 18/05/2017 and 17/06/2017, which is after the due dates. Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] wherein it has been held that deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act,1961. Accordingly, the sum is not allowable u/s 36(1)(va) of the Act and is deemed to be income u/s 2(24)(x) of the Act. Accordingly, we dismiss this ground raised by the assessee.

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• 2023 (6) TMI 387
  Appealable orders before Commissioner (Appeals) - Non-granting of TDS credit in order passed u/s 143 (1) - HELD THAT:- Appeal before CIT(Appeals) lies against the intimation issued under section 143(1) of the Act, wherein adjustments have been made in the said intimation, which have a bearing on the amount of tax determined . Accordingly, in our considered view, CIT(Appeals) has taken a very restrictive view of the provisions of section 246A of the Act, and accordingly, the matter is being set aside to the file of Ld. CIT(Appeals) to hear the appeal of the assessee on merits, after giving due opportunity of hearing to the assessee, in accordance with law. As in DEERE AND COMPANY C/O JOHN DEERE INDIA PRIVATE LIMITED [ 2021 (11) TMI 503 - ITAT PUNE] ITAT held that any order passed under the Act against the assessee, impliedly including an order u/s 139(9) in the circumstances as are obtaining in this case, having the effect of creating liability under the Act which he denies or jeopardizing refund, gets covered within the ambit of clause (a) of section 246A(1). Therefore, even otherwise, appeal lies before the Ld. CIT(Appeals) against the adjustments to the TDS credit made by the AO u/s 143 (1) of the Act, in view of the observations made by the ITAT in the aforesaid order. - Decided in favour of assessee.

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• 2023 (6) TMI 386
  Penalty u/s 271B - delay filing of tax audit report contravening section 44AB - HELD THAT:- The assessee completed the tax audit within the due date. But the assessee filed the tax audit report before the authority with a delay which is contravening of section 44AB - assessee filed a proper reason for delay in filing tax audit report. In factual matrix the assessee was suffering a financial exigency with legal battel. This is a sufficient reason for delay in filing the tax audit report before the authority which follow the Section 273B of the Act. Accordingly, the penalty u/s 271B is quashed. Decided in favour of assessee.

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• 2023 (6) TMI 385
  Reopening of assessment u/s 147 - non obtaining valid approval u/s. 151 - HELD THAT:- As approving authority JCIT Range-36 while granting approval merely wrote a single word i.e. approved . Respectfully following the case of M/s NC Cable Ltd. [ 2017 (1) TMI 1036 - DELHI HIGH COURT] have no hesitation to hold that in the present case also the exercise of approving powers u/s. 151 of the Act appears to have been only ritualistic and formal rather than based on application of mind to the material placed by the Assessing Officer before the approving authority which could lead to a valid and meaning full approval. Therefore notice u/s. 148 of the Act without obtaining valid approval u/s. 151 of the Act and all consequent reassessment and first appellate order are not validly sustainable and deserve to be quashed and thus hold so. Decided in favour of assessee.

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• 2023 (6) TMI 384
  Revision u/s 263 - According to the CIT, the assessee had incorrectly claimed the cost of acquisition while calculating the capital gain arising from sale of the properties - HELD THAT:- These charges were claimed towards cost of acquisition as it was one time charges paid for realising the enduring benefit arising out of the properties. Therefore, the expenditure was capital in nature and was capitalised in the books of account in the year in which it was incurred. During assessment proceedings the same explanation was submitted before the AO who after considering all the details had come to the conclusion that the assessee had correctly computed and declared the capital gain - In such a scenario, in our opinion, CIT had no jurisdiction u/s 263 merely because the Ld. AO did not express his satisfaction in so many words in the assessment order as held in CIT vs. Reliance Communication Ltd. [ 2016 (4) TMI 173 - BOMBAY HIGH COURT] SLP filed by the Department against the decision (supra) has been dismissed by the Hon ble Supreme Court [ 2016 (11) TMI 1189 - SC ORDER] After considering the material placed by both the parties before us, we have come to the conclusion that assumption of jurisdiction by the CIT u/s 263 of the Act is not in accordance with law. Allow the appeal of the assessee.

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• 2023 (6) TMI 383
  Depreciation on the Goodwill - transaction of sale of slump sale to subsidiary company - HELD THAT:- We find that the identical issue has come up before the Tribunal in assessee s own case for the AY 2012-13 [ 2023 (4) TMI 384 - ITAT DELHI] following the decisions of Smifs Securities Ltd [ 2012 (8) TMI 713 - SUPREME COURT] and the decision of Triune Energy Services Pvt. Ltd.[ 2015 (11) TMI 1218 - DELHI HIGH COURT] sustained the order of the Ld.CIT(A) in allowing the depreciation on Goodwill - Decided against revenue.

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• 2023 (6) TMI 382
  Penalty u/s 271(1)(b) - failure to sign on the so called Consent Letter which is not an authorized form notified by the Government - HELD THAT:- No penalty is imposable on the person for any failure referred to in the relevant penal provisions prescribed therein, including section 271(1)(b) of the Act, if the assessee proves that there was a reasonable cause for the said failure. It, thus, transpire that the imposition of penalty under section 271(1)(b) of the Act on account of alleged failure to comply with notice issued is not automatic. If there is a reasonable cause for such a failure, then, penalty is not at all imposable in terms of section 273B of the Act. In the context of section 273B of the Act, the expression reasonable cause has been explained to mean a cause which prevents a man of ordinary prudence and average intelligence, acting under normal circumstances, without negligence or inaction or want of bona fide. Hence, keeping in view, the details of the tax payment, investigation of the revenue, provisions of the act and the judicial pronouncement, we delete the penalty levied by the AO u/s 271 (1)(b). Assessee appeal allowed.

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• 2023 (6) TMI 381
  Penalty u/s 271(1)(c) - Income assessed was based on estimate basis - estimated profit @8% - HELD THAT:- As relying on Aero Traders Pvt. Ltd. [ 2010 (1) TMI 32 - DELHI HIGH COURT ] and Subhash Trading Company (Guj) [ 1995 (11) TMI 37 - GUJARAT HIGH COURT ] additions were made/sustained by the CIT(A) on the basis of estimation and the penalty cannot be levied on the basis of estimated additions and therefore, the Assessee cannot be subjected to levying penalty. Decided in favour of assessee.

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• 2023 (6) TMI 380
  Penalty u/s 271(1)(c) - period of limitation - CIT(A) has passed rectification order on 28.10.2011, second notice u/s 271(1)(c) was issued on 04.03.2013. - HELD THAT:- AO after issuing the initial notice u/s 271(1)(c) of the Act on 17.12.2009, keeping the proceedings in abeyance, has assumed jurisdiction to pass the order dated 30.03.2013 on the basis of subsequent notice u/s 271(1)(c) dated 04.02.2013 which was issued after the receipt of CIT(A) s rectified order. There was no justification to issue a fresh notice u/s 271(1)(c) of the Act on 04.02.2013, as already Ld. AO at the instance of the assessee had kept the penalty proceeding in abeyance. The disposal of appeal by Ld. CIT(A) on 28.02.2011, itself gave Ld. AO an opportunity to revive the penalty proceedings or to have waited further for the order from Tribunal. Thus, for the purpose of exercising jurisdiction to pass the penalty order the Ld. AO was supposed to proceed on receiving the order of ld. CIT(A) dated 28.02.2011 and when that is taken into account, the order dated 30.03.2013 stands barred by limitation, as for the purpose of Section 275(1)(a) of the Act, the period of 6 months for disposal of appeal had to be reckoned from receipt of order of Ld. CIT(A). Non-striking of the limb in the notice - DR could not dispute the fact that these notices were issued on cyclostyle formats. In this regard, there is a consistent view of the Tribunal following the Delhi High Court judgment in PCIT v. Sahara India Life Insurance Co. Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] that non-striking of the limb in the notice vitiates the penalty order. In the case in hand on behalf of the Ld. DR an attempt was made to defend the notices submitting that there are allegations of both concealment and of furnishing inaccurate particulars, then in that case it was all the more necessary to identify and convey to the assessee under the notice as to which particular set of allegations he needs to defend. The Bench is inclined to sustain the grounds raised in the cross objections, consequently, the same are allowed

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• 2023 (6) TMI 379
  Credit of TDS denied - out of the TDS claimed a portion of tax relates to income under the head house property assessable in the subsequent assessment year - HELD THAT:- Notwithstanding any procedural constraints, the revenue authorities are not entitled to appropriate the taxes which have been paid in excess of the due taxes to be paid by the assessee. We hereby order the AO to call for the record of AY 2002 - 03 and pass appropriate rectification order giving full credit for the TDS amounts to the assessee and issue refund of tax which the assessee is entitled consequent to such rectification order. Since, a long period of 20 years have already been elapsed, this action be completed by the revenue authorities within 6 months from the date of this order. Appeal of the assessee is allowed.

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• 2023 (6) TMI 378
  Income deemed to accrue or arise in India - business connection in India - Appellant s Business Connection (BC) and Permanent Establishment (PE) in India - HELD THAT:- The issue relating to Business Connection and Permanent Establishment in India is decided against the assessee by the Tribunal [ 2021 (10) TMI 1004 - ITAT DELHI ] wherein the Tribunal followed the decision of the Hon ble Delhi High Court in assessee s own case [ 2014 (8) TMI 902 - DELHI HIGH COURT ] and the assessees predecessor s case in deciding the issue of as to whether the assessee was BC/PE in India. Respectfully following the said decision, we hold that assessee has Business Connection and Permanent Establishment in India. The grounds raised by the assessee in respect of BC/PE are decided against the assessee. Excess attribution of Revenue to India operations in respect of PE in India - HELD THAT:- For the assessment years 2007-08 to 2014-15 [ 2021 (10) TMI 1004 - ITAT DELHI ] held that the correct attribution rate to be taken at 15% of gross booking fees. Thus we direct the AO to adopt the attribution rate of Revenue for the Indian operations of its PE in India at 15% of gross booking fees for the year under consideration also. As assessee submits that during the assessment year under consideration i.e. AY 2015-16 also if the attribution rate to the alleged PE is considered at 15% of gross booking fees since India related expenses are more than the attributed gross booking fees to the PE in India it would extinguish the assessment as no further income would be taxable in India. In view of the above submissions of the Ld. Counsel for the assessee we direct the Assessing Officer to check the correctness of the figures before giving effect to this order. Disallowance of other expenses to 30% - HELD THAT:- We direct the AO to recompute the income/loss of the assessee by restricting the disallowance of other expenses to 30% for the year under consideration also. Grounds raised by the assessee on this issue are partly allowed.

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• 2023 (6) TMI 363
  Foreign tax credit - procedural lapse of filing of Form 67 belatedly - HELD THAT:- As stated that under the identical facts, in the cases of Rohan Hattangadi [ 2023 (1) TMI 1070 - ITAT MUMBAI] , Ritesh Kumar Garg [ 2022 (9) TMI 926 - ITAT JAIPUR] and Brinda Rama Krishna [ 2022 (2) TMI 752 - ITAT BANGALORE] allowed the claim of the assessee regarding FTC. The Revenue has not rebutted the claim of the assessee regarding allowance of FTC. We therefore, hereby direct the Assessing Officer to grant FTC to the assessee. Grounds of appeal raised by the assessee are hence, allowed.

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• Customs

• 2023 (6) TMI 377
  Reduction in quantum of Redemption Fine and Penalty - import of Sri Lankan Areca Nuts - restricted goods or not - misdeclaration of goods - declared value being higher than the threshold limit as per notification No. 20/2015-2020 issued by the Department of Commerce - goods freely importable or not - HELD THAT:- The impugned goods were freely importable and there is no allegation of misdeclaration of goods and there is no evidence on record to show that the appellant has acted with malafied intention to import substandard goods intentionally. It is a fact that on test, it was found that the goods are of substandard and is not fit for human consumption and therefore original authority as well as the appellate authority both allowed re-export of the same. As far as the demand of redemption fine and penalty is concerned, the Commissioner (Appeals) has rightly relied upon various decisions of the Tribunal involving similar circumstances of re-export of food items, after being denied NOC by FSSAI and took the lenient view and rightly reduce the fine and the penalty - reliance can be placed in the case of M/S. ROYAL IMPORTS EXPORTS VERSUS COMMISSIONER OF CUSTOMS TUTICORIN [ 2021 (3) TMI 937 - CESTAT CHENNAI] . For reducing the penalty under Section 112 (a) (i), the Ld. Commissioner (Appeals) has relied upon the decisions in the case of COMMISSIONER OF CUSTOMS (EXPORT) CHENNAI-I VERSUS BANSAL INDUSTRIES [ 2006 (9) TMI 58 - HIGH COURT, MADRAS] . The Ld. Commissioner (Appeals) has rightly observed that in the absence of malafide on the part of the appellant penalty is reduced to Rs. 50,000/-. There is no infirmity in the order passed by the Commissioner (Appeals) reducing the redemption fine under Section 125(1) of the Customs Act, 1962 to Rs. 1,00,000/- and penalty under section 112(a)(i) of the Customs Act, 1962 to Rs. 50,000/- - the impugned goods are lying on the port since 10.11.2020 but the customs authorities did not bother to comply with the order of the Ld. Commissioner (Appeals). It shows complete insensivity of the officers to the financial loss occurring to the respondent due to deterioration of goods, in addition to, it shows complete dereliction of duty on their part. The assessable value of the consignment was Rs. 49,24,504/- and the respondent has paid the duty of Rs. 3,52,439/- as recorded in the impugned order, moreover the respondent also paid Rs. 1,50,000/- towards redemption fine and penalty but the customs authorities below did not release the goods for re-export thereby allowing the goods to further deteriorate in quality and in addition incurring huge demurrage due to lapse of considerable time for no fault of the respondent. It is deemed appropriate to direct the Chief Commissioner of Customs, Delhi to hold necessary inquiry into the matter regarding the delay caused in not allowing the re-export of the goods and take appropriate action against the errant officials - the impugned goods are directed to be released immediately to the respondent for the purpose of re-export and refund the duty back to the respondent as observed by the Ld. Commissioner (Appeals) in the impugned order. The appeal of the revenue is dismissed.

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• 2023 (6) TMI 376
  Reduction in the quantum of Redemption Fine and Penalty - Valuation of imported goods - old and used worn clothing, completely fumigated - enhancement of value - restricted goods or not - requirement of valid license for such import - HELD THAT:- This issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [ 2018 (11) TMI 625 - CESTAT MUMBAI] , wherein this Tribunal has observed that The failure of the original authority to comply with the direction in remand to disclose the margin of profit that prompted the fine and penalty, the matter would normally have to be remitted back by another remand order. However, the paucity of evidence and the negligible scope for ascertainment at this stage deters us from doing so. The redemption fine and penalty imposed on the respondent to the tune of 10% 5% respectively on the assessed value is sufficient. Therefore, the redemption fine and penalty confirmed by the ld. Commissioner (Appeals) are sufficient to meet the end of justice - There are no infirmity in the impugned order and the same is upheld. The appeals filed by the Revenue are dismissed.

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• 2023 (6) TMI 375
  Valuation - Additions of 2% Notional Commission on High Seas Sale - Purchased goods / Propane on High Seas Sale basis from various Public Sector undertaking like IOCL, BPCL, and HPCL. - Genuineness of the transactions price - failure of the appellant to produce the documents or not - HELD THAT:- The issue regarding addition of Notional Commission at the rate of2% of high Seas Sale price has been examined by Tribunal in the case of Indian Farmers Fertilizer Co-Operative Limited [ 2020 (2) TMI 1134 - CESTAT AHMEDABAD ] where it was held that while there was scope for addition of notional charges in the assessable value under the unamended Section 14 of the Customs Act, but after the actual sale price concept was introduced in the year 2007 on the basis of GATT guidelines and Section 14 of the Customs Act was amended in 2007, any inclusion of notional charges seems to have lost its relevance and only actual cost incurred by the buyer is required to be considered. Thus, it is apparent that addition of 2% High Seas Sale on Notional Basis Cannot be sustained. Genuineness of the transactions price - failure of the appellant to produce the documents - HELD THAT:- The same has no merit. The documents that the Commissioner (appeals) has sought the invoice which is always produced at the time of filing of bill of entry. The agreement between the public sector undertaking and the appellant is also produced before the Commissioner (Appeals), therefore the objection raised by the learned AR cannot be sustained. Appeal allowed.

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• Insolvency & Bankruptcy

• 2023 (6) TMI 374
  Exclusion of claim of the fourth Respondent IARC from the list of the Financial Creditors of the Corporate Debtor and consequentially directing her to declare the fresh list of the Financial Creditor with their revised percent of voting rights in the CoC - Non-speaking order - violation of principles of natural justice - HELD THAT:- This Tribunal is of the considered view that in the interest of Justice, an opportunity may be accorded to the Appellant, herein to be heard on merits, before the Adjudicating Authority and therefore, it is a fit case to remand the matter to the Adjudicating Authority and the Adjudicating Authority shall decide the Application within a period of four weeks from the date of this Order. It is made clear that this Tribunal has not commented on the merits of the matter and the Adjudicating Authority shall proceed in accordance with Law, uninfluenced by any observations in this Order. The matter is remanded back to the Adjudicating Authority for fresh adjudication on merits - Appeal allowed.

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• Service Tax

• 2023 (6) TMI 373
  Service of SCN - SCN not sent at proper address - Show Cause Notice also clearly mentioned that this was the address in which the appellant was previously residing - adjudication order has been passed exparte and that the Show Cause Notice has not been served upon the appellant - Principles of natural justice - HELD THAT:- The department was fully aware that the appellant is not residing and not available in the address at No. 2/126-E, Dindigul Road, Ramjee Nagar, Trichy 620 009. Even then the Show Cause Notice has been issued to the said address by the department. After the Show Cause Notice was returned as unclaimed, the department has not opted to issue the Show Cause Notice to the proper address and instead was followed the procedure under sec. 37C(b) of the Central Excise Act r/w sec. 83 of the Finance Act, 1994 to paste and affix the Show Cause Notice at the Trichy address. The appellant has not been served the intimations for personal hearing and the order is seen to have passed exparte. The Show Cause Notice was not issued to the appellant and also that the order has been passed exparte. Clear violation of principles of natural justice is established - the demand cannot sustain and requires to be set aside - Appeal allowed.

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• 2023 (6) TMI 372
  Demand of service tax - belated filing of ST-3 returns - Reconciliation of amount shown in the ST3 returns and Form 26AS (TDS statement) - Works Contract Service - Maintenance Repair Service - Manpower Recruitment/Supply Service - Cleaning Service - suppression of facts - invocation of extended period of limitation. Extended period of limitation - HELD THAT:- From the records it is seen that a Show Cause Notice dated 22.05.2015 was already issued to the Appellant for an earlier period viz. 2010-11 and 2011-12 on the issue of non-payment of Service Tax by invoking the extended period of limitation which has attained finality in terms of Tribunal s Final Order dated 22.11.2019 dismissing Department s appeal under National Litigation Policy. Further in the said case, the Ld. Commissioner (Appeals) had decided the matter in favour of the Appellant by considering all the submissions as to abatement and reverse charge (RCM) on services provided by the Appellant as well as the payments made during the said period - the present Show Cause Notice is also based on the data collected by the Department during IOCL CERA audit for all contractors and basis the payments made by IOCL to various contractors, the demand has been raised in the impugned proceedings also. Hon ble Supreme Court in the case of ECE INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, NEW DELHI [ 2003 (3) TMI 136 - SUPREME COURT] , had held that the extended period of limitation cannot be invoked where the Department has earlier issued Show Cause Notice in respect of the same subject-matter. It could not be said that there was a willful suppression or mis-statement. Then, the extended period of limitation cannot be invoked. As regards the judgment referred to by the department in their written submissions in the case of MM CYLINDERS (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, TIRUPATHI [ 2011 (9) TMI 779 - CESTAT, BANGALORE] , the same is not applicable to the facts of the present case as in that case the further investigations had revealed new details, whereas in the present case both the notices are based on third party IOCL records and then comparing the same with 26AS data of the Appellant. The Appellant had been providing same services as was alleged in the earlier Show Cause Notice dated 22.05.2015 which was adjudicated in favour of the Appellant for the earlier period. It is not the case of the Department that there was any change in the nature of services provided by the Appellant and thus when the first Show Cause Notice was issued invoking extended period of limitation, it cannot be alleged that the Appellant has suppressed facts while issuing demand notices for subsequent period. The impugned Order-in-Original arising against the said Show Cause Notice which is issued by the Department for a subsequent period by invoking the extended period of limitation is unsustainable and is liable to be quashed on this ground itself - However, the Appellant is liable to pay the late fee for filing of ST-3, if not already paid. Even though the extended period of limitation cannot be invoked in the present case, on merits it is found that the department has grossly erred in not taking into account the payments made by the Appellant as well as submissions for provision of services having abatement as well as falling under reverse charge mechanism. It is found that the ST-3 returns disclosing the payment of tax had been filed by the Appellant belatedly, but before passing of the adjudication order, the same was communicated to the Department by the Appellant. However, the Ld. Adjudicating authority has not taken it on record as the same was filed belatedly. In this regard though the Appellant had filed the ST-3 belatedly, but the same had clearly accounted for all the value of taxable services provided by the Appellant. It is found from the Chartered Accountant s certificate that the entire value as per form 26AS has suffered tax to the extent of supplies taxable under forward charge and only GTA services provided by the Appellant has not suffered tax at the hands of the Appellant as the recipient was liable to pay Service Tax on the same. The Ld. Authorized Representative has not been able to make out a case that the services of works contract as provided by the Appellant are not allowed abatement as claimed by the Appellant or otherwise that such services were not provided by the Appellant. Thus, at this juncture having regard to the various reconciliations submitted and the Chartered Accountant s certificate produced, the amounts as per form 26AS has suffered service tax at the hands of the Appellant. The impugned order cannot be sustained and is accordingly set aside - The Appeal filed by the Appellant succeeds both on merits as well as on limitation.

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• 2023 (6) TMI 371
  Adjustment of Advance tax paid (service portion) - Apportionment of advance received towards supply of goods and supply of services - Rule 6(4A) and 6(4B) of the Service Tax Rules, 1994 - HELD THAT:- There is no apportionment of advance in the invoice itself towards the cost of materials or service portion and no tax has been determined. Therefore, the contention of the appellant that the mistakenly appropriated a part of the advance towards service portion can not be faulted as it is not on record that the same was approved by M/s. VISA or they had any information that the appellant had appropriated part of the advance towards service portion. Therefore, if VISA had informed the appellant at a later stage that the whole of the advance was to be appropriated towards cost of material, the same cannot be disputed without any evidence to the contrary. It is a settled law that the terms of the contract between the parties are to be accepted so far as those do not infringe the law. Further, It is not disputed that the for all the time tax amount of Rs. 1,87,93,063/- paid by the appellant on 4.11.2010/31.03.2011 was always remained with the Revenue till its adjustment made in Jan, 2011. It is also not disputed that the advance comprised only 5% of the project value of Rs. 1610.01 crore out of which 445 Crore (130+415) comprised of the service portion as per agreement between the appellant and VISA. This final value of service portion is also not disputed. Final taxable invoices for advance against the service portion were issued on 05.01.2012 involving service tax of Rs. 2,29,18,015/- on a taxable value of Rs. 22.25 Crore of which Rs. 1,87,93,063/- was suo-moto adjusted on the ground that the tax was erroneously paid in the past which was not required to be paid as same does not pertain to the taxable value of service - It is not disputed in the impugned order that the total advance received by the appellant was not 22.25 crore. Thus, there was in reality no short payment by the appellant. We further find that the findings of the Ld. Commissioner, that the appellant could not have adjusted the excess tax paid on 4.11.2010/31.03.2011 beyond the month of Nov 2010/April 2011 is also not sustainable. The demand of Rs. 1,87,93,063/- is not sustainable against the appellant and the same is hereby quashed - Appeal allowed. There is no rationale in contention of the department that the whole of 2nd installment of Rs. 40.25 crore should be considered towards service portion and is liable to service tax @10.3%. Demand is merely presumptive with no corroborative evidence and cannot be sustained. Therefore, appeal filed by the department is dismissed.

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• 2023 (6) TMI 370
  Classification of services - services provided to customers / members for effluent treatment and disposal of waste - club and association service or not - mutuality of services - HELD THAT:- It is found from the facts of the case the appellant is having its independent processing unit for effluent treatment of industrial waste. The appellant has set up the unit with his sole capital investment. The customer for which the appellant is carrying out the effluent treatment of the waste have no legal say in the independent activity of appellant company. The appellant charge to their industrial customer for the treatment and disposal of the waste on quantitative basis. From the above invoice it can be seen that the appellant are carrying out activity of treatment and disposal of sewage waste water for individual customer and depending upon the quantum of waste treatment they are raising the bill and collected the charges against the same. Other then this there is no subscription involved unlike the subscription between club and association and its member. The commercial dealing between the appellant and its customer is purely on principle-to-principal basis - there is no iota of doubt that there is no relationship of club and association between the appellant and its customers. Therefore, the demand raised under club or association cannot be sustained. Even though the contention of the Revenue is accepted, the demand under club or association service shall not sustain in the light of Hon ble Supreme Court judgment in the case of State of West Bengal vs. Calcutta Club Limited [ 2019 (10) TMI 160 - SUPREME COURT ] wherein the Hon ble supreme court expressed view that since there is mutuality of interest between the club or association and its members and club or association being made of its members the concept of service provider and service recipient is absent hence the service to self cannot be taxed. With this view the Apex court held that the payments received from the members of the club by club or association is not taxable for this reason also the demand is not sustainable. The impugned order is not sustainable - Appeal allowed.

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• 2023 (6) TMI 369
  Refund claim - Denial of benefit accrued to assessee under the service tax before introduction of GST - provision of time of supply of goods is applicable under Section 12 of CGST Act, 2017 for export of goods during the period of October to December 2017 or not - applicability of Section 16 of the IGST Act, GST in India on exports - N/N. 41/2012-ST dated 29.06.2012 ceases to be applicable from 01.07.2017 - HELD THAT:- The notification do not provide for any limitation on the period in which the goods have to be exported from the date of receipt of the input service on the payment of service tax. Impugned order do not analyze the notification in dispute but have misdirected himself by going into the transitional provisions as per the Central Goods and Service Tax Act, 2017. From the plain wording of the notification it is evident that the right to claim the rebate has accrued to the appellant (exporter) on the date of payment of the service tax on input services received by him for use in the export of goods. Assistant Commissioner has in para 5 (iii) recorded a specific finding in this regard which was not disputed by the revenue in their appeal before the Commissioner (Appeal) nor Commissioner (Appeal) has recorded any finding to this effect. In the case of EICHER MOTORS LTD. VERSUS UNION OF INDIA [ 1999 (1) TMI 34 - SUPREME COURT] , Hon ble Apex Court observed a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the Rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods. In case of COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. [ 1999 (8) TMI 920 - SUPREME COURT] Hon ble Supreme Court has category held that It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. Same view has been expressed as per the Section 173 and 174 (2) of the Central Goods and Service Tax Act, 1994 while repealing the Chapter V of The Finance Act, 1994. The observation made by the Commissioner (Appeal) in respect of the provisions of Section 173 of The Central Goods and Service Tax Act, 2017, are in respect of the repeal of notification 41/2012-ST without even referring to the Section1 74 (2) ibid, cannot impact the rights accrued to the appellant prior to such repeal - As is evident from the wording of the notification and the decision of the Hon ble Supreme Court the right to rebate has accrued to the appellant at the time of the receipt of the specified input services for use in the export of goods by the exporter, and such right could not have been extinguished by the subsequent event of repeal of Chapter V of the Finance Act, 1994. Appeal allowed.

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• Central Excise

• 2023 (6) TMI 368
  Levy of interest under Rule 14 of the Cenvat Credit Rules, 2004 (CCR) read with Section 11AB of the Central Excise Act, 1944 - amount of Cenvat credit taken inadvertently but not utilized - HELD THAT:- In the present facts of the case, the Appellant has asserted that it had sufficient credit balance in its account and also produced relevant statements evidencing the same. Further, the issue of interest on unutilized reversed credit entry was the subject matter before the Hon ble Supreme Court in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [ 2011 (2) TMI 6 - SUPREME COURT] . The decision was considered by Hon ble Karnataka High Court 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] , and it is only after consideration of the aforesaid decision of the Hon ble Supreme Court it was held that in case the Cenvat credit taken is not utilized, no interest liability would arise. Hon ble Punjab Haryana High Court in the case of COMMISSIONER OF C. EX., DELHI-III VERSUS MARUTI UDYOG LIMITED [ 2006 (10) TMI 63 - PUNJAB HARYANA HIGH COURT] held that the assessee is not liable to pay interest as the credit was only taken as an entry in the Modvat record and was not in fact utilized. Against the decision, the Special leave to Appeal filed by Revenue, was rejected by the Hon ble Supreme Court COMMNR. OF CENTRAL EXCISE, DELHI-III VERSUS M/S. MARUTI UDYOG LTD. [ 2007 (5) TMI 307 - SC ORDER] . In the present case, since the Appellant had sufficient credit balances, there would be no loss of Revenue to the exchequer. Therefore, the imposition of interest in the present proceedings cannot sustain and hence, the impugned orders are set aside. Appeal disposed off.

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• 2023 (6) TMI 367
  CENVAT Credit - inputs used commonly in the manufacture of excisable goods, exempted goods and non-excisable goods - amount of 10% of the value of the exempted goods paid but no payment in case of non-excisable goods manufactured and exported by them under bond/LUT - Rule 6(5) of CENVAT Credit Rules, 2004 - HELD THAT:- The issue is no longer res integra being decided by the Hon ble Bombay High Court in the case of Repro India [ 2007 (12) TMI 209 - BOMBAY HIGH COURT ] where it was held that As noted earlier the object and purpose of Rule 6(6) of Cenvat Credit Rules, 2004 is to promote the policy of the Government that the benefit of duty paid on input is available as credit in respect of certain exempted goods as well as the exempted goods exported under bond. The minor change in the wordings of Rule 6(6) of the Cenvat Credit Rules, 2004 by using the term excisable goods instead of exempted goods is that the term exempted goods may not cover the dutiable goods which are exported under bond. Therefore, in order to widen and cover both dutiable and exempted goods exported under bond, Rule 6(6) of Cenvat Credit Rules, 2004 uses the expression excisable goods . Hon ble High Court of Himachal Pradesh in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DRISH SHOES LTD. [ 2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT] has held that an assessee, manufacturing goods chargeable to nil duty, is eligible to avail CENVAT credit paid on the inputs under the exception clause to rule 6(1), as contained in 6(5) of CENVAT Credit Rules, 2002 and Rule 6(6) CENVAT Credit Rules, 2004, used in the manufacture of such goods, if the goods are exported. The High Courts and Tribunal have been consistent in holding that credit of inputs used in exempted goods exported under bond/LUT or otherwise cannot be denied to the assessee in terms of Rule 6(6)(v) of Cenvat Credit Rules. 2004 and that it is not the intention of the Government to export Taxes. Further, we find that the situation would not alter even if non-excisable goods are manufactured by using dutiable inputs and are subsequently exported. Appeal not maintainable and is dismissed.

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• 2023 (6) TMI 366
  Benefit of exemption - Mega Power Project - goods supplied against International Competitive Bidding will be charged at nil rate of duty - Denial of benefit of otification no.48/2004-CE read with Notification No.21/2002-Cus dated 01.03.2002 Sl.No.400 (as amended) - goods classifiable under 98.01 relates to goods imported under project imports HELD THAT:- The appellant has supplied the goods for Mega Power Project to be executed by M/s BHEL and certificate to that effect that has been received. In the case of SARITA STEELS INDUSTRIES LTD. VERSUS COMMR. OF C. EX., VISAKHAPATNAM [ 2010 (7) TMI 568 - CESTAT, BANGALORE] , who supplied the goods for the same project, wherein this Tribunal has observed that the wordings of the Notification No. 21/2002-Cus. categorically indicates that the goods which are required for execution of mega power project are exempted. It is undisputed in the case before us that channels, beams, angles are goods required for execution of mega power project. The appellant is entitled for the benefit of the Notification - there are no merits in the impugned order - appeal allowed.

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• Indian Laws

• 2023 (6) TMI 365
  Dishonour of Cheque - Rejection of application under Section 391 of the Code of Criminal Procedure (Cr.P.C.) - application seeking permission to produce on record documents and to cross-examine the complainant - HELD THAT:- In the case of Bipin Shantilal Panchal Vs. State of Gujarat and another [ 2001 (2) TMI 590 - SUPREME COURT] , the Hon ble Apex Court has held that, when any objection is raised to the admissibility of any material or the document or the evidence, the Court shall record such objections and to decide those at the stage of final judgment. In the case of Rajendra Prasad Vs. Narcotic Cell Through its Officer-In-Charge, Delhi [ 1999 (7) TMI 707 - SUPREME COURT] , the Hon ble Apex Court has observed that in the Criminal Court the defence would be entitled to recall witness under Section 311 of the Cr.P.C. It is held that, the lacuna in prosecution is not to be equated with the fallout or an oversight committed by a public prosecutor during trial. Lacuna in the prosecution must be understood as the inherent weakness or a latent wedge in the matrix of the prosecution case. It is thus held that the power to cross-examine any witness is plenary power and that can be exercised at any stage of the trial if Court finds the same to be necessary for a just decision of the case. In the case of Maria Margarida Sequeria Fernandes and ors. Vs. Erasmo Jack de Sequeria (Dead) through L.Rs. [ 2012 (3) TMI 594 - SUPREME COURT] , the Hon ble Apex Court has held that, in the trial it is against the case when the suit was filed for possession and the matter went to the Hon ble Apex Court. It is held in the said case that truth must be foundation of justice and the judges should not sit merely as umpire during trial, but play active role to find out truth. It was case arising out of civil suit. This Court finds that, the application under Section 391 of the Cr.P.C. needs to be considered in the facts of the case. The principle underlying under Section 41 Rule 27 need not be considered while considering the application under Section 391 of the Cr.P.C. It also requires a consideration as to what is the nature of the evidence that is sought to be produced in the appeal. It is not a case of the petitioner in this case that he discovered some new fact or the document or material only after filing of the appeal. It is also not a case that in spite of due diligence he could not get the material during the course of trial. In this petition there are two prayers (i) to allow to exhibit the documents which are already produced on record and (ii) to allow him to cross-examine the complainant on the aspect of payment of amount. While considering both these aspects this Court finds that, so far as exhibiting the documents is concerned even the respondent has accepted that the documents are admitted by both the parties and those can be read into evidence. So far as the second aspect that is the cross-examination of the complainant, it is the case of the complainant that by way of cross-examination now the petitioner wants to set up altogether a new defence. The defence in the trial court is that the cheques were stolen whereas, from the application now it appears that the petitioner wants to make out a defence that the amount of the cheque is already paid and on that aspect he wants to examine the respondent No. 2. This is also recorded by the learned Sessions Judge - The application therefore is not mere application for correcting the inadvertent mistake. So far as exhibiting of the document is concerned, the Court has already observed that the said documents would be considered. This Court thus finds that no case is made out to exercise the jurisdiction by allowing the petition. There is no merit in the petition and the same deserves to be dismissed - Petition dismissed.

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• 2023 (6) TMI 364
  Seeking grant of regular bail - recovery of contraband item - Heroin - narcotic substance - proper sampling procedure or not - HELD THAT:- The procedure which comes into effect after arrest and seizure is contained in Section 52 and 57 of the NDPS Act. The Hon ble Supreme Court, in STATE OF PUNJAB VERSUS BALBIR SINGH [ 1994 (3) TMI 173 - SUPREME COURT ] has held The provisions of Sections 52 and 57 which deal with the steps to be taken by the officers after making arrest or seizure under Sections 41 to 44 are by themselves not mandatory. If there is noncompliance or if there are lapses like delay etc. then the same has to be examined to see whether any prejudice has been caused to the accused and such failure will have a bearing on the appreciation of evidence regarding arrest or seizure as well as on merits of the case. It is pertinent to note that Section 52A of the NDPS Act was added by 1989 Amending Act with effect from 29.05.1989 - It is pertinent to note that the language of the aforesaid provision signifies its applicability with regard to disposal of seized drugs, i.e., at a stage after recovery and seizure. The issue with regard to defect in sampling was for the first time dealt with by the Hon ble Supreme Court, in Gaunter Edwin Kircher v. State of Goa, [ 1993 (3) TMI 370 - SUPREME COURT ] was dealing with a case of conviction under Section 20(b)(ii) of the NDPS Act. The appellant in the said case was found in possession of 2 pieces of charas that weighed 7 and 5 gms respectively. Out of the 2 pieces, one piece of 5 gms was sent for chemical analysis, however, the piece weighing 7 gms was neither sent nor a sample thereof was taken and sent for chemical analysis. In this factual background, the Hon ble Supreme Court held that since there was no chemical analysis for the other piece weighing 7 gms, either wholly or a part of it as a sample, the appellant cannot be convicted for the other cylindrical piece, weighing 7 gms. It was further noted that since the quantity for which test was conducted, was less than 5 gms, the same came within the meaning of small quantity for the purpose of Section 27 of the NDPS Act and in that case, conviction was modified from Section 20(b)(i) to Section 27 of the NDPS Act. The Hon ble Supreme Court, in Balbir Singh observed that the provision of Section 52 of the NDPS Act is directory in nature. It was further held that non-compliance of the said provision, in itself, cannot render the actions of the investigating officers as null and void. It would have to be demonstrated that in the facts and circumstances of a particular case, whether such non-compliance caused prejudice to the accused and resulted in failure of justice. It was further held that if there is no proper explanation for non-compliance, then the same will have an effect on the case of the prosecution and the Courts will have to appreciate the evidence and material placed on record in the case in order to determine the issue. Whether non-compliance of rules could be a ground for grant of bail, especially in cases involving a commercial quantity, where the twin conditions of Section 37 of the NDPS Act would required to be satisfied , will have to be examined considering the nature of violation of such standing procedure and consequences thereof. This Court is of the opinion that the procedure adopted with respect to contraband in the present case is not defective in nature at this stage. The applicant will get ample opportunity to prove that the said recovery was defective and samples drawn were not the true representatives of the samples recovered, during the course of trial before learned Special Judge. It is pertinent to note that, the said standing orders cannot be exhaustive enough to cover all factual scenarios at the time of seizure of the contraband. Various factors like nature of contraband seized, the volume/quantity of the seizure, place of seizure, time of seizure, etc. will be relevant to determine any non- compliance thereof and effect of such noncompliance. Hon ble Supreme Court in Balbir Singh observed that the Investigating Officer is bound by the procedural instructions and has to follow the same, and in case of non-compliance thereof, and if no proper explanation is forthcoming, then the same would have adverse impact on the prosecution s case. It was further noted in the said judgment that the Courts would appreciate the evidence and merits of the case keeping these aspects in view. In the opinion of this Court, whether the samples drawn would be a true representative sample of the contraband recovered, can be answered by the chemical analyst, who analyses the sample and gives his/her opinion. Learned Special Judge during the course of the trial will have the advantage of the testimony of the chemical analyst as well as the production of contraband seized in the Court. It is pertinent to note that the case property is still there for any further analysis if so required. Therefore, it is premature at this stage to say that the samples drawn are not true representative samples of the contraband seized. In the present case, at the time of examination of case property, the learned Special Judge can satisfy himself with regard to the correctness of the procedure followed. Application dismissed.

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