Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 12, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Articles
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Maintainability of writ petition - Condonation of delay in filing of appeal before Commissioner (appeals) - The claim of Input Tax Credit and the computation thereon ought to have been agitated before the appellate authority. Having not availed the statutory remedies available, the petitioner cannot seek to approach this Court under Article 226 of the Constitution of India to challenge an assessment order especially with respect to the computation of the turn over and the determination of the taxable turnover and the tax payable, as arrived at by the Assessing Officer. - HC
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Refund of GST - Export of goods - allegation of use of fake invoices to claim refund - Since the present is a case of an allegation of raising fake invoices and the matter is under investigation, we are not inclined to issue a direction for refund but to direct the competent authority to decide petitioner’s refund application in accordance with law keeping in view the mandate of Section 54 of the CGST Act and provisions contained in Rule 96 of the CGST Rules and all relevant considerations within a period of 60 days. - HC
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Levy of penalty equal to 200% - Detention of consignments - quantity of the boxes were lesser than the quantity shown in the document - levying penalty on the entire consignment is not proper - appellate authority directed to recalculate to take note of the order and recalculate the penalty in respect of shortage in quantity and over than quantity penalty shall be levied at 200% - remaining penalty to be refunded - HC
Income Tax
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Calculation of Net winnings from online games during the previous year, for the purposes of section 115BBJ - New Rule 132 inserted - TDS Form 16, certificate amended - various TDS Returns / statements amended - Income-tax (Fifth Amendment) Rules, 2023 - Notification
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Rejection of books of accounts - best judgement assessment - only objection raised by the AO is non-filing of the tax audit report - CIT- A deleting the addition - Assessee stated that it has produced books of account along with vouchers and when the AO has not considered the books of account and vouchers but rejected the books of account of the assessee the same were produced before the ld. CIT(A) and therefore, there is no violation of Rule 46A of the Income Tax Rules. - Order of CIT(A) sustained - AT
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Ex-parte order passed by CIT-A -NFAC - submission of assessee that the notices issued by CIT (A) NFAC through mail went to Spam for which he was not able to see the notices issued and remained unrepresented - Considering the totality of the facts of the case and in the interest of justice, matter restored back before CIT(A) - AT
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Unexplained cash credit u/s 68 - supporting evidences to substantiate the source of cash found from the possession - Assessee has shown a taxable income of Rs. 2.30 crores during the year. Before us, the ld. CIT-DR for the revenue failed to bring any contrary fact against the availability of cash in hand for preceeding assessment years at various specified branches from where the cash was transported. - Additions deleted - AT
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Cessation of liability u/s 41(1) - Notice issued u/s 133(6) could not be served upon the creditors - while the assessee has continued to declare the trading liability in its books of account, no benefit can be said to have been obtained in respect of such trading liability by way of remission or cessation thereof and thus the requirement of Section 41(1) are not satisfied - The additions made u/s 41(1) set aside and reversed. - AT
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Penalty levied u/s 270A - misreporting of income - Since AO failed to bring the addition/disallowance he made in quantum assessment, under the ken of (a) to (f) of the sub-section(9) of section 270A of the Act, the penalty levied for misreporting @ 200% cannot be sustained because it is trite law that penalty provisions have to be strictly interpreted. - AT
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Disallowance of paddy purchase - purchases from Societies and Samathies - A bogus purchase implies no purchase, while verification w.r.t. s. 40A(3) necessarily implies a seller and a purchaser, i.e., a payer and payee, both of whom coalesce into one in case of a bogus claim. - AT
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Unexplained cash deposits - Genuiness of Agricultre income - Sale of mango and chikoo and miscellaneous vegetable - from number of trees the estimation of yields of fruits could be easily got estimated. No such exercise was conducted before making any enhancement. - In absence of adverse evidence against furnishing by assessee, Ld. CIT(A) was not justified in making enhancement - AT
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Method of valuation of shares - Addition u/s 56(2)(viib) - The lower authorities have not examined the basis on which the valuation is done and from the perusal of facts, no details in this regard have been called for by the lower authorities. The valuation report is rejected based on the objective satisfaction and not based on detailed examination. - Additions deleted - AT
Customs
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Right to speedy trial - Allegation of corruption on the ASI / Policer officer posted at Railway - Abetment in evasion of duty - Inordinate delay in filing the PR/final report - The petitioners claim for right to speedy trial cannot be entertained of this case as there are sufficient materials against the present petitioner in the P.R. there are no justification to entertain the present petitioner to quash the criminal proceeding. - HC
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Advance authorisation Scheme - supply of valves - deemed exports - manufacturing activity carried out or not - Even in the writ affidavit, the petitioner has maintained that it has been procuring indigenously procured items for the process of manufacture. One approach is to state that even without such procurement and additions to the imported valves, the processes of testing of the valves prior to final supply would suffice to satisfy the definition of manufacture under Clause 9.36 of the Exim Policy. - HC
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Classification of imported goods - Non-Texturised Polyster Lining Fabric - the Department proposed to classify the goods under the CTH 5407 only on the basis of end use. End use of a product cannot be a criteria for classification. However, as held by the Hon’ble Supreme court in the case of Indian Aluminium Cables vs UOI, end use alone cannot determine the classification. The other parameters such as the nature of cloth, nature of coating etc are required to be ascertained to classify the fabrics. - AT
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Classification of goods - import of PU coated leather cloths - test report of CLRI mentions the goods as ‘flock fabric’ - Circular dated 06.10.1998 - The said circular prescribed End use Certificate may be obtained in such circumstances in respect of imports were made under Notification No. 11/97-Cus. The said order points out that this circular can be applied prospectively and not retrospectively - Benefit of exemption allowed - AT
IBC
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Application for intervention filed by an unfortunate financial creditor - As on today, both CIRPs are on hold. This is despite the fact that the order passed in favour of the proposed intervenor in his own application under Section 7 IBC, by the NCLAT has attained finality and there is no impediment for the CIPR initiated by the proposed intervenor to proceed further - It is understandable that if the CIRP initiated by the respondent in the above civil appeal is on track. If it is not on track, at least the other CIPR should be allowed to proceed. The Corporate Debtor cannot be allowed to have benefit of the best of both the worlds. - SC
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CIRP - Confinement of CIRP to one project - absence of any Project financing being brought in by the Promotor - absence of any Project Wise Accounts - whether the Adjudicating Authority was justified in initially admitting the Section 7 Application against the Corporate Debtor and thereafter confining it to a single Project Dreamz Sumadhur Project only? - Order of NCLT sustained - AT
Service Tax
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Nature of activity - Renting of Immovable Property Service or not? - It is sharing of profit of the business of the hotel and not a consideration paid for renting of the Hotel Building. If the business is at a loss or suppose the hotel has to be closed down (for eg., in a situation like lockdown during COVID-19) there may not be any income for the hotel. The appellant then does not get any consideration. - Demand set aside - AT
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Classification of services - Contract for carrying out not only site grading but also construction of Roads, Boundary wall, Drains lines and associated works for crude oil terminal of Bina Refinery Project - The appellant’s activity is not covered by the definition of “site formation and clearance, excavation and earth moving and demolition service. The majority of work relates to civil work in the nature for construction of road, boundary wall and drainage lines. The essential character of this composite work is reflected as that of construction service. - AT
Central Excise
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Valuation - interconnected units - These two entities charged higher price on the third parties on which no excise duty was paid. Therefore this is not a case where Revenue neutrality will arise. It is a clear case that Appellant was avoiding Excise Duty payment by charging higher price for the supplies made by their interconnected units. - the fact of suppression is also well established - Demand confirmed - AT
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Valuation - inclusion of amount of subsidy - Subsidy under the promotion policy does not reduce the selling price - The amount of subsidy under the promotion policy is not an additional consideration - Section 9 of the Rajasthan VAT Act, 2003 would have no application to the facts of the present case - AT
Case Laws:
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GST
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2023 (6) TMI 447
Appeal dismissed on account of the delay in filing the same - Wrongful claim of input tax credit - HELD THAT:- The Hon ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER ]. Therein, due to the pandemic situation limitation was saved between 15.03.2020 till 28.02.2022. It was also directed that an appeal could be filed within ninety days from 01.03.2022. Hence, an appeal could have been filed on or before 29.05.2022, which provision was not availed by the petitioner herein. The Hon ble Supreme Court also declared that if a longer period than 90 days is provided in a Statute, then that longer period will apply. In the BGST Act, u/s 107(4) there is a provision for condonation of delay, if the appeal is filed delayed, within one month of expiry of limitation. Even if that be deemed to be appealable then the appeal ought to have been filed by 28.06.2022. The appeal is said to have been filed only on 02.09.2022, after 65 days from the date on which even the limitation period as stipulated by the Hon ble Supreme Court, expired. The contours of the jurisdiction under Article 226 of the Constitution of India to interfere with appellable orders laid down by the Hon ble Supreme Court in STATE OF HP. AND OTHERS VERSUS GUJARAT AMBUJA CEMENT LTD. AND ANOTHER (AND OTHER APPEALS) [ 2005 (7) TMI 353 - SUPREME COURT ]. It has been held that if an assessee approaches the High Court without availing the alternate remedy, it should be ensured that the assessee has made out a strong case or that there exists good grounds to invoke the extraordinary jurisdiction. While reiterating that Article 226 of the Constitution confers very wide powers on the High Court, it was clarified that nonetheless the remedy of writ is an absolutely discretionary remedy. The High Court, hence, can always refuse the exercise of discretion if there is an adequate and effective remedy elsewhere. The claim of Input Tax Credit and the computation thereon ought to have been agitated before the appellate authority. Having not availed the statutory remedies available, the petitioner cannot seek to approach this Court under Article 226 of the Constitution of India to challenge an assessment order especially with respect to the computation of the turn over and the determination of the taxable turnover and the tax payable, as arrived at by the Assessing Officer. In the BGST Act, an appellate remedy is provided under Section 107, which has to be availed within a period of three months or with a delay within a further period of one month - It is trite law that when there is a specific period for delay condonation provided, there cannot be any extension of the said period by the Appellate Authority or by this Court under Article 226 of the Constitution. The petitioner by his own failure has not availed the appellate remedy and in that circumstance, there can be no invocation of the extraordinary jurisdiction under Article 226 of the Constitution of India - there is no jurisdictional error, violation of principles of natural justice or abuse of process of Court averred or argued by the petitioner in the above writ petition. Petition dismissed.
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2023 (6) TMI 446
Refund of GST - Export of goods - Alleged inaction on the part of the respondents in not finalizing petitioner s claim for refund - use of fake invoices to claim refund - Section 54 of the CGST Act read with provisions contained in Rule 96 of the CGST Rules - HELD THAT:- The application for grant of refund once filed is required to be decided one way or the other and cannot be kept pending with an oral information that the claim has been withheld. The provisions contained in Section 54 of the CGST Act read with provisions contained in Rule 96 of the CGST Rules provides for refund of tax. Once an application for grant of refund is submitted, the application is required to be decided in accordance with the provisions of law applicable. In this case, the respondents have sought to justify by stating why they have not taken decision in the matter. However, there is no order passed by the competent authority on petitioner s application for refund. The refund application, therefore, is required to be decided and cannot be kept pending indefinitely on the ground of pendency of certain proceedings. The effect of pendency of proceedings could be a matter of consideration while exercising discretion in deciding the claim for refund. In the present case, the proceedings were initiated in the year 2020 and 2022. If the statement at the Bar made by the learned counsel for the petitioner has to be accepted, the second show cause notice dated 11.03.2022 has been brought to its logical conclusion. As far as the first show cause notice dated 17.07.2020 is concerned, the same is still pending. Since the present is a case of an allegation of raising fake invoices and the matter is under investigation, we are not inclined to issue a direction for refund but to direct the competent authority to decide petitioner s refund application in accordance with law keeping in view the mandate of Section 54 of the CGST Act and provisions contained in Rule 96 of the CGST Rules and all relevant considerations within a period of 60 days. The writ petition stands disposed of.
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2023 (6) TMI 445
Seeking grant of anticipatory bail - bogus E-way bill - there was no transaction and yet the e-way bills were generated - HELD THAT:- Considering the fact that when the preliminary investigation carried out by Investigating Officer has revealed that the goods have been never been at the desired place and the vehicle has never travelled from Gandhidham to Patan or Deesa. in absence of there being any actual transaction, prima facie, it seems that the bogus e-way bills were generated and hence, considering the fact that the amount involved is more than 1,84,00,000/-, this Court does not deem it appropriate to exercise the powers under section 438 of the Criminal Procedure Code and therefore, the present applications are required to be dismissed. Hence, the same is dismissed.
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2023 (6) TMI 444
Levy of penalty equal to 200% - Detention of consignments - quantity of the boxes were lesser than the quantity shown in the document - IGST not charged - alleged discrepancy in the export invoice and the purchase order - HELD THAT:- So far as the issue relating to not mentioning charging IGST the appellate authority has granted relief in favour of the appellant assessee. So far as the aspect of discrepancy is concerned the learned advocate appearing for the appellant has produced before us a copy of the sales order which shows the sales order number as SG/2022-23/004 dated 23rd April, 2022. The purchase order placed by the purchaser from Bhutan shows the sales order number correctly and in the said purchase order license number of the purchase has been given as SAB84282. In the export invoice, which was generated by the appellant, buyer s license number has been shows as buyer s order number. This cannot be treated as a discrepancy because in the purchase order of the buyer the sales order number has been correctly shown as SG/2022-23/004. Therefore, on this ground the authorities could not have imposed 200% penalty on the entire consignment. Shortage of quantity of goods - HELD THAT:- It is submitted by the learned counsel for the appellant that even at the time of detention of the goods, the appellant expressed his willingness to pay penalty for the shortage of quantity of the goods. However, the authority while passing the penalty order has imposed penalty on the entire consignment which includes the amount of cess paid by the appellant. The writ petition stand disposed of by setting aside the order passed by the appellate authority for levying penalty on the entire consignment and the matter is remanded back to the appellate authority to recalculate to take note of the order and recalculate the penalty in respect of shortage in quantity and over than quantity penalty shall be levied at 200% and the remaining penalty which has been remitted by the appellant shall be refunded to the appellant within a period of eight weeks from the date of receipt of the server copy of the order.
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Income Tax
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2023 (6) TMI 443
Validity of reopening of assessment - reason to believe - Change of opinion - query was raised during the scrutiny proceedings u/s 143(3) - HELD THAT:- Once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. If an AO has to record the consideration bestowed by him on all issues raised by him during the assessment proceeding even where he is satisfied then it would be impossible for the Assessing Officer to complete all the assessments which are required to be scrutinized by him u/s 143(3) - See ARONI COMMERCIALS LIMITED [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] There can be no doubt that the very issues raised in the reasons to believe has been raised by the assessing officer during the scrutiny u/s 143(3) detailed explanation has been given and the assessing officer has been satisfied with the explanation. Reopening of the assessment by impugned notice is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Decided in favour of assessee.
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2023 (6) TMI 442
Adjustment u/s 245 - Set off and withholding of refunds in certain cases - order whereby a sum which was payable to the petitioner, was adjusted by the respondents against the demand for a prior period (Assessment Year 2019-20) - According to the petitioner, it was impermissible for the respondents to make any such adjustment for the dues pertaining to the Assessment Year 2019-20, as the demand in respect of the said assessment year was stayed in terms of an order dated 22.07.2022, passed by the Income Tax Appellate Tribunal - HELD THAT:- Notwithstanding that the petitioner was afforded thirty days to respond to the notice why the adjustment not be made against the demand outstanding for the Assessment Year 2019-20; the respondents had proceeded to adjust the said amount and issued a refund for the balance amount on 17.11.2021. The petitioner claims that it was entitled to receive the entire refund without any adjustment u/s 245. In view of the above, we consider it apposite to set aside the respondents action in adjusting a sum u/s 245 of the Act and remand the matter to the concerned authority to decide afresh, within a period of four weeks from today. The concerned authority shall consider the contents of this petition as the petitioner s response pursuant to the intimation dated 03.11.2022.
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2023 (6) TMI 441
Disallowance u/s 14A r.w.r. 8D - method prescribed for the purpose of section 14A - working on reasonable basis - HELD THAT:- In the present case, the assessment year is 2006-07 and hence disallowance has to be worked out on reasonable basis u/s 14A. The method prescribed for the purpose of section 14A of the Act is contained in Rule 8D of the Income Tax Rules, 1962. Rule 8D had been inserted vide Notification 45 of 2008 and has been held to be prospective in nature i.e. applicable from AY 2008-09. [See CIT vs. Essar Telehodings Ltd. [ 2018 (2) TMI 115 - SUPREME COURT ] and Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT ] - The Rule 8D has been amended vide Notification No. 43 dated 2nd June 2016. The sub- rule (2) of the amended Rule 8D, as it stands on date and which is effective from AY 2017-18, provides that the disallowance u/s Section 14A is to be computed as an aggregate. The constitutional validity of provisions of section 14A(2) and (3) read with Rule 8D has been upheld in Godrej and Boyce Mfg Co. Ltd s case [ 2010 (8) TMI 77 - BOMBAY HIGH COURT ] However, Rule 8D shall not be applicable for assessment year prior to AY 2008-09; and the AO had to enforce the provisions of section 14A(1) by determining expenditure by adopting a reasonable basis or method consistent with all relevant facts and circumstances. Thus, the Tribunal, vide impugned order had rightly partly allowed the appeal of the assessee by giving direction to work out the disallowance on reasonable basis.
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2023 (6) TMI 440
Rejection of books of accounts - best judgement assessment - only objection raised by the AO is non-filing of the tax audit report - CIT- A deleting the addition - HELD THAT:- It is only a case where accounts were not correct or incomplete or method of accounting employed by the assessee is not such as to enable the AO to determine the income properly then can resort to the provisions of section 145(3) or 144 of the Act. In the absence of any major discrepancies or defects in the books of accounts the rejection of the books of account only for want of tax audit report is not justified. AO while computing the total income has rejected the claim of loss for want of tax audit report and other details and even refused to entertain the CA for want of power of attorney though the reply along with balance sheet and other details as well as statutory audit report were filed before the AO. AO even did not allow the brought forward loss which were allowed in the preceding year to be carry forward and therefore, it shows that the AO has passed the assessment order by ignoring the undisputed facts available before him and rather contrary to the fact so far as the brought forward loss of Rs. 2.55 crores which was subsequently accepted by the AO in the remand proceedings. Assessee stated that it has produced books of account along with vouchers and when the AO has not considered the books of account and vouchers but rejected the books of account of the assessee the same were produced before the ld. CIT(A) and therefore, there is no violation of Rule 46A of the Income Tax Rules. CIT(A) has confirmed these facts while passing impugned order that the record was brought before the AO but it was not considered. Thus, AO misconducted himself while passing the assessment order and therefore, the record which was already filed before the AO was rightly considering by the CIT(A) while passing the impugned order. No error or illegality in the impugned order of the Ld. CIT(A) same is upheld. Decided in favour of assessee.
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2023 (6) TMI 439
Ex-parte order passed by CIT-A -NFAC - submission of assessee that the notices issued by CIT (A) NFAC through mail went to Spam for which he was not able to see the notices issued and remained unrepresented - submission of assessee that if given an opportunity, the assessee is in a position to substantiate his case by filing the requisite details - HELD THAT:- We restore the issue to the file of the learned CIT (A) NFAC with a direction to grant one last opportunity to the assessee to substantiate its case and decide the issue as per fact and law. The assessee is also hereby directed to file the requisite details before the CIT (A) NFAC on the appointed date without seeking any adjournment under any pretext failing which the learned CIT (A) NFAC is at liberty to pass appropriate order as per law. Appeal filed by the assessee is allowed for statistical purposes.
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2023 (6) TMI 438
Denial of deduction u/s 80P - interest from cooperative banks - denial of deduction on late filing of the return by the assessee - Because of Covid-19 pandemic, the due dates were extended for filing the return - HELD THAT:- As noted extended due date for filing the return in the case of the assessee was 10-11-2021. As against that, the assessee filed the return on 27-12-2020. In that view of the matter, it becomes clear that the return filed by the assessee was within the time allowed u/s. 139(1) of the Act as extended by the circular. The view point of the authorities that section 80AC prohibited granting of deduction u/s. 80P(2)(d) on account of late filing of the return is untenable .Therefore, overturn the impugned order and direct to grant the deduction u/s. 80P(2)(d) - Decided in favour of assessee.
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2023 (6) TMI 437
Deduction u/s. 80P - interest income earned from nominal members - assessee is a cooperative credit society engaged in the business of providing credits facilities to its members - AO did not allow the deduction on the net interest income which action came to be countenanced in the first appeal - HELD THAT:- It is seen that the extant issue of granting deduction on the interest income received from nominal members is no more res integra in view of several orders passed by the Tribunal holding the same in favour of the assessee. The Tribunal in The Vainganga Nagari Sahakari Pat Sanstha Ltd. [ 2021 (6) TMI 758 - ITAT NAGPUR] has decided the issue in favour of the assessee held that definition of `member given in section 2(19) of the Maharashtra Act takes within its sweep even a nominal member and there is no distinction between a duly registered member and nominal member. In view of the above discussion, we overturn the impugned order and direct to grant deduction u/s 80P(2)(a)(i), as claimed by the assessee. Non-granting of deduction u/s. 80P in respect of Electricity Commission - assessee carried out the activity of collection of electricity bills from customers and then depositing it with the Maharashtra State Electricity Distribution Company Limited (MSEDCL) - HELD THAT:- It is seen that this issue has been decided in favour of the assessee in Bhagyalaxmi Nagri Sahakari Patsanstha Meryadit [ 2022 (3) TMI 772 - ITAT PUNE] the activity of earning commission from collection of bills relating to MSEDCL has been held as eligible business activity and resultantly allowed granted deduction u/s. 80P. DR fairly conceded the position but relied on the impugned orders on this score. Commission income on collection of bills from MSEDCL has been made eligible for deduction u/s. 80P(2)(a) on the ground of the same being in the nature of business activity, allow the assessee s claim in respect of similar commission income - Thus allow deduction on such commission income.
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2023 (6) TMI 436
Addition of opening balances of the trade creditors - AO made the two additions by treating the opening balances as unexplained - made partial additions in the preceding year and the remaining amounts in the current year towards the closing balance of the last year - HELD THAT:- Once there is a difference in the account in the opening balance and there is no further transaction for the year, then no addition can be made on that score. If the AO was not satisfied with the correctness of the balances appearing in the last year, then he ought to have made addition for the full difference in the preceding year. Having not made full addition due to non-reconciliation of the balances in the preceding year, and there being no fresh transactions, AO cannot be allowed to make addition in the current year towards opening balances. Therefore, order to delete the addition. Disallowance u/s.14A r.w.r. 8D - addition made towards interest expenses - HELD THAT:- When the capital and interest free unsecured loan with the assessee far exceeded the interest free loan advanced to the sister concern, disallowance of part of interest out of total interest paid by the assessee to the bank was not justified. More recently, in CIT(LTU) VS. Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT ] has reiterated the same view. When we examine the amount of Investments at Rs. 67.95 lakh lakh as against the availability of Share Capital and Reserves at Rs. 1.64 crore, it becomes evident that the amount of such Investments is less than the amount of the assessee s capital. We, therefore, order to delete the disallowance of Rs. 92,108/-.
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2023 (6) TMI 435
Denial of granting of exemption u/s. 80G - substantial objects of the trust are to perform religious practices and activities - Assessee trust is registered u/sec. 12AA - HELD THAT:- The Hon'ble Supreme Court in the case of CIT(E) v. Sant Girdhar Anand Parmhans Sant Ashram [ 2023 (3) TMI 566 - SC ORDER] has held that while there is no dispute that the assessee asserts that it continues to hold exemption u/sec.12AA, nevertheless, for the benefit u/s.80G(5B), the requirements of that provisions have to be satisfied separately. Therefore, the proposition of law emerges is that even if a trust is having registration u/sec. 12AA still, in order to get exemption u/sec. 80G, the conditions in this provision needs to be complied with also along with the conditions specified in sec. 80G(5B) of the Act separately. In the referred judgment, the details of percentage of expenses incurred for religious purpose vis-a-vis the total income were not appearing in the order of the ld. CIT(E) nor in the order of the Tribunal and, therefore, the matter was remanded back for fresh adjudication, but in the instant case of the assessee before us, in the order of the ld.CIT(E) itself specifically mentioned that for all the three F.Ys.2019-20 to 2021-22, assessee had spent more than 5% for religious purpose from its total income which details where voluntarily submitted by the assessee trust itself. As, there is a clear violation of sec. 80G(5B) no infirmity with the findings of the ld.CIT(E), which is hereby upheld. Appeal of the assessee stands dismissed.
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2023 (6) TMI 434
Addition u/s 68 - proof of identity and creditworthiness of the creditor as well as genuineness of the transaction - as per the post search investigation carried out in case of Third Party, it was found that the said entity has availed bogus purchase bills from some other entities controlled by Shri Dinesh Jain and since, the source of fund is itself doubtful due to the creditor indulging in bogus purchase, the unsecured loan cannot be treated as genuine - CIT-A deleted addition - HELD THAT:- AO has observed that enquiry conducted could find only four creditors available in the given addresses, however, that does not conclusively prove that the rest of the trade creditors are non-existing. When the creditor has stated that unsecured loan was funded out of the sale proceeds available with it and there are outstanding trade creditors, without any contrary material brought on record by the AO, such statement cannot be rejected merely on conjectures and surmises. More so, when the assessee had furnished all documentary evidence relating to the creditor not only to prove the identity and creditworthiness of the creditor but genuineness of the transaction. We do not find any reason to interfere with the decision of learned first appellate authority in deleting the addition made u/s. 68 and the interest paid on the unsecured loan. Grounds are dismissed. Assessment u/s 153A - Addition u/s 68 - whether incriminating material found in search? - HELD THAT:- We do not find that the AO has made reference to any seized/incriminating material while making the additions u/s. 68 - In so far as the documents recovered from i-phone of Chanchal Taneja, Commissioner (Appeals) has recorded a finding that it cannot be considered as incriminating material. Nothing has been brought before us to controvert the factual finding of ld. Commissioner (Appeals) that the additions are not based on any incriminating material found as a result of search. In a recent decision rendered in case of bhisar Buildwell (P.) Ltd. Ors. [ 2023 (4) TMI 1056 - SUPREME COURT ] has affirmed the view expressed by Hon ble jurisdictional High Court in case of CIT vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] Decided in favour of assessee.
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2023 (6) TMI 433
Unexplained u/s 69A - cash seized by Police Department - statement of the assessee differed during the Investigation and the assessment proceedings - HELD THAT:- Changing of the statement before the authorities below and in the present proceeding constitutes an afterthought which has no evidentiary value in absence of supporting corroborative documentary evidences. Even if, it is presumed that the cash seized pertains to the business cash, it is required to be supported with documentary evidences to substantiate that the cash has been withdrawn from the cash book of the assessee on the date of the seizure or previous day. The purpose of the withdrawal of cash, has been for the treatment of mother illness in Vedanta, Gurgaon, however, he has not produced any documents relating to the either mother illness or her treatment in Medanta Hospital. Meaning thereby, the appellant-assessee has failed to explain the source of cash seized. Accordingly, it has been rightly treated by the CIT(A) as undisclosed income of the appellant u/s 69A after considering both factual evidence such as no cash withdrawals from cashbook and circumstantial evidence of medical prescription of appellant s mother and bills thereof with the support of the decisions of the higher Judicial forums as above. AR failed to filed any documentary evidence or judgement in rebuttal to the contention and citation discussed by the CIT(A) while arriving at the decision in confirming the action of the AO. No infirmity or perversity in the decision of the CIT(A) in confirming the addition as unexplained money u/s 69A and taxed accordingly u/s 115BBE - Decided against assessee.
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2023 (6) TMI 432
Unexplained cash credit u/s 68 - Additions towards cash seized by CGST, Mumbai at Mumbai Central Railway station only on the ground that the partner of assessee took stand that the cash was transported for purchase of property and the assessee failed to disclose the details of such property - CIT-A deleted the addition - HELD THAT:- As per direction of CIT(A), the assessee furnished availability of cash in last three assessment years. CIT(A) also called and verified the availability of cash at three specific branches from where the assessee claimed to have transported such cash i.e. from Rajkot, Bhavnagar and Ahmedabad branches. Such availability of cash is also recorded by ld. CIT(A). CIT(A) after verification of cash available at three specific branches and the history of cash availability in three preceeding assessment years, took his view that the addition on cash seized was not warranted when the assessee has proved the availability of cash balance. Assessee has shown cash balance of Rs. 3.55 crores as on 31/03/2016, Rs. 1.72 crores as on 31/03/2017 and Rs. 2.39 crores as on 31/03/2018. All such figures of availability of cash is not disputed by the AO. In a similar case of Angadia in CIT Vs Patel Natverlal Chinubhai Co. [ 2012 (9) TMI 1223 - GUJARAT HIGH COURT ] held that when in support of cash seized during search, assessee brought on record its cash book which duly showed that said amount belonged to its particular branch office, amount so seized could not be added to assesses taxable income taking it to be unexplained money. Assessee has shown a taxable income of Rs. 2.30 crores during the year. Before us, the ld. CIT-DR for the revenue failed to bring any contrary fact against the availability of cash in hand for preceeding assessment years at various specified branches from where the cash was transported. Therefore, we do not find any infirmity or illegality in the order/finding of ld. CIT(A) which we affirm. Grounds of appeal raised by the revenue are dismissed. Addition on account of salary expenses, rent expenses, stationary and vehicle expenses - HELD THAT:- No addition in earlier or succeeding year was made. The statement of partner was recorded in December, 2020 which perhaps relate to A.Y. 2021-22. AO worked out the addition in a casual manner without reference to any incriminating material or corroborative evidence. The assessee has furnished list of their employee alongwith details of salary and only 68 employees are working and their total salary debited for the year is Rs. 31,07,326/- . On the basis of such observation, the ld. CIT(A) deleted the entire additions. Before us, no contrary fact or evidence or any law is brought to our notice by the ld. CIT-DR except relying on the order of Assessing Officer. Thus, we do not find any infirmity in the order of ld. CIT(A). The addition is made on mere assumption and presumption without any evidence on record. Thus, this part of ground of appeal is dismissed. Addition of rent and stationery expenses - CIT(A) deleted the addition by taking a view that the addition is not based on any evidence. No evidence on unexplained expenditure was found during the search. The ld. CIT(A) thereby deleted both the additions i.e. stationary and vehicle expenses. Before us, except relying on the order of Assessing Officer, no contrary fact or evidence was brought to our notice by the ld. CIT-DR, therefore we do not find any reason to interfere with the finding of ld. CIT(A) which we affirm. In the result, ground No. 1 of revenue s appeal is dismissed. Addition of commission expenses - CIT-A deleted the addition partly - HELD THAT:- Addition of commission income sustained by ld CIT(A) is not purely based on the incriminating material, rather based on his exercised assumed on presumption that a uniform commissions was earned. We find that the assessee has categorically pleaded that they are charging commissions @ 100/- per lacs transferred/ transported from one place to other place and has shown such commission in their regular books of accounts. Such books of accounts of the assessee is not rejected. Thus, we do not find any justification for addition sustained by the ld CIT(A). As recorded in case of ITO Vs Deepak Vithaldas Suchak [ 2021 (8) TMI 1028 - ITAT SURAT ] we have made addition @ 100/- per lacs on cheque discounting business against their plea of Rs. 30 to 40/- per lacs, therefore we find that the assessee has reasonably offered the income in their profit and loss account @ Rs. 100/- per one lacs as commissions income. Hence, the assessing officer is directed to delete the entire additions sustained by ld CIT(A). In the result, ground No. 2 is allowed. Addition on unaccounted/excess commission - CIT-A deleted the addition partly - HELD THAT:- CIT(A) despite the fact that the assessee denied any such transaction reflected in the impugned images held that the at the most, it can be treated as cash transferred from one place to another place and maximum can be brought to tax, the commission at the market rate of Rs. 200/- per lacs and worked out the addition to the extent of Rs. 46,436/-. We find that the Assessing Officer has not brought any evidence on record to substantiate such addition. Once the Assessing Officer has accepted the business of assessee as of Angadias/courier services at the most only transaction charges/commission can be added and not the substantial or entire amount allegedly reflected in the images. We find that the ld. CIT(A) taxed the commission income @ Rs. 200 per lacs and sustained the addition to the extent of Rs. 46,436/-. In our view, the commission added by the ld. CIT(A) does not require any further interference.
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2023 (6) TMI 431
Cessation of liability u/s 41(1) - As contented liability existed in the books of account and therefore provisions of Section 41(1) cannot be invoked - AO based on non service of notice under Section 133(6) concluded that the liability has ceased to exist - HELD THAT:- The assessee in the instant case, has continued to recognize the liability and one cannot say that the liability is not unenforceable against the assessee without its discharge or reversal. A mere fact of expiry of period of limitation to enforce it does not, by itself, constitute cessation of liability. In the case of Dattatray Poultry [ 2019 (4) TMI 1171 - GUJARAT HIGH COURT] as similarly observed that where the existence of liability was doubted, same could have been disallowed in the year in which it is claimed or could have been treated as unexplained credit in that relevant year - while the assessee has continued to declare the trading liability in its books of account, no benefit can be said to have been obtained in respect of such trading liability by way of remission or cessation thereof and thus the requirement of Section 41(1) are not satisfied. The additions made u/s 41(1) is thus set aside and reversed. Decided in favour of assessee.
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2023 (6) TMI 430
Penalty levied u/s 270A - misreporting of income - AO has levied the higher penalty of 200% of tax payable of mis-reporting income - scope of word may direct the assessee to pay penalty - According to assessee imposition of penalty is at the discretion of AO, since sub-section (1) of section 270A of the Act, refers to the word 'may' and not shall - HELD THAT:- From reading of the reasons given by the AO to levy penalty for misreporting it is discerned that he has failed to spell out as to how the assessee s case/additions falls within the ken of instances given in clause (a) to (f) of sub-section (9) of section 270A of the Act. Since AO failed to bring the addition/disallowance he made in quantum assessment, under the ken of (a) to (f) of the sub-section(9) of section 270A of the Act, the penalty levied for misreporting @ 200% cannot be sustained because it is trite law that penalty provisions have to be strictly interpreted. Therefore we find that the levy of penalty by the AO u/s 270A of the Act suffers from the vice of non-application of mind as well as violates principles of natural justice. Penalty levied on addition of sustained quantum addition cannot survive. Decided in favour of assessee.
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2023 (6) TMI 429
Disallowance of paddy purchase - purchases from Societies and Samathies - HELD THAT:- The assessee, in the instant case, has, despite abundant opportunity, abysmally failed to prove the incurring of the impugned expenditure, with, rather, there being material on record disproving the same. It is under the circumstances not considered necessary to travel to the question as to whether the same is merited u/s. 40A(3) as well. The same, even as noted by the ld. CIT(A), does not in fact arise for consideration when the expenditure itself is held by the Revenue as not incurred; it being a non-obstante clause providing further stipulation for allowance of an expenditure incurred in cash or other than by way of legal tender. A bogus purchase implies no purchase, while verification w.r.t. s. 40A(3) necessarily implies a seller and a purchaser, i.e., a payer and payee, both of whom coalesce into one in case of a bogus claim. AO, as indeed the Tribunal, referring thereto is only as, without prejudice. The same, not unprecedented, is misplaced in the facts of the case where the basic record is missing; the assessee admitting to the sourcing details from Samathies who are stated to be not maintaining the records, where the supplier is abroad and/or does not have agricultural land. Continuing further, in this view of the matter, the partrelief allowed by the ld. CIT(A), being contested by the assessee per it s CO, also fails. The same, it may be appreciated, forming part of the question arising for determination in appeal, does not entail any separate examination and adjudication. Decided in favour of revenue.
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2023 (6) TMI 428
Assessment in the name of company dissolved - Whether a procedural defect or mistake curable under Section 292B? - HELD THAT:- Having examined the facts of the case, the judgment of Skylight Hospitality LLP [ 2018 (2) TMI 1093 - DELHI HIGH COURT] , Spice Infotainment Ltd.[ 2011 (8) TMI 544 - DELHI HIGH COURT] and Maruti Suzuki India Ltd. [ 2017 (7) TMI 1045 - ITAT DELHI] and Mahagun Realtors Pvt. Ltd. [ 2022 (4) TMI 347 - SUPREME COURT] since the Assessing Officer is in know of the dissolution of the company as established from the Assessment Order itself, we hereby affirm the decision of the ld. CIT(A) quashing the Assessment Orders. Appeals of the Revenue are dismissed.
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2023 (6) TMI 427
Unexplained cash deposits - Genuiness of Agricultre income - Sale of mango and chikoo and miscellaneous vegetable - AO held that assessee could not substantiate the genuineness of income which pertains to sales bills issued which was added to the total income of assessee - CIT(A) after considering the reply of assessee took his view that assessee has merely made stress about the agricultural income though the fact that circumstances disprove the claim of agricultural income - HELD THAT:- CIT(A) or the AO has not disputed the area of agricultural land owned by assessee. The lower authorities have not disputed the numbers of mango and chikoo trees in agriculture holding. Assessee has filed affidavit of contractor / persons who have received the agricultural produce before the lower authorities. Lower authorities have not exercised their power to examine such persons u/s 131 nor directed the assessee to produce such persons for verification of facts or for their cross-examination. No physical verification of mango trees and chikoo trees or other agricultural produce was conducted. I am conscious of the fact that case of assessee was related to assessment year 2007-08 and the Ld. CIT(A) passed the appellate order on 20.12.2017. However, from number of trees the estimation of yields of fruits could be easily got estimated. No such exercise was conducted before making any enhancement. CIT(A) relied on the pattern of cash deposits by taking view that there was substantial fluctuation instead of examining the fact that agricultural produce depends on various factors like weather, wind temperature in the season or natural calamities etc. In absence of adverse evidence against furnishing by assessee, Ld. CIT(A) was not justified in making enhancement. Decided in favour of assessee. Addition was made for want of evidence - As assessee has furnished affidavits of contractors / purchaser before ld CIT(A). They have specified in their affidavit that as and such payments were made to the assessee. No doubt that such affidavit was sworn in the month of July, 2017, but still the assessing officer has not directed the assessee to produce such person for their cross examination. However, assessee, has agreed for such addition and no contrary fact is shown addition made by the Assessing Officer to the extent of Rs. 6,02894/- is confirmed. Hence, ground of appeal is dismissed.
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2023 (6) TMI 426
Method of valuation of shares - Addition u/s 56(2)(viib) - AO Rejected the DCF method of valuation on the ground that the same is not based on any scientific method and that since the assessee is making a loss, there is no possibility of valuing the shares of the assessee at a premium - CIT(A) upheld the addition made by the AO on the ground that the assessee has not employed any scientific method for determining the valuation of shares and the valuation is done solely with an intention to arrive at the higher value of issue of shares at the premium. HELD THAT:- Lower authorities have not gone into the details used by the assessee under DCF method to arrive at the valuation and rejected the entire methodology as adopted by the assessee - one of the reasons as quoted by the AO for not considering the valuation report is that the Director during the survey proceedings has stated that there is no valuation report. We are unable appreciate this reason for rejection as the satisfaction to be recorded by the AO should not be objective satisfaction exercised at his discretion, but a subjective satisfaction based on the facts of the case. The lower authorities have not examined the basis on which the valuation is done and from the perusal of facts, no details in this regard have been called for by the lower authorities. The valuation report is rejected based on the objective satisfaction and not based on detailed examination. As respectfully following case of Town Essential Private Limited Ltd. [ 2021 (7) TMI 17 - ITAT BANGALORE] we hold that the valuation done by the assessee cannot be rejected without recording any finding to the contrary by the lower authorities and therefore we delete the addition made in this regard. Disallowance u/s. 40(a)(i)/(ia) - tax deduction u/s. 194J should have been made on the payments of Management Fees,Outsourcing Expenses and License Fees - AR submitted that the details and evidence with regard to applicability of TDS provisions are already submitted before the lower authorities which have not been examined and payees have included these payments as their income and paid taxes on the same - HELD THAT:- We are of the view that the issue needs to be verified factually based on evidence submitted by the assessee and also whether the payees have included the payments as their income and paid taxes on the same. We therefore remit the issue back to the AO to look at the issue afresh and decide after examining the evidences submitted by the assessee with regard to the applicability of TDS provisions on the impugned payment and wherever TDS provisions are applicable to verify whether the payees have included the said amount in their income and paid tax on the same. The assessee is directed to produce the necessary details before the AO and cooperate in the proceedings before the AO.
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Customs
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2023 (6) TMI 425
Classification of imported goods - Big Cola - Big Orange Cola - Big Lemon etc. - goods are described as carbonated beverage with fruit juice - whether classifiable under Customs Tariff Heading 22021090 and 22021020 as claimed by the Revenue or are classifiable under 22029920 as claimed by the respondent/importer? - It was held that the products, in question, have been correctly classified under 22029920 by the learned Commissioner (Appeals) in the impugned order and the same calls for no interference. HELD THAT:- This Court is of the opinion that the order impugned does not call for interference. The appeal is, accordingly, dismissed.
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2023 (6) TMI 424
Right to speedy trial - Allegation of corruption on the ASI / Policer officer posted at Railway - Abetment in evasion of customs duty - Inordinate delay in filing the PR/final report - it is submitted that the allegation made in the complaint or in the final report submitted by the Customs Authority did not constitute offence punishable u/s 135 of Customs Act against the present petitioners - when the P.R disclosed sufficient materials against the present petitioners to proceed; and fact goes to show that the criminal proceeding has not proceeded at all though it has been pending since 25 years, is it justifiable for this revisional court to quash proceeding on the sole ground that the accused has denied his right to speedy trial? HELD THAT:- The revisional court has the power to quash the proceeding if it appears that there are no sufficient materials to proceed further or if it appears that the continuation of the criminal proceeding would amount to abuse of process of court. In considering the right of the accused of speedy trial in my view the test is whether the personal life or liberty of the present petitioners was at all infringed by the pendency of the criminal proceeding since long. If it appears that the present petitioner has had suffered immense and his life and personal liberty was jeopardy during the entire period for the pendency of the criminal proceeding then the relief on the ground of right to speedy trial guaranteed by the Indian Constitution under Article 21 must be established. But if it appears that no hindrance has caused to petitioner during the entire period or his day to day life was not disrupted due to the pendency of the criminal proceeding then the right enshrined under Article 21 need not necessarily be come into play. During their entire period of service they never terminated due to the pendency of this criminal proceeding nor they anyway disturbed in performing their service. After successful completion of service period they retired on superannuation. The petitioners claim for right to speedy trial cannot be entertained of this case as there are sufficient materials against the present petitioner in the P.R. there are no justification to entertain the present petitioner to quash the criminal proceeding. The instant criminal revision is dismissed being devoid of merit.
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2023 (6) TMI 423
Advance authorisation Scheme - supply of valves - deemed exports - manufacturing activity carried out or not - the goods imported and goods exported were same or not - HELD THAT:- The argument that both the imported and sold product remain one and the same, that is, valves, is also liable to be rejected since the emergence of a commercially distinct commodity is satisfied in the present case by the requirement of inspection and testing which falls within the definition of manufacture . The judgment of the Hon ble Supreme Court in Shri Hariprasad Shivshanker Shukla and Another v. Shri A.D. Divelkar and Others [ 1956 (11) TMI 34 - SUPREME COURT] is an authority for the proposition that where a term has been defined in the statute, there is hardly any need for further scrutiny of the term and the statutory definition is itself to be scrupulously applied. Admittedly, there is a grey area in regard to whether at all the petitioner has added any components to the imported valves. While it has been consistently representing to the authorities that it has been fitting indigenously procured actuators and gear-boxes to the valves, the authority has, in the impugned order, pointed out that there is a declaration in Form ANF 4A of the Advance Authorisation confirming that the petitioner has not procured any indigenous items for the export product - Even in the writ affidavit, the petitioner has maintained that it has been procuring indigenously procured items for the process of manufacture. One approach is to state that even without such procurement and additions to the imported valves, the processes of testing of the valves prior to final supply would suffice to satisfy the definition of manufacture under Clause 9.36 of the Exim Policy. The Karnataka High Court in Commissioner v. Hewlett Packard India Sales (P) Ltd [ 2011 (4) TMI 1281 - KARNATAKA HIGH COURT] has held that the process of testing, repacking and re-labelling of imports would satisfy the definition of manufacture under the Foreign Trade Policy. The matter remanded to the file of Respondent 1, to be decided afresh - Petition allowed.
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2023 (6) TMI 422
Quantum of Redemption Fine and penalty - Valuation of imported goods - used Multifunctional Devices (MFDs) - restricted goods or not - appellant could not produce valid authorization - rejection of transaction value - enhancement of value - HELD THAT:- The Tribunal in a series of judgments referred to by the learned counsel consistently held that when the value has been enhanced on the basis of certificate by the Chartered Engineer without market enquiry, the imposition of fine and penalty @ 10% and 5% taking note of the enhanced value would meet the ends of justice. In Navpad Enterprises [ 2008 (3) TMI 604 - CESTAT, BANGALORE] , the Tribunal held that the value declared by the appellant has already been enhanced by the Revenue on the basis of the Chartered Engineers certificate. It is seen that there is no evidence brought out by the revenue to show that the appellants had paid more than what he had declared to the customs. Therefore, in such circumstances, the Tribunal took a view to impose fine and penalty at 10% and 5% in many of the cases cited by the appellant. As this Bench cannot deviate from the ratio of its own decision, we find that in all these cases the fine and penalty should be fixed only at 10% and 5% of the value of the imported goods determined by the Chartered Engineer, respectively. Also recently in M/S. OMEX INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2015 (4) TMI 112 - CESTAT NEW DELHI (LB)] , it was held that the redemption fine and penalty in such cases be 10% and 5% of the value. Following the aforesaid precedent, the impugned order is modified and fine and penalty in each of the cases are reduced to 10% and 5% of the enhanced value. Appeal disposed off.
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2023 (6) TMI 421
Classification of imported goods - Non-Texturised Polyster Lining Fabric - to be classified under the Chapter Heading No.5903 or as Umbrella Panel Fabrics classifiable under Chapter Heading 5407? - provisional release of seized goods on execution of bond and Bank Guarantee. HELD THAT:- The Commissioner has classified the goods under the CTH 5903 on the basis of Chapter Note 2 (a)(1) of Chapter 5903 - the Commissioner has arrived at the conclusion on the basis of the two Test Reports received from IIT Delhi and Textile Committee. The Report received from RLTC indicate that the fabrics are coated and the coating can be seen with naked eye other than change in colour. The contention of the Department is that as per Chapter Note 2(a)(1) fabrics coated with plastics only are covered under the Chapter heading 5903 and in the instant case, the Test Reports of RLTC and IIT Delhi clearly indicates that the impugned fabrics are not coated with plastics. The Test report of IIT Delhi clearly indicates that the fabrics are coated with Aluminium paste. The RLTC report also indicate that the fabric are coated with silver. Accordingly, the Department contended that once the fabric are not coated with plastics, whether it can be seen with naked eyes are not, is immaterial, and the goods cannot be classified under the Chapter Heading 5903 - there are merit in the argument of the Department. Chapter Note 2(a) of Heading 5903 applies to textile fabrics, impregnated, coated, covered or laminated with plastics. According to the Principle of Ejusdem generis, when a general word follows some specified words, then the general words will have the same meaning as that of the specified words. By applying this Principle of ejusm genris, the interpretion of the above Chapter Note is that the textile fabrics impregnated with plastic, coated with plastic, covered with plastic and laminated with plastic are covered under the Chapter Heading 5903. The end use of a product cannot necessarily be the determining factor for classification of the goods as held by the Hon ble Supreme Court in the case of Indian Aluminium Cables vs UOI [ 1985 (5) TMI 54 - SUPREME COURT] - the Department proposed to classify the goods under the CTH 5407 only on the basis of end use. End use of a product cannot be a criteria for classification. However, as held by the Hon ble Supreme court in the case of Indian Aluminium Cables vs UOI, end use alone cannot determine the classification. The other parameters such as the nature of cloth, nature of coating etc are required to be ascertained to classify the fabrics. The goods are not classifiable under CTH 54071094 as proposed by the Appellant - Appeal of Revenue dismissed.
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2023 (6) TMI 420
Classification of goods - import of PU coated leather cloths - test report of CLRI mentions the goods as flock fabric - Benefit of N/N. 11/97-Cus. dated. 01-Mar-1997 denied - PU coated sheets imported by the appellant declaring them as PU coated Sheets for used in making insoles - HELD THAT:- Identical matter has been decided by the Tribunal in the case of PREET INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS, PUNE [ 2017 (2) TMI 359 - CESTAT MUMBAI] wherein the Circular No. 74/98-Cus dated 06.10.1998 was also examined. The said circular prescribed End use Certificate may be obtained in such circumstances in respect of imports were made under Notification No. 11/97-Cus. The said order points out that this circular can be applied prospectively and not retrospectively - In the instance case also the imports of the goods accorded prior to the issue of this circular. Thus, the facts of the case are identical. Appeal allowed.
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2023 (6) TMI 419
Maintainability of appeal - appeals dismissed on the ground that the appeals have not been filed by a person authorized under Rule 3 of Customs Appeal Rules, 1982 - HELD THAT:- It is seen that Custom House Agent cannot file appeal under his signature and authorization. Such signature or authorization can be made only if the importer is not in India at the material time and the Custom House Agent or any other person duly authorized for filing appeal in terms of Rule 3 of Customs Appeal Rules, 1982. This deficiency should have been pointed out by the Commissioner (Appeals) to the appellant and the same could have been corrected. This cannot be a ground for rejection of appeal itself. The matter remanded back to the Commissioner (Appeals) to treat this as a defect and offer an opportunity to the appellant to correct the same in terms of Rule 3 of the Custom Appeals Rules, 1982.
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Insolvency & Bankruptcy
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2023 (6) TMI 418
Application for intervention filed by an unfortunate financial creditor - seeking to intervene in the main appeal filed by the corporate debtor against the order of admission passed in another Corporate Insolvency Resolution Process (CIRP) initiated by another financial creditor - HELD THAT:- The CIRP initiated at the behest of the respondent in the above Civil Appeal is put on hold by this Court and the CIRP initiated by the proposed intervenor is put on hold by the NCLT. Therefore the intervenor is caught in the middle and hence he seeks appropriate directions. The main contention of the corporate debtor who is the appellant in the above main appeal is that there cannot be two CIRPs simultaneously going on against the same debtor. The said contention is legally well-founded. But today, both CIRPs are on hold. This is despite the fact that the order passed in favour of the proposed intervenor in his own application under Section 7 IBC, by the NCLAT has attained finality and there is no impediment for the CIPR initiated by the proposed intervenor to proceed further - It is understandable that if the CIRP initiated by the respondent in the above civil appeal is on track. If it is not on track, at least the other CIPR should be allowed to proceed. The Corporate Debtor cannot be allowed to have benefit of the best of both the worlds. Therefore the intervention application is disposed of clarifying that the intervenor may again move an application before the NCLT for restoration.
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2023 (6) TMI 417
Application for Condonation of Delay of 49 days in filing of the Claim under Form C dismissed - the Claim was filed belatedly by the Applicant after the expiry of 90th day on 06.08.2022 - whether the Adjudicating Authority was justified in rejecting the Condonation of Delay of 49 days in filing the Claim together with the delay in filing the Application before the Adjudicating Authority? HELD THAT:- A brief perusal of the material on record shows that the CIRP commenced on 21.03.2022, a public announcement was made on 25.03.2022, the last date for filing of the Claims was 04.04.2022, the expiry of 90 days is 19.06.2022, whereas the Appellant had filed the Claim before the RP on 07.08.2022, which is indeed the 139th day of the commencement of the CIRP. The ground taken by the Counsel for the Appellant that it was initially filed under Form B as an Operational Creditor which was rejected vide email communication dated 03.08.2022, and thereafter the Appellant had resubmitted her Claim under Form C on 07.08.2022, does not strengthen or substantiate her case as the timelines given under IBC are to be strictly adhered to and any latches on behalf of the Appellant in filing, the Claim under a wrong category cannot be a substantial ground for condoning the delay. Moreover, keeping in view the aforenoted dates, it is clear that the actual time period of delay in submitting the Claim Form is 125 days. It is also significant to mention that the Appellant approached the Adjudicating Authority , vide I.A.1589/22 with a further delay of 100 days, and the only reason that was given is that they were seeking legal advise , which the Adjudicating Authority has rightly held is only a bald explanation and does not construe a sufficient cause for the delay . Reliance placed on Puneet Kaur [ 2022 (6) TMI 108 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ], in support of his case that the NCLAT Principal Bench condoned the delay of the Homebuyers in filing their Claims . The facts in that matter are distinguishable as the case relates to Homebuyers where there were Builder Buyer Agreements ( BBA ) and it was held that rightfully some provisions in the Plan/submission of Claims are to be made for the genuine Homebuyers. This decision is not applicable to the facts of this case. Appeal dismissed.
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2023 (6) TMI 416
Condonation of delay in filing the Appeal - exclusion of the period from 26.12.2022 to 01.05.2023 during which the Appellant - whether the Applicant is entitled for the benefit of Section 14 of the Limitation Act for purposes of the limitation for filing this Appeal under Section 61 of the Code? HELD THAT:- The Law is well settled that even though Section 14 of the Limitation Act is not strictly applicable in the Appeal filed under Section 61 of the Code but the principles underlying Section 14 are clearly attracted. The Hon ble Supreme Court KALPRAJ DHARAMSHI ANR. VERSUS KOTAK INVESTMENT ADVISORS LTD. ANR. [ 2021 (3) TMI 496 - SUPREME COURT ] which was a case where the question of applicability of Section 14 of the Limitation Act in an Appeal filed under Section 61 of the Code came for consideration held in the said Judgment that principles underlying Section 14 of the Limitation Act are clearly applicable while considering the limitation for filing an Appeal under Section 61 of the Code - The scope and ambit of Section 14 of the Limitation Act have been considered and explained by Hon ble Supreme Court in several judgements. In Kalpraj Dharamshi case itself the Hon ble Supreme Court has noted the conditions that are required to be fulfilled for invoking the provisions. In Kalpraj Dharamshi case the Hon ble Supreme Court extended the benefit of Section 14 of the Limitation Act in the Appeal filed under Section 61 of the Code before this Appellate Tribunal. The expression used in Section 14 are defect of jurisdiction or other cause of a like nature . The expression other cause of a like nature has been explained and examined in large number of cases by Hon ble Supreme Court - reference made to the Judgment of the Hon ble Supreme Court in India Electric Works Ltd. vs. James Mantosh Anr. [ 1970 (9) TMI 105 - SUPREME COURT ], wherein the Hon ble Supreme Court had occasion to consider the ambit and scope of Section 14 of the Limitation Act and both the expressions, from defect of jurisdiction or other cause of like nature came for consideration. The Hon ble Supreme Court held that if the above words are read alongwith expression is unable to entertain it , they would denote that the defect must be of such a character as to make it impossible for the Court to entertain the suit or application either in its inception or at all events as to prevent it from deciding it on the merits. When Hon ble Supreme Court in Kalpraj Dharamshi has held that Appellant who has filed an Appeal under Section 61 is entitled for benefit of proceeding which was being prosecuted in the High Court under Article 226 which writ proceedings were also dismissed on the ground of availability of the alternative remedy - following the Judgment of the Hon ble Supreme Court, the dismissal of writ petition is on the ground something similar or analogous and the benefit of Section 14 cannot be held to be denied to the Appellant. Power of attorney - HELD THAT:- The fact of the matter is that power of attorney was executed on 01st August, 2022 which has been brought on record and we for the purposes of prosecuting this Appeal, are not persuaded to accept the submission of the Respondent that since power of attorney was executed on stamp paper which was purchased earlier, the Appeal and Application rejected on this ground. Power of attorney has been executed by the Appellant with regard to the Corporate Debtor in question, the objection of the Respondent to reject the Delay Condonation Application on this ground is not persuaded with. The Appellant is entitled for the exclusion of period from 26th December, 2022 to 01st May, 2023. The Appeal having been e-filed on 19th May, 2023 and after excluding the aforesaid period by giving benefit of Section 14 of the Limitation Act to the Appellant, this Appeal under Section 61 of the Code has to be treated to be filed within 30 days from the date of the Impugned Order. Appeal is held to be filed within limitation - application disposed off.
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2023 (6) TMI 415
Maintainability of application - initiation of CIRP - Confinement of CIRP to one project - absence of any Project financing being brought in by the Promotor - absence of any Project Wise Accounts - whether the Adjudicating Authority was justified in initially admitting the Section 7 Application against the Corporate Debtor and thereafter confining it to a single Project Dreamz Sumadhur Project only? HELD THAT:- It is an admitted fact that the three Applicants/Homebuyers who had filed the Section 7 Application were related to Dreamz Sumadhur and subsequent to the calling of the Claims from all Homebuyers, there was lot of confusion and the IRP had filed multiple IAs before the Adjudicating Authority, subsequent to which, this Common Order dated 04.09.2020 was passed clarifying that the CIRP was with respect to one Project, namely Dreamz Sumadhur Project only - This Tribunal in the matter of Ram Kishor Arora Suspended Director of Supertech Ltd. Vs. Union Bank of India Anr. [ 2022 (6) TMI 720 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] , passed by the Principal Bench, New Delhi has directed for Project Wise Resolution wherein the IRP was directed to separate the Claims received with regard to the Project. The scope and objective of the Code is to see that there is Resolution of the Corporate Debtor Company and seek maximization of Assets. A three-Member Bench of the NCLAT, Principal Bench, New Delhi in the matter of Majestic Towers Flat Owners Association Anr. Vs. Housing Development and Infrastructure Ltd. Ors. [ 2022 (1) TMI 166 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] , has held that Project Wise Insolvency can be granted to bring about better Resolution and prevent Liquidation as the sufferers would be the Homebuyers who are thousands in numbers in different Projects and if there is a possibility of Project Wise Resolution, reasonable time could be allowed by the Adjudicating Authority to bring about a proper Resolution. The contention of the ERP/R-18 that another Bench of NCLT Bengaluru has erroneously admitted a Section 7 Application initiating CIRP against another Project namely Dreamz Sneh and that it has to be set aside, is completely unsustainable as the Order was passed in a separate Company Petition dated 15.02.2023, and is based on a different cause of action - Merely because the Adjudicating Authority had relied on Umang Realtech Pvt. Ltd. [ 2020 (2) TMI 1409 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] ], wherein reverse Insolvency was a principle laid down by the NCLAT Principal Bench, New Delhi, and this Project did not have a Promotor to infuse funds, which was the case in Umang Realtech Pvt. Ltd., the principle of Project Wise Insolvency also discussed in Umang Realtech Pvt. Ltd., cannot be overlooked and requires considerable attention as it applies to the facts of this case. This Tribunal is of the earnest view that the Impugned Order has nowhere stated that the Promotor was interested in infusing funds into the Project and that reverse CIRP has to be undertaken. In fact, a reference was made to Umang Realtech Pvt. Ltd., decision to substantiate the advantages of Project Wise Resolution and to clarify that the CIRP was confined to Dreamz Sumadhur Project only. As regarding the different Applications filed by the RP seeking relief, this Tribunal is of the considered view that the Adjudicating Authority has rightly observed that most of the reliefs sought for were unrelated to Dreamz Sumadhur Project and are Civil in nature requiring adjudication in other fora as the Adjudicating Authority does not have jurisdiction to foray into matters of title and possession of land which are broadly matters of Civil Litigation and cannot be decided under the provisions of IBC. As initially the Section 7 Application was admitted against the entire Project and thereafter the clarifications were given by the Adjudicating Authority that the CIRP was confined to Dreamz Sumadhur Project, in the interest of justice, this Tribunal is of the view that the adverse comments made against the RP may be expunged. This Tribunal does not find any substantial grounds to interfere with the well-reasoned Order of the Adjudicating Authority, National Company Law Tribunal, Bengaluru Bench and hence application fails and is accordingly dismissed.
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2023 (6) TMI 408
Appointment of Interim Resolution Professional - Section 16(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Apparently, the impugned order having been passed on 22.12.2022, it is also pleaded in the writ petition itself that 23.12.2022 was the last working day of the National Company Law Appellate Tribunal and it was to reopen on 02.01.2023 and the petitioner had no notice whether any Vacation Bench was functioning and, therefore, it has been deprived of its statutory remedy of appeal under Section 61 of the Code. Resultantly, writ jurisdiction of this Court was being invoked. The writ petition is disposed off with liberty to the petitioner to avail his statutory remedy of appeal before the above said Tribunal within a period of two weeks from today.
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Service Tax
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2023 (6) TMI 414
Levy of Service Tax - Renting of Immovable Property Service or not - whether the appellant is liable to pay service tax under the category of Renting of Immovable Property Services for the amounts received from GRT? - HELD THAT:- As per the agreement there is no fixed assured rent paid to the appellant by GRT. A sum calculated as 20% of the Gross Room Income and all other income, except food and beverage income and 15% on the food and beverage income derived from the hotel has to be paid on a monthly basis. It is also stated that room income, food or beverage income and other income derived shall be called as Gross Turnover of the Hotel . It is thus sharing of profit of the business of the hotel and not a consideration paid for renting of the Hotel Building. If the business is at a loss or suppose the hotel has to be closed down (for eg., in a situation like lockdown during COVID-19) there may not be any income for the hotel. The appellant then does not get any consideration. Whereas in a situation of renting of immovable property, the consideration is for the service of providing renting of immovable property - the rent is paid all along when the transfer of right in the immovable property is active and alive. Similar arrangement of licence granted to operate and run a Hotel was considered by the Tribunal in the case of GRAND ROYALE ENTERPRISES LTD. VERSUS COMMISSIONER OF SERVICE TAX-I CHENNAI [ 2018 (10) TMI 656 - CESTAT CHENNAI ]. The Tribunal had set aside the demand and relied upon the decisions of the Tribunal in the case of AMBIENCE CONSTRUCTIONS INDIA LTD. VERSUS THE COMMISSIONER OF SERVICE TAX HYDERABAD [ 2012 (11) TMI 653 - CESTAT BANGALORE ] and M/S JAI MAHAL HOTELS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2014 (7) TMI 540 - CESTAT NEW DELHI] - The above decision of the Tribunal in the case of Grand Royale Enterprises (supra) was affirmed by the Hon ble Supreme Court in COMMISSIONER OF SERVICE TAX 1 CHENNAI VERSUS GRAND ROYALE ENTERPRISES LTD. [ 2022 (9) TMI 273 - SC ORDER ]. After analysing the facts, evidence and applying the decision in the case of Grand Royale Enterprises as affirmed by the Hon ble Apex Court, it is opined that the demands cannot sustain - Appeal allowed.
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2023 (6) TMI 413
Refund claim - services used for export of goods - denial on the ground that there are some discrepancy in the service bills in as much as the bills do not tally with the form A1 for export submitted by the appellant - failure to produce registration certificate from export council as required under para 2 (1) (B) of Notification No. 17/2009 ST dated 07.07.2009 - Classification of input services under port service and test and inspection service - violation of principles of natural justice. HELD THAT:- There is no dispute that the appellant have exported the goods and the services in question were used for export of such goods. It is also found that the reason for rejecting the refund claim is all based on small technicalities, for technical lapse substantial benefit of refund of input services for export of goods cannot be denied. Classification of input services under port service and test and inspection service - HELD THAT:- The appellant have submitted all the documents and certificates such as shortage explanation, disclaimer certificate, tabular chart of invoices and export against the same with shipping bill numbers along with the refund application. Therefore, on this count also refund cannot be disputed. The lower authorities have raised the issue on unjust enrichment, in this regard it is clear that on the basis of settled law in the case of refund against export of goods, the provisions of unjust enrichment is not applicable. Moreover, in the present case the appellant have submitted the chartered accountant certificate and have also shown the books of account wherein the refund amount is reflected as receivable. On this fact also unjust enrichment is not applicable. The appellant is entitled for the refund - the impugned order is set aside and appeal is allowed.
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2023 (6) TMI 412
Classification of services - site formation and clearance, excavation and earth moving and demolition service or Commercial/Industrial Construction Services? - work of Site grading, Roads, Boundary wall, Drains and associated works of Crude Oil Terminal of M/s Bina Refinery Project at Vadinar in the state of Gujarat - extended period of limitation - HELD THAT:- As per the facts of the case, the appellant have carried out the service in terms of bidding documents No. 1204/T-64/06-07/RAL/04 and No. 6743/T-174/05-06/SKK/01.As per the said documents we noticed that during the disputed period appellant have undertaken the work of site grading, Roads, Boundary Wall, Drain and associated works of Crude Oil Terminal of M/s Bina Refinery Project at Vadinar in the state of Gujarat - It would be seen from the main part of the definition that the said service includes drilling, boring and core extraction services for construction, geophysical, geological or similar purpose, Soil Stabilization, Horizontal drilling, Horizontal drilling for the passage of cables or drain pipes, Land reclamation work, Contaminated top soil stripping work and Demolition and wrecking of building, structure or road. Whereas from the documents submitted by the appellant, it is found the entire contract was for lum sum price for carrying out not only site grading but also construction of Roads, Boundary wall, Drains lines and associated works for crude oil terminal of Bina Refinery Project - it is found that without the site cleaning, road, boundary wall and drainage line cannot be constructed. The contract specifically provide site grading for the reason that road, boundary wall and drainage line should be constructed after completion of site grading works. Clearly, the main object of contract was for construction of road, boundary walls and drainage line. The appellant s activity is not covered by the definition of site formation and clearance, excavation and earth moving and demolition service. The majority of work relates to civil work in the nature for construction of road, boundary wall and drainage lines. The essential character of this composite work is reflected as that of construction service. Thus, instead of site formation and clearance, excavation and earth moving and demolition service, this service is appropriately classifiable under Commercial or Industrial Construction Services . The service tax demand from the appellant by treating their activity as taxable under section 65(97a) as site formation and clearance, excavation and earth moving and demolition service is not sustainable. Time Limitation - HELD THAT:- It is undisputed that the appellant had been rendering the services and has been paying service tax on disputed service under the head construction services and also filing ST-3 returns regularly with the departmental authorities. If a tax is chargeable, in order to recover the service tax not paid or short paid a notice has to be issued under Section 73 of the Act. This is the only remedy available to the Revenue. The notice can be issued within the normal period of limitation only unless the elements of fraud or collusion or wilful statement or suppression of facts or contravention of any provisions of the Act or Rules with an intent to evade payment of service tax is established - The appellant had been classifying its services under Commercial or Industrial construction service, paid the service tax and filed returns. Once the returns are filed, if Revenue was of the opinion that in the self-assessment of service tax the classification was not correct, it could have scrutinized the returns and issued notices within time. The show cause notice was issued on 19.10.2012 for the period 2007-08, which is clearly beyond the normal period of limitation. Therefore, the demand is time barred and, therefore, cannot sustain. The impugned order cannot be sustained. Hence, the impugned order is set aside. The appeal is allowed.
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Central Excise
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2023 (6) TMI 411
Payment of interest under Section 35FF of Central Excise Act, 1944 - HELD THAT:- In the facts of the present case, the petitioner deposited a sum of Rs. 43,75,786 which includes a sum of Rs. 24,39,600/- on the referral services. The tax was deposited during investigation. It is not in dispute that the Tribunal vide order dated 16.03.2018 allowed the appeal of the assessee and the petitioner was not held liable to pay service tax on referral services. Hence the petitioner is entitled to refund of Rs. 24,39,600/- along with interest. The amount was deposited during investigation in the year 2018. The show cause notice was issued on 20.10.2014 after conducting investigation. Hence, the petitioner is entitled for refund from the date of deposit of the amount since the date of investigation. The present petition is allowed and direction is given to the respondents to refund the mentioned amount ie. Rs. 24,39,600/- along with interest @9% w.e.f October, 2014 till the payment is made.
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2023 (6) TMI 410
Valuation - interconnected units - duty demand was quantified based on the value charged by two units to the other parties minus the value adopted by Amara Raja Batteries to these units - bills raised at higher amounts - HELD THAT:- As per the facts on record, it is clear that two entities were purchasing batteries from the Appellant and these batteries were directly delivered to the third parties who were identified by these two entities. The Appellant company was billing at a lower rate to the two entities on which Excise Duty was being paid by the Appellant but no cenvat credit was taken by the two entities. These two entities charged higher price on the third parties on which no excise duty was paid. Therefore this is not a case where Revenue neutrality will arise. It is a clear case that Appellant was avoiding Excise Duty payment by charging higher price for the supplies made by their interconnected units. The Adjudicating Authority has gone into totally different direction by going into the percentage of sales effected, which has no legal basis when the facts are very clear that there is a difference between the value charged by Appellant to these two entities and value adopted by these entities for third parties. Therefore on merits, there are no case in favour of the Appellant. The Appeal is dismissed on merits.
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2023 (6) TMI 409
Valuation - amount of subsidy received by the appellant from the State Government under the Rajasthan Investment Promotion Scheme, 2010 is includible in the assessable value of the goods or not - section 4(3)(d) of the Central Excise Act, 1944 - HELD THAT:- The issue, stands settled by an order dated 21.03.2023 of the Tribunal while answering on the reference that had been made on account of difference of opinion between the two Members constituting the Division Bench in M/S HARIT POLYTECH PVT. LTD. VERSUS COMMISSIONER, CENTRAL EXCISE CGST- JAIPUR I, GANPATI PLASTFAB LTD., M/S APEX ALUMINIUM EXTRUSION PVT. LTD., M/S MAHA MAYAY STEELS, M/S. TIRUPATI BALAJI FURNACES PVT. LTD., M/S. TRANS ACNR SOLUTIONS PVT. LTD., M/S. FRYSTAL PET PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS CGST- ALWAR [ 2023 (3) TMI 1120 - CESTAT NEW DELHI] . The order of the Commissioner (Appeals) does not suffer from any illegality so as to call for interference - Appeal allowed.
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