Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 11, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Writ against SCN & attachment order allowed. SCN not properly uploaded, violating natural justice. 30 days to respond granted. Approach appellate authority permitted. Attachment quashed.
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GST registration can't be cancelled for non-response to show cause notice. Allow response on principal place allegation & details of operations.
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SCN issued sans reasons for registration cancellation. Authorities lauded for natural justice compliance. Directed to follow HC's 2022 directives.
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Tax credit on rent disallowed - sub judice. Reverse charge on freight inadmissible under Sec 98(2). Input/output set-off query outside Sec 97(2).
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Supply of security services to BBMP not exempt from GST as not related to functions under Articles 243G/243W. Outsourced security services attract GST.
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Pure services to State Govt related to Panchayat functions under Article 243G are GST exempt as per Entry 3 of Notification 12/2017-CTR.
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Employers can recover bonuses/allowances from employees who exit early, as per contract. It's not a taxable service under GST.
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Professional tax filing services for BWSSB don't qualify for exemption as it's not a local authority & services aren't for panchayat/municipality functions.
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Movie ticket prices hiked despite GST cut from 28% to 18%, violating law. Rs. 88.67 lakh profiteered amount not passed to customers. Directed to refund with interest & penalized.
Income Tax
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Excise contractors not "buyers" for tax deduction at source under Sec 206C. Distinct transactions for vending rights & retail sale.
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Non-resident software payments not royalties, not taxable in India. No TDS obligation under Sec 195. Upholds Engineering Analysis.
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Faceless assessment regime u/s 151A bars Jurisdictional AO from issuing notice u/s 148; exclusive jurisdiction to FAO/JAO, not both. Unlawful action by Authority quashed.
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Loss & profit from F&O trades not taxable if net effect is nil. No correlation between assessee's transactions & market manipulation.
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Flat renovation cost disallowed due to lack of evidence. Bills in unrelated entity's name, unsecured loan advanced. Partial cost allowed based on assessee's bills. Appeal dismissed.
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Settlement applications filed before 31.03.2021 valid despite retrospective amendment. Vested right upheld.
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Taxpayer bought 4 flats as single unit, got deduction u/s 54F on capital gains from asset sale for entire cost despite separate IDs.
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IBC 2016 prevails over Income Tax Act 1961. Tax authorities can determine dues but can't recover during IBC moratorium.
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CIT(A) deleted addition on unaccounted income, accepted retraction of statement, agreed cash payment from surplus, not suppressed sales.
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Interest on enhanced compensation is taxable as income from other sources, not capital gains.
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Discontinued biz loss disallowed; no revival likelihood. Interest income taxed at 10% as per India-NZ DTAA for NZ residents.
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AO erred by disregarding CBDT guidelines on cash deposits up to ₹2.5L. ITAT granted relief based on binding precedents.
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Trust's mutual fund investments from corpus allowed. Settlor's accommodation clause infructuous post death. Registration cancellation improper. Actual activities genuine. Order set aside.
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Assessee's appeal dismissed; share premium treated as unexplained cash credit under Sec 68 due to accommodation entries.
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Assessee valued intangible assets per AS-26, CIT wrongly assumed non-compliance. Tribunal upheld valuation, CIT's jurisdiction flawed.
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TPO's interest rate determination flawed. DRP rightly considered future projections & risk for arm's length rate. Final assessment valid.
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Daurau Farms LLP partner paid Rs. 30L cash for cows from firm's sales. Revenue doubted, made addition. ITAT accepted explanation, deleted addition.
Customs
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Commissioner Appeals can't pass order based on quashed order. New facts emerged, should've remanded for fresh consideration.
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Refund of CVD paid on re-import after GST implementation due to system error & insistence, not time-barred. Drawback paid, no duty liability.
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Imported goods valuation: Retail vs bulk packs must be considered. NIDB data alone can't enhance value. Quantities & quality are key.
Corporate Law
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Delayed filings denied fee waiver. Pay late fees for restoration. Court upholds previous order's condition. No relief beyond granted.
Indian Laws
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Appellate Court's remand power u/s 37(1)(c) to be used sparingly. Narrow scope of interference u/s 34 & 37. Multiple grounds waste time & increase pendency.
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Limitation period for arbitration petition filing expired on 30/09/2022, excluding extension. Petition filed on 31/10/2022 dismissed.
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Cheque dishonour: Proprietor/signatory liable, not others. Petitioner neither, so complaint dismissed.
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Reference proceedings abate if 3/4th secured creditors initiate SARFAESI recovery, benefiting majority creditors. Statutory conditions met, abatement ensues.
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Petitioner violated undertakings, failed to clear dues despite extensions. Bank allowed to take possession of properties.
Service Tax
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GTA service tax liability on recipient, not provider. Reimbursement expenses not taxable. Order set aside, appeal allowed. Demand time-barred.
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Subcontractor services to SEZ units exempt from service tax, regardless of provider's location. Complex laws, debatable issue. Limitation period wrongly invoked, demand set aside.
Central Excise
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Black sand from casting process not 'manufactured', hence non-dutiable. Color change alone doesn't alter nature.
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Sale completed on delivery to buyer's factory. Outward freight charges for FOR sale eligible for CENVAT credit.
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Penalty for CENVAT credit fraud set aside as firm settled dues under Sabka Vishwas Scheme. Discrepancy in stock can't lead to adverse inference against supplier. Payments received through cheques.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (7) TMI 533
Challenge to SCN and adjudication order - attachment of petitioner's bank account - SCN was not uploaded in the view notices and orders section of the portal and as such the petitioner did not have knowledge with regard to the same - principles of natural justice - HELD THAT:- Admittedly, in this case the show cause notice under Section 73 of the said Act has been issued on 26th July, 2023. It is also not in dispute that the said notice was not uploaded in the view notices and orders section of the portal but was uploaded in the view additional notices and orders section. It is found from the provisions of Section 73 (8) of the said Act that a registered taxpayer is entitled to deposit within 30 days from the date of issuance of the show cause notice, the demand arising out of the show cause notice. Taking into consideration such provision and the corresponding Rule being Rule 142 (3) of the CGST Rules 2017, ordinarily 30 days time is required to be granted for responding to a show cause notice. However, in the facts of the case, the petitioner did not file any response to the show cause notice nor did the petitioner apply for extension of time - It is found from the pleadings on record, inter alia, including the disclosure made today that the show cause notice had been uploaded in the view additional notices and orders section of the portal and not in the view notices and orders section where ordinarily all orders and notices are uploaded. It cannot be said that the petitioner had little or no opportunity to respond to the show cause notice. Further, at this stage without going into the controversy whether uploading of a notice in the view additional notices and orders section of the portal constitutes due service of notice within the meaning of Section 69 (1) (d) of the said Act, since, there may have been some confusion in identifying the notice/orders in the pre-redesigned dashboard of the portal, the petitioner should be permitted to approach the appellate authority - the order of attachment dated 21st February 2024 cannot be sustained and the same is accordingly quashed. Petition disposed off.
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2024 (7) TMI 532
Cancellation of petitioner s GST Registration - cancellation on the ground that petitioner had not responded to the impugned SCN - HELD THAT:- It is apparent from the record that the only reason for which the petitioner s GST Registration is sought to be cancelled is that the petitioner has been found non-existent at its principal place of business. It is also apparent that the petitioner has sought to change its principal place of business more than once. It is considered apposite to direct that the petitioner be permitted to file a response to the allegation regarding the non-existence at its principal place of business. It will be open for the petitioner to set out the complete details as to when it has ceased to carry on its business from its principal place of business and also to furnish sufficient evidence as to the place from where it continued to carry on its business. The petition is disposed off.
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2024 (7) TMI 531
Cancellation of GST registration with retrospective effect - non-filing of returns for a continuous period of six months - no reason given for cancellation - violation of principles of natural justice - HELD THAT:- Since the reasons for which the petitioner s GST registration is cancelled viz. non filing of returns for a period of six months, is not disputed, the decision to cancel the petitioner s registration cannot be faulted. In the present case, the impugned SCN does not set out any reason proposing to cancel the petitioner s GST registration with retrospective effect. The impugned order also does not indicate any reason as to why the proper officer has decided to cancel the petitioner s GST registration from the date on which the CGST Act came into force. It is material to note that the only ground on which petitioner s GST registration was proposed to be cancelled was that it has not filed its return for more than six months - there are no reason which would warrant cancellation of the petitioner s GST registration even for the period it had furnished its returns. Clearly, non-filing of returns for a period of six months or more cannot, absent any other consideration warranting cancellation of registration to cover the period during which the taxpayer had duly complied with the provisions of the CGST Act, cannot constitute a reason to cancel the same with retrospective period to cover the period for which GST returns were duly filed. It is considered apposite to confine the operation of the impugned order to cancellation of the petitioner s GST registration albeit from the date of the impugned order - application disposed off.
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2024 (7) TMI 530
Violation of principles of natural justice - neither the show cause cum demand notice issued u/s 73 of WBGST Act nor the adjudication order passed by the proper officer issued u/s 73 (9) was uploaded on the common portal - HELD THAT:- It is true, that in absence of the registered tax payer being made aware with regard to the show cause in the manner provided in Rule 142 (1) of the said Rules, the registered tax payer may be denude the opportunity to appropriately respond to the same. But in the instant case, it is noticed that the show cause notice was duly served on the petitioner by speed post. The petitioner had also responded to the same and was also afforded an opportunity of personal hearing. It may be relevant to note that Section 169 of the said Act specifies that the notices are required to be served in the mode and manner as provided for therein. Admittedly, since, the petitioner had been served with the show-cause notice by speed post and the petitioner having responded to the same, it constitutes substantial compliance of statutory provision as regards service of notice. Having regard to the above, the show-cause notice or the order does not get vitiated simply because the same had not been uploaded on the common portal - the petitioner should be permitted to pursue its statutory remedy. If, however, for any reason the said order is yet to be uploaded, the respondents should forthwith upload the same on the portal positively within a period of 7 days from date. Petition disposed off.
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2024 (7) TMI 529
Validity of assessment order - service of notice of personal hearing - violation of principles of natural justice - HELD THAT:- The petitioner cannot be said to have been prejudiced merely because the Officer from the Intelligence Department has passed the order. The Officer who investigated and passed the order also is different from the Officer who has passed the impugned order although from the same Department. As mentioned in M/S. RASATHE GARMENTS VERSUS THE STATE TAX OFFICER (ST) (INSPN.) , TIRUNELVELI, THE COMMISSIONER OF COMMERCIAL TAXES [ 2024 (6) TMI 481 - MADRAS HIGH COURT] , the scheme of the Act also does not contemplate an embargo on an Intelligence Officer from passing the order. Petition dismissed.
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2024 (7) TMI 528
Cancellation of GST registration of petitioner - inadequate SCN - violation of principles of natural justice - HELD THAT:- It is apparent that the impugned SCN fails to meet the requisite standards of a show cause notice as it does not clearly specify the reasons as to why the petitioner s GST registration was proposed to be cancelled. Although it is alleged that the registration has been obtained by means of fraud, wilful misstatement or suppression of facts, it fails to disclose the precise nature of the fraud or; it does not specify which statement is alleged to be a wilful misstatement; and it does not disclose the facts that are allegedly suppressed - The purpose of a show cause notice is to afford the noticee an opportunity to respond to the allegations. It is clear that such a notice, which does not specify the nature of the allegations is incapable of eliciting a meaningful response. The order for cancellation of registration merely refers to the impugned SCN which, does not set out any intelligible reason for proposing to cancel the petitioner s GST registration - The impugned SCN as well as the impugned order dated 08.08.2023 cancelling the petitioner s GST registration are set aside. The petitioner s GST registration is directed to be restored forthwith - the petitioner s application for revocation of the said order is rendered infructuous - petition allowed.
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2024 (7) TMI 527
Maintainability of petition - availability of alternative remedy - demand on account of Input Tax Credit (ITC) being availed by the petitioner no. 1 - HELD THAT:- Having regard to the case made out by the petitioners, the writ petition should be heard. Further considering the prima facie case made out by the petitioners there shall be a stay of the demand raised by the proper officer as is reflected in the order dated 30th March, 2024, subject to the petitioners depositing 10% of the disputed tax amount with the GST authorities. Such payment must be made within a period of seven days from date. Let this matter appear in the Combined Monthly List of July, 2024 and be taken up for consideration on 23rd July, 2024.
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2024 (7) TMI 526
Challenge to recovery notices - Deposit requirement under Section 112 of the GST Act - non-constitution of GST Tribunal - HELD THAT:- Considering the fact that the petitioner has deposited more than 20% of the disputed tax, the impugned recovery Notices issued to the petitioner shall be kept in abeyance subject to the condition that the petitioner either files appeals before the GST Tribunal in case GST Tribunal is constituted, within a period of 30 days from the date of receipt of a copy of this order or in the alternative, the petitioner files Writ Petitions challenging the respective Orders-in-Appeals and/or Orders-in- Original, within such time. Petition disposed off.
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2024 (7) TMI 525
Condonation of delay in filing the revocation application - HELD THAT:- The delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. Petition disposed off.
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2024 (7) TMI 524
Challenge to SCN issued by the respondent authorities for cancellation of the registration - no detailed reasons for issuance of SCN - HELD THAT:- It goes without saying that the approch of the respondent authorities is appreciable so as to comply with the principles of natural justice by giving an opportunity to the assessees before cancellation of the registration number so as to avoid unnecessary litigation before this Court. It is hoped that the respondent authorities shall adhere to the aforesaid directions issued by this Court in the year 2022 and no further show-cuase notices without any detailed reasons would be issued henceforth or any order of cancellation of registration shall be passed without assiging the detailed reasons by the respondent authorities, failing which, this Court shall be complelled to pass appropriate orders for cost against the Officers who would pass the orders in breach of the principles of natural justice though brought to their notice by the highest Authority of the Department by the aforesaid Standard Operating Procedures circulated to all the Officers of the respondent Departments. Petition disposed off.
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2024 (7) TMI 523
Scope of Advance Ruling application - Admissibility of input tax credit of tax paid or deemed to have been paid - Applicability of RCM on freight inward - set off Input and Output in a situation where the Applicant is having more than one business done under the same GST Number. Input eligibility on renting of commercial Property - HELD THAT:- Since the same issue is pending before the Hon'ble Supreme Court, the same cannot be answered by this Authority as the case is sub judice. Applicability of RCM on freight inward - HELD THAT:- The issue raised in the instant application and the audit objection raised in the audit report are one and the same and the same has already been decided in the proceedings. Thus, first proviso to Section 98 (2) of the CGST Act 2017 is squarely applicable to the instant case and hence is inadmissible. How to set off Input and Output in a situation where the Applicant is having more than one business done under the same GST Number? - HELD THAT:- The authority can't give any decision on the issues that are not covered under Section 97 (2) of the CGST Act 2017. In the instant case the questions is not covered under the issues specified under Section 97 (2). Thus, the same cannot be answered.
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2024 (7) TMI 522
Exemption from GST - Bruhat Bengaluru Mahanagra Palike, Banglore - obtaining security services on outsource basis from security agency as per the pure services under 12th schedule to Article 243-W of the Constitution and under 11th schedule to Article 243-G - HELD THAT:- Supply of Security services to Bruhat Bengaluru Mahanagara Palike (BBMP) are not by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution and hence not exempted from GST.
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2024 (7) TMI 521
Levy of GST - rent received from the Department of Social Welfare - Pure services or not - HELD THAT:- The Applicant is providing pure services to the State Government by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution and the same is covered under entry No. 3 of Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017 and hence the same is exempted. The pure services provided by the Applicant to the State Government are exempted as per entry No. 3 of Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017 and hence not taxable.
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2024 (7) TMI 520
Levy of GST - recovery of joining bonus and retention bonus on account of employee's inability to serve the organization (or a particular department, in case of retention bonus) for a pre-agreed period - recovery of work from home one-time setup allowance paid to employees in case where the employees exit before serving the pre-defined period from the payout date - recovery of amount paid as financial assistance to employees under Tuition Assistance Program (TAP) policy in case where the employee exit before serving the pre-agreed period in the organization. HELD THAT:- The Applicant is recovering retention bonus, joining bonus, work from home allowance and expenses under TAP, only when the employee wishes to voluntarily exit the organization within the stipulated time period as mentioned in the terms and conditions laid out with respect to each bonus/allowance. The intention behind such bonus/allowance is to incentivize and motivate the employee to remain in the organization - the recovery of bonus/allowance by the applicant is in same lines with that of the forfeiture of salary or recovery of bond amount in the event of the employee leaving the employment before the minimum agreed period which is not taxable under GST as per para 7.5 of Circular No. 178/10/2022-GST dated 03.08.2022. Retention bonus, joining bonus, work from home allowance and expenses under TAP are also in the nature of perquisites provided by the employer to its employees in terms of contractual agreement entered into between the employer and employee and hence not taxable under GST. The recovery of joining bonus, retention bonus, work from home allowance and expenses under TAP are not taxable under GST.
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2024 (7) TMI 519
Exemption from GST - professional services for assistance in filing of corporate tax returns provided to BWSSB - exempt supply as referred in SI No. 3 (chapter 99) of table mentioned in Notification 12/2017-Central Tax (Rate) dated 28 June 2017 or not - HELD THAT:- From the definitions of Panchayat and Municipalities it is seen that both are institutions of self-government in defined areas. Self-Government is the management of local affairs by local Authorities, members of which have been elected by the local people. One of the distinctive attributes and characteristics of Local Authority is that their members are elected through direct elections by the inhabitants of the defined area. But as per section 3 of BWSSB Act 1964, all the members of BWSSB are appointed by the State Government - BWSSB is also not a Municipal Committee or a Zilla Parishad or a District Board, since it is not vested with the control or management of a municipal or local fund. In view of the above, it is concluded that BWSSB is not Local Authority - BWSSB is neither State Government nor Local Authority and hence the first condition is not satisfied. The Applicant states that he is providing professional services in relation to corporate tax return filing to BWSSB. But these services are not provided by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. Thus, the second condition is also not satisfied. Hence the services provided by the Applicant to BWSSB are not exempt as per entry No. 3 of Notification 12/2017 Central Tax (Rate) dated 28th June 2017. The professional services for assistance in filing of corporate tax returns provided by the Applicant to BWSSB is not an exempt supply as per SI No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017.
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2024 (7) TMI 518
Profiteering - increasing the base prices of movie tickets by maintaining the same selling prices of the movie admission tickets despite the reduction in GST rate - GST rate reduction benefits not passed on - contravention of Section 171 of the CGST Act - penalty - HELD THAT:- It has been established that the Respondent has profiteered by way of increasing the base prices of movie tickets by maintaining the same selling prices of the movie admission tickets despite the reduction in GST rate Services by way of admission to exhibition of cinematograph films where price of admission ticket was above one hundred rupees from 28% to 18% wet 01.01 2019. It Is also clear to us that the Respondent has not passed on the benefit of rate reduction for the period from 01 01.2019 to 30.04.2020 amounting to Rs. 88.67.790/- (inclusive of GST) to his customers/recipients Thus, the profiteering is determined as Rs. 88,67.790/-as per the provisions of Section 171 read with Rule 133 (1) of the CGST Rules 2017 and accordingly the Respondent is directed to commensurately reduce the prices of movie tickets in line with the provisions of Section 171 (1) read with Rule 133 (3) (a) of the CGST Rules, 2017. Further, since the customers/ recipients, in this case. are not Identifiable, we direct the Respondent to deposit the profiteered amount of Rs. 88,67,790/-along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited, in two equal parts, in the Central Consumer Welfare Fund and the Telangana State Consumer Welfare Fund as per provisions of Section 171 (1) read with Rule 133 (3) (c) of the CGST Rules, 2017. The above amount shall be deposited by the Respondent within a period of 3 months from the date of receipt of this Order failing which the same shall be recovered by the Commissioner CGST/SGST as per the provisions of the relevant GST Act, 2017. Penalty - HELD THAT:- The Respondent has denied the benefit of rate reduction from 28% to 18% w.e.f. 01.01.2019 to his customers/recipients in contravention of the provisions of Section 171 (1) of the CGST Act. 2017 and has committed an offence under Section 171 (3A) of the above Act. That Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act. 2017 vide Section 112 of the Finance Act, 2019, and the same became operational w.e.f. 01.01.2020. As the period of investigation was 01.01.2019 to 30.04.2020, therefore, he is liable for imposition of penalty under the provisions of the above Section for the amount profiteered from 01.01.2020 onwards.
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Income Tax
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2024 (7) TMI 534
Addition u/s 68 - assessee failed to prove, identify and genuineness of the transaction - Second round of litigation before ITAT - in the first round AO disbelieved the claim of assessee that the advances were received from various persons and held that the assessee has not proved the identity of the persons and genuineness of the transaction - CIT(A) in the first round, upheld the findings of the AO in this round too. HELD THAT:- This is the second round of litigation before the ITAT, wherein, same as in the first round, the AO disbelieved the claim of assessee that the advances were received from various persons and held that the assessee has not proved the identity of the persons and genuineness of the transaction. AO this time has, however, has mentioned about the CBI and EOW inquiry to support his action of making addition u/s 68. CIT(A), as in the first round, upheld the findings of the AO in this round too. Before us, the assessee has placed the documents of the Government of Odisha referring to the status report on the issue of identifying the depositors in the schemes of Golden Land Developers Ltd and GLP Developers Ltd and of refund of the deposits to them. The assessee has also placed before us the order of Orissa High Court taking cognizance of the issue of identification and return of deposits in the case of GLP Developers Ltd and Another. In view of the Orissa High Court cognizance of the matter and the Government of Odisha correspondence, we are of the considered opinion, that the details of depositors need further examination and verification in the context of the provision of section 68. We, accordingly, restore this issue to the file of the AO - AO is directed to examine and verify details of the depositors and decide the issue afresh after giving reasonable opportunity of being heard to the assessee. The assessee is also directed to furnish evidences/documents as required by the AO. Assessee appeal allowed for statistical purposes.
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2024 (7) TMI 517
Applicability of Section 206C - Collection of tax at source - liquor vendors (contractors) who bought the vending rights from the appellant on auction - Determination of Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc. - such liquor vendors can be termed as buyer within the meaning of Explanation(a) to Section 206C or excluded from the said definition of buyer as per clause (iii) of Explanation (a) to Section 206C? - HELD THAT:- By the process of auction etc., the excise contractors are only shortlisted and conferred the right to retail vend of arrack in their respective areas. It cannot be said that by virtue of the auction, certain quantities of arrack are purchased by the excise contractors. Thus, at this stage there are two transactions, each distinct. The first transaction is shortlisting of excise contractors by a process of auction etc. for the right to retail vend. The second transaction, which is contingent upon the first transaction, is obtaining of arrack for retail vending by the excise contractors on the strength of the permits issued to them post successful shortlisting following auction. Therefore, it is evidently clear that arrack is not obtained by the excise contractors by way of auction. What is obtained by way of auction is the right to vend the arrack on retail on the strength of permits granted, following successful shortlisting on the basis of auction. Thus, the first condition under clause (iii) is satisfied After the arrack is obtained in the above manner by the excise contractor, the requirement of the second condition under Explanation(a)(iii) is that he has to sell the same in the area(s) allotted to him at the sale price fixed as per Rule 4 of the 1967 Rules. The language of the second condition is that the sale price of such goods to be sold by the buyer is fixed by or under any state statute. As already noted above, Rule 4 of the 1967 Rules enables the excise contractor to sell the arrack in retail at a price within the range of minimum floor price and maximum ceiling price which is fixed by the Excise Commissioner. The sale price is fixed by the statute but within a particular range beyond which price, either on the higher side or on the lower side, the arrack cannot be sold by the excise contractor in retail. Therefore, the arrack is sold at a price which is fixed statutorily under Rule 4 of the 1967 Rules and thus the second condition stands satisfied. Since both the conditions as mandated under Explanation(a)(iii) are satisfied, the excise contractors or the liquor vendors selling arrack would not come within the ambit of buyer as defined under Explanation(a) to Section 206C of the Income Tax Act. AO declared that Mysore Sales had failed to collect and deposit an amount as TDS from the excise contractors - As per sub-section (3), any person collecting TDS under sub-section (1) shall have to pay the same to the credit of the central government within seven days. Requirement under sub-section (5A) is that every person collecting TDS in terms of Section 206C (1) shall prepare half yearly returns for the periods ending on 30th September and 31st March respectively for each financial year and thereafter to submit the same before the competent assessing officer. Sub-rule (6) mandates that if any person responsible for collecting TDS fails to collect the same, he shall have to deposit the said amount to the credit of the central government notwithstanding failure to deduct TDS. Though there is no express provision in sub-section (6) or any other provision of Section 206C of the Income Tax Act regarding issuance of notice and affording hearing to such a person before passing an order thereunder, nonetheless, it is evident that an order passed under Section 206C(6) of the Income Tax Act, as in the present case, is prejudicial to the person concerned as such an order entails adverse civil consequences. It is trite law that when an order entails adverse civil consequences or is prejudicial to the person concerned, it is essential that principles of natural justice are followed. In the instant case, though show cause notice was issued to the assessee to which reply was also filed, the same would not be adequate having regard to the consequences that such an order passed under Section 206C(6) of the Income Tax Act would entail. Even though the statute may be silent regarding notice and hearing, the court would read into such provision the inherent requirement of notice and hearing before a prejudicial order is passed. We, therefore, hold that before an order is passed under Section 206C of the Income Tax Act, it is incumbent upon the assessing officer to put the person concerned to notice and afford him an adequate and reasonable opportunity of hearing, including a personal hearing. Thus, the question framed in paragraph 3 above, is answered in the negative by holding that Section 206C of the Income Tax Act is not applicable in respect of Mysore Sales and that the liquor vendors(contractors) who bought the vending rights from the appellant on auction cannot be termed as buyers within the meaning of Explanation(a) to Section 206C of the Income Tax Act. We also hold that the High Court was not justified in dismissing the writ petitions and consequently, the writ appeal challenging the orders.
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2024 (7) TMI 516
Nature of expenditure - expenditure claimed by assessee as salaries and marketing expenditure for development of new software platform - revenue or capital expenditure - HELD THAT:- As relying on passed by this Court [ 2024 (5) TMI 712 - SC ORDER] , this Special Leave Petition also stands dismissed as held Assessee has incurred expenditure in these two years to develop a software but due to change in technology, it had to abandoned the product, it had lost money spent on this product. The product having been abandoned, the Assessee shall not get any endure in benefit and issue correctly decided in favour of assessee.. Pending application(s), if any, shall also stand disposed of.
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2024 (7) TMI 515
Increase in loan liability due to fluctuation in foreign exchange rates - foreign currency loan had been taken - investment allowance additionally claimed by the Assessee with regard to the additional cost arising out of fluctuation in the foreign currency exchange rate - ITAT held that the Assessee was not entitled to claim investment allowance to the extent of exchange rate fluctuations - HELD THAT:- As decided in GUJARAT STATE FERTILIZERS CO. LTD. [ 2002 (10) TMI 79 - GUJARAT HIGH COURT] on a plain reading of section 43A of the Act, one thing is certain, and that is, the increase or reduction in the liability has to take place only in the year of fluctuation and it does not relate back to the year of acquisition/installation/first user. One will therefore have to proceed on the footing that the actual cost figure which was quantified earlier than the previous year in which the fluctuation took place, shall have to be modified in the year of fluctuation. It is well-settled that when the asset was purchased at a price, liability was to be discharged in installments, it cannot be stated that the liability did not exist or accrue till the installments became due and payable. It is this liability which changes on account of fluctuation in the rate of exchange. Thus investment allowance, consequent to exchange rate fluctuation, would be allowable. For these reasons, and in the backdrop of the provisions of Section 32A, and in view of the judgments referred to above, the question of law deserves to be answered in favour of the Appellant and against the Revenue.
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2024 (7) TMI 514
Validity of Block assessment - no satisfaction note for initiating proceedings u/s 158BD recorded by proper AO - search in the premises of UIC Group was conducted by the income tax department in which certain share certificates issued in the name of the respondent/assessee were found - as per ITAT Satisfaction was to be recorded by the assessing officer of the UIC Group where the search was conducted but in the instant case in hand satisfaction has been recorded by the assessing officer having jurisdiction over the assessee HELD THAT:- Under Section 158BD satisfaction has to be recorded by the assessing officer of the searched person and then to send it to the Assessing Officer of such other person. The facts of the present case clearly based on documentary evidences clearly reveals that the assessing officer of the searched person has neither recorded any satisfaction as required u/s 158BD nor handed over to the assessing officer of the respondent/assessee seized documents etc. to enable the assessing officer of the respondent/assessee to proceed under Section 158BC. Under the circumstances, the initiation of proceedings by the assessing officer of the respondent/assessee under Section 158BD of the Act, 1961 was without jurisdiction and unauthorized. The finding recorded by the ITAT in the impugned order with regard to the satisfaction note as aforementioned, does not suffer from any perversity. The view being taken by us is also supported by the law laid down in Manish Maheshwari [ 2007 (2) TMI 148 - SUPREME COURT] . Thus no illegality in the impugned order of the ITAT. Decided against revenue.
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2024 (7) TMI 513
Validity of Faceless assessment order - violation of principles of natural justice - petitioner no. 1 was not afforded adequate opportunity to respond to the additional show cause - HELD THAT:- As in the instant case, it is noticed that the petitioner no. 1 had been denied the very opportunity to respond to the second/additional show cause. Additionally in terms of Section 144B (6) (viii) of the said Act, it is the duty of the Faceless Assessment Unit in case of proposing variations to afford an opportunity to the assessee to show cause why the assessment should not be completed as per the income or loss proposed in the variations. In our view, failure to afford adequate opportunity to the petitioner no. 1 to respond also constitutes violation of statutory provisions apart from violation of principles of natural justice. Since, the petitioner no. 1 did not get the opportunity to respond to the additional show-cause, in my view, the petitioners cannot be asked to pursue statutory remedy as the defect cannot be cured by affording opportunity to the petitioners to prefer an appeal. Having regard to the aforesaid, the assessment order passed by the Faceless Assessment Unit u/s 143 (3) r.w.s. 144B of the said Act cannot be sustained and the same is accordingly set aside. The matter is remanded back to the Faceless Assessment Unit with a direction to permit the petitioner no. 1 to file its response to the additional show cause within a period of 15 days from date. For the said purpose, the Faceless Assessment Unit shall activate the submit response button on the portal so as to enable the petitioner no. 1 to submit its response. Faceless Assessment Unit is also directed to intimate the petitioner no. 1 via online portal the date and time of virtual meeting/video hearing and upon giving an opportunity of hearing to the petitioner no. 1 to hear out and dispose of the scrutiny assessment proceeding within a period of 10 weeks from the date of communication of this order. Notice issued Section 274 read with Section 271AAD (1) (i) of the said Act and the notice for penalty under Section 274 read with Section 271B of the said Act stand quashed.
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2024 (7) TMI 512
Income taxable in India or not - payments made by the respondent for obtaining computer software were liable to be taxed in India as royalties under the provisions of Section 9 (1) (vi) of the Income Tax Act, 1961 - HELD THAT:-As in Engineering Analysis Centre of Excellence (P.) Ltd [ 2021 (3) TMI 138 - SUPREME COURT] held that amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income-tax Act were not liable to deduct any TDS under section 195 of the Income-tax Act. Decided against revenue.
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2024 (7) TMI 511
Faceless assessment of income escaping assessment - validity of notice issued by the JAO as not in accordance with Section 151A - not permissible for the Jurisdictional Assessing Officer to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A - HELD THAT:- As decided in Hexaware T.echnology Ltd. [ 2024 (5) TMI 302 - BOMBAY HIGH COURT ] provisions of Section 151A of the IT Act had clearly brought a regime of faceless assessment. The Court held that it was not permissible for the Jurisdictional Assessing Officer to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A of the IT Act. There is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice under Section 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the JAO or the FAO in the Scheme dated 29th March, 2022, then it is to the exclusion of the other. To take any other view in the matter, would not only result in chaos but also render the whole faceless proceedings redundant. If the argument of Revenue is to be accepted, then even when notices are issued by the FAO, it would be open to an assessee to make submission before the JAO and vice versa, which is clearly not contemplated in the Act. Therefore, there is no question of concurrent jurisdiction of both FAO or the JAO with respect to the issuance of notice under Section 148. When an authority acts contrary to law, the said act of the Authority is required to be quashed and set aside as invalid and bad in law and the person seeking to quash such an action is not required to establish prejudice from the said Act. An act which is done by an authority contrary to the provisions of the statue, itself causes prejudice to assessee. All assessees are entitled to be assessed as per law and by following the procedure prescribed by law. Therefore, when the Income Tax Authority proposes to take action against an assessee without following the due process of law, the said action itself results in a prejudice to assessee. Decided in favour of assessee.
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2024 (7) TMI 510
Validity of assessment orders passed u/s 144C - Objections rejected by respondents due to failure to file before Dispute Resolution Panel (DRP) - petitioner is a Non Resident Indian, who has been charged for suppressing the income - as argued petitioner is an employee in UAE and that the amounts are not liable to be taxed - respondents rejected the objections filed by the respective petitioner on the ground that the petitioners have not filed objections before the Dispute Resolution Panal (DRP) as is contemplated u/s 144C(2) HELD THAT:- The respective petitioners appear to have entertained a view that the objections with the respondent were sufficient for the purpose of Section 144C(2) of the Income Tax Act, 1961, though the petitioners ought to have filed their objections not only with the respondent but also with the Dispute Resolution Panel. The objections of the petitioners, which has been considered by the respondents, were an incomplete representation by the objections of the petitioners as it ought to have been filed before the Dispute Resolution Panel. Under these circumstances, we inclined to dispose of these writ petitions by quashing the impugned orders and by remitting the case back to the respondent to pass a fresh order on merits and in accordance with law subject to the respective petitioners filing their objections with the Dispute Resolution Panel within a period of 15 days from the date of receipt of a copy of this order. Subject to the petitioners filing the objections before the Dispute Resolution Panel, the assessment shall be completed in accordance with Section 144C of the Income Tax Act, 1961. It is made clear that in case the petitioners fail to file their objections before the Dispute Resolution Panel within such time, the respondent is at liberty to proceed against the petitioners in the manner known to law, as if this order has not been passed. The submission of the petitioners that the petitioners will withdraw their respective appeals filed before the Appellate Commissioner stands recorded. Writ Petitions stand allowed
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2024 (7) TMI 509
Condonation of delay in filing an appeal before CIT(A) - Delay of 12 days due to the non-availability of our legal consultant who was out of station due to some personal reasons - HELD THAT:- Filing an appeal in tax matters may require legal and technical assistance. The taxation laws and the procedures involved in filing an appeal may be beyond comprehension for a layman assessee. Therefore, in my view, the reason advanced by the petitioner for condoning the delay in filing the appeal is sufficient, and the delay should have been condoned by the 1st respondent. Rejection of appeal on technical grounds amounts to violation of principles of natural justice. As relying on COLLECTOR, LAND ACQUISITION VERSUS MST. KATIJI AND OTHERS [ 1987 (2) TMI 61 - SUPREME COURT] there is sufficient cause for not presenting Ext. P2 appeal within the time provided under Section 249 (2) of the Act. Ext. P3 order is therefore set aside. The delay of 11 days has to be condoned and the appeal has to be admitted and adjudicated on merits. Direction to the 1st respondent to consider Ext. P2 appeal on merits within a period of two months from the date of receipt of a copy of this judgment, after affording an opportunity of hearing to the petitioner.
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2024 (7) TMI 508
Reopening of assessment u/s 147 - non-genuine loss on account of the transactions in F O carried out by the assessee - HELD THAT:- On perusal of the reasons recorded, it is not disclosed any income which has escaped assessment of income as the effect of loss and profit earned by the petitioner would be nil . There is no any other information recorded by the Assessing Officer, which shows that the petitioner has earned any income which is not offered to tax. It is not in dispute that the transactions referred to by AO were carried out on the Bombay Stock Exchange and no co-relation of the petitioner is established in the reasons recorded between the transactions of loss and profit of the equal amount in the case of the assessee with the observations of the Hon ble Apex Court referred to in the reasons recorded. Even the chief characteristics of manipulative reversal trades, on the basis of the order passed by the SEBI, recorded the fact reasons by the Assessing Officer which has no connection, as stated in the reasons recorded. Therefore, merely referring to the order of the Hon ble Apex Court and the observations of the SEBI, without there being co-relation of the petitioner assessee and only because the two contracts, in which the trades have been undertaken by the assessee, was identical resulting into loss and profit. The Assessing Officer could not have come to the, prima facie, conclusion that the income has escaped assessement to the tune of Rs. 38,40,000/-. There is no effect on the income of the assessee in view of loss and profit incurred on the F O transactions. Thus, reasons recorded by AO therefore, cannot, by any stretch of imagination, be said to form any reason to believe as to escapement of income for assuming the jurisdiction under Section 148 of the Act to reopen the assessment for the year under consideration. Decided in favour of assessee.
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2024 (7) TMI 507
Eligibility of settlement applications under the amended provisions of the Act - Scope of amendment in Section 245C - maintainability of the Settlement Applications filed prior to 31.03.2021 as well as notices issued prior to the said date u/s 148 or 153A of the Act would be maintainable before the Interim Board for Settlement - HELD THAT:- Section 245A (b) of the Act defines the word case to mean any proceedings for the assessment under the Act of the any person in respect of any Assessment Year or Assessment Years, which may be pending before the Assessing Officer on the date on which application is made under Section 245C (1) of the Act. It is pertinent to note that when the Finance Bill came into force and became the law with effect from 01.04.2021, provisions of Section 245C (5) of the Act, which provides that no application shall be made under this Section on or after 01.02.2021 cannot obliviate, the applications already filed by the petitioners as on the date of filing of the application for settlement, amendment of Section 245C (5) of the Act was not a statute and therefore by retrospective amendment the petitioners cannot be prohibited from making an application because if the legislature intended to make applications filed between 01.02.2021 and 01.04.201 as invalid and bad in law, it would have instead provided that such application would be treated as null and void. Therefore the provisions of Section 245C (5) of the Act cannot be placed into service to invalidate the applications filed between 01.02.2021 and 31.03.2021. When the petitioners have filed their applications before 31.03.12021, the date on which amendment Finance Act, 2021 did not come into effect and therefore the petitioners had vested right of preferring the application in absence of any statute prohibiting the same application. It is also pertinent to note that the CBDT has extended the last date from 01.02.2021 to 30.09.2021 for filing applications for settlement eligible on 31.01.2021 and the CBDT could not have prescribed the eligible date of filing of application up to 01.02.2021 for the assessee relying upon provisions of Section 245C (5) of the Act which was not in existence up to 31.03.2021 and therefore the application for settlement made by the petitioners are valid applications filed prior to 31.03.2021 in absence of provisions of Section 245C (5) of the Act. Therefore an application already filed after 01.02.2021 but before 31.03.2021 cannot be declared invalid and provision of section 245C (5) has rightly been read down that no application shall be made after 01.04.2021 once the provision of Section 245C (5) received the assent of the Hon ble President of India on 01.04.2021, however before the assent being accorded to the Finance Act, 2021 the applications made by the petitioners cannot be held to be invalid by virtue of subsection 5 of Section 245C of the Act. The petitions succeed and are accordingly allowed. The applications filed by the petitioners in respect of the cases arising between 01.02.2021 to 31.03.2021 shall be deemed to be the pending applications and shall be applications for the purpose of consideration by the Interim Board considering the last date of eligibility mentioned in para No. 4 (1) of the Notification dated 28.09.2021 shall be read as 31.03.2021 by reading down the last date 01.02.2021 as 31.03.2021 in Section 245C (5) of the Act as amended by the Finance Act, 2021. The impugned orders of the Interim Board are therefore set aside and the applications filed by the petitioners shall be deemed to be the pending applications for the consideration by the Interim Board, if otherwise, in order and eligible and shall be dealt with in accordance with law on merits and in accordance with the scheme that maybe framed by the Central Government as in respect of the other cases which were pending as on 31.01.2021. Consequential actions to the impugned orders passed by the Interim Board if any taken by the respondent Assessing Officer shall also stand quashed and set aside and the matter is remanded back to the Interim Board for Settlement for deciding the applications filed by the petitioners on merits.
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2024 (7) TMI 506
Rectification u/s 154 - deduction was not allowed u/s 11 as new registration details under new provisions of section 12AB were not furnished in return of income - as argued CIT(A) should have allowed the rectification petition since there was glaring mistake of CPC apparent from record that the assessee trust was registered u/s 12A, the old registration number were duly mentioned in the return of income and the action of CPC in denying exemption u/s 11 to the assessee trust in the intimation u/s 143(1) for not mentioning the new registration number in the return of income when the date for making application for obtaining new registration number was extended by the CBDT which was much after the date of the intimation. HELD THAT:- We find that the assessee s application for new registration in Form 10A, which was granted in Form 10C on 05.04.2022 granted from A.Y 2022-23 to A.Y 2026-27, however, the ld. CIT(A) failed to appreciate that old registration u/s 12A was valid till fresh registration was granted to the assessee. However, this fact was never examined by the Assessing Officer while passing the main order by simply rejecting the appeal of the assessee. We, therefore, direct the ld. CIT(A) to re-examine the issue after affording reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2024 (7) TMI 505
LTCG - Deduction u/s 54F - Determination of single residential unit - AO has disallowed the said deduction for the reason that the assessee has purchased residential house beyond the period of two years from the date on which the transfer took place and further by observing that the assessee that purchased more than one residential house, since the assessee has purchased four flats - DR submitted that the assessee has purchased four different flats and the possession was given to her in the year 2019- i.e. after expiry of four years from the date of sale of the land HELD THAT:- In the present case, the assessee s rights have been created in the said four flats at the moment they were allotted to the assessee on the payment of consideration which falls within the stipulated time period prescribed u/s. 54F of the Act, therefore, the allegation of the AO that the said flats are purchased by the assessee after the expiry of the four years does not hold water. Since all the four flats are constituted as single residential unit and allotted by the builder as one single residential unit though having four identification numbers, therefore, they can be termed as one residential unit for the purpose of claiming deduction u/s. 54F of the Act. Assessee has purchased one residential unit only where four flats are merged together as one residential unit and finally got registered in same manner as a single unit though they have different numbers and, therefore, the assessee is eligible for deduction for entire cost of four flats u/s. 54F of the Act against the sale consideration received from the sale capital asset. Accordingly, we direct the AO to allow deduction u/s. 54F of the Act to the assessee as discussed above. Appeal of the assessee is allowed.
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2024 (7) TMI 504
Capital gain computation- applicability of section 50C - Scope of amendment brought by Finance Act, 2016 to Section 50C(1) - as argued agreement of sale of land was executed on 31.03.2014 and part consideration was also received through proper banking channel on the date of agreement, therefore, stamp duty value as on the date of agreement was relevant in view of the amendment brought in by the Finance Act, 2016, which is curative in nature and therefore, has retrospective effect HELD THAT:- As first proviso to section 50C(1) deemed to be retrospective in nature and, therefore, benefit of the same shall be available to the assessee for the AY 2015-16 i.e., in the present case. Accordingly, the decision of Ld. CIT(A) accepting the contention of Ld. AO that the amendment introduced in section 50C(1) in Finance Act, 2016 is effective prospectively is found to be contrary to the analogy drawn in the case of Vummudi Amarendran ( 2020 (10) TMI 517 - MADRAS HIGH COURT] , therefore, we are unable to concur with the same, accordingly the order of Ld. CIT(A) is liable to be set aside. Further, we may herein observe that since the stamp duty valuation of the subject land as on the date of agreement i.e., 31.03.2014 was Rs. 49,86,000/- which was also the actual consideration received by the assessee as emanating from the assessee s reply before the Ld. AO, which was not disputed by the revenue, therefore, we direct the Ld. AO to vacate the addition, and recompute the capital gain adopting the full value of consideration being the value of land for stamp duty purpose as on the date of agreement to sale. Resultantly, ground no. 1 of the assessee stands allowed.
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2024 (7) TMI 503
Income tax demand post Insolvency proceedings concluded - Whether, the provisions of the IBC code 2016 would prevail over the Income Tax Act 1961, and if so to what extent? - HELD THAT:- Referred Sub Section 6 of Section 178 of the Act was amended by Section 247 r/w 3rd schedule of IBC with effect from 01.11.2016 which makes it clear that IBC code will override the provisions of Income Tax Act 1961. The three judges bench of Hon ble Supreme Court in Sundaresh Bhatt, Liquidator of ABC Shipyard V. Central Board of Indirect Taxes and Customs [ 2022 (8) TMI 1161 - SUPREME COURT ] has held that the respondent could only initiate assessment or re assessment of the duties and other levies, once a moratorium is imposed in terms of Section 14 or 33(5) of the IBC as the case may be, the respondent authority, only has limited jurisdiction to assess/determine the quantum of the customs duty and other levies. The respondent authority does not have the power to initiate recovery of dues. Liquidator has an obligation to ensure that assessment is legal and he has been provided with sufficient power to question any assessment if he finds the same to be excessive. Thus we hold that the provisions of IBC 2016 would prevail over the Income Tax Act. Income Tax authorities have limited jurisdiction to assess/determine the quantum of Income Tax dues but have no authority to initiate recovery of such dues at its own during the period of moratorium in violation of Section 14 or 33(5) of the IBC. The Income Tax Authorities are like any other creditor, may stake their claim before liquidator or adjudicatory authority as the case may be, within the statutory limitation period provided under the IBC for substantiating its claim under the waterfall mechanism related to the order of priority as provided u/s. 53 of IBC 2016. The first point is accordingly determined in positive except to the extent that the Income Tax Authorities are not barred from determining the tax dues, which is sine qua non for staking its claim as creditor before the liquidator or the adjudicatory authority as the case may be, under the provisions of IBC. Whether learned CIT(A) erred in not adjudicating the issue on merit, merely because of the pendency of the liquidation process against the assessee corporate debtor? - Secondly, in view of the findings given at point no.1 referred as above, it is easily concluded that Learned CIT(A) has erred is not adjudicating the matter on merit, which was with respect to the determination of tax dues only, more so, when the liquidator, himself, was pursuing the matter before the first appellate authority. The second point is accordingly determined in positive. Thus, the case deserves to be restored back to the file of CIT(A) for the disposal of the case on merits in accordance with law. It is clarified that we have not made any observations in respect of the merits of the case.
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2024 (7) TMI 502
Unaccounted business income - CIT(A) deleted addition on Acceptance of retraction of statement recorded u/s 132(4) - CIT(A) accepting the assessee's version as well as part retraction of statement and thereby agreeing that the cash payment of the assessee, along with its group entities, of 60 crores (over and above Rs 50 crores paid through banking channels) was made not out of suppressed cash sales but out of surplus cash available - HELD THAT:- CIT(A) has categorically and rightly observed, taking support from the order of Rakesh Ramani [ 2018 (6) TMI 456 - BOMBAY HIGH COURT] that there is no requirement in law that evidence in support must be produce only at the time when, the seizure has been made and not during the assessment proceedings. CIT(A) have elaborately made his observations qua the transactions under consideration in the present case, placing his reliance on Pullangode Rubber Produce Company Ltd [ 1971 (9) TMI 64 - SUPREME COURT] that addition by ignoring the retracted statement without considering material brought on record during assessment proceedings, the action of Ld. AO cannot be held justifiable. CIT(A) on the issue of unaccounted business receipts have taken a note that since the amount of Rs. 7.00 Crores is part of sales proceeds of the assessee and due taxes have already been paid, thus, the utilization of such amount for making payment / investment with SBIL group as per MOU, taxing the impugned amount again as unaccounted income would lead to double taxation which is against the settled principle of law as laid down under various judicial pronouncements. CIT(A) also deliberated on the issue of incomplete books of assessee as examined and observed that the cash found from the office premises and residence of the assessee during the search was duly reconciled with the completed books of accounts, such facts were submitted before the Ld. AO also, who accepted the same and on such position of cash balance no negative inference was drawn. The cash sales of the assessee was also supported by the GST returns thus cannot be termed as an afterthought. Ld CIT(A) also observed that the assessee has made entries in the books of accounts on the basis of bills / vouchers / statements of branches, hence, the books completed are duly supported with lawful evidence. An important aspect regarding the sales of assessee that certain sale proceeds are received from IRCTC generated in Rajdhani Express through banking channel which had also remained to be entered in the books of accounts. Such error of the assessee cannot be treated as malafide or intentional as the same was duly included in the GST return of the assessee. With such observations, Ld. CIT(A) had concluded and rightly so that there is substance in the submission of the assessee that cash payment made to SBIL were not recorded in the books of accounts which are incomplete at the time of search for genuine and practical reasons. CIT(A) also analysed the comparative data of sales from GST returns and sales recorded in the completed / audited books and found that the same are matching with very paltry and insignificant variation. CIT(A) also after perusal of month wise sales figures of the assessee for the FY 2019-20 in comparison to previous FY 2018-19 have observed that there is no abnormal increase / decrease in total sales of the assessee, therefore, the sales figures shown for the year under consideration cannot be doubted. It is the observation of Ld. CIT(A) supported by the order of Jewel Emporium [ 2020 (9) TMI 761 - ITAT JAIPUR] hat conclusion on the basis of incomplete books of accounts may give wrong picture of affairs of any assessee, the completion of the books cannot be denied without pointing out discrepancies. It is the observation of Ld. CIT(A) that the retraction from the statement by Shri Rahul Agrawal is found justifiable and acceptable as the same was backed by audited books of accounts and genuine reasons. Thus, we are of the considered view that the Ld. CIT(A) had correctly and judiciously adjudicated the issue, deleting the addition made by Ld. AO on account of unaccounted business income of the assessee, which in absence of any contrary argument, material, decision or evidence brought on record by the revenue, deserves to be affirmed, thus, we uphold the same. Resultantly, ground no. 1 of the revenue stands rejected. Error on the part of Ld. CIT(A) in accepting the assessee s version as well as part retraction from the statement, ignorance of incriminating material, acceptance of retraction by the key person of the assessee - Conclusions of the Ld AO are incomprehensible, wherein he is blowing hot and cold together as per convenience to enforce the additions, brushing aside all the substantial evidence (GST returns, sale bills, branch sale records, transactions in bank statements etc.) without depicting any cogent reason to suspect the same. Ld. AO kept himself confined up to the words stated in the statement u/s 132(4), without adverting to the retractions afterwards, whereas he was under abundant obligation to consider all the relevant facts, evidence / documents placed during the post search proceedings or during the assessment proceedings, so as to check the veracity of such statements before reaching at any logical conclusion. It is the trite law that the statement alone cannot, on a standalone basis, constitute incriminating material to empower the Assessing Officer (AO) to frame an assessment under Section 153A. Under such facts and circumstances, we are unable to persuade ourselves to subscribe to the findings of the Ld AO, wherein he attempted to contradict with the explanations and facts furnished by the assessee, but unable to dislodge the same with any reasonable and convincing observation, in absence of any valid or plausible interpretation, while making the addition on account of unaccounted business income. On a comparative evaluation of the aforesaid observations and decision of the Ld. CIT(A) as well as that of the Ld. AO, we find force and justification in the decision of the first appellate authority, who had considerately deliberated upon the issues with appropriate appreciation of the facts of the case, following the prescribed provisions of the Act, guided by the settled principle of law laid down by Hon ble Courts, thus, in absence of any further plausible, cogent or convincing explanation or contrary decision brought on record by the revenue, dislodging the aforesaid observations of the Ld CIT(A), supporting the action of Ld AO, are of the considered view that there was no infirmity in the decision of Ld. CIT(A) in deleting the addition made by Ld. AO, on account of unaccounted business income, thus, we uphold the same. Consequently, ground no. 2 to 7 of the department, dehors proving / establishing any error in the order of Ld CIT(A) are rejected in terms of our aforesaid observations.
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2024 (7) TMI 501
Revision u/s 263 - CIT(A) direction for completing the assessment afresh - Chargeability of interest on enhanced compensation under section 56(2)(viii) - original proceedings u/s 143(3) 143(3A) 143(3 allowed the assessee claim u/s 28 of the Land Acquisition Act, 1894 and the Ld. PCIT revised the order - As argued PCIT had relied upon the case law subsequent to the assessment - whether after insertion of section 56(2)(viii) and 57(iv) of the Act w.e.f 01.04.2010, the assessee can claim that interest received under section 28 of the Land Acquisition Act will part take the character of the compensation and will fall under the head Capital Gains and not income from other sources ? HELD THAT:- The Hon ble Punjab Haryana High Court, in the case of Mahender Pal Narang [ 2020 (3) TMI 1115 - PUNJAB AND HARYANA HIGH COURT] had held categorically that the interest received on compensation or on enhanced compensation is taxable under the head Income from other sources in the year of receipt. Therefore, the tax authorities within the territorial jurisdiction of Punjab Haryana have to follow this decision being binding in nature. The decision in the case of Mahender Pal Narang (P H), SLP dismissal in the case of Mahender Pal Narang relied upon by the Ld. PCIT, in our considered opinion, is binding in the jurisdiction of the Hon ble Punjab Haryana High Court as the AO was situated within the territorial and subjective jurisdiction of that Hon ble High Court. Thus, the record for the purpose of Section 263 of the Act is not limited with the assessment record up to the date of the assessment only. Hence, the plea of the Ld. Counsel that the Ld. PCIT had relied upon the case law subsequent to the assessment is of no relevance. The 2010 amendment was a conscious departure by the legislature from earlier position and said departure holds good law, as on date. There is no question with respect to the vires of the amendment or regarding any ambiguity in the language of the amendment. Interest whether on compensation or on enhanced compensation shall be considered as income from other sources and shall be exigible to Income Tax. The language of section 56(2)(viii) and 57(iv) of the Act is plain, simple and unambiguous. There is no scope of taking outside aid for giving an interpretation to newly inserted sub sections and clauses As argued the issue under reference here is debatable, hence, the order passed under section 263 of the Act following one view is not legally valid/tenable - As decided in case of Sham Lal Narula [ 1964 (4) TMI 10 - SUPREME COURT] interest received under Section 28 and 34 of the Land Acquisition Act is not compensation received in lieu of compulsory acquisition of land under the Land Acquisition Act. The decision in Sham Lal Narula (supra) was subsequently followed by the Hon ble Supreme Court in the case of Bikram Singh [ 1996 (9) TMI 6 - SUPREME COURT] wherein, it was held that interest under Section 28 of the Land Acquisition Act was in the nature of a revenue receipt and hence, the same was considered to be taxable. In view of the decision of three-Judges Bench of the Hon ble Supreme Court in the case of Sham Lal Narula (supra), the finding of two-Judges Bench of the Hon ble Supreme Court in the case of Ghanshyam HUF [ 2009 (7) TMI 12 - SUPREME COURT] does not come to the rescue of the appellant/assessee to claim that the interest received under Section 28 and 34 of the Land Acquisition Act is to be treated as compensation and to be dealt with under Capital gains . The fact that there is no amendment carried out under section 10(37) of the Act will also not change the position. The argument raised by the Ld. Counsel is not well founded. Decision in the case of Ghanshyam HUF (supra) is not applicable after the substitution of Sections 145A, 145B, 56(2)(Viii) and 57(iv) by Finance (No.2) Act, 2009. In view of the above, it is evident that the interest on compensation or interest on enhanced compensation is chargeable to tax under the head income from other sources‟ from 01.10.2010 onwards. Therefore, the decision of the Hon ble Supreme Court in the case of Ghanshyam HUF (supra), which was passed in the year 2009, in our considered opinion, is not applicable in the facts of the present case. The case laws relied upon by the Ld. Counsel were held distinguishable on facts and thus these were of no help to the appellant/assessee. We find merit in the argument of the Ld. DR that the assessment order dated 11.02.2021, wherein the decisions of the Hon ble Jurisdictional High Court/Punjab Haryana High Court in the cases of Mahender Pal Narang [ 2020 (3) TMI 1115 - PUNJAB AND HARYANA HIGH COURT] and Puneet Singh 2019 (1) TMI 1068 - PUNJAB AND HARYANA HIGH COURT] not followed was erroneous and prejudicial to the revenue as per the clause (d) of Explanation 2 to section 263 of the Act. Decided against assessee.
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2024 (7) TMI 500
Capital gain computation - difference between the guidance value and sale consideration - applicability of section 50C of the Act and stamp duty value adopted by the Registering Authority - determination of tolerance limit of 10% - HELD THAT:- The agreement is made on 15.10.2014 for Rs. 8,70,00,000. Accordingly there is a difference of Rs. 56,40,000. The Sale Deed was registered on 21.03.2016. The payment is received by the assessee through Post Dated Cheques which was encashed on 04.02.2015. Considering the entire arguments noted supra, as per the mandate provisions the tolerance band of 10% was introduced by the Finance Act, 2018. The difference between the sale consideration received and stamp duty valuation is less than 10% of the tolerance limit as per section 50C(1) third proviso, for purpose of section 48, be deemed to be the full value of the consideration. As relying on Amrapali Cinema [ 2021 (4) TMI 1160 - ITAT DELHI] we hold that the actual consideration received is within the 10% of tolerance limit as per section 50C(1) third proviso, therefore the actual consideration received is to be considered as sale value for the purpose of computation of Long Term Capital Gain u/s 48 of the Act. and the amendment made by the Finance Act. 2018 will apply in the case of the assessee. Accordingly we allow the ground No. 4 of the assessee.
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2024 (7) TMI 499
Disallowance of business loss of discontinued business - assessee was engaged in the business of rendering outsourced housekeeping but AO disallowed the claim, stating the business was discontinued - As argued even though the business was transferred, there were various litigations pertaining to income tax and labour laws which remained unresolved. Assessee had to maintain staff and consultants. Therefore, business loss having arisen due to expenditure incurred towards professional charges, consultancy charges and other expenditure such as ESI arrears and bank charges during the financial year 2020-21 could not be disallowed - HELD THAT:- No deduction could be allowed on account of incurring of various impugned expenditure when the assessee did not carry on any business in the relevant assessment year and there is no likelihood of revival of business. If the expenditure incurred to upkeep the business of the assessee, the said expenditure could be allowed. However, in the present case, there was no likelihood of restarting the said business and completely closed down earlier to so many years and now this expenditure cannot be allowed as a business expenditure. It was not incurred to keep its existing business. Thus, expenditure incurred during the period when no business was carried o was not admissible deduction. As decided in case of L.M. Chhabda and Sons [ 1967 (3) TMI 10 - SUPREME COURT] that the claim of allowance of expenditure from an independent business, which was closed down was not allowable against other income of the assessee. Thus, to allow any deduction relating to discontinued business would be a total contradiction and violation of the legal principle upon which section 29 of the Act stands. Among various conditions required for a loss or expenditure to be allowed, the foremost condition is that it should be in the course of business and it should be incidental to the business. On understanding this basic rule, the simplest interference to arrive at is that in the case of discontinued business, there is no question of loss or expenditure incurred in the course of business wholly and exclusively for the purpose of business as the business no longer is in existence. Revenue authorities have taken a correct view of the facts of the case and disallowed the same. Decided against assessee. Tax rates on Interest income - global income earned - status of being a Resident of the contracting state - assessee stayed in New Zealand for 359 days during the year under consideration, he was a Resident of New Zealand and accordingly, his global income was taxable in New Zealand - interest income earned by an assessee being a resident of the other Contracting State to be taxed at a maximum rate of 10% as per Article 11 of the DTAA between India and New Zealand - HELD THAT:- As rightly pointed out by assessee, he is a non-resident of India and resident of New Zealand and assessee s global income is taxable in New Zealand. As per the Article 11 of DTAA between India and New Zealand income earned by the assessee being a resident of New Zealand may be taxed subject to at a maximum rate of 10%. Admittedly, DTAA has overriding effect over the Income Tax Act. The department is denying the benefit of lower rate of tax as per Article 11 of DTAA on the reason that assessee s income is not subject to tax in New Zealand. As noted that this income is not taxable in New Zealand as the New Zealand has given a benefit to the assessee of temporary exemption for a period of 4 years being the transactional tax recipient. Thus, it was not taxable in New Zealand. Because it was not taxable in New Zealand, the assessee is not disentitled to take the benefit of Article 11 of DTAA, which is the beneficial provision and it would be granted and the rate of the tax to be applied in respect of business income in accordance with Article 11 of DTAA. The various judgements relied by the assessee s counsel supports the view as a condition. Accordingly, we allow this ground taken by the assessee. This ground of appeal of the assessee is allowed.
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2024 (7) TMI 498
AO jurisdiction over the case of the assessee for cash deposit up to Rs. 2.5 lakhs - assessee contended that in CBDT Instruction No.3 of 2017 dated 21/02/2017, CBDT has debarred the revenue officers to conduct any enquiry in those cases, where the cash deposit is up to Rs. 2.5 lakhs - HELD THAT:- As per Source Specific General Verification Guidelines it would be amply clearly that this instruction has been issued by Ministry of Finance immediately after demonetization and hence binding on the department. The title of the instruction is Standard Operating Procedure to be followed by the AOs in verification of cash transaction during demonetization period. Certain paras of this instruction are very crucial for cases like this. For instance in para 5.6, it has been mentioned that the AO should follow the sources specific verification guidelines as given in annexure. On perusal of clause 1.1 annexed to the instruction, as extracted herein above, would reveal that in case of an individual (other than minors) not having any business income, no further verification is required to be made if total cash deposit is up to Rs. 2.5 lakhs. When we apply the instruction of CBDT to the facts of present case it is abundantly clear that the AO has framed the impugned assessment in utter disregard of the CBDT guidelines, which is not permissible in law. There are so many decisions of the coordinate Benches wherein it has been held that the no addition can be made in such cases which are covered by the CBDT instruction, granting exemption of Rs. 2,50,000/-. Reference can be made to the judgment of coordinate Bench in ITA Number in the case of Amar Singh Vs ACIT International Taxation [ 2022 (9) TMI 1599 - ITAT DELHI] Therefore, we hold that the AO has erred in investigating the matter further and hence, exceeded his jurisdiction; therefore, we allow the appeal of the assessee.
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2024 (7) TMI 497
Addition being 20% of suppressed sale - apart from the suppressed sale the assessee shown 20% profit element on the claimed turnover during the year under consideration and during the year and preceding years the assessee has consistently earned the profit @ 17.36% to 20.58% as shown - Assessee contended that since the assessee is not maintaining books of accounts his profit on the admitted turnover at the rate of 8% under section 44AD may be estimated. HELD THAT:- We are of the considered view that when the assessee has himself claimed the profit at 20.58% during the year under consideration and 18.80% in the subsequent years and has suppressed the turnover which was detected by the AO, the assessee cannot be allowed to aprobate and reprobate in the face of admitted fact that the assessee has himself admitted turnover of Rs. 72,50,000/- during the year under consideration. So the Ld. CIT(A) has rightly confirmed the profit percentage of 20% for the year under consideration made by the AO. Decided against assessee.
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2024 (7) TMI 496
Cancellation of registration granted u/s. 12AB(4) - assessee is engaged in the business of activity of investment in mutual funds - assessee contended that the trust deed providing accommodation to the settlor had become infructuous since the settlor passed away way back in the year 1965 and Investments in the mutual funds are made out of the accumulations and corpus donations and not out of any borrowed funds HELD THAT:- The entire proceedings of the CIT(Exemption) are based on the covenants of the trust deed but not based on the actual activities carried out by the appellant trust. Mere fact that the trust deed contain a covenant that enables the settlor to utilize the premises for her use or family use, cannot empower the CIT to cancel the registration, as it does not lead to any conclusion that either the activities of the trust are not genuine or the activities are not being carried out in accordance with the objects of the trust. Similarly, the fact that huge investments are made in mutual funds, cannot also lead to the conclusion that the activities of the trust are not genuine. It is an admitted fact that the settlor died in the year 1965, therefore, the relevant clause had become infructuous and thus there is no question of violation of provisions of section 13(3). The investments in mutual funds are only in order to meet the statutory requirements of section 11(5) of the Act. The reasons assigned for cancellation of registration as enumerated above neither lead to conclusion that the activities of the trust are not genuine and are not carried out in accordance with the objects of the trust. As in the CIT Vs. Institute Management Committee of Industrial Training Institute [ 2017 (3) TMI 48 - BOMBAY HIGH COURT ] held that exercise of power u/s.12AA(3) can be done by the CIT(Exemption) only on being satisfied that one of the two conditions satisfied therein. Thus, we are of the opinion that the impugned order by the CIT(Exemption) cannot be sustained in the eyes of law. The same is therefore, set-side. The appeal filed by the assessee stands allowed.
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2024 (7) TMI 495
Unexplained cash credit u/s 68 - assessee had received share application money and premium from a company who admitted to providing accommodation entries - As argued non-appearance of the director should not be considered as sufficient for rejecting the claim of the assessee - HELD THAT:- These are only theoretical submissions on the jurisprudence as to how share application money issues are to be dealt with. All these propositions are relevant for the purpose of the case decided in those judgments. The assessee has nowhere rebutted the finding of the AO that in response to the information called for by him u/s 133(6) of the Act the share applicant company has itself submitted that it has received cash from M/s. Gopikar Supply Pvt. Ltd. and transferred to the assessee company. The statement of Accomodation enrty provider/Mr. Jagdish Prasad Purohit is not being treated as an incriminating statement in the case of the assessee. It is a statement which is being used for the corroboration purposes for initiating the assessment machinery into motion that transactions conducted through the companies managed by him are not free from doubt. AO has not accepted this stand of assessee submitting with the help of procedural evidence i.e. PAN card, registration certificate of the share applicant company and bank details. The enquiry of the AO is to demonstrate as to how a newly incorporated company can command a premium of Rs. 390/- per share. In order to dispel this belief of the AO, assessee was required to submit details of its assets and future business prospective but the assessee failed to do so. It is also observed that assessee did not produce the share applicant company s directors because from them it could be unearthed as to how they decided to make investment in the assessee company. Therefore, both the authorities have examined the issue with an analytical mind and recorded a specific finding that this investment in the assessee company is a bogus one and it deserves to be considered as unexplained cash credit u/s 68 of the Act. Accordingly, appeal of the assessee is dismissed.
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2024 (7) TMI 494
Revision u/s 263 - valuation of intangible assets - Cost of an Internally Generated Intangible Asset - inadequacy of inquiry by the Assessing Officer and the incorrect allowance of claim of deprecation by the AO - as per CIT, no valuation report had been submitted by the assessee, nor any corroborative evidences or documents filed which could be relied upon for evidencing the cost of intangible assets - HELD THAT:- As going through AS-26 as heavily relied upon by the ld. PCIT to form her belief that the AO without conducting proper inquiry, accepted the assessee s valuation of intangible assets and we concur with assessee that the relevant paragraph to which the ld. PCIT refers to in the notices of AS-26, is merely a definition paragraph which defines Fair Market Value only. Paragraph 6.11. does not prescribe Fair Market Valuation method to be adopted for arriving at the value of intangible assets. PCIT has relied on a definition in the AS-26 for stating the method prescribed by the Standard for valuation of intangible asset and then gone on to find error in the valuation method adopted by the assessee, which method has been suitably demonstrated before us to be in accordance with that prescribed by the Accounting Standard. Assessee has pointed out to us that the accounting standard AS-26 prescribes the historical cost basis for accounting for intangible assets which are developed by the entities by incurring expenditure. That the ld. PCIT has noted in her notice that the assessee did develop the intangible assets itself by way of developing designs relating to machinery and had valued the intangible assets on the basis of cost incurred for developing designs. Therefore, we find, that even as per the facts noted by the ld. PCIT, the assessee s basis of valuation of the intangible assets was as per that prescribed by AS-26 and the ld. PCIT s belief that the assessee had not followed AS-26 was an incorrect and completely flawed understanding of the Accounting Standard. We completely agree with assessee that the very basis, therefore, for assumption of jurisdiction under Section 263 of the Act by the ld. PCIT was flawed, based on wrong premises, and therefore, the entire proceedings conducted by the ld. PCIT, we hold, was not valid. Erroneous claim of depreciation allowed to the assessee on intangible assets - CIT was aware that the assessee has valued the intangible assets based on actual expenses incurred for the same. The case of the ld. PCIT being that the assessee had incorrectly valued the intangible assets; it only means that the expenses incurred by the assessee were not to be included in the valuation of intangible assets. These expenses otherwise not being doubted by the ld. PCIT either with regard to their genuineness or with respect to the fact that they were incurred for the purpose of the business of the assessee; therefore, any change in the valuation of the intangible assets by way of reduction in its value would only have resulted in the portion not included in its value to be allowed as expenses of the assessee u/s 37(1) and as rightly pointed out by the assessee, it would tantamount to putting the assessee in a beneficial position, since otherwise the assessee had been allowed only a portion of the expense as depreciation. Therefore, the stand taken by the ld. PCIT regarding erroneous claim of depreciation allowed to the assessee on intangible assets by no way has caused any prejudice to the Revenue. Thus, the order passed u/s 263 of the Act, we hold, is not sustainable in law and is directed to be set aside. It is sad to note that despite such detailed submissions made by the assessee during the assessment proceedings, which records were duly perused by the Ld.PCIT before issuing notice under Section 263 and despite the assessee submitting the same during revisionary proceedings also, the ld. PCIT has not addressed the contentions of the assessee on any aspect at all. She has not pointed out as to why the inquiry by the Assessing Officer was inadequate or improper; she has neither pointed out as to how the explanation of the assessee that the accounting of intangible assets was as per AS-26 was incorrect. On the contrary, on a completely flawed understanding of the Accounting Standard the Ld.PCIT has found the assessee s valuation of intangible assets to be not in accordance with AS-26. The ld. PCIT, we find, has in a very cryptic order dismissed all the detailed and voluminous contentions raised by the assessee - Decided in favour of assessee.
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2024 (7) TMI 493
TP Adjustment - interest on External Commercial Borrowing (ECB) - TPO has benchmarked the transaction using CUP method and has used the SBI base rate as the CUP - as submitted since the AE has given the loan to its group concern there is no risk of non-recovery of the loan, therefore, no mark up is required - OECD Guidelines on the issue of determination of Arm s length Interest on the Loan taken from the AE - HELD THAT:- When we read the OECD Guidelines on the issue of determination of Arm s length Interest on the Loan taken from the AE, one needs to consider and analyze many factors. In this case the Loan was provided by an AE situated in Netherland which is one of the holding companies. However, in the Transfer Pricing Study Report submitted by the assessee the Assessee has not carried out proper analysis of the transaction. No reason has been given by the assessee in the TPSR while considering the Weighted Average Lending Rate. The assessee has not carried out Credit rating analysis of the assessee. In any Loan the Credit rating of borrower is the most important factor. However, in this case the Assessee has not tried to understand its Credit rating. In the TPSR the assessee has mentioned that it has used Other Method for benchmarking the transaction. However, as per the Income tax Act no such other method is allowed. Thus, the Benchmarking Analysis of the impugned Interest claimed to have been carried out by the assessee suffers from many defects. TPO has applied State bank of India base rate. It is also a fact that normally no bank gives corporate loan at the Base rate of Interest. The exact dates of the Loan disbursements are also not mentioned in the Transfer Pricing Study Report of the assessee or Form 3CD. There is an Advance of Rs. 10294,00,000/- by the Assessee to Air Products and Chemicals Inc USA. In the TPSR it is merely mentioned that the said advance is for supply of capital goods for Phase 2 of Kochi Project, however no specific schedule for delivery of the capital goods is mentioned. An independent third party while giving Loan will analyse all such advances given by the assessee. Interest Rates in other Countries - Interest expenses are mainly on account of this impugned ECB. When we have analysed these Financials, it is observed that Revenue has grown 3.5 times, the profit before Interest and Depreciation has also grown almost 12 times. Any Financial Corporations/Banks considers projected Future Revenue and Projected Future Profit of the company before deciding the rate of interest to be charged on the Loan. In this case we have already analysed that the Assessee s Revenue has increased 3.5 times and its Phase 2 was to commence .There are no earlier Loans in the Balance Sheet. Therefore, as per FAR analysis the Risk involved in the Loan given to the assessee seems to be minimal. Therefore, we agree with the DRP that the Arm s Length Interest should be SBI base rate plus 25 basis points. Assessee had paid Interest at 10% and 10.5% pa at compounded rate. In the Agreement it is mentioned that if Assessee fails to pay any of the Instalment of Interest, the same will be added to the Principal amount, this results in Interest on Interest(the relevant terms of the loan agreement we have already reproduced). As per the Terms of the Loan the tax if any in India is to-be paid by the Assessee who is borrower and not the Lender. However, in India, the tax on Interest paid by the borrower is always the responsibility of the Lender, the borrower do not have to pay the tax on the interest paid. In India Banks do not calculate Interest on Loan in this way. Therefore, the Interest paid by the Assessee to its AE on the impugned ECB is not at Arm s Length. Accordingly, we confirm that the Arm s Length Interest in this case should be SBI base rate plus 25 basis points for the impugned Loan, which will be simple interest. Validity of the Final Assessment Order - ACIT jurisdiction as per the provisions of Section 144B to pass final assessment order u/s 144B - HELD THAT:- As per Section 144B(8) of the Act the ld.Pr.Chief Commissioner of Income Tax may transfer any case to the jurisdictional Assessing Officer after obtaining permission from the CBDT. In this case the Ld.DR filed copy of the report of the Assessing Officer. Copy of this report was also provided to the ld.AR. The said report contains reproduction of the order sheet, which is maintained on the Income tax system called ITBA. As per the Order sheet the case of the assessee was transferred to the Jurisdictional Assessing Officer after obtaining permission from the CBDT. AR has not produced any documentary evidence to rebut the facts recorded in the order sheet. Therefore, the Case of the assessee was duly transferred to the Jurisdictional Assessing Officer after obtaining due permission of the CBDT as per the Section 144B(8) of the Act. Therefore, the Jurisdictional Assessing Officer (JAO) had due authority of the law to pass the Final Assessment Order as per the Act once he has received the case on transfer as section 144B(8) of the Act. Accordingly, the Jurisdictional Assessing Officer, passed the final Assessment order. Hence, we do not find any illegality in the impugned Final Assessment Order. Assessee appeal dismissed.
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2024 (7) TMI 492
Delay in filing of the present appeal by 840 days - Rejection of registration application U/s 12AA - assessee trust was under the incorrect impression that once registration had been granted u/s 12AA of the Act, upon filing of the second application on the same set of facts, the benefit of exemption was available to the assessee trust for the impugned assessment year as well and secondly, it was submitted that the assessee has been genuinely carrying out charitable activities, which is evident from the fact that on filing of second application for grant of registration, the CIT(Exemptions) had granted registration under Section 12AA of the Act to the assessee trust on the same set of facts HELD THAT:- The delay in filing of the present appeal has been caused due to bona fide mistake on part of the assessee trust and also on account of the fact that consultants of the assessee never advised the assessee to file appeal against the first order of rejection. Accordingly, looking into the instant facts, the delay in filing of the present appeal is hereby condoned. Registration u/s 12AA of the Act on filing of second application - As the fact that upon filing of second application for grant of registration u/s 12AA of the Act, the assessee trust was granted registration u/s 12AA of the Act, on same set of facts points to the fact that that the assessee trust has a genuine case on merits, and that the assessee has been able to establish that it is carrying on genuine charitable activities. Accordingly, in the interest of justice, looking into the instant facts, the matter is being restored to the file of CIT(Exemptions) to consider the application of the assessee trust afresh, in accordance with law. Appeal of the assessee is allowed for statistical purposes.
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2024 (7) TMI 491
Addition u/s 69C - cash paid for purchase of livestock - HELD THAT:- It is not in dispute that the assessee and his wife are partners in Daurau Farms LLP engaged in the main business activity of sale of farm fresh milk of cows. The contention of the assessee all along has been that the above transactions of Rs. 10 lakhs each has been entered into through Mr. Deepak for the purchase of cows for Daura Farms LLP and that Mr. Deepak has been providing knowledge/assistance to the assessee as partner of the firm as deposed by him in statement recorded u/s 132(4) of the Act. As to the reply of Shri Rahish Pal Singh in response to the summon issued u/s 131(1A), the stand of the assessee has been that it is factually correct that the assessee had no business transactions with Shri Rahish Pal Singh during the year. However, cash given on 31.12.2019 to Mr. Deepak to purchase quality breed of cows for the firm was received back by the assessee on 05.01.2020 through Mr. Rahish Pal Singh who is relative (spouse of sister in law) of the assessee. Mr. Deepak had handed over the amount to Mr. Rahish Pal Singh in his daily meeting in regular course of business to return the same to the assessee on his behalf. The explanation furnished by the assessee has been considered by the Ld. AO as afterthought without bringing on record any cogent material to establish its falsity. CIT(A) has only dittoed the view of the Ld. AO. As to the source, the assessee s explanation has been that Rs. 10 lakh has been given by the assessee to Mr. Deepak in the capacity of partner of Daurau Farms LLP in support of which cash book pertaining to the Financial Year 2019-20 had been produced during the assessment proceedings. As per the income expenditure statement of the firm for Financial Year 2019-20 brought on record it had cash sales of Rs. 8,40,400 in local market and sale of Rs. 17,46,798/- as reflected in the bank statement of the firm. Therefore it is not a case of failure to explain the source of the impugned amount on the part of the assessee. It is not the case of the Revenue that the entire amount of Rs. 30 lakhs was given by the assessee to Mr. Deepak in one go. In our opinion, the assessee discharged his onus of explaining the nature and source of the transactions noticed in his phone during the course of search proceedings. The impugned addition has been made by the AO and sustained by the Ld. CIT(A) on the basis of suspicion and surmises alone. Keeping in view the nature of business of the assessee, we hold that there is no justification on facts and in law for the impugned additions which we direct the Ld. AO to delete. Appeal of the assessee is allowed.
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2024 (7) TMI 490
LTCG - Disallowance of cost of improvement - HELD THAT:- To claim cost of improvement, assessee has to establish that assessee had incurred expenditure for improvement of the Immovable Asset. However, the assessee failed to file any evidence to prove that the assessee had incurred expenditure for improvement of the impugned immovable asset. The Bills filed by the assessee are mainly in the name of Wings Travel Management India Private Limited, which is an independent entity. Assessee have advanced unsecured loan to Wings Travel Management India Private Limited and charged Interest. Therefore, the Bills which are in the name of Wings Travel Management India Private Limited are not the proof of expenditure incurred by the assessee for improvement of the flat owned by him. Since the assessee has failed to file the necessary documentary evidence for claiming Cost of Improvement and the AO has already allowed assessee s partial claim of Cost of Improvement, to the extent of bills which are in the name of the assessee, we uphold the disallowance made by the AO - Accordingly, grounds of appeal raised by the assessee are dismissed
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Customs
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2024 (7) TMI 489
Validity of the exemption under N/N. 12/2012-CE for aluminum waste and scrap used for manufacturing aluminum circles - Jurisdiction - whether the Commissioner (Appeals) could not have passed the impugned order as the order relied upon by the Commissioner (Appeals)? - HELD THAT:- On perusal of the impugned order passed by the Commissioner of Customs (Appeals) wherein reliance was placed on the order passed in case of M/S RY MIDAS METACAST PVT LTD 1 VERSUS UNION OF INDIA 3 [ 2015 (5) TMI 834 - GUJARAT HIGH COURT] which has now been quashed and set aside by this Court where it was held that ' If the Commissioner of Customs (Appeals), Ahmedabad has been satisfied that new facts have emerged then, he could not himself decide the matter. At the most, he could have remanded the matter for a fresh consideration. It was not open to the Commissioner of Customs (Appeals), Ahmedabad to decide the matter himself without examining anything further and without taking any material on record merely on the contention made by the other side.' The impugned order passed by the Commissioner (Appeals) cannot be sustained and therefore, the same is hereby quashed and set aside and it is held that the petitioners are entitled for exemption for additional customs duty for aluminum waste and scrap under Serial No. 220 of N/N. 12/2012-CE dated 17th March, 2012. Petition allowed.
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2024 (7) TMI 488
100% EOU - Validity of SCN - without challenging the assessment (review of the decisions made while allowing credit of duty) the Department cannot issue a Show Cause Notice demanding duty - HELD THAT:-The foremost contention put forward by the appellant is that the Show Cause Notice issued is ab-initio-void for the reason that the permission granted by the Assistant Commissioner allowing to take recredit of the duty foregone at the time of import of inputs being an order of assessment ought to have been challenged by the Department. The Ld. Counsel has relied upon the decision of the Hon ble Apex Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] where it was held that ' the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act.' The matter requires to be remanded to the Adjudicating Authority for fresh consideration. In such denovo proceedings, the Adjudicating Authority shall give opportunity for personal hearing and to adduce evidence - appeal allowed by way of remand.
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2024 (7) TMI 487
Refund of Additional Duty of Customs (CVD) demanded from the respondent after introduction of GST on imported goods - refund of duty paid on re-import - time limitation - Commissioner (Appeals) granted the refund. - HELD THAT:- It is an admitted fact that the respondent was not supposed to pay CVD after introduction of GST w.e.f. 01.07.2007. However, it was paid at the relevant time due to system error and as insisted by the appellant. Moreover, limited ground raised by the appellants in the present Appeal is whether limitation under Section 26A is applicable in present case considering the facts and circumstances of the case. From the statutory provision it is clear that provisions of Section 26A is applicable while importing goods for home consumption and the provisions governing payment of duty on re-import of goods is as per the Notification No. 46/2017 dated 30.06.2017. Once the respondent satisfied the condition of said Notification by paying drawback drawn with interest, respondent was not liable to pay duty as demanded by the appellant. There is no merit in the present appeal and the appeal is dismissed.
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2024 (7) TMI 486
Valuation/undervaluation of imported goods - HCG 3MM Strip (Pregnancy Testing Strip) - retail packing versus bulk quantities - rejection of declared value - enhancement of value - HELD THAT:- The fact that the goods are identical are not in dispute, the goods imported at Mumbai was for retail packing and that as against the bulk packets received at Bangalore and the quantitates also differed is not disputed. In the case of COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS DM INTERNATIONAL [ 2013 (5) TMI 549 - CESTAT NEW DELHI] , the Tribunal has held that 'It has been held in a number of decisions that NIDB data cannot be made the basis for enhancement of value. Commissioner (Appeals) has relied upon various decisions of the Tribunal for holding that any enhancement in assessment value, the transaction value has to be first rejected based on legal permissible ground as indicated in the Valuation Rules.' The transaction value can be rejected and enhanced only on the basis of same quantities, quality, are imported. In this case, it is very clear that the imported goods were at variance in quantity when compared with Mumbai and also the retail packing and bulk packing had influenced the price. Without considering these facts, the enhancement of value based on the fact that the goods were similar will not hold good. The impugned order is set aside - Appeal allowed.
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Corporate Laws
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2024 (7) TMI 485
Seeking issuance of directions to have the proceedings carried out before the National Company Law Tribunals (NCLT), located in various parts of the country and the National Company Law Appellate Tribunal be recorded - HELD THAT:- The Hon ble Chairperson is requested to examine the viability of the directions sought in the writ petition concerning recordal of proceedings before NCLT benches and NCLAT. The petitioner is given liberty to place the writ petition before the Hon ble Chairperson, NCLAT - Petition disposed off.
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2024 (7) TMI 484
Condonation of delay on the part of Petitioners in filing of e-forms in respect of belated annual returns and balance sheets - permission to Petitioners to file e-forms in respect of belated annual returns and balance sheets without charging additional fees - HELD THAT:- On 11.02.2021, the Scheme dated 15.01.2021 was floated by the Union of India for condonation of delay for companies which has been restored on the Register of Companies between 01st December, 2020 and 31st December, 2020. Despite the fact that the Scheme for condonation of delay was already in existence, this Court did not extend the benefit of the Scheme to the Petitioners herein. Meaning thereby, this Court while exercising its jurisdiction under Article 226 of the Constitution of India only directed that the name of the Petitioners to be restored subject to the payment of requisite fees by the Petitioners which actually meant that the Petitioners had to pay the late fees. The Petitioners by way of the present writ petitions cannot now seek the relief which this Court had not given in the Order dated 11.02.2021. The Petitioners will have to pay the late fees in order to get the name of the Petitioners restored - Petition dismissed.
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2024 (7) TMI 448
Declaration as Significant Beneficial Owner - Non-compliance of Section 90 r/w the Companies (Significant Beneficial Owners) Rules, 2018 of the Companies Act, 2013 - Adjudication of Penalty. Declaration as Significant Beneficial Owner - HELD THAT:- Section 90 of the Act r/w Rules made thereunder deals with the concept of disclosure of Significant Beneficial Owner (SBC)) in a company. Section 90 provides a dual test of objective and subjective for identification of a 'Significant Beneficial Owner'. The section along with the rules provide for determination of the SBO either through a concept of threshold limit in the shares of the company or through exercise of significant influence or a control in the company, thus Section 90 and the SBO Rules made thereunder does not restrict the threshold limit in shares only, to establish the SBO in a company, when there also exists significant influence or control by any individual directly or indirectly. From the details submitted by the reporting company vide its various replies to the Registrar, it is clear that all required information and documentary evidences have not been submitted before this office. Further, it also appears from the material placed in this Order that the reporting company has failed to exercise the necessary due diligence to ascertain the SBO in terms of the provisions of Section 90 of Act r/w SBO Rules. The reporting company has not taken necessary action to identify an individual(s) who is /are SBC) in relation to company and require them to comply with the provisions of Section 90 of the Act, thus the subjected company and its officers who is in default have violated the provisions of Section 90(4A) of the Companies Act, 2013. Adjudication of Penalty - HELD THAT:- In respect of the violation under Section 90 r/w SBO Rules of the Act, the company Samsung Display Noida Pvt. Limited, its officers' are further directed pursuant to Section 454(3) (b) of the Companies Act, 2013 to determine all the individuals who fall under the definition of 'significant beneficial owner' in the letter and spirit of the Act, in respect of the reporting company and file the relevant e-form BEN-2 with respect to all such individuals within a period of 90 days from the date of this Order. Attention is also invited to Section 454(8) of the Companies Act, 2013, in the event of noncompliance of this order. In case appeal is made, 0/0 the Registrar of Companies, U.P may be informed alongwith the penalty imposed and the payments made.
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Service Tax
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2024 (7) TMI 483
Levy of service tax - petitioner represents the Tamil Nadu Police - liability of petitioner to pay service tax for the services rendered by them to various Banks while transportation of cash from currency chest to ATMs of the respective Banks - HELD THAT:- After hearing this case on 19.06.2024, a similar Writ Petition came up for hearing on behalf of the SUPERINTENDENT OF POLICE VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, EXCISE AND CUSTOMS - INDORE [ 2023 (12) TMI 906 - CESTAT NEW DELHI] - the said Writ Petition was disposed of by giving liberty to file statutory appeal before the Customs, Excise Service Tax Appellate Tribunal (CESTAT), Chennai. The CESTAT, Chennai was directed to entertain the appeal and dispose of the same without insisting the certified copy of the said order. There are no reason to take a different view in this Writ Petition. Hence, this Writ Petition is disposed of by giving liberty to the petitioner to file statutory appeal before the Customs, Excise Service Tax Appellate Tribunal (CESTAT), Chennai, within a period of 60 days from today, without awaiting for the certified copy of this order. Petition disposed off.
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2024 (7) TMI 482
Maintainability of petition - time limitation - section 73 (4B) (a) and (b) of the Finance Act, 1994 - whether the jurisdiction could be transferred by virtue of a corrigendum? - HELD THAT:- When the appellant has questioned the validity of the adjudication on the ground of limitation, such issue can be adjudicated in a writ petition based on affidavits. Therefore, the respondents/department should file their affidavit in opposition in the writ petition and the writ petition should be heard and decided on merits. In the meantime, if the show-cause notice is adjudicated by the authority, then the entire writ proceedings would become infructuous. Therefore, the adjudication proceedings by the adjudicating authority at Kolkata should be deferred and await the decision in the writ petition. The order passed in the writ petition by the learned Single Bench is set aside and the respondent/adjudicating authority at Kolkata is directed to defer the adjudication of the show-cause notice and there will be a direction to the department to file their affidavit in opposition in the writ petition within a period of three weeks from date - Appeal allowed.
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2024 (7) TMI 481
Short payment of service tax - GTA Services - reverse charge mechanism - reimbursement of expenses - extended period of limitation - HELD THAT:- The Appellant has brought in proper evidence to the effect that the major portion of the quantified demand is on account of their turnover pertaining to GTA services - The documentary evidence placed in terms of the Consignment Notes, Invoices and Certificate issued by one of the clients OCP clarifies that without any dispute the Appellant has been providing the GTA services and no Service Tax is required to be paid by them since the Service Tax liability rests on the recipient of the service. The service Tax is not required to be paid on account of reimbursable expenses received by the Appellant - the impugned order is not legally sustainable and we set aside the same and allow the Appeal on merits. As a matter of fact, the Show Cause Notice itself was issued based on the values shown in the Balance Sheet and Profit Loss Account. In respect of the major portion of the demand, no Service Tax is payable since the service involved is that of GTA services. There are no justification in invoking the extended period for confirming the demand. According, the confirmed demand is set aside in respect of the extended period on account of time bar also. Appeal allowed.
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2024 (7) TMI 480
Liability of the subcontractor to pay service tax - sub-contractor or not - exempton from service tax or not - Appellant submits that the Appellant is directly providing the services to SEZ units and is not a sub-contractor and hence the Appellant is entitled to the benefit of exemption - interest - penalty - extended period of limitation. HELD THAT:- It is found that usually, for the services transaction takes place between two parties, i.e. Service provider and Service receiver but in the present case there are three parties to the transaction. If sub-contractor is providing services to the main contractor for completion of main contract, then service tax is not leviable on the services provided by such sub-contractor. Unequivocally, Appellant qua sub-contractor had provided services exclusively to SEZ units and also wholly consumed by the SEZ units, hence not liable to service tax. The conjoint reading of Section 26(1)(e) of SEZ Act with Rule 31 of SEZ Rules would show that the only condition required for availing exemption from payment of service tax by developer/entrepreneur/ unit is that the taxable services should be used for carrying on the authorized operations by the Developer/Entrepreneurs/Unit. The location of the service provider or the place of service is entirely irrelevant for this exemption. The issue involved in the present case is in respect of the liability of the subcontractor to pay service tax. The issue as such was highly debatable and clearly an issue involving interpretation of complex provisions of law. It is also not in dispute that the issue in respect to liability of subcontractors to pay service tax has been decided by the larger bench of tribunal in case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB] . Larger Bench has in the said case observed 'A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract.' Extended period of limitation - HELD THAT:- An extended period of limitation could not have been invoked for making this demand. Entire demand is barred by limitation. Interest - penalty - HELD THAT:- There are no merits in the impugned order confirming the demand by invoking extended period of limitation. As the demand of service tax is set aside, the demand for interest and penalty imposed is also set aside. Appeal allowed.
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2024 (7) TMI 479
Non-payment of service tax - foreign remittances to its overseas service providers - taxability under Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 read with Section 66A of the Finance Act, 1994 - business exhibition service - levy of penalty u/s 78 of FA - HELD THAT:- The issue involved in the present case is no more res integra and has been settled by the Hon ble Bombay High Court in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [ 2008 (12) TMI 41 - BOMBAY HIGH COURT] and further affirmed by the Hon ble Apex Court by dismissing the appeal of the department in UNION OF INDIA VERSUS INDIAN NATIONAL SHIPOWNERS ASSOCIATION [ 2009 (12) TMI 850 - SC ORDER] . Therefore, in view of the settled position, the demand of service tax on the services received from abroad prior to 18.04.2006 is set aside. The demand of service tax on business exhibition service which falls under Section 65(105)(zzo) as it existed then was under second category of the Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. As per the said rule, the service tax can be demanded only when the services are wholly performed in India or partly performed in India, whereas in the present case, admittedly the business exhibition service was conducted wholly outside India, hence demand of service tax is not sustainable for the period from 18.04.2006 to 10.05.2007. Penalty u/s 78 - HELD THAT:- As the demand is not sustainable, the penalty under Section 78 of the Act cannot be imposed because the issue relates to interpretation and the position of law was not clear then. In view of this circumstance, imposition of penalty under Section 78 is not sustainable. The impugned order is not sustainable in law and therefore, set aside - appeal allowed.
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2024 (7) TMI 478
Refund of service tax - specified services used in relation to the authorized operations in the SEZ during the period from 01.04.2012 to 30.12.2012 and from 01.01.2013 to 30.9.2013 - Services consumed wholly within SEZ - Invoice addressed to corporate office - Rejection of refund due to no signature, wrong date in invoice and no payment proof - Xerox copy of invoices produced at the time of filing of refund claim - Exchange rate fluctuations - Rejection of refund on tax paid on container repair charges. Services consumed wholly within SEZ - HELD THAT:- In UNICHEM LABORATORIES LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [ 2002 (9) TMI 110 - SUPREME COURT] the hon ble Apex Court held ' There can be no doubt that the authorities functioning under the Act must, as are duty-bound, protect the interest of the Revenue by levying and collecting the duty in accordance with law no less and also no more. It is no part of their duty to deprive an assessee of the benefit available to him in law with a view to augment the quantum of duty for the benefit of the Revenue. They must act reasonably and fairly' - The appellant who has paid the duty which was exempted, hence cannot be denied a refund stating that such services are exempt ab-initio, and that the taxpayer has no option to pay tax and claim refund. The order hence merits to be set aside. Invoice addressed to corporate office - HELD THAT:- The department could have verified the proper use / receipt of the input services by the appellant. Trade facilitation involves taking such an extra step. In case dual use of invoice or non-provision any service was detected, or the appellant was not able to discharge the burden of proof regarding the admissibility of the CENVAT credit, then a reasoned decision could have been taken to deny the credit. Merely rejecting a valid invoice since it is addressed to the corporate office was not warranted. Further there is no allegation that the input services were not received or utilised by the Appellant. In absence of any such dispute, denial of refund solely on ground that the Invoice is in the name of Corporate Office is unjustified and is set aside. Rejection of refund due to no signature, wrong date in invoice and no payment proof - HELD THAT:- There is no reason why government finances and tax payment should be handled differently and in a cavalier manner. A signature placed on an invoice inculcates faith in the document and gives it credibility and value in matters of taxation, business operations and day to day transactions. Dishonesty in the issue of such an instrument is an offence under relevant statutes. It is on the basis of this trust that day to day business thrives. The menace of fake invoicing and its deleterious effect on the economy is well known. Hence the stand taken by the department cannot be faulted - The procedure for verification of refund as per Commissionerate s Public Notice, if any, can be followed. The issue hence merits to be examined denovo with the appellant given one more opportunity to prove his case. Xerox copy of invoices produced at the time of filing of refund claim - HELD THAT:- Rule 9(1) of the CENVAT Credit Rules, 2004 lists the documents on the basis of which CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor. These documents are original documents, as they represent the best evidence of the payment of duty, in different circumstances and it also prevents a double claim of credit or refund. This can be done by defacement of the original document on the basis of which a refund claim has been settled. A photocopy or duplicate invoice carries the threat of misuse - The Supreme Court, in the case of SAMBHAJI VERSUS GANGABAI [ 2008 (11) TMI 393 - SUPREME COURT] , has held that procedure cannot be a tyrant but only a servant. It is not an obstruction in the implementation of the provisions of the Act, but an aid. The procedures are handmaid and not the mistress. It is a lubricant and not a resistance. Hence the rejection of a part of the claim on this ground that photo copies of invoices have been filed along with the refund claim, even though the original documents were produced at a later stage was not proper and merits to be set aside. Claim may be verified with the original invoices submitted. In case of any discrepancy in documents that is noticed the matter can be examined. Exchange rate fluctuations - HELD THAT:- As per the conditions prescribed in Notifications (Paragraph 2(d)(f) of Notification No. 40/2012-ST dated 20.06.2012), they are eligible to claim refund of the service tax which they have paid to the service provider. It is found that the legal position has been correctly stated by the appellant on both the issues and hence, refund can t be denied on the said issue. Rejection of refund on tax paid on container repair charges - HELD THAT:- It would be relevant to state that as per the Apex Court s judgment in PEEKAY RE-ROLLING MILLS (P) LTD. VERSUS ASSISTANT COMMISSIONER AND ANOTHER [ 2007 (3) TMI 356 - SUPREME COURT] , exemption does not negate a levy of tax altogether. Despite an exemption, the liability to tax remains unaffected, only the subsequent requirement of payment of tax to fulfil the liability is done away with. Moreover, an exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. Section 26(1)(e) of the Special Economic Zones Act, 2005 states that subject to the provisions of sub-section (2) thereof, every developer and entrepreneur shall be entitled to exemption from Service Tax under Chapter (V) of the Act on taxable services provided to a developer or unit to carry on the authorised operations in a SEZ. It is hence for the appellant to demonstrate to the Proper Officer that repair of containers is an authorised operation. Such an activity does not prima facie fall within the scope of commercial or industrial construction service . The matter hence merits being examined de novo and the appellant given an opportunity to show evidence as required by law. The matter may be re-examined by the Original Authority on merits and a speaking order be passed, after affording the Appellant a reasonable time to submit their written submissions if they so desire and after hearing them afresh within ninety days of receipt of this order - appeal disposed off by way of remand.
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2024 (7) TMI 477
Short payment/non-payment of service tax by builder/developer - Construction of Residential Complex Service - period from December 2005 to August 2006 - HELD THAT:- This Tribunal in the case of M/S. SHANMUGA CONSTRUCTION SERVICES VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [ 2023 (4) TMI 432 - CESTAT CHENNAI] , where the very same issue was considered by this Tribunal and it was held that no service tax could be levied on construction of residential complex prior to 01.07.2010. The appellant has engaged contractors for execution of various items of work for construction of residential complexes and these contractors have been paid for the works executed along with service tax by the appellant. The department has demanded service tax on amounts paid to these contractors, who executed the works and confirmed the demand of service tax with interest and imposed penalty. The demand was for the period September, 2006 to March, 2010. The demand confirmed in the impugned order cannot sustain - Appeal allowed.
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2024 (7) TMI 447
Maintainability of petition - availability of alternative remedy - Levy of service tax - service provided by the petitioner as a part of sovereign functions of the Government of Tamil Nadu - HELD THAT:- The issue is no longer res integra and is covered by the Circular No.89/7/2006-S.T., dated 18.12.2006 issued by the Central Board of Excise and Customs, wherein, it has been clarified ' such an activity performed by a sovereign/public authority under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such activities.' This Writ Petition is disposed off by giving liberty to the petitioner to file statutory appeal before the Customs, Excise Service Tax Appellate Tribunal (CESTAT), Chennai, within a period of 60 days from today, without awaiting for the certified copy of this order.
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Central Excise
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2024 (7) TMI 476
Method of Valuation - Section 4 or Section 4A of the Central Excise Act, 1944 - denial of exemption under Rule 34(b) on the ground that the poly pack contains a quantity of more than 10 gms of chewing tobacco - whether the packages made by the respondent-assessee are such that under the said Rules, there is a requirement to declare the retail price of the goods on the packages? - HELD THAT:- The Commissioner held that an HDPE bag containing 100 poly packs does not contain a declaration of selling price and therefore, it would be a wholesale package. There is no finding recorded that what is distributed or sold by the respondent is a poly pack containing 33 plus one small pack. The respondent s case that 100 poly pack packages are being put in one HDPE bag has been accepted by the Commissioner. Therefore, the respondent is selling HDPE bags containing 100 poly packs each to the distributors and dealers. The said Rules do not require the display of price on such HDPE bags. Even assuming that 100 poly packs were retail packages, HDPE bags would be covered by the definition of wholesale package as defined in clause (iii) of Rule 2(x) of the said Rules. Thus, the HDPE bags are not group packages within the meaning of Rule 2(g). The impugned judgment is not satisfactorily worded, the ultimate conclusion recorded in the impugned judgment that Section 4A(1) of the Excise Act was not applicable to the goods subject matter of the show cause notices, cannot be faulted with - there is no reason to interfere with the impugned judgment - Appeal dismissed.
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2024 (7) TMI 475
Method of valuation - Section 4 or 4A of the Central Excise Act, 1944 - removal of factory packaged medicines covered by the Standards of Weights and Measures Act (SWM Act) on stock transfer basis to Patna depot - demand of differential duty on the basis of transaction value in terms of Section 4 of the Central Excise Act from the appellant - HELD THAT:- It is observed that MRP based valuation is applicable only for goods cleared for domestic sales, where the SWM Act is applicable. When goods are sold outside the country, such as Nepal, MRP based valuation is not applicable and the value to be adopted is the transaction value as provided under Section 4 of the Act. This view has been expressed by the Tribunal, New Delhi in the case of GILLETTE INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [ 2005 (8) TMI 222 - CESTAT, NEW DELHI] wherein it was observed that export consignments to Nepal were required to be valued in terms of their transaction value under Section 4 and not in terms of Section 4A, even if the goods under export were specified under Section 4A(1) of the Act. It is observed that the appellant has fairly accepted the valuation in terms of Section 4 of the Act for the goods cleared to Nepal from their depot at Patna and paid the differential duty before filing this appeal. Therefore, by relying on the decision of the Tribunal in the case of Gillette India Ltd. v. Commissioner of Central Excise, Jaipur, the demand of differential duty confirmed in the impugned order upheld along with interest. Penalty u/s 11AC of the Central Excise Act, 1944 - HELD THAT:- When the Department contended that MRP based valuation is not applicable for the goods cleared to Nepal, the appellant accepted their liability and paid the differential amount of duty. Even though it was paid after issuance of the adjudication order, we observe that in this case, there is no mens rea or intention to evade payment of duty existing on the part of the appellant. As suppression of facts with intent to evade payment of duty is not established in this case, it is held that the penalty imposed under Section 11AC of the Central Excise Act, 1944 is not sustainable and accordingly, the same is set aside. Appeal disposed off.
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2024 (7) TMI 474
Dutiability - black sand produced during the manufacturing process of castings - manufactured goods or not - HELD THAT:- It is not the case of the revenue that the object of the Appellant was to manufacture black sand; even if the appellant intended to manufacture black sand, that too using natural sand which by itself is a non- dutiable goods. When the Natural Sand turns out black during the manufacture of castings, it does not lose its character; may be the natural sand turns out black and other than this, there are no material differences brought out on record. The authorities have clearly erred in fastening the appellant with duty liability on Black sand which was not manufactured - the impugned order set aside - appeal allowed.
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2024 (7) TMI 473
CENVAT Credit - Furnace Oil used for manufacture of job worked goods - interpretation of Rule 2(K) and Rule 6 of the CENVAT Credit Rules, 2004 - HELD THAT:- The furnace oil used by the Appellant for heating the MS Ingots / Billets for the manufacture of rolled products on his own account satisfies the definition of the term input but the furnace oil used in the manufacture of finished goods on behalf of the principal manufacturer does not satisfy the definition of inputs, as the rolled products manufactured on job work basis are the final products of the principal manufacturer and not the final products of the Appellant. The above issue is no more res integra as in the appellant s own case, the issue was decided in favor of the appellant for the earlier periods by the Tribunal in DECCAN ALLOYS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI-III [ 2018 (9) TMI 1058 - CESTAT CHENNAI] where it was held that ' No duty has been discharged by appellants. The adjudicating authority has found merit with the arguments of appellants that Notification No.214/86-CE is not an exemption Notification but it is merely postponing payment of duty at the time and removal of finished goods by principal manufacturer. However having come to this conclusion, the adjudicating authority has held that there is yet another condition that input should be used by manufacturer of final products, and has held that since appellants are not manufacturer of final products, the credit availed on furnace oil used by them for job work basis cannot be allowed since the same are not used for final products of the appellants. ' The impugned order is set aside - appeal allowed.
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2024 (7) TMI 472
Reversal of CENVAT Credit - inputs and input services which were used in the manufacture of main excisable goods, sugar and molasses produced by the Appellant - relevant time - HELD THAT:- The issue is no more res integra and is squarely covered by the decision of the Tribunal in the case of M/S TRIVENI ENGINEERING INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE S.T., LUCKNOW [ 2017 (11) TMI 599 - CESTAT ALLAHABAD] . It is found that Hon ble Supreme Court in the case of UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] that Bagasse being only an agricultural waste and not being a result of any process, not covered in definition of manufacture under Section 2(f) of the Act and there being no Chapter note or Section note in the Central Excise Tariff declaration process in respect of Bagasse as amounting to manufacture. Thus, notwithstanding the amendment in 2008 in Section 2(d), creating a fiction of deemed marketability, Bagasse is not excisable, as it does not pass through the test of manufacture. Accordingly, whatever amount the Appellant-assessee have paid by way of reversal is in the nature of revenue deposit and there is no limitation attracted for refund of such revenue deposit. Bagasse is not a dutiable item and not a manufactured item, as held by the Hon ble Supreme Court, there was no question of any reversal of duty under the provision of Rule 6(3) of CCR, 2004. Under such facts and circumstances, the amount reversed by the Appellant under Rule 6(3) of CCR was in the nature of revenue deposit. The impugned order is set aside - appeal allowed.
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2024 (7) TMI 471
CENVAT Credit - input service or not - Product Liability Insurance - place of removal - case of revenue is that the Product Liability Insurance is a service not used in or in relation to the manufacture of the final product and clearance up to the place of removal. HELD THAT:- It is seen from the definition of input service as per Rule 2(l) of the CCR 2004 that the term upto the place of removal is specific to outward transportation and is not related to other services mentioned in the definition. Service like accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services etc are activities that are related to the pre and post manufacturing and clearance of the goods. They do not have any restriction for availment with regard to the place of removal or else the definition of input service would be rendered redundant in as far as these services are concerned. In fact as per explanation (BA) to rule 2(l), service of general insurance business, servicing, repair and maintenance, in so far as they relate to a motor vehicle alone is not included. Since the impugned services are neither for personal consumption of staff nor are general insurance which relates to a motor vehicle, input credit cannot be denied and the impugned order merits to be set aside. The impugned order is set aside and the appeal succeeds - Decided in favor of appellant.
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2024 (7) TMI 470
Interpretation of statute - input service - nexus of service with the manufacturing activity either directly or indirectly and as specified under the definition of Rule 2(l) of the CENVAT Credit Rules, 2004 - HELD THAT:- The definition covered activities relating to business but we do not see anywhere as to the revenue agitating that the other services which were disputed, were never used in the business of the appellant. Further, para 20 of the impugned order makes it very clear that the denial is made on the ground that the setting up of business was not an activity related to the business. It is difficult to understand the logic behind this conclusion. It is not their case that the appellant having undertaken the activity of setting up of the factory did not carry any manufacturing activity in that premises and therefore, the denial of input credit was called for. It is the settled position of law that the ambit of the definition prior to 01.04.2011 was large enough to cover all such activities that are disputed here, in this case, as long as there is no denial by the revenue that after setting up of the factory, no business was carried on from that premises. The denial of input credit is contrary to law and therefore, the impugned order cannot sustain - Appeal allowed.
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2024 (7) TMI 469
CENVAT Credit - Goods Transport Agency (GTA) service used for transportation of finished goods - whether such Cenvat credit is recoverable treating it as wrongly availed credit, along with interest and penalty under Rule 15(1) of CCR, 2004? - HELD THAT:- The transportation charges which are to be added in value have to be up to the stage of the transfer of the ownership of goods inasmuch as once the ownership in goods stands transferred to the buyer, any expenditure incurred thereafter has to be on buyer s account and cannot be a component which would be included while ascertaining the valuation of the goods manufactured by the buyer. Thus, the principle of law, is in determining at what point of time sale is effected namely whether it is on factory gate or at a later point of time i.e. when the delivery of the goods is effected to the buyer at his premises, which can be seen in the light of provisions of the Sale of Goods Act, 1930 by applying the same to the facts of each case to determine as to when the ownership in the goods is transferred from the seller to the buyer. Plain reading of the above legal provisions under Section 4 of the Central Excise Act, 1944 state that for the purpose of valuation of excisable goods, for determining the levy of central excise duty if chargeable on ad valorem basis, it shall be the transaction value. Where the goods are sold by the assessee, for delivery at the time and place of removal, and where the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, then the same shall be the transaction value. Thus, it is clear that the value shall be determined with reference to goods delivered at the time and at the place of removal. The Purchase Order placed by the customer-BAL with the appellant specifically provide for delivery as follows:- Delivery Term: FREE DELIVERY AT OUR WORKS . Further, the payment terms for the sale of goods is 45 days from the date of goods being received at the customer s factory works. Thus, it is found that the sale of goods in the present case takes place when the goods are delivered by the appellant and the factory works of the customer-BAL. It is also found that the impugned order did not discuss the facts of the case to arrive at a decision on place of removal and further assumed that the customer s premises to be the place of removal, without any basis and without examination of the facts of the case. Thus, the impugned order cannot be sustained in law. There are no substance in the impugned order dated 29.09.2020, in denying the Cenvat credit on input services without proper examination - the appellant is eligible for the credit of service tax paid on outward freight charges, where the sale is on FOR basis or delivery at works on FOR, in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 read with Section 4 of the Central Excise Act, 1944 - the impugned order is set aside by allowing the appeal filed by the appellant - appeal allowed.
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2024 (7) TMI 468
Levy of penalty on appellant, a Proprietary firm - involvement in illegality by not receiving goods and receiving invoices only with an intension to avail CENVAT credit and clearing goods without payment of duty - main appellant has settled the dues under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules 2019 - HELD THAT:- The Appellant had not supplied goods as per invoices on the presumption that there was shortage of raw material in the factory of the Consignee M/s KEPL. But the discrepancy in the stock of goods in the factory of M/s KEPL cannot lead to any adverse inference against the Appellant since it can be due to many reasons and not attributable only to the Appellant, amongst all the suppliers. M/s KEPL has made payments by Cheques for the goods supplied under 18 invoices. Moreover Respondent has not disputed the contents of RG 23D Register maintained by the Dealer and the quarterly CENVAT returns submitted to the respondent as required under the Sub-Rule (8) of Rule 9 of the CENVAT Credit Rules, 2004 showing the details of availing of credit on purchase of goods and passing of credit on sale of goods. Considering the above facts and the fact that the main appellant has settled the dues under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules 2019 which allows waiver of interest and penalty to the co-notice if the duty is discharged by the main notice, there are no merit to sustain the penalty against the appellant who is a co-notice. Appeal is allowed by setting aside the penalty imposed on the appellant.
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2024 (7) TMI 467
Recovery of CENVAT Credit with interest and penalty - import of Propane and Butane and utilisation of the same on clearance of LPG from the warehousing premises (MLIF) - HELD THAT:- It is found that merely on the ground that the appellants are not possessing manufacturer registration at the time of receipt of the goods in their premises would not disentitle them in availing CENVAT credit in view of the judgment of the Hon ble Karnataka High Court in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT] , the Hon ble High Court had observed 'In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. Therefore, said finding recorded by the Tribunal as well as by the lower authorities cannot be sustained.' Thus, the appellants are entitled to avail CENVAT credit on the inputs viz., Propane and Butane which were later utilised in the clearance of LPG from their MLIF. Besides, in view of the ratio laid down by the Hon ble Bombay High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] which was followed by the Karnataka High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-V VERSUS M/S. VISHAL PRECISION STEEL TUBES AND STRIPS PVT. LTD. [ 2017 (3) TMI 1287 - KARNATAKA HIGH COURT] once the department accepts the duty on the final product, denial of the credit on the inputs cannot be sustained. The impugned order is set aside - Appeal allowed.
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CST, VAT & Sales Tax
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2024 (7) TMI 466
Issuance of refund voucher with interest payable to the respondent herein under Section 24(4) of the TNGST Act - HELD THAT:- On perusal of the materials available on record, it is seen that though the appellant had issued a refund voucher on 01.06.2005, subsequently, a revised order has been passed by the appellant on 16.12.2005, before the writ petition filed by the respondent came to be disposed of and as per the revised order, the respondent was liable to pay a sum of Rs. 419.00 towards resale tax and a sum of Rs. 210.00 towards penalty. However, the said factum was not brought to the notice of the learned Single Judge at the time of disposing of the writ petition. The order passed by the learned Single Judge is liable to be set aside - Appeal allowed.
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2024 (7) TMI 465
Violation of principles of natural justice - Challenge to assessment order - non-furnishing of documents - failure to file any reply - Assessment Years 2006-2007 2007-2008 - HELD THAT:- There is manifest violation of principles of natural justice inasmuch as the petitioner has produced documents along with the reply dated 13.02.2019. These have not been considered. Instead, the petitioner has been blamed for not producing purchase invoices. In case, any shortcoming was noticed in the documents filed by the petitioner, the petitioner could have been called upon to produce such documents such as purchase invoices. However, in the impugned order, the shortcoming has been pointed out for the first time. The impugned Assessment Orders are set aside and the cases are remitted back to the second respondent to pass fresh orders on merits within a period of 3 months from the date of disposal of this order - Petition disposed off by way of remand.
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2024 (7) TMI 464
Benefit of Amnesty Scheme for waiver of penalty - Benefits under Vera Samadhan Yojana, 2019 - release of bank attachment - refund of the amount wrongly recovered pursuant to the intimation letter - HELD THAT:- The benefit of the Amnesty Scheme is available for waiver of interest and penalty. However, the Scheme also provides that no refund would be issued qua interest or penalty which is already deposited by the applicant. Therefore, the petitioner is not entitled to the refund of interest but so far as the penalty is concerned, the petitioner was entitled for the waiver thereof. The respondent authorities however invoking the Clause 4.5 by misinterpreting the object of the Scheme to give waiver of interest and if the amount of tax is deposited by the assessee. According to the respondent-authority, only the outstanding amount is to be seen which pertains to the penalty and therefore as per Clause 4.5 of the Amnesty Scheme, the petitioner was directed to deposit 20% of the penalty. The petitioner however, intimated the respondent-authority that as the petitioner has already paid tax and interest before assessment order was passed, the petitioner is not liable to deposit any amount of the penalty as required by the intimation letter. However, the respondent-authority rejected the application of the petitioner for the benefit of the Amnesty Scheme as the petitioner did not deposit the amount as required by the intimation letter. The respondents have committed error while rejecting the application under Amnesty Scheme as the petitioner has already paid amount of tax and interest prior to passing of the order of assessment and prior to the announcement of the Scheme. Therefore, reliance placed by the respondent authority on Clause 4.5 of read with Clause 8 of the Scheme would not be applicable as the petitioner is entitled to the waiver of interest and penalty under the Scheme on having paid the entire amount of tax considering the fact that the petitioner had challenged the assessment order comprising of tax, interest and penalty. The petitioner is therefore entitled to the waiver of the penalty as per the provisions of the Scheme accordingly. As the petitioner is not entitled to the Amnesty Scheme alternative prayer with regard to restoration of the second appeal before the Tribunal would not survive. The impugned Assessment Orders and notices issued by respondent No. 3 are hereby quashed and set aside - petition allowed.
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2024 (7) TMI 463
Recovery of the outstanding dues of the company from the Director - lifting of corporate veil - HELD THAT:- The issue of recovery of the outstanding dues of the company from the Director is no more re integra in view of the decision by this Court in the case of M.R. CHOKSI VERSUS STATE OF GUJARAT [ 2004 (6) TMI 642 - GUJARAT HIGH COURT] , wherein it is held that ' As regards the faint plea of lifting the corporate veil, as per the settled legal position, the corporate veil is not to be lifted lightly. It is only when there is strong factual foundation for lifting the corporate veil that the question of examining the applicability of the principle of lifting such veil would be required to be examined. In neither of the two petitions raising the controversy, the authorities have passed any specific order fastening the liability on the Directors personally, much less any factual foundation has been laid to invoke the doctrine of lifting the corporate veil. Hence it is not necessary to dilate on the said principle any further.' In view of the above settled legal position, the impugned notice dated 7th March 2023 for recovery of outstanding dues of the company from the petitioner is hereby quashed and set aside and the respondents are restrained from initiating proceedings against the petitioner from his personal property for recovery of the outstanding dues of the company in which the petitioner was a Director. Petition disposed off.
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2024 (7) TMI 462
Liability of the petitioner to pay Turnover Tax (TOT) on sales to Oil Marketing Companies (OMCs) - whether the petitioner-ONGC is liable to pay TOT on the turnover of sale made to OMCs in view of the provisions of Section 10A read with entry No. 173 in schedule II of Section 49 (2) of the Act or not? - statutory exemption as per entry No. 173 under Section 49 (2) of the Gujarat Sales Tax Act, 1969 - HELD THAT:- The sale made by the petitioner-ONGC to oil marketing companies was exempted as per Entry No. 173 as notified by the Government in the year 1988 under Section 49 (2) of the Act granting exemption from payment of whole or any part of the tax payable under provisions of the Act which includes the TOT as per Section 2 (32) of the Act. Section 10A inserted with Gujarat Sales Tax Amendment Act, 1988 provides for levy of TOT, however, in view of the contention of the petitioner that the provisions of Section 49 (2) would override the provisions of Section 10A as once the exemption is granted from the provisions of the levy tax under the Act, the TOT cannot be accepted even on the assumption that the turnover tax is a single point levy, however, single point levy of tax is provided in Section 9 of the Act for the declared goods and there is no provision for single point of levy of sales tax, general sales tax and TOT except for the declared goods. On perusal of Section 10A, it appears that the turn over tax is leviable on the taxable turnover of taxable goods beyond a prescribed threshold and any dealer whose taxable turnover crosses the threshold at whatever stage was liable to pay TOT. As per Section 10A (2) (f) for the purpose of calculating amount of tax payable under Sub-section (1) of Section 10A i.e. TOT, the sales of goods wholly exempted payment of tax under Section 49 was to be deducted and not to be considered as a part of the taxable turnover for levy of the TOT but after the amendment with effect from 01.04.1993, clause (f) of Sub-section (2) of Section 10A was deleted and as a result of such amendment, the TOT would be payable on the sales of goods exempted under Section 49 of the Act so far as calculation of the taxable turnover of taxable goods under Section 10A was concerned. The provision of Section 10A would be applicable on the goods which are taxable but for exemption granted under Sub- section (2) of Section 49. Therefore, the turnover of sales made by ONGC to OMCs which are otherwise exempted under Section 49 (2) of the Act would be considered as a taxable goods for the purpose of Section 10A to include in taxable turnover if the total turnover of the dealer exceeds Rs. 50 lakhs. Admittedly, the total turnover of ONGC is exceeding Rs. 50 lakhs and therefore, the taxable turnover would include the taxable goods irrespective of whether such goods are exempted vide entry No. 173 as per the notification issued pursuant to Section 49 (2) of the Act. Thus, no interference is required to be made in the impugned order passed by the respondent No. 2 and the Tribunal - petition dismissed.
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2024 (7) TMI 461
Challenge to assessment order - non-furnishing of documents - HELD THAT:- It is noticed that the demand that was earlier confirmed has been now confirmed vide impugned order pursuant to the remand order dated 16.02.2023 pursuant to the alleged information gathered by the respondent from the common portal. Unless the information is furnished to the petitioner, the petitioner cannot be saddled with a liability. The respondent is directed to furnish the necessary information to the petitioner as was ordered by the Deputy Appellate Commissioner vide order dated 16.02.2023 and thereafter proceed with the assessment - the impugned orders are quashed and the case is remitted back to the respondent to pass a fresh order on merits and in accordance with law as expeditiously as possible, preferably within a period of 6 months from the date of receipt of a copy of this order. Petition allowed by way of remand.
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2024 (7) TMI 460
Challenge to notice of attachment of petitioner s immovable property for recovery of tax under Andhra Pradesh General Sales Tax Act, 1957 - Section 27 of the Andhra Pradesh Revenue Recovery Act, 1864 R/w. Section 17-C of APGST Act, 1957 - HELD THAT:- Under Section 20 of the APGST Act there is power for the Commissioner to revise, if he finds that the proceedings or orders by the subordinate authorities are prejudicial to the interests of revenue. It is not the petitioner s case that the Commissioner invoked its powers under Section 20 of the APGST Act, might be because the orders of the subordinate authorities were not prejudicial to the interest of revenue. It is observed that the memo dated 28.07.2010 is not only without jurisdiction but is also prejudicial to the interest of revenue. Petition dismissed.
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Indian Laws
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2024 (7) TMI 459
Jurisdiction - power of the Appellate Court dealing with the appeal under Section 37(1)(c) of the Arbitration Act to pass an order of remand to Section 34 Court - HELD THAT:- In the facts of the case in hand, while deciding the petition under Section 34 of the Arbitration Act, the learned Single Judge has made a very elaborate consideration of the submissions made across the Bar, the findings recorded by the Arbitral Tribunal and the issue of illegality or perversity of the award - the finding of the Appellate Bench that the impugned judgment of the learned Single Judge does not address several issues raised by the parties cannot be sustained at all. The remedy of an appeal will not be effective unless there is a power of remand vesting in the appellate authority. In the Arbitration Act, there is no statutory embargo on the power of the Appellate Court under Section 37(1)(c) to pass an order of remand. However, looking at the scheme of the Arbitration Act, the Appellate Court can exercise the power of remand only when exceptional circumstances make an order of remand unavoidable. If the Courts dealing with appeals under Section 37 of the Arbitration Act start routinely passing the orders of remand, the arbitral procedure will cease to be efficient. It will cease to be costeffective. Such orders will delay the conclusion of the proceedings, thereby defeating the very object of the Arbitration Act. Therefore, an order of remand by Section 37 Court can be made only in exceptional cases where remand is unavoidable. The scope of interference in a petition under Section 34 is very narrow. The jurisdiction under Section 37 of the Arbitration Act is narrower - When members of the bar take up so many grounds in petitions under Section 34, which are not covered by Section 34, there is a tendency to urge all those grounds which are not available in law and waste the Court s time. The time of our Courts is precious, considering the huge pendency. The restored appeal shall be placed before the roster Bench on 29th July 2024 at 10:30 a.m. The parties to the appeal before this Court shall be under an obligation to appear before the concerned Bench on that day, and no fresh notice shall be served to the parties - Appeal partly allowed.
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2024 (7) TMI 458
Seeking grant of anticipatory bail - condition of dropping a PIN on Google Maps - Condition of furnishing certificate of the embassy. Condition of dropping a PIN on Google Maps - HELD THAT:- Imposing any bail condition which enables the Police/Investigation Agency to track every movement of the accused released on bail by using any technology or otherwise would undoubtedly violate the right to privacy guaranteed under Article 21. In this case, the condition of dropping a PIN on Google Maps has been incorporated without even considering the technical effect of dropping a PIN and the relevance of the said condition as a condition of bail. This cannot be a condition of bail. The condition deserves to be deleted and ordered accordingly. In some cases, this Court may have imposed a similar condition. But in those cases, this Court was not called upon to decide the issue of the effect and legality of such a condition. Condition of furnishing certificate of the embassy - HELD THAT:- Grant of such a certificate by the Embassy/High Commission is beyond the control of the accused to whom bail is granted. Therefore, when the Embassy/High Commission does not grant such a certificate within a reasonable time, as explained above, the accused, who is otherwise held entitled to bail, cannot be denied bail on the ground that such a condition, which is impossible for the accused to comply with, has not been complied with. Hence, the Court will have to delete the condition. If the Embassy/High Commission records reasons for denying the certificate and the reasons are based on the adverse conduct of the accused based on material, the Court can always consider the reasons recorded while considering an application for dispensing with the condition. Coming to the facts of the case, bail has been granted to the appellant firstly on the ground that the appellant has been implicated based on statements recorded under Section 67 of the NDPS Act, and that such statements are entirely inadmissible in view of the decision of this Court in the case of Tofan Singh v. State of Tamil Nadu [ 2020 (11) TMI 55 - SUPREME COURT ]. So, bail has been granted on merits as well. Secondly, the bail has also been granted relying upon what is held in paragraph 15 of the decision in the case of Supreme Court Legal Aid Committee1. The case shall be listed on 15 July 2024 for passing final orders after considering the compliances made by the appellant so far.
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2024 (7) TMI 457
Period of limitation for filing a petition under Section 34 of the Arbitration Act - HELD THAT:- As per Section 12(1) of the Limitation Act, the day from which the limitation period is to be reckoned must be excluded. In this case, the period of limitation for filing a petition under Section 34 will have to be reckoned from 30th June 2022, when the appellants received the award. In view of Section 12(1) of the Limitation Act, 30th June 2022 will have to be excluded while computing the limitation period. Thus, in effect, the period of limitation, in the facts of the case, started running on 1st July 2022. The period of limitation is of three months and not ninety days. Therefore, from the starting point of 1st July 2022, the last day of the period of three months would be 30th September 2022. As noted earlier, the pooja vacation started on 1st October 2022. In the facts of the case in hand, the three months provided by way of limitation expired a day before the commencement of the pooja vacation, which commenced on 1st October 2022. Thus, the prescribed period within the meaning of Section 4 of the Limitation Act ended on 30th September 2022. Therefore, the appellants were not entitled to take benefit of Section 4 of the Limitation Act. As per the proviso to subsection (3) of Section 34, the period of limitation could have been extended by a maximum period of 30 days. The maximum period of 30 days expired on 30th October 2022. As noted earlier, the petition was filed on 31st October 2022. The High Court was right in holding that the petition filed by the appellants under Section 34 of the Arbitration Act was not filed within the period specified under subsection (3) of Section 34 - there are no merit in the appeal - appeal dismissed.
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2024 (7) TMI 456
Suit for specific performance - refund of the advance sale consideration - whether the plaintiff has proved payment of Rs. 3,00,000/- initially and another sum of Rs. 15,00,000/- totalling to Rs. 18,00,000/- to the defendant no. 1? - HELD THAT:- The document would show that the witness PW-2 had signed just below that endorsement and only thereafter, the signature of the defendant no. 1 is seen subscribed. Ordinarily, in any agreement witnessing payment of money, the party signs first and the witness(s) puts his signature(s) below that endorsement. However, in the case in hand, the witness has signed just below that endorsement and only thereafter, the defendant no. 1 is seen subscribing to the endorsement. In the suit notice exhibit B-1 also, there is no mention of payment of a definite sum paid as advance sale consideration nor existence of any endorsement has been mentioned therein. The amount of Rs. 15,00,000/- so received subsequent to exhibit A-1 agreement of sale, as stated in the second notice and also in the plaint and so reflected in exhibit A-1(a) endorsement is not stated in exhibit B-1 suit notice. The only possible reason for this could be that the advocate who prepared the notice was not apprised of this fact. If such was the case, plaintiff s statement in Court, without any further corroboration, is not believable and the High Court has rightly found that the case of the plaintiff as to the subsequent payment of Rs. 15,00,000/- is not established by positive evidence. There are no substance in this appeal which deserves to be and is hereby dismissed - petition dismissed.
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2024 (7) TMI 455
Refund of security deposit money and one month advance money - no justification to retain the amount that was paid by the petitioner at the time of getting licence - HELD THAT:- The respondents is merely a State Marketing Company, engaged for selling liquor products in Tamil Nadu. For facilitating further sale of liquor, the petitioner has also licenced licencee to set up bars adjacent to the TASMAC Retail shops maintained by them - In case the petitioner fails to pay tax in time, it is for the Authorities under the respective GST enactments to recover and collect the same from the petitioner in the manner known to law under Section 63 or Section 73 or under Section 74 of the respective GST enactments. In case the petitioner has failed to file Returns or had failed to obtain registration under the provisions of respective GST enactments, the Authorities under the respective GST enactments were empowered to initiate proceedings under Section 63 of respective GST enactments. In this case, it is noticed that the petitioner had obtained registration, which was subsequently cancelled on 09.04.2019. The petitioner has also filed that receipts on the sales during the period. The petitioner may have evaded tax. However, such evasion of tax could not be justify by retention of the security deposit and one month advance paid by the petitioner at the time of granting the licence to the petitioner - The second respondent cannot be retain the amount and exercise a lieu over it, based on the terms in the licence issued to the petitioner. This Writ Petition is allowed by directing the second respondent to refund the amounts collected together with 9% of the interest from the date, when the petitioner s licence expired. The amount shall be paid to the petitioner within a period of three months from the date of receipt of a copy of this order - Petition allowed.
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2024 (7) TMI 454
Dishonour of Cheque - vicarious liability of petitioner - whether the petitioner has signed the agreement or not - Section 141 of NI Act - HELD THAT:- The provision of Section 141 of the NI Act cannot be extended in case where the offence under Section 138 of the NI Act is committed by a proprietorship concern. In such a case, only the proprietor or at best the signatory of the cheque may be made liable to face the prosecution under Section 138 of the NI Act, but not a person who is neither the proprietor of the proprietorship concern, nor is a signatory to the cheque. Applying the above principles to the facts of the present case, it is apparent that, in the Complaint, the respondent itself has pleaded that the Accused No. 1 is the proprietorship concern of which the Accused No. 2 is the proprietor. The cheque in question is also signed by the Accused No. 2 as proprietor of the Accused No. 1. The petitioner/Accused No. 3 has been arrayed as an accused on the premise that she is the authorized signatory of the accused no. 1 and that she signed the Agreement between the Accused No. 1 and the respondent along with the accused no. 2. That itself is not sufficient to invoke the vicarious liability of offence under Section 138 of the NI Act, in terms of Section 141 of the NI Act, on the petitioner. The complaint against the petitioner cannot be sustained. Accordingly, the same is quashed as against the petitioner - Petition disposed off.
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2024 (7) TMI 453
Simultaneous proceedings - Validity of Notice issued by the Respondent under Section 13(2) and 13(4) of SARFAESI Act - whether the recovery proceedings initiated by Respondent No. 1 under the RDDB Act can be continued along with the proceedings under the SARFAESI Act simultaneously? - HELD THAT:- In TRANSCORE VERSUS UNION OF INDIA [ 2006 (11) TMI 349 - SUPREME COURT] , the Supreme Court held that the provisions of RDDB Act are not inconsistent with the provisions of the SARFAESI Act and the application of both the Acts was held to be complementary to each other. The continuation of the adjudicatory proceedings by Respondent No. 1 in the application number i.e., T.A. No. 165/2022 filed under Section 19 of the RDDB Act was maintainable. There was no bar on its continuation due to the invocation of the SARFAESI proceedings, which are in the nature of enforcement proceedings, as observed by the Supreme Court. In view of the settled position of law, filing of the present petition is not bona fide. It is evident that the Petitioners have filed the present petition to overreach the recovery proceedings, wherein the Petitioners have been found to be liable to pay an amount of Rs. 2,74,31,840.37 as on 26th November, 2021 plus interest, so as to circumvent the provisions of statutory appeal. Petition dismissed.
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2024 (7) TMI 452
Abatement of reference proceedings - recovery of debt under the SARFAESI Act - HELD THAT:- A close analysis and interpretation of third proviso to subsection (1) of Section 15 of the SICA would reveal that where secured creditors take any measure to recover their secured debt under the provisions of the SARFAESI Act, as provided therein, the reference shall abate by operation of law. The abatement would follow as necessary consequence under the law where the secured creditors represent not less than three-fourth of the amount outstanding. Therefore, it is vividly clear that such a provision has been made for the benefit of a secured creditor. The expression, such secured creditors clearly manifests legislative intention that the outstanding amount must be of such secured creditors who have taken any measure to recover their secured debt under subsection (4) of Section 13 of the SARFAESI Act. To put it differently, if there are number of secured creditors who have taken any measure to recover their secured debt under subsection (4) of Section 13 of the SARFAESI Act and the secured debt, which is outstanding, is not less than three-fourth of the outstanding amount which was disbursed to the borrower by those secured creditors, third proviso to sub-section (1) of Section 15 of the SICA would be attracted to result in abatement of the proceedings by operation of law. Thus, it is already held that even before repeal of the SICA vide the SIC Repeal Act of 2003, the reference proceedings abated in view of the provisions contained in third proviso to sub-section (1) of Section 15 of the SICA, the third proviso to clause (b) of Section 4 of the SIC Repeal Act of 2003 is not attracted. Appeal dismissed.
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2024 (7) TMI 451
Classification of the petitioners account as Non Performing Asset (NPA) - Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 - HELD THAT:-Admittedly, the credit facility was last renewed on September 29, 2022 and was valid up to December 31, 2022, after which the same was not renewed. The period of 180 days expired on June 29, 2023. Thus, under Clause 4.2.4(c) of the RBI Circular dated April 1, 2023, the account was fit to be declared NPA since the regular/ad hoc credit limits were not reviewed or renewed within 180 days from the due date of ad hoc sanction. In the present case, the credit facility was valid up to December 31, 2022. Thus, thereafter, the sanctioned limit dropped to zero. The amount outstanding from then onwards became due and payable in the absence of any renewal to the credit facility irrespective of the fact that the sanctioned limit was not crossed. The outstanding balance of the petitioners remained less than the sanctioned limit and the credits were not enough to cover the interest debited during the previous 90 days period. After the lapse of the credit facility on December 31, 2022, the outstanding balance constantly remained below the credit facility. The notice under Section 13(2) of the SARFAESI Act dated September 11, 2023 clearly mentions the date of classification of the petitioners account as NPA to be June 30, 2023. Such a notice is not required to contain elaborate or detailed reasons for the classification of NPA, the same not being a judicial or quasi-judicial order - Since the NPA classification has been upheld above, the subsequent steps taken under Section 13, sub-sections (2) and (4) of the SARFAESI Act were also justified. The challenge to the NPA classification as well as the issuance of the notice under Section 13(2) of the SARFAESI Act and further consequential measures under Section 13 (4) fails. Petition dismissed.
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2024 (7) TMI 450
Maintainability of appeal before DRT - non-compliance with mandatory requirement of pre-deposit or not - judgement debtor failed to challenge the order of attachment, proclamation of sale, auction proceedings and sale of immovable properties - HELD THAT:- It is admitted that loan was taken, which was enhanced from time to time with a limit of Rs. 12 lacs as on 22.01.1992. It is also not in dispute that in lieu of loan and its enhancement facility, various documents were executed in favour of the respondent Bank. The guarantees were also executed by the respondents defendants. It is also not in dispute that the property was also mortgaged in favour of the Bank. Due to default in repayment of loan, the Bank proceeded to recover its amount. In the said process, an appeal was preferred before the DRT, Jabalpur, which was decided in favour of the Bank and thereafter, consequent proceedings were initiated for attachment, proclamation, sale and confirmation. The record further reveals that neither compliance of the mandatory pre-deposit as required under Rules 60 61 of Schedule II to the Income Tax Act has been made, nor any material has been brought on record to show that the mandatory requirement of pre-deposit was made good. Once the mandatory condition was not fulfilled, the DRT ought not to have entertained the appeal and passed the impugned order - In Bishan Paul [ 1965 (3) TMI 112 - SUPREME COURT] , the Apex Court has held that the sale certificate, though issued later, mentioned the date of confirmation of sale and the title, does not remain in abeyance till the certificate is issued and title, therefore, was not in abeyance till the certificate was issued but passed on the confirmation of sale. The intention behind the rules appears to be that title shall pass when the full price is realised. Once the effect and operation of the interim order wipes out on final order being passed thereon, all consequential proceeding goes. This vital aspect of the matter was brought to the notice of the Tribunal, but in stead of taking note of the said fact, the appeal of the petitioner was dismissed on that ground, which cannot be permissible in law. The impugned judgment order passed by the Debt Recovery Appellate Tribunal, Allahabad as well as the impugned order dated 29.04.2005 passed by the Presiding Officer of D.R.T., Lucknow cannot be sustained - Petition allowed.
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2024 (7) TMI 449
Seeking to restrain the Respondent No.1-Bank from taking the physical possession of the two immovable properties - HELD THAT:- The Petitioner herein has acted in gross violation of the undertakings dated 21st September, 2022 and 02nd June, 2023 filed in the present petition. Further, as noted above, the Petitioner was served with a demand notice dated 15th June, 2021 under Section 13(2) of the SARFAESI Act. However, the Petitioner despite having failed to point out any illegality in the actions taken by the Respondent No.1-Bank under the SARFAESI Act, has succeeded in preventing the Respondent No.1-Bank from proceeding in law against taking physical possession of secured assets by making representations before DRT and this Court with respect to its intention to clear the dues. However, as is evident from the proceedings of the DRT and the orders passed in this petition, the Petitioner has failed to avail the extension of time granted by the Court as well as the Respondent No.1-Bank. The prayer sought in this petition for seeking extension of time to make payments to Respondent No. 1, Bank stood satisfied with passing of the orders dated 13th September, 2022 and 25th May, 2023. However, the Petitioner having failed to avail the said extension of time is not entitled to the consequential relief of restraint against the Respondent No.1-Bank - Petition dismissed.
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