TMI Tax Updates - e-Newsletter
June 20, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. Export Strategies for Indian Businesses: Adapting to Global Trade Challenges

   By: DrJoshua Ebenezer

2. SHIPPING BILL FILED BY AN EXPORTER OF GOODS SHALL BE DEEMED TO BE AN APPLICATION FOR REFUND OF INTEGRATED TAX PAID ON THE GOODS EXPORTED OUT OF INDIA

   By: DR.MARIAPPAN GOVINDARAJAN

3. CO-OPERATIVE SOCIETY IS NOT A PUBLIC AUTHORITY UNDER THE RIGHT TO INFORATION ACT, 2005

   By: DR.MARIAPPAN GOVINDARAJAN

4. SCN and Form GST REG 31 liable to be set aside when SCN lacks officer details issuing SCN and supporting documents and is not in compliance with Rule 21A of the CGST Rules

   By: Bimal jain

News

1. India’s seafood exports touch all-time high by volume in FY 2023-24

2. CCI approves realignment of interests, legal ownership, and management of various entities within the Godrej group

3. CCI approves acquisition of(i) certain share capital of WeWork India by Real Trustee; and (ii) Volrado IIIand other independent co-acquirers; and (ii) 100% share capital of OAW by Embassy Buildcon

Circulars / Instructions / Orders

DGFT

1. Policy Circular No. 06/2024-25 - dated 19-6-2024

Clarification regarding Notification No. 17/2024-25 dated 11.06.2024

Highlights / Catch Notes

GST

• High Court Orders Reassessment of Supply Valuation in Job Work Case Under WBGST/CGST Act 2017, Section 107.

  Case-Laws - HC : The High Court addressed the issue of determining the value of supply in a job work scenario, challenging an order u/s 107 of the WBGST/CGST Act, 2017. The petitioner received goods for job work from outside the state, but faced interception and detention while returning the consignment after completion. The Court noted that if the value of supply cannot be determined u/s 15(1), it should be as prescribed. The petitioner did not disclose the contract, affecting value determination. The proper officer did not assess the transaction value under Section 15(1). The Court remanded the matter to the appellate authority for reevaluation, directing the petitioner to disclose all job work documents within 3 weeks. Petition disposed off.
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• Bagheri Unit claimed budgetary support not Baga Unit. Order set aside for fresh decision. Petition remanded for personal hearing.

  Case-Laws - HC : The High Court addressed a case where Budgetary support was claimed by Bagheri Unit, not Baga Unit. The court found that the petitioner's plea for full budgetary support for Bagheri Unit was not considered. Orders by the 4th respondent and Commissioner (Appeals) were set aside. The matter was remitted back to the 4th respondent for fresh decision after providing a personal hearing. The 4th respondent's failure to give a personal hearing and provide reasons for rejecting a portion of the claim led to setting aside of the Order-in-Original. The case was remanded back for reconsideration of the claim for budgetary support for the 3rd quarter. The petition was disposed of through remand.
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• Denial of GST refund due to improper application filing. Court cites relevant rules for manual applications. Petitioner's case remanded for fresh review.

  Case-Laws - HC : The High Court declined to consider refund applications u/s 54 (3) of GST for FY 2017-2018, 2018-2019 & 2020-2021 due to non-filing of RFD-01 forms as petitioner was unregistered. Citing precedent from Bombay and Gujarat High Courts, assessing authority must consider Rule 97A allowing manual applications. Petitioner, though unregistered, eligible u/s 54 (1) for refund. Refusal based on lack of registration and failure to consider Rule 41 on credit transfer deemed incorrect. The impugned order was set aside, remanding the matter for fresh consideration within four weeks. Petition allowed for remand.
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• Petitioner's GST reg. cancelled due to non-functional premises. Violation of rules found, reg. restored retrospectively.

  Case-Laws - HC : The High Court ruled on the cancellation of GST registration due to non-functional business premises. The court found violations of Rule 25 of CGST Rules as physical verification was not done in the presence of concerned persons. The State Tax Officer had admitted the existence of the petitioner's unit prior to issuing a show cause notice for cancellation. The petitioner had informed about changing the principal place of business, which was acknowledged. The court directed restoration of GST registration retroactively from 20.09.2022, allowing filing of annual returns with late fees. Petition disposed off.
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• Pet. to pay Rs.10,00,000/- by 15.04.2024 for interest liability. Installments for balance due. Bank attachment withdrawn.

  Case-Laws - HC : The High Court addressed the validity of a bank attachment notice for overdue interest and tax liabilities. The petitioner discharged the tax liability belatedly, leading to interest liability. The court acknowledged the petitioner's payment towards interest and tax liabilities. It directed the petitioner to pay Rs.10,00,000 by 15.04.2024 towards outstanding interest, with the remaining amount in 11 monthly installments. Upon receipt of the initial sum, the bank attachment and garnishee notices were to be withdrawn. Failure to comply could result in fresh attachment orders u/s relevant laws. The petition was disposed of accordingly.
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• Petitioner's GST registration cancellation challenged: Lack of access to portal & computer skills. Assessment order quashed, 10% tax remittance required.

  Case-Laws - HC : The High Court considered the validity of an assessment order cancelling the petitioner's GST registration. The petitioner lacked access to the GST portal and was unfamiliar with computer resources. The Court noted the cancellation of registration and that the petitioner was not heard despite being offered a personal hearing. The petitioner agreed to pay 10% of the disputed tax demand for a remand. The Court quashed the assessment order, allowing the petitioner to contest the tax demand. The petitioner was directed to remit 10% of the disputed tax demand within two weeks. The petition was disposed of accordingly.
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• Cancellation of GST registration due to non-payment of interest can be revoked under section 30. Payment of Rs.6,19,258.85 required.

  Case-Laws - HC : The High Court allowed the petition seeking revocation of registration cancellation u/s 30 of the GST Act. The Court recognized the serious consequences of cancellation on the petitioner's business and emphasized the Act's objective of tax collection. The petitioner was permitted to apply u/s 30 upon payment of Rs. 6,19,258.85 and other penalties. The payment of interest was without prejudice to the petitioner's rights, allowing challenge within 30 days. The decision reflects a liberal approach towards defaulters to enable businesses to continue operations.
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• Uttarakhand Peyjal Nigam Not a Local Authority Under GST; Exempt from Tax for Water Tank Construction, No ITC Claim.

  Case-Laws - AAR : In this case, the Advance Ruling Authority (AAR) addressed the issue of whether Uttarakhand Peyjal Sansadhan Vikas Evam Nirman Nigam (UK Peyjal Nigam) qualifies as a Local Authority u/s 2(69) of the GST Act. The AAR determined that UK Peyjal Nigam does not meet the criteria of a Local Authority as it does not have control over a municipal or local fund entrusted by the Government. However, it was established that UK Peyjal Nigam is a governmental authority based on its formation by the State legislature. Consequently, the reverse charge mechanism does not apply to UK Peyjal Nigam, and it is exempt from paying tax on the construction of an overhead water tank, as it is considered an activity related to functions entrusted to a Municipality & Panchayat under the Constitution of India. Thus, UK Peyjal Nigam is categorized as a "Governmental Authority" and is not eligible to claim Input Tax Credit (ITC).
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Income Tax

• High Court Quashes Tax Reassessment Notice Due to Lack of Credible Evidence Linking Information to Belief.

  Case-Laws - HC : The High Court addressed the issue of reopening assessment u/s 147 of the Income Tax Act. The case involved the alleged absence of a "reason to believe" and a "live link" between information and belief. The assessment was reopened based on information uploaded by the ADIT (Inv) on the Income Tax Department's portal, designated as "High Risk Transaction" for 2016-17. The petitioner had declared the loss in the return for 2017-18, which was accepted by the AO. The Court emphasized that reopening required a valid reason to believe income had escaped assessment, not merely a change of opinion. The Court found the existing Section 147 requirements were not met, as no credible information supported the reopening. The notice u/s 148 and the subsequent order were quashed in favor of the assessee.
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• High Court dismisses review application; trust fails to prove donations were not anonymous, reaffirms ITAT's decision.

  Case-Laws - HC : The High Court addressed the maintainability of a review application u/s 114 of the Code of Civil Procedure concerning the assessment of anonymous donations received by a trust u/s 115 BBC. The court emphasized that the burden was on the applicant to prove the donations were not anonymous, which it failed to do. The court noted that the identity of donors could not be established, as many donors could not be located, and some even denied making donations. The court highlighted that the review process is limited to rectifying errors apparent on the face of the record and cannot be used to re-argue the case. Referring to legal precedents, the court emphasized that an error on the face of the record must be evident without the need for extensive reasoning. Ultimately, the court dismissed the appeal, affirming the ITAT's conclusion that no substantial question of law was raised.
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• Validity of assessment transfer u/s 153A questioned. Notice given for objections, but no reply from petitioner. Transfer to Kozhikode upheld.

  Case-Laws - HC : The High Court addressed the validity of an assessment u/s 153A and the jurisdiction for assessment proceedings transfer. The petitioner challenged the transfer from Sangli to Kozhikode, citing lack of mandatory notice and hearing u/s 127(2) and absence of a Document Identification Number (DIN) in the order. The Court found that notice was duly served, giving the petitioner an opportunity to respond, which was not utilized. The absence of DIN is being considered by the Supreme Court, but the transfer was deemed valid as the petitioner's business and recovery were within Kozhikode's jurisdiction. The Court dismissed the writ petition, finding no errors in the proceedings.
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• ITAT Upholds Reopening of Assessment u/s 147; Validates Addition u/s 68 for Unaccounted Income.

  Case-Laws - AT : The ITAT, an Appellate Tribunal, addressed the validity of reopening assessment u/s 147 and addition u/s 68. The AO had sufficient material to believe the assessee introduced unaccounted income as bogus share capital, leading to income escapement. The notice u/s 147 was upheld as valid. The assessee failed to prove creditworthiness of share applicant or transaction genuineness. AO's addition u/s 68 was deemed justified, concluding the assessee channeled its own funds through investor companies. The assessee engaged in dubious activities, introducing unaccounted money through questionable transactions. The CIT(A)'s order was upheld, ruling against the assessee.
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• License Fees Taxable as Business Income u/s 9; System Fund Services Not Royalty/FTS, Tribunal Rules.

  Case-Laws - AT : The case pertains to taxability of income in India related to royalty and fees for technical services. The Appellate Tribunal held that license fees received by a company for granting trademark rights are taxable in India as business income u/s 9. The company entered into a Hotel Management Agreement, providing marketing and reservation services. Payments made for System Fund support services and SCHI Facility charges were held not to be Royalty/FTS and hence not taxable. The Tribunal directed the Assessing Officer to verify Travel Agent Commission receipts to determine if they are reimbursement in nature, in line with previous decisions. The Assessee can submit further details to support their claim.
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• Income for services in China taxable in China, not India. Exempt under DTAA. Tax resident of China. Tax paid in China.

  Case-Laws - AT : The ITAT considered the taxability of salary earned in China by an individual residing in China. The AO argued that the salary was taxable in India due to an existing employer-employee relationship. However, the ITAT agreed with the argument that as the individual was a tax resident of China, the salary income was taxable in China only. The ITAT held that the salary for services in China was exempt u/s Article 15(1) of the India-China DTAA. The ITAT directed the AO to allow the exemption, noting that the proportionate salary for services in India had already been taxed in India and the remaining salary in China. The individual had not claimed foreign tax credit. Decision favored the assessee.
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• Stay granted for disputed demand subject to deposit or security. Stay is not a blanket order. Revenue's interest secured. Cooperation required.

  Case-Laws - AT : The ITAT held that a stay of demand can only be granted u/s 254(2A) subject to deposit of 20% of disputed demand or furnishing security. The Tribunal cannot violate statutory provisions. The power to grant stay u/s 254(2A) must be read with 254(1) to avoid redundancy. A conditional stay may be granted even when issues are covered by judicial precedents in favor of the assessee. In this case, with a large attachment in place, no further payment is required. If the attachment is lifted, the assessee must deposit 20% of the outstanding liability. The assessee must cooperate and not delay the appeal process. The stay order is valid for 180 days or until appeal disposal, with no unnecessary adjournments allowed.
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• Penalty Invalid Due to Wrong Section: Tribunal Upholds Fair Hearing Rights, Citing Article 14 Violation and Assessee's Appeal Win.

  Case-Laws - AT : The Appellate Tribunal found that the penalty was initiated u/s. 271DA instead of u/s. 271D, which led to confusion and violated the assessee's right to a fair hearing. The initiation of penalty under the wrong section was deemed arbitrary and against Article 14 of the Indian Constitution. The defective notice denied the assessee the opportunity to defend effectively. The Tribunal held that strict compliance with Sec. 274 of the Act is necessary for imposing penalties. Regarding the cash transactions exceeding Rs. 20,000, the Tribunal noted that the penalty was not justified as the assessee's explanations were not adequately addressed. The Tribunal also considered that the penalty notice was invalid, rendering the levied penalty unsustainable in law. The appeal by the assessee was allowed, and the penalty levied was ordered to be deleted.
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• Tribunal Overturns Deduction Disallowance Due to Delayed Form 10CCB Filing; Supreme Court Ruling Supports Assessee's Appeal.

  Case-Laws - AT : The Appellate Tribunal considered the disallowance of deduction claimed u/s 80-IA due to the assessee's failure to file Form no.10CCB on time. The Tribunal found that the audit report was filed online by the assessee, albeit with a delay. The Tribunal disagreed with the lower authorities' decision, citing that the Supreme Court's ruling in Wipro Ltd. did not support the Revenue's case. The Tribunal noted that the amendment to section 80-IA(7) by the Finance Act, 2020, was not applicable to the assessment year in question. As the audit report was filed within the allowed time, the disallowance of the deduction u/s 80-IA was overturned, and the assessee's appeal was allowed.
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• Tribunal Upholds TNMM for Transfer Pricing; Adjusts Brokerage Commissions, Royalty Payments, and Reimbursements.

  Case-Laws - AT : The Appellate Tribunal considered TP adjustment on brokerage commission received from related parties. It found TNMM method appropriate for benchmarking the commission rates. Also, it held that higher commission rates for non-related parties should be arm's length for related parties. The Tribunal allowed the appeal, holding TNMM as the preferred method. Regarding royalty payments, the Tribunal upheld TNMM method for benchmarking, rejecting internal CUP and external CUP due to lack of comparable data. Indirect cost reimbursement was scrutinized, with the Tribunal directing deletion of the addition made by AO/TPO. Additionally, the Tribunal ruled in favor of the assessee for outstanding securities tax and TDS issues, directing deletions of disallowances. The Tribunal allowed the appeal on various grounds, maintaining consistency with prior rulings.
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• Sales commission received by assessee not Fees for Technical Services - ITAT holds income not taxable.

  Case-Laws - AT : The Appellate Tribunal (ITAT) examined the taxability of sales commission as Fees for Technical Services (FTS) under the Act and India-USA DTAA. The Tribunal held that the sales commission received did not meet the definition of "FTS" under both the Act and the DTAA. It was noted that since the payer was previously held exempt from tax on commission payments, the same applies to the recipient. Ground No.3 was allowed in favor of the assessee, determining that sales commission is not taxable.
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• ITAT Upholds No TDS on Foreign Remittances for Clinical Trials, Consultancy, and Surveys; Payments Not Royalties.

  Case-Laws - AT : The ITAT addressed TDS u/s 195 withholding tax demand by the AO on foreign remittances for clinical trials, consultancy, and market surveys. The "make available" clause in tax treaties was interpreted. The ITAT found in favor of the assessee for remittances to USA-Canada parties and payments for science data base access, as they did not constitute royalty. Payment to Cambridgesoft for software purchase was not considered royalty. For fees paid to Thailand companies, no specific provision existed in the India-Thailand tax treaty, and since the companies had no permanent establishments in India, the income was not taxable in India. Payment to a Sri Lanka-based party for market survey was not considered technical services under section 9(1)(vii) of the Act. The CIT(A)'s decision to delete the demand was upheld, and the revenue's appeal was dismissed.
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• Assessee entitled to exemption u/s 11/12 even if audit report not filed with return. CBDT Circular allows for delay.

  Case-Laws - AT : The case involved the entitlement to exemption u/s 11/12 based on the filing of an audit report. Non-filing of the audit report with the return of income was considered a procedural irregularity, not a basis for denying the exemption. The CBDT Circular allowed for condoning delays, but as no condonation petition was filed, this point was rejected. The assessee was advised to appeal against the intimation u/s 143(1) rather than a rectification order u/s 154. The decision emphasized that the correct amount of tax should be imposed on the assessee, even if the appeal channel was not chosen correctly. Ultimately, the assessee was granted the benefit of exemption u/s 11/12 despite the delay in filing the audit report.
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• Tribunal Rules Cost of Acquisition for Bonus Shares as Nil for Capital Gains, Clarifies Interpretation of "Allotted" Term.

  Case-Laws - AT : The case involves the interpretation of u/s 55(2)(b)(i) and u/s 55(2)(aa)(B)(iiia) of the Income Tax Act regarding the cost of acquisition of bonus shares. The Tribunal held that the legislative intent of u/s 55(2)(aa)(B)(iiia) is clear - capital gains on transfer of bonus shares should be computed with a cost of nil if conditions are met. The term "allotted" in sub-clause (iiia) refers to past allotment without specifying a date. The Tribunal rejected the argument that sub-clause (iiia) applies only to shares allotted post-1-4-1995. Referring to Dept. Circular No. 717, the Tribunal emphasized the simplicity of computation intended by the amendment. The Tribunal found that u/s 55(2)(b) applies to financial assets where a price is paid, not to bonus shares acquired without payment. Applying u/s 55(2)(b)(i) to bonus shares would render u/s 55(2)(aa)(B)(iiia) redundant. The Tribunal dismissed the appeal, noting the distinction between capital assets and bonus shares.
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• Tribunal Rules Interconnect Utility Charges Not 'Royalty'; Taxable as Business Profits Without Permanent Establishment in India.

  Case-Laws - AT : The Appellate Tribunal addressed the issue of characterizing interconnect utility charges (IUC) as 'Royalty' for TDS u/s 195 of the Income Tax Act and India-Japan DTAA. The revenue argued that the payments constituted 'Royalty' due to the use of process or equipment. However, the Tribunal found that no intellectual property rights were transferred to service recipients, thus Explanation 2 to section 9(1)(vi) did not apply. The Tribunal also noted that changes in the Act did not impact the DTAA definition of 'Royalty.' Citing precedents, the Tribunal held that the payments for services provided did not qualify as 'Royalty' under section 9(1)(vi) Explanation 5 & 6. Since the process was not secret and no exclusive rights were granted, it couldn't be classified as 'Royalty' under the DTAA. The Tribunal ruled in favor of the assessee, stating that the payments constituted business profits taxable in the resident country and not in India, as there was no permanent establishment in India.
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• Interest Calculation for Tax Defaults: Tribunal Rules 36-Month Charge Valid; Taxpayer May Object to Recalculation.

  Case-Laws - AT : The case involves the computation of interest under section 234B for defaults in payment of advance tax. The Appellate Tribunal held that interest was correctly charged under section 234B(1) for the 36-month period from April 2010 to March 2013 based on the first assessment under section 153A. The subsequent appellate order only impacts the assessed income and tax liability, not the period for interest levy. Section 234B(3) applies when there is no first-time assessment under section 147/153A. Interest is to be charged based on the tax liability determined in the appellate proceedings for the mentioned 36-month period. The AO is directed to recompute interest in line with the Tribunal's order, allowing the assessee to raise objections if needed to avoid further litigation.
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• Rejection of trust's registration application u/s 12AB due to limiting benefits to "SUNNI MUSLIMS". Tribunal orders reconsideration.

  Case-Laws - AT : The Appellate Tribunal reviewed the rejection of registration u/s 12AB due to alleged violation of section 13(1)(b) as trust's objects were not solely for "SUNNI MUSLIMS." Tribunal found the trust to be religious cum charitable, with objects not limited to a specific religious community. The CIT(E) denied registration based on this restriction, invoking section 13(1)(b) and disallowing exemption u/s 11. Tribunal directed CIT(E) to reassess the registration application and grant it in accordance with the law. The appeal by the trust was allowed for statistical purposes.
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• Court Rules Section 153A Inapplicable: No Incriminating Material Found; Cash Credit Additions and Vehicle Depreciation Disallowed.

  Case-Laws - AT : The case involved legality of assessment u/s 153A without search or Panchnama. The search warrant named the assessee company, rejecting the objection. No incriminating material was found during search, challenging the applicability of section 153A. Unexplained cash credit additions lacked proper investigation, leading to deletion of Rs. 3,70,000 addition. Income deposited in cash was declared and documented, leading to deletion of Rs. 10,50,000 addition. Addition u/s 68 was disputed, with relief granted by CIT(A). Disallowance of depreciation on vehicle was found baseless. CIT(A) upheld unexplained cash credit appeal, rejecting Department's challenge on genuineness. Overall, Department's appeal was dismissed due to lack of merit.
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• Tribunal Upholds Timely Application for Provisional Registration of Charitable Trusts u/s 80G(5.

  Case-Laws - AT : The case concerns denial of registration u/s. 80G(5)(iii) and the timeline for filing the application. The Tribunal noted the provision for provisional registration to facilitate new trusts/institutions. Trusts already engaged in charitable activities but not registered u/s. 80G(5) can apply for provisional registration. The sub-clause requires such institutions to apply at least six months before provisional registration expiry or within six months of activity commencement. The Tribunal interpreted this clause to apply to trusts not yet engaged in charitable activities at provisional registration. The Trust's application was deemed valid and timely. The Tribunal also noted the provisional approval's validity until A.Y. 2025-26, which can only be canceled for specific violations, none of which were cited in this case. The Tribunal directed the CIT(E) to review the application's eligibility beyond technical grounds.
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• Penalty for Transfer Pricing Non-Compliance Deleted; ITAT Upholds Decision, Acknowledges Assessee's Compliance Efforts.

  Case-Laws - AT : The ITAT, an Appellate Tribunal, considered the issue of penalty u/s 271G in a case involving Transfer Pricing (TP) adjustment. The assessee did not initially provide segment-wise results for international transactions but later submitted the information to the TPO upon query. Despite this, the TPO imposed a penalty u/s 271G without proposing any Arm’s Length Price adjustment. The ITAT noted precedents where penalties were deleted in similar cases. The CIT(A) also referred to relevant decisions and deleted the penalty, citing the substantial compliance by the assessee, the nature of the diamond trade, and the absence of any Arm’s Length Price adjustment. The ITAT upheld the CIT(A)'s decision, dismissing the revenue's grounds for appeal.
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• ITAT Rules Interest-Free Advances for Property Purchase Do Not Violate Tax Exemption, Favoring Educational Society.

  Case-Laws - AT : The ITAT reviewed a case regarding the exemption u/s 11 of the Act concerning non-charging of interest on advances for property purchase. The Assessee's society extended advances to a specified person for land purchase without interest or security. The AO argued it violated sec. 13(1)(c) r.w.s. 13(2)(a). However, as the advances were deemed genuine business deals by CIT(E) and not in violation of sec. 13(1)(c), and since they related to land for educational activities, sec. 13(2)(a) was inapplicable. The revenue accepted the advances in previous years, and CIT(E) considered them genuine business transactions. Denying exemption u/s 11 based on notional interest addition was unjustified. The ITAT directed AO to vacate the additions, ruling in favor of the assessee.
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Customs

• HC: Defendant granted leave to defend suit on wrongful detention charges. Customs waiver not binding. Defendant has arguable case.

  Case-Laws - HC : HC granted conditional leave to defend the suit to the Defendant on the issue of wrongful detention charges. The key question was whether a detention-cum-demurrage waiver Certificate u/s05.08.2019 by Customs Authority would bind the Defendant. Defendant claimed to be an agent of the principal shipping line, acting as a carrier. Plaintiff exceeded free detention period due to Customs hold. Defendant sought detention charges for the extra period. The Bill of Lading and contract were until the end of free detention period. Plaintiff saved goods, received waiver Certificate. HC found Defendant's defense arguable, quashed the direction to deposit Rs. 18 lakhs. Petition allowed.
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• Exemption Scheme for Cost Recovery Charges Upheld; Petitioner Eligible After Settling Arrears in Customs Area Regulation Case.

  Case-Laws - HC : In a case before the High Court concerning denial of exemption from cost recovery charges at a Container Freight Station (CFS) within Customs Area Regulation, it was held that the exemption scheme issued by the Central Board of Indirect Taxes and Customs (CBIC/CBEC) remains in force. The petitioner is deemed eligible for exemption from the cost recovery charge from the date of payment of the pending arrears, including the principal amount with interest. The department is directed to calculate and inform the petitioner of the interest and any other dues owed for the period 2011-2013. Upon payment by the petitioner, the relevant authority must promptly process the applications for waiver and de-notification, ideally within one month. The petition has been resolved accordingly.
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• Commissioner (Appeals) rejected appeal as time-barred. Appeal filed after 92 days; only 30-day extension allowed. Appeal rightly rejected.

  Case-Laws - AT : The case involved a rejection of an appeal u/s 128 of the Customs Act, 1962 on the ground of being barred by limitation. The appeal before the Commissioner (Appeals) was filed after 92 days, exceeding the normal period of 60 days. Section 128 allows for a 30-day extension if sufficient cause is shown. Citing SINGH ENTERPRISES V. COMMISSIONER OF C. EX., JAMSHEDPUR, which interprets a similar provision in the Central Excise Act, it was held that the Commissioner (Appeals) can only condone a delay up to 30 days. As the delay exceeded this period, the rejection of the appeal was deemed appropriate. The decision was upheld, and the appeal was dismissed without any legal infirmity.
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• Tribunal Affirms Duty Exemption for Lithium Ion Battery Under DFIA License; Focuses on EV Use Capability.

  Case-Laws - AT : The Appellate Tribunal considered the entitlement to duty exemption u/s N/N. 25/2023-CUS for the import of Lithium Ion Battery under a Transferrable DFIA License. The issue was whether the battery falls under the description of "Automative Battery" as per the license. The respondent argued that the imported Lithium Battery is a type of automotive battery, supported by a certificate from IIT engineers. The Tribunal emphasized the "capability of use" of the battery, not just similarity to other automotive batteries. It upheld that the DFIA scheme allows for broad categorization under "capable of being used in electrical vehicles." The appeal by the Department was dismissed, granting relief to the respondent.
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• Customs Tribunal Overturns Broker's License Revocation; Imposes Rs. 50,000 Penalty for Verification Lapse.

  Case-Laws - AT : CESTAT, an Appellate Tribunal, reviewed the revocation of a customs broker's license and related penalties u/s various regulations. The charges included failure to verify information imparted to the client, failure to ascertain client details accurately, and failure to cooperate with customs authorities. The Tribunal found lack of evidence to support the charges, emphasizing the need for specific evidence to prove violations. It noted the broker's failure to verify client details but highlighted the absence of evidence regarding non-cooperation with customs authorities. The Tribunal overturned the revocation of the license and ordered a penalty of Rs. 50,000 only, under regulation 18 of Customs Broker Licensing Regulations, 2018. Appeal was allowed.
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• Customs Tribunal Overturns Penalty Due to Lack of Intent in Power Tools Undervaluation Case.

  Case-Laws - AT : CESTAT, an Appellate Tribunal, considered a case involving penalty u/s 114AA of the Customs Act, 1962 on a co-noticee who is a Partner in a Customs Broker firm for undervaluation of imported power tools from China. The Tribunal noted that Section 114AA allows a penalty not exceeding five times the value of goods under specific circumstances. It was observed that other sections like 112 and 114A also deal with penalties, and subsequent sections like 114AB and 114AC were introduced later. Referring to a relevant case, it was highlighted that penalties under 114AA require mens rea or conscious knowledge, which was not present in the appellant's case. The Tribunal found that the appellant's involvement as a customs broker did not involve criminal intent or duty evasion, and thus, the penalty u/s 114AA was deemed inapplicable. Consequently, the penalty imposed on the appellant was set aside, and the appeal was allowed.
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• Employee of a Customs House Agent not liable for penalty under Customs Act. No evidence of involvement with branded goods. Appeal allowed.

  Case-Laws - AT : The case involved a penalty u/s 112(B) of the Customs Act, 1962 against an employee of a Customs House Agent (CHA) for allegedly concealing information affecting a bill of entry assessment. The tribunal found no evidence linking the employee to the concealed branded goods in the consignment, nor any indication of his involvement in handling the goods. Goods were confiscated u/s 111(m) due to incorrect declaration, but the employee was not proven aware of the branded products. As a result, the tribunal set aside the penalty, ruling in favor of the appellant.
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• CESTAT ruled on classifying old garments as per Customs Tariff Act. Upheld classification & valuation, penalty.

  Case-Laws - AT : The Customs Excise and Service Tax Appellate Tribunal (CESTAT) addressed the issue of classifying imported goods as worn clothing under Customs Tariff Item No. 6309 90 00. The Tribunal upheld the classification of the goods as 'old and used garments' under Customs Tariff Heading 6309, rejecting the Revenue's claim for reclassification. The valuation of the goods at US$ 0.60 per kg (CIF) was found appropriate, with the adjudicating authority's enhancement from US$ 0.55 upheld. The redemption fine and penalty imposed were deemed sufficient, leading to the dismissal of the Revenue's appeal. The Tribunal found no errors in the impugned order and upheld it.
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DGFT

• Government is seeking feedback on changes to export obligations for spices, drugs, and more. Have your say within 15 days!

  Circulars : The Trade Notice announces amendments to Appendix-4J of the Handbook of Procedures, 2023 by the Directorate General of Foreign Trade. Stakeholders are invited to provide comments on proposed changes within 15 days. The amendments include adjustments to the Export Obligation Period for various items like Spices, Drugs, Tea, Coconut Oil, Silk, Raw Sugar, Precious Metals, Penicillin, Natural Rubber, and others. The amendments come into effect immediately u/s 1.03 and 2.04 of the Foreign Trade Policy, 2023. The Public Notice specifies revised export obligation periods for specified inputs with pre-import conditions under Advance Authorizations.
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Indian Laws

• HC ruled accused in a cheque bounce case can't give evidence by affidavit u/s 145 NI Act. Trial to conclude swiftly.

  Case-Laws - HC : In a case involving dishonour of a cheque u/s 138 of the NI Act, accused sought to give evidence through affidavit u/s 145. High Court held that accused cannot do so, following SC decisions in similar cases. Emphasized expeditious trial completion. Refused to reconsider stance. Directed trial court to hasten proceedings as accused's evidence pending. Petition dismissed. Relevant cases: Mandvi Cooperative Bank, Indian Bank Association, SBI Global Factors Limited, Nitin v. Prakashrao.
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• High Court rules debtor cannot avoid liability for bounced cheque by initiating insolvency proceedings. Criminal case continues.

  Case-Laws - HC : HC addressed dishonour of cheque with borrower in insolvency proceedings under IBC, 2016. SC clarified insolvency proceedings don't automatically extinguish criminal proceedings u/s Negotiable Instruments Act. Signatory remains liable despite Code proceedings. Trial conviction upheld, no error in Appellate Court's condition for suspension of sentence. Applicant's appeal dismissed.
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• Convicted for bouncing a cheque! Court upheld conviction under Sec 138. Sentencing not legal. Sentence modified.

  Case-Laws - HC : The High Court upheld conviction u/s 138 of the Negotiable Instruments Act, as presumption u/s 139 favored the complainant. Petitioner's personal cheque dishonored, complying with Act's provisions. Trial and Appellate Court's findings affirmed. However, sentencing of Rs. 1,00,000 compensation or 12 months' imprisonment not in line with law. Citing Krishan Gupta case, compensation not part of sentence but additional to it. HC modified the sentence to align with law, requiring payment within 30 days or face 12-month imprisonment. Application disposed of.
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PMLA

• Court Dismisses Challenge to Money Laundering Order; Directs Petitioners to Special Court for Statutory Remedy.

  Case-Laws - HC : The High Court considered a case involving money laundering and a provisional attachment order issued without providing the petitioner an opportunity of hearing, alleging a violation of natural justice. The court noted that the law allows provisional attachment by authorized officers for up to 180 days. The petitioners, considered claimants under the law, were directed to seek remedy before the Special Court u/s Prevention of Money-Laundering Act in Jaipur. The court found the statutory remedy available to the petitioners more appropriate than the extraordinary jurisdiction of the High Court. As the petitioners did not challenge the attachment on merits and lacked standing to contest it as proceeds of crime, their plea to restrict the attachment was dismissed, leading to the dismissal of the petition.
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• Quashing of attachment order under PMLA sought but denied due to ongoing proceedings. Apex Court holds predicate offence closure affects PMLA case.

  Case-Laws - HC : The High Court considered a case involving a challenge to an attachment order by the Enforcement Directorate under the Prevention of Money Laundering Act. The proceedings stemmed from a crime registered by the Lokayukta for an offence under the Prevention of Corruption Act against the husband and wife. The court noted that the predicate offence under the Prevention of Corruption Act was closed for the wife in 2016 and for the petitioner in 2023. The Lokayukta challenged these proceedings in the Apex Court, which held that if the predicate offence is nullified by a competent court, the PMLA proceedings would also cease. Consequently, the High Court quashed the order by the Adjudicating Authority under the PMLA, allowing the petition.
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Service Tax

• Refund of service tax clarified: Pay attention to time limits! Service tax paid before 2015 amendment can be refunded.

  Case-Laws - HC : The High Court addressed the issue of refund of service tax paid in relation to subscription of a chit fund. It was held that the petitioner paid the tax upon demand by tax authorities, not due to a mistake of law. The 2015 amendment to the Finance Act was deemed substantive, not clarificatory, with prospective effect. Refunds for taxes paid before the amendment were permissible within the extended one-year limitation period from the judgment date. The court dismissed the petition, noting the petitioner's failure to apply within the extended time limit set by the court.
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• CESTAT ruled that TDS paid by appellant to Income Tax Dept. for service providers not part of service value. Appeal allowed.

  Case-Laws - AT : CESTAT, an Appellate Tribunal, addressed a valuation issue concerning TDS deposited with the Income Tax Department related to payments to foreign service providers under reverse charge. Referring to a previous decision, it was established that the appellant is responsible for bearing the TDS as per the agreement terms. The TDS amount is not part of the value of services received, on which service tax under reverse charge is applicable. The appeal was allowed, finding no merit in the initial order.
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• Tribunal Rules on Service Tax for Educational Programs: Exemption Denied, Case Remanded for Tax Assessment.

  Case-Laws - AT : CESTAT analyzed levy of service tax on educational programs from 01.5.2011 to 30.06.2017. Tribunal held that pre-2011 tax applicability was institute-specific while post-2011 became course-specific. The appellant, not a Commercial Coaching Institute, was exempt for recognized courses. Referring to legal precedents, recognition by law is crucial for tax liability. Absence of evidence for recognition led to tax liability. No exemption under Notification 33/2011 or Section 66D(l). Tax liability started from 01.03.2016. Claim of exemption under Indian Institute of Management Act, 2017 dismissed. Demands restricted to normal limitation period due to evolving laws. Penalties set aside, demands confirmed with interest. Appeal remanded for tax determination within normal limitation period.
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• CESTAT ruled against service tax on penalties & deposits as consideration under u/s 66E(e). Appeal granted

  Case-Laws - AT : The case involved a dispute regarding the levy of service tax on liquidated damages, security deposit, earnest money deposit, and retention money. The Appellate Tribunal held that these amounts do not constitute consideration for tolerating an act under u/s 66E(e) of the Finance Act. The Tribunal cited a previous case to support its decision. Consequently, the appellant was deemed not liable to pay service tax on the forfeited amounts. The impugned order was found to lack merit and was set aside, resulting in the appeal being allowed.
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VAT

• Court rules dealer must pay excess tax collected over to the Govt incl. interest. Confirmed that dealer must follow specific tax collection rules.

  Case-Laws - HC : The High Court addressed the issue of liability to pay excess tax collection to the Government when the respondent's tax liability is higher than the tax collected. The court held that u/s 8(f)(iii), a dealer must pay excess tax collected to the Government if it surpasses the tax payable for the year. If a dealer collects tax at a rate different from the prescribed rate, it does not qualify as "tax so collected" under the provision. Section 30(1) allows registered dealers to collect tax at specified rates, but it does not apply to cases where dealers collect tax only at rates under Section 8. The court found the Appellate Tribunal's order legally unsustainable and allowed the O.T. Revisions.
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Case Laws:

• GST

• 2024 (6) TMI 836
  Determination of value of supply in case of Job work - Challenge to order passed by the appellate authority u/s 107 of the WBGST / CGST Act, 2017 - generation of e-way bill - Receipt of goods for executing certain job work from outside the state - the petitioner was in the process of returning the consignment upon executing the job work and had loaded the same in a vehicle, the same was intercepted and detained - HELD THAT:- It is noticed that in terms of Section 15 of the said Act where the value of supply of goods or services cannot be determined under sub-Section (1) of the said Section the same shall be determined as may be prescribed. In the instant case, it is found that the petitioner chose not to disclose the contract in question, though a reflection thereof is available in the purchase order. Records, however, do not reveal that the proper officer had proceeded to ignore the transaction value by recording that the same is not possible to be determined in accordance with Section 15(1) of the said Act. In fact, the aforesaid aspect has not been considered either by the proper officer or by the appellate authority. As to whether or not the petitioner is required to generate e-way bill, would however depend on the determination of the transaction value in respect of the goods in question and the same would be required to be gone into on the basis of the facts. Since admittedly, the aforesaid aspect has not been considered either by the proper officer or by the appellate authority, the matter is remanded back to the appellate authority for redetermination of the aforesaid issued - the petitioner is further directed to disclose all documents in connection with the job work for the proper officer to identify the transaction value of the goods/consignment. Such disclosure must be made by the petitioner within a period of 3 weeks the date of communication of this order. Petition disposed off.

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• 2024 (6) TMI 835
  Budgetary support claimed by Bagheri Unit and not the Baga Unit - application seeking budgetary support for period from 01.07.2017 to 30.09.2017 - HELD THAT:- Having regard to the fact that there appears to be non-consideration of the petitioner s plea as to its entitlement for full budgetary support for its Bagheri Unit for the 2nd quarter from 01.07.2017 to 30.09.2017, the Order-in-Original dt. 27.07.2018 of the 4th respondent as well as the order in appeal dt. 29.07.2019 of the Commissioner (Appeals), CGST, Chandigarh set aside, and the matter remitted back to the 4th respondent to decide afresh after giving a personal hearing to the petitioner. Since the 4th respondent not only did not give any personal hearing to the petitioner but he also did not assign reasons for rejecting a portion of the claim for budgetary support, and appears to have adopted certain figures without putting them to the petitioner, the Order-in-Original dt. 20.08.2018 passed by the 4th respondent is also set aside and the matter is remitted back to the 4th respondent to the extent he had rejected the claim of the petitioner for grant of budgetary support for the 3rd quarter from 01.10.2017 to 31.12.2017. Petition disposed off by way of remand.

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• 2024 (6) TMI 834
  Declining to consider the applications for refund of GST for the financial years 2017-2018, 2018-2019 2020-2021 - application form i.e. RFD-01 not filed - petitioner not registered during the relevant period - manual application filed - HELD THAT:- The Bombay High Court in LAXMI ORGANIC INDUSTRIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2021 (12) TMI 63 - BOMBAY HIGH COURT] as well as the Gujarat High Court in M/S. AYANA PHARMA LIMITED THROUGH ITS AUTHO. REPS. MULRAJ K. CHHEDA VERSUS UNION OF INDIA [ 2022 (5) TMI 860 - GUJARAT HIGH COURT] have held that 97A of Central Goods and Services Tax Rules prevail and would have to be taken into account by the assessing authority and he cannot insist on only electronic filing of refund application. Petitioner not being a registered person and therefore not entitled to seek refund under Section 54 (3) - HELD THAT:- Reference made to sub-section (1) of Section 54, which permits any person to make an application for refund of tax - the 5th respondent could not have refused to entertain the application of the petitioner for refund of unutilized input tax credit on the ground that the petitioner was not a registered person at the relevant point of time. The 5th respondent should also have taken note of Rule 41 which deals with instances of transfer of credit on amalgamation/ merger etc. of businesses/companies. The impugned order dt. 28.07.2022 passed by the 5th respondent is set aside and the matter is remitted to the 5th respondent for fresh consideration on merits within four weeks from the date of receipt of copy of this order - petition allowed by way of remand.

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• 2024 (6) TMI 833
  Violation od principles of natural justice - appeal of petitioner was dismissed without entering into the merits of the case - HELD THAT:- A perusal of the documents filed by the petitioner shows that the appeal was filed on 24.07.2021 and it was admitted on the same date. The admission means it is admitted for final hearing. There are substance in the argument of learned counsel for the petitioner that when the impugned order itself was uploaded on 22.07.2021, the petitioner s appeal should not have been dismissed on the ground that physical certified copy is not filed on the said date and it was indeed filed at a later point of time in the month of September, 2023. Allahabad High Court in M/S ENKAY POLYMERS VERSUS STATE OF U.P. AND 2 OTHERS [ 2024 (5) TMI 917 - ALLAHABAD HIGH COURT] has already taken this view. The respondent No.3 are directed to decide the appeal on merits - petition disposed off.

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• 2024 (6) TMI 832
  Cancellation of GST registration of petitioner - business premises was found non-functional at the time of field inspection - failure to file reply to the notice within the time specified therein - HELD THAT:- The proper officer was required to get the physical verification of the business premises done in the presence of concerned person. In the present case, it seems the respondents have clearly violated the provisions of Rule 25 of CGST Rules because the Appellate Authority, State Taxes (Appeals-II), Kashmir-Srinagar in its order, bearing No.234-37/GST/DCST/APP-II dated 18.08.2023, impugned herein, has clearly recorded that the State Taxes Officer (STO) had fairly conceded before him that no notice was issued to the petitioner-company herein as mandated by Rule 25, requiring presence of its employee(s) at the time of verification. Further, nowhere in the CGST provisions it has been stipulated that the employee(s) must be present at the business premises all the time. Therefore, on this ground alone the impugned orders are liable to be quashed and set aside. Once the State Tax Officer had himself admitted before the Appellate Authority, State Taxes (Appeals-II), Kashmir Division that the unit of the petitioner-company was existing and he confirmed existence of the same, as reflected in order dated 29.08.2022, then what prompted the respondents herein, particularly State Tax Officer, to again issue show cause notice dated 20.09.2022 within 19 days of the restoration of petitioner s registration or within 22 days of the passing of order dated 29.08.2022, proposing to cancel the registration of petitioner-company being non-functional at the principal place of business, is not forthcoming. It is strange enough that just 22 days earlier in the order dated 29.08.2022 passed by the Appellate Authority, State Taxes (Appeals-II), Kashmir Division, the State Tax Officer had himself admitted that the unit of petitioner-company was existing at the principal place of business and he confirmed the existence of the same as per his inspections. Further, the file reveals that the petitioner-company had intimated to respondents Nos.2 and 3 regarding change of principal place of business to Boulevard Shopping Complex, Ghat No.03/04, Boulevard Road, Srinagar with effect from 07.05.2023 along with relevant documents and the same has also been acknowledged by them. Respondents, particularly respondent No.3, are directed to restore the GST registration of petitioner-company forthwith retrospectively, i.e., with effect from 20.09.2022 and to allow the petitioner-company to file the annual returns for the financial years 2021-22 and 2022-23 onwards with late fees/interest, if any, as admissible under Rules - Petition disposed off.

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• 2024 (6) TMI 831
  Validity of bank attachment notice - overdue interest liability - tax liability was discharged belatedly, the petitioner became liable to pay interest thereon - HELD THAT:- The admitted position is that the tax liability pertaining to the relevant periods was discharged by the petitioner, albeit belatedly. The petitioner asserts that a sum of about Rs.7.20 lakhs was paid towards discharge of interest liability leaving a balance of about Rs.68 lakhs. By taking into account that the tax liability was discharged and the petitioner also paid about Rs.7.20 lakhs towards interest liability, it is just and appropriate that conditions be imposed subject to which the petitioner is permitted to pay the interest liability in installments. The petitioner shall pay a sum of Rs.10,00,000/- towards outstanding interest liability on or before 15.04.2024. Subject to and upon receipt of this sum by the first respondent, the impugned bank attachment and garnishee notices issued for recovery of such interest liability shall stand withdrawn - petitioner shall pay the remaining outstanding interest liability in 11 equal monthly installments on or before the 15th of every succeeding month. In case of default, it is open to the first respondent to issue fresh bank attachment or garnishee orders or take any other measures for recovery of dues in accordance with law. Petition disposed off.

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• 2024 (6) TMI 830
  Validity of assessment order - cancellation of GST registration of petitioner - petitioner did not have access to the GST portal and was, in any event, not acquainted with the use of computer resources - HELD THAT:- The admitted position is that the petitioner s GST registration was cancelled. As a consequence, at a minimum, the petitioner had little reason to monitor the GST portal. The assessment order indicates clearly that the petitioner was not heard although it appears that personal hearings were offered to the petitioner. The petitioner also agreed to remit 10% of the disputed tax demand as a condition for remand. The petitioner should be provided an opportunity to contest the tax demand. Solely for this reason, the impugned assessment order is quashed subject to the 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 - Petition disposed off.

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• 2024 (6) TMI 829
  Validity of assessment orders - opportunity of hearing not provided - breach of principles of natural justice - HELD THAT:- The impugned assessment orders indicate that the petitioner was not heard before such orders were issued. The tax liability arises out of alleged discrepancies between the GSTR 3B GSTR 2A returns or between the GSTR 7 and GSTR 2A returns. If the petitioner had been heard, the petitioner may have been in a position to place all relevant documents on record to endeavour to provide a satisfactory explanation for the discrepancies - the impugned assessment orders call for interference by putting the petitioner on terms. The impugned assessment orders are quashed subject to the condition that the petitioner remits 10% of the disputed tax demand under each assessment order within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (6) TMI 828
  Rejection of petitioner s application for refund - appeal filed by the petitioner was dismissed on the ground of delay - HELD THAT:- The issue regarding condonation of delay in filing the appeal before the appellate authority is no more res integra in view of the latest judgment of the Hon ble Calcutta High Court in S.K. CHAKRABORTY SONS VERSUS UNION OF INDIA ORS. [ 2023 (12) TMI 290 - CALCUTTA HIGH COURT] and ARVIND GUPTA VERSUS ASSISTANT COMMISSIONER OF REVENUE STATE TAXES, COOCH BEHAR CHARGE ORS. [ 2024 (1) TMI 1096 - CALCUTTA HIGH COURT] - It has been categorically held that the appellate authority under the GST Act has power under law to condone the delay beyond 120 days. Hence, in view of the settled position of law, the appellate authority ought to have condoned the delay in the statutory period while considering the petitioner s appeal. Further, as held by this Court in RAKESH MANDA VERSUS ASSISTANT COMMISSIONER OF CGST CENTRAL EXCISE, COOCH BEHAR DIVISION ORS. [ 2022 (7) TMI 1398 - CALCUTTA HIGH COURT] , the appellate authority has the power under Rule 107 of the CGST Act to accept additional documents under certain circumstances. This Court condones the delay in filing the appeal and set aside the order dated 24.09.2021 passed by the appellate authority. The matter is remanded back to the appellate authority for fresh consideration - Petition disposed off by way of remand.

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• 2024 (6) TMI 827
  Cancellation of registration for non-payment of interest - seeking to avail the option under section 30 of the GST Act for revocation of the cancellation of registration - HELD THAT:- The primary object behind the GST Act is levy and collection of tax on intra State supply of goods or services and the matters connected therewith or incidental thereto. Now the cancellation of registration shall ensue serious civil consequences for the petitioner and his entire business shall come to a standstill. The provisions under sections 30, 45, 46, 47 etc. are intended at providing opportunity to the defaulter Firm so as the Firm continues its business. Therefore, a liberal approach is required to be taken in the matters like the present one. A permission to the petitioner to file an application under section 30 of GST Act can be granted subject to the petitioner making payment of Rs.6,19,258.85 and other statutory penalty/fine for moving the application under section 30 of the GST Act. The payment of Rs. 6,19,258.85 on account of interest shall be without prejudice to the rights of the petitioner and the same shall remain open to challenge by the petitioner in a separate proceeding laid by the petitioner, if so advised, within 30 days. Petition allowed.

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• 2024 (6) TMI 826
  Applicability of Reverse Charge Mechanism - Uttarakhand Peyjal Sansadhan Vikas Evam Nirman Nigam (UK Peyjal Nigam) - Local Authority or not - governmental authority or not - THDC or UK Peyjal is entitled to avail ITC on the GST deposited. Whether the Applicant i.e. Uttarakhand Peyjal Sansadhan Vikas Evam Nirman Nigam is covered under Local Authority as defined under Section 2 (69) of Goods and Services Tax Act, 2017? - HELD THAT:- The term local authority is defined in Section 2 (69) of CGST Act,2017. The definition of local authority in the CGST, Act includes within its ambit any other authority legally entrusted by the Central Government or any State Government with the Control or Management of a municipal or local fund . Thus, for the purpose of the GST Laws, any authority legally entitled to or entrusted by the Government with the control or management of a municipal or local fund qualifies as a Local Authority . The Apex court in the UNION OF INDIA ORS. VERSUS RC. JAIN ORS. [ 1981 (2) TMI 200 - SUPREME COURT] has held that the main requirement to qualify as a local authority is that the authority must be legally entitled to or entrusted by the Government with, the control and management of a Municipal or local fund. In case of UK Peyjal Nigam, there is no local fund entrusted by the Government with UK Peyjal Nigam, but the Act (supra) would reveal that no municipal or local fund has been entrusted by the Government. The fund of UK Peyjal Nigam is its own fund and cannot be equated with a fund entrusted by the Government. Thus, the important requirement in order to qualify as a local authority viz. control and management of a municipal/local fund is absent in the present case. The UK Peyjal Nigam is a body corporate formed by the State legislature under UPWSS Act enacted by the UP State Legislature. Further, as per section 3 of the Uttaranchal (The Uttar Pradesh Water Supply and Sewerages Act, 1975) Adaptation and Modification Order, 2002 read with UPWSS Act, UK Peyjal Nigam is a body corporate established by the Government of Uttarakhand, as such, the requirement of governmental authority has been fulfilled in the present case - the Applicant i.e. M/s Uttarakhand Peyjal Sansadhan Vikas Evam Nirman Nigam UK Peyjal Nigam is not a local authority , within the meaning and ambit of the provisions of the CGST/SGST Act, 2017, but is a governmental authority . It is found that at SI. No. 5 of the N/N. 13/2017-Central Tax (Rate) dated 28.06.2017 issued under Section 9 (3) of the CGST Act, 2017, it has been mandated that if the services have been supplied by the Central Government, State Government, Union territory or local authority to a business entity, then central tax leviable under section 9 of the said Central Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services. In the instant case, as has been held above that the applicant does not qualify to be a LOCAL AUTHORITY - the applicability of the provisions of the Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, does not arise in the instant case. Thus, the applicant is not a local authority but falls under the category of a Governmental Authority and in view of the provisions of the Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017, as amended, the construction of an overhead water tank at Rishikesh in the THDC colony is a construction service and pertains to supply of water which is an activity in relation to a function entrusted to a Municipality Panchayat under article 243W 243G respectively of the Constitution of India and is exempted from payment of tax and hence the question of claiming of ITC does not arise.

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• Income Tax

• 2024 (6) TMI 825
  Stay of demand - Petitioner challenging demand notice u/s 143(2) subsequent actions - petitioner is calling upon the respondents not to take further steps on the basis of the demand notice - HELD THAT:- In this case it may be noticed that an order u/s 143 (3) read with Section 143 (3A) and 143 (3B) of the said Act has been passed on 7th April, 2021. It is also an admitted position that the petitioner had filed an appeal under Section 246 of the said Act. Admittedly, the said appeal is pending consideration. As taken note of the guidelines issued by the Central Board of Direct Taxes dated 29th February, 2016 including Instruction No. 1914 dated 2nd February, 1993 as well as Office Memorandum dated 31st July, 2017. Although ordinarily where an assessee files an appeal disputing the demand, stay may be granted upon payment of 20% of the disputed demand, however, exceptional circumstances have also been noted in the Memorandum dated 29th February, 2016 Thus taking note of the case made out by the petitioner, the petitioner is directed to make payment of a sum of Rs. 40 lakhs with the assessing officer. If such payment is made within a period of eight weeks from date, the demand dated 7th April, 2021 issued under Section 156 of the said Act shall remain stayed till the disposal of the appeal, to the extent challenged in the appeal by treating the petitioner as not being in default in respect of the amount in dispute in the appeal. The payment made by the petitioner with the authorities shall abide by the result of the appeal.

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• 2024 (6) TMI 824
  Reopening of assessment u/s 147 - Reason to believe - Alleged absence of reason to believe and live link between information and belief - case was reopened, on the basis of information uploaded by the ADIT (Inv) III, Nagpur on the insight portal of the Income Tax Department, which was designated under the category High Risk Transaction for the financial year 2016-17 as suspicious transaction report (STR) - HELD THAT:- The loss was declared by the petitioner in the return of income for the assessment year 2017-18 filed on 17/10/2017, in pursuance to which an order u/s 143 (1) was passed on 25/05/2018 accepting the assessment, which would indicate that the loss of the aforesaid amount was considered and accepted by the AO. This being the position, any subsequent action in exercise of the power u/s 148 of the IT Act for reopening of the assessment could only be in terms of language of Section 148 of IT Act as it then existed. The language of Section 147 of the IT Act as it stood then, clearly mandates, that for reopening the assessment, there has to be existence of reason to believe available with the Assessing Officer that any income chargeable to tax has escaped assessment for a particular assessment year. Such reason to believe, has to be on the basis of information, which has subsequently been gathered or for that matter has to be in terms of Clause c of Explanation -2 to then existing Section 147 of the IT Act. The reason for this, is obvious, that a reassessment cannot be permitted, merely on the basis of change of opinion as that would denude the entire action of accepting the assessment of any finality, only on the basis of change of the AO. Thus, information and that too credible, which would permit the Assessing Officer to have reason to believe that the income chargeable to tax has escaped assessment is the very basis, for reopening of the assessment. It is necessary to note, that the loss claimed by the petitioner was already disclosed in its return filed for the assessment year 2017-18, as is indicated, from the intimation under Section 143 (1), accepting the return - It is also necessary to note, that in the order dated 19/12/2021 itself, the respondents, have categorically stated that in the AIR transaction details it is found that the assessee/petitioner has transacted (cumulative credit balance) to various Banks during the financial year 2016-17 and this information was not suspicious one and the Assessing Officer had rightly applied his mind in this regard. This being the position, merely because the CBDT inspection directs cases from non-filer management system (NMS) and other cases as flagged by the Directorate of Income Tax (Systems) as per risk profiling to be potential cases for taking action u/s 148 that by itself cannot be held to be a ground/information, giving reason to believe, to the Assessing Officer, to reopen the assessment in exercise of the powers u/s 147 of the IT Act. We find that the requirement of the then existing Section 147 does not stand satisfied which is also apparent from the language of the order which itself, is self-contradictory and silent as to a link being indicated between the information claimed to have been received and the reason to believe, in light of which, the impugned notice dated 31/03/2021 u/s 148 and so also the order dated 19/12/2021 cannot be sustained and are hereby quashed and set aside. Decided in favour of assessee.

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• 2024 (6) TMI 823
  Statutory appeal against the assessment - allegation of anti-dating - HELD THAT:- We find that the assessment order dated 24.03.2022 was challenged by filing this writ petition and during the pendency of this petition, the petitioner has assailed the legality and validity of that order by filing statutory appeal. Petitioner would submit that on the peculiar ground relating to alleged anti-dating, the petitioner has filed instant petition before this Court and thereafter, in order to save the petitioner from a situation where it may be deprived of statutory appeal because of the period of limitation, the petitioner has filed appeal also. The allegation of anti-dating can be examined in appeal proceedings and it cannot be said that these grounds cannot be taken up in appeal. Keeping that in view and giving the petitioner liberty to raise all the grounds which have already been raised in this petition, this petition is disposed off. The petitioner, however, would be at liberty to take such remedy as may be available to it under the law in case it suffers an adverse order in appeal.

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• 2024 (6) TMI 822
  Maintainability of a review application u/s 114 of the Code of Civil Procedure - assessment of anonymous donations received by a trust u/s 115 BBC - HELD THAT:- The reasoning resorted to by us while dismissing the applicant s appeal was on the ground that this Court had inherent limitations while deciding the appeal preferred u/s 260-A of the Act. The exemption being claimed by the application under section 11 of the Act was not a pure question of law which alone could have been gone into in the appeal. By virtue of section 68 of the Act read with Rule 46A of the Income Tax Rules, 1962, the onus was on the applicant to satisfy that the donations received by it were not anonymous. It had failed to discharge the onus. It had not even filed any return. Only an attempt was made to furnish some record. Exercise of verifying genuineness by sample check was resorted to. Except few, the donors could not be identified. We had also observed that in the light of section 133 (6) of the Act, donors list was produced before the CIT (A) in the appeal under the pretext that the first list produced by it was erroneous, still, enquiry was undertaken by resorting to sample check to identify the donors. Identity of the donors could not be established. Eight donors flatly denied to have paid any donation. Notices / letters sent to many of the donors from the list furnished by the applicant u/s 133 (6) had returned unserved with the remarks address not found , insufficient address , addressee left . Consequently, we held that the decision of the ITAT of holding the conclusion drawn by the Assessment Officer being plausible, no substantial question of law was being raised and the appeal was dismissed. Assessment of Donations - As we have demonstrated, it cannot be an appeal in disguise which precisely seems to be the case in the matter in hand. We avoid to burden this order by citing several decisions on this aspect of the matter. Suffice for the purpose to observe that the powers of review are circumscribed by well settled norms. It is only an error which can be rectified. If, as is being submitted on behalf of the applicants, every point is to be decided afresh, it would tantamount to re-hearing of the appeal. The whole attempt on behalf of the applicant seems to be to point out as to how this Court had committed illegality in deciding the appeal rather than making any attempt to point out any error apparent on the fact of the record. Suffice for the purpose to refer to the decision in the matter of Shanti Conductors Pvt. Ltd. V. Assam State Electricity Board and others [ 2019 (12) TMI 1513 - SUPREME COURT] wherein it has been observed that the scope of review is limited and a party cannot be permitted to re-agitate and re-argue a question under the guise of review. The error should be evident and if it requires a process of reasoning to be undertaken to detect it, it can hardly be said to be an error apparent on the face of record. As laid down in the matter of Arun Dev Upadhyaya Vs. Integrated Sales Services Ltd [ 2023 (7) TMI 1411 - SUPREME COURT] an error on the face of the record must be such an error which merely looking at the record should strike and it should not require any long drawn procedure on the points where there may be two opinions. Bearing in mind these principles, the whole submissions made by Mr. Deshmukh on behalf of the applicant would clearly demonstrate that every attempt has been made to re-argue the appeal which cannot be permitted to be done. As admitted that no concrete record of the donors was produced. Even a list which was initially produced, was subsequently replaced and that was not even a complete list of donors as is being submitted on behalf of the applicant. If such is the state-of-affairs, when the ITAT has, for the elaborate reasons, demonstrated as to how the applicant had not been able to discharge the burden, by producing independent material in respect of the 7145 donors who had in aggregate paid the donations to the tune of Rs. 2,89,20,955/- and when even an attempt to resort to random check had grossly failed and 8 of the donors even denied to have paid any donation, we had dismissed the appeal by pointing out as to how the observations and the conclusion of the ITAT was a plausible one and as to now no substantial question of law was arising.

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• 2024 (6) TMI 821
  Validity of Assessment u/s 153A - Jurisdictional Authority for Assessment Proceedings - transfer of assessment proceedings from Sangli to Kozhikode was questioned on the grounds of lack of mandatory notice and hearing as required by Section 127(2) - petitioner argued that the transfer order lacked clarity on reasons and did not contain a Document Identification Number (DIN), rendering it illegal - HELD THAT:- From the record and the pleadings, it can be noted that after receipt of the centralization proposal dated 15.01.2021 from the 4th respondent/Director General of Income Tax (DGIT) (Inv.) Kochi, a notice was sent to the petitioner by the 3rd respondent/ Principal Commissioner of Income Tax, Pune in Annexure R1 (A) dated 26.02.2021 giving an opportunity to the petitioner to convey his objections, if any, to the proposed centralization of his case with Deputy Commissioner of Income Tax (DCIT), Central Circle, Kozhikode. The said notice was duly delivered on the e-filing portal as well as the registered e-mail ID of the petitioner. In the notice, it was categorically mentioned that in the event of not receiving any reply from the petitioner within ten days of receipt of the notice, an order under Section 127 (2) of the IT Act shall be passed transferring his case to the 1st respondent/Assessing Officer, DCIT, Central Circle, Kozhikode. Despite the service of notice on the petitioner on the e-filing portal as well as the registered e-mail ID, the petitioner chose not to file any reply to the said notice. The petitioner s contention that the notice was not received by him cannot be accepted in view of the aforesaid facts. As the petitioner did not choose to file a reply, the order in Annexure R1(B) dated 09.04.2021 has been passed transferring the proceedings from Sangli to Kozhikode, as mentioned above. The question of whether in the absence of DIN, the order becomes inoperative, is pending consideration before the Supreme Court in THE COMMISSIONER OF INCOME TAX Versus BRANDIX MAURITIUS HOLDINGS LTD.[ 2024 (1) TMI 276 - SC ORDER ] arising out of the judgment of the Brandix Mauritius Holdings Ltd [ 2023 (4) TMI 579 - DELHI HIGH COURT ], wherein the learned Division Bench of the Delhi High Court has held that in the absence of DIN any communication, order should be treated invalid. However, the Supreme Court has stayed the said judgment vide interim order passed on 03.01.2024 in the said Special Leave Petition. So far as the question of no reasons in the order passed under Section 127 (2) in IT Act in Annexure R1 (B) is concerned, it may be said that the petitioner chose not to file any reply to the notice issued to him. Even otherwise, the facts would disclose that the petitioner is a resident within the jurisdiction circle of Kozhikode. The money was recovered here. The petitioner s place of business is within the jurisdiction limit and therefore valid reasons are available for transferring the proceedings from Sangli to Kozhikode. No error in the proceedings as contended by the learned Counsel for the petitioner. Thus, the writ petition has no merit which is hereby dismissed.

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• 2024 (6) TMI 820
  Estimation of income - bogus purchases - information received from Investigation Wing wherein the assessee has purchased material from Apex Associates which is controlled by the accommodation entry providers and based on the statement recorded from the entry providers, he came to the conclusion that the assessee has received accommodation entries - HELD THAT:- After considering the facts on record, in our considered view, no doubt assessee had purchased material from Apex Associates which was treated by the AO as non genuine. In our view, the AO has accepted the sales declared by the assessee and only proceeded to disallow purchases from Apex Associates, therefore, it was held in the decision of various High Courts, the AO cannot proceed to disallow only the purchases in isolation, therefore, in our considered view disallowance of 12.5% will serve the purpose of justice to both parties. Accordingly, we direct the AO to disallow the purchases @ 12.5%. Accordingly, the appeal filed by the assessee is partly allowed. With regard to appeal filed by the assessee for Assessment Year 2014-15, we observed from the record submitted by the assessee that assessee had made only payment towards the purchases of previous year. AO has only observed that assessee has paid 4,85,000/- to the Apex Associates from the bank statement and he presumed that assessee has purchased the material. Since, there is no purchases recorded nor claimed by the assessee during this year from Apex Associates, the addition made by the Assessing Officer is unjustified and accordingly deleted.

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• 2024 (6) TMI 819
  Validity of reopening of assessment u/s 147 - Addition u/s 68 - HELD THAT:- In our view, the Assessing Officer had sufficient material to form a prima facie belief that the assessee had introduced own unaccounted income in term of bogus share capital, thereby leading to escapement of income. Therefore, we find no infirmity in the order of Ld. CIT(Appeals) when he held that issuance of notice under section 147 of the Act was valid in the instant set of facts. Addition u/s 68 - Assessee failed to establish creditworthiness of share applicant or genuineness of transaction, AO was justified in making additions under section 68 and concluding that assessee routed its own money in books of account through conduit of investor companies. Assessee has adopted colourable means to introduce its own unaccounted money in the form of share capital and clearly engaged in dubious activities and is introducing its own unaccounted money through a maze of colourable set of transaction, we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. Decided against assessee.

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• 2024 (6) TMI 818
  Unexplained cash credit u/s 68 - Intercorporate deposits - AO disagreed with the contention of the assessee on the reasoning that all the companies from whom the assessee has received the fund either in the form of intercorporate deposits or as sales consideration are paper companies as evident from the documents found during search as well as the statements recorded of various persons as discussed above and therefore the impugned fund represents bogus in nature - Whether the sales consideration shown by the assessee can be subject to the addition under section 68? - HELD THAT:- We note that the transaction of sale is possible when there is a purchase. The transaction of sale cannot be completed until corresponding purchases are there. However, what we find is this that the revenue has treated the sales as unexplained cash credit without disturbing purchases shown in the profit and loss account. In simple words, the assessee has already shown sales in the profit and loss account, meaning thereby such sale has been offered to tax. Now, the Revenue without reducing the corresponding sales from the profit and loss account, has treated the sales of Rs. 4,76,00,000 as unexplained cash credit under section 68 of the Act. Thus such an act of the Revenue leads to the double addition of the same receipt shown by the assessee which is not desirable under the provisions of law until and unless the provisions warrant so. Thus, we are of the view that the Revenue has taken contradictory stand while framing the assessment which has been upheld subsequently by the learned CIT-A erroneously. Thus, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Whether the intercorporate deposits accepted by the assessee which were claimed to have been repaid can be made subject to the addition under section 68? - We note that the Revenue has not challenged the submission of the assessee that such borrowing has been repaid to the companies. In this respect, we find support and guidance from the judgment of Rohini builders [ 2001 (3) TMI 9 - GUJARAT HIGH COURT] wherein as held genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. Thus we hold that the genuineness of the transaction in the present case was proved by the fact that the loan amount was received through banking channel and repaid during the year through banking channel - no addition is warranted with respect to the loan under section 68 of the Act once the same has been repaid through the banking channel. Hence ground of appeal of the assessee is hereby allowed. Disallowing of the loss on account of trading of shares - HELD THAT:- Tribunal in the group case of the assessee i.e. Vicky Rajesh Jhaveri [ 2024 (6) TMI 698 - ITAT AHMEDABAD] held in absence of any finding specifically against the assessee in the investigation wing report, the assessee cannot be held to be guilty or linked to the wrong acts of the persons investigated as far as trading loss claimed by the assessee in the scripts - We set aside the finding of the land CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is hereby allowed. Disallowing the loss on account of client code modification - assessment proceedings found that the code of the assessee was modified 3239 times while carrying out the share trading transactions - HELD THAT:- Admittedly, the genuineness of the loss was not doubted by the authorities below, but such loss was rejected on the apprehension that the same belongs to other parties but shifted to the assessee on account of client code modification. As per the revenue, there was the possibility of claiming such loss by the other party too. To our understanding, the apprehension of the revenue is correct but the same can be addressed until necessary verification is carried out at the level of the AO to find out whether such loss was claimed by the other parties whose code was modified with the code of the assessee. If such loss has not been claimed by the other party, then we can presume that such loss belongs to the assessee and therefore the same should be allowed to the assessee. Accordingly, we set aside the issue to the file of the AO for fresh adjudication in the light of the above stated discussion and as per the provisions of law. Hence, the ground of appeal of the assessee is allowed for the statistical purposes. Disallowance on account of bad debts - AR submitted that the assessee has offered the income in the earlier year and therefore the same should be allowed as deduction under the provisions of section 36(1)(vii) of the Act - whether the amount written off by the assessee on account of bad debts, is an allowable deduction under the provisions of section 36(1)(vii)? - HELD THAT:- There was a sale made by the assessee dated 24 October 2011 amounting to Rs. 3,24,00,000 only. Against such sales the assessee has received amount to the tune of Rs. 1,74,99,800.00 with the outstanding balance of Rs. 1,49,00,200 which was written off by the assessee. From the copy of the ledger there remains no ambiguity that the assessee has offered the amount of bad debts as income in the earlier year and therefore the same should be allowed as deduction in view of the judgement of TRF Ltd [ 2010 (2) TMI 211 - SUPREME COURT] wherein it was observed that it is not necessary to establish that bad debts has become irrecoverable. For claiming deduction under section 36(1)(vii) of the Act, it is enough if such bad debts are written off in the books of accounts. Hence, we set aside the finding of the ld. CIT-A and direct the AO to delete the addition made by him. Thus, the ground of appeal of the assessee is hereby allowed.

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• 2024 (6) TMI 817
  Taxability of income in India - Royalty/FTS - Additions made in respect of receipts on account of Marketing, Distribution Marketing, Frequency Marketing Programme (IHG Rewards) collectively referred to as System Fund support fee and SCHI Facility charges (also referred as Technology Service Fees) - HELD THAT:- With effect from 1st April 2019, IHG India has been granted a non-exclusive license by IHG AP Singapore for granting use of trademark/ brand rights to the third-party hotels owners and the license fees received is taxable in India in the hands of IHG India as business income. Accordingly, from 1 st April 2019, IHG India has entered into a Hotel Management Agreement ( HMA ) with third party IHG brand Hotel in India. Under the HMA, IHG India grants license to the third-party hotel owners for the use of brand name/ trademark, provides hotel management services and provision of system fund services (which is in relation to marketing and reservation related services). As per above referred HMA, IHG India is required to provide/ procure marketing and reservation related services to the Indian Hotels. Such marketing and reservation services were earlier provided by SCHI to the hotel owners in India. For providing marketing and reservation related services, IHG India facilitates provision of marketing and reservation services through its team of employees in India and has also entered into agreements with the Assessee to seek its support for provision of marketing and reservation related services (which IHG India is unable to provide to the Hotels on its own). For the System fund support services provided by SCHI, IHG India shall pay to SCHI a fee equal to amount payable by Indian third-party hotel owners to IHG India in respect of such services less all the expenses incurred by IHG India with respect to such services. Further, in consideration for reservation system support services, IHG India pays to SCHI, a fee equal to 95% of the total fees payable by third- party Indian hotels to IHG India. As relying on own case Marketing, Distribution and Marketing and Frequency Marketing program and SCHI Facility Service charges is not Royalty/FTS and hence not taxable in India. Therefore, the matter is squarely covered by the above decisions and hence, the appeal of the assessee on this ground is allowed. Additions in relation to Travel Agent Commission ( TACP ) received from third-party Indian hotels - HELD THAT:- AO did not examine the explanation/documents submitted by the assessee during the course of assessment proceedings and therefore, there is a merit in this ground of the assessee. AO also did not follow the directions of the DRP, which had directed the AO to verify from the available record as to whether the receipt on account of recovery of travel agent commission (TACP), is reimbursement or not, and directed the AO to delete the above addition, in case, it was found to be reimbursement in nature. Therefore, the AO is directed to verify the above claim/documents of the assessee and to decide the matter keeping in view the directions of the ITAT that the same was an allowable expense, if it was in the nature of reimbursement as decided by the Co-ordinate Bench [ 2024 (6) TMI 697 - ITAT DELHI] Assessee is allowed to submit any details/explanations/documents in support of its claim. AO may also call for any further details to satisfy himself in deciding the matter keeping in view the above directions that the amount will not be taxable, if the assessee establishes that the same is reimbursement of expenses as claimed by it. Ground no.3 of the appeal is disposed.

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• 2024 (6) TMI 816
  Rectification of mistake - according to assessee there is mistake apparent from record in the order as regards to scheme of forward premium paid for the turnover of foreign exchange contract whether falls u/s. 43A - HELD THAT:- We noted that the provisions of section 43A of the Act would not apply in respect of working capital loan or loan for acquiring domestic assets whereas it will apply only to an imported asset. The assessee has given complete details of working capital loan availed from banks and also foreign currency long term loan availed from foreign entities for funding indigenous assets. The amount of forward premium of following accounts is allowable because these are for the indigenous assets and not imported asset. But for the purpose of verification, we are remitting this issue back to the file of the AO who will verify the forward premium on foreign currency working capital availed from banks, forward premium of foreign currency long term loans availed for funding indigenous assets and also forward premium of foreign currency long term loan for funding imported assets. AO will verify these from the invoices and then in case, he finds that this forward premium is for the purchase of indigenous assets, the AO will allow the same as revenue expenditure. In term of the above, we rectify our mistake and the appeal of the assessee is allowed for statistical purposes. Accordingly, the miscellaneous application of the assessee is allowed. Disallowance enhanced by CIT(A) of exempt income as against disallowed by the AO by applying the provisions of section 14A read with Rule 8D - HELD THAT:- Tribunal has committed mistake apparent from record in the order of the Tribunal in not adjudicating the above ground of enhancement. Thereafter, the ld.counsel for the assessee drew our attention to the order of CIT(A) and noted that there is no notice for enhancement and even now, the ld.Senior DR could not controvert and the AO has rightly computed the average value of investment for making disallowance under Rule 8D(2)(iii) for Rs. 4,57,368/-. Once the AO himself has computed the disallowance at Rs. 4,57,368/- and the CIT(A) without giving any notice of enhancement, he cannot enhance the disallowance to the extent of exempt income earned by assessee being dividend income at Rs. 18,28,080/-. Hence, we find mistake apparent from record in the order of Tribunal, first in not adjudicating the issue and secondly confirming the enhancement to the extent of exempt income because the AO has rightly computed the disallowance being 0.5% of average value of investment under Rule 8D(2)(iii) at Rs. 4,57,368/-. Thus we rectify our mistake and accordingly, this issue is allowed.

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• 2024 (6) TMI 815
  Income deemed to accrue or arise in India - Taxability of salary received in India for services rendered in China - whether salary earned by an individual for services rendered in China could be subject to exemption under Article 15(1) of Double Taxation Avoidance Agreement (DTAA) between India and China? - AO held that the assessee did not shift his employer and the assessee continued to be on the payroll of its employer. There existed employer-employee relationship. Therefore, the income so received would be chargeable to tax in India under section 15 of the Act which provides that any salary due from an employer would be chargeable to tax under the head salaries. HELD THAT:- We find substance in the arguments of the Ld.AR that assessee being tax resident of China, the salary income was taxable in China only. In fact, salary to the tune of Rs. 1,22,09,830/- received for the employment exercised in China is taxable in China and in the light of Article 15(1) of the India-China DTAA it is exempt income. The proportionate salary for services rendered in India has already been offered to tax in India whereas the balance salary has already been offered to tax in China. The assessee has not claimed any foreign tax credit in any of the jurisdiction. The China tax has been paid. Therefore, we direct the AO to allow benefit of exemption under Article 15(1) of Double Taxation Avoidance Agreement (DTAA) between India and China. Decided in favour of assessee.

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• 2024 (6) TMI 814
  Stay of demand - Attachment orders - TP Adjustment - MAM - adjustment in accordance with TNMM - as argued TPO adopted inconsistent approach on year-on-year basis by computing adjustments under a transaction-by-transaction approach as well as under the entity-wide TNMM approach and cherry-picking the approach which yields the higher adjustment HELD THAT:- Once a statutory provision specifically provides that the Tribunal can only grant a stay subject to deposit of not less than 20% of disputed demand, or furnishing of security of equal amount thereof, it is not open to this Tribunal to grant stay in violation of those basic provisions as the Tribunal being a creation of the statute and we are not in a position to question the provisions of this section 254(2A) of the Act. At this point, it is pertinent to mention ratio laid down in the case of CIT Vs Hindustan Bulk Carriers [ 2002 (12) TMI 10 - SUPREME COURT] A construction which reduces the statute to a futility has to be avoided. A statute or any enacting provision therein must be so construed as to make it effective and operative on the principle expressed in maxim ut res magis valeat quam pereat i.e., a liberal construction should be put upon written instruments, so as to uphold them, if possible, and carry into effect the intention of the parties. The power of this Tribunal to grant stay u/s 254(2A) of the Act is to be read with 254(1) of the Act and either of the section cannot be read on standalone basis, otherwise it would make these provisions redundant. his principle has been discussed in the case of Hindustan Lever Ltd. [ 2023 (3) TMI 188 - ITAT MUMBAI] It is further held in the decision of Hindustan Lever Ltd., cited (supra) that, even though all the issues are covered by the binding judicial precedents in favour of the applicant/assessee, a conditional stay may be granted directing the AO to grant stay on collection/recovery of the demand impugned in the appeal. Thus, it is discernible that, it is not open to this Tribunal to grant a blanket stay as argued by the Ld.Senior Counsel, as it would be contrary to the scheme of Act as visualized under the first proviso to section 254(2A) of the Act. In the present facts of the case, out of total attachment of Rs. 5551,27,15,824/- by Enforcement Directorate as well as by Income Tax authorities, an amount of Rs. 3700 Crores has been attached by Income tax authorities. In our opinion, as of now, the interest of the revenue is fully secured against quantified demand of INR 19,95,68,06,291/- and INR 17,36,59,96,491/- respectively for the present assessment year i.e. 2020-21 2021-22 under consideration. Being so, till this attachment continues, the applicant/assessee is not required to make any further payment and/or furnish any further securities. I n the event the attachment of above Bank Accounts as mentioned in earlier para stands vacated or revoked or disturbed or modified by any orders of Court or authorities, the applicant/assessee then shall deposit not less than 20% of INR 19,95,68,06,291/- for AY 2020-21 and INR 17,36,59,96,491/- for AY 2021-22, or furnish security amounting to not less than 20% of the outstanding liability within two weeks from the date of such removal or vacating or revoking or modifying the attachment of the bank accounts mentioned in earlier para of this order. Assessee shall fully cooperate in speedy disposal of appeal before this Tribunal and will not seek any unnecessary adjournments of the hearing before the bench at any point of time and the applicant/assessee shall not resort to any dilatory tactics, in such event, the stay will be automatically vacated forthwith. This stay order will be in operation for 180 days from the date of this order, or till the disposal of related appeal or till further orders of this Tribunal, whichever is earlier as the case may be. The Registry is directed to post related appeal for hearing in due course. No further notice of hearing be issued to both the parties.

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• 2024 (6) TMI 813
  Penalty levied u/s. 271D - Notice initiating penalty u/s. 271DA instead of notice u/s. 271D which was levied on the assessee - HELD THAT:- We find that JCIT has initiated penalty u/s. 271DA of the Act on 07.01.2022 and not u/s. 271D of the Act; and having noted so, we find that only on 18th /19th July, 2022 i.e. just before 13 days before levy of penalty, assessee was put to notice of proposed penalty s.271D of the Act, instead of u/s. 271DA of the Act. It needs to be noted s.271DA of the Act, is a penalty levied for failure to comply with the provisions of Sec. 269ST of the Act, whereas penalty u/s. 271D of the Act, is levied for failure to comply with Sec. 269SS of the Act, and both are distinct provisions; and Sec. 269ST was inserted only by Finance Act, 2017, w.e.f. 01.04.2017, violation of which entail penalty u/s. 271DA of the Act. As noted (supra), after two years of passing the assessment order, the Range Head/JCIT had initiated the penalty u/s. 271DA of the Act, in January, 2022 and only on 18th /19th July, 2022, he had corrected the mistake and put the assessee on notice for penalty to be levied under a different section i.e. Sec. 271D of the Act, and within 13 days, he has levied penalty, which action of the JCIT cannot be countenanced, since initiation of notice itself is bad in law and it exposes the non-application of mind by the authority initiating penalty; and his impugned action was whimsical/arbitrary which violates Article-14 of the Constitution of India. Defective notice - as submitted by the Ld.AR, the impugned notice initiating penalty u/s. 271DA of the Act, could have created confusion in the assessee s mind and disabled him from defending/explaining his case effectively. Thus, it results in the denial of right to adequate opportunity and fair hearing envisaged u/s. 274 of the Act. According to us, in law, it is not permissible to presume that the assessee knows the charge, more so when proceedings are punitive. It is settled position of law that penal laws must be construed strictly, that is according to the language used in the statute. Sec. 274 of the Act clearly mandates that assessee must have reasonable opportunity of hearing before the authority passes an order imposing penalty. In other words, notice cannot be treated as mere formality. It in fact requires strict compliance and therefore, all actions following the defective notice are vitiated and consequently penalty levied is unsustainable in law. Penalty u/s. 271D for Cash Transactions Exceeding Rs. 20,000 - It is not a fit case for levy of penalty, because, assessee s assertion/explanation that in the year under consideration (AY 2017-18) there was neither cash transaction nor cash deposits [in his bank-account as admitted by AO] in respect of sale of immovable property has not been addressed by the JCIT; and assessee s assertion that cash was transacted in earlier years upon sale agreement for the same property on 06.01.2014 (AY 2014-15), has not been found false by the JCIT. And the Ld.AR pointed out that in AY 2014-15, Sec. 269SS of the Act (violation for which JCIT levied penalty u/s. 271D of the Act) did not had the term/expression any specified sum which was inserted only in Finance Act, 2015 w.e.f. 01.06.2015, therefore no penalty could have been taken in the year in which assessee took advance of Rs 2.50 crores. And it was pointed out that assessee s stand throughout the assessment/penalty proceedings were that in the year under consideration, the assessee had adjusted the amount received in AY 2014-15; therefore no penalty was warranted; and in the relevant year assessee has only adjusted the amount taken in AY 2014-15 and showed as taking advance of Rs. 4.20 lakhs on 6.10.2016; and that the balance consideration of Rs. 1.14 Crs. was shown as given on next day when the sale was executed/registered to four relatives of Shri R.Shaktivel who was party in the agreement of sale in AY 2014-15 as noted. Moreover, it was pointed out by the Ld.AR that the entire sale consideration was reflected in the Sale Deed as noted by the JCIT. Thus, according to him, there is no dispute about the identity of four buyers, and the amount of sale consideration albeit in cash was also not in dispute. Therefore, according to the Ld.AR, Rs. 1.14 Crs. given as sale consideration while executing the sale, penalty ought not to have been levied; and for such a preposition relies on the decision of the Tribunal in the case of ITO v. R. Dhinagharan (HUF) [ 2024 (1) TMI 61 - ITAT CHENNAI] Thus we find force in the contentions we agree that even if the penalty would have been levied, it would have been only of Rs. 4.20 lakhs and not Rs. 1.14 Crs. However, as noted we have found that the penalty notice which was initiated against the assessee was invalid in the eyes of law and therefore, the penalty levied is vitiated; and consequently, penalty levied deserves to be deleted. Appeal filed by the assessee is allowed.

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• 2024 (6) TMI 812
  Delayed payment of employees contribution towards provident fund and ESIC - HELD THAT:- Issue is covered in favour of the Revenue by the decision of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] Accordingly, respectfully following the aforesaid decision of the Hon ble Supreme Court, ground no.2 raised in assessee s appeal is dismissed. Disallowance of deduction claimed u/s 80-IA - assessee has failed to file Form no.10CCB within the due date - HELD THAT:- We find that in the facts of the case, the taxpayer could not produce a copy of the audit report in Form no.10CCB, though claimed to be filed after a delay. However, as noted above, in the present case, the learned CIT(A) upon verification of the database noted that the audit report in Form no.10CCB was filed by the assessee online on 11/06/2020. Therefore, we are of the considered view that the reliance placed by the learned CIT(A) on the aforesaid decision of the coordinate bench of the Tribunal is completely misplaced. During the hearing, DR supported the conclusion reached by the lower authorities by placing reliance upon the decision of Wipro Ltd. [ 2022 (7) TMI 560 - SUPREME COURT] . From the perusal of the aforesaid decision passed by the Hon ble Supreme Court, we find that compliance with the provisions of section 10B(8) of the Act was under consideration before the Hon ble Supreme Court, which specifically requires furnishing of declaration to the AO before the due date of furnishing the return of income under sub-section (1) of section 139 of the Act. The provisions of section 80-IA(7) of the Act neither qualify the term return of income nor mention the specific provision of section 139 of the Act. Therefore, we are of the considered view that the decision of the Hon ble Supreme Court in Wipro Ltd (supra) does not support the case of the Revenue. Amendment to section 80-IA(7) of the Act, by the Finance Act, 2020, whereby the time period for audit and furnishing the audit report in Form no.10CCB has been laid down is made effective from 01/04/2020, and therefore, cannot apply to the assessment year under consideration. Since the audit report in Form no.10CCB has been found to have been filed on 11/06/2020 and the reference to the same was made by the assessee in its revised return of income filed on 22/07/2020, in the absence of any other allegation to deny the claim of deduction u/s 80-IA we are of the considered view that the CIT(A) erred in upholding the disallowance of deduction claimed u/s 80-IA -. Accordingly, on this issue, the impugned order is set aside, and ground no.1 raised in assessee s appeal is allowed.

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• 2024 (6) TMI 811
  TP adjustment on brokerage commission received by the assessee from its AE s - MAM selection - assessee has worked out the rate of commission to be 0.13% of the turnover in the case of clearing house transaction and 0.04% in case of futures transaction and had bench marked the said transaction using TNMM - Charging of higher rate of brokerage commission levied on overseas non AE s has to be the arm s length price for the AE s for similar services rendered by the assessee and also the method to be adopted for determination of the ALP for the said brokerage receipt, i.e., whether TNMM or CUP method to be the most appropriate method - assessee s contention is that the nature of service varies from client to client depending upon various parameters and requirements and that TNMM method is the most appropriate method for bench marking the said transaction - HELD THAT:- TPO whose recommendation has been followed by the ld. A.O. in passing the assessment order, has not specified as to how CUP method is the most appropriate method except for the fact that in A.Y. 2004-05, the assessee has bench marked the transaction using CUP method. A.O./TPO has also not specified as to what were the comparables that was relied upon for determining the ALP of the said transaction and has also not given a specific finding as to what is the similarity in the services rendered to the AEs and non AEs provided by the assessee pertaining to the brokerage commission received by the assessee though the ld. TPO has stated in his order that TNMM method cannot be adopted in this case where the difference in product and services relate to unrelated parties are identifiable based on the documentation available with the assessee, the TPO has not given a detailed finding as to how he has arrived at the said contention. Thus as this issue is a recurring one, which has been dealt with by the Tribunal in assessee s case for various years, we do not find any change in the circumstances or the nature of transaction entered into by the assessee with its AE during the year under consideration. We, therefore, deem it fit to allow these grounds of appeal raised by the assessee by holding the said transaction to be at arm s length and TNMM to be the most appropriate method for determining the arm s length price. Ground nos. 3 to 10 raised by the assessee is allowed. Payment of royalty/branding fee - Assessee had relied on the Exchange Control Regulation, as per which 1% of the domestic sales and 2% for the export sales was to be charged as payment of royalty under the automatic rule for use of trade mark and brand name of a foreign collaborator without any technology transfer and has bench marked the said transaction by using TNMM method - assessee s contention was not accepted by the ld. TPO/AO for the reason that the assessee has failed to substantiate that the ownership of CLSA belongs to the Netherland entity when the said company is based in Hongkong and merely producing the brand registration letter to prove the ownership of CLSA BV is per se not sufficient -HELD THAT:- As observed that the Tribunal in the earlier years has held that CLSA BV owned the brand CLSA which had facilitated the assessee to establish and promote business in the Indian industry. It was also held that the other group entities were not making payment on royalty for the reason that different entity have different arrangements in different jurisdiction and the assessee was not in commission sharing arrangement and, therefore, was entitled to payment of royalty. The other entities were engaged in market contributions with CLSA BV and, therefore, there was no necessity of payment of royalty in those cases. The Tribunal further observed that the expenditure incurred by the assessee on royalty was only 1% when compared to other comparable companies where it worked out to be more than that of the assessee and, therefore, held that the royalty paid by the assessee was not excessive. The Tribunal in assessee s case has held that the TNMM was the most appropriate method for bench marking the said transaction and not the internal CUP method where the transaction is not with the unrelated party but with its AE s - external CUP also could not be applied for the reason that there was no material on record, pertaining to royalty made by any independent party for the brand name and due to non availability of such transactions, the said method could not be considered as the most appropriate method. As the Tribunal in other years has also followed the finding of the Tribunal in earlier years, with no change in facts and circumstances for the impugned year, we find no justification in deviating ourselves from the finding of the tribunal in assessee s case for other years. Therefore, ground nos. 11 to 16 raised by the assessee is hereby allowed. Payment of indirect cost - assessee and CLSA Hong Kong had entered into an indirect expenses reimbursement agreement for the purpose of reimbursement of indirect expenditure incurred at group level, which pertains to remuneration and travel and entertainment cost of sales team stationed in London and New york who are engaged exclusively for the assessee s business - HELD THAT:- As observed that the ld. A.O./TPO has not applied any of the prescribed methods mentioned in the provisions to determine the ALP of the said transactions and had rejected the ALP determined by the assessee by holding that the assessee has failed to substantiate its claim by any documentary evidences. Assessee stated that the issue of payment on indirect cost has been decided by the Tribunal in assessee s case for A.Y. 2003-04 and 2004-05 where it has been held that the assessee has bench marked the transaction by using TNMM method as one of the prescribed method u/s. 92C of the Act, whereas the ld. TPO/A.O. has merely made an adhoc addition without prescribing to any of the methods as per the provisions of the Act and had thereby deleted the impugned addition. The facts of this ground is identical to that of earlier years where the Tribunal has decided this issue in favour of the assessee with no change in facts and circumstances during the year under consideration. Hence, we deem it fit to direct the ld. A.O. to delete the impugned addition made on account of reimbursement of indirect overhead expenses. Therefore, ground nos. 17 to 22 raised by the assessee is allowed. Addition made on outstanding securities tax - assessee during the year under consideration had received security transaction tax from its clients, which is payable to the stock exchange and the same has been declared as liability in the books as on 31.03.2005 - AO observed that the assessee has not paid the STT to the stock exchange neither has it settled to the clients pursuant to a settlement of disputes of levy of STT and held the same to be the part of trading/business receipts and added the same as business income - HELD THAT:- As relying on assessee own case [ 2020 (12) TMI 1358 - ITAT MUMBAI] we hereby allow ground no. 23 raised by the assessee and, therefore, direct the ld. A.O. to delete the disallowance made u/s. 43B(a) of the Act. TDS u/s 194J - Disallowance of transaction charges and straight through processing (STP) charges u/s. 40(a)(ia) - assessee has not deducted TDS for the same - HELD THAT:- As this issue is no longer resintegra, we deem it fit to hold that the assessee was not entitled to deduct TDS u/s.194J of the Act for the transactional charges and STP charges paid to stock exchange and NDSL respectively. We, therefore, delete the disallowance made u/s.40(a)(ia) of the Act and allow ground nos. 24 to 26 raised by the assessee. TDS u/s 195 - disallowance of STP charges paid to Singapore entity u/s. 40(a)(ia) - assessee contends that it has paid STP charges to the Singapore entity u/s. 40(a)(ia) for which the assessee has deducted tax at source as per section 195 and had deposited the same to the Central Governmen - A.O. vide rectification order has allowed the said amount - HELD THAT:- Since the issue has already been resolved, we deem it fit to delete the disallowance after duly verifying the facts of this ground. Therefore, ground no. 27 raised by the assessee is allowed.

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• 2024 (6) TMI 810
  Taxability of Sales Commission - FTS - whether the sales commission received by the assessee from ASPL qualifies as Fees for Technical Services (FTS) under the Act and the India-USA DTAA? - HELD THAT:- We hold that the income received towards the sale commission does not satisfy the definition FTS both under the Act and under DTAA. It was also noted that the payer (ASPL) it is already held that commission payment is not taxable, the same findings are applicable in the present assessee who is being a recipient. We allow the ground No.3 in favour of the assessee in all these appeals holding that sales commission is not taxable.

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• 2024 (6) TMI 809
  TDS u/s 195 - withholding tax demand AO towards the TDS and interest thereon - foreign remittance to various parties against the services being clinical trial, professional consultancy, and market survey - interpretation of the make available clause in tax treaties - CIT(A) was pleased to delete the demand raised by the AO - HELD THAT:- As far as the issue of withholding tax on remittance made to USA-Canada based 7 parties for clinical trial and professional consultancy from Cambridgesoft Corp. USA where DTAA has specific provision regarding FTS is concern, we find that such issue is covered in favour of the assessee by the order of this Tribunal in the own case of the assessee for AY 2010-11 [ 2017 (1) TMI 554 - ITAT AHMEDABAD] it is not even the case of the Assessing Officer that the assessee, i.e. recipient of services, was enabled to use these services in future without recourse to the service providers. The tests laid down by Hon ble Court were clearly not satisfied. There mere fact that there were certain technical inputs or that the assessee immensely benefited from these services, even resulting in value addition to the employees of the assessee, is wholly irrelevant. The expression make available has a specific meaning in the context of the tax treaties and there is, thus, no need to adopt the day to day meaning of this expression, as has been done by the Assessing Officer. Payment made for use of science data base, subscription of journal Publication is also covered in favour of the assessee by the order of this Tribunal in the own case of the assessee for AY 2010-11 [ 2017 (1) TMI 554 - ITAT AHMEDABAD] as held as a matter of fact, the AO righty noted that royalty has been defined as payment of any kind received as a consideration for the use of, or right to use of, any copyright of literary, artistic or scientific work and that the expression literary work , under section 2(o) of the Copyright Act, includes literary database but then he fell in error of reasoning inasmuch as the payment was not for use of copyright of literary database but only for access to the literary database under limited non exclusive and non transferable licence. Even during the course of hearing before us, learned Departmental Representative could not demonstrate as to how there was use of copyright. In our considered view, it was simply a case of copyrighted material and therefore the impugned payments cannot be treated as royalty payments. This view is also supported by case of Dun Bradstreet Information Services India (P.) Ltd [ 2011 (7) TMI 957 - BOMBAY HIGH COURT] . Thus we hereby do not find any reason to interfere with the finding of the learned CIT(A) to extent of demand raised under section 201(1)/201(1A) of the Act on account of payment made to 7 USA-Canada based parties on clinical trial, consultancy fees, Cambridge soft Corp. USA and the payment made to 3 parties for access of chemistry data base, science publication and science journals. Payment made to Cambridgesoft corporation against purchase of ChemOffice enterprise - We find that the impugned payment represents the outright purchase of the software which cannot be treated as royalty and consequently, the same is outside the purview of the TDS provisions under section 195 of the Act. In holding so, we draw support and guidance from the judgment of Nokia Networks OY [ 2012 (9) TMI 409 - DELHI HIGH COURT] wherein it was observed that the transaction of software purchase on principal-to-principal basis cannot be considered as royalty payment. Hence, the demand raised by the AO is hereby deleted. Payment made to 2 Thailand based company for bio equivalent study - We find that there is no dispute that there is no specific provision for taxation of fees for technical services in India Thailand tax treaty. Thus, the profits earned by rendering fees for technical services are only a species of business profits just as the profits any other economic activity. Likewise, there is also no dispute that Thailand based companies did not have any permanent establishments in India. Thus, the income earned by a resident of a contracting state by carrying on business in the other contracting state cannot be taxed in the source state unless such a resident has a permanent establishment in the other contracting state, i.e. source state. In holding so, we draw support and guidance from the order of this Tribunal in the case of DCIT Vs. Welspun Corporation limited [ 2017 (1) TMI 1084 - ITAT AHMEDABAD] Payment made to Srilanka based party namely Swiss Biogenics Ltd Sri Lanka for Market Survey/development - AO treated the services of market survey under the preview of technical services as defined under the explanation 2 to section 9(1)(vii) of the Act. On the hand, CIT-A held that such payment falls under the exception clause (b) of section 9(1)(vii) of the Act regarding the fees for technical services and thus deleted the demand raised by the AO. In this regard, we find that in the case of Evolv Clothing Co. Pvt. Ltd. [ 2018 (6) TMI 1324 - MADRAS HIGH COURT] has held that the payment for market survey is equivalent to sales agent commission. Hence, the same cannot fall within the definition of FTS. Therefore, the provisions of section 9(1)(vii) are not applicable and thus the demand raised by the AO is deleted. In view of the above detailed discussion, the grounds of appeal raised by the Revenue are hereby dismissed. Appeal of revenue dismissed.

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• 2024 (6) TMI 808
  Entitlement to to exemption u/s 11/12 - claim made in the return of income when the audit-report (Form No. 10B) was not filed before filing of return but filed before filing of first-appeal - procedural requirement of filing the audit report along with the return of income - HELD THAT:- Non-filing of audit report with the return of income is a mere procedural irregularity for which the exemption u/s 11/12 cannot be denied. CBDT Circular No. 10/2019 dated 22.05.2019 empowers the Commissioner of Income-tax for condoning delay in the matter of filing audit report (Form No. 10B) but the assessee has not filed any condonation-petition before Commissioner of Income-tax - This point is also rejected by Hon ble Gujrat in Indian Panel Board Manufacturer [ 2023 (3) TMI 1374 - GUJARAT HIGH COURT] as held tribunal further committed an error in appreciating the import of Section 119(2)(b) of the Act in as much as the application contemplated thereunder is only additional remedy for the assessee which could not be said to be compulsorily resorted to, by the assessee. The circular No. 7/18 dated 20.12.2018 issued u/s 119 of the Act could not be, therefore, said to have taken away the appellate remedy. Assessee ought to have appealed against the intimation u/s 143(1) and not against rectification-order u/s 154 - A similar dispute was decided by ITAT, Jodhpur in Akbar Mohammad [ 2022 (2) TMI 479 - ITAT JODHPUR] as held it is a case in point that the assessee did not file any appeal against the intimations passed us 143(1) of the Act and the Ld. Sr. DR is right to the extent that the assessee cannot be given relief for that reason. However, it is also a settled law that the assessee cannot be taxed on an amount on which tax is not legally imposable. Although, the assessee might have chosen a wrong channel for redressal of his grievance, all the same, it is incumbent upon the Tax authorities to burden the assessee only with correct amount of tax and not to unjustly benefit at the cost of tax payer. Therefore, we find that in present case, the assessee cannot be denied benefit of exemption u/s 11/12 as claimed in return for mere delay in filing of audit report.

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• 2024 (6) TMI 807
  Applicability of Section 55(2)(b)(i) to bonus shares - Cost of acquisition of bonus shares which became the property of assessee before 1.4.2001 - Applicability provisions of section 55(2)(aa)(B)(iiia) or it is to be applied subject to the provisions of sub-clause (i) (ii) of clause (b) of Section 55(2) - bonus shares were allotted to the assessee without payment and on the basis of his holding the original shares so as to bring the case of the assessee within the ambit of sub-clause (iiia) HELD THAT:- The provision u/s 55(2)(aa)(B)(iiia) of the Act was introduced w.e.f. 1.4.1996 by Finance Act, 1995. Section 55(2)(aa)(B)(iv)(ac) of explanation (b) was introduced w.e.f. 1.4.1998 by Finance Act, 2018. The assessee wants to press the assistance of this explanation so as to ascertain the fair market value of the asset as on 1.4.2001 when this bonus shares have became property of the assessee before 1.4.2001. As carefully gone through the provisions of sub-clause (iiia). We do not find any word used therein which can be said to be vague or ambiguous or failing to convey clearly the legislative intent. The legislative intent is clear that the capital gains arising on transfer of bonus shares on or after 1-4-1995 i.e., assessment year 1996-97 should be computed by taking the cost of bonus shares to be nil if the conditions of clause (iiia) are satisfied. It is not disputed by the assessee that bonus shares were allotted to him without payment and on the basis of original shares held by him. The plain and natural meaning of the term allotted (a past tense) as occurring in sub-clause (iiia) is that the factum of allotment of bonus shares should have taken place in the past. The said term is neither restricted nor qualified nor followed by any date and hence we are not inclined to insert or read any date after the aforesaid term, as contended by the assessee. We do not think that the plain words of sub-clause (iiia) are capable of any such interpretation as suggested by the learned counsel for the assessee. In CESC Ltd v. Dy. CIT (No. 2) [ 2003 (6) TMI 20 - CALCUTTA HIGH COURT] as held: In the absence of any restrictions provided within the scheme of Chapter XV, the court is not supposed to read something, which is otherwise not permissible. While interpreting a provision, the High Court is not supposed to legislate indirectly. The court has to read the statute, as it is when the statute is capable of conveying clear and unambiguous simple grammatical meaning. We are therefore unable to agree with the submission of the Ld. Counsel for the assessee that sub-clause (iiia) would apply in those cases only where bonus shares are allotted on or after 1-4-1995 as such a construction requires for its support, addition of words or rejection of words which is not permissible in the face of clear provisions of sub-clause (iiia). Departmental Circular No. 717 dated 14th August, 1995 highlights that sub-clause (iiia) has been inserted with effect from 1-4-1996 in order to overcome certain difficulties and the problem of complexity in working out the cost of bonus shares and consequential computation of capital gain as a result of judicial decisions. The aforesaid amendment, therefore, is required to be construed in a manner so as to promote the purpose and object of the amendment. The Legislature wants to adopt a simple method for computation of capital gains with effect from the assessment year 1996-97 by providing that the cost of acquisition shall be taken to be nil in cases falling under sub-clause (iiia). Sub-clause (iiia) has been made specifically applicable with effect from the assessment year 1996-97 requiring thereby that income from capital gains would be computed, with effect from assessment year 1996-97, by taking the cost of acquisition of bonus shares to be nil. It is well-settled that even existing rights can be impaired by express enactment or by necessary implication from the language employed in the statute. In the present case, sub-clause (iiia) enacts that the cost of bonus shares would be taken to be nil if they were allotted to the assessee without payment and on the basis of his holding the original shares. The provision of sub-clause (i) of clause (b) in section 55(2)(b) of the Act is in respect of financial asset, where a purchase price has been paid by an assessee for acquiring such financial asset. Whereas, in present facts, the assessee has admittedly not paid any price for acquiring the bonus shares. Under such circumstances, the specific provision relating to acquisition of financial asset under section 55(2)(aa)B(iiia) of the Act, without any cost would be applicable. As the legislature has expressly provided for cost of acquisition to be at Nil , in a situation where the financial asset is allotted to an assessee without any payment, upholding the argument of the assessee to apply sub-clause (i) of clause (b) to section 55(2)(b) of the Act will make sub-clause (iiia) to section 55(2)(aa)B of the Act redundant. As noted that section 55(2)(b) of the Act talks of other capital asst, which segregates from sub-clause (iiia) to section 55(2)(aa)B of the Act, that talks about Bonus shares specifically. The decisions relied by the ld. A.R. has not considered being this distinguishing feature between these two provisions. Thus, we find no merits in the arguments of ld. A.R. and all the grounds of appeal raised by the assessee herein are dismissed.

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• 2024 (6) TMI 806
  Taxability of Excise Duty subsidy - Characterization of receipt - claiming it to be capital in nature and not taxable - CIT(A) dismissed the claim stating it was not made before the AO or revised in the RO - As argued Excise Duty subsidy received by the assessee was wrongly declared as revenue income by the assessee and incorrectly offered to taxation as chargeable income while filing the return of income - CIT(A) has denied to entertain such claim of the assessee on the ground that such claim was neither made before the AO in the assessment proceedings nor the ROI was revised - assessee states that the higher taxable income has been offered by including Excise Duty subsidy as revenue income out of sheer mistake and inadvertence on the part of the assessee. HELD THAT:- It is trite that the authorities under the Act are under sacrosanct obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or not being properly instructed, is over assessed, the authorities under the Act are required to ensure that only legitimate tax dues are collected. This is the view which flows from innumerable judgments including Shelly Products [ 2003 (5) TMI 4 - SUPREME COURT ], S. R. Koshti [ 2004 (12) TMI 62 - GUJARAT HIGH COURT ], Ester Industries [ 2009 (3) TMI 11 - DELHI HIGH COURT ] and.Pruthvi Brokers Shareholders (P.) Ltd. [ 2012 (7) TMI 158 - BOMBAY HIGH COURT ] The essence of these decisions are that mere admission on the part of the assessee with respect to an addition/disallowance in its original return or in revised return would not ipso facto bar an assessee from claiming an expense or disputing an income, if it is otherwise permissible under law. It is thus well settled that if a particular income is not taxable under the Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Revenue authorities cannot enforce untenable actions of the assessee against it which led to declaration of income of higher amount incorrectly. It is thus open to assessee to show that it was over assessed under erroneous impression of law or facts even if it is attributable to the mistake of assessee. So viewed, we do see potency in the argument laid on behalf of the assessee that the CIT(A) committed error in not making enquiry into legitimacy of relief so claimed and grant him appropriate relief if found in order. In our considered view, the action of the CIT(A) is in defiance of the judicial precedents on the issue and thus cannot be countenanced. Assessee cannot be prevented from raising such additional claim before the CIT(A) merely because the ROI could not be revised or claim was not put before Assessing Officer. The factual matrix towards character of Excise Duty subsidy however has not been verified by AO or by the CIT(A). It would thus be in fitness of things to remit the issue to the file of the AO rather than that of CIT(A) for fresh determination of correctness of claim. AO shall exclude the Excise Duty subsidy from the ambit of chargeable income in accordance with law on being satisfied with the claim of the assessee that such subsidy is to be regarded as capital in nature in the context of the case. The issue is accordingly set aside to the file of the AO for proper determination of taxability of Excise Duty subsidy in question in accordance with law after providing reasonable opportunity to Assessee in this regard. Appeal of the assessee is allowed for statistical purposes.

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• 2024 (6) TMI 805
  Deduction u/s 80G - rejection of an application filed in Form No.10AB - HELD THAT:- It is admitted fact that the assessee is a new trust having commenced its activities on 10.07.2020. It could further be noted that the assessee has already received provisional approval u/s 80G(5)(iv) for a period commencing from 26.03.2022 to AY 2024-2025. It sought approval u/s 80G(5)(iii) by filing Form No.10AB on 23.05.2023 which has been rejected by Ld. CIT(E) on the ground that the assessee had violated the mandatory time lines as statutorily provided. The bench thus held that the extended time limit of 30.09.2023 as per CBDT Circular would apply to Form No.10AB as well. The bench also takes note of the latest decision in the case of Sri Nrisimha Priya Charitable Trust [ 2024 (4) TMI 499 - MADRAS HIGH COURT] wherein Hon ble Court has held that clause 5(ii) of Circular No.6 of 2023 dated 24.05.2023 is illegitimate, arbitrary and ultra vires the constitution of India. The clause 5(ii) of Circular No.6 of 2023 bearing F.No.370133/06/2023-TPL, dated 24.05.2023 of the first respondent is declared as illegitimate, arbitrary, and ultra vires the Constitution of India. The respondents are directed to consider the applications submitted by the petitioners as to the recognition/approval in respect of clause (i) of the first proviso to sub-section (5) of section 80G of the Act as within time and consider the same and pass orders thereon on merits, in accordance with law within six months from the date of receipt of a copy of this order.

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• 2024 (6) TMI 804
  TDS / Withholding Tax u/s 195 - Characterization of interconnect utility charges (IUC) as Royalty under the Income Tax Act and India-Japan DTAA - AR submitted that there is no use of process or any use of equipment , hence, the entire assumption of process royalty / equipment royalty does not arise in the case of the assessee - HELD THAT:- We note that the revenue characterised the payments received by assessee towards interconnectivity utility charges as Royalty , since the payment is made to use the process or an equipment . It is an admitted fact that various service providers in India entered into agreement with assessee for international carriage and connectivity services against which an interconnectivity charges are received by the assessee. The words which surround the word process in clauses (i) to (iii) of Explanation 2 to section 9(1 )(vi), refer to various species of intellectual properties such as patent, invention, model, design, formula, trade mark etc. The expression similar property used at the end of the list, further fortifies the stand that the terms patent, invention, model, design, secret formula or process or trade mark are to be understood as belonging to the same class of properties viz. intellectual property. We also note that Intellectual property as understood in common parlance means, Knowledge, creative ideas, or expressions of human mind that have commercial value and are protectable under copyright, patent, service mark, trademark, or trade secret laws from imitation, infringement, and dilution. Intellectual property includes brand names, discoveries, formulas, inventions, knowledge, registered designs, software, and works of artistic, literary, or musical nature. Thus the word process thus must also refer to specie of intellectual property, applying the rule of, ejusdem generis or noscitur a sociis, as held by Hon ble Supreme Court in case of CIT vs. Bharti Cellular [ 2010 (8) TMI 332 - SUPREME COURT] It is an admitted fact that there is no transfer of any intellectual property rights or any exclusive rights that has been granted by the assessee to the service recipients for using such intellectual property. Therefore Explanation 2 to section 9(1)(vi) cannot be invoked. By insertion of Explanation 5 6, meaning of word Process has been widened. As per these explanations, the word Process need not be secret , and situs of control possession of right, property or information has been rendered to be irrelevant. However, in our opinion, all these changes in the Act, do not affect the definition of Royalty as per DTAA. The word employed in DTAA is use or right to use , in contradistinction to, transfer of all or any rights or use of , in the domestic law. As per Explanation 5 6 , the word process includes and shall be deemed to included, transmission by satellite (including up- linking, amplification, conversion for down-linking of any signal), cable, optic fibre or by any other similar technology, whether or not such process is secret. However, the Explanation does not do away with the requirement of successful exclusivity of such right in respect of such process being with the person claiming royalty for granting its usage to a third party. Similar issue came up before Hon ble Delhi Tribunal in case of Bharti Airtel [ 2016 (3) TMI 680 - ITAT DELHI] The issue considered therein was in respect of payment towards call interconnectivity charged for call transmission on foreign network. The Tribunal therein, on applying ratios pronounced in the above referred decisions, held it not as Royalty . Therefore in our opinion, the Payments made by the assessee in lieu of services provides by the assessee cannot fall within the ambit of Royalty under section 9(1)(vi) Explanation 5 6. We also note that in the present facts of the case, at no point of time, any possession or physical custody, control or management over any equipment is received by the end users / customers. It is also noted that the process involved in providing the services to the end users / customers is not secret but a standard commercial process followed by the industry players. Therefore the said process also cannot be classified as a secret process , as is required by the definition of royalty mentioned in clause 3 of Article 12 of India-Japan DTAA. We are therefore of the opinion that the receipt of IUC charges cannot be taxed as Royalty under Article 12 in India of India- Japan DTAA. Respectfully following the above view, in case of Vodafone Idea Ltd . ( 2019 (12) TMI 206 - ITAT BANGALORE ) and the discussions hereinabove, we hold that payments received by assessee towards interconnectivity utility charges from Indian customers / end users cannot be considered as Royalty to be brought to tax in India under section 9(1)(vi) of the Act and also as per DTAA. The payment received by the non-resident assessee amounts to be the business profits of the assessee which is taxable in the resident country and is not taxable in India under Article 5 of the DTAA as there is no case of permanent establishment of the assessee that has been made out by the revenue in India. Decided in favour of assessee.

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• 2024 (6) TMI 803
  Denial of registration u/s. 80G(5)(iii) - timeline for an application to be filed under clause (iii) of first proviso to sub-section (5) of Sec.80G exceeded - assessee was required to file this application at least before 6 months prior to expiry of provisional approval or within 6 months from the date of commencement of its activities, whichever is earlier, and as assessee filed application much after expiry of 6 months from commencement of its activities, application was time barred and liable to be rejected - HELD THAT:- It is admitted fact that the assessee is an old trust and it has already commenced its activities on 05.07.2020. Therefore, under new regime of registration u/s 80(G)(iii) as effective from 01.04.2021, it could not have made an application for registration within 6 months of commencement of its activities. It could further be noted that the assessee has already received provisional approval u/s 80G(5)(iv) for a period commencing from 10.02.2022 to AY 2024-25. It sought approval u/s 80G(5)(iii) by filing Form No.10AB on 25.09.2022. However, in the application, the assessee mentioned wrong sub-clause (ii) instead of sub-clause (iii). When being brought to notice, the assessee filed revised Form No.10AB under correct sub-clause (iii) on 19.01.2023 which has been rejected by Ld. CIT(E) on the ground that the assessee had violated the mandatory time lines as statutorily provided. However, it could very well be seen that the earlier application filed on 25.09.2022 is well within the extended time line. Secondly, even if assuming the date of application as 19.01.2023, we find that this issue has been decided in M/s CIT-1982 Charitable Trust Ors, 2024 (3) TMI 1201 - ITAT CHENNAI] wherein held timeline prescribed under clause (iii) of first proviso to section 80G(5) of the Act should be treated as directory and not mandatory especially considering the transitional nature of the amendment as brought out by the taxation of other laws (relaxation and amendment of certain provisions) act 2020 for bringing new regime. Hence, in our view, the CIT(Exemptions) should not have rejected the assessee s application in Form No.10AB only for this technical reason. We are of the view that the intention of CBDT in its circular clearly reflects their mind that once the timeline prescribed for filing Form No.10AB for recognition u/s.12A of the Act has been extended up to 30.09.2023, the same may be treated as extended for forms namely Form No.10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to section 80G of the Act also. Thus we set aside the impugned order and direct Ld. CIT(E) to consider the application on merits without raising the issue of timeline. Assessee appeal stand allowed for statistical purposes.

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• 2024 (6) TMI 802
  Manner of computing the interest liable to be levied u/s. 234B - Interest for defaults in payment of advance tax - Scope of amendment to section 234B(3) by Finance Act, 2015 - HELD THAT:- In the facts of the instant case, income stands assessed in the first instance vide order u/s. 153A on 28.03.2013, which therefore is to be regarded as per regular assessment. The interest charged u/s. 234B upon this assessment is only u/s. 234B(1). The same, thus, and correctly, is for the 36-month period, from April, 2010 to March, 2013. The only adjustment in the said interest is to be upon passing the appellate order u/s. 250(6) on 16/2/2016, i.e., by allowing the assessee credit for the reduction in tax, as originally assessed (Rs. 83,35,990), to that pursuant to the appellate order (Rs. 60,58,729), i.e., in terms of s. 234B(4). The same, as afore-said, has no bearing on the period for which interest stands levied. Interest stands charged on assessment u/s.153A dated 28.03.2013, being the first assessment either u/s. 147 or there-under, u/s. 234B(1) r/w Explanation 2 thereto, for a period of 36 months, i.e., from 01.04.2010 (the first day of the relevant assessment year) to March, 2013 (i.e., up to the month of assessment). There being no subsequent assessment, either u/s. 147 or u/s. 153A, there is no occasion to charge interest u/s. 234B(3). Reference thereto is thus wholly misplaced. The only change subsequent thereto is in the appellate proceedings, and which would, as afore-stated, not impact the period for which the interest stands to be levied u/s. 234B, but only, in view of the modification in the assessed income and, thus, the assessee s tax liability and, consequently, the assessed tax, i.e., the principal sum on which interest for shortfall is to be levied (s. 234B(4)). All that the law therefore provides is for the corresponding increase or, as the case may be, decrease in the interest chargeable u/s. 234B with reference to the revised principal sum, substituting tax liability with that determined in the appellate/revisionary proceedings. Sheer force of logic would also dictate the same inasmuch as interest could only be charged, on the change in the principal sum, for the same period for which it was earlier charged/payable. It is this that admits the rectification in the interest payable u/s. 154. Section 234B(3) would, as afore-noted, come into play only in the case where an assessment u/s. 147/153A is not made for the first time, while it is so in the instant case. Interest shall accordingly be charged on the assessed tax computed with reference to the assessee s tax liability as determined pursuant to the appellate proceedings for the 36-month period, i.e., April, 2010 to March, 2013. The assessee s case is thus without basis on facts or in law. The AO is directed accordingly. If and where, however, we may add, the computation of interest chargeable u/s. 234B consequent to this order is at variance with that already computed by him, he shall provide opportunity to the assessee to raise objection/s, if any, and take same into account in his final computation. This is with a view to ensure that the interest u/s. 234B is charged to the assessee strictly in terms of this order, eschewing another round of litigation, which was wholly avoidable in view of the law in the matter being trite and well-settled.

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• 2024 (6) TMI 801
  Rejection of application for registration u/s 12AB citing violation of section 13(1)(b) - objects of the trust are not restricted to SUNNI MUSLIMS - HELD THAT:- We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(E) and other material brought on record. We note that CIT(E ) denied the registration mainly on the reason that assessee, is not a religious trust, but it is religious cum charitable trust and ld CIT(E ) also gone through the objects, which are in the nature of charitable but the same is restricted to benefit of a particular religious community or caste SUNNI MUSLIMS and therefore the provision of section 13(1)(b) of the Act, would be applicable to the assessee and therefore the assessee would not be eligible for exemption under section 11 of the Act. We have gone through the objects of the assessee-trust and noted that all the objects are not restricted to particular religious community or caste SUNNI MUSLIMS . We direct the ld. CIT(E) to reconsider the application of assessee regarding registration under section 12AB of the Income Tax Act, 1961 and grant the registration to the assessee-trust in accordance with law. For statistical purpose, ground of appeal raised by assessee-trust is allowed.

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• 2024 (6) TMI 800
  Legality of assessment u/s 153A without a search or Panchnama - HELD THAT:- Bench had called for the original search warrant from the Department, which was produced. The name of the assessee company was found mentioned in the search warrant. Panchnama does not bear the signature of Shri T.N. Singla, Director of the assessee Company, who is stated to have been present at the place of search at the time of the search - Whether it is necessary to have the names of the person searched in the Panchnama , the ld. DR has sought to place reliance on MDLR [ 2013 (12) TMI 1116 - DELHI HIGH COURT] wherein, the Hon ble Delhi High Court has held that since the 22 parties whose names were not mentioned, did not object to the order u/s 153A in the petition u/s 264 pursuant to the assessment order, such objection was not justified in the writ petition filed; that the assessment order under section 153A cannot and should not be permitted to become a matter of writ petition as the First Appellate Forum; and that the with the questions and issues raised in the writ petition the jurisdiction of the First Appellate Authority having not been invoked with the appeals preferred by the writ petitioners. As observed, the name of the assessee company has been mentioned in the search warrant, which was produced in the original by the Department before us. Therefore, this puts this entire controversy at rest and the Assessee s objection in this regard is found to be unjustified and it is, accordingly, rejected, while rejecting Ground No. 2. Additions made are not based on any incriminating material found during the search - This assessment was abated, as the search was conducted on 16.02.2018. The appellant brought to our notice that no incriminating material was found during the search and provisions of section 153A were not applicable in this case. As the search was conducted on 16.02.2018 and as per Section 153A the assessment for 2017-18 and 2018- 19 were abated and the Assessing Officer was competent to pass assessment order u/s 153A r.w.s. 143(3) of the Act for these years. Hence ground Nos. 2, 3, 4 and 5 are hereby rejected. Unexplained cash credit - whether Addition was made by the AO without considering each credit separately on merit, while making addition holding that the purpose and utilization of funds which had not been explained by the assessee? - AO found the documentary evidence furnished by the assessee company to be unsatisfactory while the ld.CIT(A) observed that the creditworthiness cannot be established due to non-submission of documents, the AO and CIT(A) could have initiated proceedings under Sections 133(6) or 131 of the Act for further investigation. However, it is noteworthy that neither the AO nor the CIT(A) extended any such notice to the lender for additional inquiries. Instead, an addition of Rs. 3,70,000/- was made based on the directive of a third party. Neither enquiry was made by CIT(A) / AO before confirming the addition of Rs. 3,70,000/- nor any documentary evidence were sought from the assessee company, therefore the assessee company has now submitted copy of computation and confirmation of Sh. Vashisht Kumar Goyal as additional evidence. The submission of said documents are neither challenged nor disputed in the appeal by the department. Hence the addition of Rs. 3,70,000/- as advance received form Sh. Vashisht Kumar Goyal confirmed by ld.CIT(A) without considering the documents submitted by the assessee company should be deleted. Accordingly, ground of appeal No. 6 is accepted. Income deposited in cash by the assessee - assessee company has laid emphasis on the fact that as per bank statement of the company it is clear that the company has withdrawn Rs. 2,50,000/- on 25.05.2016 and the same were re-deposited on 30.05.2016, remaining Rs .8,00,000/- was declared as income of Rs.8,03,250/- by the assessee company - The copy of income account in the books of the company is available at paperbook page 303, which was also submitted before the AO during assessment proceedings. The AO neither discussed the same in the assessment order nor considered the copy of account which was already placed on record, while making the addition on the dictate of third party ignoring the fact that it has been duly recorded by the assessee company in the Prof it and Loss account of the company as at 31.03.2017. The aforesaid documents submitted by the assessee were neither challenged nor disputed by the department in the appeal. Hence, any receipt already shown as income in the Prof it and Loss Account cannot be added u/s 68 of the Act, without any specific reasons or evidence. Therefore, the addition of Rs. 10,50,000/- is wrong and needs to be deleted as it includes an amount Rs. 2,50,000/- withdrawn and re-deposited by the company and Rs. 8,00,000/- which was already declared by the company as income in its Profit and Loss Account for AY 2017-18. Accordingly, Ground No. 7 stands accepted. Addition u/s 68 - assessee contended that the AO did not make any adverse findings in the remand report and the entire investigation / proceedings of the AO revolves around stating the assessee company as shell company on the dictat of third party - AO made addition of all the credit entries in the bank account of the company ignoring all the proofs and documentary evidences submitted by the assessee during the assessment proceeding. However, same documents were submitted before the ld. CIT(A) during the appellate proceedings and the ld. CIT(A) granted relief of Rs. 1,88,03,250/- to the assessee after verification of all the documents and confirmed addition of Rs. 14,20,000/- without asking assessee for any other evidence or document during appellate proceeding for three years as no Show Cause Notice was issued or query was raised by the ld. CIT(A) . Accordingly, ground of appeal No. 8 is accepted. Disallowance against the loss claimed in the return of income - disallowance of depreciation on vehicle - HELD THAT:- We found that the very basis of the disallowance made is unsustainable in law and we hold so. Accordingly, both the additions are deleted, found to be based on no material , whatsoever and in direct opposition to the documentary evidence furnished by the assessee. Accordingly, Ground Nos. 9 and 10 are also accepted. Unexplained cash credit u/s 68 - CIT(A) allowing the appeal of the assessee by holding that identity and creditworthiness of the persons from whom such credits were received, were proved - HELD THAT:- It is despite the above inability of the Department to repel the evidence based stand taken by the assessee, that the Department has raised the issue that the genuineness of the transactions had not been established. We, on the basis of the preceding discussion, find ourselves unable to subscribe to this view of the Department. Accordingly, finding no merit therein, all the grounds raised by the Department are rejected and the appeal filed by the Department is dismissed.

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• 2024 (6) TMI 799
  Assessment u/s 153A - addition towards share capital raised by the assessee during the year by treating it as unexplained credit u/s. 68 - HELD THAT:- Perusal of the order of Ld. AO evidently demonstrate that there is no reference to any incriminating material found and seized during the course of search in respect of the addition towards share capital amounting to Rs. 2 Cr. The observations made by the Ld. AO are routine in nature which have been found from the accounts of the assessee and submissions made thereon. It is also undisputed that the year under consideration is an unabated year considering the date of conduct of search within the meaning of section 153A of the Act. Admittedly, no incriminating material has been referred to which has been found in the course of search of the assessee for the impugned assessment year. Accordingly, as relied on by the Ld. Counsel for the assessee, the decision of Abhisar Buildwell Pvt. Ltd.. [ 2023 (4) TMI 1056 - SUPREME COURT] applies squarely to the facts of the present case. Thus as no incriminating material has been unearthed during the course of search for the relevant assessment years, no addition can be made by the AO in the assessments. Consequently, the assessment orders passed for the impugned assessment years stand quashed. Assessee appeal allowed.

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• 2024 (6) TMI 798
  Denial of registration u/s. 80G(5)(iii) - timeline for an application to be filed under clause (iii) of first proviso to sub-section (5) of Sec.80G - cancellation of provisional registration - whether the application of the assessee was time barred or not? - HELD THAT:- When we read the Budget Speech of the Hon ble Finance Minister 2020 and the Memorandum of Finance Bill, 2020 together, it becomes clear that the concept of Provisional registration was mainly to facilitate the registration of newly formed Trust/Institutions which have not yet begun the activities. The parliament in its wisdom has decided to differentiate between the Trust which were newly formed and the trust which were already doing charitable activities. In the second category of cases, there are again two possibilities, one trust was already doing charitable activities and was already having Registration u/s 12AA or 80G(5) of the Act, such trust were directed to reapply for registration under new procedure on or before 30th August, 2020 but due to Covid-19 this date was subsequently extended. There is Second category of trust/institutions which were already doing Charitable Activities but had never applied for registration u/s.80G(5) of the Act. It is not mandatory that every charitable trust/institution has to apply for registration u/s.80G(5) of the Act. However, there is no bar in the Act that such trust or institutions cannot apply for registration u/s.80G in the new procedure. In these kinds of cases, the Trust/Institute though doing charitable activity may apply first for the Provisional Registration under the Act. After getting the Provisional Registration the Trust/Institution have to apply for Regular Registration. These kind of Trust/Institutes will fall under sub clause (iii) of the Proviso to Section 80G(5) of the Act, since they have obtained Provisional registration. The sub-clause says that the Institution which have provisional registration have to apply at-least six months prior to expiry of the provisional registration or within Six months of commencement of activities, whichever is earlier. In continuation of this when we read the sub clause iii of Proviso of section 80G(5), which we have already reproduced above, it is clear that the intention of parliament in putting the word or within six months of commencement of its activities, whichever is earlier is in the context of the newly formed Trust/institutions. For the existing Trust/Institution, the time limit for applying for Regular Registration is within six months of expiry of Provisional registration if they are applying under sub clause (iii) of the Proviso to Section 80G(5) of the Act. This will be the harmonious interpretation. If we agree with the interpretation of the ld.CIT(E), then say a trust which was formed in the year 2000, performed charitable activities since 2000, but did not applied for registration u/s.80G, the said trust will never be able to apply for registration now. This in our opinion is not the intention of the legislation. This interpretation leads to absurd situation. As observed in K P Varghase[ 1981 (9) TMI 1 - SUPREME COURT] the statutory provision shall be interpreted in such a way to avoid absurdity. In this case to avoid the absurdity as discussed by us in earlier paragraph, we are of the opinion that the words, within six months of commencement of its activities has to be interpreted that it applies for those trusts/institutions which have not started charitable activities at the time of obtaining Provisional registration, and not for those trust/institutions which have already started charitable activities before obtaining Provisional Registration. We derive the strength from the Speech of the Hon ble Finance Minister and the Memorandum of Finance Bill, 2020. Therefore, in these facts and circumstances of the case, we hold that the Assessee Trust had applied for registration within the time allowed under the Act. Hence, the application of the assessee is valid and maintainable. Even otherwise, the Provisional Approval is uptoA.Y.2025-26, and it can be cancelled by the ld.CIT(E) only on the specific violations by the assessee. However, in this case the ld.CIT(E) has not mentioned about any violation by the Assessee.Therefore, even on this ground the rejection is not sustainable. CIT(E) has not discussed whether the Assessee fulfils all other conditions mentioned in the section as he rejected it on technical ground. Therefore, in these facts and circumstances we hold that the Assessee had made the application in form 10AB within the prescribed time limit and hence it is valid application. Therefore, we direct the ld.CIT(E) to treat the application has filed within statutory time and verify assessee s eligibility as per the Act.

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• 2024 (6) TMI 797
  TDS u/s 194H - sale of pre-paid vouchers and cards to distributors at a rate lower than face value - difference of the MRP and price charged from distribution is the trade discount passed on to the retailers - HELD THAT:- The appeal of the assessee against the aforesaid order before CIT(A) was also dismissed by the CIT(A) by holding that the distributors was acting as an agent of the assessee and therefore, the assessee was liable to deduct taxes u/s 194H. Separately, the assessee also filed rectification application u/s 154 before the CIT(A)-8, Ahmedabad submitting that irrespective of treatment of trade discount as commission by the Department, the assessee had duly deducted taxes at source on such trade discount / commission to it s distributors and, accordingly, the assessee could not be held to be an assessee in default in the first instance, having deducted taxes at source on such alleged commission income. The aforesaid application was also dismissed by the CIT(A), against which the assessee is in appeal before us. Assessee has contended that it has made due compliance of TDS provisions and the assessee has deducted taxes at the appropriate rates at the time of giving trade discount / commission to it s agents and, accordingly, the assessee could not be held to be an assessee in default in the first instance - As since it has already deducted taxes at source at the appropriate rates. We observe that the Department has not analyzed this aspect / contention of the assessee that since the assessee has already deducted taxes at source at appropriate rates, there is no question of invoking the provisions of Section 201(1)/201(1A) since the assessee cannot be held to be an assessee in default for non-deduction of TDS, when assessee has already deducted taxes at source appropriate rates. Accordingly, in the interest of justice, the matter is being restored to the file of the CIT(A) for carrying out the necessary verification as to whether the assessee has deducted taxes at source on such discounts / commission given to it s agents, as contended by the assessee. Appeals of the assessee are allowed for statistical purposes.

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• 2024 (6) TMI 796
  Disallowance made u/s 14A while computing total income under normal provisions of the Act - HELD THAT:- We agree with the contentions of the assessee that no disallowance is called for u/s 14A of the Act during the year under consideration, since the assessee has not earned exempt income during this year. Accordingly, we set aside the order passed by the CIT(A) on this issue and direct the AO to delete the disallowance made u/s 14A of the Act. Addition of the amount of disallowance u/s 14A while computing book profit u/s 115JB of the Act - In the case of Vireet Investments P Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] has held that the disallowance made u/s 14A of the Act cannot be imported in sec.115JB of the Act. Hence the addition of Rs.15,38,295/- to the net profit for the purpose of computing book profit u/s 115JB of the Act should be deleted. Then the question that arises is whether any addition is called for under clause (f) of Explanation to sec.115JB of the Act, when the assessee has not earned any exempt income. A perusal of the Explanation 1 to sec.115JB would show that the addition under clause (f) is required to be made only if any expenditure relatable to exempt income is debited to the Profit and Loss account. When the assessee has not earned any exempt income, then the question of incurring any expenditure does not arise. Accordingly, there is merit in the contentions of A.R that addition under clause (f) of Explanation 1 to section 115JB does not arise in the facts of the present case. Accordingly, we direct the AO to delete the addition made to the net profit under section 115JB of the Act. Appeal filed by the assessee is allowed.

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• 2024 (6) TMI 795
  Levy of penalty u/s 271G - TP Adjustment - HELD THAT:- We observe from the record that the assessee has not filed the segment wise results of purchase and sales of polished and unpolished diamonds relating to international transactions. However, on the query raised by the TPO assessee has made an attempt to segregate the figures of sales and purchases segment-wise and submitted the same before TPO. Transfer Pricing Officer has considered the same or atleast not discussed anything in his order. However, proceeded to levy the penalty u/s 271G of the Act and at the same time has not proposed any Arm s Length Price adjustment. In the similar facts on record, there are several decisions where various Coordinate Bench of this Tribunal has deleted the penalties. We observe that Ld. CIT(A) has relied on the decision of Annapurna Business Solutions [ 2011 (12) TMI 224 - ITAT HYDERABAD] and Magick Woods Exports [ 2012 (10) TMI 205 - ITAT CHENNAI] in which the relevant Coordinate Bench has deleted the penalty u/s 271G. Even in this case CIT(A) has deleted penalty u/s 271G of the Act with the observation that levy of penalty u/s 271G of the Act is neither fair nor reasonable and it is not justified in the present facts of the case viz., the nature of diamond trade, substantial compliance made by the assessee and the reasonable cause submitted before TPO and above all when there is no adjustment made in the Arm s Length Price, the levy of penalty u/s 271G is hereby deleted. Ground raised by the revenue is dismissed.

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• 2024 (6) TMI 794
  Exemption u/s 11 - Non-charging of interest on advance paid for the purchase of property - certain advances were extended by the Assessee s society to specified person covered u/s 13(3) of the Act for the purchase of land without any interest or security, which according to Ld. AO was in the nature of transaction attracting provisions of section 13(1)(c) r.w.s. 13(2)(a) - HELD THAT:- Since the advances extended to specified person, pertaining to transaction of purchase were accepted as genuine business deal, no adverse inference was drawn by the CIT(E) and proceedings for cancellation of 12AA were dropped, the same cannot be treated as a transaction in violation of sec. 13(1)(c). Regarding adequate security and interest as mandated by provisions of section 13(2)(a), since the transaction pertains to purchase of land on which the assessee society has proposed to conduct its educational activities, the same does not fall under the category of money lent to a specified person, the provisions of sec. 13(2)(a) thus cannot be triggered on such transactions. Thus when the advances made towards purchase of land has been accepted by the revenue in earlier year and also in the relevant year and no addition qua the advances was proposed in the assessment in impugned orders. Impugned advances were further held as genuine and normal business transaction by the Ld CIT(E), Bhopal by dropping the proceedings of cancellation of registration u/s 12AA. Addition on account of notional interest is uncalled for, much less, on the basis of such addition denial of exemption claimed u/s 11 is a farfetched application of mind which cannot be permitted under the law. Set aside the findings of Ld. CIT(A) on the issue and direct the AO to vacate the additions made - Decided in favour of assessee.

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• 2024 (6) TMI 793
  Validity of assessment passed u/s 143(3) r.w.s. 153A - CIT(A) has concluded the appellate orders based on the written submissions filed by the assessee after a period of more than four years, without affording any opportunity of being heard to the assessee to explain its case - HELD THAT:- As in the interest of natural justices, we are of the opinion that the assessee shall be afforded one more opportunity to substantiate his case before the ld. CIT(A). Accordingly, we set aside the appellate orders and remit the matter back to the file of the ld. CIT(A) for fresh adjudication in accordance with law after affording reasonable opportunity of being heard to the assessee.Appeals filed by the assessee are allowed for statistical purposes.

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• 2024 (6) TMI 792
  CIT(A) Jurisdiction u/s 251(2) - enhancing taxable income based on unexplained investment from a foreign entity - HELD THAT:- Assessee has received investments in foreign remittance from Singapore and all the clearance from RBI were obtained. The only issue needed examination is the source for this money in terms of Section 68 of the Act as proposed by the ld. CIT(A) and the same need to be examined and hence, I set aside the order of the ld. CIT(A) and that of Assessing Officer and remit the issue back to the file of the Assessing Officer who will examine the entire investments of foreign remittance received from M/s. Darlington Investments P Ltd, Singapore under section 68 of the Act denovo. In terms of the above discussions, I remit the issue back to the file of the ld. Assessing Officer for fresh consideration. Appeal filed by the assessee is allowed for statistical purposes.

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• 2024 (6) TMI 791
  Allowability of exemption u/s 80P(2)(d) - interest income earned by a cooperative society from the cooperative bank - HELD THAT:- This issue is no longer res integra as the issue was decided by the Co-ordinate Bench of the this Tribunal in the case of The Ugar Sugar Works Kamgar Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society [ 2021 (11) TMI 1117 - ITAT PANAJI] wherein held so long as the appellant society had not obtained any licence from Reserve Bank of India for the purpose of banking business, it cannot be termed as cooperative bank. We hold that the appellant status continued to be a cooperative society though interest income as received from its members. Thus, appellant society qualifies for exemption u/s 80P(2)(a)(i) of the Act. Thus even the interest income earned by cooperative society on deposits made out of surplus funds with cooperative banks as well as schedule bank qualifies for deduction both under the provisions of section 80P(2)(a)(i) and section 80P(2)(d) of the Act, therefore, the reasoning given by the lower authorities on this issue cannot be accepted. Therefore, I direct the Assessing Officer to allow deduction u/s 80P(2)(a)(i) and 80P(2)(d) in respect of interest income earned from cooperative bank/scheduled bank. Thus, the ground of appeal filed by the assessee stands allowed.

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• Customs

• 2024 (6) TMI 790
  Seeking grant of bail - detention u/s 112 and 135 of the Customs Acts, 1962 - quantum of punishment - HELD THAT:- Apparently, for the offences under which the accusation has been made against the present petitioner, namely Section 135 of the Customs Act, 1962 as well as Section 112 of the Customs Act, 1962 and Section 112 of the Customs Act, 1962, the maximum punishment which may be imposed is imprisonment up to seven years. It also appears that the provisions of Section 41A of the Code of Criminal Procedure, 1973 as well as provision of 108 of the Customs Act, 1962 does prima facie appears to be similar in nature, whereas the section is the power of the Gazetted Officers of customs to summon persons to give evidence and to produce document, whereas on the other hand, Section 41A relates to the duty of the Police Officer to issue notice to a person suspected of committing an offence to appear before him whose arrest is not required to be made. This Court is not inclined to deal with the said question in detail as this bail application may be considered even without considering the said issue, as from the materials available in the case diary, it appears that the investigation has fairly progressed and considering the period of detention already undergone by the present petitioner, i.e. 52 days, his further custodial detention does not appear to be necessary if he otherwise cooperates in the investigation. The above-named petitioner is hereby allowed to go on bail subject to fulfilment of conditions imposed - bail application allowed.

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• 2024 (6) TMI 789
  Conditional leave to defend the suit to the Defendant - wrongful detention charges - whether the detention-cum-demurrage waiver Certificate dated 05.08.2019 issued by the Customs Authority will be applicable or binding on the Defendant? - HELD THAT:- It is seen from the pleadings that Defendant claims to be an agent of the principal shipping line i.e. M/s. Vasco Maritime Pte. Ltd., Singapore and thus acting as a carrier, executed the Bill of Lading. According to the Defendant s case, the containers which were provided for the import of the goods were required to be returned latest by 30.06.2019 on the expiry of the free detention period of 14 days at the Port of discharge. However, since the Plaintiff s cargo was put on hold by the Customs Authority for investigation, the Plaintiff continued using the containers beyond the free detention period for upto 48 days. Thus, admittedly the Plaintiff used and utilised the containers beyond the free detention period which is an admitted fact. In that view of the matter, the Defendant sought detention charges from Plaintiff for that period. It is clearly seen that the Bill of Lading and the contract between the parties was only upto the end of free detention period i.e. 30.06.2019. In this view of the matter, the Plaintiff in order to save its goods, because they were perishable got them released and received a waiver Certificate thereafter from the Customs Authority. Thus, requiring the Defendant to deposit the entire sum of Rs. 18 lakhs is unsustainable since an arguable case of defence has been made out by the Defendant - direction to deposit the amount of Rs. 18 lakhs in the impugned order is unsustainable and is therefore quashed and set aside only to that extent - petition allowed.

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• 2024 (6) TMI 788
  Denial of exemption from cost recovery charges - Container Freight Station (CFS) - Customs Area Regulation - HELD THAT:- The exemption scheme issued by the Central Board of Indirect Taxes and Customs (CBIC/CBEC)) are not withdrawn. Tthe petitioner is eligible for exemption from cost recovery charge from the date of payment of the pending arrears i.e. Principal amount along with interest. The department is directed to compute and intimate the petitioner the interest and any other dues payable by the petitioner in complete settlement for the period 2011-2013. Once the petitioner makes the payment, the concerned authority is directed to consider the applications for waiver and de-notification as expeditiously as possible, preferably within one month. The petition is disposed off.

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• 2024 (6) TMI 787
  Smuggling - Challenge to action of seizure of areca nuts by the officials of the respondent customs department while exercising power under section 110 of the Customs Act, 1962 - invocation of extra-ordinary powers under Article 226 of the Constitution of India - HELD THAT:- The Hon ble Supreme Court in Indru Ramchand Bharvani [ 1988 (7) TMI 78 - SUPREME COURT ] has observed that reasonable belief as to smuggled goods had been explained by the Hon ble Supreme Court in State of Gujarat vs. Mohanlal Jitamalji Porwal Anr. [ 1987 (3) TMI 111 - SUPREME COURT ], wherein the Hon ble Supreme Court observed whether or not the official concerned has seized the article under reasonable belief that the goods are smuggled goods is not a question on which the Court can sit on appeal. The circumstance under which the officer entertains reasonable belief have to be judged from his experienced eye who is well equipped to interpret the suspicious circumstances to form a reasonable belief. In the present case, the officer concerned acted on the basis of information that huge quantity of areca nuts, smuggled from Myanmar, were lying at Bairabi Railway Station, Mizoram and to be loaded in Railway Parcel Wagons for transporting to Uttar Pradesh. On receiving the said information, he activated the machinery and carried out a raid at the concerned railway station where huge quantity of areca nuts, possibly smuggled from Myanmar, were found. Taking into consideration the above facts, it can be presumed that the officer concerned had the reason to believe that the goods seized were liable for confiscation. The view expressed by the learned Single Judge in the impugned judgement is one of the possible views, therefore, no interference required - this intra-court appeal is dismissed.

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• 2024 (6) TMI 786
  Rejection of appeal on the ground that it is barred by limitation - appeal before Commissioner (Appeals) was filed on 20.10.2022, after 92 days - Section 128 of Customs Act, 1962 - HELD THAT:- It is clear from the plain reading of Section 128(1) that the normal period for filing appeal before the Commissioner (Appeals) is 60 days from the date of communication of the order. However, the same can be extended by further period of 30 days by Commissioner (Appeals) on sufficient cause being shown by the appellant for delay in filing the appeal. It is apparent from the reading of Section 128 that the Commissioner (Appeals) has not been provided to condone the delay beyond the period of 30 days. The Hon ble Supreme Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT ] wherein the HSC has interpreted the Section 35F of Central Excise Act, 1944 which is pari-materia to Section 128 of the Customs Act, 1962. Thus, it is apparent from record of the appeal that maximum period to condone the delay available with Commissioner (Appeals) is only 30 days. Therefore, since the delay has been more than 30 days in filing the appeal, the appeal has rightly been rejected by the Commissioner (Appeals). There are no legal infirmity in the impugned order-in-appeal - the impugned order is upheld - appeal dismissed.

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• 2024 (6) TMI 785
  Entitlement to duty exemption under N/N. 25/2023-CUS dated 01.04.2023 - Import of Lithium Ion Battery - covered by the description of import item Automative Battery so as to allow to them under Transferrable DFIA License purchased by the Respondent which was issued under SION C-969 against export of Agriculture Tractor or not - HELD THAT:- The respondent in the rejoinder points out that imported consignment has now been registered with the DGFT office as well as the Lithium Battery is one type of automotive battery, the other being the conventional battery and the import of one against the other cannot be permitted as have been decided by the Adjudicating Authority - He also points out that it is the capability of use which is to be decided. This is a factor and not the import and export has to be other similar kind of automotive battery or common parlance cannotations. He further points out that certificate of IIT engineers about the capability of Lithium Ion Battery was duly produced and considered in the case of K S Enterprises also. It is found that DFIA scheme requires broad catogerisation are same and then as capable being used in electrical vehicle . There are merits in the impugned order and the appeal of the Department is liable to be dismissed with consequential relief to the party.

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• 2024 (6) TMI 784
  Revocation of a customs broker s license - forfeiture of security deposit - imposition of penalty - violation of regulation 10(e), 10(m) and 10(q) as well as regulation 13 of Customs Broker Licensing Regulations, 2018. Alleged failure to ascertain correctness of information which was imparted to the client in relation to clearance of cargo - HELD THAT:- The enquiry report held the charge to be proved solely by inferring from the admitted position of the customs broker not having had any direct communication with the importer that the obligation under regulation 10(e) of Customs Broker Licencing Regulations, 2018 could not have been complied with - The specific contents of the obligation renders it necessary for the information that was imparted to the importer to have been verified for authenticity and for the charge to be preferred by elaborating on the contrariness thereof to law or facts. Such occurrence is not on record and there is also no such averment in statements of the importer. This charge against the appellant herein is not backed with evidence of any information imparted to the client, let alone of any incorrectness thereto, owing to which the finding on this count is not tenable. Failure in responsibility to verify correctness of details, such as import-export code (IEC) , goods and service tax identification number (GSTIN) , identity of client and that business of the client was operated at the declared address, by using reliable, independent and authentic sources for ascertainment - HELD THAT:- The appellant had failed to ascertain that the client did really operate from the address given in the records and no evidence was offered at inquiry stage or in subsequent proceedings, including the present, to establish otherwise. Therefore, notwithstanding the correctness of the several documents and the correctness thereof having been established by reference to resources in the public domain, the lack of diligence in establishing identity of the client, as well as place of operation, is certain breach of obligation and hence must be affirmed as proved. Failure to cooperate with customs authorities and to join investigations in enquiry against them or their employees - HELD THAT:- There is no record available to indicate that, at the relevant time, it was the customs broker who was the subject of an enquiry against them which, considering that regulation 10(q) of Customs Broker Licensing Regulations, 2018 stipulates cooperation and joining for investigation in the event of an enquiry against them or their employees, precludes the inclusion of this charge. It was incumbent upon the licensing authority initially, as well as the enquiry authority subsequently, to examine the summons issued for ascertainment of the subject of investigation before preferring, or offering conclusions on, such charge. In the absence of such examination and also the justification furnished for non-appearance in response to summons, the finding that the charge was proved is not tenable. It is already on record that neither was identity established nor antecedents verified and, consequently, it is not relevant if the person who, it was claimed had actually undertaken such verification and such identification, had been approved or not. In effect, the activity of employees, other than the F and G card holders, are not related to any acts of omission or commission as customs broker even if the client be the beneficiary of these agency function - the charge that the appellant had failed to ensure proper conduct of employees in customs-related transaction does not sustain as also the validity of the charge arising from the stipulations in regulation 13 of the Customs Broker Licensing Regulations, 2018. There is no doubt that the client of the appellant had attempted to violate provisions of Customs Act, 1962 by alleged erroneous declaration of origin to evade higher rate of duty. At the same time, the breach by the appellant has been observed only on this single occasion and also only in relation to only one aspect in one of the charges. The licensing authority had proceeded on the presumption that, with all the charges having been held as proved, gravity of the offence deserved full measure of the detriment available under the Customs Broker Licensing Regulations, 2018. The revocation of customs broker licence and forfeiture of the security deposit ordered by the licensing authority is set aside and the detriment to penalty limited to Rs. 50,000/- imposed under regulation 18 of Customs Broker Licensing Regulations, 2018. Appeal allowed.

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• 2024 (6) TMI 783
  Proceedings against Customs Broker - various benefits available to exporters, such as drawback, refunds and other incentives, had been misappropriated by submission of purportedly bogus invoices from suppliers - HELD THAT:- There are nothing on record to conclude that this delay is attributable to deliberate acts on the part of the appellant; the impugned order is silent about the date on which the copy of the enquiry report, with communication of intent of acceptance thereof, had been conveyed to the appellant herein and neither is there any record of the correspondence leading to grant of personal hearing. More importantly, it is the failure, or disinclination, to even place narration of events leading from the last explained delay on record that appears to convey the non-applicability of time-lines to the licencing authority which is of concern. Doubtlessly, the decision in re Unison Clearing Pvt Ltd has not affirmed that the time-lines are mandatory in every situation but, at the same time, there is no affirmation either that, irrespective of circumstances, it is only directory. The appellant herein could not have been prescient to anticipate delay in concluding the proceedings. It was incumbent upon licencing authority to offer justification; the absence thereof jeopardizes the outcome. It would, however, be inappropriate to set aside the findings for insufficiency in justification of delay. The impugned order is set aside - matter remanded back to the Commissioner of Customs (General) to incorporate justification, if any, and pass orders afresh in accordance with jurisdictional competence, or otherwise, in consequence. Petition allowed by way of remand.

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• 2024 (6) TMI 782
  Refund of special additional duty (SAD) - sole ground for rejection was that the description in the sale invoices did not match the descriptions of the imported goods in the bill of entry which comprised several lots of varying dimensions - HELD THAT:- The appellant had brought on record that the software deployed by them for generating invoices precluded the entirety of the description from appearing on the sales invoices and, at the same time, had also submitted the RG23D register in which removals had been recorded which would, at least, provide details lacking in the description of the goods corresponding to the respective invoices. If at all, there were any doubts about the genuineness of the invoices, that could have been verified and claimant put to notice of intention to deny refund for that reason. The claimant could have been asked to demonstrate through the documents furnished that the invoices pertain to the imported goods. No such evidence is forthcoming and no such effort was undertaken. Consequently, it is found that the denial of refund is improper. In the scheme of exemption, it would be appropriate for the original authority to re-visit the claim for refund to ascertain the correspondence of the invoices with the RG23D furnished at the time of adjudication and to deny refund only to the extent that evidence of the goods having been consumed by the importer is available or it is established that the imported goods had not been sold in the market within one year from the date of import. The impugned order is set aside - matter remanded back to the original authority for a fresh decision on the basis of submissions by the appellant herein - appeal disposed off by way of remand.

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• 2024 (6) TMI 780
  Imposition of fine and penalty, more than 10% / 5% - violation of condition of DGFT in importing the second hand Digital Multi-function Printers - HELD THAT:- The issue is covered by the decision of this Tribunal in the case of SRI SAI GRAPHICS VERSUS COMMISSIONER OF CUSTOMS, BANGALORE [ 2023 (6) TMI 422 - CESTAT BANGALORE] , wherein the Tribunal observed that the Tribunal in a series of judgments referred to by the learned counsel consistently held that when the value has been enhanced on the basis of certificate by the Chartered Engineer without market enquiry, the imposition of fine and penalty @ 10% and 5% taking note of the enhanced value would meet the ends of justice. The impugned order is modified and the fine and penalty are reduced to 10% and 5% respectively - Appeal disposed off.

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• 2024 (6) TMI 779
  Penalty u/s 114AA of the Customs Act, 1962 - Penalty on Co-noticee who is a Partner in a Customs Broker firm - undervaluation of the imported goods - power tools imported from China, by various importers - HELD THAT:- From plain reading of the legal provisions under Section 114AA of Customs Act, 1962, it is clear that it has been introduced for the first time in the said Act and brought into effect from 13.07.2016. The said provision lays down that a maximum penalty not exceeding five times the value of the goods is liable to be imposed in certain situations stated therein. It is also found that the Customs Act, 1962 inter alia, provide for imposition of penalties under various sections such as Section 112, 114, 114A ibid which was in existence prior to the insertion of Section 114AA. Further, some more sections have also been introduced for imposition of penalty, subsequent to the introduction of section 114AA viz. Section 114AB, 114AC ibid. Section 112 ibid deals with omission or commission of an action, in relation to goods, acquiring possession of goods, various actions such as carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing of such goods, all of which make such goods liable for confiscation. Similarly, Section 114A ibid deals with non-levy or short levy of customs duty arising on account of the reason of collusion or any wilful misstatement or suppression of facts by any person. Furthermore, in the case of Commissioner of Customs (Import) Vs. Trinetra Pvt. Limited [ 2019 (11) TMI 72 - DELHI HIGH COURT ] wherein the department having aggrieved that penalty imposed on CHA/CB under Sections 112(b) and 114AA of the Customs Act, 1962 was deleted by the Tribunal, had filed Customs Appeal. In the said case, the Hon ble Delhi High Court have held that in the absence of an element of mens rea or conscious knowledge which can be attributed to CHA/CB, and where a CHA/CB had merely facilitated imports on strength of documents that were handed over to him by importer no penalty can be imposable under Section 112(b) or 114AA ibid. The provisions of Section 114AA ibid does not apply to the present case of the appellant conoticee who is a Partner in a Customs Broker firm, as neither there was any dummy export being made only on paper, nor there was any criminal intent involving evasion of duty. In fact, the present case deal with demand of short paid duty arising from under valuation of imported goods by various importers, in which the appellant-CB being co-noticee had only facilitated as a customs broker, but was imposed a penalty under Section 114AA ibid. Hence the imposition of penalty u/s 114AA does not arise in the present case of the appellant. The impugned order is modified to the limited extent of setting aside the penalty imposed on Mr. Suresh K Aggarwal, Partner of M/s I.C.S. Cargo u/s 114AA of the Customs Act, 1962. The appeal is allowed by setting aside the penalty.

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• 2024 (6) TMI 778
  Levy of penalty u/s 112(B) of Customs Act, 1962 - Liability of employee of a Customs House Agent (CHA) - Alleged role in concealing particulars that could have had effect on assessment of bill of entry - HELD THAT:- It would appear that the case against the appellant is built on a statement confirming the facts relating to latest consignment that alone had been subjected to examination. There is nothing on record to establish that branded goods were contained in the earlier consignment or that the appellant was aware of similarly discrepancy in the goods handled earlier by him. Furthermore, the appellant was not shown as having dealt with the goods in any manner before or after clearance to counter the claim of having been concerned only with filing of bill of entry. Goods were confiscated under section 111(m) of Customs Act, 1962 which is contingent only upon incorrect that declaration in bills of entry for clearance. No evidence has been brought on record to establish that the appellant was aware of the presence of branded products in the consignment when bills were filled as only such act of omission and commission rendering goods liable for confiscation then would lead to penalty under section 112 of Customs Act, 1962. There was, thus, neither any cause for invoking section 112(a) of Customs Act, 1962, which the customs authorities desisted from proceeding with, and nor is there evidence of appellant having been concerned with the goods in the manner set out in section 112(b) of Customs Act, 1962. The impugned order is set aside - Appeal allowed.

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• 2024 (6) TMI 777
  Classification of imported goods - worn clothing (old and used garments) - classifiable under Customs Tariff Item No. 6309 90 00 of the First Schedule of the Customs Tariff Act, 1975 or not - valuation - enhancement of redemption fine and penalty. Classification of imported goods - HELD THAT:- The Ld. Commissioner has given an elaborate finding in the impugned order and upheld the classification of the goods as goods as old and used garments classifying the same under Customs Tariff Heading 6309. It is found that there is no evidence available on record to reclassify the goods as other than old and used garments , as claimed by the Revenue. Accordingly, the classification of the goods determined by the adjudicating authority in the impugned order is upheld. Valuation of the goods - HELD THAT:- The goods were old and used garments, for which the general practice of valuation adopted during the relevant period was at the rate of US$ 0.60 per kg(CIF). The adjudicating authority has already enhanced the value from US$ 0.55 to US$ 0.60 per kg(CIF). Accordingly, there are no infirmity in the value re determined by the adjudicating authority and hence uphold the same. Redemption fine and penalty - HELD THAT:- The redemption fine and penalty imposed on the respondents by the adjudicating authority is sufficient to meet the end of justice. Therefore, the redemption fine and penalty confirmed by the adjudicating authority are upheld. There are no infirmity in the impugned order and the same is upheld - appeal of Revenue dismissed.

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• Corporate Laws

• 2024 (6) TMI 776
  Permission for withdrawal of petition with liberty to institute proceedings before the appropriate commercial court for adjudication of their claims - Seeking winding up of the respondent company - Section 433(e) of the Companies Act, 1956 read with Sections 434 and 439 of the Act - Non-payment of outstanding dues with interest. Winding up of company - HELD THAT:-This Court is of the opinion that the contentions raised by the parties constitute triable issues, insofar that there is a dispute as to the existence of a payable debt. It is trite law that the Company Court cannot enter into an adjudication of disputed facts, wherein a finding on facts is to be recorded as regards whether the liability stated is actually due and payable, and such a case would be the subject matter of a commercial suit. Withdrawal of petition - it has been prayed by learned Counsel for the Petitioner that they may be permitted to withdraw the present petition with liberty to institute proceedings before the appropriate commercial court for adjudication of their claims in accordance with law - HELD THAT:- Reference may be invited to the decision of a Co-ordinate Bench of this Court in M/S. SHANKAR STEEL SUPPLIER VERSUS M/S. RAMPUR ENGINEERING COMPANY LIMITED [ 2018 (12) TMI 1308 - DELHI HIGH COURT] , wherein it was held that the issues in contention ought to have been raised before the Civil Court, and it was held therein that It is settled legal position that it is not the function of the company court to enter into an adjudication of disputed facts which should have been the subject matter of the Civil Suit. The present company petition is dismissed as withdrawn, and pending applications, if any, are disposed of. The petitioner is granted liberty to institute proceedings before the appropriate Commercial Court and the petitioner may seek condonation of delay, in accordance with law, for the period of time which has been spent during the pendency of these winding up proceedings. Petition dismissed.

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• PMLA

• 2024 (6) TMI 775
  Money Laundering - proceeds of crime - provisional attachment order - opportunity of hearing not provided to petitioner - violation of principles of natural justice - HELD THAT:- From perusal of Section 8, it is evident that the Director or any other officer not below the rank of Deputy Director authorized by the Director Enforcement, is authorized to pass an order in writing, provisionally attaching the property raised by any person by the proceeds of crime. The attachment of such property shall not be for a period exceeding 180 days from the date of the order - It is beyond the pale of any dispute that a person, who has acted in good faith and has suffered a quantifiable loss as a result of the offence of money-laundering, despite having taken all reasonable precautions and is otherwise not involved in money-laundering, would be a claimant entitled to invoke the second proviso to sub-section (8) of Section 8 of the Act of 2002. Admittedly, the petitioners, as per their claim, fall in the category of claimants and are, thus, well within their right to approach the Special Court under the Prevention of Money-Laundering Act at Jaipur, which has taken cognizance of the prosecution complaint filed by the Enforcement Directorate on 31-03-2021. It is thus abundantly clear that the remedy of the petitioners lies before the Special Court under the Prevention of Money-laundering Act, at Jaipur which has taken cognizance of the case and is seized of the matter. This remedy is available to the petitioners under Section 8 (8) of the Act read with Rule 3-A of the Rules of 2016. The petitioners have deliberately skipped the aforesaid statutory remedy which is equally efficacious and could be availed before the Special Court under Prevention of Money-Laundering Act and have rushed to this Court invoking extraordinary jurisdiction of this Court. The petitioners do not dispute the order of provisional attachment on merits nor have they any locus standi to challenge the provisional attachment of the property to the extent it represents the proceeds of crime. The short grievance of the petitioners is that the provisional attachment, as confirmed by the Adjudicating Authority, should be restricted to the land and the dwelling units constructed thereon, the value whereof, is equal to the actual proceeds of crime used in the project in question. It is not required to entertain this writ petition - petition dismissed.

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• 2024 (6) TMI 774
  Money Laundering - seeking quashment of a attachment order passed by the Enforcement Directorate under the PMLA - predicate offence or not - proceedings against the husband and the wife commenced by registration of a crime by the Lokayukta for offence punishable under Section 13 (1) (e) read with Section 13 (2) of the Prevention of Corruption Act, 1988 - HELD THAT:- The proceedings in the predicate offence i.e., the offence under the Prevention of Corruption Act come to be closed by two orders. One against the wife in the year 2016 and against the petitioner in the year 2023. The proceedings are challenged by the lokayuktha before the Apex Court THE KARNATAKA LOKAYUKTHA POLICE VERSUS LAKSHMAN RAO PESHVE [ 2023 (9) TMI 1483 - SC ORDER] and there is no interim order of stay is granted - The Apex Court holds that in the event the predicate offence would get obliterated by a competent court of law either by discharge, quashment or acquittal, the proceedings under the PMLA would automatically vanish. The order dated 22.12.2021 passed by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002, stands quashed - Petition allowed.

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• Service Tax

• 2024 (6) TMI 773
  Determination of the value of material consumed based on invoices and other documents - Photography services - whether this matter should go back to the authorities for examining the value of material consumed on the basis of invoices and other documents? - HELD THAT:- This matter is pending since 2006 and there are substance in the argument of learned counsel for the petitioner that it cannot be expected either from the petitioner or from the Department to lay their hands on the very old documents of the years prior to 2006. Apart from this, the document dated 18.07.2006 (Annexure-P.3) shows that the tax liability is worked out by the Department. Although Sri Dominic Fernandes stated that said exercise of working out is based on petitioner s letter dated 24.05.2006, we are not inclined to deal with this aspect any further because once the exercise of worked out is carried out, it is presumed that said exercise must be based on all relevant documents. In the peculiar facts and circumstances of this case and more particularly, the fact that it is not possible because of afflux of time to trace the invoices etc., it is required to accept the value of material consumed as mentioned in the impugned order dated 18.07.2006. Thus, in the peculiar facts of this case, it is not required to relegate the matter for scrutiny of invoices and other relevant documents. That course may be open to other cases where time gap is not enormous. It is deemed proper to set aside the order dated 18.07.2006. In case the petitioner has already deposited any amount pursuant to interim order passed in this case, if the petitioner prefers an application, the said amount be returned to the petitioner within ninety days from the date of such application. Petition disposed off.

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• 2024 (6) TMI 772
  Refund of service tax paid - applicability of time limitation on the refund claims - subscription of chit fund - HELD THAT:- In the present case, the petitioner did not pay any service tax under the mistake of law, but he paid the tax on demand made to him by the tax authorities. The tax authorities considered the amendment of 2015 brought in the Finance Act, 1994 as clarificatory. However, the Supreme court and this court held that it was not a clarificatory amendment but it was substantive amendment, and therefore, in absence of any retrospective operation under the Act, the provision brought in by the amendment as in 2015 have prospective effect. Therefore, the tax paid prior to the amendment in the Finance Act, 1994 was liable to be refunded on moving appropriate applications as per the law, however the limitation was extended by one year from the date of judgment. There are no substance in the submission of the learned counsel for the petitioner as the petitioner did not pay the service tax under the mistake of law. The petitioner admittedly did not file the application within the extended time of limitation as prescribed by this court - there are no error in the impugned order in original in Ext. P6, which requires this court to interfere with in the present writ petition - petition dismissed.

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• 2024 (6) TMI 771
  Determination of service tax not levied or not paid under the provisions of Section 73 of Finance Act, 1994 - determination of value of taxable services for charging service tax as provided under Section 67 of the said Act - value of taxable services for charging service tax is properly determined during the proceedings of this case or not. Whether for determination of service tax not levied or not paid under the provisions of Section 73 of Finance Act, 1994, it is essential to determine the value of taxable services for charging service tax as provided under Section 67 of the said Act? - HELD THAT:- Section 67 of Finance Act, 1994 provides that where service tax is chargeable on any taxable service with reference to its value, then such value shall be the consideration in money charged by the service provider. Therefore, it is primarily important to determine the value on which service tax shall be levied as a specific percentage and such value should be the value of taxable service. Clause (44) of Section 65B of Finance Act, 1994 has provided for definition of service and it has elaborately dealt with a list of activities which shall not be included in such definition - while determining value of taxable service under Section 67 ibid, such aspect as to the activities which are covered by negative list and activities which are mentioned in the definition of service as those which are not covered by such definition becomes important - for arriving at amount of service tax not paid or not levied arriving at correct value of taxable service which has not suffered service tax needs to be determined as the first step. Whether the value of taxable services for charging service tax is properly determined during the proceedings of this case? - HELD THAT:- In the present case the charges were framed in the show cause notice for arriving at taxable value of Rs.4,54,64,051/- without examining the books of account and records maintained by the appellant and without quoting any admissible evidence for making out a prima facie case. It is noted that in the case of M/S KUSH CONSTRUCTIONS VERSUS CGST NACIN, ZTI, KANPUR [ 2019 (5) TMI 1248 - CESTAT ALLAHABAD] , this Tribunal had held that without examining the records for difference in the figures reflected in income tax returns and ST-3 returns, Revenue cannot raise demand without establishing the entire amount received by the appellant as reflected in the income tax returns is consideration for providing services. There was no basis for arriving at taxable value of Rs.4,54,64,051/- for the period from October 2013 to March 2014 in the subject show cause notice dated 24.04.2019. The subject show cause notice is not sustainable in law. Whether the impugned order is sustainable in law or whether any part of the said impugned order is not sustainable? - HELD THAT:- Since the subject show cause notice is held as non- sustainable, the impugned order passed by learned Commissioner (Appeals) is set aside and the appeal is allowed. Appeal allowed.

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• 2024 (6) TMI 770
  Determination of service tax not levied or not paid under the provisions of Section 73 of Finance Act, 1994 - determination of value of taxable services for charging service tax as provided under Section 67 of the said Act - value of taxable services for charging service tax is properly determined during the proceedings of this case or not. Whether for determination of service tax not levied or not paid under the provisions of Section 73 of Finance Act, 1994, it is essential to determine the value of taxable services for charging service tax as provided under Section 67 of the said Act? - HELD THAT:- Section 67 of Finance Act, 1994 provides that where service tax is chargeable on any taxable service with reference to its value, then such value shall be the consideration in money charged by the service provider. Therefore, it is primarily important to determine the value on which service tax shall be levied as a specific percentage and such value should be the value of taxable service. Clause (44) of Section 65B of Finance Act, 1994 has provided for definition of service and it has elaborately dealt with a list of activities which shall not be included in such definition - while determining value of taxable service under Section 67 ibid, such aspect as to the activities which are covered by negative list and activities which are mentioned in the definition of service as those which are not covered by such definition becomes important - for arriving at amount of service tax not paid or not levied arriving at correct value of taxable service which has not suffered service tax needs to be determined as the first step. Whether the value of taxable services for charging service tax is properly determined during the proceedings of this case? - HELD THAT:- In the present case the charges were framed in the show cause notice for arriving at taxable value of Rs.4,54,64,051/- without examining the books of account and records maintained by the appellant and without quoting any admissible evidence for making out a prima facie case. It is noted that in the case of M/S KUSH CONSTRUCTIONS VERSUS CGST NACIN, ZTI, KANPUR [ 2019 (5) TMI 1248 - CESTAT ALLAHABAD] , this Tribunal had held that without examining the records for difference in the figures reflected in income tax returns and ST-3 returns, Revenue cannot raise demand without establishing the entire amount received by the appellant as reflected in the income tax returns is consideration for providing services. There was no basis for arriving at taxable value of Rs.4,54,64,051/- for the period from October 2013 to March 2014 in the subject show cause notice dated 24.04.2019. The subject show cause notice is not sustainable in law. Whether the impugned order is sustainable in law or whether any part of the said impugned order is not sustainable? - HELD THAT:- Since the subject show cause notice is held as non- sustainable, the impugned order passed by learned Commissioner (Appeals) is set aside and the appeal is allowed. Appeal allowed.

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• 2024 (6) TMI 769
  Valuation - TDS deposited in the Income Tax Department in relation to the payment made to the service providers - Reverse Charge - services provided by foreign service providers - HELD THAT:- As in the appellant s own case M/S. PARADEEP PHOSPHATES LIMITED VERSUS COMMISSIONER OF CGST CX, BHUBANESWAR COMMISSIONERATE [ 2023 (3) TMI 1498 - CESTAT KOLKATA] , the issue has already been decided that as per the agreement, the taxes are to be borne by the appellant, therefore, TDS deducted by the appellant, which is as per the terms of agreement, the appellant has to bear. The value of income tax deducted at source is not includible of the value tax service received by the appellant, on which the appellant had to pay the service tax under reverse charge mechanism. There are no merits in the impugned order - appeal allowed.

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• 2024 (6) TMI 768
  Liability of sub-contractor to pay service tax - main contractor had paid the service tax - Exemption as per the Notification No. 25/2012-ST dated 20.06.2012. Liability of sub-contractor to pay service tax - HELD THAT:- The issue whether the appellant being a sub-contractor is liable to pay service tax when the main contractor has discharged the total tax liability was referred to the Larger Bench of the Tribunal in COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB] and the reference was answered that a sub-contractor would be liable to pay service tax, even if the main contractor has discharged service tax liability on the activity undertaken by the subcontractor in person of the contract. It is found that the agreement submitted by the appellant states that, sure service tax paid by you on the work carried out for us will be reimbursed subject to production/ submission of challan for the service tax paid on the work carried. The terms of the agreement clearly negates the submission of the appellant that the main contractor has paid the duty. In terms of the agreement, the appellant was required to discharge the service tax liability, which was then to be reimbursed by the main contractor. Hence, the appellant is required to discharge the duty liability. No further details have been submitted by the appellant in respect to the payments made or received under the agreement. In absence of the details, the authorities below rightly concluded that it cannot be ascertained that the payments received by the appellant from the main contractor are in respect of works carried out with material and hence the department was justified in resorting to Best Judgement Assessment as per section 72 of the Act on the basis of the limited information available with them. The appellant is engaged in providing the services of Plaster of Paris to M/s Tirath Ram Ahuja Pvt Ltd. for consideration and, therefore, the activity is covered as service under the pre-negative list as well as during the negative list era under section 65 (25b)(c). The adjudicating authority rightly negated the contention of the appellant that the service tax has been deposited by the service recipient and hence they are not liable to pay the same. Exemption as per the Notification No. 25/2012-ST dated 20.06.2012 - HELD THAT:- The appellant is not entitled to claim the exemption under the said notification as it speaks services by and not services to . The appellant had not deposited the service tax although they were liable to pay during the relevant period and, therefore, the liability to pay interest which is mandatory in nature accrues - The penalty imposed under sections 76 and 77 of the Act and sections needs no interference as the appellant has failed to pay the service tax and has thereby contravened the provisions of section 66 of the Act. Appeal dismissed.

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• 2024 (6) TMI 767
  Levy of service tax on Renting of Immovable Property Service as well as other services against appellants (Municipalities) - time limitation - HELD THAT:- The Hon ble High Court of Madras in the case of CUDDALORE MUNICIPALITY VERSUS THE JOINT COMMISSIONER OF GST CENTRAL EXCISE, THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE SERVICE TAX AND VIRUDHACHALAM MUNICIPALITY VERSUS THE ASSISTANT COMMISSIONER, OFFICE OF THE ASSISTANT COMMISSIONER OF GST AND CENTRAL EXCISE, CUDDALORE [ 2021 (4) TMI 500 - MADRAS HIGH COURT] had analysed the matter in detail for the period prior to 01.07.2012 and post 01.07.2012. It was held that prior to 01.07.2012, the word person was not defined in the Finance Act, 1994. The definition of the taxable service used the word person and so did not include Municipality prior to 01.07.2012 - It was held by the Hon ble High Court in the case of Cuddalore Municipality that service tax was payable only if such services were provided by any other person which means other than the owner to any person. In the case of Cuddalore Municipality, the Hon ble High Court set aside the demand for the period prior to 30.06.2012. In the case of G.V. Matheswaran the constitutional validity of the levy of service tax of renting of immovable property was under challenge. The main ground raised was that it is a tax on immovable property and that Centre has no powers to levy tax as immovable property (land) falls within the State List. There were decisions passed by various High Courts upholding the validity of the provisions of Section 65 (105) (zzzz) and Section (90a) of the Finance Act. It is to be seen that some of the amounts falling within the demand pertain to fees and charges collected for carrying out functions specifically listed in 12th schedule. Further, services are carried out as per the provisions of Panchayat Act, Municipalities Act etc. by which State has bestowed the local authority to carry out such functions and services. These issues require to be examined. If sovereign functions, the levy of tax cannot be attracted. Time Limitation - HELD THAT:- The appellants being local authority, which is a wing of the Government, it cannot be said that appellants had suppressed facts with intention to evade payment of service tax. So also there is no positive act of suppression alleged in the Show Cause Notices against these municipalities. As the matter is remanded, we direct the adjudicating authority to consider the issue of limitation also. The impugned orders are set aside - The appeals are allowed by way of remand to the adjudicating authority.

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• 2024 (6) TMI 766
  Taxability of forfeited earnest money under Section 66E (e) of the Finance Act, 1994 - declared service or not - Forfeiting earnest money amount to tolerating an act or not - HELD THAT:- Once the activity of appellant that is of forfeituring the amount of earnest money is not a declared service, question of retaining said money as consideration for rendering the such service becomes absolutely redundant. Otherwise also it is always the value of service, which is actually rendered that has to be ascertained for the purpose of calculating the service tax payable thereupon. Support drawn from the decision of Hon ble apex Court in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] where it was held that The value of the goods/materials cannot be added for the purpose of aforesaid notification dated September 10, 2004, as amended by notification dated March 01, 2005 . Thus, it is absolutely clear that the amount, in question, was not towards rendering the taxable service. In addition, it is also on record that the amount was not actually retained by the appellant. Subsequent to the receipt of show cause notice, the same was transferred to the sub-contractor as is apparent from the General Voucher dated 25.01.2021 - Once the activity of the appellant cannot be called as the taxable service as that of rendering the declared service and that the appellant has returned the amount alleged to be a consideration for the said activity the question of any tax liability of the appellant as has been appreciated in the impugned order under challenge has no sustainability. The order under challenge is hereby set aside - Appeal allowed.

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• 2024 (6) TMI 765
  Levy of service tax - Post Graduate Programme in Public Policy and Management (PGPPM) - Post Graduate Programme in Enterprise Management (PGPEM) - Executive Post Graduate Programme in Management (EPGP) - period 01.5.2011 to 30.06.2017 - demand dated 13.10.2015 is barred by limitation or not. HELD THAT:- A simple analysis of the changes effected from time to time regarding applicability of service tax to educational courses/ programmes offered by Commercial Coaching or Training centres, it is clear that such services for the period prior to 01.5.2011, was institute specific, and thereafter it became course specific. It is held by the Commissioner in the previous proceeding that the Appellant is not a Commercial coaching or Training Institute , as defined under section 65(27) of Finance Act,1994 as one of the course offered by them is recognized by law - if a Commercial Coaching or Training Institute provides both recognized and non-recognized courses, then non-recognized courses be leviable to tax. Analysing the facts and principles laid down in the case of M/S INDIAN INSTITUTE OF AIRCRAFT ENGINEERING VERSUS UNION OF INDIA ORS [ 2013 (5) TMI 592 - DELHI HIGH COURT] , it can easily be inferred that in the said case their Lordships have confronted with the issue as narrated in the facts are that the course issued by the Aircraft Maintenance Engineering Training School which has been approved by DGCA for providing Aircrafts Maintenance Engineering course whether could be considered to be covered under exclusion clause of definition of Section 65(27) before 1.5.2011 and after the date under Notification No.33/2011-ST dated 25.04.2011. Analysing the approvals given by the DGCA and the courses provided by the appellant a recognised institute, it has been held that the qualification acquired by the candidates even without a license to practice, definitely be considered as a qualification recognised by law. In IILM UNDERGRADUATE BUSINESS SCHOOL VERSUS CCE DELHI AND (VICE-VERSA) [ 2017 (11) TMI 1271 - CESTAT NEW DELHI] , the issues involved is that the course namely B.Sc(Hons) in Business Management Studies conducted by the appellant are recognised and degree is awarded by the University of Bradford, UK, whether liable to service tax for the period 1.7.2003 to 31.08.2009. After analysing the principle of law settled in this regard, the Tribunal held that the award of degree University of Bradford, UK be considered as recognised by law and hence, decided the issue in favour of the assessee. In the present case, learned Commissioner has consistently recorded that evidence of recognition of the said three courses by any authorities empowered/authorized in this regard, who approve such courses, making the successful candidates eligible to get an employment or qualification, so as to establish that these programmes have been recognised by law, not produced by the appellant. In these circumstances, it is difficult to accept the contention of the appellant that since the learned Commissioner has allowed to drop the demands against one programme viz., PGP which is specifically approved, the same is automatically be applicable to other three courses and to be considered at par with the said PGP course. The three courses conducted by the appellant would not fall under the scope of the said exemption Notification No.33/2011-ST dated 25.04.2011 or the Negative List under clause (l) of Section 66D of the Finance Act, 1994. Besides, the appellant had commenced discharging Service Tax with effect from 01.03.2016 after insertion of Sl. No.9B and deletion of clause (l) under Section 66D of the Finance Act, 1994. The claim of the appellant that Indian Institute of Management Act, 2017 since acknowledges such institute as an Institution of national importance and therefore, all the courses offered by the institute should be exempted, also cannot be acceptable as no such provision has been brought to our notice mentioned in the said Act. Time Limitation - HELD THAT:- There has been changes in the law frequently and clarifications issued by the Board. Accordingly, during the said period, the applicability of the Notification and clause (l) of the negative list rests on the interpretation of the provisions of law, therefore, alleging suppression of fact cannot be sustained. Consequently, the demands be restricted to normal period of limitation. Since the issue involves interpretation of law, imposition of penalty is unwarranted and accordingly, set aside in both the appeals. The impugned orders are modified by setting aside penalty in both the appeals and upholding the confirmation of demands with interest for the normal period of limitation. The appeals are remanded only for the limited purpose of determination of tax for the normal period of limitation with interest. Appeal disposed off by way of remand.

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• 2024 (6) TMI 764
  CENVAT Credit - services availed by the appellant, not taxable services at the end of the service provider - plantation services. Credit on services availed by the appellant - HELD THAT:- The Service Tax paid by the service provider was accepted by the Revenue and it was not disputed at the end of the service provider. In that circumstances, it cannot be disputed at the end of the service recipient. It is admitted fact that whatever service tax has been paid by the appellant, the appellant has taken the Cenvat credit of the same and it is also not disputed by the respondent that the above said services on which service tax has been paid by the appellant were not received by the appellant. Therefore, whatever service tax paid by the appellant on the services received is entitled to Cenvat credit as held by this Tribunal in appellant s own case as M/S. HINDALCO INDUSTRIES LIMITED VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, ROURKELA [ 2023 (12) TMI 117 - CESTAT KOLKATA] . Credit on plantation services - HELD THAT:- The Tribunal cited the case of COMMISSIONER OF CENTRAL EXCISE. SURAT VERSUS M/S. GUJARAT STATE FERTILIZERSS CHEMICALS LIMITED [ 2013 (1) TMI 409 - CESTAT AHMEDABAD] , where it was held that the appellant is eligible to avail Cenvat credit on gardening services as mandated by the Pollution Control Board - the appellant has correctly taken the Cenvat credit of service tax paid by them. There are no merits in the impugned order. The same is set aside - appeal allowed.

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• 2024 (6) TMI 763
  Levy of service tax - Liquidated Damages - Security Deposit (SD) - Earnest Money Deposit (EMD) - Retention Money - time limitation - Taxability as consideration against tolerating an act under Section 66E(e) - HELD THAT:- An identical issue had come up before the Tribunal for consideration in the case of M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI] wherein the Tribunal held that It is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards consideration for tolerating an act leviable to service tax under section 66E(e) of the Finance Act. As it has been held by the Tribunal that on the said forfeited amount or amount received by an appellant, the appellant is not liable to pay Service Tax, in these circumstances, it is held that the appellant is not liable to pay Service Tax under Section 66E(e) of the Finance Act, 1994. There are no merit in the impugned order and accordingly, the same is set aside - appeal allowed.

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• Central Excise

• 2024 (6) TMI 781
  Refund claim u/s 11B of the Central Excise Act, 1944 - entire quantity of SKO was cleared from those refineries at nil rate of duty in terms of N/N. 4/2006-C.E. dated 01.03.2006, for ultimate sale through Public Distribution System (PDS) - failure to pass the bar of unjust enrichment - time limitation. Whether the appellant has passed the bar of unjust enrichment or not? - HELD THAT:- The appellant paid 7% duty at the time of clearance, which means that the goods in question have suffered total rate of duty of 21% whereas duty is payable at the rate of 14%. Therefore, the excess duty paid by the appellant is required to be refunded, as instead of charging duty from the customers at the rate of 14%, the appellant charged duty at the rate of 7% at the time of clearance. Thus, in these circumstances, the appellant has passed the bar of unjust enrichment - the appellant has passed the bar of unjust enrichment. Whether the refund claim(s) filed by the appellant are barred by limitation or not? - HELD THAT:- The facts of the present case are similar to that in the case of M/S. BANSAL BISCUITS PRIVATE LIMITED VERSUS COMMR. OF CENTRAL EXCISE SERVICE TAX, PATNA [ 2023 (11) TMI 615 - CESTAT KOLKATA] wherein the duty was paid by utilizing CENVAT Credit account, which was not payable by the assessee and in those set of facts, this Tribunal held that the duty paid, which was not payable, is to be refunded and no time-limit as prescribed under Section 11B of the Central Excise Act would be applicable. Therefore, in this case also, in respect of both the refund claims filed by the appellant, the provisions of Section 11B of the Act are not attracted. Accordingly, the appellant succeeds on limitation. The impugned order set aside - appeal allowed.

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• 2024 (6) TMI 762
  Denial of CENVAT Credit - fake invoices - appellant have not received the inputs and taken credit only on the invoice - HELD THAT:- In respect of M/s Gujarat Intrux Limited who is similarly placed as the present appellant, a matter was remanded in GUJARAT INTRUX LIMITED; SHRI DHIRAJ DHARAMSHIBHAI PAMBHAR VERSUS C.C.E. S.T. -RAJKOT [ 2022 (4) TMI 1615 - CESTAT AHMEDABAD] by passing the following order, where it was held that the Adjudicating Authority has rejected the retraction for one or other reason. In this case it is necessary for the adjudicating authority to allow the cross examination which is mandated under Section 9 D of Central Excise Act, 1944. By not allowing the cross examination the Learned Adjudicating Authority has violated the principles of natural justice. From the above decision, it can be seen that in the aforesaid decision also M/s Gujarat Intrux Limited has taken the Cenvat credit same as in the case of the present appellant and the goods were shown to have manufactured by M/s Suraj and supplied to the appellant through M/s Neo. In both the cases, the charge of the department is the recipient of goods in the present case the appellant have taken Cenvat credit without receipt of goods. This Tribunal has remanded the matter for want of cross-examination of Director and Chairman of M/s Neo and M/s Suraj and also of transporter. The same evidences were used in the present case also - this matter also needs to be reconsidered on the same line of the observation made in the above decision. Appeal allowed by way of remand.

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• 2024 (6) TMI 761
  CENVAT Credit - ISD invoices - input services were not used directly or indirectly or in or in relation to the manufacture of final goods by Paharpur unit - HELD THAT:- It could be seen that upto 31.03.2012, no condition is specified to the effect that credit can be distributed only when the particular unit is using the input services. Therefore, we find that the Department is in error in taking the stand that Cenvat credit can be distributed only for the input services used by Paharpur unit. In terms of the above provisions even if the services were used by other units, still the ISD distributing Head Office could have distributed the said Cenvat credit to the Paharpur Unit till the Rule was amended on 01.04.2012. Therefore, there are no error in the ISD invoices issued by the Mumbai unit based on which the Appellant has taken the Cenvat credit. On this count itself, the confirmed demand for the period June 2005 to 31.03.2012 stands set aside. Eligibility of Cenvat taken by the Mumbai unit which distributed the Cenvat Credit - HELD THAT:- Admittedly the Cenvat credit on various input services have accrued to the Head Office. They are duly registered as ISD in Mumbai for the Cenvat credit coming to them on account of various input service invoices. For the ISD invoices raised by them towards distribution of such Cenvat credit, they have been filing their ST-3 Returns before their jurisdictional authorities at Mumbai. Therefore, if they have taken the Cenvat credit in respect of any input services which is considered as ineligible, it was for the Mumbai Revenue officials to initiate recovery proceedings against them. The Paharpur unit (the present Appellant) has only taken the credit, so distributed by the Mumbai ISD unit. They have no control over the Cenvat taken by the Mumbai Head Office on various services. It has been time and again held by various Tribunals that the recipient cannot be questioned for the eligibility or otherwise of the Cenvat availing Head Office registered under ISD - the Kolkata authorities had no jurisdiction to question the eligibility of Cenvat taken by the Mumbai unit which distributed the Cenvat Credit. Several decisions have clearly held that jurisdiction to question the Cenvat availment lies with the officials with whom the ISD Returns are filed for issuing any Show Cause Notice towards eligibility of Cenvat credit. This Bench also in the M/S NALCO WATER INDIA LIMITED VERSUS COMMISSIONER OF CGST EXCISE, HOWRAH [ 2024 (3) TMI 751 - CESTAT KOLKATA] has considered the Mahindra Mahindra case, but held that the ISD Cenvat receiving unit cannot be questioned on the eligibility of input services. Therefore, the present proceedings initiated against the Appellant is without jurisdiction. For the period from 01.04.2012 to 31.03.2013, the appellants have claimed that they have taken the credit for the Service Tax paid by the Head Office for the services rendered to their Paharpur unit only. Thus the conditions set w.e.f. 01.04.2012 under Rule 7 of the Cenvat Credit Rules also have been fulfilled. Appeal allowed.

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• 2024 (6) TMI 760
  Valuation of the goods - Inclusion of inspection charges paid to RITES in the assessable value of the dutiable goods - HELD THAT:- It is found that in the appellant s own case for an earlier period M/S. PASUPATI ISPAT PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, BHUBANESWAR-I, ORISSA [ 2023 (3) TMI 1499 - CESTAT KOLKATA] , this issue came up before this Tribunal, wherein it was observed that The reimbursed receipts do not form part of their income and thus this is not an additional consideration. This is also relevant to observe that RITES raised the bills to the Appellant charging Inspection charges as per agreement amongst RITES, the Appellant and the customer. This is variably from the records that the Inspection charges were paid to RITES by the Appellant on behalf of their customers and the same amount was reimbursed by the customers and there is no difference between the amount paid and the reimbursed receipts. Both the amounts are matching. As the issue has already been settled by this Tribunal in the appellant s own case for an earlier period, therefore, following the same decision, the appellant is not liable to pay duty on account of the alleged undervaluation. The impugned order is set aside - appeal allowed.

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• 2024 (6) TMI 759
  CENVAT Credit - input services - Scientific technical consultancy services - denial of credit on the ground that since the appellant have carried out the trading of technology, hence, not provided any output service - HELD THAT:- In the present case, the Cenvat Credit on Scientific technical consultancy services were denied and ordered to be recovered in terms of Rule, 14 on the ground that since the appellant have carried out the trading of technology, hence, not provided any output service. Therefore, they are not eligible for Cenvat Credit on scientific and technical consultancy services. The very same issue has been considered by this Tribunal in the appellant s own case UNIMED TECHNOLOGIES LTD VERSUS C.C.E. S.T. -VADODARA-II [ 2023 (12) TMI 1324 - CESTAT AHMEDABAD] where it was held that it cannot be correct to say that the service provided by the SPIL was not used by the appellant. The revenue s argument is that the entire service was provided on the date of invoice is totally fallacious and illogical. Thus, we hold that the appellants received and consumed the service while they were participating in the development of technology by supervising and monitoring the same. Accordingly, following the Tribunal s decisions in the appellant s own case, the appellant are entitled for the Cenvat Credit on scientific and Technical consultancy services. Accordingly, impugned order is set aside - appeal allowed.

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• 2024 (6) TMI 758
  CENVAT Credit - input services - Examination of factual submissions and judicial determinations - HELD THAT:- The issues relating to admissibility of Cenvat credit in respect of input services is no more open to debate, inasmuch as the legal issues governing such issues have been settled finally by the various judgements of the higher judicial forum is follows. There are judgments of the Hon ble High Court of Bombay with particular reference to M/S. COCA COLA INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, PUNE-III [ 2009 (8) TMI 50 - BOMBAY HIGH COURT] , Commissioner of Central Excise, Nagpur Vs. Ultra Tech Cement Ltd., [ 2010 (10) TMI 13 - BOMBAY HIGH COURT] and the judgement of the Hon ble Supreme Court in the case of State of Karnataka Vs. Shreyas Paper Pvt. Ltd. [ 2006 (1) TMI 243 - SUPREME COURT] in affirming the view taken by the Hon ble Karnataka High Court [ 1999 (9) TMI 932 - KARNATAKA HIGH COURT] . Considering the fact that the Coordinate Division Bench of the Tribunal in its Final order NITIN CASTINGS LTD VERSUS COMMISSIONER OF CENTRAL EXCISE THANE [ 2023 (6) TMI 1392 - CESTAT MUMBAI ] had remanded the case back to the original adjudicating authority to decide the matter afresh upon consideration of the factual submissions made by the appellant and the relevance of judicial determination on each of the input service, it is found that the issues covered in the present case are being same except for different period in the subsequent year, the ends of justice would be met, if the present appeal is also allowed to be decided by the original adjudicating authority, for a decision afresh in de nova proceedings. There are no substance in the impugned order in denying the Cenvat credit on input services without proper examination in the context of various decisions passed by the Hon ble High Court of Bombay and Hon ble Supreme Court. Therefore, the impugned order is set aside and the matter is remanded back to the original adjudicating authority for consideration of the various submissions made by the appellant in the appeal paper book. Appeal allowed by way of remand.

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• 2024 (6) TMI 757
  Clandestine removal of the zinc oxide - applicability of SION norms in determining the quantity of zinc oxide manufactured from zinc scrap - difference in the calculated figure and the figure of production recorded in the statutory records - HELD THAT:- Undisputedly the appellants are using raw materials viz., zinc dross, skimming, zinc ingots and other zinc scraps for manufacture of zinc oxide. The department applying the SION norms has calculated the quantum of zinc oxide ought to have been manufactured and the excess quantity alleged to have been clandestinely removed. Such methodology has not been accepted by the Tribunal in similar circumstances in the case of M/S MITTAL PIGMENT PVT. LTD. VERSUS CCE, JAIPUR [ 2016 (9) TMI 1016 - CESTAT NEW DELHI] case after analyzing the facts, it has observed that There is nothing on record from the Revenue side to come to a reasonable conclusion to say that there has been preponderance of probability of such suppressed production on the part of the appellant. Since the impugned order itself is set aside on merits, there is no question of imposing personal penalty on Sri M. Jayaram, Director; hence, Revenue s appeal is dismissed. Appeal disposed off.

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• 2024 (6) TMI 756
  Liability of Central Excise Duty on notional basis instead of the actual figures - denial of Cenvat credit on photocopies of invoices - disallowance of cenvat credit on inputs used in the manufacture of goods lying in stock - CENVAT credit on sugar cess. Whether the central excise duty liability has been incorrectly demanded on notional basis instead of the actual figures? - HELD THAT:- It is submitted that the actual figures of production and clearances for the relevant period was available with the adjudicating authority, as the appellant had submitted the said data during the said adjudication proceedings. It has also been submitted that the CA Certificate to certify the actual production figures had also been submitted to the adjudicating authority - it is found that in the impugned order that the clearances for the period August 07 to March 2008 has indeed been calculated as a proportion of the total production figures - this methodology adopted by the adjudicating authority to calculate the clearances during this period when the actual data of clearances was available with the Commissioner cannot be appreciated - CA Certificate also examined wherein the monthly production clearances figures for the period 01.08.2007 to 30.06.2008 has been certified by the Chartered Accountant. The department had not led any evidence to hold that this CA Certificate was incorrect or fraudulent - the Commissioner has erred in determining the duty resulting of excess duty liability - the total duty determined is liable to be reduced by this amount. Whether the adjudicating authority was correct in denying Cenvat credit on photocopies of invoices? - HELD THAT:- Rule 9 of Cenvat Credit Rules, 2004 specifies the documents and records for the purpose of availment of credit. In some cases, it is noted that the appellant only had photocopies of the purchase invoices on which credit was denied. However, the receipt and utilization of inputs for the specified purpose has not been disputed nor has the department led any evidence to establish that the input was not received or was not duty paid - In view of the same, the Commissioner had erred in disallowing this part of the cenvat credit. Whether the adjudicating authority was correct in disallowing cenvat credit on inputs used in the manufacture of goods lying in stock? - HELD THAT:- The reasoning given by the adjudicating authority cannot be accepted. It is on record that the appellant had opening stock of 8389 quintals of sugar as on 01.08.2007. Subsequently, 8389 quintals of sugar was used in the manufacture of the final products - The department has denied the credit by not giving any sound reasoning for the denial. There is nothing on record to establish that the CA certificate produced by the appellant is fraudulent or incorrect - the adjudicating authority has erred in ignoring the cogent evidences led before it - the Tribunal in several decisions has held that once the appellant has submitted sufficient evidence along with the CA certificate to substantiate their claim, the onus shifts to the Revenue to disprove the same - credit wrongly denied. Whether the credit on sugar cess has been correctly allowed? - HELD THAT:- The coordinate bench of the Tribunal in similar facts and circumstances has allowed the Cenvat credit on sugar cess in the case of M/S. DIAMOND BEVERAGES PVT. LTD. VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, KOLKATA SOUTH [ 2019 (8) TMI 1517 - CESTAT KOLKATA] relying upon the decision in M/S. BENGAL BEVERAGES PRIVATE LIMITED VERSUS COMMISSIONER OF CGST CX, HOWRAH COMMISSIONERATE (VICE-VERSA) [ 2022 (2) TMI 1118 - CESTAT KOLKATA] - the Commissioner was correct in allowing the Cenvat credit of Sugar Cess to the appellant. Appeal of assessee allowed.

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• 2024 (6) TMI 755
  Levy of Central Excise duty - physician s samples in terms of section 4A of the Central Excise Act, 1944 i.e. MRP less abatement - HELD THAT:- The said issue has been examined by this Tribunal in the case of M/S KLAR SEHEN PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA [ 2023 (8) TMI 742 - CESTAT KOLKATA] , wherein this Tribunal has observed We hold that the valuation of physician samples is to be done as per under Rule 4 of the valuation rules, 2000 based on the pro rate value of medicaments sold in the trade and valued under Section 4A. The appellants are not liable to pay Central Excise duty on physician samples in terms of section 4A of the Central Excise Act, 1944. Therefore, the proceedings against the appellant are not sustainable. The impugned order set aside - appeal allowed.

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• 2024 (6) TMI 754
  Levy of personal penalty u/r 26(1) of the Central Excise Rules, 2002 - Clandestine removal - non-accounting and clearance of the goods without payment of duty - non-maintenance of proper accounts relating to receipt and consumption of raw materials such as iron ore, coal, etc., during the relevant period - HELD THAT:- The allegation was levelled against the company on the basis of input output norms and other factors by calculating the duty on theoretical basis. Besides this, personal penalty imposed on the appellant is solely on the ground that he was the Director of the company and in-charge of the day-to-day affairs in running the company. This Tribunal in the case of M/S MITTAL PIGMENT PVT. LTD. VERSUS CCE, JAIPUR [ 2016 (9) TMI 1016 - CESTAT NEW DELHI] held that in the absence of sufficient evidence, imposition of penalty on the Director merely being in-charge of the company cannot be sustained. Also, it is found that in the show-cause notice, there has been no proposal nor any allegation indicating that the goods which were cleared are liable for confiscation. Thus, imposition of personal penalty under Rule 26(1) on the appellant is unsustainable in law and liable to be set aside. The appeal is allowed.

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• CST, VAT & Sales Tax

• 2024 (6) TMI 753
  Challenge to assessment order - It is contended that the proprietor of the M/s. P.G. Oil Traders was not aware about the said assessment orders - request for waiver of the condition of pre-deposit of 25% of tax amount not considered -whether appeal filed by the petitioner being aggrieved with the said assessment orders is required to be considered as per the provisions under AGST Act, 1993 or VAT Act, 2003? - non-application of mind - violation of principles of natural justice - HELD THAT:- The said question has already been answered by the Division Bench of the Hon ble Supreme Court in Messrs. Hoosein Kasam Dada (India) Ltd. [ 1953 (2) TMI 35 - SUPREME COURT ]. The said judgment was later on affirmed by a Constitution Bench of the Hon ble Supreme Court in Garikapati Veeraya [ 1957 (2) TMI 54 - SUPREME COURT ]. In Messrs. Hoosein Kasam Dada, the Hon ble Supreme Court has held the appellant s appeal should not have been rejected on the ground that it was not accompanied by satisfactory proof of the payment of the assessed tax. As the appellant did not admit that any amount was due by it, it was under the section as it stood previously entitled to file its appeal without depositing any sum of money. We, therefore, allow this appeal and direct that the appeal be admitted by the Commissioner and be decided in accordance with law. Thus, the appeals filed by the petitioner against the impugned assessment orders are required to be considered under Section 33 of the AGST Act, 1993 instead of Section 79 of the VAT Act, 2003 because lis arose in the matter with filing of returns by the petitioner, i.e. in the year 2002-2004, which is admittedly prior to coming into force of the VAT Act, 2003. Perusal of the order dated 29.07.2013 passed by the respondent No. 3, it is clear that the request made by the petitioner for waiver of the condition of pre-deposit of 25% of disputed amount was not even considered and even the prayer of the petitioner to deposit the 25% of the disputed amount in the form of Bank Guarantee has also been rejected - it is clear that the Assam Board of Revenue has not applied its mind while passing the impugned order dated 16.07.2015. The matter is remanded back to the Appellate Authority to consider and decide the appeal/appeals filed by the petitioner as per the provisions of Section 33 of the AGST Act, 1993 - petition allowed by way of remand.

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• 2024 (6) TMI 752
  Rectification of errors in an order related to tax assessments and refunds - reversal of ITC - HELD THAT:- The respondent cannot refuse to pass appropriate order on the representation/petition filed by the petitioner under Section 84 of the TNVAT Act, 2006 on 24.08.2021 followed by two reminders dated 23.10.2021 and 14.04.2022. There shall be a positive direction to the respondent to consider and pass appropriate orders on the representation/petition of the petitioner under Section 84 of the TNVAT Act, 2006, within a period of 3 months from the date of receipt of a copy of this order and refund the amount, if any available to the petitioner. Needless to state, the order shall be passed without prejudice to the rights of the respondent in the proposed appeal filed before this Court. Petition allowed.

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• 2024 (6) TMI 751
  Liability to pay excess tax collection to the Government when the tax liability of the respondent is higher than the tax collected - direction to respondent to pay the excess collected tax with interest to the Government even if the tax liability of the respondent is higher than the tax collected - HELD THAT:- The proviso to Section 8 (f)/Section 8 (f) (iii) deals with a situation where a dealer in bullion or ornaments or wares or articles of gold, silver or platinum group metals including diamond, who has chosen to pay tax at the compounded rate under Section 8 of the KVAT Act, in lieu of the normal rate under Section 6 of the KVAT Act, is permitted to collect tax from the person to whom he has sold goods at the prescribed rate. The second limb of the said provision clarifies that if the tax so collected during the year is in excess of the tax payable for the year then the tax collected in excess shall be paid over to the Government in addition to the tax payable under Section 8 (f) - if a dealer collects tax at a rate different from the rate prescribed in the first limb of the proviso/Section 8 (f) (iii), then it would not answer to the description of tax so collected for attracting the second limb of the provision. It is apparent therefore that the finding of the Appellate Tribunal, in the orders impugned in these O.T. Revisions, are contrary to the express provisions of Section 8 (f) (iii)/proviso to Section 8 (f). Section 30 (1) clearly envisages a situation where a registered dealer is permitted to collect tax at the rates specified in Section 6. Thus, the provision, even if it applies in respect of registered dealers who pay tax under Section 8, cannot apply to cases where the dealer is permitted to collect tax only at the rates specified under Section 8. That apart, even if such a dealer collects tax at the rate specified under Section 6, he is obliged in terms of Section 30 (1) of the KVAT Act to pay it over to the Government since there is no provision similar to the proviso to Section 8 (f)/Section 8 (f) (iii), in Section 30 (1) of the KVAT Act - the order of the Appellate Tribunal impugned in these Revisions cannot be legally sustained. The O.T. Revisions are allowed.

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• Indian Laws

• 2024 (6) TMI 750
  Dishonour of Cheque - entitlement to a person who is an accused in complaint for an offence punishable under section 138 of NI Act, 1881, to give evidence on an affidavit as provided under section 145 of the NI Act, 1881 - The petitioners, after their examination u/s 313 of the Code of Criminal Procedure, 1973, tendered an affidavit in lieu of examination in chief. The complainant objected, arguing that the accused has no right to adduce evidence by way of affidavit u/s 145 of the NI Act, 1881. HELD THAT:- The question that arose for consideration in the case of Mandvi Cooperative bank [ 2010 (1) TMI 570 - SUPREME COURT] was in the context of the import of amended section 143 and 145 of the NI Act, 1881, in particular. On the contrary, a larger issue of expeditious completion of the trial in the complaints under section 138 of the NI Act, 1881 was the subject matter of the Writ Petition filed by the Indian Bank Association [ 2014 (5) TMI 750 - SUPREME COURT] . In that context, the Supreme Court gave certain directions. However, despite noting the decision in the case of Mandvi Cooperative bank, especially the fact that the provisions contained in section 145 were restricted to permitting the complainant to lead evidence on affidavit and do not provide the same dispensation to the accused, Indian Bank Association did not struck a discordant note. The decisions of this Court in SBI Global Factors Limited [ 2021 (3) TMI 490 - BOMBAY HIGH COURT] and NITIN VERSUS PRAKASHRAO [ 2024 (1) TMI 1292 - BOMBAY HIGH COURT] have correctly held that the question sought to be raised by the petitioners is no longer res integra and stands concluded against the accused by the judgment of the Supreme Court in the case of Mandvi Cooperative bank. This Court does not find any reason to take a different view of the matter than the one taken by the coordinate Benches in the cases of SBI Global Factors Limited and Nitin Shriram Sabe. Therefore, the invitation of Mr. Patel (petitioner) to take a different view of the matter is declined and the question referred to a larger Bench. Since the trial in the complaints has reached an advanced stage and only the evidence for the accused is to be adduced, it is deemed appropriate to request the learned Metropolitan Magistrate to conclude the trial as expeditiously as possible. Petition dismissed.

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• 2024 (6) TMI 749
  Dishonour of cheque - recovery of debt when the borrower has initiated the proceedings for insolvency under the Code, 2016 - HELD THAT:- The Supreme Court after taking note of judgment passed in the case of P. MOHANRAJ ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [ 2021 (3) TMI 94 - SUPREME COURT] has held in the case of AJAY KUMAR RADHEYSHYAM GOENKA VERSUS TOURISM FINANCE CORPORATION OF INDIA LTD. [ 2023 (3) TMI 686 - SUPREME COURT] has held that proceedings under the Insolvency and Bankruptcy Code do not automatically extinguish criminal proceedings under the Negotiable Instruments Act. Considering the totality of facts and circumstances of the case and in view of the fact that merely because of initiation of proceedings under the Code, 2016 the signatory of the cheque cannot escape from his liability, it is held that conviction recorded by Trial Court was not bad on account of initiation of proceedings under the Code, 2016. The Appellate Court did not commit any mistake by directing the applicant to deposit an amount of Rs. 13,73,890/- as a condition precedent for suspension of sentence - application dismissed.

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• 2024 (6) TMI 748
  Dishonour of Cheque - Conviction and sentence under Section 138 of the Negotiable Instruments Act - presumption under Section 139 N.I. Act in favour of the Complainant/Opposite Party not rebutted - HELD THAT:- The mandatory provisions under Section 138 N.I. Act has also been duly complied with by the complainant - It appears that the cheque has been issued by the petitioner in his personal capacity from his personal account - Thus the findings and order of conviction passed by the Trial Court and affirmed by the Appellate Court is in accordance with law and thus requires no interference by this Court - But the sentencing is clearly not in accordance with law. In the present case the petitioner has been convicted and sentenced to pay Rs. 1,00,000/- as compensation in default to suffer simple imprisonment for a period of twelve months. In Krishan Gupta Anr. Vs State of West Bengal Anr. [ 2007 (3) TMI 834 - CALCUTTA HIGH COURT] , it was held that The Negotiable Instruments Act provides for sentence of imprisonment and sentence of fine. The compensation is not the part of any sentence neither it is a substitute of sentence but in addition thereto. The provisions of Section 357(3) of the Code makes it abundantly clear that when Court imposes a sentence may order the accused person to pay by way of compensation such amount as may be specified, when fine does not form the part of the sentence. Therefore, no compensation can be awarded without being preceded by imposition of sentence and obviously not by imposition of sentence of fine. The judgment and order dated 30.03.2019 passed by the learned Sessions Judge, Hooghly in Criminal Appeal No. 6/2018 and the judgment and order of conviction and sentence passed by the learned Judicial Magistrate, 5th Court, Hooghly, in CR No. 98/2013, convicting the petitioner to pay Rs. 1,00,000/- to the complainant as compensation within 30 days in default he shall suffer simple imprisonment for a period of twelve months, as to sentence not being in accordance with law is hereby modified - Application disposed off.

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