Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 29, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Validity of order of assessment - GST DRC-07 order - The annexures filed along with DRC 01A reveal the identity of the allegedly non-existent suppliers as M/s.Baby Suba Company as well as the details of transactions inter se and thus, the petitioner is well aware of the specifics of the proposal and is conscious of the fact that the show-cause notice relates to, and is in continuation of the earlier proceedings. The procedure adopted aligns with the statutory scheme of the Act as well. - There are no legal infirmity in the procedure followed by the assessing authority in passing the impugned order - The petitioner / assessee directed to cooperate the assessment proceedings - HC
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Condonation of delay in filing appeal - sufficient reasons for delay present or not - delay due to medical treatment of the petitioner - Admittedly, the appeal was filed beyond time, however, in the peculiar set of facts and circumstances, the reason for delay prima facie, appears to be bona fide - Delay in filing of appeal before the Appellate Authority condoned - HC
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Seeking refund of 90% of the Central Goods and Service Tax (CGST) and Integrated Goods and Service Tax (IGST) amount paid by the petitioner against the Export of goods - The GST department has not only failed to respond to the request of the petitioner, but even before this Court, they have not been able to give any reason as to why the refund is not made despite orders of the first respondent - Directions issued to release the refund - HC
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Scope of Advance Ruling application - Transfer of unutilized balance in E-credit ledger on merger of distinct persons within same State having same PAN - Application for Advance Ruling on the issue of transfer to unutilized balance of Input tax credit lying in E-credit ledger is not maintainable. - AAR
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Levy of GST - pre-packaged and labelled rice upto 25 Kgs - GST would be applicable on the supply of prepackaged and labelled rice up to 25 Kgs, for both domestic supplies as also for export clearances. Thus, the applicable rate of GST on the supply of pre-packaged and labelled rice up to 25 Kgs, for both domestic sales as also for export clearances is 5% - AAR
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Classification of supply - HSN Code - rate of tax - Fortified Rice Kernels(FRK) which the applicant intends to manufacture and supply at Chhattisgarh - to be classified under Chapter Heading 1103 of Customs Tariff Act or not - The applicable rate of GST on all goods of 1904 including Fortified Rice Kernels (FRK) meriting classification under chapter subheading 19049000 is 18% - AAR
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Input Tax Credit - GST paid on various services/ expenses incurred towards discharging its CSR obligation - CSR activities, as per Companies (CSR Policy) Rules, 2014 are those activities excluded from normal course of business of the applicant and therefore not eligible for ITC, as per Section 16(1) of the CGST Act. - AAR
Income Tax
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Computation of arm's length price - tolerance limit of 1% in case of wholesale trading and 3% in other cases notified - U/s 92C(2) of IT Act 1961 - Notification
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Addition u/s 45(1) - long term capital gains - Consideration received on retirement from partnership firm - Receipts as full and final settlement of its right, title and interest as a partner as having 50% share in the firm - High Court deleted the additions - There is no discussion on any submission on the lines which has been addressed before this Court - Matter restored back before the HC - SC
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Prosecution proceedings for TDS deducted but not deposited in time - offence allegedly committed u/s 276(B) and 278(B) - As per HC amount has already been deposited with interest and there is no reason why the criminal proceeding shall proceed and the criminal proceeding was launched after receiving the said amount with interest - Apex Court dismissed the appeal of the Revenue. - SC
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Validity of Reopening of assessment - accommodation entry - Tthe search and seizure action under Section 132 of the Act was not carried out against the petitioner; such action was carried out against a third party - There seems to be weight in the submission made on behalf of the petitioner that the CBDT via its circular dated 01.08.2022 and 22.08.2022 has relaxed the rigour of the law. - CBDT has read into the provisions of 148A and Section 148 of the Act, the principles of natural justice. - HC
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Validity of order u/s 263 - Failure of the AO of examine the income - In the assessment order, there is no discussion about the above referred two incomes nor the assessee had filed any details before the PCIT. Even, before us in the present appeal, no paper-book has been filed and the assessee has not appeared on any of the given dates which shows that the assessee has no material evidence to rebut the findings of the PCIT. - AT
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‘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. - Notification
Customs
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Absolute Confiscation - gold biscuits - If all these facts are viewed together, it is clear that the gold biscuits are of foreign origin only. In the absence of any plausible evidence brought in by the Appellant to the contrary, it gets established that the gold biscuits were of foreign origin and the Department was correct in absolutely confiscating the gold. - AT
DGFT
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Amendments in Category 5B of the Appendix 3 (SCOMET LIST) to Handbook of Procedures 2023. - Public Notice
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Amendment under Appendix 2T (List of Export Promotion Councils/Commodity Boards/Export Development Authorities) of Appendices and ANFs of FTP 2023 - Public Notice
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Amendment in procedure for import of Copper products and Zinc Oxide under the Revised India Nepal Treaty of Trade - Public Notice
Corporate Law
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Statutory Auditors’ Responsibilities in relation to Fraud in a Company - NAFRA issued certain guidelines.
Indian Laws
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Dishonour of Cheque - Respondent/ Accused was acquitted - The delivery challans are produced by the Complainant, which were disbelieved by the Trial Court on the precise ground that the signature on the said delivery challans are not matching with the signature of the Accused - The person who receives the material at the site normally signs such delivery challans. Therefore, comparing the signature of the Accused where there is no denial to show that he personally did not receive such material at the site was completely unwarranted. - Accused stands convicted for the offence punishable u/s 138- HC
Service Tax
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OIDAR Service or not - setting up the network for transfer of data not provided by them - they are neither involved in generation of data or information nor involved in providing the same to their clients. They are involved in setting up the network for transfer of data not provided by them. Thus, the Respondent has not provided the service of ‘Online Information and Data Base Access and / or Retrieval Services’ to their clients - Demand not sustainable - AT
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Refund of excess tax paid - The refund claim under 11B was rejected by the Original Authority on the ground that the claim cannot be modified by the appellant to include a totally new ground. While the Commissioner (Appeals) in the impugned order felt that the appellant was seeking a refund claim under section 11 B to derive a double benefit by also taking credit of the same amount - Both the ground of rejection not valid - Revenue directed to allow refund after verification of mathematical accuracy in computing the refund claim - AT
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Consulting Engineering Service or not - The Appellant is not a consulting engineer firm. They are a manufacturing firm and whenever physical execution of erection and commissioning is sought along with supply of their own manufactured goods, they assist the buyer in procurement of bought out items - A composite contract cannot be bifurcated to artificially arrive at the service value - Demand set aside - AT
Central Excise
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CENVAT Credit - Allegation of being fake invoices - Non-existence of supplier - The main reason for denying the credit to the party was that two letters were received by the department one from the Municipal Commissioner and the other from the Postal authorities according to which the said party was not in existence at the said place. This Tribunal after analyzing the entire evidence held that the best evidence would have been for departmental officers to physically visit the place and draw a panchnama after making enquiries from the locality. - Credit cannot be denied - AT
Case Laws:
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GST
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2023 (6) TMI 1190
Maintainability of appeal - contravention to sub-sections (1) (4) of Section 107 of the GST Act - non-constitution of 2nd appellate tribunal - It is contended that the petitioner has already deposited 10% of the demanded tax amount before the first appellate authority and as there is no second appellate forum, this Court should entertain this writ petition - HELD THAT:- Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted, as an interim measure subject to the Petitioner depositing entire tax demand within a period of four weeks from today, the rest of the demand shall remain stayed during the pendency of the writ petition. Application disposed off.
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2023 (6) TMI 1189
Refund of GST - Petitioner claimed the refund from IRCTC which would in turn claim the refund form the GST department - Seeking directions from the Court passing order to effect GST refund - HELD THAT:- Upon a perusal of the relevant clauses of Explanation(2)(d) to Section 54(14) of the 2017 Act, it is evident that there is no bar for this Court to pass such an order. The IRCTC is justified in seeking a complimentary refund direction from GST Authorities and that the order of refund to the petitioner should be coupled with a rider that the petitioner files an affidavit indicating that they have not availed the input credit of GST. The petitioner is directed to file an affidavit indicating that the petitioner has not availed the input credit of GST, including a complete working supported by relevant documents in connection with not claiming the input. Such affidavit shall be filed by the writ petitioner on July 4, 2023, when the matter shall next be listed for passing further orders - Petition disposed off.
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2023 (6) TMI 1188
Validity of order of assessment passed under the provisions of Section 74 of the TNGST Act - case of petitioner is that petitioner are that the impugned order of assessment is grossly in violation of principles of natural justice - HELD THAT:- The show-cause notice issued under Section 74 is evidently a continuation of the proceedings initiated under notice in DRC 01A dated 23.01.2023. In fact, that notice under DRC 01A has itself been issued under threat of further proceedings under Section 74 and thus, the connection or nexus, in my considered view, has been clearly established. The annexures filed along with DRC 01A reveal the identity of the allegedly non-existent suppliers as M/s.Baby Suba Company as well as the details of transactions inter se and thus, the petitioner is well aware of the specifics of the proposal and is conscious of the fact that the show-cause notice relates to, and is in continuation of the earlier proceedings. The procedure adopted aligns with the statutory scheme of the Act as well. The petitioner states that (i) it is aware of the issue raised relating to allegedly fraudulent purchases made from M/s.Baby Suba and Company, Chennai and (ii) further, that it was in possession of documents to establish the purchases. In the conclusion of paragraph 5, the petitioner states that supporting documents will be filed at the time of personal hearing. Paragraph 6 relates to the proposal for levy of penalty to which the petitioner objects stating that there was no statutory provision mentioned in relation to which penalty is sought to be levied. The impugned order has come to be passed in GST DRC 07 dated 12.04.2023 wherein, in the absence of any supporting materials as promised by the petitioner and also no appearance on 05.04.2023, when the matter was fixed for personal hearing, the assessing authority has proceeded to confirm the proposals. There are no legal infirmity in the procedure followed by the assessing authority in passing the impugned order. It is incumbent upon an assessee to cooperate in the course of assessment proceedings and provide effective responses to the show-cause notice as well as avail of the opportunity for personal hearing - petition dismissed.
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2023 (6) TMI 1187
Provisional attachment of Bank Accounts of petitioner - attachment in operation for more than one year - HELD THAT:- When a provisional attachment remains in operation for a period exceeding one year from the date it is made, it shall cease to have effect under sub-section (2) of Section 83 of the CGST Act. Considering the clear legal mandate as ordained by subsection (2) of Section 83, there is much substance in the contentions that by operation of the said provision, the provisional attachment of the petitioner s bank accounts as made by the Commissioner vide order dated 7 March, 2022 has ceased to operate after 7th March 2023. Such attachment cannot continue after 7 March, 2023 - It needs to be observed that in pursuance of the order dated 4th May 2022 passed by this Court the Petitioners had undertaken to provide bank guarantee of a nationalised bank, however, as the provisional attachment itself has ceased to operate, the bank guarantee as furnished by the Petitioners be returned to the Petitioner. The Writ Petition is disposed of.
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2023 (6) TMI 1186
Condonation of delay in filing appeal - sufficient reasons for delay present or not - delay due to medical treatment of the petitioner - contention of the petitioner is that the inability on the part of the petitioner to prefer the appeal within the prescribed period was due to some bona fide reasons, unavoidable circumstances and sufficient cause for delay - HELD THAT:- Admittedly, the appeal was filed beyond time, however, in the peculiar set of facts and circumstances, the reason for delay prima facie, appears to be bona fide. Considering the submissions of the learned counsel for the petitioner, the impugned order passed by the Appellate Authority is set aside and the matter is remanded to the Appellate Authority (opposite party no.1) with a direction to consider and adjudicate upon the appeal filed by the petitioner on merits without raising any objection on the limitation, after giving notice and opportunity of hearing to all concerned. The present petition is partly allowed.
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2023 (6) TMI 1185
Seeking refund of 90% of the Central Goods and Service Tax (CGST) and Integrated Goods and Service Tax (IGST) amount paid by the petitioner against the Export of goods - HELD THAT:- Admittedly, the first respondent has sanctioned refund both by virtue of the provisional refund orders and the final orders sanctioning the refund. The second respondent has not only failed to respond to the request of the petitioner, but even before this Court, they have not been able to give any reason as to why the refund is not made despite orders of the first respondent. These amounts are rightfully due to the petitioner. The second respondent is directed to refund the amount due to the petitioner within a period of four weeks from the date of receipt of a copy of this order, if not otherwise paid - Petition allowed.
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2023 (6) TMI 1184
Scope of Advance Ruling application - Transfer of unutilized balance in E-credit ledger on merger of distinct persons within same State having same PAN - transfer of unutilized balance in E-credit ledger between distinct persons from one GSTIN to another GSTIN in some State with same PAN, without following the process of merger - HELD THAT:- Any person who is registered under GST or desirous of obtaining a registration under GST may apply for an advance ruling and that the question on which an advance ruling is sought for, may be with respect to any of the issues referred to in Section 97 (2) ibid which are in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. In other words, it is the supplier of goods or services or both who can seek an advance ruling on any of the issues specified in clauses (a) to (g) of Section 97(2). In the instant case there is neither any issue involving applicability of a Notification issued under the provision of Act nor this is a case regarding admissibility of input tax credit of tax paid or deemed to have been paid. Here the issue being raised by the applicant is admissibility of transfer of unutilized balance of Input Tax Credit in E-credit ledger and not regarding the admissibility of Input Tax Credit of tax paid - as Section 97 (2) (d) specifies about the admissibility of input tax credit of tax paid and not regarding admissibility of transfer of unutilized balance of Input tax credit lying in E-credit ledger, the issues raised by the applicant in the instant ARA-01 is out of the scope of advance ruling and accordingly their application merits rejection. Application for Advance Ruling on the issue of transfer to unutilized balance of Input tax credit lying in E-credit ledger is not maintainable.
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2023 (6) TMI 1183
Levy of GST - export of pre-packaged and labelled rice upto 25 Kgs, to foreign buyer, to exporter on bill to ship to basis i.e., bill to exporter and ship to customs port and to the factory of exporter - HELD THAT:- Export of goods in its cognate expression means taking goods out of India to a place outside India. Exports under GST are zero rated supplies and in this context, as per section 16 of IGST, Act 2017 export of goods or services or both and supply of goods or services for authorized operations to Special Economic zone developer or Special Economic zone units are zero rated supplies. We further find from the detailed submissions put forth by the applicant, that they are of the firm opinion that in view of amendment in entry no. 51 of Schedule I of Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017, CGST and SGST @2.5% each is appliable with effect from 18.7.2022 on export of pre-packaged and labelled rice up to 25Kgs directly to a foreign buyer / to an Exporter on bill to ship to basis/ to the factory of exporter. If specified commodities are supplied in a package that do not require declarations / compliances under the Legal Metrology Act, 2009 ( 1 of 2010), and the rules made thereunder, the same would not be treated as pre-packaged and labelled for the purposes of GST levy and that rice supplied in pre-packaged form would fall in the definition of pre-packaged commodity under Legal Metrology Act, 2009 and rules made thereunder, if such prepackaged and labelled packages contains a quantity up to 25 Kgs. GST would be applicable on the supply of prepackaged and labelled rice up to 25 Kgs, for both domestic supplies as also for export clearances. Thus, the applicable rate of GST on the supply of pre-packaged and labelled rice up to 25 Kgs, for both domestic sales as also for export clearances is 5% [2.5% CGST + 2.5% SGST] or (5% IGST) as the case may be, in terms of amended entry no. 51 to Schedule-1 to Notification no. 01/2017-CT(Rate) /Integrated tax [Rate) dated 28.6.2017 as amended, with effect from 18.7.2022 - for inte-rstate supply of taxable goods by a registered supplier to a registered recipient/ merchant exporter, for exports the IGST rate of 0.1 % has been stipulated vide Notification no. 41/2017-lntegrated Tax (Rate) dated 23.10.2017, subject to the adherence of the terms conditions as stipulated therein.
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2023 (6) TMI 1182
Classification of supply - HSN Code - rate of tax - Fortified Rice Kernels(FRK) which the applicant intends to manufacture and supply at Chhattisgarh - to be classified under Chapter Heading 1103 of Customs Tariff Act or not - HELD THAT:- There remains no ambiguity as regards the fact that the impugned goods are nothing but preparations of rice flour. At this juncture, for ascertainment of the correct classification of impugned good viz. Fortified Rice Kernels (FRK) and thereby to arrive at the applicate rate of GST on the same, we would also like to cite reference to the Agenda for 45th GST Council meeting held on 17th September 2021 (volume 2) wherein at Agenda item 14 relating to issues recommended by the Fitment committee for the consideration of GST council - From Recommendations made by the Fitment Committee for making changes in GST rates or for issuance of clarification in relations to goods, it gets amply clear that Fortified Rice Kernel is classifiable under chapter heading 1904. Thereafter it is also observed that in the 45th Meeting of the GST Council, held at Lucknow on 17th September, 2021, the GST Council has inter-alia made the recommendation of lowering the rate of GST from 18% to 5% on Fortified Rice Kernels for schemes like ICDS etc. Accordingly, vide Notification No. 11/2021 C.T.(Rate) dated 30.09.2021, Notification 39/2017 dated 18.10.2017 stood amended effective from 01.10.2021, by including the terms Fortified Rice Kernel (Premix) supply for ICDS or similar scheme duly approved by the Central Government or any' State Government in column (3) and also, the words 'Food Preparation' is amended as 'goods' in column (d) of the Notification, by citing the chapter of the goods as Chapter 19 or 21. The applicable rate of GST on all goods of 1904 including Fortified Rice Kernels (FRK) meriting classification under chapter subheading 19049000 is 18% [9% CGST + 9% SGST] or (18% IGST) as the case may be, in terms of entry no. 15 to Schedule-Ill to Notification No. 01/2017-CT(Rate) dated 28.6.2017 as amended. It is also seen that the applicant in their submissions have also referred that the quantity of vitamins and minerals which are to be added in rice flour to prepare FRK as per FSSAI Regulations which provides for the ratio of Vitamin and Minerals to be added in a quantity of 1 kg of Rice. In this context, it is seen that Food Fortification Resource Centre FFRC set up by the very same FFSAI has in its advisory dated 12/7/2021 addressed to all business operators and FRK manufacturers giving reference to chapter heading 1904 has advised to take appropriate action for uniform billing of Fortified Rice Kernels. The other issues /points raised by the applicant in their application, including the reference to the discussion of the fitment committee of the GST Council put forth in the agenda for the 37th GST Council Meeting, is distinguishable to the facts and circumstances involved here, in view of the subsequent agenda of 45th GST council meeting held on 1 7.9.2021.
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2023 (6) TMI 1181
Input Tax Credit - GST paid on various services/ expenses incurred towards discharging its CSR obligation - to be considered as being in course or furtherance of business in terms of Section 16(1) of the CGST Act, 2017 r/w UPGST Act, 2017 or not - HELD THAT:- As per Rule 4(1) above (for the period prior to 23-1-2021), the CSR activities undertaken by the company shall exclude activities pursuance of applicant s normal course of business. Companies must ensure that none of these activities is included in their CSR policy as they have specifically been excluded from the definition of CSR. It has been clarified that any costs incurred as a result of these actions are not eligible for CSR credit - The new CSR Rules along with Section 135 of the Act has created a very strict regulatory framework for CSR activities. Earlier the Parliament intended for Section 135 compliance to be voluntary rather than compulsory. Now the CSR activities are independent of normal business activities of the entity requiring separate registration and records for compliance of law. The CSR Policy and projects approved by The Board of Directors are implemented by a CSR Committee which is made public on the website. As per Rule 4 on and after April 1, 2021 Companies can undertake CSR activities only through implementing agencies which are registered with MCA. These implementing agencies will have to file e-form CSR-1 with MCA portal and will receive unique CSR registration number. Rule 7(4) says that the CSR fund may be spent by a company for creation or acquisition of a capital asset which shall be held in the name of only section 8 company or registered public trust or registered society having CSR registration number and cannot be held in the name of the company itself. For existing capital assets compliance within 180 days is required. Thus the corporation cannot directly own this capital asset that was made or purchased with CSR funding. It is also prescribed that the surplus generated by CSR activities will not be included in a company s business profit and will be transferred to the Unspent CSR Account or reinvested in the same project. The company should transfer any unspent CSR funds to any funds listed in Schedule VII of the Act until a fund is specified in Schedule VII in accordance with sections 135(5) and 135 (6) of the Act. Section 16(1) of the CGST Act, stipulates that a registered person is entitled to take credit of input tax charged on any supply of goods or services or both, which are used or intended to be used in the course or furtherance of his business. Thereby, Section 16 (1) of the CGST Act bars CSR activities from input/input service. CSR activities, as per Companies (CSR Policy) Rules, 2014 are those activities excluded from normal course of business of the applicant and therefore not eligible for ITC, as per Section 16(1) of the CGST Act.
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Income Tax
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2023 (6) TMI 1180
Exemption u/s 11 - Charitable activity or not - Profit motive - Exemption was disallowed on the ground that registration u/s 12AA granted to the assessee stood cancelled - what's the charitable nature of activities carried out by assessee in terms of Section 2(15)? - ITAT and HC restored the registration and allowed the benefit of exemption - as decided by HC [ 2022 (8) TMI 1400 - ALLAHABAD HIGH COURT] , mere selling some product at a profit will not ipso facto hit assessee by applying proviso to Section 2(15) and deny exemption available u/s 11 and proviso to Section 2(15) is not applicable to the facts and circumstances of the case, and the assessee was entitled to exemption provided under Section 11 HELD THAT:- No ground to interfere with the impugned judgment. The special leave petitions, accordingly, stand dismissed.
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2023 (6) TMI 1179
Depreciation allowed as per its original return of income u/explanation-5 to clause (ii) of Section 32(1) inserted vide Finance Act - HELD THAT:- Relying upon the decision of this Court in the case of Commissioner of Income Tax vs. Mahendra Mills [ 2000 (3) TMI 3 - SUPREME COURT] the High Court has dismissed the Appeals preferred by the Revenue. Revenue has heavily relied upon Explanation 5 to Section 32(1) of the Income Tax Act, 1961. We are of the opinion that, in the facts and circumstances of the case, Explanation 5 to Section 32(1) shall not come to the rescue of the Revenue.
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2023 (6) TMI 1178
Addition u/s 45(1) under the head long term capital gains - Consideration received on retirement from partnership firm - Receipts as full and final settlement of its right, title and interest as a partner as having 50% share in the firm - It is the case of the appellant revenue that this is a case where the AO was right for the reason that the sum of Rs. 15 crores received by the respondent was paid in excess of the amount due to it by way of the share it was entitled under the partnership deed - High Court deleted the additions HELD THAT:- As per appellant is not a case where the amount which it has received is attributable in other words to the share which the retiring partner would be entitled in law. The amount is far in excess. Had the amount being the same as the share, the Revenue would not have raised objection. This is in addition to the fact that the amount paid to the respondent was, in fact, brought in by the three new incoming partners. This made the amount exigible to Income Tax under the head income under the capital gains u/s 45 of the Income Tax Act, 1961. As Learned senior counsel, on the other hand, would point out that actually though the amount may appear to be in excess of the share standing to the credit of the capital account of the respondent-assessee, the amount in excess is attributable to the goodwill which, according to him, is subject matter of decisions of this Court and since goodwill under the law as it stood was to be taken into consideration in determining the share of the retiring partner, no part of the amount received by the respondent-assessee was exigible to tax. From the impugned order, we do not find any discussion on any submission on the lines which has been addressed before this Court. We are of the view that the matter should, therefore, be reconsidered by the High Court with reference to the facts as are not in dispute and law which governs the field. The appeal is allowed. The impugned order will stand set aside. The case will stand remitted. The appeals will be reheard.
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2023 (6) TMI 1177
Exemption u/s 11 - scope and amplitude of the definition charitable purpose - correct interpretation of the proviso to Section 2(15) for charitable purpose - HELD THAT:- The issue is covered by the judgment reported as Ahmedabad Urban Delvelopment Authority [ 2022 (10) TMI 948 - SUPREME COURT] The special leave petition is dismissed in the light of the said judgment and the clarification.
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2023 (6) TMI 1176
Income taxable in India - Addition of recharacterization of receipts from sale of software licenses to Indian customers/distributors as royalty - High Court has held that, in view of the decision of Apex Court, the income is not taxable in India - HELD THAT:- Special leave petitions is covered against them vide judgment in the case of Engineering Analysis Centre of Excellence Private Limited vs. The Commissioner Of Income Tax Anr [ 2021 (3) TMI 138 - SUPREME COURT] Learned Additional Solicitor General states that a Review Petition has been filed against this judgment, which is currently pending and the right of the Revenue to revive the present special leave petitions may be reserved, in case the Review Petition is allowed. Recording the aforesaid, the special leave petitions are dismissed, as the same is covered by the said decision of this Court. In case the review petition on the issue raised in the present special leave petitions is allowed, it will be open to the petitioner(s) to get the present special leave petitions revived.
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2023 (6) TMI 1175
Reopening of assessment u/s 147 OR assessment u/s 153C - Addition u/s 69B of the Act as unexplained investment - HC decided in favour of assessee - HELD THAT:- This Court is of the opinion that the order impugned does not call for interference. The Special Leave Petition is, accordingly, dismissed. All Pending applications are disposed of.
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2023 (6) TMI 1174
Prosecution for commission of offence u/s 276B r/w 278B - Sanction u/s 279(1) - TDS deducted but not deposited in time - offence allegedly committed u/s 276(B) and 278(B) - As per HC amount has already been deposited with interest and there is no reason why the criminal proceeding shall proceed and the criminal proceeding was launched after receiving the said amount with interest, had it been a case that the case was immediately instituted and thereafter the TDS amount has been deposited with interest, the matter would have been different - HELD THAT:- SLP dismissed.
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2023 (6) TMI 1173
Revision u/s 263 - cancellation of registration for the year when the cancellation order was not available to the AO while passing the order u/s 147/143(3) - HC confirmed Tribunal order as allowing the assessee s case and held that Section 12AA(3) is applicable only from the assessment year 2011-12 deciding substantial questions of law raised in this appeal are covered against the revenue - HELD THAT:- Heard learned counsel for the petitioner. We are not inclined to interfere with the impugned order and judgment of the High Court. However, the question of law is kept open. Special leave petition is dismissed.
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2023 (6) TMI 1172
Faceless Assessment - Validity of assessment order u/s 144B - Legality and validity of the notice u/s 148 issued on the ground that the said notice is without jurisdiction, in as much as the necessary satisfaction u/s 151 has not been obtained - High Court quashed the notice - HELD THAT:- As the impugned order does not call for interference. The Special Leave Petition is accordingly dismissed. However, the question of law is kept open. Pending application stands disposed of.
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2023 (6) TMI 1171
Nature of subsidy receipt - value of the MILIEV grant given by the Dutch government as a subsidy for purchase of wind turbine generator - transfer of right by the assessee to another company, no offset credit and electricity charges paid to Wescare as deduction - HC confirmed ITAT orders for deleting the additions - HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The special leave petitions are, accordingly, dismissed.
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2023 (6) TMI 1170
Validity of reopening of assessment - monetary requirement for reopening assessment - unexplained cash credit under Section 68 - as decided by HC condition precedent of an asset in the form of Rs.50 lakhs is not be attracted to the present case, as the notice u/s 148A(b) had been issued on 17th March, 2022 i.e. within three years of the assessment year sought to be assessed, namely, 2018-19 and Section 148A(d) order as well as Section 148 notice issued on 31st March, 2022 was within prescribed time HELD THAT:- Learned counsel seeks liberty to withdraw the special leave petition and agitate all issues before the authorities. Liberty sought for is granted. The petition is accordingly dismissed as withdrawn. Pending application(s), if any, stand disposed of.
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2023 (6) TMI 1169
Validity of Reopening of assessment - accommodation entry being provided to the petitioner, as alleged, in the form of a bogus loan made by Mr Rajesh G Mehta - reliance on third party [entry provider] statement - whether AO had material available with him to form a reasonable belief that income chargeable to tax had escaped assessment? - HELD THAT:- As the foundation for triggering reassessment proceedings qua the petitioner is the statement of Rajesh G Mehta. The statement, by itself, does not lend any clarity as to whether the AO had underlying material available with him for reaching a conclusion that income chargeable to tax qua the petitioner had escaped assessment. This aspect would have, perhaps, become clear if the AO had accorded personal hearing to the authorized representative of the petitioner. As required to be noticed that, as adverted to hereinabove, the search and seizure action under Section 132 of the Act was not carried out against the petitioner; such action was carried out against a third party. The period in issue, as noted right at the outset, is FY 2018-19 [AY 2019-20]. There seems to be weight in the submission made on behalf of the petitioner that the CBDT via the aforementioned circular i.e., circular dated 01.08.2022 and 22.08.2022 has relaxed the rigour of the law. CBDT has read into the provisions of 148A and Section 148 of the Act, the principles of natural justice. Therefore, we are of the view that the best way forward would be to set aside the order under Section 148A(d) of the Act and consequential notice of issued under Section 148 - Decided in favour of assessee.
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2023 (6) TMI 1168
Revision u/s 263 by CIT - denial of claim of deduction u/s 80IC in respect of exchange rate fluctuation income, interest income and insurance claim - HELD THAT:- As we find that the impugned order passed under section 263 of the Act by learned PCIT is dated 15.03.2017. Certainly, the giving effect order to section 263 of the Act should have been passed by learned Assessing Officer by this time. DR before us was not able to provide any details with regard to the fact as to what happened in the giving effect proceedings. The assessee also was not present to explain the status of giving effect proceedings. Hence, in absence of details of the giving effect proceedings before us, we deem it fit and appropriate, in the interest of justice and fair play to modify the revision order passed by learned PCIT by simply setting aside the assessment order dated 20.01.2015, instead of cancelling the same. Assessing Officer is directed only to examine afresh the eligibility of claim of deduction under section 80IC of the Act in respect of the aforesaid three receipts, uninfluenced by earlier decisions taken by him, if any. The order passed by learned PCIT under section 263 of the Act is modified. Decided partly in favour of assessee for statistical purposes.
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2023 (6) TMI 1167
Disallowance of interest expenses - AO observed that the loans/advances were given without charging interest whereas the assessee had paid interest on funds borrowed from Syndicate Bank and Allahabad Bank - CIT-A deleted the addition - HELD THAT:- If there are funds available both interest-free and over draft and / or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments. Thus respectfully following the decision of Reliance Utilities [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and assessee s own case [ 2014 (11) TMI 1272 - ITAT DELHI] we uphold the order of CIT (Appeals) in deleting the disallowance of interest expenses and reject ground No. 1 of appeal of the Revenue. Addition towards unexplained stock - HELD THAT:- Contentions made during search, seizure and survey operations do not serve any useful purpose if such contentions are not based upon credible evidence collected in the course of search and survey operations. See S. Khader Khan Son [ 2007 (7) TMI 182 - MADRAS HIGH COURT] We hold that addition on account of undisclosed difference in stock discrepancy cannot be made merely on the basis of the statement given by the partner at the time of survey without any corroborative evidences found in the course of survey. In this case the assessee explained that there is no discrepancy in stock along with various evidences and explanations and, therefore, the ld. CIT (Appeals) has rightly deleted the addition of Rs. 4,00,84,677/- (4,29,63,309 - 28,78,632). Thus, the order of the ld. CIT (Appeals) is sustained to this extent. Ground No. 2 of grounds of appeal of Revenue is rejected. Bogus fabrication expenses - Merely because the summons could not be served, in our opinion, the addition cannot be sustained. The assessee in respect of these fabrication expenses furnished copies of bills, copies of ledger account, copy of Form 16A issued to the fabricators wherein the assessee has deducted TDS and remitted to the Govt. account. All these evidences cannot be brushed aside simply because the summons issued to the parties could not be served. There may be various reasons for non-service of summons on the parties. Thus simply because the summons could not be served the fabrication expenses incurred by the assessee cannot be treated as not proved. Thus, allowing ground No. 2 of grounds of appeal of the assessee, we direct the Assessing Officer to delete the addition. TDS u/s 195 - Disallowance being the commission paid to foreign agents - We hold that the commission paid to non-resident for procuring sales cannot be said to be fee paid for any technical services within the meaning of Explanation (2) to section 9(1)(vii) - Thus, we reverse the order of the ld. CIT (Appeals) on this issue and direct AO to delete the disallowance made u/s 195 for non-deduction of TDS. Ground of appeal of the assessee is allowed.
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2023 (6) TMI 1166
Dismissal of assessee appeal by CIT(A) by passing an ex-parte order on the basis of the non-prosecution - denial of principles of natural justice - Reopening of assessment - capital introduced by the appellant in firm by alleging the same to be from unexplained source - HELD THAT:- We find that the CIT(A) has dismissed the appeal without considering the material available on record, as also without going into the merits of the case. As such, an opportunity of hearing requires to be given to the assessee to represent his case fully before the Ld. PCIT. Even otherwise, it is trite [ S. Velu Palandar Vs. DCIT 1971 (8) TMI 42 - MADRAS HIGH COURT )] and incumbent on the authority to decide an appeal on merit. Finding force in the grievance raised by the Assessee, in the interest of justice, the matter is remitted to the file of the ld. CIT(A), to be decided afresh on merit, in accordance with law, on affording due and adequate opportunity of hearing to the assessee.
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2023 (6) TMI 1165
Eligible for registration u/s 12AB - application of the assessee was rejected without giving adequate opportunity to the assessee / applicant to present its case on merits - HELD THAT:- As in the interest of justice, the case is being set-aside to the file of Ld. CIT(Exemption) for denovo consideration of the application of the assessee Trust for registration u/s 12AB of the Act and to pass appropriate orders after considering the documents filed by the applicant / assessee in accordance with law. Hence, the matter is being set-aside to the file of CIT(Exemption) with the above direction. Appeal of the assessee is allowed for statistical purposes.
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2023 (6) TMI 1164
Validity of order u/s 263 - Failure of the AO of examine the income properly - interest on LIC pension and interest from compensation from land acquisition - HELD THAT:- PCIT examined the issue raised in the show-cause notice and observed that a TDS u/s 194LA was deducted on the payment of compensation on acquisition of land paid to assessee - The findings of the PCIT given in para 6 of the impugned order states that the above referred two issues i.e. interest on LIC pension and interest from compensation from land acquisition has not been dealt by the Assessing Officer and has not raised any enquiry about the same. We find merit in the finding of the PCIT since in the assessment order, there is no discussion about the above referred two incomes nor the assessee had filed any details before the PCIT. Even, before us in the present appeal, no paper-book has been filed and the assessee has not appeared on any of the given dates which shows that the assessee has no material evidence to rebut the findings of the PCIT. We, thus, considering the facts of the case, hold that the PCIT rightly held the order of the AO u/s 143(3) of the Act as erroneous and prejudicial to the interest of Revenue as the AO failed to examine the issue relating to interest on LIC pension and income from land acquisition. Thus, we confirm the order of the PCIT framed u/s 263 of the Act and dismiss all the grounds of appeal raised by the assessee.
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Customs
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2023 (6) TMI 1163
DEPB Scheme - Wrongful claim of Export incentives - goods exported [Ferro Silicon (FeSi)] were of Bhutanese origin and the Appellant had mis-declared them as Indian origin goods - Confiscation - recovery of amount equivalent to import duties foregone due to imports made by different importers on the strength of the DEPB Scrip s purchased from the Appellant - levy of penalty u/s 114 and 114AA imposable on the Appellant and its Director separately for the same offence. Whether the goods exported by the Appellant were of Indian origin or of Bhutan origin? - HELD THAT:- The department has taken statements from the suppliers of FeSi to the Appellant. Five suppliers or traders who have supplied the FeSi to the Appellant stated that the FeSi supplied by them were of Bhutanese origin.The statements from the suppliers indicate that even the FeSi procured by them from Indian market were also originally imported from Bhutan - the statements recorded from the suppliers clearly establish that the exported goods were of Bhutanese origin. Confiscation - HELD THAT:- The exporter has accepted their liability and deposited an amount of amount of Rs 63,40,305/- and interest of Rs 11,83,617/- even before issue of the Notice. Since the exports were made by declaring the country of origin as India , it is observed that there is a misdeclaration in the country orgin at the time of export. Accordingly, the confiscation of 2169 MT of FeSi in the impugned order is legally tenable. Whether penalty under section 114 and 114AA are imposable on the the Appellant and it s Director, for the same offence even after imposition of penalty by DGFT? - HELD THAT:- Once DGFT initiates action and impose penalty for the violations, then Customs cannot initiate separate action to impose penalty for the same violation - Reliance placed in the case of M/S. GAYSON COMPANY (P) LTD., SRI CHETAN AGGARWALA, DIRECTOR VERSUS COMMISSIONER OF CUSTOMS (PORT) , KOLKATA [ 2018 (12) TMI 880 - CESTAT KOLKATA] where it was held that Taking into consideration of the fact that the DGFT authorities had already imposed penalty upon the appellant, the penalty imposed on the appellant company is not warranted - Following the decision, the penalties imposed on the Appellant and its Director Aditya Almal under Sections 114 and 114AA are not sustainable. Accordingly, the penalties imposed under sections 114 and 114 AA on the Appellant and it s Director set aside. Penalty on the Appellant and its Director under section 114 and 114AA of the Customs, Act, 1962 set aside - other part of demand upheld - appeal allowed in part.
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2023 (6) TMI 1162
Absolute Confiscation - gold biscuits - wallets - Owner of biscuits - Corroboration of statements or not - levy of penalty - HELD THAT:- There is no dispute that the gold biscuits were seized from the Appellants when they were being screened at Imphal Airport. If the Appellants have bought the gold through licit channel, they would have carried the Invoice copy towards the same, particularly taking into account that the value of gold was for Rs.15.7 Lakhs. While they were not in a position to show any document for purchasing these gold biscuits in India, in the Recorded statement, the Appellants have stated that they have travelled to Myanmar and bought the biscuits by way of cash payment. The recorded statements have not been retracted by them at any stage. The Test Report issue by Assam Hallmarking Centre dated 15 March 2019 also states that the golds were of 24 Carat with fineness of 998.4 to 998.5 purity. If all these facts are viewed together, it is clear that the gold biscuits are of foreign origin only. In the absence of any plausible evidence brought in by the Appellant to the contrary, it gets established that the gold biscuits were of foreign origin and the Department was correct in absolutely confiscating the gold. Admittedly the Recorded statements did not specify that the same were being recorded in terms of Section 108 of Customs Act, 1962. However, the Appellants are required to support their claim by way of proper Invoices in the first place. They were not in a position to prove the same. Therefore, even the error pointed out about the Recorded Statement cannot come to the rescue of the Appellants. Confiscation of gold biscuits and wallets are upheld - Considering the value of gold biscuits, penalty imposed on Shri Antony Philip is reduced to 1,00,000/- - Considering the fact that both the Appellants have admitted that the owner of the gold biscuits is Shri Antony Philip and taking the view that Shri Jochan Michael has acted as a carrier, the Penalty on him stands reduced to 25,000/-.
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Service Tax
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2023 (6) TMI 1161
Levy of service tax - Business Support Services - receipt of the Appellant-assessee s share in the Central Rights Income is consideration for the alleged services rendered to BCCI-IPL in organizing the IPL tournament or not - taxability of 10% of the payments made by Franchisee Company to the foreign players - reverse charge mechanism - payments made to foreign service provider for management consultancy services - costs incurred in marketing and PR activities outside India - 90% of payments made by Franchisee company to the foreign players - 100% of payments by the company to foreign coaches and support staff. Whether receipt of the Appellant-assessee s share in the Central Rights Income is consideration for the alleged services rendered to BCCI-IPL in organizing the IPL tournament, and taxable as Business Support Services (BSS)? - HELD THAT:- The Tribunal by relying upon the decision of the Tribunal in the case of MORMUGAO PORT TRUST VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, GOA- (VICE-VERSA) [ 2016 (11) TMI 520 - CESTAT MUMBAI] has set aside the demand holding that in case of joint venture contract, there is neither an intention to render a service to the other partner(s) nor is there any fixed consideration quid pro quo for any particular service of a partner. It has further been held that a contractor-contractee or the principal-client relationship, which is the essential element of any taxable service, is absent in the case of the partners or co-venturers in a joint venture agreement - In the present case, since the demand of Rs.16,71,71,797/- in respect of Central Rights Income arising out of the franchise agreement cannot be considered as provision of any service between the members to the franchise agreement, such demand cannot be confirmed on the assessee-appellants. Whether 10% of the payments made by Franchisee Company to the foreign players is taxable under the reverse charge mechanism (RCM) as BSS on the basis that the players carry out promotional activities (incl. wearing uniforms with logos, etc.)? - HELD THAT:- The said issue has already been dealt with by the Co-ordinate Bench of this Tribunal, in the case of SOURAV GANGULY VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA (NOW COMMISSIONER OF CENTRAL GOODS SERVICE TAX CENTRAL EXCISE, KOLKATA SOUTH) [ 2020 (12) TMI 534 - CESTAT KOLKATA] , wherein it was held that the view taken by the commissioner is not correct as the players had received the fees for the purpose of playing cricket only and even otherwise, it is a settled principle of law that if no machinery provision exists to exclude non-taxable service (playing cricket) from a composite contract, the same is not taxable since law must provide a measure or value of the rate to be applied and any vagueness in the legislative scheme makes the levy fatal. Thus, the Tribunal held in this case that the confirmation of demand could not be sustained - Considering that the ratio of the above decision squarely applies to the present case in hand, it is held that the confirmation of demand Rs.47,55,082/- towards fees paid to foreign players on RCM basis and Rs. 20,13,565/- to the agents of foreign players are not sustainable. Whether payments made to foreign service provider for management consultancy services are taxable under RCM under taxing entry for Management or Business Consultant s Service? - HELD THAT:- The said issue has already been dealt with by the Hon ble Supreme Court, in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] . Upon consideration of such issue, the Hon ble Apex Court while dismissing the Revenue s appeal had observed only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. In the present case, the disputed period for which demands were raised relate to 2008-2009 and 2011-2012, much prior to the amendment to Section 67 introduced w.e.f. 14.05.2015. Hence, the confirmation of demand for Rs.38,31,865/- in respect of reimbursable expenses to foreign service provider on RCM basis cannot be considered as there exists no legal provision for charging to service tax on such reimbursement charges, we are of the view that such demand cannot be confirmed on the assessee-appellants. Whether costs incurred in marketing and PR activities outside India is taxable under the taxable service for BSS, on RCM? - HELD THAT:- The identical issue was considered by the Co-ordinate Bench of this Tribunal, in the case of KPH DREAM CRICKET PVT. LTD. VERSUS CCE ST, CHANDIGARH-I (VICE-VERSA) [ 2019 (5) TMI 1171 - CESTAT CHANDIGARH] . Upon consideration of such issue, the Tribunal had held that the main object of the appellant-assessee is to promote game of cricket in India through IPL tournaments. For obtaining service of organizing the said tournaments cannot be treated a service is in nature of Business Support Service. Therefore, no service tax is leviable under the category of Business Support Service as discussed hence the demand of service tax is not sustainable - As the present case is identical in the factual matrix to the above case already decided by the Tribunal, there exists no ground to deviate from the above stand - the confirmation of demand Rs.11,24,636/- towards service tax liability on marketing and Public Relations activities conducted outside India paid to foreign vendors on RCM basis is not sustainable. Whether the appellants-assessee is required to reverse common CENVAT Credit availed for providing taxable and exempt output service? - HELD THAT:- The issue has already been examined by Co-ordinate Bench of this Tribunal, in the case of CCE ST, CHENNAI VERSUS L. BALAJI, S. BADRINATH, DINESH KARTHICK, MURALI VIJAY, VIDYUT SIVARAMAKRISHNAN, ANIRUDA SRIKKANTH, SURESH KUMAR, YO MAHESH, HEMANG BADANI, ASHWIN R,C. GANAPATHY, ARUN KARTHIK KB, KAUSHIK GANDHI, PALANI AMARNATH C, ABHINAV MUKUND (VICE-VERSA) [ 2019 (5) TMI 377 - CESTAT CHENNAI] . Upon consideration of such issue, the Tribunal had held that no Cenvat credit is required to be reversed - the Tribunal held that the demand of service tax is not sustainable against the appellants. The explanation 3 to Rule 6(1) of the Cenvat Credit Rules, 2004 was amended vide notification No. 13/2016-C.E. (NT) dated 01.03.2016, wherein the exempted service was expanded to include an activity which is not a service as defined under Section 65B (44) of the Finance Act, 1994 w.e.f. 01.04.2016, for which reversal of cenvat credit is required. Hence, prior to this there was no legal requirement legally binding an assessee to reverse cenvat credit of inputs or inputs services taken on such activities which are not services under the scope of the said Finance Act, 1994 - the confirmation of demand Rs.2,13,57,472/- towards common Cenvat credit reversal is not sustainable. Whether 90% of payments made by Franchisee company to the foreign players is taxable under RCM as BSS on the basis that they carry out promotional activities (incl. wearing uniforms with logos, etc.)? - HELD THAT:- The issue has been addressed in a number of cases earlier by Co-ordinate Benches of the Tribunal and in the case of M/s KPH Dream Cricket Pvt. Ltd. it was clearly held that the main activity of players, who were engaged under a contract by the appellants-assessee, is to play cricket apart from engagement of promotional activities which are ancillary to the main activity of playing cricket. On drawing support from various decisions held in favour of the appellants-assessee, the Tribunal held in this case that on player s fee, no service tax is payable and upheld the decision of the Commissioner in rightly dropping the demand of service tax on player s fees - the instant case is covered by the decision of the Tribunal in the above case, and thus there are no merit for interfering with the decision of the learned Principal Commissioner in dropping the demand of service tax in the impugned order. Whether 100% of payments by the company to foreign coaches and support staff is taxable under RCM as BSS on the basis that they carry out promotional activities? - HELD THAT:- The issue has already been addressed in detail in the impugned order by the learned Principal Commissioner concluding that the activity of coaches and also support staff clearly stands out distinctly different as coaching service provided in relation to sports and is not covered Business Support Service; further he concluded there exists a specific category for levying such category of services, i.e., commercial training or coaching centre . However, as the coaching in the filed of sports has been specifically excluded from the applicability of service tax vide the definition of commercial training or coaching centre under section 65(27) of the Finance Act, 1994, and as the service of coaching is not provided by an centre but an individual coach and support staff, he concluded that the service tax is not chargeable on such activity - there is no ground for interfering with the order of the learned Principal Commissioner. Thus the demand of service tax on this issue is not sustainable and appeal made by the Revenue does not survive. Appeal disposed off.
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2023 (6) TMI 1160
Classification of services - Online Information and Data Base Access and / or Retrieval Services or not - setting up the network for transfer of data not provided by them - HELD THAT:- In the instant case, the Respondent has been providing System Networking Services . The said service involves linking of two or more computing devices together for the purpose of sharing data. Networks are built with a mixture of computer hardware and software. The work of the Respondent is to undertake inter-linking of computers through installations of required software and hardware. It is the contention of the Respondent that they were nowhere concerned with supply / retrieval of any information or data through any network to any person whomsoever - There was no allegation in the notice also that they have supplied/ retrieved any information or data through any network to any person. It is observed that the Respondent has provided solutions to their customers based on various network models, architectures etc, and thus they have provided service for making available telecommunication network through which data and information can reach from one place to another for the purpose of sharing data - this service will not be classifiable as Online Information and Data Base Access and / or Retrieval Services liable to service tax. From the activity of the Respondent, it is observed that they are neither involved in generation of data or information nor involved in providing the same to their clients. They are involved in setting up the network for transfer of data not provided by them. Thus, the Respondent has not provided the service of Online Information and Data Base Access and / or Retrieval Services to their clients - the impugned order dropping the demands holding that the Respondents have not rendered Online Information and Data Base Access and / or Retrieval Services is sustainable. Appeal of Revenue dismissed.
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2023 (6) TMI 1159
Refund of service tax paid on gas transmission charges collected by them from their customers - refund claim arose due to differential price charges i.e. the difference between tariff already charged as per contract by the appellant and the tariff amount as received by PNGRB - it appeared to the Department that the said refund amount had already been adjusted / utilized by the appellant under Rule 6(3) of Service Tax Rules, 1994. Whether the data entered in the ST-3 Returns will bind the appellant and the act of not correcting an error in time, will close the avenues for a claim of refund, filed subsequently by the appellant? - HELD THAT:- The ST-3 Returns filed by the appellant show that the appellant had adjusted an amount of Rs.11,47,41,041/- under Rule 6(3) of the Service Tax Rules, 1994 towards their service tax liability. The appellant on the other hand claimed that this was an inadvertent error and that in fact they had adjusted only an amount of Rs.66,24,847/-. In the normal course departmental officers have powers to correct an error of clerical or arithmetical nature, which are obvious, apparent or patent as do not admit of any debate or discussion. The original authority however felt that since the ST-3 Returns showed that an amount of Rs.11,47,41,041/- which was greater than the refund amount claimed, has been adjusted under Rule 6(3), no refund could be paid. A question arises that if the appellant had inadvertently or otherwise entered a lesser figure as the value of taxable service and the amount of tax payable in Part B of the ST-3 Return, would the Original Authority be similarly bound? The answer lies in Section 72 of finance act, 1994 which gives power to central excise officer to make best judgment assessment if he finds that the Assessee has filed the service tax return but has failed to assess service tax as per provisions of Finance Act, 1994. Assessment in its broad sense means determination of tax liability. Since Revenue cannot retain any money deposited / collected without the authority of law, excess collection has to be refunded. Rule 6 of the Service Tax Rues, 1994 has been introduced as a part of the procedure to bring in a tax payer friendly regime - The CBIC has a scheme for the scrutiny of ST-3 Returns as in Circular No. 113/07/2009-St, dated 23.04.2009 and has brought out a Return Scrutiny Manual for Scrutiny of ST-3 Returns , for this very purpose. As per these instructions Division/Range offices should, among other things, at first carry out a preliminary online scrutiny of the ST-3 Returns filed. The purpose is to ensure the completeness of the information furnished in the Return, arithmetic correctness of the amount computed as tax and its timely payment, timely submission of the return etc. The refund claim under 11B was rejected by the Original Authority on the ground that the claim cannot be modified by the appellant to include a totally new ground. While the Commissioner (Appeals) in the impugned order felt that the appellant was seeking a refund claim under section 11 B to derive a double benefit by also taking credit of the same amount - as per the appellant the total excess service tax paid by was Rs 11,47,41,041/- during the period April 2011 to July 2014. However, they have claimed a refund of Rs 10,54,78,124/- only as stated in para 2 of the impugned order. The balance of Rs 92,62,917/- which was not claimed was due to the fact that Rs 66,24,851/- was adjusted by the appellant under Rule (3) in the October 2014 to March 2015 ST 3 Returns and Rs 26,38,066/- that was not claimed due to being able to produce certificates of non-availment of credit from 3 customers. (Rs 66,24,851/- + Rs 26,38,066/- = Rs 92,62,917/-). It is seen that as per the table the amount of Rs 66,24,851/- was not included in the refund claim of Rs 10,54,78,124/- and no double benefit was claimed. The appellant has now in their appeal before us brought to notice that in a subsequent development the Hon ble new Delhi Tribunal s vide its Final Order [ 2017 (9) TMI 554 - CESTAT NEW DELHI ] has held that there can be no levy of service tax on the activity of transportation of gas up to delivery point at customers premises as it pertains to self-service. Hence on this ground too they would be eligible for a refund under section 11B of the Central Excise Act, 1944. While this is a fresh legal issue which has not been examined by the Original Authority, it is no longer in dispute that claims for refund, even where tax has been paid under a mistake of service tax law are to be filed and decided upon under Section 11B of the Central Excise Act, 1944, subject to the claimant establishing that burden of duty has not been passed on to third parties. The only issue for rejecting the refund claim is a data entry in the ST-3 Return, which when claimed to be erroneous by the appellant was not verified for its correctness just because the original authority mistakenly found himself bound by the legal framework - the appellant s claim was wrongly dismissed without examining the claim based on verifiable facts. Hence the impugned order merits to be set aside. Revenue can however verify the mathematical accuracy in computing the refund claim before sanction - impugned order set aside - appeal allowed.
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2023 (6) TMI 1158
Consulting Engineering Service or not - Activity of supply of basic equipments as well as supervision and erection and commissioning of the manufacturing lines - valuation of such service - HELD THAT:- The Appellant raised consolidated bill to the client JUD, which include supply of materials and providing technical assistance for setting up the cement plant. Out of gross receipt of Rs.65,76,56,249/-, the Appellant has supplied machinery and equipments valued at Rs.13,68,01,000/-from their own manufacturing unit, which include an amount of Rs.2,42,91,584/- paid towards Central Excise duty. The Appellant is not a consulting engineer firm. They are a manufacturing firm and whenever physical execution of erection and commissioning is sought along with supply of their own manufactured goods, they assist the buyer in procurement of bought out items. In the present case, JUD themselves undertook the erection and commissioning activity. Apart from the Appellant they have engaged various other service providers also to assist them in the erection and commissioning activities. Hence, the allegation of the department that the Appellant has rendered 'Consulting Engineer' service is not supported by any evidence - the Appellant has appropriately paid service tax on the services rendered towards supervision of erection and commissioning of the plant. The value of bought out items sold to JUD on a profit cannot be considered as Consulting Engineer service for the purpose of demanding service tax. A composite contract cannot be bifurcated to artificially arrive at the service value - the demand in the impugned order is not sustainable - Since the demand itself is not sustainable, the question of demanding interest and imposing penalty does not arise. Appeal allowed.
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2023 (6) TMI 1157
Levy of Service Tax - construction of residential complex service - dispute in the present appeal relates to the period prior to July 01, 2010 and also post July 01, 2010 - HELD THAT:- If there was no liability of service tax prior July 01, 2010, all that is required to be seen is whether there was any delay in deposit of the amount so as to attract interest. For this period, penalty could not have been imposed as there was no liability to pay service tax. For the period from July 01, 2010, onwards, the situation is different because the appellant is liable to pay service tax. Service tax should have been collected at the time each installment was paid by the purchaser and not when the last installment was paid. The Principal Commissioner has not examined this issue from this perspective and therefore, the matter would have to be remanded to enable him to examine when the liability to pay service tax arose and when service tax was actually deposited by the appellant and whether interest was liable to be paid by the appellant. The matter is remitted to the Principal Commissioner to separately examine the factual position prior to July 01, 2010 and post July 01, 2010 after hearing the appellant - Appeal disposed off.
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2023 (6) TMI 1156
Levy of service tax - Arrangement Fee - Facility Agent Fee - Processing Fee - Facility Fee - Arrangement Fee - appellant is engaged in generation of electricity at various plants located at West Bengal - requirement to issue SCN. Arrangement Fee - Facility Agent Fee - HELD THAT:- The demand pertain to the period prior to 18.04.2006 and as per CBEC Circular F.No.276/8/2009-CX8A dated 26th September, 2011, it has been clarified the service tax liability on any taxable service provided by a non-resident or a person located outside India, to a recipient in India, would arise w.e.f. 18.04.2006, i.e. the date of enactment of Section 66A of the Finance Act, 1994. The Board has accepted this position. Accordingly, the instruction F.No.275/7/2010-CX8A dated 30.06.2010 stands rescinded - thus, the appellant is not liable to pay service tax for the demand. Processing Fee - Facility Fee of USD 15 million- Arrangement Fee - HELD THAT:- The appellant has already been paid service tax along with interest. Therefore, the demand against the appellant is not sustainable. Facility Fee of USD 50 million - HELD THAT:- The demand has already been dropped by the Adjudicating Authority, accordingly, the same is not in dispute. Requirement to issue SCN - HELD THAT:- As the appellant has already been paid service tax along with interest, the show-cause notice was not required to be issued to the appellant. The show-cause notice issued to the appellant is bad in law. Accordingly, the impugned proceedings against the appellant are not sustainable, hence, the same are set aside - Appeal allowed.
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Central Excise
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2023 (6) TMI 1155
CENVAT Credit - Input or not - Sponge Iron - Charging Report does not reflect the quantity of Sponge Iron charged in the Blast Furnace - officers were of the view that Sponge Iron was not required for manufacture of Pig Iron and the Appellant has wrongly taken the credit on the Sponge Iron as their input without using the same in the manufacture of Pig Iron - Penalty. HELD THAT:- The allegations of the department are only on presumption basis and not supported by any evidence, in view of the explanations submitted by the Appellant against each of the allegations. Allegation that RG-23 Register shows the availment of credit, but the Charge Report did not indicate the issue of Sponge Iron for the manufacture of Pig Iron - HELD THAT:- The officer visited the factory had taken possession of some documents but did not take the sample of Sponge Iron, which was stored at the store of the company for manufacturing of pig iron. It is observed that just because there was no issue of Sponge Iron on the day of visit of the officers, it cannot be concluded that the Appellant has not used it at all in the manufacturing of Pig Iron. It is a fact that Sponge Iron is not must for manufacturing Pig Iron. The Appellant stated that they have used it as a trial basis only to reduce the usage of Coke - the statement of Usha Martin (another Conversant Agent of TISCO) also agrees that the usage of Sponge Iron reduces the use of Coke. Since it is not an essential major input in the manufacturing of Pig Iron, we agree with the submission of the Appellant that on the basis of one day verification by the officers, it cannot be concluded that the Appellant has never used Sponge Iron in the manufacture of Pig Iron. The officers found from the Costing Sheet, the cost of Sponge Iron was not taken into consideration - HELD THAT:- Appellant contended that the costing has no relevance to conclude whether Sponge Iron is an input or not and to decide the eligibility of availment of Cenvat credit- the Contention of the Appellant agreed upon, that on the basis of costing it cannot be decided whether the Appellant is eligible for Cenvat credit or not, since it was not their finished goods. They manufacture it for TISCO only for job charges. The investigation has relied upon the literature Making Shaping and Treating of Steel published by Association and Iron Steel Engineers of United State Steel, to support of their allegation that Sponge Iron was not viable for use in the manufacture of Pig Iron - HELD THAT:- The Appellant stated that the Literature Making Shaping and Treating of Steel published by Association and Iron Steel Engineers of United State Steel, relied upon by the investigation in support of their allegation that Sponge Iron was not viable for use in the manufacture of Pig Iron, does not represent the correct picture. The theoretical application of the said book cannot be made in the present case, to deny Cenvat credit. It is observed that the Appellant was also using the Sponge Iron only on trial basis with a view to reduce the cost by using less Coke. Hence, the contention of the Appellant is agreed upon that the Literature cannot be relied upon to deny the credit otherwise eligible to them. In the Central Excise Registration, the Appellant has not mentioned Sponge Iron as one of their major inputs - HELD THAT:- The receipt of the input Sponge Iron into the factory was not in dispute. The RG-23 Register maintained by the appellant ,the Gate Register and the Stores Register containing all the details about the transport details of the Sponge Iron and issue of the same for manufacture of Pig Iron. The duty paid nature of the Sponge Iron was also not in dispute. Since receipt, utilization and duty paid nature of the input Sponge Iron was not in dispute, the Appellant are eligible for the Cenvat credit of the input Sponge Iron, as the same has been utilized in the manufacturing of finished goods Pig Iron. Penalty - HELD THAT:- There was no violation committed by the Director Shri Uday Singh. Thus, no penalty is imposable on the Director under Rule 15(1) of Cenvat Credit Rules, 2004. Appeal allowed.
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2023 (6) TMI 1154
100% EOU - cross-examination not allowed - violation of principles of natural justice - inflation of weight of the consignments in the export/ deemed export documents with an objective to wrongly claim fulfilment of their export obligation - HELD THAT:- The impugned order-in-original has been passed without providing for cross-examination of the witnesses whose statements were recorded and relied upon by the authorities - it is necessary on the part of the Adjudicating Authority to accord opportunity of cross-examination of witnesses whose statements have been used as an evidence in the matter. It is mandatory for Adjudicating Authority to follow the principles of natural justice. The adjudication order passed without allowing cross-examination is an act of gross violation of natural justice. On this issue, this Tribunal in the case of PATIDAR PRODUCTS, MAHASHAKTI SALES AGENCY, TULSIDAS CO, RADHESHYAM TRANSPORT CO, KIRITBHAI BACHUBHAI FINAVA, BINTU STORES, SHIVAM MARKETING, MILAN TRANSPORT AND ASHWINBHAI PRAGJIBHAI AMBALIYA VERSUS C.C.E. S.T. -BHAVNAGAR [ 2022 (10) TMI 874 - CESTAT AHMEDABAD] considering various High Court judgments and the Supreme Court judgment, held that Non-production of witnesses for cross-examination, it was held, is violative of principles of natural justice. All these judgments in the matter of cross-examination are at the stage of adjudication. The law, therefore, at that stage, need not be elaborated, as it is the right of an assessee in the event the Revenue seeks to rely on the statements of witnesses recorded by it and whose statements are sought to be relied upon at the stage of adjudication to make available the said witnesses for cross-examination so that it could be established whether the statements recorded from the said witnesses have been voluntarily given and/or are relevant for the issue or based on personal knowledge or hearsay and the like. Matter remanded back to the original Adjudicating Authority for passing a fresh order after allowing opportunity of cross-examination of the witnesses - appeal allowed by way of remand.
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2023 (6) TMI 1153
CENVAT Credit - input services received at the captive coal iron ore mines, either directly or on the strength of the ISD invoices issued by the Bokna Mines Office - alleged violation of Rule 7(b) read with Rule 15 of the Cenvat Credit Rules (CCR) - extended period of limitation - HELD THAT:- Ld. Commissioner entertained a view that coal and iron ore mines situated away from the factory were separate entities having their own financial transactions engaged in the manufacture of exempted goods and consequently the services rendered at the mines could not be said to have been received by the factory. However, no material has been placed on record by the revenue to substantiate that the mines were owned by separate entities. On the contrary, it is evident from the coal and iron ore mining leases dated 15.10.2007 and 16.08.2005 that these mines were allotted to the Company, Usha Martin Limited (UML), for its captive use. The contention of the Appellant that the factory and the mines were a part of UML holding a single PAN has also not been negated/refuted by the learned Commissioner. It is not in dispute that coal and iron ore were essential raw materials for the Appellant and it is also not the case of the revenue that the Appellant had more than one factory or that the credit availed at the factory was in excess of the tax paid in respect of the services availed at the mines during the relevant period. A similar issue in the context of availment of cenvat credit of service tax in the hands of the factory in respect of input services received at the Captive Mines had fallen for consideration of the Tribunal in the case of Hindalco Industries case [ 2012 (10) TMI 922 - CESTAT, NEW DELHI] . The period involved therein was March 2005 to October 2010 and the credit was availed by the assessee s factory therein, directly as also on the strength of ISD invoices issued by the mines. The Tribunal allowed the credit of service tax to the assessee s factory by treating the Captive Mines and the factory as one integrated unit - the ratio of the said decision is squarely applicable to the facts of the present case as well. It is also found that the statutory ER-I returns were being filed along with a statement containing invoice-wise details of the credit taken and the ISD registration was obtained after disclosing all the relevant facts vide letter dated 25 April 2008 addressed to the Superintendent, Jharkhand Commissionerate. Therefore, the charge of suppression against the factory and the Bokna Mines also fails. The appeals succeed on merits as well as limitation and the impugned orders are set aside, the penalties imposed are also set aside - Appeal allowed.
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2023 (6) TMI 1152
CENVAT Credit - capital goods - entire transaction between the Appellant and M/s.Saha Industries were based upon fake invoices issued by the said M/s.Saha Industries which were merely on paper with the ulterior motive of availing wrongful and irregular Cenvat credit - onus of proof - Rule 7(2) of the said Cenvat Credit Rules, 2002 / Rule 9(3) of the said Cenvat Credit Rules, 2004 - extended period of limitation - HELD THAT:- The Ld. Commissioner has nowhere observed that the Appellant had actually received the said capital goods from other alternate source. Therefore, the whole case of the department that the transactions with M/s. Saha Industries were fake transactions and the Appellant took credit without receipt of the capital goods or non receipt of the goods clearly falls down. Even in the show cause notice it was alleged that the Appellant had utterly failed to verify the antecedents of the supplier-manufacturer for the purpose of availing of Cenvat credit. This would also mean that the goods were actually received by the Appellant without verifying the antecedents of the supplier manufacturer. It is well settled law that onus of proof that the Appellant received the capital goods from some other source was squarely on the department which it failed to prove. In the present case, the issue as to whether when a supplier was duly registered with the Central excise department and had paid Central excise duty on the capital goods and cleared the same from his factory and whether Cenvat credit on the same can be denied to the recipient unit - it is already taken note of the findings of the Ld. Commissioner rendered in para7.13 of his order wherein he had held that the capital goods were duly received by the Appellant. Therefore receipt of the capital goods is not in dispute as the department has not reviewed this portion of the order of the Ld. Commissioner which has attained finality. That the Ld. Commissioner has tried to justify denial of Cenvat credit to the Appellant by rendering findings that M/s. Saha Industries was not an assessee of Central Excise manufacturer of excisable goods and had no power to issue central excise invoice on which Cenvat credit could be availed - in the present case the statutory as well as financial records of M/s.Saha Industries as well as of the Appellant have not been alleged to be incorrect or false. The main reason for denying the credit to the party was that two letters were received by the department one from the Municipal Commissioner and the other from the Postal authorities according to which the said party was not in existence at the said place. This Tribunal after analyzing the entire evidence held that the best evidence would have been for departmental officers to physically visit the place and draw a panchnama after making enquiries from the locality. Extended period of Limitation - HELD THAT:- In the present case the period involved is March, 2007, May 2007, September 2007 October 2007 and the show cause notice was issued on 10-03-2010 under extended period of limitation - In this regard Hon ble Gujarat High Court in the case of Prayagraj Dyeing Printing Mills Ltd [ 2013 (5) TMI 705 - GUJARAT HIGH COURT] has held in clear terms that where the credit was availed on the basis of invoices of a manufacturer who was duly registered with the department but could not be found subsequently it could not be said that the credit was availed on the basis of forged documents and it has been held that even if the original document was issued by the supplier of the inputs even by practicing fraud, a holder for valuable consideration unless shown to be a party to a fraud, could not be proceeded with by taking aid of a larger period of limitation as indicated in Section 11A(1) of the Act - In the present case also it is held that there is no evidence that even if the goods were not actually manufactured by M/s. Saha Industries the fact remained that the same were duly received by the Appellant and M/s. Saha Industries have duly discharged the central excise duty on the same. In such a case following the law laid down by the Hon ble Gujarat High Court extended period of limitation could not be invoked against the Appellant. The impugned Order cannot be sustained both on merits and on the point of limitation - Appeal allowed.
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2023 (6) TMI 1151
CENVAT credit on the customs duty paid through TR-6 challan on Greaves 1.51 Diesel Engine 77 KW which initially imported from China under the Scheme ATA Carnet - rejection of credit on the grounds that not a capital good and that TR- 6 Challan is not the valid document as contemplated by Rule 9 of Cenvat Credit Rules, 2009 for establishing the payment of duty. HELD THAT:- The engine in issue is undisputedly falls under Chapter 84 therefore one limb of Rule 2(a) ibid has been fulfilled, the another limb is that it must be used in the factory of the manufacturer of the final product. According to the learned Commissioner, the appellant has failed to submit any corroborative evidence to establish the use of the said engine for any research purpose in their factory whereas learned counsel submits that all relevant evidences were produced by them before this learned Commissioner - if the appellant wishes to avail credit then they have to fulfill the conditions laid down in the relevant provision. Learned counsel produced test data sheet in respect of LEAP 3 Cyl diesel engine variant indicating the use of imported engine in their factory. The test data sheet as produced herein may be a relevant document for their purpose but the authority below will be the appropriate authority to appreciate the same. Without going into the other aspect viz. suppression by appellant, imposition of penalty etc., one more opportunity granted to the appellant to produce evidences including the test data sheet to establish the use of the said engine for any research purpose in their factory and for that purpose the matter is remanded back to the learned Commissioner (Appeal) for deciding the same afresh - The issue regarding TR-6 challan has already attained finality. The appellant is directed to produce all relevant documents/ evidences they wish to rely upon in support of their submission before the learned Commissioner (Appeals). Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2023 (6) TMI 1150
Rejection of request of the appellants/writ petitioners for waiver of tax arrears and penalty - HELD THAT:- As the Assessee has decided to go before the Authority, the Assessee, as a matter of right cannot demand that the entire waiver shall be granted. The Authority has the power either to waive or reject the waiver in its entirety and he also has the power to demand a higher perccentage as an interim measure till the issue is finally decided. In case, the Authority concerned accepts the case of the Assessee, the excess amount, if any collected will have to be refunded to the Assessee. The Authority, while passing a final order can either accept 4% or 12.5%, depending upon the acceptance of the contentions of the parties, but cannot increase the percentage from 4% or reduce it from 12.5%. The order of the learned Single Judge need not be interfered with, since the entire issue is at large and the issue has to be decided on merits, in order to give a quietus to the entire issue and the matter being pending before the authorities, as an interim measure, the respective appellants can be directed to pay another 4% of the tax. Accordingly, the respective appellants are directed to pay 4% of the tax determined by the authorities, apart from 4% already remitted, i.e., Total 8% (4% + 4%) within a period of four weeks from the date of receipt of a copy of this order - the matter is remitted back to the authority concerned for passing appropriate orders on merits and in accordance with law.
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Indian Laws
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2023 (6) TMI 1149
Dishonour of Cheque - rebuttal of presumption under Section 139 of the Negotiable Instruments Act - HELD THAT:- The Defendant having voluntarily handed over the said cheque duly signed, even assuming the same was blank would necessarily be liable in respect thereof. There is no doubt that the practice of handing over blank cheques is one which is attended with risks. The law is well settled that the presumption under Section 139 of the Negotiable Instruments Act would apply. Therefore, when a person voluntarily hands over a blank cheque he therefore accepts the risks of the consequences that may follow in doing so. The handing over of a blank cheque also presupposes (a) that the same was handed over for consideration and/or some benefit having been or to be received by the drawer and (b) the existence of a high level of faith and trust between the Parties. The Defendant therefore cannot be permitted to now raise defences that were not expressly taken at the time of the handing over of the said cheque, namely that the same was handed over only as security etc. Had this been the case, it was incumbent for the Defendant to have made this clear in writing at the time the cheque was handed over. Presumably the Defendant did not do so as monies were being lent and accepted in cash as is the case of the Plaintiff. While there is no doubt that the presumption under Section 139 of the Negotiable Instruments Act in this case arises, it is well settled that the same is a rebuttable presumption. Leave to defend the present Suit is granted to the Defendant subject to depositing a sum of Rs. 50,00,000/- within a period of six weeks from today - If the aforesaid deposit is made within the stipulated period, this Suit shall be transferred to the list of Commercial Causes and the Defendant shall file written statement within a period of six weeks from the date of deposit - Application disposed off.
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2023 (6) TMI 1148
Dishonour of Cheque - Respondent/ Accused was acquitted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - failure to disclose in statement of Account the amount which was due to him from the Accused for the year ending 31.03.2015 - failure to step into the witness box and the presumption under Section 139 of the N.I. Act has not at all been rebutted - error in shifting such burden on the Complainant or not - HELD THAT:- There are catena of decisions showing the settled proposition of law that once the signature on the cheque is not disputed and when conditions imposed under Section 138 of the N.I. Act are fulfilled while presenting the cheque and thereafter, by issuing legal notice, the Magistrate is duty bound to draw a presumption under Section 139 of the N.I. Act in favour of the Complainant that such cheque is issued towards legally enforceable debt. The cheque in question was issued by the Accused, which is not at all disputed. The question which the Accused tried to raise is that such a cheque is not issued towards the supply of material. The burden of this aspect in order to rebut the presumption under Section 139 of the N.I. Act is certainly on the Accused. The cross examination of the Complainant shows only suggestions given to the Complainant to that effect. The delivery challans are produced by the Complainant, which were disbelieved by the Trial Court on the precise ground that the signature on the said delivery challans are not matching with the signature of the Accused - The person who receives the material at the site normally signs such delivery challans. Therefore, comparing the signature of the Accused where there is no denial to show that he personally did not receive such material at the site was completely unwarranted. The observations of the learned Magistrate in paragraph 36 of the impugned judgment are therefore clearly perverse and against the documents produced on record since there is no other material which has been brought on record on behalf of the Accused and of rebutting presumption under Section 139 of the N.I. Act, dismissal of the complainant and acquittal of the Accused by the Trial Court needs to be interfered - appeal allowed.
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