TMI Tax Updates - e-Newsletter
June 26, 2023

Case Laws in this Newsletter:

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

Articles

1. NEW GUIDELINES FOR PROCESSING OF APPLICATIONS FOR GST REGISTRATION

   By: Dr. Sanjiv Agarwal

2. Enhancing GST Compliance: The Importance of GST Compliance Audits for SMEs

   By: Sundaran Damodaran

3. LIABILTY TO PAY INTEGRATED TAX

   By: DR.MARIAPPAN GOVINDARAJAN

4. Unused CENVAT Credit does not incur any interest liability

   By: Bimal jain

5. SCN lacking specific reasons is liable to be set aside

   By: Bimal jain

News

1. Minutes of the Monetary Policy Committee Meeting, June 6 to 8, 2023 [Under Section 45ZL of the Reserve Bank of India Act, 1934]

2. Union Commerce and Industry Minister Shri Piyush Goyal highlights resolution of six outstanding WTO disputes between US and India through mutually agreed solutions

3. DGFT liberalizes and simplifies the policy for export of Drones/Unmanned Aerial Vehicles (UAVs) for civilian end uses from India

4. Union Minister of Commerce and Industry Shri Piyush Goyal lauds the support and encouragement provided to exporters by ECGC Ltd. 

Notifications

Customs

1. 46/2023 - dated 23-6-2023 - Cus (NT)

Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Turkish Lira - Seeks to amend Notification No. 44/2023-CUSTOMS (N.T.), dated 15th June, 2023

GST - States

2. 06/2023-State Tax - dated 23-6-2023 - Delhi SGST

Special procedures for assessment order deemed to be withdrawn for registered persons who failed to furnish a valid return within a period of thirty days from the service of the assessment order issued on or before the 28th day of February, 2023

3. 09/2023-State Tax - dated 22-6-2023 - Delhi SGST

Extension of time limit specified u/s 73(10) for issuance of order u/s 73(9) of the DGST Act for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilised - 3 notifications modified

Income Tax

4. 45/2023 - dated 23-6-2023 - IT

Income-tax (Eleventh Amendment) Rules, 2023 - Charitable, religious, educational institutions and / hospitals - Various rules towards procedure of filing of application for approval u/s 10(23C), 12A and 80G and related form, amended / modified.

5. 44/2023 - dated 23-6-2023 - IT

‘University, College or Other Institution’ for research in ‘Social Science or Statistical Research’ u/s 35(1)(iii) - M/s Patanjali Yog Peeth Nyas, Delhi for its university unit ‘University of Patanjali’, Haridwar’ Notified.

Circulars / Instructions / Orders

DGFT

1. Policy Circular No. 02/2023-24 - dated 23-6-2023

Procedure for applying for Amnesty scheme for onetime settlement of default in export obligation by Advance and EPCG authorization holders in manual mode

Highlights / Catch Notes

GST

• Court Quashes GST Registration Cancellation Due to Non-Speaking Order and Insufficient Show-Cause Notice Documentation.

  Case-Laws - HC : Cancellation of GST registration of petitioner - non-speaking order - While issuing Show-cause notice for cancellation of Registration, necessary documents were not supplied and the notice is cryptic. Therefore, it was not possible for the petitioners to give reply to the said Show-cause notice. - SCN as well of order of cancellation quashed and set aside - HC
  Visit to Get Source

  ---

• Misuse of Credit Notes to Fraudulently Transfer ITC is Penalized u/s 132(b) for Reducing Invoice Value.

  Case-Laws - AAR : Reversal of Input Tax credit / ITC - financial credit note is issued for part amount of invoice - the financial credit note shall not be used as a conduit to transfer input tax credit fraudulently, by raising an Invoice for a higher value to transfer ITC and then reducing the transaction value though financial credit note whereas the ITC transferred Is left unaltered. In case such a misutilisation of financial credit note is noticed at any point the same shall be liable for penalties under section 132(b). - AAR
  Visit to Get Source

  ---

• GST Applies to Export of Pre-packaged Rice, Regardless of Buyer's Identity or Destination, Says Advance Ruling Authority.

  Case-Laws - AAR : Levy of GST - export of pre-packaged and labelled rice - In the instant case, the ultimate buyer is not present and the commodity is being pre-packed for an unknown ultimate buyer. The buyer from the applicant is re-selling the same to another buyer be it export or indigenous. This advance ruling authority agrees with the observation regarding the applicability of GST on pre-packaged and labelled' irrespective of the fact that whether the it is for domestic sale or exported outside the country. - GST is leviable - AAR
  Visit to Get Source

  ---

• GST at 18% Applies to Entire AOCOS Service Value Including Remuneration, EPE, ESI, Welfare Fund per GST Act Section 15.

  Case-Laws - AAR : Value of the supply of services rendered by AOCOS as per section 15 of GST Act - They have provided the way for the processing of bills and the way the monies are transferred directly into the employees account directly from the state CFMS account - As per section 15 of the GST act, the total value of the supply includes all the above and 18% GST is leviable on the entire amount (total of remuneration +EPE +ESI + welfare fund) and not just welfare fund as contended by the applicant. - AAR
  Visit to Get Source

  ---

Income Tax

• Limitation Period for Revision Orders u/s 263: Linked to Re-assessment or Original Assessment Date?

  Case-Laws - SC : Revision u/s 263 - period of limitation for passing order - Only in a case where the issues before the Commissioner at the time of exercising powers u/s 263 relate to the subject matter of re-assessment, the limitation would start from the date of Re-assessment Order. However, if the subject matter of the re-assessment is distinct and different, in that case the relevant date for the purpose of determination of period of limitation for exercising powers u/s 263 would be the date of the original Assessment Order. - SC
  Visit to Get Source

  ---

• Court Rules Notice Invalid u/s 139(9); Refund Claim Correct Despite Name Change Dispute.

  Case-Laws - HC : Refund claim - effect of name change - defective return u/s 139(9) or not - in whose name the refund should be issued? - PAN database correction would certainly indicate what was the original name and therefore, Petitioner’s name when it filed the return of income tax was the correct name as it then existed. Therefore, there can never be a defect and notice issued u/s 139(9) was not a valid notice. If AO had checked the database, he would have found answer and could have avoided issuing a notice. - HC
  Visit to Get Source

  ---

• High Court Rules Refund Includes Interest Paid on Deleted Penalty; Additional Interest Due u/s 244(1A.

  Case-Laws - HC : Claim of interest on refund of "penalty amount and interest paid thereon" - Petitioner had paid interest on outstanding amount of penalty. On deletion of penalty, Petitioner became entitled to refund of amount of penalty paid by Petitioner as well as the interest thereon paid under Section 220(2) of the Act. The amount of interest paid by Petitioner under Section 220(2) of the Act, in our view, thus became part of refund envisaged under Section 240 of the Act. Therefore, Petitioner is entitled to interest on the said amount under the provisions of Section 244(1A). - HC
  Visit to Get Source

  ---

• Section 271(1)(c) Penalty Not Imposed Without Detailed Allegations of Income Concealment by Taxpayer.

  Case-Laws - AT : Penalty u/s 271(1)(c) cannot be lead on the assessment by alleging that the assessee had concealed particulars of income and also furnished inaccurate particulars of income particularly when the AO himself has in the assessment order at page 3 only alleged that the assessee had deliberately or without any reasonable cause concealed the particulars of income without making further allegations - AT
  Visit to Get Source

  ---

• Hotel or resort revenue from management contracts should be "Business Income," not "House Property" income, aligning with business operations.

  Case-Laws - AT : Correct head of income - letting out of Hotel/Resort as running business - treatment of revenue receipts from operation of Hotel/Resort - Contract for managing the business from the said premises on a consideration of management license basis - No fixed consideration - the revenue receipts are undoubtedly income from the Business and therefore, should be treated under the head “Business Income” but not as rental income from “House Property” - AT
  Visit to Get Source

  ---

• Assessing Officer's acceptance of assessee's reply without inquiry deemed erroneous; Principal Commissioner upholds revision order.

  Case-Laws - AT : Revision u/s 263 - The AO merely accepted whatever reply was filed by the assessee, which as noted above by us did not even justify the increase in commission expenses but contrarily revealed infirmities which should have prompted further inquiry by the AO. - The finding of the ld.Pr.CIT are correct that the assessment order was erroneous - Revision order sustained - AT
  Visit to Get Source

  ---

• Court Rules Yield Ratio Alone Insufficient for Proving Unrecorded Sales; Requires Additional Evidence for Income Addition.

  Case-Laws - AT : Unaccounted sale of Gajjak, Makhane and Namkeen - rejection of books of accounts - Shortage has been equated with undisclosed sales basely solely on yield ratio. In our view, no doubt yield ratio is one of the guiding factors which needs to be considered for determining appropriate level of production but at the same time, to equate production with sales, there has to be something more in terms of positive evidence in form of unrecorded sales realization which has not been entered in the regular books of accounts which is apparently absent and not available on record. - No additions - AT
  Visit to Get Source

  ---

• TDS Credit Denied After Business Transfer: Calls for Mechanism or Rule 37BA Interpretation to Ensure Fairness u/s 199(1).

  Case-Laws - AT : Credit for TDS denied - transfer of business - it is not even disputed by the department that assessee is entitled for credit for TDS. Either some mechanism should be devised by the department to address such grievances in such circumstances or authorised the Assessing Officer to examine it and allow; or the strict conditions provided in Rule 37BA should be read in the provisions of Section 199(1) to make it workable in genuine cases where department is sure no double credit is allowed or claimed. - AT
  Visit to Get Source

  ---

Customs

• CHA License Revocation Overturned; Only Rs. 10,000 Forfeited Due to Lack of Specific Allegations Against Appellant.

  Case-Laws - AT : Revocation of CHA license - forfeiture of security deposit - The forfeiture of entire security deposit is disproportionate, also since there is no specific allegation as to the involvement of the appellant; rather, the culprits have clearly been identified who, admittedly, having misused the fake IECs, it is they who are actually liable for any penalty - It is deemed fit that a nominal amount of Rs.10,000/- could be forfeited out of the security deposit, but not the entire amount of Rs.75,000/- - AT
  Visit to Get Source

  ---

• Low Aromatic White Spirit Reclassified from CTH 27101239 to CTH 27101990 Due to Note 4 of Chapter 27 Criteria.

  Case-Laws - AT : Classification of imported goods - Low Aromatic White Spirit - When the goods do not satisfy the criteria fixed under Note 4 of Chapter 27, the goods cannot be classified under CTH 27101239. The remaining option available in the Tariff is to classify the same under CTH 27101990 which is the only residuary entry available for classification - AT
  Visit to Get Source

  ---

• Valuation Method for Imported Goods Using Transfer Pricing System Aligns with Resale Price Method Under Customs Act Section 14.

  Case-Laws - AAR : Valuation of imported goods - The applicant's proposed valuation method, Transfer Pricing System and Steering Concept (TPuS) method also known as Resale Price method/Resale Minus method, for determination of transaction value under Section 14 of the Customs Act 1962 for goods proposed to be imported from the related party suppliers, after compliance with the procedure prescribed in the CBEC, is consistent with Rule 3 as well as Rule 7 of the Valuation Rules - AAR
  Visit to Get Source

  ---

• AAR Rules Processed Betel-Nut Supari Classified Under Chapter 8 of Customs Tariff, Affecting Duties and Regulations.

  Case-Laws - AAR : Classification of goods proposed to be imported - Processed API Betel-nut product known as Supari - Processed Betel-nuts unflavoured chemically processed Supari in small cut-pieces (not split) merit classification under chapter 8 of the Customs Tariff - AAR
  Visit to Get Source

  ---

• Application to Recall Ruling on Goods Classification Dismissed Due to Lack of Good Faith and Manipulation of Facts.

  Case-Laws - AAR : Application for recalling of Ruling - Classification of goods - The interesting fact is the applicant has approached the Authority only in respect of the current application and has sought to recall, modify, rectify or make the ruling void ab-initio. - However, they have not sought to make the rulings in those cases void ab-initio as most of them are favorable to them. This clearly reveals that the applicant has not approached this forum with clean hands and have tried to twist facts and laws to circumvent the ruling. - Application dismissed - AAR
  Visit to Get Source

  ---

DGFT

• India Amends SCOMET Policy to Simplify and Liberalize Drone and UAV Exports Under Category 5B of Appendix 3.

  Notifications : The Category 5B of the Appendix 3 (SCOMET List) of Schedule 2 of the ITCHS classification of Import and Export Items that controlled the export of all kinds/types of drones/UAVs is amended to simplify and liberalize the SCOMET policy for export of Drones/UAVs. - Amendments in Category 5B of Appendix 3 (SCOMET Items) to Schedule-2 of ITC (HS) Classification of Export and Import items - Notification
  Visit to Get Source

  ---

• Chromium Ore Exports Restricted: HS Code 2610 Now Requires Special Permission for International Trade. Effective Immediately.

  Notifications : Chromium Ores and Concentrates - The export items under HS Code 2610 have been placed under restricted category with immediate effect. Amendment in Export policy of HS Code 2610 - Notification
  Visit to Get Source

  ---

• DGFT Circular Details Amnesty Scheme for Settling Export Obligation Defaults for Advance and EPCG Authorization Holders.

  Circulars : Procedure for applying for Amnesty scheme for onetime settlement of default in export obligation by Advance and EPCG authorization holders in manual mode - Circular
  Visit to Get Source

  ---

Indian Laws

• Court Orders Tax Dept to Issue Certificate on Deceased's Tax Records u/s 65-B of Indian Evidence Act.

  Case-Laws - HC : Rejection of application made by the Petitioner for calling upon the Income Tax Department to provide a proper certificate / letter in support of the Income Tax records deceased - Information sought by the Family members to settle dispute between them - The Trial Court is, therefore, directed to call upon the Income Tax department to provide a proper certificate as per the requirements of Section 65-B of the Indian Evidence Act, 1872 in respect of the documents of Income Tax records of deceased - HC
  Visit to Get Source

  ---

IBC

• High Court Dismisses Appeal Over Misappropriated Trademarks; Liquidator Confirmed as True Proprietor Under Chapter V Trade Marks Act.

  Case-Laws - HC : CIRP - Infringement of seven trademarks - assignment of trademark in favor of petitioner - Under Chapter V of the Trade Marks Act, 1999 the right of assignment and transmission is vested in the registered proprietor. In case of these seven marks, the registered proprietor was Duckbill, the custodian of whose assets was the liquidator. So the real proprietor was the liquidator - a deliberate attempt was made by Poulami and her father-in-law to divest Duckbill of its principal assets that is the trademarks and misappropriating them, by backdating a deed of assignment to 2017 and then filing it with the trademark registry five years later. - Appeal dismissed - HC
  Visit to Get Source

  ---

• Tribunal Rules Sub-Contractor's CIRP Application u/s 9 Not Maintainable Due to Lack of Direct Contractual Relationship.

  Case-Laws - AT : Maintainability of Application for CIRP filed under Section 9 of I&B Code - Sub-contractor of the main contractor - Contractual Relationship between the Appellant and the Respondent or not - privity of contact - This Tribunal is of the considered view that any promise made in the letter dated 17.10.2018, specifically having regard to Clause 6.1.4 of the Agreement for Civil Works and Construction entered into between Embassy Energy Private Limited and ISPL, whereby and whereunder, it was clearly specified that the sub-Contractor, would not have any contractual relationship with the owner and would not be entitled to prefer any Claims against the owner - AT
  Visit to Get Source

  ---

Service Tax

• Court Orders Acceptance of Delayed Payment Under 2019 Scheme to Reduce Tax Litigation and Settle Dues.

  Case-Laws - HC : SVLDRS - It can be said that the basic object of the Scheme, 2019 is to reduce litigation by allowing the eligible assessee to make the payment of the outstanding dues after availing the relief under the Scheme, 2019. The petitioners herein made bona fide attempt to make the payment as determined under the Scheme, 2019 and the petitioners are also ready to pay the amount in question in accordance with law along with interest for the period for which the petitioners were not permitted to make the payment by the respondents. - Directions issued to accept the payment under SVLDRS - HC
  Visit to Get Source

  ---

• Indian Railways and Konkan Railway Not Separate Entities; Demand Set Aside Under Board's Circular No.109/3/2009-S.T.

  Case-Laws - AT : Business support service - allowing Indian Railways to use the said Railways Lines of Konkan Railway including signals and systems for transportation of Goods and passengers - both the appellant and Indian Railways are not separate entities, it is thus held that the Appellant’s case is also covered by Board’s Circular No.109/3/2009-S.T. - Demand set aside - AT
  Visit to Get Source

  ---

• Service Tax Refund Approved for Non-Commercial Medical College Construction; Institution Operates u/s 12AA Non-Profit Status.

  Case-Laws - AT : Refund of Service Tax paid on construction activity - commercial construction or not - there is no doubt that building constructed by the Contractor is medical college building - it is also noticed that the Appellant have been granted registration of Trust under Section 12AA of the Income Tax Act which shows that Appellant have been registered for non-commercial purpose. Since the organization of the appellant itself is non-profit purpose, it cannot be said that the building is used for commercial activity - merely by charging a higher fees an institution cannot be treated as commercial institute - Refund allowed - AT
  Visit to Get Source

  ---

• Revenue-Sharing in Hotel Operations Not Classified as Service; No Service Tax Demand Due to Lack of Provider-Recipient Relationship.

  Case-Laws - AT : Classification of services - Renting of Immovable Property Service - revenue sharing agreement - Agreement to run, conduct and operate the three hotels together - a revenue sharing agreement by itself does not necessarily imply provision of service, unless service provider and service recipient relationship is established - agreement did not bring out any service provider and service recipient relationship - Demand set aside - AT
  Visit to Get Source

  ---

• Service Tax Demand on SBI for Handling PPF Accounts Set Aside; No Discretion in Fund Management Involved.

  Case-Laws - AT : Banking and Other Financial Services - remuneration received from RBI in relation to PPF management - There is no discretion for the appellant in handling the funds under the PPF accounts and the PPF funds are entirely managed by the Government of India. In such a scenario, there is no question of management of funds lying in the PPF accounts, by the appellants. - Demand of service tax from the SBI set aside - AT
  Visit to Get Source

  ---

• Car Manufacturer's Trade Discounts and Commissions Not Subject to Service Tax Under Business Auxiliary Services Section.

  Case-Laws - AT : Business auxiliary service - trade discount, incentives and commission offered by the car manufacturer - principal to principal basis - As the present case of incentives/ commission is solely related to trade discounts for sale of cars in accordance with the regular practice as well as the agreement/schemes that were in vogue in the industry, the same is not treated as compensation received by the appellant for any services provided to the car manufacturer M/s MSIL. - Demand set aside - AT
  Visit to Get Source

  ---

• Tax Authority Cannot Reclassify IT Software Services as Online Database Services for Pre-2008 Period.

  Case-Laws - HC : Classification of services - if the Appellant Revenue has accepted the classification of entry under the head “Information Technology Software Service” for the period post 2008, then it cannot be contended by the Appellant Revenue that pre 2008 that very service falls under the entry “Online Information and Database Access or Retrieval Services”. - HC
  Visit to Get Source

  ---

Central Excise

• Interest on Refund Claim Starts Three Months Post Original Filing, Not Reversal Date, per Section 11BB.

  Case-Laws - AT : Interest on refund claim - relevant date for calculating the interest arising due to a delay in the payment - appellant claimed credit from the date on which they reversed the CENVAT Credit - As per the statutory mandate of Section 11BB of the Act the department is under a legal obligation to sanction the refund claim along with interest after the expiry of 3 months from the date of filing of the refund claim and not from the revised date of filing the claim as decided in the impugned order. - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2023 (6) TMI 1054
  Cancellation of GST registration of petitioner - non-speaking order - HELD THAT:- In the present case, the respondent authority has not disputed the fact that while issuing Show-cause notice for cancellation of Registration, necessary documents were not supplied and the notice is cryptic. Therefore, it was not possible for the petitioners to give reply to the said Show-cause notice. It is not in dispute that while passing the impugned order for cancellation of registration, the respondent authority has not assigned any reason and thus, the order passed by the respondent authority is not a speaking order - both Show-cause notice dated 24.11.2021 as well as the order dated 13.12.2021 deserve to be quashed and set aside. Petition allowed.

  ---

• 2023 (6) TMI 1053
  Release of confiscated vehicle - section 130 of the Karnataka Goods and Services tax Act, 2017 - section 130 of the Karnataka Goods and Services tax Act, 2017 - HELD THAT:- The petitioner is the registered owner who has made over the subject vehicle to a transporter. In similar circumstances, this court has granted leave to the concerned to file appropriate affidavit before the fifth respondent to place on record the circumstances that would belie any connivance by the petitioner in, or the petitioner s knowledge of, the misuse of the vehicle while calling upon the fifth respondent to pass suitable orders in the light of such affidavit. This court is of the considered view that the petitioner must be granted liberty to file such affidavit before the fifth respondent and call upon the fifth respondent to pass suitable orders in accordance with law within the time frame - Petition disposed off.

  ---

• 2023 (6) TMI 1052
  Maintainability of Advance Ruling application - Classification of services - rate of GST - transportation of Goods through rail - amount from M/s XYZ (Foreign Company) as reimbursement without raising Invoices - treatment of GST ITC - raising of separate invoice for only Service charges for arrangement of such services - HELD THAT:- the applicant has not submitted any relevant documents, including Invoice, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment of vouchers, e-waybill and agreement copies etc. The issue on which advance ruling is sought, by the applicant appears to be hypothetical in nature, in the absence of relevant documents. Further, the applicant has not appeared for personal hearing and also declined another opportunity of personal hearing. The applicant neither submitted sufficient documents nor showed any Inclination to defend his case. Therefore we are not inclined to pronounce the ruling In the absence of proper documents - the ruling can be pronounced on the basis of proper documents in support of questions sought and not on the basis of assumption and hypothetical situation hence the application is not maintainable.

  ---

• 2023 (6) TMI 1051
  Reversal of GST credit - Tax invoice issued by supplier and GST was paid by such supplier to government even though later commercial/ financial credit note is issued for part amount of invoice - requirement of reversal of ITC proportionately to the extent of financial/ commercial credit note issued by supplier. HELD THAT:- The discount value shall not be included, as per 15 (3) (b), when such supply has already been affected and the discount is established as per terms of an agreement at or before the time of such supply and there is a link to the invoices of the discount given. Further, the ITC attributable to the discount is to be reversed by the recipient of the supply. On examination of the transaction between the applicant and their supplier, M/s Gold Medal, it is found that the supplier is issuing a tax invoice on the supply of goods to the applicant and the applicant is taking ITC on the same. The applicant is issued commercial credit note or financial credit notes under various schemes such as turnover discount, quantity discount, additional scheme discount etc. The credit. notes issued are without GST and as per the applicant were issued only for accounting purpose as also given in undertaking by the supplier. The credit notes are duly accounted in the book of accounts of the applicant and also in their income tax returns - For the applicability of provisions of 15 (3) (b) there should be prior agreement and a link established with the relevant invoices of the discount given. No such co-relation between the credit notes issued by the supplier to the applicant is found except credit note mentioning the scheme and the goods for which the credit note is being given. In absence of such specific Information, the benefit of lessening the value of discount from the transaction value as per the provisions of 15 (3) (b) is not allowed and therefore the contention of the applicant is correct. However, it is pertinent to note that the financial credit note shall not be used as a conduit to transfer input tax credit fraudulently, by raising an Invoice for a higher value to transfer ITC and then reducing the transaction value though financial credit note whereas the ITC transferred Is left unaltered. In case such a misutilisation of financial credit note is noticed at any point the same shall be liable for penalties under section 132(b). The applicant is not required to reverse ITC, provided the dealer pays the value of the supply as reduced after adjusting the amount of post-sale discount in terms of financial/commercial credit notes received by him from the supplier of goods plus the amount of original tax charged by the supplier.

  ---

• 2023 (6) TMI 1050
  Levy of GST - export of pre-packaged and labelled rice upto 25 Kgs, to foreign buyer - supply of pre-packaged and labelled rice upto 25 Kgs, to exporter on bill to ship to basis i.e., bill to exporter and ship to customs port, exporter ultimately exports the rice to foreign buyer - supply of pre-packaged and labelled rice upto 25 Kgs, to the factory of exporter, exporter will export the rice. HELD THAT:- In the instant case, the ultimate buyer is not present and the commodity is being pre-packed for an unknown ultimate buyer. The buyer from the applicant is re-selling the same to another buyer be it export or indigenous. This advance ruling authority agrees with the observation regarding the applicability of GST on pre-packaged and labelled irrespective of the fact that whether the it is for domestic sale or exported outside the country. GST is leviable on all the above three cases.

  ---

• 2023 (6) TMI 1049
  Valuation of supply of services - pure services or not - supply of manpower services to various departments under state government provided by the applicant i.e., APCOS - services of manpower supply services to various government authorities and Government entities provided by the applicant - exemption from GST, as provided under Sr. 3A of Notification Number 12/2017-Central Tax (Rate) New Delhi, dated 28th June, 2017. Whether the services of manpower supply services to various Government authorities and Government entities provided by the applicant, ie., APCOS is eligible for exemption from GST, as per Notification Number 12/2017-Central Tax (Rate) New Delhi, dated 28th June, 2017 as amended vide notification 16/2021-Central tax (rate) dated 18-11-2021 being pure services, as per the definition and the services rendered thereby being listed in article 243G and 243W of Constitution as functions pertaining to panchayat and municipality? - HELD THAT:- It is pertinent to note that the eligibility of exemption is dependent on case-to-case basis and cannot be generalized. The exemption is available only in relation to services provided by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution of India or in relation to any function entrusted to a Municipality under Article 243W of the Constitution of India or not. The applicant had submitted only few work orders for verification and hence it is not feasible to pass an ruling on a generalised basis and hence it is being held at a principle level that any services provided in relation to any function entrusted to a panchayat under article 243G of Constitution of India or in relation to any function entrusted to a municipality under Article 243W of Constitution of India and the applicant be guided accordingly. Value of the supply of services rendered by AOCOS as per section 15 of GST Act - HELD THAT:- The applicant had put forth the point of argument that the value of the service rendered by them is only limited to collection of welfare fund and also contented that the employees are not recruited by the applicant directly and they are concerned only with the payroll management . They have provided the way for the processing of bills and the way the monies are transferred directly into the employees account directly from the state CFMS account - As per section 15 of the GST act, the total value of the supply includes all the above and 18% GST is leviable on the entire amount (total of remuneration +EPE +ESI + welfare fund) and not just welfare fund as contended by the applicant.

  ---

• 2023 (6) TMI 1048
  Seeking grant of pre-arrest bail - fraudulently encashing the undue input tax credit by showing exports of goods exported - territorial jurisdiction to entertain the present applicant seeking pre-arrest bail. Maintainability of present application - admittedly proceedings of CGST have been initiated at Bhopal Commissionerate there and not in Delhi - HELD THAT:- Applicant has moved the present application on the ground that he being permanent resident of Delhi having no concern with the firm in question apprehends his possible arrest, therefore approached the court at Delhi. Having gone through the judgment in Capt. Satish Kumar Sharma s case [ 1990 (9) TMI 363 - DELHI HIGH COURT ], without commenting much into the details of facts of that case, it would be rather important to note that in para 14 to 18 Hon ble High Court referred to different judgments of High Courts laying down legal proposition that an application u/s 438 Cr.PC can be filed before the court of Session/High Court of that territorial jurisdiction where applicant resides and apprehends his arrest on accusation of having been committed beyond jurisdiction. In the absence of any specific bar either u/s 438 Cr.PC or in any manner, a court can entertain any application for pre-arrest bail at the instance of an applicant who resides within territorial jurisdiction of that court and apprehends his arrest at another jurisdiction, where he intends to approach in accordance with law - this court has jurisdiction to entertain the present application. Merits of the case - fraudulently encashing the undue input tax credit by showing exports of goods exported - HELD THAT:- Sr. Standing counsel on the other hand submits that even if the refund had not been withheld by custom authorities, there is no provision which prohibits the CGST from inquiring and claiming the refund when there is sufficient material in the investigation of the Department show that the input tax credit has been availed without actual supply of material. Ld. Sr. Standing counsel specifically referred to section 74 and 132(1)(e) of the Act. Considering the totality of the circumstance, this court need not to go into much details of material which is otherwise under investigation of CGST Bhopal, merits of the matter can obviously be examined by courts of local jurisdiction. However two aspects which certainly weigh this court to give protection to the accused - there was no tangible reason furnished in the application of his apprehension of being arrested. As such he submits that very application is without basis. However receiving of summons by the applicant from the Department, more particularly when his father has already arrested and the fact that applicant has no concern with the firm is admitted. - When the very initiation of action by the Department may not be in accordance with Rule 96 of the Act, though there is no denial to the fact that Department can still initiate the action in terms of section 74 of the Act as rightly pointed out by ld. Sr. Standing counsel but the fact that the applicant being not at all concerned with the said firm. - Therefore for the above said two reasons accused/ applicant is protected from possible arrest, subject to he joins the investigation with CGST Bhopal Commissionerate as well as of any succeeding dates for which he would be called upon. Application disposed off.

  ---

• Income Tax

• 2023 (6) TMI 1047
  Revision u/s 263 - period of limitation for passing order - reckoned from the date of the original assessment order or from the date of the reassessment order? - ITAT and High Court held that proceedings u/s 263 by the Commissioner as barred by limitation - HELD THAT:- The issues before the Commissioner while exercising the powers u/s 263 relate back to the original Assessment Order and, therefore, the limitation would start from the original Assessment Order and not from the Re-assessment Order. We are fortified with our view by the decision of Alagendran Finance Ltd. [ 2007 (7) TMI 304 - SUPREME COURT] as held once an Order of Assessment is re-opened, the previous order of assessment will be held to be set aside and the whole proceedings would start afresh but the same would not mean that even when the subject matter of re-assessment is distinct and different, the entire proceedings of assessment would be deemed to have been re-opened. Meaning thereby, only in a case where the issues before the Commissioner at the time of exercising powers under Section 263 of the Act relate to the subject matter of re-assessment, the limitation would start from the date of Re-assessment Order. If the subject matter of the re-assessment is distinct and different, in that case the relevant date for the purpose of determination of period of limitation for exercising powers under Section 263 of the Act would be the date of the original Assessment Order. Thus no error has been committed by the ITAT or even the High Court in holding the proceedings under Section 263 of the Act by the Commissioner as barred by limitation.

  ---

• 2023 (6) TMI 1046
  Nature of expenses - Expenses incurred for replacement of membrane cells-II - revenue or capital expenditure - HELD THAT:- This Court is not inclined to interfere with the impugned judgment and order of the High Court treating it as revenue expense deleting the addition treating the same as capital expenditure by following the rule of consistency. Nature of receipt under the subsidy scheme - subsidy in the form of Sales Tax Exemption as capital receipt or revenue receipt - HELD THAT:- The special leave petitions are dismissed in the light of orders of this Court in Deputy Commissioner of Income Tax vs. Munjal Auto and Nirma Ltd. [ 2018 (5) TMI 1738 - SC ORDER] The order in Munjal Auto relied upon judgment of this Court in Commissioner of Income Tax vs. M/s Chaphalkar Brothers [ 2017 (12) TMI 816 - SUPREME COURT] . This Court is also satisfied that the terms of the scheme in this case require the recipient of the benefit to set up a new unit or substantially expand the existing unit and utilize substantial portion of the amount retained (at least 50% of the subsidy) for the capital purposes. For these reasons, the impugned judgment does not call for interference. SLP dismissed.

  ---

• 2023 (6) TMI 1045
  Reopening of assessment u/s 147 - accommodation entries entry transactions - as decided by HC in light of the information which forms the basis of the initiation of the inquiry and in view of the fact that the transactions with Mridul Securities are admitted by the Petitioners, we do not find any case for interfering in the writ proceedings - Petitioners have not brought on record anything to suggest that the reassessment proceedings are being undertaken in an arbitrary manner - HELD THAT:- We are not inclined to interfere with the impugned judgment and hence, the special leave petitions are dismissed. Pending application(s), if any, shall stand disposed of.

  ---

• 2023 (6) TMI 1044
  Exemption u/s 10(23C)(iv)/11/12 - whether activities of the respondent/assessee do not qualify for charitable purpose in view of the Proviso to Sec 2(15)? - HC [ 2022 (1) TMI 544 - DELHI HIGH COURT] granted approval to the petitioner under Section 10(23C)(iv) - HELD THAT:- This Court is of the opinion that the order impugned does not call for interference. Special Leave Petition is, accordingly, dismissed.

  ---

• 2023 (6) TMI 1043
  Depreciation on the WEGs for the year ending 31.03.2006 - Benefit of set off of brought forward losses - HC decided issues in favour of assessee - HELD THAT:- We are not inclined to interfere with the impugned judgment and order of the High Court. The special leave petition is dismissed.

  ---

• 2023 (6) TMI 1042
  Validity of reopening of assessment - jurisdiction of respondent no.3 (ITO, Ward No.1, Shimla) to make an assessment u/s 148 - Transfer of case u/s 127 - HELD THAT:- Admittedly, the order u/s 127(2) of the Act was passed by respondent no.1 transferring to respondent no.4 at New Delhi, the power to assess the petitioner, which was with respondent no.3 (ITO, Ward No.1, Shimla). It was clearly mentioned therein that the said order would come into effect immediately with effect from 12.03.2022. Therefore, with effect from 12.03.2022, the jurisdiction of respondent no.3 to make an assessment under Section 148 of the Act, qua the petitioner, got extinguished. When respondent no.3 had issued notice under Clause (b) of Section 148A of the Act to the petitioner on 22.03.2022, the petitioner had brought this fact to the notice of respondent no.3 in his response on the Portal given on 28.03.2022. It was further stated that the order dt. 15.03.2022 issued u/s 127(2) of the Act that respondent no.1 was also available on the Income Tax Portal and a copy of the same was also attached to respondent no.3; and the specific plea was raised that notice dt. 22.03.2022 under Section 148 A (b) of the Act issued by respondent no.3 to the petitioner, was without jurisdiction. Ignoring the same, the impugned notice under Section 148 was issued on 01.04.2022 by respondent no.3. The respondents cannot place reliance on sub-section (4) of Section 127 of the Act and contend that the transfer of the case can be made at any stage of the proceedings and the notice issued under Section 148 of the Act is not invalidated because in the instant case, the transfer of jurisdiction was done on 15.03.2022, much prior to the issuance of notice under Section 148A(d) and Section 148 of the Act on 01.04.2022. Had the transfer of jurisdiction happened after the issuance of notice of Sec.148 of the Act, the situation would have been otherwise. Writ petition is allowed; the notice issued u/s 148 by respondent no.3 is quashed and respondent no.3 is prohibited from taking any action pursuant thereto.

  ---

• 2023 (6) TMI 1041
  Refund claim - effect of name change - defective return u/s 139(9) or not - in whose name the refund should be issued? - as change of name of Petitioner, Petitioner ought to have filed revised returns to be entitled to refund and therefore, a notice u/s 139(9) of the Income Tax Act, 1969 - HELD THAT:- As the name change has been reflected in the records of the Income Tax Department. Notwithstanding this, Petitioner has been issued a notice dated 23rd April, 2019 stating that the name mentioned in the return of income does not match with the name as per the PAN database and Petitioner has been advised to correct the name in the return of income as per PAN allotted to Petitioner. PAN database correction would certainly indicate what was the original name and therefore, Petitioner s name when it filed the return of income tax was the correct name as it then existed. Therefore, there can never be a defect and notice issued u/s 139(9) was not a valid notice. If AO had checked the database, he would have found answer and could have avoided issuing a notice. Notice is hereby quashed and set aside.

  ---

• 2023 (6) TMI 1040
  Dismissal of appeal by tribunal on non filling of paper book - HELD THAT:- On 23/02/2022, this Court had directed respondent no.1 to file an affidavit after inspecting the Records and Proceedings and make a statement whether such a paperbook was filed. The affidavit has been filed, but it only says that paperbook was not found. We would, however, agree with Mr. Jain that just because the paperbook is not found in the Records and Proceedings of the Tribunal, it does not mean it was not filed. Petitioner has filed an affidavit through its Director stating that the paperbook was filed. A copy of the paperbook was also served on 01/10/2019 upon the departmental representative through covering letter addressed to the Registrar, Appellate Tribunal, CGO Building, Mumbai. To the averments of petitioner that such a paperbook was filed, there is no denial. We would lean in favour of petitioner and accept petitioner s explanation that such a paperbook containing 71 pages was filed. Without going into or dealing with this point, the Tribunal has simply rejected the Misc. applicatoin. We hereby quash and set aside the impugned order dated 18/05/2021 and remand the matter to the Tribunal.

  ---

• 2023 (6) TMI 1039
  Validity of reopening of assessment - notice against company non existent/ amalgamated - HELD THAT:- As assessee has intimated the concerend AO about scheme of amalgamation and company having ceased to exist as a result of the approved Scheme of Amalgamation, thus legal principle provides that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Notice issued under Section-148 in its name[ company amalgamated] would be fundamentally illegal and without jurisdiction. See MARUTI SUZUKI LTD [ 2019 (7) TMI 1449 - SUPREME COURT] and ADANI WILMAR LTD. [ 2023 (2) TMI 864 - GUJARAT HIGH COURT] - Decided in favour of assessee.

  ---

• 2023 (6) TMI 1038
  Reopening of assessment u/s 147 - deduction u/s 80-O claimed - change of opinion - claim of deduction u/s 80-O consequent to the amendment w.e.f. A. Y. 1998-99 but copies of the bills were not produced - HELD THAT:- As perused the Assessment Order in which the only issue which has been discussed is the deduction claimed under Section 80-O. AO has extensively dealt with the submission of bills during the assessment proceedings - AO has also recorded that the assessee even submitted relevant supporting vouchers and bills which have been verified on the test case basis with the detailed statement filed by the assessee. This indicates that what is recorded in the reasons to believe that assessee did not produce bills is incorrect. As held by this Court in Aroni Chemicals Limited [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] once a query is raised during assessment proceeding and the assessee has replied to it, it follows that the query raised was a subject of consideration of the A. O. while completing the assessment. In the case at hand from the Assessment Order, it is quiet clear that the A. O. has not only considered but also extensively dealt with in the Assessment Order the deduction claimed under Section 80-O - Therefore, there can be no doubt in the present facts that the re-opening of the assessment is merely on the basis of change of mind of the A.O. from that held earlier during course of assessment proceedings leading to the Assessment Order. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Decided in favour of assessee.

  ---

• 2023 (6) TMI 1037
  Claim of interest on refund of penalty amount and interest paid thereon - Revision of revision of order u/s 264 - rejecting application of Petitioner to grant interest on refund under the provisions of Sections 244/244A - HELD THAT:- Madras High Court in Needle Industries Pvt. Ltd., [ 1998 (6) TMI 84 - MADRAS HIGH COURT] has held that the expression amount in the earlier part of Section 244 (1A) of the Act would refer to not only the tax but also the interest, and the expression amount is a neutral expression and it cannot be limited to the tax paid in pursuance of the order of assessment. The clear intention of the Parliament is that the right to interest will compensate the assessee for the excess payment during the intervening period when the assessee did not have the benefit of use of such money paid in whatsoever character. Madras High Court further held that in the context of Section 244(1A) of the Act, the expression tax would include interest also and the definition of tax under Section 2(43) meaning income tax cannot be applied in the context of Section 244(1A) - Court also held that consequently, the interest paid in pursuance of the order of Assessment has to be regarded as forming part of income tax or an adjunct to income tax and the result would be that Assessee is entitled to interest on the interest refunded also. We are in respectful agreement with the view expressed by the Madras High Court in Needle Industries Pvt. Ltd [ 1998 (6) TMI 84 - MADRAS HIGH COURT] This has been followed by the Gujarat High Court in Gujarat State Warehousing Corporation (supra) and later Delhi High Court followed Gujarat State Warehousing Corporation [ 2001 (8) TMI 24 - GUJARAT HIGH COURT] in the Modipon Ltd. [ 2004 (4) TMI 38 - DELHI HIGH COURT] . We should also add that Section 240 of the Act makes no distinction between refund of tax or penalty paid and refund on other amount collected. The case of Respondent is totally off target because Petitioner is not claiming interest on interest which is due to Petitioner but what Petitioner has claimed is interest on amount which is paid by Petitioner as interest under Section 220(2) of the Act which forms part of refund due to Petitioner. The A.O. had wrongly demanded the amount of the interest under Section 220(2) of the Act. Petitioner had paid interest on outstanding amount of penalty. On deletion of penalty, Petitioner became entitled to refund of amount of penalty paid by Petitioner as well as the interest thereon paid under Section 220(2) of the Act. The amount of interest paid by Petitioner under Section 220(2) of the Act, in our view, thus became part of refund envisaged under Section 240 of the Act. Therefore, Petitioner is entitled to interest on the said amount under the provisions of Section 244(1A). Impugned order passed u/s 264 after going through the same and examining the question of the legality thereof, to quash, cancel and set aside the same.

  ---

• 2023 (6) TMI 1036
  Request for personal hearing through video conferencing with the second respondent rejected - violation of principles of natural justice - HELD THAT:- As the petitioner claim that it has to produce voluminous documents before the Authority and hence, personal hearing through video conferencing was not provided to the petitioner. However, the AO is sitting at Chennai on 03.05.2023 at Non - Corporate Circle 11 (1), BSNL Building Tower, Greams Road, Chennai 600 006 and without prejudice to the rights of the respondents, the petitioner will be given opportunity. In view of the fair submission made by the learned Senior Standing Counsel (Income Tax) appearing for the respondents, the impugned orders passed by the second respondent dated 14.03.2023 are set aside and the matter is remanded back to the AO for fresh consideration. The petitioner is directed to appear before the Assessing Officer during the sitting at Chennai on 03.05.2023 in Non - Corporate Circle 11 (1), BSNL Building Tower, Greams Road, Chennai 6 at 11.00 a.m. and produce all the necessary documents without seeking any further adjournment. On hearing the petitioner, the Assessing Officer shall pass appropriate orders, as early as possible.

  ---

• 2023 (6) TMI 1035
  Penalty u/s 271(1)(c) - Defective notice - non specification as to whether penalty is being initiated for concealment of income or for furnishing inaccurate particulars of income ? - HELD THAT:- A notice issued for imposing penalty u/s 271(1)(c) has to specify the charge and it cannot be omnibus notice. Hence, we agree with the assessee to conclude, penalty imposed u/s 271(1)(c) of the ACT will not be sustainable if the penalty notice does not specify the specific charge. In the present case, this ground has been raised for the first time before us. We remit the issue to AO. AO shall examine the records and follow the judicial principle as enunciated herein above which has also the mandate of Hon ble jurisdictional High Court. Needless to add, assessee should be provided an opportunity of being heard. Appeal of the assessee is allowed for statistical purposes.

  ---

• 2023 (6) TMI 1034
  Levying penalty u/s 271(1)(c) - Proof of concealment of income by the assessee - AO in quantum proceedings dismissed excess claim of assessee u/s 54 - HELD THAT:- As identical facts and circumstances of the case quite similar and identical to the case of ITO Vs. M. Narayanswami [ 2010 (10) TMI 670 - ITAT, BANGALORE] wherein, held that the assessee has furnished all particulars regarding sale of immovable property and claimed exemption u/s 54 of the Act which was partly denied by the AO. In such a situation the claim of deduction u/s 54 centres around interpretation of a provision based on various judgment of Hon ble High Court and orders of the Tribunal. The identical situation is clearly discernable from two of the assessment orders wherein, the AO by relying and referring to certain judgments and factual matrix of the case recalculated the long term capital gain and allowed share to the assessee u/s 54 of the Act and remaining part was disallowed making addition in the hands of the assessee. Penalty u/s 271(1)(c) cannot be lead on the assessment by alleging that the assessee had concealed particulars of income and also furnished inaccurate particulars of income particularly when the AO himself has in the assessment order at page 3 only alleged that the assessee had deliberately or without any reasonable cause concealed the particulars of income without making further allegations. As in the case of CIT Vs. Reliance Petro Products Pvt. Ltd [ 2010 (3) TMI 80 - SUPREME COURT] held that merely because the claim of assessee was not accepted or not found to be acceptable by the revenue authorities does not entitle the AO to impose penalty u/s 271(1)(c) of the Act. Decided in favour of assessee.

  ---

• 2023 (6) TMI 1033
  Unexplained expenditure u/s 69C - Difference in net taxable income declared and as per TRACES form 26AS TCS - assessee disclosed only an amount on account of purchase of beedi leaves in the profit and loss account, AO called for the reasons for difference - HELD THAT:- On a calculation of the CGST and SGST at 9% each on the net purchase amount as pleaded by the assessee it is found that cumulative GST comes to Rs. 17,39,806/- and this amount has to be added not to the total amount of purchase as found in the profit and loss account, which includes the other expenses relating to the purchase, but to the amount which was subject to TCS. In that case, it comes to Rs. 1,12,10,164/-. This amount tallies with the invoice amount of Rs. 1,12,10,160/-. The difference of Rs. 2 lakhs, observed by the learned CIT(A), was due to the non-consideration of the contention of the assessee by CIT(A) that there are other expenses like godown rent, charges on late payment etc., to the tune of Rs. 1,95,235/-; and when that amount is considered, absolutely there is no difference and highly probablises the case of the assessee. No discrepancy in the case of the assessee. The addition is not warranted - Appeal of assessee is allowed.

  ---

• 2023 (6) TMI 1032
  Deduction u/s 80P(2)(a)(i) - interest derived by the assessee on the deposits in the State Bank of Hyderabad on the credit balance available therein - HELD THAT:- Undisputedly, the interest arose on the credit balances with reference to the regular course of business of the assessee. As decided in Vavveru Co-operative Rural Bank Ltd. [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] held that, if the original source of the investments made by the petitioners in nationalized banks is admittedly the income that the petitioners derived from the activities listed in sub-clauses (i) to (vii) of clause (a), then the character of such income may not be lost, especially when the statute uses the expression attributable to and not any one of the two expressions, namely, derived from or directly attributable to . Interest credited by the State Bank of Hyderabad to the account of the assessee on the credit balances does not lose its character as the income derived from the activities of the assessee covered by 80P(2)(a)(i) - Thus disallowed interest in this matter, as a matter of fact is eligible for deduction under section 80P(2)(a)(i) - Decided in favour of assessee.

  ---

• 2023 (6) TMI 1031
  Addition u/s 69 - unexplained investment - HELD THAT:- CIT(A) decided the issue without considering the explanation offered by the assessee. By way of statement of facts and grounds of appeal, the assessee had offered explanation regarding source of cash deposited in bank account hence, to sub-serve the principle of natural justice, atleast the assessee should get opportunity to represent its case before the appellate authority. We, hereby, set aside the impugned order and restore the issue to the file of Ld.CIT(A) to decide the grounds of appeal raised before him afresh after giving opportunity of being heard to the assessee.Appeal of the assessee is allowed for statistical purposes.

  ---

• 2023 (6) TMI 1030
  Assessment proceedings u/s 153C - unexplained share capital - addition made on protective basis - Settlement Commission has not admitted the application of the assessee on the grounds that the assessee does not qualify as a related person to the specified person - HELD THAT:- Addition was confirmed in the hands of other Assessees and not on the assessee here in by the settlement Commission, the protective assessment made in the hands of the assessee does not survive. Addition on substantive basis , as incriminating material found during the search is pertaining to Assessment Year 2010-1 and not pertaining to Assessment Year 2009-10, further, even before us the Revenue has not refuted the finding of the Ld. CIT(A). As relying on of Sinhgad Technical Education Society case [ 2017 (8) TMI 1298 - SUPREME COURT] , we find no error or infirmity in the order of the CIT(A) in deleting the addition and find no merit in the grounds of Appeal of the Revenue.

  ---

• 2023 (6) TMI 1029
  Income chargeable to tax in India - consideration received by the assessee from supply / distribution of its copy righted software products - Whether income from royalty as defined in Article 12 of the agreement for avoidance of double taxation between the India and Ireland? - HELD THAT:- This quarrel has now been settled by the Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd [ 2021 (3) TMI 138 - SUPREME COURT] amounts paid by resident Indian end- users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to In section 195 of the Income Tax Act were not liable to deduct any TDS u/s 195. Decided in favour of assessee.

  ---

• 2023 (6) TMI 1028
  Year of taxability of gains arising on transfer of immovable property situated at Kolhapur - HELD THAT:- As on perusal of clause of the sale deed, it would reveal that the parties intended that the ownership of property would be transferred to the seller only upon receipt of the entire consideration by the assessee firm is condition precedent. Therefore, the ratio of the decision of the Hon ble Supreme Court in the case of Kaliaperumal [ 2009 (2) TMI 825 - SUPREME COURT] is squarely applicable to the facts of the present case. No hesitation to hold that the transfer of property had not taken place during the previous year relevant to the assessment year under consideration. Consequently, the profits or gains arising on sale of such property cannot be brought to tax for the year under consideration. No illegality or perversity in the findings of the ld. CIT(A) for requiring our interference. The contention of CIT-DR that the assessee firm had received full consideration stipulated in the sale deed inclusive of alleged on-money consideration cannot be accepted for the reason that the effect of the sale deed should be considered with reference to the sale consideration stipulated in the sale deed. Therefore, there is no merit in the grounds of appeal nos.1 and 2 filed by the Revenue. Payment of On-money consideration at the time of purchase of property - assessee firm had paid on-money consideration in cash over and above the sale consideration stated in sale deed based on the information received from the ACIT, CC, Kolhapur - HELD THAT:- From the contents of letter received from ACIT, CC, Kolhapur, it is clear that there was no reference to any document or loose sheets suggesting the payment of on-money consideration. AO had neither proved nor had brought on record any corroborative, independent evidence in support of such allegation of on-money consideration, as well as, no independent enquiries were conducted by the AO. It is very well settled position of law that no addition can be made merely based on the information received from another AO without any independent corroborative evidence on record. No illegality and perversity in the findings of the ld. CIT(A) deleting the addition made by the AO. Thus, the ground of appeal nos.3 and 4 filed by the Revenue stands dismissed. Assessment u/s 153C - transaction of alleged receipt of on-money consideration on sale of immovable property - HELD THAT:- As no material was placed before us in support of contention that no approval of Pr. CIT was obtained. It is further contended that the assessment order is silent as to the approval accorded by the Pr. CIT to convert the limited scrutiny into complete scrutiny. The approval of the Pr. CIT need not form part of the assessment order, if it form part of the record is sufficient, the assessee firm could not discharge the onus proving that no such approval was obtained. Thus, all the contentions raised by the assessee firm are devoid of merits and, accordingly, dismissed. As regards to the contention of the assessee firm that invalidity of the assessment order on the ground that since the assessment is based on the information received consequent to the search and seizure operations of third party, the assessment should be done u/s 153(C) not under regular assessment are devoid of any merit for the reason that the assessee firm had failed to prove the existence of condition for exercise the jurisdiction u/s 153C - Moreover, during the course of regular assessment proceedings, any information received from third party can be used against the assessee after affording an opportunity of rebuttal. Accordingly, the additional ground of appeal as well as original ground of appeal nos.1 and 2 filed by the assessee firm stands dismissed. Whether or not there was the evidence of receipt of on-money consideration on sale of property? - We are of the considered opinion that in the absence of any conclusive material brought on record by the Assessing Officer establishing the receipt of on-money consideration, it cannot lead to the conclusion that the assessee had received on-money consideration. Therefore, the findings of the lower authorities are hereby reversed and we direct the Assessing Officer to delete the addition.

  ---

• 2023 (6) TMI 1027
  Correct head of income - letting out of Hotel/Resort as running business - treatment of revenue receipts from operation of Hotel/Resort - Contract for managing the business from the said premises on a consideration of management license basis - No fixed consideration - addition qua revenue from House Property or business income - HELD THAT:- As in the agreement executed by Assessee with M/s Four Seasons, not a single term or condition reflects the essence of rent agreement. The Assessee had received the receipts/income from the revenue generated by M/s Four Seasons on fluctuation basis and undisputedly has not received any fixed amount, which can be termed as rental income , hence, we do not have any hesitation to hold that the revenue receipts generated by the Assessee from M/s Four seasons, are undoubtedly income from the Business and therefore, should be treated under the head Business Income but not as rental income from House Property as determined by the authorities below. Consequently the AO is directed to delete the addition on this issue and re-compute the liability. Disallowing the claim of set off of brought forward unabsorbed depreciation losses of earlier years - In view of our decision in treating the receipts as income under the head Business Income , Assessee shall be eligible for unabsorbed depreciation as claimed for. AO is directed to allow the set off of the unabsorbed depreciation. Appeal filed by the Assessee stands allowed.

  ---

• 2023 (6) TMI 1026
  Deduction u/s 80P(2)(a)(i) - net profit earned by the assessee from carrying on business as Co-operative Society - HELD THAT:- As in the case of the assessee before us the surplus funds parked by way of short-term deposit with the co-operative bank, viz. Malavia Urban Co-operative Bank Limited are inextricably interlinked, or in fact interwoven with its business of providing credit facilities to its members, therefore, the same as claimed by the Ld. AR, and rightly so, would duly be eligible for deduction u/s.80P(2)(a)(i). We, thus, in terms of our aforesaid observations, direct the AO to allow deduction u/s. 80P(2)(a)(i) of the Act on the interest income earned by the assessee society on its deposits with the co-operative bank - Appeal of assessee allowed.

  ---

• 2023 (6) TMI 1025
  Receipts on sale of Renewable Energy Certificates [REC] ESCERTS - capital receipt or revenue receipt - DR placed that the claim of the assessee as not related to carbon credit, so, it is not covered u/s 115BBG or as exempted income - DR argued that the revenue had properly taken it as an income from business - HELD THAT:- The assessee claimed the transfer value of REC/ESCs amounting to Rs. 17,77,26000/-in return under section 1115BBG and paid tax. During the time of assessment, the assessee amended the claim and treated the income as capital receipt. As relied on the orders My Home Power Ltd, [ 2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] and Maheshwari Devi Jute Mills Ltd. [ 1965 (4) TMI 10 - SUPREME COURT] the income is offshoot from environmental concern not from offshoot of business concern. The nature is fully related to environmental health. We find that said income is capital in nature and not liable to tax under business income. Amendment of claim in assessment stage - The transfer value of REC/ESCs was duly claimed as capital receipt in assessment stage. As relying on case of Goetze (India) Ltd [ 2006 (3) TMI 75 - SUPREME COURT] case of Ankit Metal Power Ltd [ 2019 (7) TMI 878 - CALCUTTA HIGH COURT] Both the orders have not impinged the power of ITAT u/s 254 to allow the claim duly amended by assessee after filing the return. The revised claim made by the assessee during the time of assessment is duly accepted. We set aside the order of CIT(A) and restore the claim of assessee. Commission paid by the assessee was treated as bogus and added back u/s 69C - DRP issued the SCN for enhancement, through e-mail, for the first time on 27th June, 2022 and the assessee was allowed time up to 28.06.2022 to respond to the same and the order making enhancement was passed by the DRP on 29.06.2022 - grievance of the assessee is that the ld. DRP has acted beyond jurisdiction u/s 144C(8) - HELD THAT:- After submission of requisite documents as evidence of transaction, the ld. DRP had not considered the same. Considering the submission of assessee the Tax Invoice, transaction through bank account and the TDS certificate are duly placed before the bench as proof of transaction with M/s Zylo International. DR has not made any objection about the assessee s submission and not able to submit any contrary judgment against the assessee. It is pertinent to mention the revenue was not able to submit any transaction with M/s Rolmex International Prop. Jaswant Singh with the assessee. The addition cannot be on basis of surmises and conjectures. See Umacharan Shaw Bros [ 1959 (5) TMI 11 - SUPREME COURT] . In our considered view the addition amount is quashed.

  ---

• 2023 (6) TMI 1024
  Disallowance of expenses u/s 36(1)(iii) - non charging of interest on advanced amount - advance was paid from interest free fund which has related to assessee s sundry creditors where assessee is advancing interest free loan - HELD THAT:- Actually, the total interest free funds available with the assessee which comprises of interest free sundry creditors and other payables and which is also apparent from the balance sheet of the assessee and these are interest free funds available with the assessee, as the assessee has not to pay any interest on the amount due to the parties. The assessee utilized the interest free fund to advance/loan, to party. Assessee claimed that the entire amount was utilized from the non-interest-bearing fund. We respectfully relied on the orders which are duly relied by the ld. AR, are ITAT Chandigarh Bench in the case of M/s Gourav Malhotra Co. [Supra] and the order of Hon ble Apex Court in the case of Reliance Utility and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] . Accordingly, the assessee s payment for advance from non-interest-bearing fund is not attracted any interest. So, the assessee has not contravened the section 36(1)(iii) for payment of interest free advance. The issue was first time explained before the Bench. The appeal is remanded back to the ld. CIT(A) for further adjudication on basis of the observation of the bench indicated above. Appeal of assessee allowed for statistical purpose.

  ---

• 2023 (6) TMI 1023
  Revision u/s 263 - Accepting the claim of assessee without enquiry - CIT justification in invoking jurisdiction u/s 263 in respect of the issues other than the commission expenses - HELD THAT:- As per the documents placed before us by assessee, it is clear and evident that it was a case of complete scrutiny and not limited scrutiny as canvassed by assessee before us. Therefore, argument of assessee that the ld.Pr.CIT s order on issues other than those mentioned for scrutiny selection was beyond the scope of revisionary power, does not survive. Even otherwise, the finding of the error by the PCIT of non-examination of disproportionately large claim of expenses by the assessee in the impugned year, as compared to the preceding year is in relation to and has direct bearing on the aspect of low net profit earned by the assessee which was one of the reasons for scrutiny selection. Therefore, for this reason also the contention of the assessee that other than the issue of commission no other issues could have been dealt by the ld.Pr.CIT, we find, has no merit, and is therefore rejected. Assesses case was selected for scrutiny on account of large commission expenses, the facts before us reveal that the AO merely accepted whatever reply was filed by the assessee, which as noted above by us did not even justify the increase in commission expenses but contrarily revealed infirmities which should have prompted further inquiry by the AO. The finding of the ld.Pr.CIT, we hold, are correct that the assessment order was erroneous on account of no inquiry at all having been conducted on the issue of large commission expenses claimed. Issue of commission expenses and the issue of low net profit, we find that there was no inquiry conducted by the AO at all, and therefore, the ld.Pr.CIT was right in holding that the assessment order was erroneous causing prejudice to the Revenue. The assessee s arguments therefore that the issues were examined during the assessment proceedings is dismissed. Also since we have found the AO to have not conducted any inquiry on the issues for which complete scrutiny was directed in the present case, there cannot be any question of any view formed by the AO on the issues and hence the argument advanced on behalf of the assessee that where two views were possible, revisionary proceedings are unjustified, needs to be rejected. In the present case, the show cause notice issued by CIT pointed out the reasons found by the ld.Pr.CIT for finding the assessment order passed in the present case to be erroneous. Due reply was filed by the assessee, and finding no satisfactory reply given by the assessee, the ld.Pr.CIT went on to hold that the assessment order as erroneous. Therefore, CIT had examined the order passed by the AO on merits, giving assessee due opportunity during the revisionary proceedings to establish its case on merits, but clearly, the assessee failed to do so. Therefore, his order restoring the case to the file of the AO for denovo assessment is in accordance with law, and we do not find any infirmity in the same. Decided against assessee.

  ---

• 2023 (6) TMI 1022
  Unaccounted sale of Gajjak, Makhane and Namkeen - rejection of books of accounts - Whether there is any single evidence on record to prove that the assessee has made any sale out of books? - HELD THAT:- AO basis the yield working of raw material and other input cost has determined the expected level of production of finished goods and comparing the said figure and figures of sales shown by the assessee has held that the differential is nothing but sales which has been effected by the assessee outside the books of accounts. Shortage has been equated with undisclosed sales basely solely on yield ratio. In our view, no doubt yield ratio is one of the guiding factors which needs to be considered for determining appropriate level of production but at the same time, to equate production with sales, there has to be something more in terms of positive evidence in form of unrecorded sales realization which has not been entered in the regular books of accounts which is apparently absent and not available on record. Alternatively, the explanation of the assessee that being food items, it is inherent that there would be pilferage, wastages and more importantly, there is a expiry date of three months under FSSAI Act beyond which these foods items are not worthy of human consumption and have to be taken off the shelves needs to be rebutted which has again not happened in the instant case. There is no justifiable basis for making the addition and the same is hereby directed to be deleted. Addition on account of excess consumption of Diesel - HELD THAT:- As assessee started production of Gajjak during the year and for the purposes, has used diesel bhatties and therefore, comparison of diesel consumption via-a-vis last year is not correct in absence of suitable adjustments which has not happened in the instant case. Assessee has produced the invoices for diesel purchase in respect of which the payments have been made through the banking channel. There is thus complete documentation in support of diesel consumption which is placed on record and no defect has been pointed out by the AO. In any case, where the overall books of accounts have been rejected, there is no basis for making the individual addition relying on the same books of accounts and all the AO is required to do is estimate appropriate level of profit based on some rational basis and which has not happened in the instant case. Addition is hereby directed to be deleted. Assessee appeal allowed.

  ---

• 2023 (6) TMI 1021
  Credit for TDS denied - transfer of business - TDS credit has been claimed by the assessee in its original as well as revised return of income - claim denied as TDS credit did not appear in Form 26AS of the assessee - Appellant transferred business of generation, transmission and distribution of electricity to another company Adani Electricity Mumbai Ltd. (AEML) vide share purchase agreement. Maharashtra Electricity Regulatory Commission (MERC) transferred the distribution license from the Appellant to AEML - substitution of name of Rinfra in place of AEML who received the amount as trustee on behalf of Rinfra. HELD THAT:- As deductor, i.e., Tata Power Company has refused to issue a certificate in favour of the assessee or comply with the Rules u/s.37BA due to whatever perceptions and apprehensions they had. There is no provision or mechanism also to enforce such certificate from Tata Power Company. Here is the case the deductor, i.e., Tata Power Company have refused to issue certificate or rectify the form and when assessee had made specific request, then instead they stated that they are not in a position to issue TDS certificates in favour of the assessee based on AAR order which is applicable to AEML and RInfra who are party to it. Instead Tata Power Company have requested AEML to get directions from the Income Tax department asking TPC to issue TDS certificate in favour of RInfra. When the same was done, then again officials from Tata Power Company stated that they have already made the payment to AEML, deducted and deposited the tax thereon and filed the TDS return accordingly and if a revised TDS return is filed and a revised TDS certificate in favour of Rinfra would be issued, they would receive queries from the Income tax department resulting in unnecessary litigation. They suggested alternatives to the assessee in their email, that AEML may declare in their return of income that TDS pertains to Rinfra and Rinfra may claim TDS in their assessment following the provisions of section 199.Rinfra/ AEML may approach the AO/CIT(TDS) for Issue of direction to TPC for issue of revised TDS certificate in the name of Rinfra. But Rinfra Official suggested that alternatives were not viable and the only legal and proper course of action was that TPC should revise the TDS return and substitute the name of Rinfra in place of AEML who received the amount as trustee on behalf of Rinfra A Form or a Rule is an aid to implement the provisions of the main enactment, i.e., Income Tax Act and the procedure prescribed under the Rule is to facilitate and implement tax. Rules and Form cannot be interpreted so as to make the main provisions of the Act subservient to such Rules or forms prescribed therein to make the procedure cumbersome and lead to grueling situation to comply like here in this case or lead to denial of credit which assessee is otherwise eligible under the provisions of the Act. There is no prescribed form available, at least nothing has been brought to our knowledge either under the Rules or provided by the CBDT. To make such rectification, if deductor fails to issue certificate or comply with the provisions of the Rules, other than deductor revising its Form 26AS online which due to many circumstances and apprehensions deductor may not do it. In such genuine cases, at least Assessing Officer should be authorised or empowered to examine the matter and give the credit of TDS to which assessee is eligible for it. Herein in this case, it is not even disputed by the department that assessee is entitled for credit for TDS. Either some mechanism should be devised by the department to address such grievances in such circumstances or authorised the Assessing Officer to examine it and allow; or the strict conditions provided in Rule 37BA should be read in the provisions of Section 199(1) to make it workable in genuine cases where department is sure no double credit is allowed or claimed. We direct the AO of the assessee to ensure that credit of the TDS amount is given to the assessee. Accordingly, the order of the ld. CIT (A) is confirmed and the appeal filed by the Revenue is dismissed.

  ---

• 2023 (6) TMI 1020
  Unexplained investment u/s 69 - Agreement to sell which is on a plain paper has been questioned by the AO as well as the ld CIT(A) - HELD THAT:- We are intrigued by the fact that the agreement to sell relates to transfer of an immoveable property wherein 90% of the agreed consideration has already exchanged hands at the time of entering into such agreement and at the same time, the handing over the possession has been deferred to the time of registration and which has eventually not happened in the instant case and thus, prima facie reflects a situation which is apparently one-sided at the cost of another party. Having said that, it is relevant to determine the enforceability of such agreement to sell against the assessee in terms of the Indian Contract Act as well as the applicability of the provisions of Transfer of Property Act, Indian Registration Act and Indian Stamp Act. The explanation of the assessee explaining the source of cash payment have to be tested on the touchstone of enforceability of such agreement to sell as per relevant statue and only where it is determined that such an agreement to sell is enforceable in hands of both the parties and/or the parties have actually taken certain steps to enforce their respective rights emanating from such agreement to sell, the same can act as a relevant and credible evidence in support of the explanation of the assessee. As no explanation of the assessee in this regard is given it would be appropriate that the matter is set-aside to the file of the AO to examine the same after providing reasonable opportunity to the assessee - Ground of assessee allowed for statistical purposes.

  ---

• 2023 (6) TMI 1019
  Validity of proceedings initiated u/s 153C - HELD THAT:- There is no tax effect involved in the years under consideration since the assessment u/s 153C r/w section 143(3) has been concluded at the returned income. However, as per the assessee, adjudication on the validity of initiation of proceedings u/s 153C is relevant for the subsequent assessment year(s), which are currently pending before the learned CIT(A). We find that adjudication on the validity of initiation of proceedings u/s 153C in favour of either party, in the present appeals, will have no impact on the total assessed income, as the AO has accepted the total income as declared by the assessee in his return of income without making any addition. Thus we are of the considered opinion that the various grounds raised by the assessee challenging the initiation of proceedings under section 153C of the Act, in the present appeals, are rendered academic and therefore, are kept open. The findings of CIT(A) upholding the initiation of proceedings u/s 153C do not impact the computation of the total income of the assessee. Such being the circumstances, we are of the view that the entire exercise by the learned CIT(A) in adjudicating the various grounds raised by the assessee on the validity of initiation of proceedings under section 153C of the Act is merely academic, with no other relevance for the assessment years under consideration. We direct that the findings of the learned CIT(A), in the impugned orders, on the validity of initiation of proceedings u/s 153C of the Act shall not have any precedential value while deciding appeal(s), which are currently pending before the learned CIT(A). Decided against assessee.

  ---

• 2023 (6) TMI 1018
  Addition of Sundry Creditors u/s 41(1) - AO estimated adhoc addition of 10% of the amounts shown under the head - HELD THAT:- Nowhere the AO, or Ld. CIT (A) have discussed as to what was the details filed by the assessee before the AO CIT (A). Merely because there are Sundry Creditors appearing in the balance sheet, then it does not entail invoking of provision of section 41(1) automatically. There has to be something on record that there is a cessation of liability and the entire conditions precedent for invoking section 41(1) has to be fulfilled. There is no scope of any kind of adhoc or estimated addition u/s. 41(1). No infirmity in the order of the Ld. CIT (A) in deleting the said addition. Appeal of the Revenue is dismissed.

  ---

• 2023 (6) TMI 1017
  Payment of on-money in cash - not extending an opportunity to the appellant to cros xamine witnesses relied upon - AO on the basis of information received from the Directorate of Investigation that the assessee has been identified as one of the persons who had paid on-money in cash to M/s Runwal Homes Private Limited for the purchase of property, initiated proceedings u/s 147 - HELD THAT:- As evident from the record, when summons were issued by the AO to the assessee as well as the builder, Mr. Subodh Runwal, calling for the details and explanation in support of the on-money paid/received, none of them replied to the summons and therefore, the assessment was completed on the basis of material available on record. Thus, when the person, whose statement was relied upon to make the addition in the hands of the assessee, does not appear in response to the summons, the submission of the Revenue that the assessee chose not to avail the opportunity to cross-examine the builder provided by the AO appears to be a mere empty formality. As difference in the price of the property, which was considered as on-money paid in cash is based on sale value as per the email, however, there is no evidence available on record as to between whom this email correspondence took place. Merely providing the evidence relied upon by the AO cannot substitute the fundamental requirement of providing the opportunity for cross-examination. Hon ble Supreme Court in I.C.D.S. Ltd. [ 2020 (2) TMI 1424 - SUPREME COURT] held that where the issue involved was about not extending an opportunity to the appellant to cross-examine witnesses relied upon by AO, the entire matter would be considered by First Appellate Authority afresh by giving fair opportunity to both sides to espouse their claim. We set aside the impugned order and restore the matter to the file of AO for de novo adjudication after providing the assessee with all the documents, which were relied upon in support of the impugned addition. Further, the AO is directed to grant the opportunity to cross-examine the party on whose statement reliance was placed. Grounds raised by the assessee are allowed for statistical purposes.

  ---

• Customs

• 2023 (6) TMI 1016
  Revocation of CHA license - forfeiture of security deposit - penalty - Availment of ineligible duty drawback without realization of any export proceeds - misuse of Import Export Code (IEC) of various exporters for fraudulent exports of low quality shoe uppers, etc. - HELD THAT:- Admittedly, there are two inquiry / investigation reports on record - one as early as in 2010 by the DRI authorities, based on which the licence of the appellant was kept under suspension. If this is considered as the inquiry report, then, the order of revocation vide impugned Order-in-Original which was passed in 2013 is clearly beyond the time-limit prescribed under the statute - If the second / other inquiry report by the Assistant Commissioner is considered, which is in November 2012, then, again, the revocation order vide impugned Order-in-Original in March 2013 is also beyond the prescribed ninety-day time limit, which is against the principles underlying the statute. The sole basis for the revocation is stemming out of the second inquiry report wherein, apparently, only statements are relied upon, which are no doubt uncorroborated. No other incriminating documentary evidence is made available on record nor has the outcome of investigation been placed on record by the Revenue to implicate or even suggest the active role of the appellant. Further, the Assistant Commissioner-Inquiry Officer has applied the Regulations and alleged violation of the same based on the statements per se - thus, the impugned order has been passed beyond the time period allowed under the Regulations and therefore, the order as well as the consequential revocation is held to be not in accordance with law, for which reason the impugned order insofar as it relates to the revocation stands set aside. The forfeiture of entire security deposit is disproportionate, also since there is no specific allegation as to the involvement of the appellant; rather, the culprits have clearly been identified as Mr. M. Vijay Anand and Mr. B. Mohan, who, admittedly, having misused the fake IECs, it is they who are actually liable for any penalty - It is deemed fit that a nominal amount of Rs.10,000/- could be forfeited out of the security deposit, but not the entire amount of Rs.75,000/- - appeal is allowed insofar as the revocation of CHA licence is concerned - appeal partly allowed insofar as forfeiture of security deposit is concerned.

  ---

• 2023 (6) TMI 1015
  Confiscation of imported goods - rough diamonds - composition of lots/parcels and the reasoning for recourse to the residual method of valuation after rejecting the declared value under rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - HELD THAT:- The intention of circular no. 53/2003- Cus dated 23rd June 2003 of Central Board of Excise and Customs (CBEC) in aligning customs procedure to conform to the global crusade against conflict diamonds but such a peremptory direction which deprives an adjudicating authority of inherent latitude in exercising powers conferred statutorily is certainly poor, even if wellintentioned, execution of such intent. After all, statutory exercise of power, in adjudication process, is also an acknowledged check on policy formulation that transcends legislative intent which should have been reasonably overcome, in overriding circumstances for conformity with the comity of nations, only by amendments in statute - A circular of an attached office of the Central Government to its subordinate formations is not to be presumed as articulation even of policy intent let alone legislative intent when it circumscribes statutory conferment. In the light of failure to contest the easing of restrictions on re-export, the argument of Learned Authorized Representative for absolute confiscation is unacceptable. It is quite possible that purposeful misdeclaration of value by importers of articles, such as rough diamonds , may warrant recourse to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 but the peculiarities of a trade upon which customs officials may be entirely dependent for expertise and whose activities may, even validly, be veiled under layers of secrecy may not be found by assessing officers to be of concern but the law cannot be ignored. That supervisory level of customs officialdom may have found it necessary to bypass impediments to proper resort to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 does not make up for that want of credibility - Absent that, substituted value will fail the test of law, as it does in the present dispute, and will have to be held as untenable even at the cost of declaring such instructions, if any, as not implementable. It is not the case of the lower authorities that any prohibition, under Customs Act, 1962 or any other law for the time being in force , stood in the way of clearance for home consumption upon assessment of bill of entry; a subsequent proceeding under Customs Act, 1962 cannot rest upon a prohibition that, at the time of clearance, was not in existence for resort to section 124 of Customs Act, 1962 proposing confiscation of goods under section 111 of Customs Act, 1962 - To postulate that empowerment to confiscate, under section 111(m) of Customs Act, 1962, on the ground that misdeclaration of value empowers resort to valuation provisions of the statute, intended for specific purpose, is to put the cart before the horse and effect before cause. The orders of the lower authorities leave no room for doubt that there is no difference in rate of nil duty, corresponding to either of the tariff items declared or substituted, in dispute, with the implication that the Customs Tariff Act, 1975 is not germane to the impugned goods - It is also not the case of the lower authorities that any other law, requiring declaration of value in bill of entry for any purpose other than assessment to duty, has been breached insofar as the present dispute in concerned. In such circumstances, section 14 of Customs Act, 1962, or any Rules framed thereunder, is not of relevance to the impugned goods. Consequently, the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 cannot be brought to bear on the impugned goods. The importer may, if it chooses to, exercise right to re-export without any restraint on the goods subject to compliance with section 50 of Customs Act, 1962. Upon seeking of re-export, the goods shall be released to them within a period of one month. The appeal of Revenue, devoid of merit and substance, is dismissed.

  ---

• 2023 (6) TMI 1014
  Classification of imported goods - Low Aromatic White Spirit - to be classified under the CTH 2710 1990 or under the CTH 27101239 as Solvent 145/205 as per IS 1745:2018. HELD THAT:- As per the Test Report details furnished, the IBP of the impugned goods is 162 degree Celsius and FBP is 194 degree Celsius, whereas as per the IS standard 1745 the minimum IFB should be 145 degree Celsius (IBP) and maximum FBP should be 205 degree Celsius respectively. The Appellant stated that the IFB 162 of the impugned goods is much higher than the minimum IFB requirement of 145 as per the IS 1745 standard. The Appellant stated that when the Test Reports differs from the standards prescribed, the goods cannot be held to satisfy the requirements under IS 1745 standards meant for CTH 2710. Hence the impugned goods cannot be categorized as Light Oils and Preparations as per the CRCL Test report - there are merit in the argument of the Appellant. None of the above said parameters are matching with the minimum or maximum standards fixed as per IS 1745 standards. There is a vast difference between the minimum IFB and maximum FBP fixed as per IS standard 1745 and the result received for the impugned goods. Hence, the impugned goods cannot be classified under CTH 27101239 as per the comparison between the Test reports received from CRCL and its comparison with the IS Standard 1745 parameters required. The condition as prescribed in the Note 4 has not been verified in the CRCL report. It is the primary condition required to be tested for classifying any goods under CTH 2712. From the said Note, it is evident that for purpose of sub heading 2710.12, the light oils and preparations are those of which 90% or more by volume (including losses) distil at 210 degree Celsius, but the test report is silent about it. AS per the Test Report, the FBP is 194, which means 100% of the goods evaporate at 194 degree Celsius itself whereas for classification of the goods as solvent 145/205 under CTH 27101239, the requirement as per Note 4 is that only a maximum of 90% should evaporate at 205 degree celsius. Since the entire 100% of the goods evaporate at 194 degree celsius itself, the goods are not meeting the requirements as specified under Chapter Note 4 of Chapter 27, accordingly we hold that the impugned goods cannot be classified under CTH 27101239 as claimed by the Revenue. When the goods do not satisfy the criteria fixed under Note 4 of Chapter 27, the goods cannot be classified under CTH 27101239. The remaining option available in the Tariff is to classify the same under CTH 27101990 which is the only residuary entry available for classification - the Test Reports of CRCL Kolkata does not provide any material evidence for classification of the said goods under CTH 27101239. Since the said goods are rightly classifiable under the CTH 27101990, the classification adopted by the Appellant is in order and hence the goods are not liable for confiscation. Appeal allowed.

  ---

• 2023 (6) TMI 1013
  Refund of SAD - time bar - delay of one and two days in filing the two bills of entry - whether the refund claims filed by the appellant are barred by limitation of one year from date of payment? - HELD THAT:- In terms of Section 9, the date of deposit of duty (SAD) being 26.08.2011 and 25.08.2011. The period of one year shall commence on 27.08.2011 and 26.08.2011 respectively. Accordingly, the one year shall be completed on 27.08.2012 and 26.08.2012. In this fact, the first refund claim since filed on 27.08.2012 is well within 1 year and in respect of second refund claim though the one year is completed on 26.08.2012 but being Sunday the filing of refund on Monday I.e. 27.08.2012 is well within the time limit prescribed in terms of Section 10 of General Clauses Act, 1897. As regard the computation of 1 year that from the date of commencement of the year shall complete on the same date in the next year, this has been held by Hon ble High Court of Bombay in the case of Skoda Auto Volkswagen India Pvt. Ltd [ 2021 (3) TMI 542 - BOMBAY HIGH COURT] . In view of undisputed settled legal position in terms of General Clauses Act, 1897 read with decision of Hon ble Bombay High Court, the appellant s both refund claims were filed within the stipulated time period of one year hence the same are not time barred. Appeal is allowed.

  ---

• 2023 (6) TMI 1012
  Valuation of imported goods - imported goods were sold to unrelated buyers in India at a higher price - whether the value arrived by using the new process is acceptable as Customs Value on which Customs Duty is required to be paid in terms of Section 14 of the Customs Act, 1962 read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. HELD THAT:- The CBIC has issued a Circular no. 5/2016 dated 9.02.2016 on the issue of Procedure for investigation of related party import cases and other cases by the Special Valuation Branches . On examination of the contents of the application as well as arguments put forth during the course of hearing I find that the CBIC Circular No. 5/2016-Customs dated 9th February, 2016 is relevant for all related party transactions Moreover, CBIC circular 5/2016 dated 09.02.2016, as stated in para 2 therein, has taken cognisance of WCO s Guide to Customs Valuation and Transfer Pricing (June 2015) which recognises TPuS method, however there is no separate dispensation provided in the CBIC circular to this method in related party transaction cases. This CBIC circular remains applicable on equal footing to the importer following TPus method as per WCO guide as well as to any other related party importer. It is observed that the Rule 10 of CVR, 2007 stipulates addition of price elements on account of certain goods and/or services to the transaction value ill the correct transaction value. CBIC Circular provides that the transactions where any payments are sought to be made which are in the nature of instances given at (a) (Rule 10(1) (c)), (b) (Rule 10(1)(d)) and (c) (Rule 10 (1)(e)) above, shall be examined with respect to the need for S VB investigations. The applicant has stated that they are not making any such payments (in the form of royalty, license fee etc.) which are required to be added in order to arrive at the transaction value - the application of Rule 10 is not warranted due to absence of financial flows on account of any such cost elements. TPuS method clearly shows that the proposed transaction value is sum total of manufacturing cost (direct cost indirect cost) and administrative expenses, other expenses and profit represented by CAR indicating absence of any financial flows which can fall under the scope of Rule 10(1)(c), Rule 10(1)(d) and Rule 10 (1)(e). The applicant s proposed valuation method, Transfer Pricing System and Steering Concept (TPuS) method also known as Resale Price method/Resale Minus method, for determination of transaction value under Section 14 of the Customs Act 1962 for goods proposed to be imported from the related party suppliers, after compliance with the procedure prescribed in the CBEC (now CBIC) Circular No. 5/2016 Customs from F. No. 465/12/2010-Cus V dated 09/02/2016 on the issue of Procedure for investigation of related party import cases and other cases by the Special Valuation Branch , is consistent with Rule 3 as well as Rule 7 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - This ruling will apply prospectively only to the TPuS method proposed to be adopted by the applicant for transaction value determination w.e.f. 1 st May 2023.

  ---

• 2023 (6) TMI 1011
  Classification of goods proposed to be imported - Processed API Betel-nut product known as Supari - Processed Betel-nuts unflavoured chemically processed Supari in small cut-pieces (not split) - classifiable under Chapter heading 0802 80 or 2106 90 30? - HELD THAT:- In this chapter, the entry 0802.80 refers to areca nuts, used chiefly as a masticatory. Thus the Explanatory Notes to Chapter-I indicate that chapter I covers nuts intended for human consumption (whether as presented or after processing); whether they are fresh, frozen (whether or not previously cooked by steaming or boiling in water) or dried (including dehydrated, evaporated or freeze-dried) and whether the nuts could also be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled. The processes to which the subject goods would be subjected to, as described in their submission, appear more of a process for additional preservation or stabilization and/or to improve or maintain their appearance only and they retain their original character. In this context the decision of the Hon ble Calcutta High Court in the case of Killing Valley Tea Co. v/s Secretary to State [ 1920 (5) TMI 1 - CALCUTTA HIGH COURT] is worth mentioning, wherein it was held that a tea leaf remains the same even after being subjected to mechanical processes like withering, crushing, roasting, fermenting etc. is a definite pointer to the principle that needs to be applied for classification in such matters. he observations of the Hon ble Supreme Court in the case of M/S. Crane Betelnut Powder Works [ 2007 (3) TMI 6 - SUPREME COURT] , that the process of cutting betel nuts into small pieces and addition of essential/non-essential oils, menthol, sweetening agent etc. did not result in a new and distinct product having a different character and use also an extension of the same line of reasoning. However, after amendment by insertion of a note in chapter 21 of Central Excise Tariff these decisions are of no relevance at present in deciding classification matters under the Customs law. The claim of applicant that these processes are very crucial for changing the essential characteristics of raw tendered betel nuts with the resultant betel nut product which, as argued by the applicant, is chemically processed and is most appropriately classifiable under CTH 2106 90 30 falls flat solely due to the fact that these are carried out to preserve or to stabilize and/or to improve or maintain their appearance, and in fact they aid to retain the character of betel nut. In my opinion the applicant has failed to substantiate their claim that the subject goods are chemically processed. Notwithstanding the claim of the applicant to any chemical process discussed above it is observed that the resultant product remains the same betel nut may be with variation in arecoline and tannin contents. Due to this no preparation of betel nut has come in to existence requiring classification under chapter 21. Hence it is not found that the applicant s recourse to and reliance placed on the research paper as legally acceptable for deciding the classification of subject goods. HSN Explanatory Note under heading General to chapter 8 provides that fruit and nuts of this Chapter may be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled. Further, it is also provided that the addition of small quantities of sugar does not affect the classification of fruit in this Chapter. Thus, the HSN explanatory notes to Section I indicate that chapter 8 covers nuts intended for human consumption (whether as presented or after processing); whether they are fresh, frozen (whether or not previously cooked by steaming or boiling in water) or dried (including dehydrated, evaporated or freeze-dried) and whether the nuts could also be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled - it is thus concluded that the processes described by the applicant do not necessitate the subject goods to be moved from the purview of chapter 8 to bring under the ambit of chapter 21 for the purpose of classification. Thus, the subject goods placed before me for consideration, i.e., 1) Processed API Betel-nut product known as Supari and 2) Processed Betel-nuts unflavoured chemically processed Supari in small cut- pieces (not split) merit classification under chapter 8 of the Customs Tariff, and more appropriately, under the heading 0802, as under: Processed API Betel-nut product known as SUPARI (Not Prepared): 0802 80 10. Processed Betel-nuts unflavoured chemically processed SUPARI in small cut pieces (Not split): 0802 80 90.

  ---

• 2023 (6) TMI 1010
  Application for recalling of Ruling - Classification of goods - Vitamin Premixes - classifiable under Heading 23.09 or under Heading 29.36 - rectification of mistake - Section 28I (2) of the Customs Act, 1962 - HELD THAT:- The interesting fact is the applicant has approached the Authority only in respect of the current application and has sought to recall, modify, rectify or make the ruling void ab-initio. They claimed the applicability of the case laws in respect of other cases also and the same case laws were relied in most of them. However, they have not sought to make the rulings in those cases void ab-initio as most of them are favorable to them. This clearly reveals that the applicant has not approached this forum with clean hands and have tried to twist facts and laws to circumvent the ruling. There are no merit in this application made by the applicant for modification of the Ruling under Regulation 21 of the CAAR, 2021 vide letter dated 06.09.2022 and the same is rejected.

  ---

• Insolvency & Bankruptcy

• 2023 (6) TMI 1009
  CIRP - assignment of trademark in favor of petitioner - Infringement of seven trademarks, having proprietary rights acquired through a deed of assignment - Refusal of grant an order of injunction restraining Duckbill from using the marks - serious allegation of fraud, misrepresentation and suppression of facts and cheating - HELD THAT:- There is every reason to believe that as a statutory functionary the liquidator acted regularly in the usual course of his duties and found fourteen registered trademarks in the name of the company. He found nothing in the records to suggest that out of those trademarks, seven had been transferred in 2017 - What is most significant is that these marks were assigned by the father-inlaw on behalf of the company to her daughter-in-law for only Rs. 7,000/- whereas about rupees 5 crores have been paid by Duckbill to purchase these marks. The purported deed of assignment dated 3rd April, 2017 was sought to be lodged with the Registrar on 18th January, 2022 for registering the assignment. This application to record this assignment was made by filling up a form RM-P issued by the Trademark registry. This form provides for an application for post registration changes in a trademark. In the garb of making this application Poulami Mukherjee tried to record with the registry that Duckbill had assigned the seven trademarks to her (see page 168 of the application CAN 2 of 2023) and managed to get the assignment registered on 14th June, 2022. Under Chapter V of the Trade Marks Act, 1999 the right of assignment and transmission is vested in the registered proprietor. In case of these seven marks, the registered proprietor was Duckbill, the custodian of whose assets was the liquidator. So the real proprietor was the liquidator - a deliberate attempt was made by Poulami and her father-in-law to divest Duckbill of its principal assets that is the trademarks and misappropriating them, by backdating a deed of assignment to 2017 and then filing it with the trademark registry five years later. This appeal is dismissed by vacating our interim order dated 24th January, 2023. The impugned judgment and order is affirmed by substituting therein the reasons in this judgment and order.

  ---

• 2023 (6) TMI 1008
  Condonation of delay of 14 days in filing appeal - Period of Limitation specified under Section 61 (2) of the I B Code, 2016 - HELD THAT:- In the present case, from the date of Certified Copy, being made ready Viz. 02.02.2023 and the date of filing of the instant Appeal, on 19.03.2023, the instant Appeal, came to be filed on 45th Day. The contention of the Respondent is that, the impugned order, came to be passed on 31.01.2023, by the Adjudicating Authority / Tribunal, and the time starts from 01.02.2023 and when the instant Appeal, came to be filed on 19.03.2023, the 46 Days, had elapsed, which is impermissible, because of the fact that an Appeal, is to be filed, within 45 days (30 + 15 = 45 days), being the Outer Limit, and further that, there is no provision in the I B Code, 2016, to Condone the Delay, beyond the period of 15 days, ofcourse, after the expiry of 30 days, mentioned in Section 61 (2) of the I B Code, 2016. As a matter of fact, the word requisite, means properly required, and it is for the Appellant, to show the necessity that no part of delay, beyond the prescribed period, is due to his Default. Taking note of the primordial fact that the Certified True Copy of the Impugned Order, was made ready by the Office of the Registry of the Adjudicating Authority, on 02.02.2023 (Impugned Order, came to be passed on 31.01.2023), and the instant Appeal, came to be filed on 19.03.2023, before the Office of the Registry, this Tribunal, comes to an inevitable, inescapable and irresistible conclusion, by excluding the time taken by the Adjudicating Authority / Tribunal, to prepare an Order, that the instant Appeal, came to be filed on 45th day (30 + 15 = 45 Days), within the Permissible Time Period, and viewed in that perspective, Condones the Delay of 15 Days (after the expiry of 30 days, vide Section 61 (2) of the Code), that has occurred, in preferring the instant Appeal, before this Tribunal, by accepting the explanation offered, on the side of the Petitioner / Appellant. Petition allowed.

  ---

• 2023 (6) TMI 1007
  Rejection of Resolution Plan - Section 31(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Having observed that the Resolution Plan preferred by one of the Resolution Applicants, required prior approval of RBI, the Adjudicating Authority, while rejecting the Resolution Plan passed an order for Liquidation. The Appellant herein is the Interim Resolution Professional (IRP) whose main grievance is that while ordering Liquidation of the Corporate Debtor, the Adjudicating Authority had appointed the 2nd Respondent herein as the Liquidator contrary to the Statutory Provisions, by disqualifying the Appellant under Section 34 (4)(a) of the Code. In Company Appeal (AT) (CH) (Ins) No. 181 of 2022 [ 2023 (6) TMI 505 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI ] has set aside the rejection of the Resolution Plan by the Adjudicating Authority holding that this Tribunal is of the considered view that the Adjudicating Authority ought not to have rejected the Resolution Plan, more so, when the principal objective of the Code is that revival of the Corporate Debtor and Resolution . Liquidation ought to be the last resort, keeping in view the scope and spirit of the Code. As Liquidation itself is set aside, this Company Appeal is rendered infructuous and for all the aforementioned reasons, the present Company Appeal is dismissed as an infructuous one - apepal dismissed.

  ---

• 2023 (6) TMI 1006
  Maintainability of Application for CIRP filed under Section 9 of I B Code - Sub-contractor of the main contractor - Contractual Relationship between the Appellant and the Respondent or not - privity of contact - whether proceedings under IBC can be sustained on the basis of a promissory estoppel? - HELD THAT:- IEDCL had sub-Contracted the work to the Appellant / Operational Creditor herein. IEDCL is one of the subsidiaries of IL FS Solar Power Limited (ISPL)/ the main Contractor which had entered into a contract with Embassy Energy Private Limited /the Respondent herein for operation of the Solar Power Project. It can be seen from the Agreement for Civil Works and Construction entered into between Embassy Energy Private Limited/ Respondent , the owner and ISPL that except for Clause 6.1.1 which deals with the name of the sub-Contractor, any Contractual Obligation with the Appellant herein is not established by way of any Written Agreement. From the agreement it is clear that a sub-Contractor shall not have any Contractual Relationship with the owner and shall not be entitled to prefer any Claims against the owner. The material on record establishes that there is no Operational Relationship between the Appellant and the Respondent herein and it is pertinent to mention that the Respondent is not even a party to the Agreements entered into between ISPL and IEDCL and ISPL and the Appellant/Operational Creditor. It is clear from the record that there are no goods and services supplied directly by the Operational Creditor to the Respondent herein and therefore it cannot be said that there is any Operational Debt between the Operational Creditor and the Respondent herein. Merely because the owner had given a bona fide assurance that if IEDCL fails to pay the amount they would pay the same on their behalf, the amount will not fall within the definition of Operational Debt as defined under Section 5(21) of the Code. The Hon ble Supreme Court in the matter of Essar Oil Limited Vs. Hindustan Shipyard Ltd. Ors. [ 2015 (7) TMI 373 - SUPREME COURT] , has held that when a principal employer grants a contract to a Construction Company the sub-Contractors cannot sue the principal employer for any issues, if payable, as there is no privity of contract between the sub-Contractors and the principal employer. This Tribunal is of the considered view that any promise made in the letter dated 17.10.2018, specifically having regard to Clause 6.1.4 of the Agreement for Civil Works and Construction entered into between Embassy Energy Private Limited and ISPL, whereby and whereunder, it was clearly specified that the sub-Contractor, would not have any contractual relationship with the owner and would not be entitled to prefer any Claims against the owner, these amounts claimed cannot fall within the definition of acknowledgement of debt in the absence of any contractual relationship between the Operational Creditor and the Respondent herein. The Respondent is a commercially solvent Company and the scope and objective of the Code is not to send a commercially Solvent Company to Insolvency specifically having regard to the facts of the attendant case on hand - Appeal dismissed.

  ---

• PMLA

• 2023 (6) TMI 1005
  Money Laundering - alleged collection of huge amount of money from the public by M/s. Fine Indisales Private Limited and of misappropriation thereof - HELD THAT:- The Court below could have issued a bailable warrant at that stage if it was not inclined to grant time or had any reason to believe that the Petitioners were avoiding appearance, but directing issuance of N.B.Ws. straight away cannot at all be held to be justified in the facts and circumstances of the case. It is stated that the Petitioners were engaged in marketing jobs at different places of Raipur and Mumbai and therefore, could not personally appear. This is a reasonable explanation for non-appearance, which ought to have been considered by the Court below. Even the fact that the Petitioners were never arrested during investigation and prosecution does not allege that they had not cooperated with the investigating agency, does not seem to have been considered by the Court at all. Therefore, there seems to be no justified reason to take coercive steps against the Petitioners for their appearance. This Court is strongly persuaded to hold that the impugned order in so far as it relates to the direction for issuance of N.B.W. cannot be sustained in the eye or law - Petition allowed.

  ---

• 2023 (6) TMI 1004
  Seeking enlargement on Bail - Money Laundering - Scheduled offences - swindling of money invested by the Government in a dubious manner - discrepancies including diversion of APSSDC funds through various shell companies - diversion of Government funds - Section 45 of the PMLA - HELD THAT:- It has been revealed about diversion of major funds to suspicious entities done by SEPL under the pretext of supply of software/ hardware/materials/services. It is alleged that in reality, the supply of such goods and services was not done. On examination of data and analysis of bank account statements shows that about Rs. 56.00 crores, out of the funds received from APSSDC, was transferred by SEPL to the entity ACI, and the said amount was diverted through a web of shell entities by way of layered transactions. The petitioner had knowledge that no goods or services were being provided by the shell companies to DTSPL. An amount of Rs. 241.00 crores was received by SEPL from DTSPL and a significant part of the said government funds were diverted through SEPL and complex web of shell companies under the guise of supply of software/ hardeware/materials/services - government funds were diverted by DTSPL, belonging to Vikas Khanvelkar, through SEPL and a web of shell companies, and in lieu of transfer of funds, cash was provided by entry operators who were managing the shell companies, and the said cash was moved from entry operators to Suresh Goyal. In the said diversion of government funds, the petitioner, Suman Bose and Vikas Khanvelkar played pivotal roles. Hence, the petitioner committed the offence of money laundering under Section 3 of the PMLA punishable under Section 4 of the PMLA. In the aforesaid identical case in SANJAY RAGHUNATH AGARWAL VERSUS THE DIRECTORATE OF ENFORCEMENT [ 2023 (4) TMI 874 - SUPREME COURT] , lodging of the prosecution complaint is sequel to the registration of the FIR in the predicate offence way back in the year 2021. In the present case on hand also, no charge sheet has been filed in the predicate offence for the last more than 15 months. The petitioner herein has been in jail from 04.03.2023. It is the first offence insofar as the petitioner is concerned. There are no other complaints registered as against him. The said argument gives room to say that second condition in clause (2) of sub-section (1) of Section 45 of the PMLA would be satisfied. In the aforesaid circumstances, continued incarceration of the petitioner is not justified. In respect of a query raised by the investigating agency, the petitioner herein gave response to each and every question that has been asked for. Prosecution complaint was also filed on 01.05.2023. The petitioner was arrested on 04.03.2023 and since then he is in judicial custody. When time and again, petitioner is continuously attending before the investigating agency and co-operating with the investigation, this Court is of the opinion that it is not necessary to detain the petitioner in jail further. In view of the aforesaid facts and circumstances, this Court feels that request of the petitioner for grant of bail can be considered, however, on certain conditions. The petitioner shall be enlarged on bail on his executing a personal bond for a sum of Rs. 50,000/- with two sureties each for the like sum to the satisfaction of the Additional Sessions Judge-cum- Metropolitan Sessions Judge, Visakhapatnam - the Criminal Petition is allowed.

  ---

• Service Tax

• 2023 (6) TMI 1003
  Levy of Service Tax - Business Auxiliary Service - commission / remuneration received by the Respondent Assessee from its parent Company - Online Information and Database Access or Retrieval Services - payment of Annual License fee to its parent Company - period prior to 2008. Business Auxiliary Service - commission / remuneration received by the Respondent Assessee from its parent Company - HELD THAT:- Both the parties agree that the issue is covered by the decision of this Court in the case of Respondent Assessee itself by the judgment in THE COMMISSIONER SERVICE TAX-VII VERSUS M/S. WARTSILA INDIA LTD. [ 2018 (9) TMI 1521 - BOMBAY HIGH COURT ] wherein this Court has held that services of procuring orders and passing it to its overseas principal and receiving payments for the same in foreign exchange is an activity of export of services covered by the Export of Services Rules, 2005 - the Appellant Revenue has not brought to attention that the decision of this Court, referred to hereinabove, is stayed - the issue raised is covered by the decision of this Court, no substantial question of law arises for consideration. Classification of services - whether annual license fee charged by Wartsila Corporation, England, for certain software licenses is covered by the entry Information Technology Software Services, which was taxable from 16th of May 2008 or whether same falls within the entry Online Information and Database Access or Retrieval Services as contended by the Revenue? - HELD THAT:- The Appellant Revenue has accepted the classification of the said service under the head Information Technology Software Service post 2008. In our view, if the Appellant Revenue has accepted the classification of entry under the head Information Technology Software Service for the period post 2008, then it cannot be contended by the Appellant Revenue that pre 2008 that very service falls under the entry Online Information and Database Access or Retrieval Services . The Tribunal in its order has given a finding of fact that the reasoning of the original authority is bereft of any examination of the taxable entry connected with the definition and bereft of even alluding to the activities of the overseas entity for ascertainment of delivery of service to the Assessee. It is settled position, by the ratio of decisions of the Apex Court in the case of Balaji Enterprises vs. CCE, [ 1997 (5) TMI 108 - SUPREME COURT] and decision of this Court in the case of Indian National Shipowners Association [ 2009 (3) TMI 29 - BOMBAY HIGH COURT] , that an introduction of a fresh entry from a particular date pre-supposes that the said services were not covered by the earlier entries. It is not the contention of the Appellant Revenue that the 2008 insertion of entry Information Technology Software Services is retrospective - thus, no substantial question of law arises with respect to this question. Appeal of Revenue dismissed.

  ---

• 2023 (6) TMI 1002
  Sabka Visvas (Legacy Dispute Resolution) Scheme, 2019 - amount deposited by the petitioner no. 1 Company were proposed to be adjusted against the demand and penalties proposed to be imposed on both the petitioners and interest was also proposed to be recovered from the petitioner no. 1 Company - HELD THAT:- It is clear that the petitioners paid total amount of Rs. 19,12,196/- towards the duty and, thereafter, voluntarily made statement before the Tribunal that an amount of Rs. 5,00,000/- towards the penalty will be deposited. Thus, we are of the view that Rs. 5,00,000/-, which was deposited by the petitioners pursuant to the order passed by the Tribunal, cannot be considered towards the amount of tax due as the said amount was deposited towards the penalty. Thus from the provision of the Scheme, 2019, it is clear that where the tax dues are relatable to an amount in arrears and the amount of duty is Rs. 50,00,000/- or less then, 60% of the tax dues are required to be paid under the Scheme, 2019. Thus, relief to the aforesaid extent is available to the declarant - in view of the aforesaid Scheme, 2019, amount paid as pre-deposit at any stage of the appellant proceedings or the amount paid towards the deposit during enquiry, investigation and audit, is required to be considered while calculating the amount of tax due. It can be said that the basic object of the Scheme, 2019 is to reduce litigation by allowing the eligible assessee to make the payment of the outstanding dues after availing the relief under the Scheme, 2019. The petitioners herein made bona fide attempt to make the payment as determined under the Scheme, 2019 and the petitioners are also ready to pay the amount in question in accordance with law along with interest for the period for which the petitioners were not permitted to make the payment by the respondents. Therefore, this is a fit case for invocation of powers under Article 226 of the Constitution of India. The present petition stands allowed partly. The respondent authorities are directed to accept the payment of Rs. 1,22,318/- as specified in SVLDRS-3 along with interest @ 9% per annum from 30.06.2020 till the date of payment and grant the benefit of the Scheme to the petitioner.

  ---

• 2023 (6) TMI 1001
  Levy of Service Tax - business support service - allowing Indian Railways to use the said Railways Lines including signals and systems for transportation of Goods and passengers between Roha and Mangalore and received consideration for use of assets in terms of apportionment of revenue - HELD THAT:- From the narration, coupled with purpose of bringing the appellant into existence that was being disclosed in the Budget Speech of the Finance Minister, it can only be stated that respective states have entered into an agreement with the Railway company owned by Government of India so as to facilitate early completion of railway line with financial, infrastructural and managerial support so that project would be executed in a better ways and railway services passing through those participating states would not suffer due to administrative, finances and other constraints. Apart from this moto, creation of the Appellant company for any other purpose is not apparently visible from the work agreement or relied upon documents on which duty demand is based - there is no flow of consideration to the appellant company and to the Indian Railway even as a separate unit so as to subject it to an independent entity under the category of service. Moreover, Indian Railways is not a separate unit that of the appellant company since it is deemed owner and a part of it having larger share during the relevant period for which show cause notice was issued. Therefore, the demand of service tax on this score on the appellant company is also not sustainable. Section 65(105)(zzzq) of Finance Act defined taxable service to mean any service provided or to be provided to any person, by any other person, in relation to support services of Business or Commerce and our finding as referred above would go to say that both the appellant and Indian Railways are not separate entities, it is thus held that the Appellant s case is also covered by Board s Circular No.109/3/2009-S.T., dated 23.2.2009. The confirmation of demand by the Commissioner is unsustainable, for which the order passed by the Commissioner is required to be set aside - appeal allowed.

  ---

• 2023 (6) TMI 1000
  Rejection of refund of Service Tax paid on construction activity - appellant is recipient of service - non-commercial organization or not - HELD THAT:- With regard to the issue, as to whether, the service recipient can claim refund of service tax, the Hon ble Allahabad High Court, in the case of COMMISSIONER OF CUSTOMS CENTRAL EXCISE SERVICE TAX VERSUS M/S. INDIAN FARMERS FERTILIZERS COOPERATIVE LTD. [ 2014 (7) TMI 891 - ALLAHABAD HIGH COURT ], have ruled in affirmative. It is also noticed that Section11B(2)(e) of the Central Excise Act, 1944 permit the person who has borne the tax, can file the refund claim.The case laws cited by the learned Advocate strengthen the view that it is not necessary that the refund claim should be filed only by the service provider /manufacturer. The person who has borne the duty burden can also claim the refund. There is absolutely no restriction in the provision of law. In the present matter contractor collected the service tax separately from the Appellant and deposited to the Central Government Account - Since the Service tax has been borne by the Appellant, they have rightly lodged the refund claim. In view of the various documentary evidence and certificates and registrations of the Appellants and analysis thereof and also considering the observations of the ld. Commissioner (Appeals) on this, there is no doubt that building constructed by the Contractor is medical college building - it is also noticed that the Appellant have been granted registration of Trust under Section 12AA of the Income Tax Act which shows that Appellant have been registered for non-commercial purpose. Since the organization of the appellant itself is non-profit purpose, it cannot be said that the building is used for commercial activity. Therefore we do not agree with the finding of the Ld. Commissioner that the activity of running medical college is nothing but a commercial one and same cannot be construed as non-commercial activity/ organization. C.B.E. C. had issued Circular No. 80/10/2004-S.T., dated 17-9-2004 and in Para 13.2 clarified that the leviability of Service Tax was primarily dependent upon the use of the building or civil structure. Further, it clarified that it was to be ascertained where building or civil structure was used or to be used for commercial or industrial purpose and further required to gather the information as to whether the buildings or civil structures were being used or to be used for the purpose of making profit or not and clarified that if the building or civil structure was used or to be used not for the purposes of profit then the same are not taxable. Thus, it is settled that merely by charging a higher fees an institution cannot be treated as commercial institute accordingly the reasoning on this count of the Lower Authority is absolutely illegal and incorrect. Appeal allowed.

  ---

• 2023 (6) TMI 999
  Classification of services - Renting of Immovable Property Service - revenue sharing agreement - agreement entered by the appellant with M/s.IHCL and grant of licence to M/s.IHCL to run, conduct and operate the three hotels together with all the related facilities and business appertaining thereto from the date of execution of the agreement - demand with interest and penalty - extended period of limitation - HELD THAT:- On perusal of the licence fee, it is seen that it is fixed on the basis of the annual sales from the operations of the hotels. The term Sales is explained in clause 4.3 of the agreement. These clauses show that amount received by the appellant is in the nature of sharing of profits and cannot be considered as rent received for renting / licensing of the immovable property. On perusal of various clauses of the agreement, it cannot be said that the there is a predominant activity of renting of immovable property. The hotel along with its premises, facilities, the goodwill etc. has been handed over to M/s.IHCL - The intention is therefore not to merely permit to use the space. Further the alleged consideration is based on the annual sales. The amount paid as security deposit is only to meet the risks at the initial stages. The decision in the case of Grand Royale Enterprises [ 2022 (9) TMI 273 - SC ORDER ] would be squarely applicable as the agreement and facts are identical and the demand for the period upto 31.03.2011 cannot sustain. Whether the consideration received is for providing the taxable service of renting of immovable property? - HELD THAT:- On examination of the agreement, it is in the nature of joint venture where both parties have come together to carry out the business on a revenue sharing model. Both parties are desirous of earning profit. Generally, while in the case of providing service one party is desirous of receiving service and the other party is desirous of receiving the consideration. It cannot be said that by providing the hotel premises for conduct of hotel business and receiving the share of profit, the appellant is providing renting of immovable property service. This is because when the entire hotel along with its facilities are licensed to M/s.IHCL with an intention to receive share of the profit of the business, the transaction is more in the nature of contributing to the capital of the joint venture. The Tribunal in the case of Inox Leisure Ltd. Vs CST, Hyderabad [ 2021 (10) TMI 893 - CESTAT HYDERABAD] had occasion to analyse a revenue sharing agreement. The facts in the case are such that the appellant therein was engaged in the business of exhibiting cinematographic films across India in theatres owned by the appellant as well as taken on rent. The appellant acquired rights for exhibiting films from film distributors by entering into special license agreements for each film. The consideration for such license is paid as per the agreed percentage of box office collection and such percentage varies from distributor to distributor, movie to movie, week to week, after the release date - The Tribunal held that a revenue sharing agreement by itself does not necessarily imply provision of service, unless service provider and service recipient relationship is established. As per para 4 of the said order of the Tribunal, the demands were raised for the period 09.05.2009 to 31.03.2012 and 01.04.2012 to 30.06.2012. The Tribunal set aside the demands for both the periods observing that the agreement did not bring out any service provider and service recipient relationship. Time Limitation - HELD THAT:- The issue is interpretational in nature and there were various litigations pending before the various forums as to the issue whether such agreements in which there is a sharing of profit can be considered as agreement for renting of immovable property. So also, Explanation-I to Section 65 (105) (zzzz) excludes hotels from the ambit of Renting of Immovable Property Service - demand raised invoking the extended period cannot sustain and requires to be set aside. Appellant succeeds on the ground of limitation also. The demand cannot sustain both on merits as well as on limitation and requires to be set aside - Appeal allowed.

  ---

• 2023 (6) TMI 998
  Levy of Service Tax - business auxiliary service - commission received by the appellant from their principal client M/s. BSNL in connection with sale and purchase of SIM card - HELD THAT:- The commission received by the appellant since included in the gross sale price of SIM card sold to the customers and the total price of the SIM card suffered service tax, no separate service tax can be demanded on the commission received by the appellant. This issue is no more res- integra as per the judgments delivered in the various cases cited by the appellant - reliance placed in the case of M/S. PATWARI ELECTRICALS VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS SERVICE TAX, AURANGABAD [ 2016 (5) TMI 845 - CESTAT MUMBAI ] where it was held that the appellant is only engaged in purchase and sale of SIM cards and recharge coupons and his relation with BSNL is of principal to principal basis. The appellant cannot be termed as an agent of BSNL. The issue is no longer res- integra and stands settled in favour of the assessee - Appeal allowed.

  ---

• 2023 (6) TMI 997
  Levy of Service Tax - management or business consultant service - agreement with M/s. CIBA Switzerland whereby it was agreed to share the costs incurred towards development of enterprise resource planning (ERP) software and reporting and replace existing system used by the appellant - reverse charge mechanism - penalties - HELD THAT:- The appellant have received services from foreign based provider namely CIBA, Switzerland and BASF, SEA, Singapore towards ERP system related services. As per the revenue, the said service up to 15.05.2008 is classifiable under management or business consultant service whereas revenue itself has admitted that the same services is classified under Information Technology Software Service w.e.f 16.05.2008. This clearly shows that the service received by the appellant towards implementation of ERP system related services is falling under Information Technology Software Service . Under this admitted position by the Revenue itself the said service cannot be taxed prior 16.05.2008 under Management or Business Consultant Service therefore, the service tax demand which is disputed up to 15.05.2008 is not sustainable under Management or Business Consultant Service . The very same issue under identical fact has been considered by CESTAT Bangalore in the case of IBM INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE [ 2009 (4) TMI 314 - CESTAT, BANGALORE ] wherein it was held that it cannot be liable to Service Tax for a period prior to that. In the present case, the entire period is prior to 16-5-2008. The appellants have clearly shown that prior to 16-5-2008, even the services rendered by the appellant were excluded from the scope of consulting engineer s service and also the judicial pronouncements made it clear that they would not be covered under the management consultancy services. The service tax demand under the head of management or business consultant service for the period prior to 16.05.2008 is not sustainable - As regard the service tax liability for the period from 16.05.2008, the same has been discharged by the appellant along with interest. Hence, the same is maintained. Since the issue involved is of pure interpretational nature no mala-fide can be attributed to the appellant for non-payment or short payment of service tax, moreover, there is force in argument of the learned counsel that since the appellant was entitled for cenvat credit of the service tax demanded, entire issue is revenue neutral. The appellant has made out a strong case for wavier of penalties invoking Section 80 of the Finance Act, 1994 - penalties set aside - appeal allowed.

  ---

• 2023 (6) TMI 996
  Refund of service tax paid - taxability of Banking and Other Financial Services - remuneration received from RBI in relation to PPF management in terms of clause (v) of Section 65(12) of the Finance Act, 1994 - Applicability of exemption on services of operation of bank account when provided to a customer, under N/N. 25/2004- ST dated 10.09.2004. Whether the appellant are liable for payment of service tax in respect of services rendered by them in terms of section 65 (105)(zm) of the Finance Act, 1994? HELD THAT:- In exercise of the powers conferred by section 3 of PPF Act, 1968, the Public Provide Fund Scheme had been notified on 1.7.1968. The PPF scheme provides for any individual desirous of subscribing to the PPF account, for opening an account by applying to an accounts office i.e., an office or branch of SBI or other authorized offices. Further, the said PPF scheme provides for the manner of making subscriptions, limit and no. of subscriptions, withdrawals from the fund, interest, transfer of accounts, loans, repayment of loans and interest, nomination and repayment after death of subscriber etc. - in the relevant years Union Budget documents, in Receipts Budget 2004-2005 under Table-I, sources and application of National Small Savings Fund as on 31st March, the liabilities outstanding as on 1st April and accretion to liabilities during the year under Public Provident Fund has been accounted as Sources of Funds under the head Capital Receipts - Department of Economic Affairs (DEA) in the Ministry of Finance had notified the pattern of investment to be followed by Non-Government Provident Funds, Superannuation Funds and Gratuity Funds prescribing the investment pattern in specific Government securities, Debt instruments, Equities and related investments which are specifically mentioned by name therein. Further, DEA also specified therein and also prescribed the percentage of the amount to be invested in various government securities vide notification F. No.5(88)/2006 PR dated 14.8.2008 as amended by notification F. No.11/14/2013-PR dated 2.3.2015. On the basis of the above, it is concluded that the PPF accounts are opened, maintained, operated by the appellant as per the scheme notified by the Government and the funds of the PPF accounts are credited to the Public Account of India, which are ultimately used/invested in the manner prescribed under notification issued by the Department of Economic Affairs in the Ministry of Finance. Thus it appears that there is no discretion for the appellant in handling the funds under the PPF accounts and the PPF funds are entirely managed by the Government of India. In such a scenario, there is no question of management of funds lying in the PPF accounts, by the appellants. It is a common practice to define certain terms in the Act itself in order to provide as an aid for construction or for interpretation of an issue. The definitions could broadly be classified into three categories viz., means , includes and means and includes . The Legislature has power to define a word even artificially. So the definition of word in the definition section may either be restrictive of its ordinary meaning or it may be extensive of the same. When a word is defined to mean such and such, the definition is prima facie restrictive and exhaustive; whereas, where the word defined is declared to include such and such, the definition is prima facie extensive - When a word is not defined in the Act itself, it is permissible to refer to dictionaries to find out the general sense in which the word is understood in common parlance. However, in selecting one out of the various meanings of a word, regard must always be had to the context as it is a fundamental rule that the meanings of words and expressions used in an Act must take their colour from the context in which they appear; when the context makes the meaning of a word quite clear, it becomes unnecessary to search for and select a particular meaning out of the diverse meanings a word is capable of, according to lexicographers as held in various judgements Mangoo Singh Vs. Election Tribunal, Bombay [ 1957 (9) TMI 85 - SUPREME COURT ] by the Hon ble Apex Court. Thus, the approach adopted in the impugned order for coming to the conclusion that the services provided by the appellant falls under the scope of funds management based on the dictionary meanings is not supported by law. Further, the Government had enacted the Securities and Exchange Board of India Act, 1992 to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto. All forms of fund management and how this is regulated is elaborated in the said legal provisions and the regulations made there under - in the given case of appellants, there was no fund management involved and the entire amount was credited to the Public Account of the Government, to be used as per the instructions, norms, scheme of PPF notified by the government. Hence we conclude that there was no fund management services rendered by the appellants in this case. During the relevant period of time i.e. in 2004-2005, if RBI was not treated as a customer as held by the learned Commissioner in para 11 of impugned order, then the whole issue of taxability of services falls flat, as this is not covered under the scope of taxable services. Hence, the impugned order is liable to be set aside on this ground alone. Refund of service tax paid by the appellants specifically mentioning in the GAR-6 Tax payment Challans that the payment of service tax is made under protest - HELD THAT:- The issue is no more res integra in view the decision taken in a number of cases both by this Tribunal and by the Hon ble High Court of Bombay in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS FDC. LTD [ 2008 (9) TMI 320 - BOMBAY HIGH COURT ] where it was held that the Tribunal was right in concluding that the ground of non-forwarding of a letter as contended by the Department would not be of any significance. It does not mean that the claim for refund is ex facie not maintainable so as to extend the benefit of the provisio to sub-section (1) of section 11B of the Central Excise Act, 1944 - the appellant is eligible to claim refund of service tax paid under protest in terms of the proviso to Section 11B, subject to the condition that such a refund claims are required to be filed in terms of section 11B of Central Excise Act, 1944, which have been made applicable to service tax as per Section 83 of the Finance Act, 1994. Appeal allowed by way remand of the refund application for fresh adjudication to the original authority for the limited issue of satisfying the unjust enrichment angle.

  ---

• 2023 (6) TMI 995
  Short payment of Service Tax - Business auxiliary service - trade discount, incentives and commission offered by the car manufacturer - principal to principal basis - re-determination of the amount of service tax payable on business actually services - such recalculated amount of service tax payable on business auxiliary services were not acceptable to the appellants - HELD THAT:- The relevant sub-clause invoked in the impugned order is relating to (i) promotion or marketing or sale of goods produced or provided by or belonging to the client . From the discussion in impugned order, it is very clear that M/s MSIL is the manufacturer of car and they sell the car to the appellants under an invoice indicating the assessable value and various components of additions and deductions with Net invoice value for such sale. Subsequently, when the appellant is able to sell the car to the ultimate customer, then a separate invoice is being raised by the appellant and on which applicable VAT/Sales Tax is payable. Hence, the nature of transaction in the case is principal-to-principal basis. The trade discount, incentives and commission offered by the car manufacturer M/s MSIL is in accordance with the agreement of the scheme announced by them. The Department does not dispute that there was such agreements, scheme between the appellant in the car manufacturers and the account of the appellant only reflect the actual discount allowed to them. The Department s argument is that the said discount/commission is in view of services rendered by the appellant by way of popularisation of the sales and consumption of the products by the end customer - it difficult to accept the conclusion arrived at in the impugned order that all the discounts/commission/incentives given by the manufacturer for the various types of targets achieved in terms of the number of vehicles sold under a particular model/category, consistent achievement of targets by each quarter, exchange bonus etc., are to be treated as compensation for the services rendered by the appellants by way of popularization of sales and purchase of the cars of the manufacturer. The element of sales promotion or marketing services is involved only when the appellants provide some service to the end customer in sale of the cars. If the discounts/commission/incentives are given in terms of the specific schemes or an agreement entered by the manufacturer of car with the appellants, then such transaction cannot be overstretched to categorize it as service for the purpose of charging service tax. CBIC Circular No. 87/05/2006-ST dated 6.11.2006 clarifies that the discount/ commission/incentives given for sale of cars in the case before us, is no way comparable to services provided to customers at free of charge for which reimbursement are given by the car manufacturer - As the present case of incentives/ commission is solely related to trade discounts for sale of cars in accordance with the regular practice as well as the agreement/schemes that were in vogue in the industry, the same is not treated as compensation received by the appellant for any services provided to the car manufacturer M/s MSIL. The dispute pertaining to the issue of service tax liability on discounts/commission offered to car dealers by manufacturer has attained finality in view of the decisions taken by this Tribunal and the Apex Court in a number of cases - reliance placed in COMMISSIONER OF SERVICE TAX, MUMBAI-I VERSUS SAI SERVICE STATION LTD [ 2013 (10) TMI 1155 - CESTAT MUMBAI ] where it was held that We have gone through the circular issued by MUL which provides certain incentives in respect of cars sold by the assessee respondent. These incentives are in the form of trade discount, thus no demand. In the case of TOYOTA LAKOZY AUTO PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX/CENTRAL EXCISE MUMBAI -II / MUMBAI - V [ 2016 (12) TMI 541 - CESTAT MUMBAI ] the Tribunal has held the discounts received on procurement of vehicles from the manufacturer are not liable to tax as business auxiliary services and set aside the demand on that head. Thus, the demand of service tax for an amount of Rs. 1,29,32,934/- determined in the impugned order, in respect of taxable services under the category of business auxiliary services along with interest, and penalty under Section 78 of Finance Act, 1994 fails to survive - Similarly the penalty of Rs.10,000/- imposed on the appellants on the ground that there was a failure on the part of the appellant to file the ST-3 return, is also upheld. Appeal disposed off.

  ---

• 2023 (6) TMI 994
  Levy of Service Tax - Overriding Commission - incentive for achieving targeted business to booking Air Ticket for their customers - HELD THAT:- The issue of Overriding Commission has already been decided by the Larger Bench of this Tribunal in the case of KAFILA HOSPITALITY TRAVELS PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX, DELHI [ 2021 (3) TMI 773 - CESTAT NEW DELHI ] where it was held that incentives paid for achieving targets cannot termed as consideration and, therefore, are not leviable to service tax under Section 67 of the Finance Act. The matter has already been decided in the favour of the appellant on merit - Appeal allowed.

  ---

• Central Excise

• 2023 (6) TMI 993
  Interest on refund claim - relevant date for calculating the interest arising due to a delay in the payment - appellant claimed credit from the date on which they reversed the CENVAT Credit - HELD THAT:- The issue regarding the relevant date for payment of interest was examined by the Hon ble Supreme Courts in its judgment in RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] . The Hon ble Court cited Boards instructions which covered consequential refunds and stated that the provisions of section 11BB of the Act, are attracted automatically for any refund sanctioned beyond a period of three months and that the jurisdictional Central Excise Officers are not required to wait for instructions from any superior officers or to look for instructions in the orders of higher appellate authority for grant of interest. The liability of the Proper Officer to pay interest commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act, as stated under Section 11BB of the Act and not from the date of reversal of credit under protest as sought by the appellant or the date of filing the revised claim as per the impugned order. The rate of interest payable would also be governed by the relevant interest rate notification issued under the Act and was prevalent at that time. This is not a case where the refund was delayed by the appellant for want of critical documents that would be necessary to quantify the refund. It was mainly because the department wanted the appellant to pay the interest amount due first, which could very well have been adjusted by the department from their refund claim as consented by the appellant - thus, as per the statutory mandate of Section 11BB of the Act the department is under a legal obligation to sanction the refund claim along with interest after the expiry of 3 months from the date of filing of the refund claim and not from the revised date of filing the claim as decided in the impugned order. The relevant date for calculating interest commences from the date of expiry of three months from the date of receipt of application for refund by the department i.e. from 05/10/2018 in terms of Section 11BB of the Central Excise Act, 1944 - Appeal disposed off.

  ---

• 2023 (6) TMI 992
  CENVAT credit - duty paying documents - bills of entry were assessed on the basis of forged licences - HELD THAT:- In the present case the cenvat credit was denied mainly on the allegation that there is a mala fide on the part of the appellant since there was forgery in the licenses under which the bills of entry were filed accordingly the said bills of entry are not valid documents for availing cenvat credit - it is observed that the genesis of this case is the fraudulent obtainment of VKGUY DEPB licences in regard to that custom matter the appellants were issue show cause notice dated 05.11.2012 which was adjudicated vide order-in-original passed by customs commissioner. However, the adjudication order in the customs matter was not considered by the Adjudicating Authority in the present case. This matter needs to be remitted back to the adjudicating authority for re- consideration after considering the customs adjudication order - Appeal allowed by way of remand.

  ---

• 2023 (6) TMI 991
  Entitlement to utilize the cenvat credit of basic excise duty for payment of education cess and secondary higher education cess - HELD THAT:- The issue is no longer re-integra as in various judgments is was held that the assessee is entitled for the utilization of cenvat credit of basic excise duty for payment of education cess or higher education cess. Reliance can be placed in the case of M/S ASR MULTIMETALS P. LTD. VERSUS C.C.E. S.T. RAJKOT [ 2018 (10) TMI 1627 - CESTAT AHMEDABAD ] where it was held that the Hon ble Supreme Court in SRD Nutrients (P) Ltd. [ 2017 (11) TMI 655 - SUPREME COURT] considering the very same issue particularly on the area based exemption notification held that Education Cess being a duty of excise is exempted under area based exemption notification. The issue is no more res- inetgra as it has been decided in favour of the assessee - Appeal allowed.

  ---

• CST, VAT & Sales Tax

• 2023 (6) TMI 990
  Recovery of sales tax - transfer of the right to use any goods - Power of Revenue Dept. to direct deduction at Source for payment of Sales Tax from Bills of any person who transfers right to use any goods for any purpose - Rule 3A(2) is a valid piece of delegated Legislation or not. Whether Sub-rule (2) of the Rule 3A of the TST Rules can be declared ultra vires being contrary to the provisions of the TST Act , though there is express proviso in Section 3(1) for levy of 4% Sales Tax on any transfer of the right to use any goods for any purpose? HELD THAT:- In exercise of the powers under Section 44 of the TST Act the State Government had enacted the TST Rules which were placed before the Legislative Assembly. On fair reading of Section 44 of the Act which is a rule making power it can be seen that the rule making power under Section 44 is inclusive and wide enough to cover the procedure for recovery including tax deduction at source. Section 3 of the TST Act can be said to be the charging Section and the liability to pay the tax shall be as per Section 3 of the TST Act. As per Section 3(1) of the TST Act every dealer in taxable goods shall pay a tax on his turnover at the rate specified in column (3) of the Schedule. As per the proviso to Section 3(1) as inserted by Tripura Sales Tax (Fourth Amendment) Act, 1987 w.e.f. 12.05.1987 the rate of tax on any transfer of the right to use any goods for any purpose (whether or not for a specified period) shall be 4%. The Sale is defined under Section 2(g) and it means any transfer of property, in goods for cash or deferred payment or other valuable considerations, and includes any transfer of the right to use any goods for any purpose for cash, deferred payment or other valuable consideration, and such delivery or transfer of any goods shall be deemed to be a sale of those goods by the person making the delivery or transfer and purchase of those goods by the person to whom such delivery or transfer is made. Thus, any transfer of right to use any goods including the vehicles shall be deemed to be a sale as defined under Section 2(g)(ii) - the submissions on behalf of the respondents suppliers/transferers that as there is no sale or transfer of the goods and that they are not registered with the TST Act and therefore, the liability to pay the tax at 4% does not arise cannot be accepted. As observed, the liability to pay the tax shall be on the transferer who transfers the right to use any goods as per proviso to Section 3(1) read with Section 2(b) and 2(g) of the TST Act. Whether Rule 3A(2) of the TST Rules and the memorandum issued by the Government to deduct the tax at 4% and the bills to be paid to the transferers can be said to be ultra vires to TST Act? - HELD THAT:- It appears that the High Court has held the said provision as ultra vires by observing that there is no such provision for tax deduction at source under the TST Act and therefore, the Rule cannot go beyond the Act. The aforesaid view taken by the High Court is absolutely fallacious. Rule 3A(2) can be said to be a recovery machinery/mechanism. What Rule 3A(2) provides is only for a machinery/mechanism where the person buying the goods is required to deduct the tax at source and deposits the same with the Revenue. It does not in any manner change the chargeability of the tax or liability of the tax which is under Section 3(1) of the TST Act read with Section 2(b) 2(g) of the TST Act. The rules are framed in exercise of Rule-making power under Section 44 of the Act and in that view of the matter and as the liability to pay the tax on transfer of right to use the goods shall still be continued under proviso to Section 3(1), mere providing for mode of recovery and/or providing for machinery/mechanism to recover the tax to be paid by the transferer/supplier from the person buying the goods deducting the tax at source and depositing the same with the Revenue cannot be said to be ultra vires to TST Act and the Rules as observed and held by the High Court - the High Court has fallen in error in misinterpreting Rule 3A(2) of the TST Rules and has fallen in error in declaring Rule 3A(2) of the TST Rules ultra vires to TST Act and the High Court has materially erred in quashing and setting aside the memorandum issued by the State Government requiring the hirers namely the ONGC and the GAIL to deduct an amount equivalent to 4% out of the respective bills of the suppliers of the vehicles. The order passed by the learned Single Judge declaring Rule 3A(2) of the Tripura Sales Tax Rules, 1976 as ultra vires to the Tripura Sales Tax Act, 1976 and quashing and setting aside the memorandum of 1992 issued by the State Government requiring the hirers to deduct an amount of tax at 4% out of the respective bills of the suppliers of the vehicles are hereby quashed and set aside - appeal allowed.

  ---

• Indian Laws

• 2023 (6) TMI 989
  Rejection of application made by the Petitioner for calling upon the Income Tax Department to provide a proper certificate / letter in support of the Income Tax records - Information sought by the Family members to settle dispute between them - HELD THAT:- The Hon ble Supreme Court in the case of ANVAR P.V VERSUS P.K. BASHEER AND OTHERS [ 2014 (9) TMI 1007 - SUPREME COURT ] has observed that whenever a person is seeking to rely upon a electronic record, for the same to be produced in the evidence, a certificate under Section 65-B of the Evidence Act is mandatory. The Hon ble Supreme Court in the case of Arjun Panditrao Khotkar [ 2020 (7) TMI 740 - SUPREME COURT] has clearly held that Section 65-B(4) of the Evidence Act to be mandatory and in paragraph 52 it has held that if a person has done everything possible to obtain the necessary certificate, but has not been able to obtain the same or is refused, then he can make an application to the Trial Court for production and the Trial Court must summon the person and direct that such certificate be given. The Trial Court has observed that the Petitioner neither moved an application on his own account for getting the certificate directly from the concerned department nor filed an application before the Court for directing the concerned department for submitting the certificate before passing an order of admissibility of documents - The documents in respect of Shri Prakash Ahuja, having admittedly, been furnished by the Income Tax Department, the said certificate being mandatorily required under Section 65-B to certify the documents necessary to decide the lis between the parties, an application for the same cannot remotely said to be an abuse of the process of law or be an application to cover up lapses in the evidence. The Petitioner had put all his efforts to obtain the said certificate and therefore it also cannot be said that there was a lapse on his part. The Petitioner has done everything to obtain the necessary certificate in respect of the documents produced by the Income Tax Department, had also moved the application Exh. 453 before the Trial Court for issuance of direction to the Income Tax Department for the necessary certification and despite that the Trial Court has observed that the Petitioner has not moved an application before the Court for direction to the concerned department for submitting certificate. The learned Trial Judge has clearly erred in holding so. The documents filed below list Exh. 313 are photocopies produced by the Income Tax department without certificate, which documents are sought to be produced and used in evidence in the said suit. The Trial Court is, therefore, directed to call upon the Income Tax department to provide a proper certificate as per the requirements of Section 65-B of the Indian Evidence Act, 1872 in respect of the documents of Income Tax records of late Mr. Prakash Ahuja below list Exh. 313 within a period of four weeks from the date of uploading of this order. Petition allowed.

  ---