TMI Tax Updates - e-Newsletter
June 13, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws PMLA Service Tax Central Excise Indian Laws

Articles

1. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

2. A PROMOTIONAL TRAILER IS NOT BY ITSELF AN OFFER AND NEITHER INTENDS TO NOR CAN CREATE A CONTRACTUAL RELATIONSHIP

   By: DR.MARIAPPAN GOVINDARAJAN

3. ITC not admissible in case of Rotary Car Parking System

   By: Bimal jain

4. ADMISSIBILITY OF INPUT TAX CREDIT TO AIR CONDITIONING AND COOLING SYSTEM

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Smt. Nirmala Sitharaman assumes charge as the Union Minister for Finance and Corporate Affairs

2. Shri Pankaj Chaudhary assumes charge in his second consecutive term as the Minister of State for Finance in Ministry of Finance

3. DPIIT to conduct knowledge sharing workshop with Flipkart and Indian Toy Industry on June 12

4. Union Minister Shri Piyush Goyal holds review meeting with officials of Ministry of Commerce and Industry

Notifications

DGFT

1. CORRIGENDUM - dated 12-6-2024 - FTP

Corrigendum to Notification No. 16/ 2024-25 dated 06.06.2024 on enabling provisions for import of inputs that are subjected to mandatory Quality Control Orders (QCOs) by Advance Authorisation holders, EOU and SEZ

GST - States

2. G.O. Ms. No. 2 - dated 20-4-2024 - Puducherry SGST

Amendment in Notification G.O. Ms. No. 54, dated the 13th March, 2024

Circulars / Instructions / Orders

FEMA

1. 10 - dated 11-6-2024

Export-Import Bank of India (Exim Bank)’s Government of India-supported Line of Credit of USD 23.37 mn to the Government of the Co-operative Republic of Guyana (GO-GUY), for procurement of two Hindustan 228-201 aircraft from Hindustan Aeronautics Ltd.

2. 11 - dated 11-6-2024

International Trade Settlement in Indian Rupees (INR) – Opening of additional Current Account for settlement of trade transactions

DGFT

3. CORRIGENDUM - dated 12-6-2024

Corrigendum to Public Notice No. 10/ 2024-25 dated 06th June, 2024 on enabling provisions for import of inputs that are subjected to mandatory Quality Control Orders (QCOs) by Advance holders, EOU and SEZ

4. Trade Notice No. 05/2024-2025 - dated 12-6-2024

Issuance of RCMC for Medical Devices

Highlights / Catch Notes

GST

• Petitioner challenged assessment orders, citing breach of natural justice. Court found discrepancies addressed, quashed order, directed fresh assessment.

  Case-Laws - HC : The High Court addressed a challenge to three separate orders, alleging a breach of natural justice principles. The petitioner responded to discrepancies during inspection by providing necessary documents. The assessment orders were deemed questionable, and the petitioner was directed to pay specified amounts within a timeframe. The assessing officer was instructed to allow a personal hearing and issue fresh assessment orders within two months. The impugned assessment order was quashed with conditions, and the petition was disposed of.
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• Challenge to Show Cause Notice in GST DRC-01 dated 25.09.2023 upheld. No restriction on officer issuing SCN or adjudicating. Petition disposed.

  Case-Laws - HC : The High Court addressed a challenge to a Show Cause Notice (SCN) in Form GST DRC-01 issued based on inspection and obtained statement. Court held no restriction on inspecting officer to issue SCN u/s GST enactments. Directed State Tax Officer to transmit Notice to proper officer for adjudication as per Circular No. 13/2022-TNGST. State Tax Officer instructed to complete the process within 2 weeks. Petition disposed of.
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• Demand of tax on cotton purchase from agriculturist under GST Act confirmed. Penalty sustained. Argument of revenue neutrality rejected.

  Case-Laws - HC : The High Court considered the issuance of notice u/s 74(1), 122(2), and 125 of the CGST Act, 2017 u/s Rule 142(1) of the CGST Rules, 2017 for unpaid tax on Reverse Charge Mechanism (RCM) on cotton purchase from agriculturist. The petitioner challenged jurisdiction but was allowed to make submissions on merits. The court found petitioner liable for GST on RCM basis as per Section 9(3) of the CGST Act. Revenue neutrality argument rejected due to non-100% export. Penalty u/s 122(2) upheld as petitioner failed to pay GST on RCM basis, deliberately violating Notification No. 43 of 2017. Court upheld the order for payment of Rs. 3,73,95,300/- with equal penalty. Petition dismissed.
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• Petitioner's challenge to GST assessment rejected due to missing documents. Order quashed for re-consideration.

  Case-Laws - HC : The High Court addressed a challenge to an assessment order u/s GST ASMT-10 due to non-submission of required documents. The assessing officer rejected the petitioner's reply citing lack of reconciliation statements and incomplete submission of relevant invoices. The Court found the rejection unsustainable as the petitioner's reply in Form ASMT-10 was sufficient. However, the petitioner failed to provide all necessary invoices to justify excluding certain expenses from taxable turnover. The Court quashed the order and remanded the matter for reconsideration, allowing the petitioner to submit additional documents to clarify the taxable turnover disparity. The petition was disposed of through remand.
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• Seizing goods before election, dispute on release method. Court says: Bond & Bank Guarantee needed. Complainant must comply.

  Case-Laws - HC : The High Court addressed a dispute regarding the release of seized goods before an Assembly Election process. The court held that release is permissible u/s the Central Goods and Services Tax Act, 2017 only if a Bond and Bank Guarantee are provided for the worth of the goods. The complainant's claim of a lower value for the goods was considered, and the court directed the release of the goods upon furnishing a Bond and Bank Guarantee for the revised lower value. The contempt complaint was disposed of with a directive for immediate release of the goods upon compliance with the specified requirements.
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• High Court ruled no GST on royalty until Nine Judge Constitution Bench decides. Petitioner has 4 weeks to reply.

  Case-Laws - HC : The High Court addressed the issue of GST liability on seigniorage fee and mining lease amounts paid by the petitioner to the Government. Referring to a Division Bench Judgment, it was held that there should be no recovery of GST on royalty until a decision by a Nine Judge Constitution Bench. The petitioner was allowed to submit a reply within four weeks from the date of the order. The petition was disposed of accordingly.
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• GTA: Goods Transport Agency can claim Input Tax Credit based on supplier's invoices.

  Case-Laws - AAR : The Advance Ruling Authority addressed two key issues: 1) Whether a supplier, who is the owner of a vehicle, can charge GST on rental/hiring services under the Forward Charge Mechanism even if the service is exempted. The ruling stated that this question is not maintainable as the applicant did not undertake or propose to undertake any supply of renting/hiring vehicles. 2) Whether a Goods Transport Agency can claim Input Tax Credit based on supplier invoices. The ruling clarified that the Agency, paying GST under the Forward Charge Mechanism, can claim ITC under Section 16 of the GST Act 2017, provided conditions are met.
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• High Court ruled no GST recovery on royalty until Nine Judge Constitution Bench decision. Petitioner can reply within 4 weeks.

  Case-Laws - HC : The High Court addressed GST liability on seigniorage fee and mining lease amounts. Referring to a Division Bench Judgment, it was held that no GST recovery on royalty is allowed until a Nine Judge Constitution Bench decision. The petitioner can respond to the intimation within four weeks from the order date.
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• Petition dismissed for not using statutory remedy. File appeal within 3 weeks. Court won't review case now.

  Case-Laws - HC : The High Court considered the maintainability of a petition u/s 107 of the U.P. Goods and Services Tax Act, 2017, in light of the availability of statutory remedy. Citing the principle of natural justice, the Court referred to a Supreme Court decision emphasizing the discretion of the High Court not to entertain a writ petition when an effective alternate remedy exists. Since the petitioner acknowledged the right to challenge orders through appeal, the High Court dismissed the petition, allowing the petitioner to pursue appeal as per statute. The Court clarified that it did not assess the merits of the case, dismissing the petition solely based on the availability of statutory remedy.
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Income Tax

• Problems with faceless assessment process - AO didn't mention summons in show cause notice. Court quashes order, sends back for reevaluation.

  Case-Laws - HC : The High Court found procedural irregularities in a faceless assessment process. The Assessing Officer (AO) did not refer to summons u/s 133(6) in the show cause notice, leading to a variance between the notice and the assessment order u/s 144B. The AO failed to provide a copy of replies received u/s 133(6) and did not allow cross-examination. Citing previous cases, the Court quashed the assessment order and remitted the matter for fresh consideration, directing the AO to provide all relevant documents and allow cross-examination.
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• Appellate Tribunal Grants Exemptions u/ss 10(34) & 10(23AAB) for Insurance Income; 12.5% Tax Rate Applies.

  Case-Laws - AT : The Appellate Tribunal held that the assessee is entitled to exemption u/s 10(34) & 10(23AAB) in computing income of insurance business u/s 44, based on precedent and CIT (A) decision. Tax rate of 12.5% u/s 115B applies to assessee's income from Life Insurance Business. Addition u/s 80(JJAA) was not adjudicated by AO, but CIT (A) directed AO to consider it. The AO must verify and decide on the deduction claim u/s 80(JJAA) as per law after giving opportunity to assessee.
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• ITAT ruled in favor of the tax authority on TP Adjustment for foreign exchange gains and engineering services. Assessee's appeal dismissed.

  Case-Laws - AT : The Appellate Tribunal (ITAT) considered Transfer Pricing (TP) adjustments related to foreign exchange gains and engineering services. The assessee used Transactional Net Margin Method (TNMM) while the Transfer Pricing Officer (TPO) applied Resale Price Method (RPM). The Dispute Resolution Panel (DRP) granted partial relief to the assessee, which was followed by the Assessing Officer in the assessment order. The Tribunal found no evidence to challenge the Assessing Officer's or TPO's findings, thus upholding the assessment order and dismissing the assessee's appeal.
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• Valuation of preference shares for tax purposes clarified by tribunal. Assessee's valuation method upheld. Revenue appeal dismissed.

  Case-Laws - AT : The ITAT considered an appeal regarding addition u/s 56(2)(viib) concerning the valuation of preference shares. The Assessee lacked a valuation report supporting the method used to determine the value of preference shares. The Tribunal held that unquoted redeemable preference shares should be valued u/s 11UA(1)(c)(c) with a mandatory merchant banker or accountant's report. The AO erred in applying the wrong rule. Valuation reports are considered statutory evidence and must be presumed correct unless proven otherwise. The burden is on the AO to rebut the report with evidence of incorrect facts or methodology. The CIT(A) found the valuation report sufficient, dismissing the Revenue's appeal.
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• ITAT Favors Resale Price Method for Solar Goods Transfer Pricing, Overturning TPO's Net Margin Approach in Key Appeal Win.

  Case-Laws - AT : The ITAT considered TP Adjustment in the context of international transactions involving purchase of solar goods/lights and reimbursement of expenses and warranty costs. The TPO rejected RPM and applied TNMM as the most appropriate method. The ITAT noted that the reimbursement expenses and warranty claims were a small fraction of the total transaction value, indicating RPM as suitable. Citing precedent, the ITAT emphasized that where no value addition occurs before resale, RPM is appropriate. As the assessee was a mere reseller without value addition, RPM was upheld as the correct method. The ITAT concluded that even when combining reimbursement transactions with purchase transactions, RPM remained valid due to the significant difference in values. Consequently, the assessee succeeded on multiple appeal grounds.
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• Contributions to Core SGI not an expense. Stock Exchange is a specified person. Statutory contributions allowed as business expense.

  Case-Laws - AT : The Appellate Tribunal addressed several issues. Firstly, it ruled that contributions to the Core Settlement Guarantee Fund by the Stock Exchange are considered income u/s 10(23EE). The Tribunal relied on a prior case involving the Bombay Stock Exchange to support this decision. Secondly, the Tribunal directed the AO to reevaluate the treatment of lease premium amortization on leasehold land. Thirdly, it instructed the CIT(A) to thoroughly review the classification of maintenance charges from Licensees as income from house property. Lastly, the Tribunal remanded the disallowance u/s 14A r.w.r. 8D for further examination by the AO to ensure the accuracy of the disallowance calculation method.
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• ITAT allowed deduction u/s 10A for enhanced business profit. Consistency key in tax assessments.

  Case-Laws - AT : The Appellate Tribunal held that the Assessing Officer erred in not allowing deduction u/s 10A on account of enhanced business profit. The Tribunal emphasized that an increase in business profit does not change the taxable income. Citing legal precedents and a CBDT circular, the Tribunal ruled in favor of the assessee. Regarding the addition for diversion of profit and unexplained expenditure, the Tribunal noted that the Assessing Officer had not raised doubts in previous assessments on similar transactions. Emphasizing consistency, the Tribunal upheld the deletion of the addition by the CIT(A), as the Department's approach should remain the same for the year in question. The Tribunal found no merit in the Revenue's appeal.
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• Tax Tribunal Overturns Unjustified Income Addition Due to AO's Failure to Verify Loan Transactions for Director's Account.

  Case-Laws - AT : The ITAT held that the assessee failed to provide a satisfactory explanation regarding unexplained loan transactions/advances to a director. The AO made an addition to the company's income due to lack of clarity on the source of the loan. However, the assessee presented confirmation copies of refunds received through account payee cheques from the individuals in question, who are income tax assessees with PAN. The AO did not utilize powers u/s 133(6) to verify the transactions, despite the assessee's request. The assessee fulfilled the burden of proof by submitting PAN and confirmation of the individuals. Citing Orissa Corporation Pvt. Ltd., it was emphasized that without issuing summons u/s 131, no adverse inference can be drawn. Consequently, the addition made by the AO was deemed unjustified, and the assessee's appeal was allowed.
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• Exemption claim denied due to clerical error in tax return. Tribunal orders fresh review. Assessee to be heard before decision.

  Case-Laws - AT : The ITAT held that the disallowance of exemption claimed u/s 10(23C)(vi) due to a clerical error in the income tax return was improper. The order u/s 154 by CPC violated natural justice by not allowing the assessee a hearing. The CIT(A) should have decided the appeal on merits. The ITAT set aside the CIT(A)'s order and remanded the matter for fresh adjudication. The CIT(A) must verify the exemption claim, grant relief if valid, and ensure the assessee's right to be heard before issuing a new order.
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• Tribunal Overturns Addition Due to Stamp Value Discrepancy in Pre-Incorporation Land Purchase; Appeal Upheld.

  Case-Laws - AT : The Appellate Tribunal considered a case involving an addition u/s 56(2)(x)(B) due to the purchase of land property where the stamp value exceeded the consideration paid by more than Rs. 50,000. The assessee argued that the land was purchased as a beneficial owner in the previous year before the incorporation of the company. The Tribunal found that the MOU dated 30-06-2016 was acted upon, establishing that the land was purchased by the promoters on behalf of the company before its incorporation. The conveyance deed executed later was deemed a formality to fulfill the earlier promise/contract. The Tribunal held that the lower authority erred in invoking section 56(2)(x)(B) based on the stamp duty paid on the conveyance deed. The addition was directed to be deleted, and the appeal of the assessee was allowed.
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• ITAT ruled in favor of assessee on disallowance of ATS fees & 14A disallowance. Bank guarantee commission & ESOP cost allowed. TP adjustment clarified.

  Case-Laws - AT : The Appellate Tribunal addressed several issues. Firstly, it upheld the deletion of disallowance of Annual Technical Service fees, citing consistency with past decisions. Secondly, it ruled against the disallowance u/s 14A, emphasizing the need for the AO to justify invoking Rule 8D. Thirdly, it rejected the addition of Bank guarantee commission, following past favorable decisions. Fourthly, it disagreed with adding interest on NPA, aligning with previous rulings. Fifthly, it remanded the ESOP cost issue for fresh consideration based on legal precedents. Lastly, it adjusted the TP for international transactions, rejecting equating LOC with bank guarantees and directing ALP adjustment based on safe harbor rules.
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• Assessee can claim deduction u/s 80IA in returns filed u/s 153A for past 6 years. ITAT rules in favor of assessee.

  Case-Laws - AT : The ITAT ruled on the assessment u/s 153A regarding lodging new claims of deduction u/s 80-IA. Assessee made fresh claims for deduction u/s 80IA(4) in compliance with notices u/s 153A for preceding six years. Forms were filed timely. Coordinate bench precedent favored assessee, allowing the deduction u/s 80IA. Revenue argued deduction for subsequent years requires allowance in AY 2017-18, which was granted. Assessee treated as "Developer of Infrastructure facility," not "Works Contractor," based on past treatment. Revenue's grounds dismissed.
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Customs

• CESTAT ruled dry dates imported from UAE were not mis-declared. No evidence of FSSAI non-compliance found. Penalties quashed.

  Case-Laws - AT : The case involved verification of Certificate of Origin and non-compliance of FSSAI Regulations u/s 111(m) and 112(a) of the Act, 1962. The Tribunal held that the goods were of UAE origin based on concrete proofs, rejecting the confiscation on mis-declaration grounds. FSSAI compliance was confirmed, invalidating the confiscation order. The importer's declaration of UAE origin was accepted, ruling out mis-declaration. Retracted statements were deemed inadmissible. No penalty was imposed u/s 112(a) as goods were not liable for confiscation. No intentional false declaration was found, leading to the quashing of penalties u/s 114AA. The appeal was allowed, setting aside the impugned order.
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• CESTAT ruled: Outdoor LCD with accessories classified under Chapter 9013, not 85287390. Supreme Court decision supported.

  Case-Laws - AT : The case involved the classification of imported goods, specifically ICON 82 Outdoor LCD with accessories, under CTH 85287390 or 9013 8010. CESTAT held that the issue was settled by the Supreme Court in a previous case, where it was determined that the LCD sets should be classified under Chapter 90, Entry 9013.8010. Following this precedent, CESTAT classified the LCD panels under Chapter Heading 9013. Therefore, the impugned order was upheld, and the appeal filed by Revenue was dismissed.
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• Confiscation and penalty for smuggling 154 mobile phones overturned; insufficient evidence under Customs Act, 1962, Section 114.

  Case-Laws - AT : The case involved smuggling of 154 mobile phones, leading to absolute confiscation and penalty u/s 114 of the Customs Act, 1962. The Appellate Tribunal found that the goods were seized within India, not near the Bangladesh border, and lack of proper documents didn't prove illegal transportation. The Department failed to verify facts with order placers or provide concrete evidence of smuggling. As a result, the confiscation and penalty were overturned, and the appeal was allowed.
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DGFT

• RCMC for Medical Devices now issued by EEPC INDIA & other EPCs u/s recent decision. Customs to accept till further notice.

  Circulars : The Trade Notice No. 05/2024-2025 issued by the Directorate General of Foreign Trade addresses the issuance of Registration-Cum-Membership Certificate (RCMC) for Medical Devices. It refers to the inclusion of Export Promotion Council (EPC) for Medical Devices in Appendix 2T of FTP 2023 for issuing RCMC. Due to the EPC's delayed functioning on the DGFT platform, RCMC can now be temporarily issued by EEPC INDIA and other relevant EPCs. This is crucial for availing benefits under RoDTEP. Customs Authorities are instructed to accept RCMCs from EEPC INDIA and other relevant EPCs until further notice to facilitate clearance of medical devices.
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FEMA

• Banks can open extra accounts for trade transactions in Indian Rupees. More flexibility for exports and imports.

  Circulars : The Reserve Bank of India (RBI) issued Circular No. 11 on June 11, 2024, allowing Scheduled Commercial Banks with AD Category-I license to open additional current accounts for trade transactions in Indian Rupees (INR). This expands on a previous circular from November 17, 2023, which permitted banks to open special current accounts exclusively for export transactions. The new provision now includes import transactions as well, offering operational flexibility to AD Category-I banks. Banks are instructed to inform their constituents about this update.
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• Exim Bank of India provides $23.37 mn LoC to Guyana for aircraft procurement. 75% of goods from India. No agency commission.

  Circulars : The Export-Import Bank of India (Exim Bank) provided a Government of India-supported Line of Credit (LoC) of USD 23.37 mn to the Government of the Co-operative Republic of Guyana (GO-GUY) for purchasing two aircraft from Hindustan Aeronautics Ltd. The agreement, effective from April 08, 2024, requires at least 75% of goods and services to be supplied from India. The LoC allows for disbursement up to 48 months after project completion. Shipments must be declared as per RBI instructions. No agency commission is payable under this LoC. AD Category-I banks must inform exporters about the LoC details. The circular was issued u/s 10(4) and 11(1) of FEMA, 1999.
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Corporate Law

• Company in liquidation lacks funds for creditors. Application for dissolution approved under Section 481.

  Case-Laws - HC : The High Court allowed the application seeking dissolution of a company (in liquidation) u/s 481 of the Companies Act, 1956. As the company had insufficient funds and no further assets to realize money for creditors other than Secured Creditors, the Official Liquidator sought permission to pay Secured Creditors and transfer any available balance to the Common Pool Fund after deducting Liquidation Expenses. With no assets left for realization, the court approved the dissolution u/s 481, ending the liquidation proceedings for M/s. Sarvodya Paper Mills Ltd. The Official Liquidator is discharged. Application for dissolution granted.
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Indian Laws

• Can a Member of Parliament claim immunity from bribery prosecution? Court says no. Bribery erodes public probity.

  Case-Laws - SC : The Supreme Court addressed the issue of whether a Member of Parliament or Legislative Assembly can claim immunity from prosecution for bribery u/s Articles 105 and 194 of the Constitution. The Court held that the doctrine of stare decisis is not inflexible and a previous decision may be reconsidered. Privileges in India are subject to judicial review. An individual legislator cannot claim privilege to seek immunity from bribery prosecution as it does not serve the collective functioning of the House. Bribery is not immune u/s Articles 105 and 194 as it undermines probity in public life. The interpretation granting immunity for bribery in exchange for a vote is paradoxical and contrary to the Constitution. The appeal was disposed of.
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• Court Highlights Need for Thorough Assessment Before Granting Interim Compensation for Dishonored Cheques.

  Case-Laws - HC : The High Court addressed the issue of interim compensation u/s 143A of the NI Act, 1881 for dishonored cheques. It emphasized the need for a prima facie evaluation of the complainant's claim and accused's defense to determine if interim compensation is warranted. The Court may refuse compensation if the defense seems plausible. The Court must also consider the appropriate quantum of compensation, not automatically awarding the upper threshold of 20% of the cheque amount. In this case, the accused claimed payment through cash and bank channels, supported by evidence. The Court noted the accused's dilatory tactics but emphasized that compensation aims to counter such delays. The Court found fault with the lower court's failure to consider the quantum of compensation, leading to the quashing of its order. The petition was allowed.
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• High Court Acquits Accused u/s 255(1) CPC Due to Insufficient Evidence on Cheque Issued for Debt.

  Case-Laws - HC : The High Court acquitted the accused u/s 255(1) Cr.P.C due to failure to prove the cheque was issued to discharge a debt. The complainant's evidence was unreliable, and the accused's version was deemed more probable. The Supreme Court held in M.S.Narayana Menon v. State of Kerala that if material consistent with the accused's innocence is presented, even if not conclusively proven, acquittal is warranted. The standard of proof to rebut statutory presumptions u/s 118 and 139 of NI Act is preponderance of probabilities, not beyond reasonable doubt. In this case, as no evidence showed the cheque was for a legally enforceable debt, the accused successfully rebutted the presumption. The appeal was dismissed.
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• Court Convicts Accused for Cheque Dishonor; Clarifies Notice Period Starts on Bank Notification, Orders Rs.70,000 Compensation.

  Case-Laws - HC : The High Court addressed the challenge to the acquittal of the accused u/s 255(1) of Cr. P. C. for dishonoring a cheque due to insufficient funds. It clarified that the statutory notice period starts from the date of receiving information from the bank about the dishonored cheque, not the exact dishonor date. The court upheld the validity of the notice despite the inclusion of a demand for legal interest alongside the cheque amount. Citing Suman Sethi v. Ajay K. Churiwal, it emphasized that separate claims in the notice are permissible and do not invalidate it. Consequently, the accused was convicted u/s 138 of the NI Act, sentenced to imprisonment till the rising of the court, and ordered to pay Rs.70,000 compensation u/s 357(3) Cr.P.C, with a default clause for further imprisonment if the compensation is not paid. The appeal was allowed, overturning the previous judgment.
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PMLA

• Applicant granted bail in money laundering case. Lack of evidence linking to crime. Court considers context, grants bail.

  Case-Laws - HC : The High Court considered a bail application u/s 19 of PMLA in a money laundering case. The Court noted material evidence including interception of betel nuts, witness statements, and financial transactions linking the applicant to alleged smuggling activities. It found prima facie justification for the applicant's arrest. The Court also addressed the inchoate nature of predicate offences, emphasizing that registration of FIR by CBI sufficed, and lack of charge-sheet did not negate the allegations. Despite serious bribery allegations, the Court granted bail considering the context and discretion. The applicant was granted bail with imposed conditions.
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• Tribunal Overturns Double Property Attachment for Money Laundering, Citing Legal Violations and Irrelevant Justifications.

  Case-Laws - AT : The Appellate Tribunal addressed issues related to money laundering, proceeds of crime from smuggling narcotics and running extortion rackets. The case involved double attachment of properties under the Fugitive Economic Offenders Act, 2018. The Tribunal held that the attachment of properties was not justified as it led to double attachment, contrary to legal principles. The respondents' attempt to justify attachment based on alleged violations of Floor Space Index (FSI) was deemed inappropriate as FSI violations were not relevant to the case. The Tribunal emphasized that for property to be confirmed as involved in money laundering, the Adjudicating Authority must record a finding to that effect. Since the property in question had already been attached in another context, the Tribunal quashed the impugned orders of attachment and allowed the appeal.
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• Seized property not proceeds of crime, gifted to avoid seizure. No prosecution complaint filed within 365 days. Appeal dismissed.

  Case-Laws - AT : The case involves a dispute u/s 17(1) of the Prevention of Money Laundering Act, 2002 regarding the seizure of documents related to alleged fraudulent transactions. The Appellate Tribunal held that the seized property, gifted to the appellant, is considered proceeds of crime as it was transferred to avoid seizure. The failure to file a Prosecution Complaint within 365 days does not invalidate the seizure. The Act aims to freeze proceeds of crime, including property transferred to non-accused individuals. The Tribunal dismissed the appeal, emphasizing the legislative intent to prevent circumvention of the law in money laundering cases.
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Service Tax

• CESTAT ruled demand of service tax on foreign currency payments not sustainable. Penalties on Shri K. Satishchandra set aside.

  Case-Laws - AT : The Appellate Tribunal addressed issues u/s Classification and Taxability of Services, Penalties u/s Section 9AA, and Performance-Based Services. The Tribunal found that the demand of service tax on foreign currency payments was not sustainable as the specific category for tax liability was not classified. The payments for ship repairs and maintenance were for services availed outside India and not taxable in India. Performance-based services were not liable for service tax if performed outside India. Penalties imposed u/s Section 9AA were set aside due to lack of evidence establishing the director's responsibility. The demands were deemed unsustainable, thus no interest or penalty was warranted. Appeal allowed.
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• CESTAT ruled services not OIDAR but Business Support Services. Export of services allowed. No service tax due.

  Case-Laws - AT : The case involved a dispute over the classification of services as Online Information and Database Access or Retrieval Services (OIDAR) or Business Support Services (BSS). The Appellate Tribunal held that the services provided were not OIDAR but BSS, allowing for the benefit of export of services under u/s Rule 3 of Place of Provision of Services Rules, 2012. The Tribunal rejected the revenue's claim that the services should be classified as OIDAR, citing a previous case where infrastructure services were deemed not to be fees for online information retrieval. The Tribunal emphasized that past tax treatment does not preclude reclassification in subsequent transactions. Ultimately, the appeal by the revenue was dismissed.
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• Eligibility of Cenvat Credit for Input Services Beyond Place of Removal Requires Evidence Submission for Verification.

  Case-Laws - AT : The case involves eligibility of Cenvat Credit on input services used beyond the place of removal. The Appellant failed to provide proper evidence supporting their case. They are directed to present all details and evidence to the Adjudicating Authority to establish eligibility. For input services used in manufacturing, Appellant as a service provider can claim credit. Job work services require maintaining ST-3 Returns to show Cenvat Credit. Nexus must be established for cross-utilization. Input tax credit is not available for outward GTA services by Job Worker as a manufacturer. Adjudicating Authority must ensure natural justice by allowing Appellant to present arguments and evidence. Proceedings to be completed within three months from the date of order.
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• CESTAT ruled on service tax liability for IT services provided as a sub-contractor. Services classified as Business Auxiliary.

  Case-Laws - AT : The case involves a dispute u/s classification of services for tax purposes. The appellant provided services as a sub-contractor for printing voter rolls and cards. The services were classified as Business Auxiliary Services due to commission-based arrangement with UPDESCO. The liability to pay service tax as a sub-contractor was upheld, following precedent. The extended period of limitation for penalty was questioned, with the need for verification of tax payments post 01.07.2010. The imposition of penalty u/s 76 for the period prior to 09.05.2008 was deemed unjustified due to limitation. The appeal was partially allowed, remanding for re-computation of tax liability for the normal period.
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• CESTAT ruled in favor of the Appellant on refund of service tax for export pass fee. No service tax liability on Export Pass Fee. Refund granted.

  Case-Laws - AT : CESTAT, an Appellate Tribunal, ruled on a case regarding refund of service tax on export pass fee u/s N/N. 30/2012-S.T. The Tribunal held that the appellant is not liable to pay service tax on the fee, as per precedent. The fees paid to the State Government do not constitute a service. The order of the Commissioner (Appeals) was set aside, and the appellant was granted a refund of Rs.30,68,750/- with 12% interest per annum, to be paid within 90 days.
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Central Excise

• CESTAT ruled medicaments supplied to institutions assessed u/s 4, not 4A. No penalty on control samples.

  Case-Laws - AT : The case involved the valuation of medicaments for excise duty purposes u/s 4 or 4A of the Central Excise Act, 1944. The issue was whether medicaments supplied to institutions should be assessed u/s 4 or 4A. CESTAT held that when medicaments are supplied to institutions without a retail price, valuation should be u/s 4. Citing a previous case, it was established that for goods supplied to institutions, valuation should be u/s 4, not 4A. Regarding cenvat credit on control samples, the appellant had paid the duty but contested the penalty. Due to the debatable nature of the issue, penalty was set aside. The impugned orders were modified, and the appeal was allowed.
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• CESTAT ruled in favor of appellant supplying goods to power projects, clearing without duty payment. Benefit of exemption granted.

  Case-Laws - AT : The case involves supply of goods to power projects through international competitive biddings without duty payment. Appellant faced denial of exemption u/s N/N. 6/2006-CE. Goods were cleared under Central Excise Tariff Sub-headings 8413 and 8431, while exemption applied to Customs Sub-heading 9801. CESTAT held that appellant, as per precedent [2023 (7) TMI 298 - CESTAT KOLKATA], is entitled to N/N. 6/2006-CE benefit. Impugned order denying exemption was set aside, and appeal allowed.
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Case Laws:

• GST

• 2024 (6) TMI 485
  Restriction availing on Input Tax Credit (ITC) - Constitutional validity of Section 16(4) of the Central Goods and Services Tax Act (CGST Act) and Section 16(4) of the Bihar Goods and Services Tax Act, 2017 - Denial of entitlement of Input Tax Credit (ITC) for delayed filing of return - it was held by High Court that sub-section (4) of Section 16 of the CGST/ BGST Act are constitutionally valid and are not violative of Articles 19(1)(g) and Article 300-A of the Constitution of India. The said provision is not inconsistent with or in derogation of any of the fundamental right guaranteed under the Constitution of India. HELD THAT:- Issue notice in the special leave petitions to the respondents as well as on interim reliefs.

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• 2024 (6) TMI 484
  Seeking a direction to the first respondent to drop the proceedings initiated under Section 67 read with Section 70 of applicable GST enactments - whether the summons relates to proceedings against M/s. GBR or Shree Sai Hanuman Smelters Private Limited? - HELD THAT:- Section 70 of the CGST Act empowers officer to summon any person whose attendance is necessary in relation to the relevant enquiry. Therefore, a mandamus cannot be issued to restrain the performance of a statutory duty. Indeed, the relief of mandamus is intended to enforce and not restrain performance of statutory duties. However, it is open to the petitioner to respond to the summons and raise all contentions, including the contention that proceedings against the petitioner cannot be initiated by the CGST department on account of the judgment of this Court. Petition disposed off.

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• 2024 (6) TMI 483
  Violation of principles of natural justice - denial of reasonable opportunity - challenge to assessment order - HELD THAT:- On perusal of the impugned order, it is evident that such order refers to contentions raised in the petitioner s replies. However, it is noticeable from the petitioner s final reply dated 24.02.2024 that the petitioner requested for a personal hearing. Such personal hearing was not granted before issuing orders impugned herein. For such reason, interference with the orders impugned herein is warranted. The impugned orders were preceded by both an intimation and a show cause notice. The petitioner s replies were also taken into consideration while issuing the impugned orders. In these circumstances, revenue interest is required to be taken into consideration while remanding the matter. The orders impugned herein are set aside subject to the condition that the petitioner remits 5% of the disputed tax demand in respect of each assessment period as agreed to within two weeks from the date of receipt of a copy of this order - petition disposed off.

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• 2024 (6) TMI 482
  Challenge to three separate orders - breach of principles of natural justice - Inspection and discrepancies - HELD THAT:- It is noted that the petitioner responded to all discrepancies during the inspection, including providing necessary documents. The impugned assessment orders were deemed questionable, and the petitioner was directed to remit specified amounts within a set timeframe. The assessing officer was instructed to provide a reasonable opportunity for a personal hearing and issue fresh assessment orders within two months. The impugned assessment order was quashed subject to the conditions imposed - petition disposed off.

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• 2024 (6) TMI 481
  Challenge to SCN in Form GST DRC-01 dated 25.09.2023 issued, based on the inspection and the statement obtained from the petitioner - HELD THAT:- There is no embargo under the Scheme of the respective GST Enactments on the inspecting officer to issue Show Cause Notice. In fact, there is also no embargo on such officer to adjudicate the issue as long as such officer also satisfies the definition of a proper officer in Section 2(91) of the respective GST enactments. These Writ Petitions are disposed of by directing the second respondent State Tax Officer (ST) (Inspn.) to transmit the Notice to the jurisdictional proper officer for adjudication in accordance with Paragraphs 4 and 5 of the impugned Circular No. 13/2022-TNGST dated 08.11.2022. This exercise shall be carried out by the second respondent State Tax Officer (ST) (Inspn.), within a period of 2 weeks from today. Petition disposed off.

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• 2024 (6) TMI 480
  Violation of principles of natural justice - opportunity of hearing was not provided to the petitioner in accordance with Section 75 (5) of CGST Act - HELD THAT:- From perusal of the record, it is revealed that the case was listed for hearing on 29.08.2023 on that date, time was sought and the matter was posted on 20.09.2023. Thereafter, as no one appeared on 20.09.2023, the matter was adjourned to 27.09.2023. A request letter was received by the respondent on 26.09.2023, however, since the request letter was received on 26.09.2023, the authority ought to have passed some order on the request letter on 27.09.2023. Some order ought to have been passed on the request letter received by the respondent, however, without passing any order on the request letter, the matter was kept for order on 27.09.2023, hence, it is deemed proper to allow the writ petition. The impugned order is set aside - petition allowed.

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• 2024 (6) TMI 479
  Issuance of notice u/s 74 (1), 122 (2) and 125 of the CGST, 2017 read with Rule 142 (1) of the Central Goods and Service Tax Rules, 2017 - demand of unpaid tax on Reverse Charge Mechanism (RCM) on purchase of cotton from agriculturist amounting to Rs. 3,73,95,300/- along with the penalty of equal amount under Section 122 (2) of the GST Act - Revenue neutrality - penalty u/s 122 (2) of the Act. HELD THAT:- As the impugned order was passed during the pendency of the petition where the petitioner has challenged the jurisdiction of the respondent No. 1 to issue the show cause notice, the draft amendment was permitted and the petitioner was granted opportunity to make the submissions on merits, without relegating the petitioner to the alternative remedy, which would otherwise have been the normal course of proceedings. Therefore, the merits of the matter considered also as to whether the petitioner is liable for payment of GST on RCM basis under the provisions of the CGST Act or not, on RCM basis on the raw cotton purchased from the agriculturist. When the respondent No. 1 has issued the notice since 2022 pointing out to the petitioner that the petitioner is liable to pay the GST on RCM on the raw cotton purchased from agriculturist, the petitioner has not shown any willingness nor has given any reply except raising the technical pleas in response to the impugned show cause notice dated 30.8.2023 by reply dated 1.9.2023. The respondent No. 1 has considered the reply of the petitioner in detail and thereafter, has come to the conclusion relying upon the aforesaid Notification No. 43 of 2017 issued under Section 9 (3) of the CGST Act that the petitioner is liable to pay the GST under RCM on the raw cotton purchased from the agriculturist. On perusal of the show cause notice in Form GST DRC-01 as well as the impugned order is concerned, both refers to the Notification No. 43 of 2017 which was issued under Section 9 (3) of the CGST Act and, therefore, mentioning the Section 9 (4) in the notice would not make the notice illegal. The petitioner was made aware that the petitioner is liable to pay the GST under RCM on the basis of the Notification No. 43 of 2017 which is issued under Section 9 (3) of the CGST Act and, therefore, the contention of the petitioner that the notice and the order are passed under different Sections 9 (3) and 9 (4) cannot be accepted - On perusal of Section 9 (3) of the CGST Act, the same applies for payment of GST on RCM wherein the Government, on recommendation of the Council by notification, has specified the categories of supply of goods or services or both, the tax on which GST is to be paid on reverse charge basis by the recipient of such goods or services or both and the provisions of the Act to apply to such recipient as if he is the person liable for paying the tax - the contention raised on behalf of petitioner that the petitioner is not liable to pay the GST on RCM basis in absence of any notification under Section 9 (4) is not tenable because the petitioner is liable to pay tax on RCM basis as per provision of Section 9 (3) of the CGST Act. Revenue neutrality - HELD THAT:- The contention of the petitioner that the entire exercise would be a revenue neutral, cannot accepted as the petitioner is not 100% EOU but is also only exporting 80% of its product and, therefore, payment of IGST on the export and getting refund of the same by the petitioner under the provisions of the IGST read with Section 54 of the CGST Act cannot absolve the petitioner from the liability to pay GST on RCM basis under Section 9 (3) of the CGST Act which is a charging section. Therefore, the submission made on behalf of the petitioner is not acceptable. Penalty levied under Section 122 (2) of the Act - HELD THAT:- The respondent authorities have given cogent reasons for the same and, therefore, no interference is called for, more particularly when the petitioner was put to notice with regard to non-payment of GST under RCM on raw cotton purchased from the agriculturist since 2022. However, the petitioner did not consider the same to be a notice for avoiding the penalty and has invited the impugned order and, therefore, it is rightly believed by the respondent No. 1 that the petitioner has deliberately not paid the GST on RCM on the raw cotton purchased from the agriculturist contrary to the Notification No. 43 of 2017 issued under Section 9 (3) of the CGST Act and, therefore, no interference is required to be made for imposition of penalty by the impugned order. No interference is called for in the impugned order passed by the respondent No. 1 fastening the liability of amounting to Rs. 3,73,95,300/- along with the penalty of equal amount under Section 122 (2) of the GST Act upon the petitioner for non-payment of GST on RCM for the raw cotton purchased by the petitioner from 15.11.2017 onwards for the period for which the impugned order is passed. Petition dismissed.

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• 2024 (6) TMI 478
  Challenge to assessment order - violation of principles of natural justice - the intimation, notice and impugned order were uploaded on the View Additional Notices and Orders tab on the GST portal, but not communicated to the petitioner through any other mode - HELD THAT:- On comparing the show cause notice and the impugned order, it is evident that the show cause notice was issued under Section 73 although 100% penalty is mentioned therein. In the summary of the impugned order, reference is made to Section 73, whereas the detailed order also makes reference to Section 74. As a registered person, the petitioner was under an obligation to monitor the GST portal on an ongoing basis and failed to do so. However, in view of the above observations, the impugned order calls for interference, albeit by putting the petitioner on terms. The impugned order dated 29.07.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand within a period of two weeks from the date of receipt of a copy of this order. The writ petition is disposed off.

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• 2024 (6) TMI 477
  GST liability on seigniorage fee and mining lease amounts paid by the respective petitioner to the Government - HELD THAT:- The Division Bench Judgment in a batch of cases where the lead case is TVL. A. VENKATACHALAM VERSUS THE ASSISTANT COMMISSIONER (ST) [ 2024 (2) TMI 488 - MADRAS HIGH COURT] has held that It is made clear that there shall be no recovery of GST on royalty until the Nine Judge Constitution Bench takes a decision. This petition is liable to be disposed of on the same terms insofar as it relates to either the issue of seigniorage fee or mining lease - the petitioner is permitted to submit his reply to the intimation within a maximum period of four weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (6) TMI 476
  Challenge to assessment order u/s GST ASMT-10 - non-submission of required documents - rejection of petitioner s reply - HELD THAT:- The assessing officer rejected the petitioner s reply on the ground that such reply was descriptive and on the ground that no re-conciliation statements were uploaded. In the face of the reply to the notice in Form ASMT-10, this conclusion is unsustainable. It should be noticed, however, that the petitioner has also failed to submit all relevant invoices pertaining to alleged expenses as to justify the non-inclusion of such expenses in the taxable turnover. Nonetheless, the order calls for interference since the explanation of the petitioner was not duly considered. The impugned order is quashed and the matter is remanded for re-consideration. The petitioner is permitted to submit any additional documents to explain the disparity between the taxable turnover reported in its returns and the details contained in Form 26AS. Petition disposed off by way of remand.

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• 2024 (6) TMI 475
  Seeking release of seized goods before Assembly Election process - dispute over method of release - HELD THAT:- There is a direction in terms of which goods are to be released, is true. However, the proceedings under the provisions of the Central Goods and Services Tax Act, 2017 are to be processed and for that purpose, as a matter of State Policy, release is permissible only if a Bond and Bank Guarantee are given for the worth of goods in question. There is another point that goes against the complainant inasmuch as he had specifically told to the said 1st accused-respondent in writing on 22.09.2023, a copy whereof avails at Annexure-R8 that the value of the goods in question was only Rs. 46,29,487/- and not a whopping sum of Rs. 3,36,00,000/-. Therefore, now he cannot say that he will not give bank guarantee for the worth of goods. The above apart, the value of subject goods is shown to be less than what the complainant himself has quoted in his letter dated 22.09.2023 at Annexure-R8 and now the latest letter issued by the 1st accused-respondent on 6.3.2024 shows the value to be only Rs. 13,36,194/-. It is not the case of complainant that he has any financial difficulty and therefore, he cannot comply with he requirement of rule in question. Therefore, the complainant can get the goods released on giving a Bank Guarantee for this lesser sum. The complaint contempt is disposed off with a direction to the 1st respondent to release the subject goods on the complainant furnishing a Bond and Bank Guarantee, without brooking any delay.

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• 2024 (6) TMI 474
  GST liability on seigniorage fee and mining lease amounts paid by the respective petitioner to the Government - HELD THAT:- The Division Bench Judgment in a batch of cases where the lead case is TVL. A. VENKATACHALAM VERSUS THE ASSISTANT COMMISSIONER (ST) [ 2024 (2) TMI 488 - MADRAS HIGH COURT] has held that It is made clear that there shall be no recovery of GST on royalty until the Nine Judge Constitution Bench takes a decision. This petition is liable to be disposed of on the same terms insofar as it relates to either the issue of seigniorage fee or mining lease - the petitioner is permitted to submit his reply to the intimation within a maximum period of four weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (6) TMI 473
  Scope of Advance Ruling application - Taxability - supplier, being the owner of the vehicle itself, can charge GST on rental/hiring services under the Forward Charge Mechanism or not - ITC - Applicant being a Goods Transport Agency, can claim the Input Tax Credit in terms of Section 16 of GST Act 2017, on the basis of suppliers invoices or not. Scope of Advance Ruling application - Whether the supplier, being the owner of the vehicle itself, can charge GST on rental/hiring services under the Forward Charge Mechanism, even though his service is exempted? - HELD THAT:- This question of chargeability on inward supply of services appears to be not maintainable in view of the Section 95 (a) of the CGST Act, 2017. As per the said section, advance ruling means a decision provided by the Authority or the Appellate Authority (or the national appellate authority) to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100 (or of section 101 C), in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant - In the instant case, no supply in respect of renting/hiring of vehicles is undertaken or proposed to be undertaken by the Applicant. So, no ruling can be pronounced in this regard. Whether the Applicant being a Goods Transport Agency, be able to claim the Input Tax Credit in terms of Section 16 of GST Act 2017 on the basis of suppliers invoices? - HELD THAT:- As per Section 16 (1) of the Act, every registered person is entitled to take ITC charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. In the present case, it is seen that the Applicant is engaged in providing transport service and opted to pay GST @12% under the Forward Charge Mechanism. So, ITC can be admissible to the Applicant subject to fulfilment of conditions and restrictions as specified in Section 16 of the CGST Act, 2017.

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• 2024 (6) TMI 468
  Maintainability of the petition on the ground of availability of statutory remedy as provided under Section 107 of the U.P. Goods and Services Tax Act, 2017 - violation of principles of the natural justice - HELD THAT:- This Court is reminded of the decision of the Apex Court in Magadh Sugar Energy Ltd. Vs. State of Bihar, [ 2021 (10) TMI 691 - SUPREME COURT] where it was held that The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person . Taking note of the fact that the petitioner does not dispute that it has the right to assail the orders in appeal, this Court in exercise of its discretionary jurisdiction does not deem it appropriate to entertain the petition which is accordingly dismissed leaving it open for the petitioner to assail the impugned orders in terms of the appeal as provided in the statute. In case, if the petitioner files the appeal before the appellate authority within a period of three weeks from today then the same shall be considered on its own merits and the issue of limitation if involved shall be considered sympathetically by the appellate authority. It is made clear that Court has not examined the case of the petitioner on merits and the petition has been dismissed solely on the ground of availability of the statutory remedy.

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• 2024 (6) TMI 467
  GST liability under applicable GST laws in respect of both seigniorage fee and mining lease amounts paid by the respective petitioner to the Government - HELD THAT:- The Division Bench Judgment in a batch of cases where the lead case is A. Venkatachalam v. Assistant Commissioner (ST), Palladam [ 2024 (2) TMI 488 - MADRAS HIGH COURT] held that It is made clear that there shall be no recovery of GST on royalty until the Nine Judge Constitution Bench takes a decision. This petition is liable to be disposed of on the same terms insofar as it relates to either the issue of seigniorage fee or mining lease. Consequently, in this case, the petitioner is permitted to submit his reply to the intimation within a maximum period of four weeks from the date of receipt of a copy of this order.

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• Income Tax

• 2024 (6) TMI 472
  Reopening of assessment u/s 147 - reasons to believe - whether satisfaction note issued by the respondent for reopening did not refer to incriminating material having direct correlation with the income of the assess for the relevant assessment year? - HELD THAT:- On perusal of the reply filed by the petitioner in response to the notice u/s 142 (1), petitioner has raised the issue with regard to connection of incriminating material and the addition proposed by the AO. Petitioner also filed detailed reply on merits to the show-cause notice issued by the respondent for the proposed addition. AO after considering such reply on merits, has passed the impugned assessment order by considering the contentions raised by the petitioner and arrived at a finding that unaccounted cash transaction in case of the assessee was found pertaining to A.Y. 2013-14 to A.Y. 2018-19 in the form of tally ledger, physical and hand-written sheet and printed sheet and on the basis of the nature of the documentary evidence found and seized in the search action, addition was made accordingly. AO has considered in detail the merits of the seized material found during the course of search and thereafter has made addition. When the petitioner has not challenged the notice and permitted the AO to pass the assessment order raising the dispute on satisfaction note as well as on merits, it cannot be said that the controversy arising in this petition is purely legal one because it involves disputed question of facts as to whether the satisfaction note of the AO pertains to the incriminating material which has direct relation with the income escaped during the assessment year or not and for that documentary evidence is required to be appreciated. Considering case of M/s.Godrej Sara Lee Ltd. [ 2023 (2) TMI 64 - SUPREME COURT ] vis-a-vis facts of the present case, the notice u/s 148 issued by the AO has already been now become part of the assessment order passed u/s 147 wherein the AO has considered all the contentions raised by the petitioner on merits as well as decided the issue on merits after considering the reply and documentary evidence filed by the assessee on merit and therefore, it involves disputed question of facts with regard to veracity of the incriminating materials analysed by the AO. Petition is not entertained. Petitioner is relegated to avail alternative efficacious remedy of preferring appeal before CIT (A) challenging the impugned assessment order raising all the contentions which are raised in this petition.

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• 2024 (6) TMI 471
  Procedural irregularities in the faceless assessment process - Addition u/s 68 - summons u/s 133 (6) issued by AO were not even referred to in the show cause notice which is in form of the draft assessment order for making addition of unsecured loan obtained by the petitioner u/s 68 - HELD THAT:- We are of the opinion that there is a clear variance between the show cause notice in form of a draft assessment order and the impugned assessment order passed by the Assessing Officer contrary to the scheme of the faceless assessment under Section 144B of the Act. It is not in dispute that the AO did not supply copy of reply received pertaining to the pursuant to the notice issued under Section 133 (6) of the Act. After issuance of the show cause notice in the form of draft assessment order, no any opportunity of cross-examination of the parties whose reply is considered to make addition under Section 68 of the Act was granted to the petitioner. This Court, in the case of Dineshkumar Chhaganbhai Nandani [ 2023 (6) TMI 935 - GUJARAT HIGH COURT] and in the case of Darshan Enterprise [ 2022 (1) TMI 605 - GUJARAT HIGH COURT] and in the case of Prakashchandra Chhotalal Shah ( 2023 (2) TMI 756 - GUJARAT HIGH COURT] in similar facts, after referring to the relevant provisions u/s 144B of the Act, allowed the petitions quashing and setting aside the assessment order and remitting the matter back to the AO for de novo consideration. We are left with no other option but to quash and set aside the impugned assessment order and remit the entire matter to the AO for de novo consideration and to pass a fresh assessment order after providing all the relied upon documents like the reply received pursuant to the notice and summons issued u/s 133 (6) of the Act as well as the other relevant documents of the parties who did not reply to the summons providing opportunity of cross-examination.

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• 2024 (6) TMI 466
  TP Adjustment - Adjustment on account of foreign exchange fluctuation gains and engineering services segment - selection of MAM - assessee applied Transactional Net Margin Method (TNMM) as the most appropriate method while TPO applied RPM - HELD THAT:- DRP vide directions granted part relief to the assessee. The Assessing Officer passed the impugned order in accordance with the directions of the DRP. No material to controvert the findings of the Assessing Officer or the order of Transfer Pricing Officer is furnished before the Tribunal. Thus, we uphold the impugned assessment order and dismiss appeal of the assessee.

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• 2024 (6) TMI 465
  Addition u/s 56(2)(viib) - issue of shares premium - valuation of preference share - Assessee was unable to furnish the valuation report supporting his method adopted for determining the value of preference shares - HELD THAT:- As agreed between the assessee and investor, the said preference shares will be redeemed at premium of Rs. 55 each after a period of 20 years. There is no doubt in mind of the bench that the AO had primarily erred in invoking Rule 11UA(1)(c)(b) as unquoted redeemable preference shares, being in the nature of was quasi-debt, have to be valued as per Rule 11UA(1)(c)(c), for which the merchant banker or an accountant s report is mandatory. The same deserves to be given status of statutory evidence with burden upon the AO to rebut the same with evidences establishing either the report is based on incorrect facts and figures, or otherwise, the valuation method lacks the sanctity to be considered as statutory evidence. As valuation of shares is a technical and complex issue for which the AO has limited authority to tinker the valuation of methodology applied. As we observed at beginning, it being statutory evidence is required to be given presumption of correctness under law as prepared by an expert. It cannot be assailed unless it is shown that valuation was made on the fundamentally erroneous basis or apparent mistake is pointed out and demonstrated. Resting an additional onus of proof on the assessee, apart from tendering the valuation report to substantiate the report also, cannot be sustained. In the case at hand, where the CIT(A) has co-terminus power to examine the issue threadbare, and after admitting the additional evidences, has drawn the conclusion, that the valuation report as submitted was good enough to explain the valuation, the grounds as raised by the revenue have no substance. Consequently appeal of the Revenue is dismissed.

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• 2024 (6) TMI 464
  TP Adjustment - selection of MAM [Most Appropriate Method] - RPM or TNMM - international transaction of purchase of solar goods/lights and reimbursement of expenses and warranty cost claim - TPO rejected RPM and applied Transactional Net Margin Method (TNMM) as the most appropriate method - HELD THAT:- We find that international transaction of purchase of solar products is to the tune of Rs. 136.63 crores, whereas, the total cost of reimbursement of expenses and warranty claims put together is only Rs. 1.9 crores. The reimbursement expenses and warranty claims are minuscule part of total transaction. The cost of reimbursement and warranty claims is merely little over 1.5% of purchase cost of solar products from AE. If the contention of Department is accepted then it would be like putting a cart before the horse. Apart from aforesaid objection, no other reason has been given by the revenue to replace RPM with TNMM. As in the case PCIT vs. Fujitsu India (P.) Ltd [ 2023 (11) TMI 289 - DELHI HIGH COURT] placing reliance on the decision of PCIT vs. Matrix Cellular International Services (P.) Ltd [ 2017 (11) TMI 1655 - DELHI HIGH COURT] that where there is no value addition made before reselling the product, RPM is the most appropriate method. Except for suspicion the revenue has not placed on record, any documentary evidence to substantiate that the assessee has undertaking any other activity resulting in value addition to the solar goods purchased by the assessee from the AEs. In such circumstances, we do not find any merit in the contentions of the revenue that TNMM should be applied as the most appropriate method. As emanating from the records, the assessee is merely a reseller of solar goods in India, therefore, we are of considered view that the assessee has rightly adopted RPM is the most appropriate method to bench mark the transaction of purchase of solar goods. We further hold that even if the transaction of reimbursement of expenses warranty claims is aggregated with the transaction of purchase of solar goods, it would not impact the method of bench marking as the former transactions are far smaller in value as compared to later transaction of purchase of solar goods. In light of our above findings, the assessee succeeds on ground no 1 to 4 of appeal.

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• 2024 (6) TMI 463
  Allowance of deduction u/s 10A on account of enhanced business profit - HELD THAT:- In all the above Assessment Years i.e. 2008- 09, 2009-10 and 2010-11 admittedly up to 2010-11 the entire income of the assessees company were exempt u/s 10A of the Act and there is no dispute regarding the said fact. During the assessment proceedings, the A.O. increased profit of business by making addition, but the A.O failed to appreciate that once the profit of business is increased it will correspondingly increase the amount of deduction u/s 10A of the Act. Even if profit of business is increased there will be no change in the return taxable income of the assessee. The said ratio has been laid down in the case of CIT Vs. Gem Plus Jewelers India Ltd. [ 2010 (6) TMI 65 - BOMBAY HIGH COURT ] and the same has been clarified in CBDT Circular No. 37/16 dated 02/11/2016. Thus we hold that the Ld. Assessing Officer committed error in not allowing the deduction u/s 10A of the Act on account of enhanced business profit. Decided in favour of assessee. Addition on account of diversion of profit and unexplained expenditure - DR submitted that the Ld. CIT(A) committed error in deleting the addition by ignoring the fact that the A.O. has referred the matter to the TPO for determining the Arms Length Price of the assessee transaction with iEnergizer Holding Ltd., though the TPO found that the transaction between the assessee and iEnergizer Holding Ltd. having been carried out at Arm s Length Price, the A.O. is having every right and duty bound to test the genuineness of the transaction - HELD THAT:- Though the TPO has opined that the transaction between the A.O. and the TPO are at Arm s Length, but the A.O. passed the assessment order by making the additions. It is not in dispute that the transaction of the Assessee are with iEnergizers Holdings Ltd. was pursuant to the Service Agreement dated 23/08/2010 w.e.f. 01/04/2010. It is also not in dispute that the very same service agreement and the transaction subsisted for subsequent years i.e. AY 2008-09, 2009-10 and 2010-11. It is pertinent to note that the assessments have been completed in those subsequent years u/s 143(3) of the Act and the very same agreement and the transactions have been tested by the A.O., wherein no doubt has been casted upon regarding the genuineness of the transaction of the Assessee with the iEnergizers Holdings Ltd. and the returned income and the book profit have been accepted by making no addition, which is evident from the Assessment Orders produced - On the query made by the Bench it is also found that the Department has not invoked provisions of Section 263 against the assessment orders passed for Assessment Year 2008-09, 2009-10 and 2010-11 and those assessment orders have reached finality. Thus, the Judgment relied by the Ld. Departmental Representative i.e. Chushman and Wakefield India Pvt. Ltd. (supra) will not come to the rescue of the Department. Considering the fact that the similar transactions were also been tested by the Department in subsequent years in Assessee s own case regarding the very same agreement and those assessment orders have reached finality, the Department cannot have different approach for the year under consideration. Following the principal of consistency, we are of the considered opinion that the additions made by the A.O. deserves to be deleted and we find no error in the conclusion of the Ld. CIT(A) in deleting the addition made by the A.O. Accordingly, we find no merit in the Grounds of Appeal of the Revenue.

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• 2024 (6) TMI 462
  Exemption claimed u/s 10(23C)(vi) disallowed due to a clerical error in the return of income - HELD THAT:- Order under section 154 of the Act was passed by the CPC without granting the assessee an opportunity of being heard, which is a violation of the principles of natural justice. We are of the opinion that the CIT(A) should have adjudicated the appeal on its merits. Therefore, we set aside the order of the Ld.CIT(A) and restore the matter back to the file of the CIT(A) for fresh adjudication. The Ld.CIT(A) is directed to verify the exemption claimed by the assessee u/s 10(23C)(vi) of the Act and to grant appropriate relief if the claim is found to be correct. CIT(A) is also directed to ensure that the assessee is provided with an adequate opportunity of being heard before passing the order.

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• 2024 (6) TMI 461
  Addition u/s 56(2)(x)(B) - purchase of land property - stamp value exceeded the consideration paid by more than Rs. 50,000/- - conversion of land into non-agricultural - assessee accordingly contended that there was no violation of provision of section 56(2)(x)(B) because the agricultural land purchased by the assessee company as a beneficial owner in the previous year 2016-17 - AO found that the assessee company was incorporated on 10-03-2017 whereas the impugned MOU was entered on 03-06-2016. Hence on the date of the MOU, the assessee company was not in existence and could not be part of the MOU. Therefore, the story of the assessee regarding purchase of land as beneficial owner is an afterthought HELD THAT:- There remains no ambiguity that the MOU dated 30- 06-2016 was translated into action. Hence it is established that the promoters purchased the land property on behalf of the company as on 15-07-2016 before pre-incorporation of the company. Therefore, in our considered opinion the conveyance deed dated 21-04-2017 was executed by the promoters in favor of the assessee company merely for completing its promise/contract entered by the promoters on behalf of company before incorporation and in the process the assessee company paid stamp duty as applicable on the date. As such the original transaction of purchase of land by the assessee company in the given facts and circumstances was 15-07-2016 from the farmers for a consideration which was higher than the value on which stamp duty paid. Accordingly, we hereby hold that the lower authority in the given facts and circumstances erred in invoking the provision of section 56(2)(x)(B) of the Act based on stamp duty paid on conveyance deed executed on 21-04-2017. Therefore we set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Ground of appeal of the assessee is hereby allowed.

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• 2024 (6) TMI 460
  Disallowance of claim of Annual Technical Service (ATS) fees - addition made for the reason that they were found to be prior period expenses - HELD THAT:- As is evident from the order of the DRP, identical disallowance was made in the case of the assessee in the preceding years, i.e. from AYs 2009-10 to 2015-16; but was consistently deleted in first appeal by the ld. CIT(A) whose order was confirmed by the ITAT also. Neither has the DRP noted any distinction in facts in the present case from the preceding years nor has the ld. DR being able to point out any distinguishing facts before us. Also, no adverse decision of any higher judicial authority in the case of the assessee has been brought to our notice by the ld. DR. Therefore, there is no case made out by the Revenue before us for not following the decision of the ITAT, deleting identical disallowance, in the preceding years. Disallowance u/s 14A read with Rule 8D - suo-moto disallowance made by the Bank u/s 14A is made on a scientific basis by proportionately allocating all the operating expenses incurred towards earning tax-free income - HELD THAT:- As decided in CIMS Hospital P. Ltd. [ 2020 (3) TMI 1024 - GUJARAT HIGH COURT ] held in very clear terms that before invoking Rule 8D, the AO is obliged to indicate that having regard to the accounts of the assessee, he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to the income which does not form part of the total income under the Act. The Hon ble Court interpreted the provisions of section 14A(2) of the Act while holding so. Having said so, we find that in the facts of the present case, the AO has failed to fulfil this necessary prerequisite for invoking Rule 8D of the Rules. We have noted from the documents filed before us that the assessee had demonstrated to the AO that the suo moto disallowance made by it had been calculated on a scientific basis. The entire basis of calculating the same had been explained to the AO, pointing out that out of the operating expenses only that portion was considered for the purpose of disallowance which was in proportion to the salary of employee, involved in the investment activity to the salary of the total employees of the assessee being 0.20%; that thereafter, these operating expenses incurred for earning exempt income was determined by bifurcating these expenses in the ratio of tax free income earned from securities and taxable earned income therefrom, which came to 3.72% of the expenses. And accordingly an amount as determined suo moto by the assessee as disallowable under section 14A of the Act, and disallowed while computing its taxable income. Thus, the assessee had demonstrated a reasonable basis for calculating the disallowance of expenses pertaining to earning of exempt income, considering the expenses relatable to the investment activity and allocating that portion of the said expenses to the earning of tax free income therefrom on a scientific basis. AO, we find, has not touched upon and made no adverse comment on the specific explanation offered by the assessee regarding the methodology adopted for allocating the expenses for the purpose of earning exempt income, as pointed out to us above. AO, we find has made only certain general comments for rejecting the assessee s explanation, that too factually incorrect. We have noted, that the AO stated that the assessee has given no basis for holding 3.72% of the expenses attributable to earning of tax free income. This is clearly incorrect, since, as noted above by us, the assessee had given a basis for the same. We are in agreement with the ld. Counsel for the assessee that invocation of Rule 8D by the AO was against the provisions of law, and the disallowance therefore made of expenses by the AO u/s 14A of the Act in accordance with Rule 8D of the Rules is not sustainable in law, and is directed to be deleted. Addition of Bank guarantee commission - HELD THAT:- As is evident from the order of the DRP, identical addition of commission income was made in the case of the assessee in the preceding years, i.e. from AYs 2010-11 to 2015-16; but was consistently deleted by the ITAT. Neither has the DRP noted any distinction in facts in the present case from the preceding years nor has the ld. DR being able to point out any distinguishing facts before us. Also, no adverse decision of any higher judicial authority in the case of the assessee has been brought to our notice by the ld. DR. Therefore, there is no case made out by the Revenue before us for not applying the decision of the ITAT in the preceding years in favour of the assessee. Interest on NPA s - addition made to the income of the assessee in respect of interest income on non-performing assets - case of the AO is that as per the Income-tax Rules, interest on NPA should not be recognized when the overdue period of 180 days has been completed - HELD THAT:- As is evident from the order of the DRP, identical addition of commission income was made in the case of the assessee in the preceding years, i.e. from AYs 2010-11 to 2015-16; but was consistently deleted by the ITAT. Neither has the DRP noted any distinction in facts in the present case from the preceding years nor has the ld. DR being able to point out any distinguishing facts before us. Also, no adverse decision of any higher judicial authority in the case of the assessee has been brought to our notice by the ld. DR. Therefore there is no case made out by the Revenue before us for not applying the decision of the ITAT in the preceding years in favour of the assessee. Employee Stock Option cost - action of AO in respect of not allowing the ESOP cost claimed as deduction u/s 37(1) - as argued DRP and AO failed to appreciate that the difference between market price as on date of exercise of options and the exercise price is actual discount offered to the employees - HELD THAT:- The contention of the ld. Counsel for the assessee before us was a reiteration of the arguments made to the authorities below, that the issue is now no longer res integra and has been decided in favour of the assessee in series of decisions including that of Hon ble Karnataka High Court in Biocon Ld. [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT ] followed by the ITAT in various decisions. Thus the impugned issue is also being restored back to the AO to be decided afresh in accordance with prevailing position of law. TP Adjustment - International Transactions of interest charged on loan provided to Associate Enterprise of the assessee in terms of the provisions of Section 92CA of the Act - contention of assessee before us primarily was against treating LOC as equivalent to bank guarantee for making adjustment to the ALP of the impugned international transaction - whether LOC can be equated to Bank guarantees or for that matter whether LOC s call for any sort of adjustment to be made to interest rates when compared to interest rates charged on non LOC loans? - HELD THAT:- There is no scope for equating bank guarantees with letter of comfort. Bank guarantees entail risk, with the provider of guarantee having to pay the amount guaranteed on the default in payment of loan by the person guaranteed. Letters of comfort entail no such financial risk on the provider of the LOC. Therefore we completely agree with assessee that both the TPO and the DRP had erred in equating LOC s to bank guarantees. In the facts of the present case the LOC is asked for by BOI in its quote to Axis Bank, UK but the format in which it is asked is not available. Nothing therefore can be said about the impact of the same on the interest to be charged on the loan transaction. Though the adjustment made to the interest rate by the AO/DRP treating the LOC as bank guarantee cannot be upheld, at the same time, the assessee s alternative argument of treating the interest rates prescribed under the head safe harbour rules i.e. Rule 10TD(2A)(5) of the Income Tax Rules can be accepted, which is six months LIBOR plus 400 bps. The AO is directed to treat the said rate as ALP of the impugned international transaction and make adjustment accordingly. Assessee also contended that the assessee has charged upfront fees also at 1.25% of the loans, and therefore, no adjustment on account of LOC is called. We are unable to agree with the same, since we have noted, even as per the quote of BOI, identical upfront fee of 1.25% of the bank loan was charged. Therefore, the LOC was, over and above, charging of upfront fees, calling for a separate adjustment to the interest on account of the same.

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• 2024 (6) TMI 459
  Exemption u/s 10(34) 10(23AAB) while computing income of insurance business of assessee u/s 44 of the Act - HELD THAT:- Assessee s own case in earlier years wherein similar grounds were raised by revenue, and the Tribunal followed the ratio of the decision on these issues in the case of M/s. ICICI Prudential Insurance [ 2012 (11) TMI 13 - ITAT MUMBAI] this Tribunal has adjudicated similar grounds of appeal of the revenue and held that assessee is entitled to exemption under section 10. Therefore, we do not see any reason to differ from the order of the CIT (A) where he has allowed assessee s claim of exemption under section 10(23AAB) of surplus of Participating Pension Business and also dividend under section 10(34). Accordingly, Revenue ground on this issue is rejected. Rate of tax applicable - according to the assessee isro 12.5% as per section 115B instead of the rate of tax levied @ 30% - according to the assessee, the assessee s income is admittedly from Life Insurance Business, therefore, it needs to be computed as per Rule-2 of the First Schedule to the Act in accordance with the Regulations contained in Part-I and Part-II of the Fourth Schedule of the un-amended Insurance Act, 1938 and rate of taxation is as per section 115B @ 12.5% - HELD THAT:- We note that the assessee carries on Life Insurance Business in India as stipulated by Insurance Regulatory and Development Authority of India (IRDA). On the strength of the license issued from the IRDA, assessee is carrying on the Life Insurance business in India. And therefore, it s income has to be computed as per section 115B of the Act. And we note that in the earlier years there was no dispute on this issue and the AO himself has applied the rate of tax @ 12.5% in accordance with section 115B of the Act. In such a scenario, the AO ought to have levied tax @ 12.5% as per section 115B of the Act. This ground of assessee is allowed. Addition u/s 80(JJAA) - according to assessee, it has claimed in its return deduction u/s 80(JJAA) and the AO didn t adjudicate on it - CIT(A) directed the AO to hear the assessee on this issue and pass speaking order but as assessee submits that Ld. CIT(A) ought to have decided on this issue - HELD THAT:- We note that assessee had filed the requisite Form-10DA before the AO for making claim u/s 80(JJAA) of the Act. But AO has not examined/adjudicated the claim and has disallowed it without giving any reason. And the Ld. CIT(A) has directed the AO to verify and pass speaking order on this claim. We note that the assessee has filed Form-10DA as required by statute to make the claim of deduction u/s 80(JJAA) of the Act and AO without any contrary material has disallowed the same without any whisper/reason for disallowing the same. In such a scenario, we direct the AO to verify the claim of the assessee and consider the claim in accordance to law after giving opportunity to assessee.

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• 2024 (6) TMI 458
  Unexplained loan transaction/advances - Onus of proof - assessee has failed to give any cogent explanation as to the source of loan advanced to Shri Vaibhav Chordia and also mentioned in his order that the assessee had not been able to rebut the observations/ findings of the AO that these persons do not appear as debtors as on 31-03-2023 - HELD THAT:- The business of the assessee is providing safety deposit services and vaults services. Basic service of the income is locker rent from customers and interest on bank deposit. The proceedings u/s. 148 of the Act were initiated on the ground that the assessee asessee had given a Loan Advance (wrongly referred as debtors) of Rs. 18,01,000/- to its Director Shri Vaibhav Chordia and the source of the same is not explained. Subsequently the AO made an addition of Rs. 18,01,000/- in the hands of the company. It is noticed from the available record that the assesse had given advanced to the above mentioned persons which was received back from them through account payee cheques. The confirmation copies of refund of advances are available at pages 27-30 of the paper book and the all these persons are income tax assessee having PAN. It may be noted that opening balances are reflected in the audited balance sheet of the company from year to year. As imperative to mention that AO had the powers u/s 133(6) to call these four persons to enquire into the matter and also recording the matter but it has not been done by the AO.We have also seen from the records that assessee vide his letter dated 19-12-2016 made a specific request to the AO to issue to these persons but it was not done. Assessee has discharged his burden of proof by the submitting the PAN and confirmation of the persons to whom advances have been given. As decided in Orissa Corporation Pvt. Ltd., [ 1986 (3) TMI 3 - SUPREME COURT] Without issuing summons u/s 131 to a party who filed confirmation, no adverse inference can be drawn by the AO. In the light of the facts and circumstances of the case addition made by the AO and sustained by the CIT(A) deserves to be deleted. Assessee appeal allowed.

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• 2024 (6) TMI 457
  Assessment u/s 153A - Lodging New Claims of Deduction u/s. 80-IA - impact of abatement of pending assessments on the ability to make new claims - fresh claims for deduction u/s 80IA(4) in the Returns of Income filed in compliance to notices issued u/s 153A in respect of the preceding six assessment years - HELD THAT:- While making fresh claims for deduction u/s 80IA(4) of the Act in the Returns of Income filed in compliance to notices issued u/s 153A of the Act in respect of the preceding six assessment years, assessee filed the corresponding forms (being Report of Audit of the Eligible Undertaking from an Accountant) in Form 10CCB [as required u/s 80IA(7)] electronically on 12.02.2021 i.e., within the time permitted as per Notices issued u/s 153A of the Act (i.e., before 15.02.2021). Thus we find that coordinate bench [ 2023 (4) TMI 527 - ITAT GUWAHATI] has given its finding by concluding it in para 104 extracted above, holding it in favour of the assessee, allowing the claim of deduction u/s. 80IA. By way of these grounds, revenue has contested that claim of deduction u/s. 80-IA for the assessment years succeeding the AY 2017- 18 can only be admissible if the deduction u/s 80-IA related to the same project(s) has been allowed in AY 207-18. Claim of assessee has been allowed in AY 2017-18 by the Coordinate Bench (supra). Accordingly, ground nos. 1 and 2 of the revenue are dismissed. Treatment of assessee as a Developer of Infrastructure facility and not a Works Contractor - Once the assessee has been taken as Developer of Infrastructure facility in the preceding years in which the claim of deduction u/s. 80IA has been allowed, in the year under consideration different treatment to the assessee for the same activities cannot be held as a Works Contractor . Accordingly, ground no. 3 taken by the revenue is dismissed.

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• 2024 (6) TMI 456
  Disallowance of contribution to Core Settlement Guarantee Fund (Core SGI) - Addition made as no default was made during the year by the clearing members - AO was of the view that once assessee has made contribution to a fund and parted away from the said amount, it does not necessarily mean that the said contribution become an expense. The core SGF is in the nature of reserve that has been created with the NSE clearing corporation - HELD THAT:- Section 10(23EE) exempt specify income and the specify income also include any income by way of contribution received from specified person. The specify person in the section under clause 10(23EE)(iv)(b)also include any recognised stock exchange, being a shareholder in such recognised clearing corporation, or a contributor to the Core Settlement Guarantee Fund therefore assessee being a Stock Exchange is a specified person. The provision of the section 10 as referred above clearly put the contribution made by the specified person to the Core Settlement Guarantee Fund in the category of income therefore corresponding claim of treating such contribution as expenditure in the hands of specified person cannot be simply brushed aside without any relevant reason. As considered the findings of the coordinate bench in the case of BSE Ltd. [ 2019 (11) TMI 1354 - ITAT MUMBAI] on the issue of similar statutory contributions made by the Bombay Stock Exchange to the Core Settlement Guarantee Fund in accordance with the circular of the SEBI holding that assessee is able to prove beyond doubt that the contribution to Core SGF is not in the nature of any deposit/contingency/reserve. In that decision it is further held that the contribution to the Investor Service Fund was made by the BSE from 1992 onwards claimed as deduction u/s 37 of the Act which had been allowed by the department till date. Further in terms of the circular dated 27th August, 2014 issued by SEBI as reproduced supra in this order it is beyond any doubt that the assessee is governed by the rules and regulations framed by the SEBI for carrying on its business of stock exchange in India. The assessee is bound by the mandatory Rules and Regulations issued by the SEBI. Therefore, following the findings of the coordinate bench, rules/regulations of the SEBI and the provisions of section 10 we consider that statutory contributions made by the assessee to the Core SGF on which it had no control is allowable u/s 37(1) of the Act as the same has been incurred exclusively in the course of carrying on its business. Therefore, this ground of appeal of the assessee is allowed. Amortization of Leasehold Land - assessee claimed deduction towards lease premium amortized on lease hold land being revenue expenditure - assessee Company had obtained lease for the term of 80 years from the MMRDA and had paid lease premium - HELD THAT:- This is undisputed facts that assessee had capitalised the lease hold land and shown as asset in the form of land in its balance sheet and also claimed depreciation on the amount capitalised as leasehold land. During the course of appellate proceedings before us the ld. Counsel filed copy of ITAT order in the case of the assessee itself [ 2019 (12) TMI 213 - ITAT MUMBAI] vide which the issue was restored to the file of the AO for deciding a fresh in the light of the decision of Hon ble Gujarat High Court in the case of Sun Pharmaceuticals Ltd. [ 2009 (3) TMI 587 - GUJARAT HIGH COURT] - Following the decision of the ITAT as discussed supra this issue is also restored to the file of the AO for deciding a fresh as directed above in the findings of the ITAT. Therefore, this ground of appeal of the assessee is allowed for statistical purpose. Correct head of income - maintenance and other charges received from the Licensees treating as income from house property - HELD THAT:- As decided in own case [ 2011 (12) TMI 376 - ITAT, MUMBAI] w e find that the CIT(A) has indeed been very superficial in his approach and has simply brushed aside contentions of the assessee. The issue in appeal does not have much to do with the decision of Hon ble Supreme Court in the case of Shambhu Investments [ 2003 (1) TMI 99 - SC ORDER] It is a case where separate payment is being made and there is no dispute that the rent is to be treated as income from house property. The question really is whether a separate payment is being made for other services whether the same could be treated as income from house property It is also to be examined whether such a payment is to be excluded for determination of annual value. There are decisions on the coordinate benches as also Hon ble Courts above dealing with fine points regarding these aspects. Learned counsel has, even before us, made these legal submissions which the CIT(A) had no occasion to deal with by way of a speaking order. In this view of the matter, we deem it fit and proper to remit the matter to the file of the CIT(A) with a specific direction to deal with all the contentions of the assessee by way of a speaking order and in accordance with the law. Disallowance u/s 14A r.w.r. 8D - assessee has suo moto disallowed the expenses towards earning exempt income - HELD THAT:- We consider that basis for the correctness of self -devised method of the assessee for estimating the disallowance u/s 14A is required to be examined at the level of the assessing officer. Therefore in order to decide the issue on merit we restore this issue to the file of the assessing officer for deciding de novo after verification of the basis of allocation of expenses under the different heads from the relevant material to be furnished by the assessee. It is needless to say that observation made by us will not injure or impair the case of the AO and will not cause any prejudice to the defence explanation of the assessee. Therefore, this ground of appeal of the assessee is allowed for statistical purpose.

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• Customs

• 2024 (6) TMI 455
  Verification of Certificate of Origin - Non-compliance of FSSAI Regulations, 2011 in respect of dry dates imported by the Appellants established as slips tagged with bags showing mandatory particulars were not securely affixed - Confiscation of goods has been ordered under section 111(m) of the Act, 1962 on the ground that country of origin of goods has been mis-declared - Retraction of statements - Penalty on M/s Omega Packwell Pvt. Ltd., under Section 112(a) of the Act, 1962 - Imposition of penalty on Shri Yogesh Gupta under Section 114AA of the Act, 1962. Verification of Certificate of Origin - HELD THAT:- In all documents viz., invoice, country of origin certificate, phytosanitary certificate etc. country of origin of dry dates in present case was shown UAE. Slips tagged with bags of dry dates were showing country of origin of the goods UAE. No enquiry was conducted by the Department to prove that country of origin certificate duly issued by the Competent Authority of the exporting country was fake - No evidence was brought out to infer that country of origin shown in the said phytosanitary certificate was incorrect. Bags of dry dates were found, during physical verification, carrying slips on which country of origin was mentioned as UAE. Mere suspicion is not enough to discard aforesaid documents. Nothing has been placed on record by which it can be said any verification request has been made by the custom authorities with concerned authorities in UAE to verify the genuineness and correctness of the Certificate of Origin issued by them. In view of the above concrete proofs regarding country of origin, we hold that said goods were of UAE origin. In the case of Challissari Kirana Merchant [ 2015 (4) TMI 686 - KERALA HIGH COURT] , the Hon ble Kerala High Court has held that for determination of country of origin due weightage should be given on the country of origin certificate in case of any suspicion. Thus, the goods, in question, were of UAE origin and confiscation of goods on the ground of mis-declaration of country of origin is not sustainable. Non-compliance of FSSAI Regulations, 2011 in respect of dry dates imported by the Appellants established as slips tagged with bags showing mandatory particulars were not securely affixed - HELD THAT:- Circular No.9/2015-Cus dated 31.03.2015 issued by CBIC provides that out of charge order by Customs would be given only after receipt of Release Order from FSSAI - In accordance with the provisions of Regulation 6(10) of FSSAI (Import) Regulations, 2017, the Authorized FSSAI officer shall reject the consignment not complying with the provisions of Labeling and Packaging Regulations, 2011 at the visual inspection and no sample shall be drawn from the consignment. Similarly, under Regulation 9(1) of FSSAI (Import) Regulations, 2017, it has been again provided that the Authorized Officer of FSSAI shall ensure compliance with the Food Safety and Standards (Labeling and Packaging) Regulations, 2011 - In the present case, the consignment of dry dates was referred to FSSAI for ensuring compliance of FSSAI Act and Rules and Regulations made thereunder. The FSSAI Authorized Officer inspected the consignment and found that the FSSAI Regulations, 2011 was complied with, then, drew the sample and finally issued No Objection Certificate vide NOC No.NOC20190005632 dated 30.09.2019. As per para 4.3 of chapter 8 of the Customs Manual, customs during examination shall exercise general checks and if products are not found to be satisfying requirements, clearance will not be allowed. In para 4.4 of chapter 8 of the Manual, General check includes verification of product to ensure compliance of labeling requirement also. Examining officers did not express any discrepancy regarding non- compliance of the FSSAI Regulations, 2011. It proves beyond doubt that there was no non-compliance of the FSSAI Regulations, 2011 in the present case. The confiscation order on account of non-compliance of FSSAI Regulations, 2011 is, therefore, invalid. Confiscation of goods has been ordered under section 111(m) of the Act, 1962 on the ground that country of origin of goods has been mis-declared - HELD THAT:- The bill of entry was filed as per invoice, packaging list and certificate of country of origin, declaring therein country of origin UAE provided by the suppler. There was no mala fide on the part of the importer. The importer has declared country of origin as was informed by the overseas supplier in import documents. The import of dry dates is neither prohibited under the Act, 1962 nor under the Foreign Trade Policy. It has already been settled in series of judicial decisions that if the importer files bill of entry on the basis of information provided in invoice and other documents, charge of mis-declaration does not survive - The declaration made in the bill of entry as per invoice and other import document cannot be treated as mis-declaration when there is no proof of involvement of the importer. It is further submitted that there is also no violation of the provisions of the FSSAI Regulation, 2011. Hence, the goods i.e., dry dates were not liable to confiscation under Section 111(m) of the Act, 1962. In the present case, dry dates were procured from local market of Dubai by M/s GVO Global FZC UAE, a Free Zone company, and stored at Free Zone for export to Indian buyers as is evident from country of origin certificate. Thus, on the basis of the said declaration, it cannot be inferred that said goods were originated in third country. Retraction of statements - HELD THAT:- The cardinal principle of acceptance of a statement as evidence is the statement has to be voluntary and it should be true. The retraction of Shri Anil Kumar Agarwal was rebutted by the team of Inquiry Officer without stating any cogent reason. During the investigation the statement is recorded with the help of Section 108 of the Act, 1962 and if the same is retracted later on then it cannot be used against the maker of the statement if the same is not rebutted by the Department - thus, the retracted statement cannot be used to prove any offence. Penalty on M/s Omega Packwell Pvt. Ltd., under Section 112(a) of the Act, 1962 - HELD THAT:- Penalty under the said Section is imposable on a person when he is involved in any action which makes goods liable to confiscation. In the present case, goods were not liable to confiscation. Hence, no penalty is imposable on M/s Omega Packwell Pvt. Ltd. Imposition of penalty on Shri Yogesh Gupta under Section 114AA of the Act, 1962 - HELD THAT:- Penalty on a person under said Section can be imposed when such person intentionally makes false declaration before the Customs. It is observed that Yogesh Gupta declared country of origin on the basis of documents supplied by the overseas supplier. There was no manipulation by him to mis-declare country of origin. No evidence was pointed out by the Adjudicating Authority to prove any involvement of Shri Yogesh Gupta in any false declaration. Hence, no penalty under Section 114AA is imposable upon him - Shri Gupta has not made intentionally any false sign or declaration, incorrect statements or declarations to attract penalty under Section 114AA of the Act. Therefore, penalty imposed under Section 114AA of the Act, 1962 on him is liable to be quashed. Similarly, penalty imposed upon Shri Manoranjan Kumar, Shri Chandan Choudhary, Shri Kush Agrawal and Shri Anil Agrawal cannot be sustained and are accordingly set aside. The impugned order is set aside - appeal allowed.

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• 2024 (6) TMI 454
  Smuggling - Absolute Confiscation - levy of penalty u/s 114 of the Customs Act, 1962 - illegal export of of 154 number of mobile phones - HELD THAT:- Admittedly, the goods in question were seized when they were moving within the territory of India about more than 60 Kms away from Bangladesh Border. Just because the Appellant was not carrying any proper document, it cannot be directly presumed that the goods were being illegally transported to Bangladesh. It is seen from the records that inspite of having the names and mobile numbers of the persons who had placed the order to purchase the mobile phones, no attempt has been made by the Department to verify the facts from these persons. Thus, the Department has failed to provide any proper, cohesive and corroborative evidence to the effect that the goods in question were to be smuggled to Bangladesh illegally. In the absence of such evidence it is clear that the proceedings have been initiated only on the basis of presumptions and assumptions. The absolute confiscation and penalty set aside - appeal allowed.

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• 2024 (6) TMI 453
  Classification of imported goods - ICON 82 Outdoor LCD with accessories - classifiable under CTH 85287390 or under 9013 8010? - HELD THAT:- The matter is no longer res integra as the issue has been settled by the Apex Court in the case of CCE, Aurangabad vs. M/s. Videocon Industries Ltd. [ 2023 (3) TMI 1338 - SUPREME COURT] interpreting the General Rules of Interpretation and the Section Notes and Chapter Notes observed The CESTAT s reasoning and conclusions, in both cases, that the LCD sets were under Chapter 90, Entry 9013.8010, is sound and unexceptionable . Following the above decision of the Supreme Court, this Tribunal in the case of M/s. Xiaomi Technology India Limited Vs. The Commissioner of Customs [ 2023 (7) TMI 325 - CESTAT BANGLORE] had classified the LCD panels under Chapter Heading 9013. The LCD Panels are to be classified under Chapter Heading 9013 8010 - The impugned order is upheld - appeal filed by Revenue dismissed.

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• Corporate Laws

• 2024 (6) TMI 452
  Seeking dissolution of the company (in liquidation) - Section 481 of the Companies Act, 1956 - HELD THAT:- Since the company (in liquidation) did not have sufficient funds and no further assets were available with the Official Liquidator from which any money could be realised and be paid to any of the creditors of the company, other than its Secured Creditors, an application was moved on behalf of the Official Liquidator bearing CA No. 561/2023, interalia seeking permission to make payment to the Secured Creditors and transfer the available balance, if any, to the Common Pool Fund, after deduction of the Liquidation Expenses incurred by the office of the Official Liquidator. At present, it is stated that the company (in liquidation) has no further assets, either movable or immovable, from which any money can be realised. Therefore, the present application has been filed under Section 481 of the Act for dissolution of the company (in liquidation), as no fruitful purpose would be served in keeping the present winding up proceedings pending. Keeping in mind the import of Section 481 (1) of the Act as also the facts and circumstances of the present case, these liquidation proceedings warrant to be brought to an end. Therefore, the present application is allowed. The company (in liquidation) M/s. Sarvodya Paper Mills Ltd., stands dissolved and the Official Liquidator is hereby discharged as its Liquidator. Application for dissolution allowed.

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• PMLA

• 2024 (6) TMI 470
  Seeking enlargement on bail - money laundering - proceeds of crime - absence of material which would justify the belief that the applicant may be guilty of an offence under the PMLA - Justification for Arrest u/s 19 of PMLA - Alleged inchoate nature of predicate offences - Justification for Arrest u/s 19 of PMLA - HELD THAT:- Firstly, the Court cannot loose sight of the fact that CBI FIR was registered pursuant to the directions given by the Division Bench in PIL. Secondly, it is necessary to note, there is material in the form of the interception and seizure of betel nuts by DRI, search and seizure operation at the premises of the applicant and Ikram Haji Haroon Jada (A4). Thirdly, the statements of witnesses, especially that of Manoj Kothari, the transporter, revealed that the applicant was the actual consignee of the alleged smuggled betel nuts and not M/s. Kheboto Traders, the purported consignee. In his statement recorded under Section 50 of the PMLA, the applicant has allegedly stated that he had placed orders and procured betel nuts from F.M. Food. Fourthly, there is further material to show that the applicant had credited the amounts to the accounts of M/s. Kheboto Traders and K.S. Enterprises which were eventually transferred to the account of F.M. Food - In these circumstances, prima facie, it cannot be said that the Investigating Officer had no justification to arrest the applicant. Alleged inchoate nature of predicate offences - HELD THAT:- The second submission on behalf of the applicant based on alleged inchoate nature of predicate offences deserves consideration. The fact that the CBI has registered FIR pursuant to the directions of the Division Bench in Public Interest Litigation is rather incontestable. It is not the requirement in law that the person who is accused of offence under the PMLA must also be arraigned as an accused in the predicate offence. The submission that since there has not been any effective investigation in the FIR registered by CBI and till the CBI concludes its investigation, it cannot be said that the applicant has any role in the allegations levelled in the said FIR, also does not merit countenance. For the reason that the CBI has not filed the charge-sheet, it cannot be said that the predicate offence has effaced. It is true, the allegations that the applicant attempted to bribe the contractual employee to obtain the copies of his statement are of serious nature. Yet the context of the matter is required to be kept in view and, in the totality of the circumstances, where the principal accused is at liberty, in the peculiar facts of the case, it is required to exercise discretion in favour of the applicant. The applicant is allowed to be released on bail, subject to conditions imposed - bail application allowed.

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• 2024 (6) TMI 469
  Money laundering - proceeds of crime - offence of smuggling of narcotics and running extortion rackets - double attachment of properties - fugitive economic offenders under Section 12 of the Fugitive Economic Offenders Act, 2018 - HELD THAT:- The proceeds of crime was shifted on the area of 14000 Sq. Ft. taken by HazraMemonin consideration of the plot of land of M.K. Mohammad and it is for that reason alone that the respondents attached the said property of HazraMemon. The respondents failed to consider that on shifting of the proceeds of crime and its attachment by attaching the property of 14000 Sq. Ft. they could not have made further attachment of alleged proceeds in the hands of the appellant. In fact, with exchange of the property and that too under the decree of the Court, the area came to the appellant no more remain to be proceeds of crime otherwise it would be a case of double attachment going against the principles of law. The respondents have tried to divert the fact in reference to the alleged violation of FSI to justify the action of attachment. The arguments were made in ignorance of the fact that violation of alleged FSI is not subject matter of FIR and ECIR and it could not have been under the ECIR being not a schedule offence under the Act of 2002. The arguments in this regard shows an exercise not appropriate to the facts of the case and under the provisions of law. The position of facts could have been different if the appellants would have occupied the area taken by M.K. Mohammad and given to HazraMemon under the assignment without consideration and a decree. The attachment of the above area at 12 to 15 floors of Ceejay House cannot be considered to be appropriate and legal. As per Section 8(2), the Adjudicating Authority is required to record its finding that property is involved in money laundering and only on recording of such an opinion, the order of attachment can be confirmed. It cannot be concluded that a property taken on consideration and the Court decree can be said to be involved in the money laundering, rather for that respondents have already taken recourse to attach 14000 sq. ft. area in the hands of HazraMemon. The impugned orders of attachment are quashed - appeal allowed.

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• 2024 (6) TMI 451
  Money Laundering - proceeds of crime - seizure of documents u/s 17(1) of the Prevention of Money Laundering Act, 2002 - no Prosecution Complaint (PC) has been filed against the appellant though a period of 365 days has already expired after the order of the Adjudicating Authority - appellant is not an accused in the FIR or ECIR. The seized documents of property are not `proceeds of crime - HELD THAT:- In the instant case, serious allegations of fraudulent transactions to the tune of Rs.164.99 crores exists against many accused which includes appellant s grandfather. The appellant s grandfather purchased a property in the year 1988 but it was gifted to the appellant in the year 2020 after registration of the FIR in the year 2017 and even the ECIR. It was by way of gift the property was transferred to the appellant to overcome with the fraud committed by him with the bank and to save the property from seizure and attachment. It was not gifted bonafide but to save the property from seizure and attachment after registration of FIR though it was not obtained out of the proceeds of crime but is for the value thereof in absence of the availability of the total proceeds out of the crime i.e. Rs.164.99 crores. The fact is that the property was originally belonging to the accused Nirmal Kumar Kejriwal, the grandfather of the appellant. A gift was made in the year 2020 in favour of the appellant whereas the FIR was registered in the year 2017 followed by the ECIR in the year 2019. The way property was given to the appellant has been noticed and as it was earlier belonging to one of the accused thus, the documents were seized by the respondent and there are no illegality in it. The words the value of such property does specify it to be earlier to the crime or subsequent and the words thus value of such property would mean the property acquired prior or subsequent to the crime is added. The prosecution complaint against the appellant not filed within 365 days - HELD THAT:- It is stated that the prosecution complaint has not been filed against the appellant within 365 days thus, the seizure should lapse in view of Section 8(3)(a) of the Act of 2002. The perusal of the provision aforesaid shows continuance of the order of Adjudicating Authority during investigation for a period not exceeding 365 days or the pendency of the proceedings relating to any offence under this Act before a Court or under the corresponding law of any other country. The provision does not mandate for filing of PC against the person whose property has been attached or seized. The provision requires completion of investigation within a period of 365 days and pendency of the proceedings relating to any offence before the Court. This Tribunal and for that no Court is having competence to add the word in the provision which does not exist. If Section 8(3)(a) is given interpretation to mandate pendency of the proceedings against the person from whom property has been attached or seized then it would become very easy for the accused to commit the offence of money laundering and park the proceeds with a person having no connection with the crime. In that case, a person not connected with the crime may not be subjected to investigation or proceedings in the criminal court and in absence of it the parked property by the accused can be saved from attachment and seizure to frustrate the very object of the Act. It is for that reason only the words accused or person from whom property is attached or seized are not mentioned under the provision for filing of PC against them rather what is required is a prosecution complaint in reference to the offence under the Act of 2002. The appellant is not an accused in the FIR or ECIR - HELD THAT:- The object of the Act is to freeze proceeds of crime and as discussed in the preceding paras, the property gifted to the appellant would fall within the realm of proceeds of crime. The use of the terms any person in Section 5(1)(a) read with such proceeds of crime in sub -clause (b) of Section 5(1) includes any person not necessarily an accused. In case, the argument of the appellant is to be accepted, the same would render to defeat intention of the legislature and frustrate the object of the Act - In the instant case, the accused Nirmal Kumar Kejriwal knowing it well that property with him may become subject matter of attachment or seizure gifted it to his grandson much after the registration of FIR and ECIR. The aforesaid cannot be considered to be bonafide rather designed to circumvent the provisions of law and the case registered against the accused. Appeal dismissed.

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• Service Tax

• 2024 (6) TMI 450
  Seeking refund of excess amount recovered from the petitioner s account - Department without communicating the order has recovered an amount - violation of principles of natural justice - HELD THAT:- The Appellate Commissioner admitted the petitioner s appeal against the Order in Original and directed the Commissioner of GST and Central Excise (Appeals) to dispose of the appeal expeditiously. The fourth respondent/the Commissioner of GST and Central Excise (Appeals) is directed to dispose of the petitioner s appeal as expeditiously as possible preferably within a period of 6 months from the date of receipt of a copy of this order subject to the defenses that are available to the Revenue. Considering the fact that the petitioner is only required to deposit Rs. 54,785/-, in case an appeal was filed under Section 86 of the Finance Act, 1994, the respondents are directed to refund the balance amount of Rs. 14,16,115/- (Rs. 14,70,900/- Rs. 54,785/-) to the petitioner subject to the petitioner furnishing a bank guarantee for the balance amount to secure the interest of the Revenue. Petition disposed off.

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• 2024 (6) TMI 449
  Invocation of extended period of limitation to demand Service Tax - suppression of facts with intention to evade payment of tax exists or not - alleged non-payment/short payment of service tax - demand of Service Tax u/s 73 of the Finance Act, 1994, interest, and penalty - inclusion of value of free supply materials in their assessable value. Extended period of limitation - HELD THAT:- The appellant has categorically informed the Department that according to them, the service rendered by them is not liable to Service Tax and hence, they are not paying Service Tax on the said services rendered by them to JSPL. However, on receipt of the above said letter, no action has been taken by the Department against the appellant. The demand of Service Tax in the present case has been raised for the period from 2007-08 to 2009-10. The Show Cause Notice in the present case has been issued on 07.06.2012 which is beyond the normal period of limitation - it is also noted that the appellant has disclosed all the information to the Department and did not suppress any facts. Accordingly, it is observed that suppression of facts with intention to evade payment of tax does not exist in this case. Hence, the demand of Service Tax by invoking the extended period of limitation is not sustainable. Demand of service tax under the category of works contract service for the period from 2007-08 to 2009-10 - HELD THAT:- The construction of complex, which is constructed by a person directly engaging any other contractor and intended for personal use as a residence, is not liable to Service Tax. In the present case, the residential complexes constructed by JSPL in their Angul and Raigarh units were meant for the use of their employees. It is observed that the activity of works contract service undertaken by the appellant for JSPL falls within the ambit of the definition of personal use . Accordingly, the service rendered by the appellant for JSPL is not liable to Service Tax under the category of works contract service. Inclusion of value of free supply materials in the assessable value for the purpose of payment of Service Tax - HELD THAT:- It is observed that in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] the Hon ble Apex Court has held that the value of free supply materials is not includable in the assessable value. In the present case, the appellant is not liable to pay Service Tax for the services rendered. Hence, the question of including the value of free supply materials in the assessable value for the purpose of payment of service tax, does not arise. In view of the discussions above and by relying on the decision cited, it is held that the demand of Service Tax by including the value of free supply materials in the assessable value is not sustainable. Service tax on advance received for the purpose of rendering works contract service - HELD THAT:- These advances have been received by the appellant towards the above services rendered - the appellant is not liable to pay Service Tax for the services rendered, the demand of Service Tax on the advances received is not sustainable. Interest and penalty - HELD THAT:- Since the demand itself is not sustainable, the question of demanding interest and penalty does not arise. The demands confirmed in the impugned order are not sustainable - the impugned order is set aside - appeal allowed.

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• 2024 (6) TMI 448
  Classification and Taxability of Services - Demand of service tax confirmed on the foreign currency payments - Performance-Based Services and Import of Service Rules - Penalties imposed of Shri K. Satishchandra - Classification and Taxability of Services - HELD THAT:- It is observed that the appellant has furnished details of year-wise and vendor-wise foreign currency payments along with the brief nature of expenses. The Department has considered the entire foreign expenses as charges paid towards provision of taxable service and confirmed service tax aggregating to Rs. 88,75,35,408/- on a reverse charge basis. However, it is found that the impugned order has not classified the specific category under which the appellant was liable to pay service tax. In the positive list regime, the onus was on the revenue to determine taxability and appropriate classification. In the present case, it is observed that notice fails to classify the specific category under which the appellant is liable to pay service tax. In the absence of such specific classification, the demand is not sustainable. In the present case, the Notice failed to classify the specific category under which service tax is to be paid by the appellant. Accordingly, the demands of service tax confirmed in the impugned order is not sustainable on this count alone. Demand of service tax confirmed on the foreign currency payments - HELD THAT:- The foreign currency payment amounting to Rs.74,18,87,361/- has been incurred towards ship repairs and maintenance. Such payments could only be tested against the taxable category Maintenance or Repair Service - Section 65(105)(zzg) which is a performance-based service and therefore could not be taxed in India as the services were availed outside India. Accordingly, the demand of service tax confirmed on these foreign currency payments id not sustainable. Performance-Based Services and Import of Service Rules - HELD THAT:- Most of the services where demand of service tax has been confirmed are performance based services which are liable to pay service tax only if the recipient of service is located in India or wholly performed in India. In this case, it is observed that most of the services are performed outside India and hence they are not liable to service tax as per Rule 3(ii) of the said Rules. It is also observed that the appellant have already paid service tax in respect of all those services which fall under category 3 (as listed in Sl. Nos. 22 to 32 of the Table mentioned in paragraph 4 above). However, the ld. adjudicating authority has categorized all the services under Rule 3(iii) and confirmed service tax, which is legally not sustainable. In view of the above discussions, the demands confirmed in the impugned order are not sustainable on merits also. Penalties imposed of Shri K. Satishchandra - HELD THAT:- The Impugned Order has imposed Penalty under Section 9AA of the Central Excise Act read with Section 83 of the Finance Act. Section 9AA deals with Offences by Companies. A perusal of the above provision indicates that in terms of Section 9AA, a person in charge of the company can be penalized only if the person was in charge and responsible when the offence was committed. It must be established that the offence was committed with his consent or negligence of such person. The department has not brought in any such evidence to substantial the allegation against the Director. It is also observed that the Show Cause Notice has not invoked the provisions of Section 9AA to impose penalty on the Appellant. Hence, the penalty imposed under Section 9AA has gone beyond the scope of the Show Cause Notice. There is no evidence brought on record to establish that the appellant was responsible for day-to-day affairs of the company during the relevant period - the penalty imposed on him is not sustainable and hence set aside. The demands confirmed in the impugned order are not sustainable - Since the demand itself is not sustainable, the question of demanding interest and imposing penalty on the appellant does not arise - Appeal allowed.

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• 2024 (6) TMI 447
  Classification of services - Online Information and Database Access or Retrieval Services (OIDAR) or Business Support Services (BSS) - POPOS rules - export of services or not - HELD THAT:- It is observed that respondent is engaged only in assimilating the verification documents and information available in public domain into a final verification report to its client- entities Dataflow Dubai. Respondent do not have any ownership or contract out the data and is not disseminating the same through the network appearing for public for uses against the cost, these the verification report created or transmitted through by the appellant to its clients/entities namely Dataflow Dubai by using network of computers. In case of PHILIPS ELECTRONICS INDIA LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [ 2018 (11) TMI 1093 - CESTAT CHENNAI] it was held that In any case, all these infrastructure services are only in the nature of providing intra connectivity between Philips locations worldwide and the payments made are obviously then for sharing of the maintenance cost between the Philips units and not as fees for supply of online information or retrieval of data from the portal . It is well established fact that there is no res-judicata in the taxation matter even if in some cases party have discharged service tax liability by treating these services under the category of OIDAR that cannot be a para for not claim otherwise in subsequent transactions - the claim of revenue that these services should be classified under the category of OIDAR cannot be accepted and the appeal on this ground lacks merit. As it is held that the services provided by the appellant are not classifiable under the category of OIDAR but the same are classifiable under the category of Business Support Service as per Rule 3 of Place of Provision of Services Rules, 2012, benefit of export of services is admissible to the appellant and no service tax could have been demanded from him as per the show cause notice. Appeal filed by the revenue is rejected.

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• 2024 (6) TMI 446
  Classification of service - Service classifiable under the category of Information Technology Services or not - Liability to pay service tax in respect of services provided by them as sub-contractor - Extended period of limitation - penalty - Imposition of penalty under Section 76 for the period prior to 09.05.2008. Determination of the classification of the services that are sought to be taxed while the demand has been made under the category of Business Auxiliary Service - Service classifiable under the category of Information Technology Services or not - HELD THAT:- Admittedly, appellant was providing these services of printing of voter electoral rolls and voter cards to various government authorities in terms of agreement entered by them with UPDESCO. The fact that these services were to be provided by UPDESCO is evident from the contract dated 29.08.2003 made between UPDESCO and the Government of Uttar Pradesh - appellant is a sub-contractor to M/s UPDESCO for providing these services. For providing these services appellant is getting 16% of the billed amount as commission and these activities of providing services on commission basis. From the above it is evident all the ingredients to classify the services rendered by the appellant to UPDESCO and UPECL contains all the element of definition of Business Auxiliary Services, particularly sub clause vi. Since the amount is in the form of commission and in planned manner, therefore, the type of work is squarely covered under Business Auxiliary Service. Service tax is a transaction based tax and liability to tax is to be determined on the basis of the transaction between the transacting party i.e. service provider and the service recipient. In the present case service provider is appellant and the service recipients are UPDESCO, UPELC etc. The services provided by the appellant to these organizations are correctly classifiable under taxable category of Business Auxiliary Services. Liability to pay service tax in respect of services provided by them as sub-contractor - Appellant has contended that as UPDESCO and UPELC are services recipients in respect of these services and they were as sub-contractor, not required to pay any service tax in respect of services provided by them as sub-contractor - HELD THAT:- The said contention has been rejected by the Commissioner and the liability of sub-contractor to pay service tax even if main contractor was pas paying the service tax on the services rendered has been decided by the Larger Bench of the Tribunal in the case of Melange Developers P. Ltd. [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB] wherein it was held that it is not possible to accept the contention of the Learned Counsel for the Respondent that a sub-contractor is not required to discharge Service Tax liability if the main contractor has discharged liability on the work assigned to the sub-contractor. Extended period of limitation - penalty - HELD THAT:- It needs to be verified whether the amount deposited by the appellant as claimed by them for services provided by them during the period post 01.07.2010 covers the tax due needs to be verified by the jurisdictional authorities after computing the demand for the normal period. Appellants have during the course of argument submitted the detailed chart year wise for computation of the value of services. This chart should be taken into account by the original authority for re-computing the demand the demand for normal period and apportioning the same against the payments made - the invocation of extended period of demand the penalties imposed under Section 78 of the Finance Act, 1994 cannot be upheld, as the ingredients for invoking extended period and Section 78 are identical. Imposition of penalty under Section 76 for the period prior to 09.05.2008 - HELD THAT:- As it is held that the demand for this period barred by limitation, there are no merits in the appeal filed by revenue. Appeal filed by the appellant is partially allowed. Matter is remanded to the original authority for re-computing the demand for normal period of limitation as per Section 73 of the Finance Act, 1994.

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• 2024 (6) TMI 445
  Refund of service tax - export pass fee - Reverse charge mechanism - rejection of refund claim on the ground that service tax on the export pass fee is payable as per N/N. 30/2012-S.T. dated 20.06.2012 as amended vide N/N. 18/2016-5.1. dated 01.03.2016 w.e.f. 01.04.2016 - HELD THAT:- The Tribunal after relying upon the case of Anheuser Busch Inbev India Ltd. vs. CCT Bengaluru North West [ 2021 (2) TMI 1023 - CESTAT BANGALORE] held that the Appellant is not liable to pay service tax on Export Pass Fee. Thus, the fees paid by the Appellant to the State Government does not amount to the provision of any service. The impugned order passed by the learned Commissioner (Appeals) is set aside and the appeal is allowed. The Adjudicating authority is directed to grant refund of Rs.30,68,750/- and also interest upon the said amount, from the date of deposit till the date of grant of refund @ of 12% per annum. Such refund and interest should be granted within a period of Ninety days from the date of receipt of copy of this order.

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• 2024 (6) TMI 444
  Classification of service - short-term accommodation service or tour operator service - entitlement of abatement under notification dated 20.06.2012 (from 01.07.2012) in respect of service of tour operator and claim abatement of 90% on gross amount charged - invocation of section 73A of the Finance Act, 1994 and requiring the appellant to pay the alleged taxes collected from the customers and passed on to the hotels for their payment of tax under hotel accommodation services - provisions of section 73 and section 73A of the Finance Act can be simultaneously invoked or not - correctness of demanding amount from the appellant under section 73A of the Finance Act in respect of cases where the customers stay in hotels having tariff value of less than Rs. 1000 per day or cases where the hotels are located in the State of Jammu Kashmir - statement for subsequent period can be issued for demand under section 73A or under section 73(1A) of the Finance Act - invocation of extended period of limitation for recovery of tax under the proviso to section 73(1) of the Finance Act and under section 73A of the Finance Act - imposing penalty on the appellant and its officials. HELD THAT:- The factual position and the issues in the decision of the Tribunal in M/S MAKE MY TRIP (INDIA) PRIVATE LIMITED, SHRI M.K. PALLAI, VICE PRESIDENT (FINANCE) AND SHRI MOHIT KABRA, GROUP CFO DIRECTOR M/S MAKEMY TRIP (INDIA) PRIVATE LIMITED VERSUS ADDITIONAL DIRECTOR GENERAL, DIRECTORATE GENERAL OF GST INTELLIGENCE, NEW DELHI [ 2024 (1) TMI 681 - CESTAT NEW DELHI] and the present appeals are identical where it was held that as follows: (i) That renting of hotel accommodation service can only be provided by a hotel. Make My Trip, did not qualify as a hotel and could, therefore, not render the service of renting of rooms in a hotel; (ii) That Make My Trip merely acted as a facilitator between the customer and the hotel permitting the booking of hotel rooms. For this, Make My Trip received commission; (iii) That Make My Trip qualified as a tour operator and, therefore, on the service of booking of accommodation of service, Make My Trip was entitled for the benefit of abatement; and (iv) That the taxes collected by Make My Trip were paid to the hotels for further remittance. Hence, section 73A of the Finance Act could not be invoked. Thus, in view of the decision of the Tribunal in Make My Trip, the impugned order passed by Additional Director deserves to be set aside and is set aside - The appeals are, accordingly, allowed.

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• 2024 (6) TMI 443
  Liability of appellant to discharge service tax - Construction of Residential Complex Services - period October 2007 to September 2011 - HELD THAT:- On perusal of the SCN, it is noted that the appellant had entered into Joint Venture agreements with the land owners for the Construction of Residential Complex Services. It is clear that the appellant is a Promoter/Builder of residential projects and as per the clarification of the Board Circular vide No.108/2/2009 dated 29.01.2009, the demand raised against the appellant for Construction of Residential Complex Services is unsustainable. The issue as to whether a Promoter/Builder is liable to pay service tax, was considered by the Tribunal in the case of M/s.Krishna Homes Vs. Commissioner of Central Excise [ 2014 (3) TMI 694 - CESTAT AHMEDABAD] and it has held that the demand of service tax against the promoter/builder/developer cannot sustain for the period prior to 01.07.2010. The said decision was followed by the Tribunal in the case of Pragati Edifice Pvt. Ltd Vs. Commissioner of Central Excise Service Tax [ 2019 (9) TMI 792 - CESTAT HYDERABAD] wherein it was held that the demand raised under construction of residential projects against the Promoter/Builder cannot sustain for the period prior to 01.07.2010. Apart from this, the Works Contracts are composite in nature, involving both supply of material and rendition of services, and are composite in nature. The Tribunal in the case of Real Value Promoters Pvt Ltd [ 2018 (9) TMI 1149 - CESTAT CHENNAI] has considered the issue as to whether the demand can be raised under Residential Complex Services/Commercial/Industrial Services for the period prior to 01.07.2012, when the contracts are composite in nature and has held that the demand of service tax for composite contracts can be made only under Works Contracts Services. The impugned order is set aside - Appeal allowed.

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• 2024 (6) TMI 442
  100% EOU - refund of unutilised CENVAT Credit of service tax paid on the input services under N/N. 5/2006-CE(NT) dated 14.03.2006 - export of services - denial of refund on the ground of no nexus between input services and service exported and non-submission of certain documents required for processing the refund claim - HELD THAT:- The revenue has held that the services provided by the appellant fall under the category of Business Support Service and not Business Auxiliary Service . The issue pertaining to the previous period was considered by this Tribunal in appellant s own case, AMD India Pvt., Ltd., Vs. CST [ 2015 (3) TMI 346 - CESTAT BANGALORE] , Bangalore and allowed the appeal. The Learned Authorised Representative fairly admits that the issue is no more res integra, since this Tribunal has taken a view allowing the appeals. Further Board vide Circular No.111/05/2009-ST dated 24.02.2009 has also issued clarification in this regard. In the facts and circumstances of the case, it is found that there is on reason to interfere with the ratio of the decisions of the Tribunal, therefore the appeals are sustainable. Appeal allowed.

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• 2024 (6) TMI 441
  Eligibility of Cenvat Credit on input services used beyond the place of removal - services falling within the definition of Rule 2 (l) of Cenvat Credit Rules, 2004 or not - HELD THAT:- The Appellant has not been able to provide proper documentary evidence and explanation to these authorities in support of their case. In the interest of justice, the Appellant should be given an opportunity to present all the factual details and documentary evidence before the Adjudicating Authority very clearly specifying as to how they are eligible for taking the Cenvat Credit. The Adjudicating Authority should take into consideration the fact that the Appellant is registered as manufacturer in the Central Excise Department where they are eligible for all the input services used by them which are used in or in relation to manufacturing and clearing activities up to the place of removal . The Appellant as provider of service would be eligible to take the Cenvat Credit for the input services utilized by them for provision of their output service. Thus the Appellant should clearly bring out the details of input services used inside the factory for which they would be eligible to take the credit in the ER 1 Returns. In respect of the job work service, the Appellant would be required to maintain the ST-3 Returns which would show the Cenvat Credit taken for various input services - The nexus is required to be established for allowing cross-utilization of Cenvat Credit. The Adjudicating Authority should keep in mind that while the input tax credit is eligible on account of outward GTA services by the Job Worker as a service provider, the same is not available to him as a manufacturer, when the finished goods are cleared on payment of freight, where they are required to pay the Service Tax on RCM basis. Therefore, if any services such kind have been utilized for job work, the same would not be eligible for transfer to the normal manufacturing Cenvat Credit Account, in view non existence of nexus. These have to be verified from the documentary evidence to be placed by the Appellant. The Adjudicating Authority should follow the principles of natural justice and give an opportunity to Appellant to present all their arguments, submissions, documentary evidence, case law etc. while deciding the issue - Since the matter pertains to the year 2015, the Adjudicating Authority is directed to complete the proceedings within three months from the date of communication of this Order.

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• Central Excise

• 2024 (6) TMI 440
  Method of valuation - manufacture and clearance of medicaments - to be assessed u/s 4 or 4A of Central Excise Act, 1944 read with abatement Notification No. 49/2008-CX(NT) dated 24.12.2008 - case of the department is that the entire sale i.e. whether sale in retail or for institution should be covered under by Section 4A for the valuation purpose - demand of differentail duty - demand of cenvat credit in respect of removal and retention of control samples. Whether the appellant is liable to pay excise duty on the product namely, medicament which are supplied to institution under Section 4 or Section 4A of the Central Excise Act, 1944? - HELD THAT:- This issue is no longer res integra as has been decided in various judgments that whether medicaments which supplied for use of institution and no retail sale price is affixed on the pack of the medicament., the assessment of value for the purpose of payment of excise duty shall be done under Section 4 of the Central Excise Act, 1944. In the case of M/S USV LTD., PARVEZ K KUMANA, DILIP A PANDIT, JAYESH K VASAVADA VERSUS C.C.E. S.T., DAMAN [ 2019 (5) TMI 507 - CESTAT AHMEDABAD] , this Tribunal considering the same issue whether the partly medicament were sold through dealer in retail and partly to the institution, the Tribunal held that the goods which were supplied for the consumption of institution, the valuation provision which is correctly applicable is section 4 of Central Excise Act and not Section 4A. In view of above judgment which are exactly on the identical facts of the present case it was consistently held that in case of supply made to institutional buyer, the valuation shall be done under Section 4 and not under Section 4A of the Central Excise Act, 1944. Demand of cenvat credit on removal and retention of control samples - HELD THAT:- In this regard, the appellant s submission is that since there is a diversion view on this issue even though the appellant have admittedly paid the duty and not contesting the same, their prayer is to set aside the penalty corresponding to the duty of such control samples - there are force in the argument of the appellant, since the appellant have given up the merit in this case, the same is not addressed, therefore, the payment of cenvat credit/ duty on the control sample is not under dispute and the same is maintained. Penalty - HELD THAT:- Considering the issue being debatable ,the penalty is not imposable, hence, the penalty corresponding to the duty on Control Sample is set aside. In the present case also, the impugned orders are not sustainable on the main issue. Accordingly, the impugned orders are modified as above - appeal allowed.

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• 2024 (6) TMI 439
  Application for fixation of special rate of refund of central excise duty in term of Notification No. 20/2007-CE dated 25th April 2007 rejected - rejection on the ground that it was time barred - HELD THAT:- The Application filed by the Appellant, for fixation of special rate of refund of central excise duty in term of Notification No. 20/2007-CE dated 25th April 2007, was rejected on the ground that it was time barred. It is found that the present case is no longer res-integra as CESTAT Kolkata in the case of M/s. Hindustan Unilever Limited Vs Commissioner of Central Excise Service Tax, Dibrugarh [ 2023 (10) TMI 991 - CESTAT KOLKATA] dealt with identical issue and held that the pecial value addition applications filed by the assessee for the period 2009-10 to 2016-17 after 30th September of the same year cannot be considered as time barred. The applications filed by the appellant for fixation of special rate in this case is not time barred. Accordingly, the impugned order is not sustainable and hence the same is set aside. The impugned order is set aside - appeal allowed.

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• 2024 (6) TMI 438
  Supply of goods to different power projects against international competitive biddings by the clearing the goods without payment of duty - Denial of benefit of exemption N/N. 6/2006-CE dated 1.3.2006 - HELD THAT:- The appellant have been issued a Show Cause Notice to deny the benefit of N/N. 6/2006 dated 1.3.2006. As the goods cleared by the appellants are classified under Central Excise Tariff Sub-heading Nos. 8413 and 8431 whereas the above mentioned Customs Notification exempted the goods falling under Customs Sub-heading No. 9801. As the issue has already been settled in the appellants own case for the earlier period in [ 2023 (7) TMI 298 - CESTAT KOLKATA] wherein it has been held that appellants is entitled for benefit of N/N. 6/2006-CE dated 1.3.2006. Thus, the appellant is entitled for benefit of the said notification - there are no merit in the impugned order and the same is set aside - appeal allowed.

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• Indian Laws

• 2024 (6) TMI 437
  Prosecution for bribery - Corruption - Doctrine of stare decisis - Whether by virtue of Articles 105 and 194 of the Constitution a Member of Parliament or the Legislative Assembly, as the case may be, can claim immunity from prosecution on a charge of bribery in a criminal court? Doctrine of stare decisis - HELD THAT:- The doctrine of stare decisis is not an inflexible rule of law. A larger bench of this Court may reconsider a previous decision in appropriate cases, bearing in mind the tests which have been formulated in the precedents of this Court. The judgment of the majority in PV. NARSIMHA RAO VERSUS STATE (CBI/SPE) [ 1998 (4) TMI 503 - SUPREME COURT] ), which grants immunity from prosecution to a member of the legislature who has allegedly engaged in bribery for casting a vote or speaking has wide ramifications on public interest, probity in public life and parliamentary democracy. There is a grave danger of this Court allowing an error to be perpetuated if the decision were not reconsidered. Unlike the House of Commons in the UK, India does not have ancient and undoubted privileges which were vested after a struggle between Parliament and the King. Privileges in pre-independence India were governed by statute in the face of a reluctant colonial government. The statutory privilege transitioned to a constitutional privilege after the commencement of the Constitution - Whether a claim to privilege in a particular case conforms to the parameters of the Constitution is amenable to judicial review. Corruption - Prosecution for bribery - HELD THAT:- An individual member of the legislature cannot assert a claim of privilege to seek immunity under Articles 105 and 194 from prosecution on a charge of bribery in connection with a vote or speech in the legislature. Such a claim to immunity fails to fulfil the twofold test that the claim is tethered to the collective functioning of the House and that it is necessary to the discharge of the essential duties of a legislator - Articles 105 and 194 of the Constitution seek to sustain an environment in which debate and deliberation can take place within the legislature. This purpose is destroyed when a member is induced to vote or speak in a certain manner because of an act of bribery. Bribery is not rendered immune under Article 105(2) and the corresponding provision of Article 194 because a member engaging in bribery commits a crime which is not essential to the casting of the vote or the ability to decide on how the vote should be cast. The same principle applies to bribery in connection with a speech in the House or a Committee - Corruption and bribery by members of the legislatures erode probity in public life. The interpretation which has been placed on the issue in question in the judgment of the majority in PV Narasimha Rao results in a paradoxical outcome where a legislator is conferred with immunity when they accept a bribe and follow through by voting in the agreed direction. On the other hand, a legislator who agrees to accept a bribe, but eventually decides to vote independently will be prosecuted. Such an interpretation is contrary to the text and purpose of Articles 105 and 194. Appeal disposed off.

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• 2024 (6) TMI 436
  Dishonour of cheque - interim compensation u/s 143A of the NI Act, 1881 - determination of the quantum of interim compensation - HELD THAT:- A prima facie evaluation of the merits of the complainant s claim and the defence of the accused is warranted to adjudge as to whether a case for grant of interim compensation is made out. In the event the defence of the accused is found to be prima facie plausible, the Court may exercise discretion in refusing to grant interim compensation. Furthermore, if the Court finds that interim compensation has to be awarded it is required to pose unto itself the question of appropriate quantum of the interim compensation. 20% of the amount covered by the cheque, which is the upper threshold, cannot be awarded as a matter of course. In the case at hand, in the reply to the application, the accused alleged, inter alia, that a substantial part of the amount covered by the cheques was paid in cash and the said fact was evidenced by the vouchers. In addition, a sum of Rs. 19,09,750/- was paid through the banking channels. The copies of the invoices were annexed to the reply. Likewise, copies of the extracts of the bank accounts were tendered to bolster up the case that a substantial part of the amount covered by the cheques was paid to the complainant. The aspect of dilatory approach of the accused cannot be said to be wholly irrelevant. It is true the mere fact that the accused regularly appeared before the Court and did not attempt to prolong the trial cannot be the sole consideration for declining to exercise discretion to award compensation under Section 143A. However, the measure of interim compensation was introduced as the unscrupulous drawers of dishonored cheques resorted to dilatory tactics to prevent expeditious disposal of the complaint under Section 138 of the NI Act, 1881. Quantum of compensation - HELD THAT:- The second ground of challenge to the impugned order on the premise that the learned Additional Sessions Judge did not advert to the question of quantum of compensation while awarding interim compensation under Section 143A of the NI Act, 1881 appears to be well-merited. The impugned order singularly lacks any consideration as regards the determination of quantum of compensation. The judgment and order passed by the learned Additional Sessions Judge stands quashed and set aside - Petition allowed.

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• 2024 (6) TMI 435
  Dishonour of Cheque for insufficiency of funds - acquittal of accused u/s 255(1) Cr.P.C - failure to prove that the cheque was issued by the accused in discharge of any debt or liability - standard of proof required for rebutting the presumption - HELD THAT:- The complainant, when examined as PW1, failed to give any satisfactory explanation for advancing a loan of Rs.2,60,000/- to the accused when amount is due as per Exhibit D2 agreement from the accused to the complainant. It is also pertinent to note that the amount due from the son of the accused to the complainant and his partner as per Exhibit D1 agreement dated 25.03.2002 and the amount shown in Exhibit P1 cheque are the same and in that circumstance, there are no reason to disagree with the finding of the trial court that the evidence of PW1 that he advanced a loan of Rs.2,60,000/- to the accused 3 months prior to 07.10.2002, is not at all reliable and that the case put forward by the accused is more probable. The Honourable Supreme Court considered the nature of the standard of proof required for rebutting the presumption under Section 139 of the Negotiable Instruments Act in M.S.Narayana Menon v. State of Kerala [ 2006 (7) TMI 576 - SUPREME COURT] , and it was held that if some material is brought on record consistent with the innocence of the accused, which may reasonably be true, even though it is not positively proved to be true, the accused would be entitled to acquittal. It is well settled that the standard of proof which is required from the accused to rebut the statutory presumption under Sections 118 and 139 of NI Act is preponderance of probabilities and that the accused is not required to prove his case beyond reasonable doubt. The standard of proof, in order to rebut the statutory presumption, can be inferred from the materials on record and circumstantial evidence - in the absence of any satisfactory evidence to show that Exhibit P1 cheque was issued for discharging a legally enforceable debt from the side of the accused to the complainant, there are no reason to interfere with the finding of the trial court that the accused has succeeded in rebutting the statutory presumptions in favour of the complainant. Appeal dismissed.

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• 2024 (6) TMI 434
  Dishonour of cheque for insufficiency of funds - challenge to acquittal of accused u/s 255(1) of Cr. P. C. - issuance of statutory notice - HELD THAT:- The period for issuance of statutory notice is from the date of receipt of information from the Bank regarding the return of the cheque as unpaid and not from the exact date of dishonour of the cheque and therefore, the finding of the trial court in this regard is not legally sustainable. The learned counsel for the first respondent also raised a contention that in Exhibit P3 notice, the complainant has demanded interest for the cheque amount and therefore, notice is vague. But, it is found that the complainant has specifically stated the cheque amount in Exhibit P3 notice and only because the complainant has also mentioned about his legal right for interest in the notice, it cannot be held that the notice is invalid. In Suman Sethi v. Ajay K. Churiwal and another [ 2000 (2) TMI 822 - SUPREME COURT ], the Honourable Supreme Court held If in a notice while giving up break up of the claim the cheque amount, interest, damages etc. are separately specified, other such claims for interest, cost etc. would be superfluous and these additional claims would be severable and will not invalidate the notice. If, however, in the notice an omnibus demand is made without specifying what was due under the dishonoured cheque, notice might well fail to meet the legal requirement and may be regarded as bad. As noticed earlier, the complainant has specifically mentioned the cheque amount in Exhibit P3 notice and only because he also mentioned about his right for legal interest, it cannot be held that the notice is invalid, as the said additional claim for legal interest is severable from the demand for the cheque amount. In the above circumstance, the finding of the trial court is liable to be set aside. The impugned judgment is set aside and the accused is convicted under Section 138 of the NI Act and sentenced to undergo imprisonment till the rising of the court and to pay a compensation of Rs.70,000/- to the complainant under Section 357(3) Cr.P.C with the default clause that he shall undergo simple imprisonment for a period of four months - appeal allowed.

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