Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 12, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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E-way Bill: Typographical error not indicative of tax evasion intent. Active GSTIN, residential address not adverse. Penalty quashed for lack of evidence.
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Delay in appeals can be condoned under Limitation Act if special statute lacks time limit. CBIC extended CGST appeal period. Writ can't override alternate remedies.
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Jurisdiction for SCN on interest & penalty upheld. Statutory appeal u/s 107 required. Writ dismissed with 30 days liberty to appeal. Pre-deposit waived if 10%+ tax paid.
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HC upheld delegation appointing proper Officers under TNGST Act. Impugned orders' validity on improper show cause notice left open for Appellate Authority.
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GST assessment order set aside, fresh order after reconciling GSTR discrepancies; 10% tax deposit within 30 days.
Income Tax
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Revision u/s 263 invalid if first order quashed; res judicata applies. Accrual basis accounting allowed for trade receivables. Ministry's cash basis directive binding.
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Undisclosed foreign assets taxed when detected. Pre-Act assets deemed acquired on notice. Declare foreign assets. Anticipatory bail with conditions.
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Septuagenarian gynecologist's cash deposits during demonetization upheld, given past income, tax filings & withdrawals.
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Unsecured loans treated as bogus without credible evidence held unjustified. Reopening requires reason to believe, not mere suspicion.
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Unexplained investment in land purchase by society/trustees. CIT(A) erred. Trustees' unaccounted money used, not society's income. Double taxation avoided.
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Excess work-in-progress accepted as income u/s 69B, taxable at 30%. Deductible as closing stock next year, unlike 69C. Windmill units treated as separate undertakings for 80IA deduction.
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U/s 68 addition deleted - share premium not undisclosed income. Entry operator earning 0.5% commission on ₹40cr share capital.
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Joint property purchase: Partner paid only for his share, no TDS u/s 194IA required. Demand u/s 201(1) & 201(IA) set aside.
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Reopening invalid, no tangible material. Director's admission unsupported. Cash in laptop unproven. Reassessment quashed due to lack of evidence & improper initiation.
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Power transfer pricing: Market value based on State Electricity Board rates for industrial consumers, not generator-distributor rates.
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Inflated expenses in revised return disallowed, penalty imposed under 271(1)(c) despite disclosure. Delayed contribution penalty dropped.
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Revision u/s 263 invalid due to DVO's failure to provide opportunity of being heard & report beyond statutory time limit u/s 142A(6).
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Assignment of contract to JV partner not expenditure, but project execution cost. No profit element. CIT(A) order accepted. Losses allowed.
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Belated GST payment after due date of filing return - disallowance u/s 43B. ITR filed u/s 139(4) can't be treated as filed u/s 139(1) for section 43B.
Customs
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Appellant proved gold ownership; Revenue failed to establish smuggling. Hearsay inadmissible without corroboration. Case based on assumptions, not evidence. Penalty set aside.
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Service of SCN for undervaluation before assessment defective. Canon India case: Sec 28 power operative post final assessment. Legally defective notice violates natural justice.
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Transponder, Muxponder, Optical splitter cards classified as 'parts' under CTI 8517 70 90, not 'other communication apparatus' CTI 8517 62 90. #
Indian Laws
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Purchase of goods (CAR) for directors' personal use isn't "commercial purpose" under Consumer Act. Profit nexus key, not self-employment.
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Trial Court didn't determine admissibility of unstamped doc, just prevented abuse. No Stamp Act violation sans judicial ruling.
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Vicarious liability: Directors liable for company's offences under NI Act only if in charge of day-to-day affairs & management.
IBC
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Appellant proved continuous loan defaults by Respondent post IBC suspension. Debt admitted. Default date justified insolvency plea u/s 7. Appeal allowed.
PMLA
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No crime, no PMLA case. Aiding concealment doesn't need charge in main case. But acquittal kills PMLA proceedings.
Service Tax
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Rebate claim rejected for illegally mined sea sand exports. No incentives for crime proceeds. Export incentives only for legitimate exports.
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Service tax exemption for UN agencies & edu. institutes upheld. J&K, SEZ services remanded for fresh adjudication. Penalties lack evidence. No evasion proved. Interest & penalties recalculated.
Central Excise
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Appellants' pool lifting charges add value, excise duty applicable. Tribunal's Victory Electricals case binding. No penalty sans mens rea.
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Copper anode moulds used captively attract excise duty despite marketability. Cost subsumed, double taxation allowed Duty demand upheld, value determined. Penalty cancelled.
VAT
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Inter-state stock transfer of packaged explosives from manufacturing unit to depots not inter-state sale. Sale upon supply to subsidiaries.
Notifications
GST-
15/2024 - dated
10-7-2024
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CGST
Seeks to Amend in the notification No. 52/2018-Central Tax, dated the 20th September, 2018. - Rate of tax collection at source (TCS) to be collected by every electronic commerce operator for intra-State taxable supplies. - Applicable on of the net value of intra-State taxable supplies
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14/2024 - dated
10-7-2024
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CGST
Seeks to exempt the registered person whose aggregate turnover in FY 2023-24 is upto Rs. two crores, from filing annual return for the said financial year.
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13/2024 - dated
10-7-2024
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CGST
Rescinded vide Notification number 27/2022-Central Tax, dated the 26th December, 2022. - Exemption from Biometric-based Aadhaar authentication u/r 8(4A)
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12/2024 - dated
10-7-2024
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CGST
Central Goods and Services Tax (Amendment) Rules, 2024
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01/2024 - dated
10-7-2024
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IGST
Seeks to Amend in the Notification No. 02/2018-Integrated Tax, dated the 20th September, 2018. - Rate of tax collection at source (TCS) to be collected by every electronic commerce operator for inter-State taxable supplies. - Appliable for other suppliers where consideration with respect to such supplies is to be collected by the said operator.
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01/2024 - dated
10-7-2024
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UTGST
Seeks to Amend in the Notification No. 12/2018-Union Territory Tax, dated the 28th September, 2018. - Rate of tax collection at source (TCS)
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (7) TMI 614
Rejection of petitioner's claim for refund under Section 54 of applicable GST enactments - export of goods on payment of IGST - rejection on the ground that the dealer had not uploaded supporting documents - HELD THAT:- The petitioner submitted that the processing of the refund claim is automatic and on the basis of documents already available on the portal such as shipping bills, invoices and the like. In these circumstances, the matter requires reconsideration. The impugned order dated 05.06.2023 is set aside and the matter is remanded to the 1st respondent for reconsideration. The 2nd and 3rd respondents are directed to co-ordinate with the 1st respondent in relation to the risk alert - Petition disposed off by way of remand.
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2024 (7) TMI 613
Challenge to order passed u/s 129 (3) of Goods and Services Tax Act, 2017 - mistake of mentioning the date on E-way Bill and Tax Invoice - HELD THAT:- It transpires that there is only a mistake of mentioning the date on E-way Bill and Tax Invoice, which is a bona-fide typographical error on the part of person who generated the same, as such, it's a minor error, therefore it cannot be held that there was mens rea of evading tax, which is essential for imposing penalty. The ground of mentioning wrong date in the E-way Bill cannot be drawn against the petitioner. Further, the material has been brought on record as Annexure No.10 to the present writ petition, that selling dealer is having active GSTIN and the said fact has not been disputed by the respondents in the counter affidavit. Furthermore, merely because Trimbakeswar Steels i.e. the selling dealer has shown the office in some flat, will not entitle the respondents to draw any adverse inference against the petitioner until and unless, some cogent material has been brought on record. The record reveals that the inference has only been drawn against the petitioner on surmises and conjectures, which cannot be permitted in the eye of law. Therefore, no adverse inference can be attributed to the petitioner with regard to evasion of tax. The impugned order cannot sustain and the same is set aside - Petition allowed.
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2024 (7) TMI 612
Levy of interest u/s 50 of GST Act - petitioner was unaware of the order - violation of principles of natural justice - HELD THAT:- Partial relief granted to the petitioner by setting aside the impugned order and remitting the case back to the respondent to pass a fresh order on merits after giving an opportunity of being heard to the petitioner. The impugned order which stands quashed in this order shall be treated as Addendum to the show cause notice, which preceded with the impugned order. The petitioner shall file a reply to the show cause notice, within a period of 30 days from the date of receipt of a copy of this order. Petition disposed off.
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2024 (7) TMI 611
Challenge to assessment order - variations between the input tax credit availed by the petitioner in Form GSTR-3B and the auto-populated input tax credit in Form GSTR-2A - HELD THAT:- This Writ Petition is disposed of by setting aside the impugned order and the case is remitted back to the respondent to pass suitable orders by applying the Circular to the facts of the case as well although the Circular states that it is applicable only where the proceedings are pending. This exercise shall be carried out by the respondent within a period of 60 days from the date of receipt of a copy of this order. Petition disposed off.
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2024 (7) TMI 610
Condonation of delay in filing appeal - power to condone delay - Applicability of Section 5 of the Limitation Act - HELD THAT:- The principles as discernible from the aforesaid indicates various situations and contingencies under which the applicability of Section 5 of the Limitation Act is to be looked into. In Hukumdev Narayan Yadav [ 1973 (12) TMI 92 - SUPREME COURT] , the special statute, the R.P. Act, contained a provision which mandated that the High Court shall dismiss the election petition, if the provisions of Section 81 were not complied with. In Section 81 there was a stipulation that an election petition shall be filed within a period of forty-five days from the date of the election of the returned candidate. In New India Assurance Company Limited [ 2020 (3) TMI 1368 - SUPREME COURT] , the special statute, the Consumer Protection Act, provided a specific time period for responding to the complaint and further provided a period of fifteen days; which further period was to be granted at the discretion of the District Forum. When there is a period provided for initiating a proceeding and it is also provided that the authority/tribunal/court before which a proceeding is to be initiated would have the power to condone the delay if sufficient cause for the delay is shown, without specifying the period within which delayed proceedings can be initiated, then necessarily the provision under Section 5 of the Limitation Act would be fully applicable; or rather, the provision would be similar to Section 5 of the Limitation Act. Further, The Central Board of Indirect Taxes and Customs has by Notification No. 53 of 2023-Central Tax, dated 02.11.2023 (S.O. 4767 (E)) extended the time for filing appeal against an order passed by the Proper Officer on or before 31.03.2023 under Sections 73 and 74 of the BGST Act. This in fact extends the period for filing a delayed appeal beyond the one-month period as provided under Section 107 (4) of the BGST Act, on following the special procedure prescribed under the said Notification. There are no reason to invoke the extraordinary jurisdiction under Article 226, especially since it is not a measure to be employed where there are alternate remedies available and the assessee has not been diligent in availing such alternate remedies within the stipulated time - petition dismissed.
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2024 (7) TMI 609
Violation of principles of natural justice - order challenged on the ground that the petitioner's reply was not taken into consideration - unlawful availment of Input Tax Credit (ITC) - payment of professional charges on reverse charge mechanism basis - HELD THAT:- It is found that the reply and documents annexed thereto were not taken into consideration. As regards professional charges, the petitioner had stated that reverse charge mechanism liability was limited to Rs. 4,18,000/- and that this amount was paid. This reply was also completely disregarded in the impugned order. Consequently, the impugned order cannot be sustained and the matter requires reconsideration. The impugned order dated 29.12.2023 is set aside and the matter is remanded for reconsideration. The petitioner is permitted to submit additional documents, if any, within a period of two weeks from the date of receipt of a copy of this order - petition disposed off by way of remand.
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2024 (7) TMI 608
Jurisdiction to issue SCN - Levy of interest and penalty - sum and substance of the petitioner is that the impugned orders, which emanated from the notices issued to the petitioner in the respective DRC 01A and DRC 01, are without jurisdiction and therefore, the impugned orders are liable to be quashed - HELD THAT:- There is no merit in the present writ petitions challenging the impugned orders under Article 226 of the Constitution of India. If at all the petitioner is aggrieved, the petitioner has to file a statutory appeal under Section 107 of the TNGST Act, 2017. The Writ Petitions are dismissed with liberty to the petitioner to file a statutory appeal within a period of 30 days from the date of receipt of a copy of this order. The mandatory requirement of pre-deposit shall stand waived if the petitioner has already paid 10% or more of the tax for the respective assessment years during inspection.
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2024 (7) TMI 607
Scope of SCN - Order challenged on the ground that such order travelled beyond the scope of the SCN - HELD THAT:- On comparing the impugned order and the show cause notice, the contention of learned counsel that the impugned order travels beyond the scope of the show cause notice is liable to be accepted. In those circumstances, as submitted by learned Additional Government Pleader, the impugned order may be treated as a show cause notice. The petition is disposed of by directing that the impugned order dated 09.11.2023 be treated as a show cause notice. The petitioner is permitted to submit a reply in respect thereof within a period of three weeks from the date of receipt of a copy of this order.
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2024 (7) TMI 606
Maintainability of petition - availability of alternative remedy - Challenge to impugned order - HELD THAT:- There is no dispute that the dealer Mr.Radhakrishnan Pillai has died on 11.10.2017 and that the petitioner is one of his legal heirs/legal representatives along with his mother R.Sujatha aged about 62 years, his sister Sreelekshmi aged about 33 years and his grand-mother Nalinakshi Amma aged about 84 years. The order that has been passed against the dead person is nonest in law. If the petitioner is carrying on the business of the deceased person, then, the remedy is available to the Department to proceed against the petitioner under Section 93 of the TNGST Act, 2017. It appears to be that the petitioner is not carrying on the business of the deceased person. Petition disposed off.
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2024 (7) TMI 605
Authority to delegate the power to the third respondent [wrongly mentioned as second respondent in the respective Writ Petitions] to pass the impugned order - Challenge to the impugned orders on the ground that the show cause notice is not proper. Authority to delegate the power to the third respondent [wrongly mentioned as second respondent in the respective Writ Petitions] to pass the impugned order - HELD THAT:- The assessment has to be completed by a proper Officer and it is open for the Commissioner to designate such Officers as proper Officers as defined in Section 2(91) of the TNGST Act and therefore, the delegation in terms of Notification No.4 of 2017 issued under Section 5(1) of the TNGST Act, appointing proper Officers is proper. There is no merit in the submission of the learned counsel for the petitioner. Challenge to the impugned orders on the ground that the show cause notice is not proper - HELD THAT:- As far as the challenge to the impugned orders on the ground that the show cause notice is not proper is concerned, it is also left open as such issue has to be decided only before the Appellate Authority. The petitioner has an alternate remedy under Section 107 of the respective GST Enactments. Therefore, liberty is given to the petitioner to file a statutory appeal within a period of 30 days from the date of receipt of a copy of this order. Petition dismissed.
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2024 (7) TMI 604
Challenge to assessment order - difference between the input tax credit claimed in the returns filed by the petitioner in Form GSTR - 3B and auto-populated information in Form GSTR - 2A - reply of the petitioner has not been considered in the impugned order - violation of principles of natural justice - HELD THAT:- The petitioner can be given a partial relief by permitting him to file a statutory appeal before the Appellate Authority. Therefore, a liberty is given to the petitioner to file a statutory appeal before the Appellate Authority, subject to the petitioner pre-depositing 25% of the disputed tax with the respondent, within a period of 30 days from the date of receipt of a copy of this order. It is made clear that pre-deposit and the proposed appeal should be made/filed within the aforesaid period of 30 days from the date of receipt of a copy of this order. Subject to the compliance of the same, the appeal of the petitioner shall be entertained and disposed of on merits and in accordance with law, as expeditiously as possible, preferably, within period of six (6) months from the date of receipt of a copy of this order - Petition disposed off.
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2024 (7) TMI 603
Challenge to assessment order - discrepancies between the return filed by the petitioner in Form GSTR - 1 and in Form GSTR - 3B and the discrepancies between amounts in Form GSTR - 3B and in Form GSTR - 2A/GSTR - 9 - HELD THAT:- The respondent cannot be wholly blamed in the facts and circumstances of the case, as the petitioner has failed to respond to both the notice in Form GST DRC-01A dated 08.08.2023 and the SCN. Be that as it may, the amount which was dropped in the earlier proceedings dated 15.03.2023 by the respondent has also been confirmed and therefore, there is an indication that there is non-application of mind on this aspect. Considering the same, the impugned order is set aside and the case is remitted back to the respondent to pass a fresh order on merits and in accordance with law subject to the petitioner depositing 10% of the balance amount of Rs. 3,61,036/- with the respondent, within period of 30 days from date of receipt of copy of this order. Petition disposed off.
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2024 (7) TMI 602
Challenge to impugned order - It is the case of the petitioner that the petitioner is exempted from the payment of Service Tax as a local body in terms of N/N.14/2017- Central Tax (Rate) read with Article 243G and Article 243W of the Constitution of India - HELD THAT:- It is noticed that the petitioner has collected tax for renting of immovable property and has remitted the amount of Rs. 5,80,518/-, which has been appropriate vide impugned order - The petitioner ought to have filed statutory appeal under Section 107 of the CGST Act, 2017, before the Additional Commissioner of Central Tax and Central Excise (Appeal), Trichy. The time for filing the appeal has already expired. Since the petitioner is a local body, this Court is inclined to dispose of this Writ Petition by giving a liberty to the petitioner to file an appeal within a period of 15 days from the date of receipt of a copy of this order. Subject to the above, the petitioner s appeal shall be considered and disposed of on merits and in accordance with law. Petition disposed off.
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2024 (7) TMI 601
Challenge to assessment order - petitioner failed to reply to SCN - Violation of principles of natural justice - HELD THAT:- This is a fit case for remanding the case back by setting aside the impugned order subject to the petitioner depositing 10% of the disputed tax to the credit of the Government from its Electronic Cash Register within a period of 30 days from the date of receipt of a copy of this order. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice in Form DRC-01 dated 29.09.2023. The petitioner shall file a reply together with all the evidences, which the petitioner seeks to rely within such time or within such period as may be extended by the respondent. It is expected that the entire proceeding will be completed by the respondent within a period of 6 months from the date of receipt of a copy of this order. Petition disposed off.
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2024 (7) TMI 600
Initiation of recovery proceedings - case of the petitioner is that the petitioner has wrongly filed return in GSTR-3B by including the input tax credit as RCM claimed when indeed according to the petitioner it was only a input tax credit and should have been availed under Table 4A(5) - HELD THAT:- This Court is of the view that the petitioner can be given a fresh opportunity to reply to the show cause notice in DRC 01 bearing Ref.No.ZD330823176794Y dated 30.08.2023 subject to the petitioner depositing 10% of the disputed tax amount confirmed in the impugned order. Subject to the above compliance, the respondent is directed to pass a speaking order on merits and in accordance with law within a period of 3 months from the date of receipt of a copy of this order. It is needless to state that the petitioner shall also be heard - Petition disposed off.
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2024 (7) TMI 599
Violation of principles of natural justice - respondent has passed the impugned order, without considering petitioner's explanation - purported discrepancy in the returns filed in GSTR 3B and GSTR 1 - HELD THAT:- It is noticed that the impugned order merely records the notice in GST DRC-01 dated 29.09.2023 bearing Ref.No.ZD330923246551F and part of the reply of the petitioner. Operative portion of the order thereafter merely records that the objection of the petitioner was examined in detail and has confirmed the demand. Clearly the impugned order is non speaking nature and is therefore liable to be set aside and is accordingly set aside. The case is remitted back to the respondent to pass a fresh order on merits and in accordance with law within a period of 3 months from the date of receipt of a copy of this order. It is made clear that the order to be passed in the remand proceeding shall be detail with proper reasonings. Petition allowed.
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2024 (7) TMI 598
Cancellation of GST registration - SCN not responded - HELD THAT:- Taking into consideration no objections on behalf of the respondents, the present petition is disposed of by directing the petitioner to approach the Officer concerned for restoration of his GST number within a period of seven days from today who shall restore the GST number of the petitioner and thereafter the petitioner shall deposit the taxes, penalty along with interest within a period of seven days in terms of the Act. In the event the needful is not done, this order shall seize to be in operation. Petition disposed off.
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2024 (7) TMI 597
Violation of principles of natural justice - petitioner was not aware of proceedings because the notices and order were uploaded on the GST portal, but not communicated to the petitioner through any other mode - HELD THAT:- The petitioner asserts that the services provided by him fall within the reverse charge mechanism. The petitioner has also placed on record a communication from the recipient of services confirming that GST was paid in respect of services received in 2018-2019. In these circumstances, the interest of justice warrants that an opportunity be provided to the petitioner by putting the petitioner on terms. The matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of 15 days from the date of receipt of a copy of this order - impugned order is set aside - petition allowed by way of remand.
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2024 (7) TMI 596
Challenge to assessment order - petitioner was not asked to submit all the credit notes and invoices etc. and without giving further opportunity to produce all the documents and evidence, the assessment order has been passed - violation of principles of natural justice - HELD THAT:- If the petitioner had produced the sample credit notes and not all the credit notes, he should have been given opportunity to produce all the credit notes and substantiate his claim by producing the original invoices. The matter can be remanded back to the assessing authority to pass fresh orders. The petitioner is directed to appear before the assessing authority with all the relevant evidence and materials in support of his claim on 02.04.2024. The assessing authority will examine the evidence and after hearing the petitioner, shall pass a fresh order expeditiously in accordance with the law - Petition disposed off by way of remand.
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2024 (7) TMI 595
Challenge to assessment order - petitioner did not have a reasonable opportunity to contest the tax demand - violation of principles of natural justice - HELD THAT:- On perusal of the impugned order, it appears that three issues were dealt with therein. Of these, a substantial portion of the claim relates to belated filing of returns and the consequential denial of Input Tax Credit. Since such order was issued without the petitioner being heard, albeit by putting the petitioner on terms, interference is necessary. The impugned order is quashed subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within two weeks from the date of receipt of a copy of this order. Within such period, the petitioner is also permitted to submit a reply to the show cause notice. Upon receipt of the petitioner's reply and upon being satisfied that 10% of the disputed tax demand was received, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of the petitioner's reply. Petition disposed off.
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2024 (7) TMI 594
Challenge to assessment order - discrepancy between the GSTR 1 and GSTR 3B returns - proceedings in relation to the same assessment period and pertaining to the same issue were dropped by the Central GST authorities - HELD THAT:- Both from the order dated 01.08.2022 of the Central GST authorities and the reply dated 17.08.2023 of the petitioner to the intimation from the State GST authorities, it appears that the petitioner made consequential adjustments to reverse the disparity between the GSTR 1 and 3B returns while filing the GSTR 3B return for the month of April 2018. Although it appears that the petitioner did not point out the order dated 01.08.2022 of the Central GST authorities, nonetheless, a case is made out for re-consideration in the light of evidence placed before this Court. For such reason, the impugned order calls for interference. The impugned order is quashed and the matter is remanded for re-consideration. The respondent is directed to reconsider the matter in light of the evidence discussed in this order and issue a fresh order after providing a reasonable opportunity to the petitioner, including a personal hearing, within two months from the date of receipt of a copy of this order. Petition disposed off.
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2024 (7) TMI 593
Challenge to assessment order - attachment of bank account - reversal of ITC - difference between the Input Tax Credit (ITC) availed of by the petitioner in the returns filed in Form GSTR-3B as compared to the auto populated GSTR-2A return for the corresponding period - HELD THAT:- On examining the impugned assessment order, it is evident that the assessing officer did not take into account the reply submitted by the petitioner to the intimation dted 09.12.2022 on 22.12.2022. In addition, no personal hearing was granted to the petitioner. Hence the assessment order dated 25.05.2023 is quashed and the matter is remanded for re-consideration for the assessing officer. The assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a maximum period of two months from the date of receipt of a copy of this order. In view of the assessment order being quashed, the order of attachment of the petitioner's bank account stands raised. Petition disposed off.
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Income Tax
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2024 (7) TMI 592
Unexplained expenditure u/s 69C - actual consumption of diamonds as mentioned in the audit report and considering the consistent trend on yield which was found to be between 10-18% AO made the additions - As decided in M/S. KANTILAL EXPORTS SURAT [ 2023 (5) TMI 371 - SC ORDER] solely relying upon the statements of the Typist and the Chartered Accountant, the High Court has reversed the findings of the Assessing Officer as well as the ITAT. The High Court has also not properly appreciated and considered the fact that the affidavits were filed for the first time before the ITAT. The High Court has also not at all considered the conduct on the part of the assessee, which came to be considered in detail by the ITAT in para 10 of the order passed by the ITAT. It was found that there has been search in the case of the assessee and its group concern which was concluded on 23.03.1999 and during the course of the search, duplicate cash book, ledger and other books showing the unaccounted manufacturing and trading arrived at by the assessee in diamonds were found. The ITAT has also noted that the huge addition was made in the case of assessee s group in the block assessment on the basis of the books so found. Therefore, it was found that the assessee was maintaining the books of accounts outside the regular books. The aforesaid has not at all been considered by the High Court, while passing the impugned order. HELD THAT:- Miscellaneous Application is dismissed, both on the ground of delay as also on merits.
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2024 (7) TMI 591
TDS u/s 194H - non-deduction of taxes on payments made to distributors towards price protection and special price clearance discounts - relationship between the assessee and the distributor is that of Principal to Principal OR Principal to Agent - As decided by HC [ 2023 (8) TMI 456 - KARNATAKA HIGH COURT] inventory risk after acquiring the product is that of the distributor. Payment from the distributor to assessee has no link with the further sales made by the distributor. commission or brokerage is described in explanation to Section 194H and CIT(A) that payment from the distributor to the assessee has no link with the further sale made by the distributor and same having been confirmed - HELD THAT:- In view of the dismissal of identical matter in M/s Acer India Pvt. Ltd [ 2024 (3) TMI 621 - SC ORDER] the instant Special Leave Petition is dismissed as being covered by the above-mentioned decision.
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2024 (7) TMI 590
Validity of Revision u/s 263 - subsequent revision orders - first order set aside by PCIT - ITAT quashing the revisionary proceedings - adoption of Accrual Basis of Accounting - assessee company followed mercantile system of accounting and showed trade receivables - Whether the Hon ble Tribunal has erred in law and facts in allowing the appeal of the assessee which is following hybrid system of accounting with respect to interest on debtors on cash basis in contravention of the provisions of Section 145 of the IT Act, 1961? - whether assessee was bound to adhere to the direction of the Ministry of Power to account for interest on cash basis? HELD THAT:- In this case, the Assessing Officer had passed an order u/s 263 of the Act, 1961, which was admittedly set aside by the Principal Commissioner of Income Tax, Shillong and thereafter, the order of reassessment was passed by the AO u/s 263 r/w 143(3). Once the order u/s 263 of the Act, 1961 has become final and stood quashed, no question of passing another order will arise in view of the fact that the subsequent order passed by the Assessing Officer is invalid in the eye of law, as the opinion formed by the Assessing Officer is not sustained on the reasoning that revision under Section 263 is not permissible. When the order of assessment is found to be erroneous and prejudicial to the interest of Revenue, the right vests with the Principal Commissioner to review the order and since the said stipulation has not been satisfied, the order passed under Section 263 cannot stand on its leg. Whether Tribunal has erred in law and facts in allowing the appeal of the assessee, which is following hybrid system of accounting with respect to interest on debtors on cash basis in contravention of the provisions of Section 145 of the IT Act, 1961? - It is true that the term res judicata cannot be blindly applied to the income-tax proceedings as held by the Supreme Court in the case of Parashuram Pottery Works Ltd [ 1976 (11) TMI 1 - SUPREME COURT] but at the same time, in the absence of challenge to the fundamental aspect permeated through different assessment years, no attempt could be made to alter the position in the subsequent year. That apart, the Punjab Haryana High Court elaborately dealt with this aspect, which got the assent from the Supreme Court as well. Thus, in the considered opinion of this Court, the order of the Tribunal is wholly justified, as we do not find any infirmity or irregularity in the order.
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2024 (7) TMI 589
Validity of reopening of assessment - notice issued by the JAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid. We, accordingly, allow this petition in terms of prayer clause (a).
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2024 (7) TMI 588
Black Money - Undisclosed assets of the accused was brought under tax by the application of Black Money Act - HELD THAT:- As per Section 3(1) of the BM Act provides that undisclosed assets located outside India shall be charged to tax on its value in the previous year in which said assets came to notice of the Assessing Officer. He further submitted that any assets acquired or made prior to the commencement of Act which has not been disclosed under the chapter 6 of the Act will be deemed to be acquired in the year in which notice under Section 10 is issued by the Assessing Officer. As placing reliance in the case of Rashesh Manhar Bhansali [ 2021 (11) TMI 420 - ITAT MUMBAI ] by the Income Tax Appellate Tribunal, Mumbai but judgment passed by the Tribunal is not binding on this Court. It is further submitted that there is no time barring limitation prescribed in the said Act. If any assets acquired or made prior to commencement of this Act which has not been disclosed is deemed to be acquired or made in the year in which notice under Section 10 is issued by the Assessing Officer. It is further submitted that accused was bound to declare the foreign assets therefore, Section 59 of the Act is applicable to accused. It is further submitted that applicant has committed the offence, therefore, prayed for rejection of the application. After having heard learned counsel for the rival parties, perusing the material and evidence available on record, Court is inclined to grant anticipatory bail to the applicant, hence application is allowed. As directed that in the event of arrest or if he surrenders in connection with the aforesaid case number and the offences, he be released on bail on furnishing a personal bond in the sum of Rs. 5,00,000/- (Rs. Five lac only) with one solvent surety of the like amount to the satisfaction of the Investigating Officer/Arresting Authority. The applicant is directed to co-operate with the Income Tax Department in investigation, inquiry or proceedings conducted by the Department, if required. He will further abide by the following conditions: (a) accused shall make himself available for interrogation by a Income Tax Department as and when required ; (b) accused shall not, directly or indirectly, make any inducement, threat or promise to complainant or witnesses ; (c) accused will not leave India without the without permission of trail Court and surrender his passport before the trial Court. (d) accused shall not commit similar offence, of which, he is accused or suspected.
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2024 (7) TMI 587
TDS u/s 194H - commission payable to an agent by the assessee under the franchise/distributorship agreement between the assessee and the franchisee/distributors - As per the assessee, neither are they paying a commission or brokerage to the franchisees/distributors, nor are the franchisees/distributors their agents HELD THAT:- High Courts of Delhi and Calcutta have held that the assessees were liable to deduct tax at source u/s 194H of the Act, whereas the High Courts of Rajasthan, Karnataka and Bombay have held that Section 194H of the Act is not attracted to the circumstances under consideration. Some of the assessees had approached the Apex Court in Bharti Cellular Ltd [ 2024 (3) TMI 41 - SUPREME COURT] to hold that the assessees would not be under a legal obligation to deduct tax at source on the income/profit component in the payments received by the distributors/franchisees from the third parties/customers, or while selling/transferring the pre-paid coupons or starter-kits to the distributors. Section 194H of the Act is not applicable to the facts and circumstances of this case. Accordingly, the appeals filed by the assessee - cellular mobile service providers, challenging the judgments of High Courts of Delhi and Calcutta are allowed and these judgments are set aside. The appeals filed by the Revenue challenging the judgments of High Courts of Rajasthan, Karnataka and Bombay are dismissed - Decided against revenue.
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2024 (7) TMI 586
Addition u/s 69D - assessee has repaid loan in cash - HELD THAT:- According to Section 69D of the Act, where assessee borrows amount on Hundi or any amount due thereon is repaid but any person otherwise than through an account payee cheque then such amount shall be deemed to be income of the assessee. It is clarified by the Central Board of Direct Taxes that borrowal on Hundi arises without a person getting money by execution of Hundi. In the present case, there is no evidence that there is any borrowal by the assessee on Hundi. The fact shows that both these loans were taken by the assessee in earlier years and the amount of loan are opening balances, both parties are wife and daughter of the assessee therefore, apparently in this case, the addition under Section 69D of the Act cannot be made. So far as the order of the CIT (A) is concerned, as submitted CIT (A) was presented with physical documents before him earlier along with the return submissions which were neither considered nor even mentioned in the appellate order. Therefore, the order of the learned CIT (A) confirmed the addition is not sustainable. AO has also not cared of looking into how the amounts of ₹12,04,971/- is arrived at in fact the amount tabulated by the learned Assessing Officer himself shows that it should be added ₹11,76,591/-. Further it is apparent that assessee has furnished the confirmation letter and statement of loan before the learned Assessing Officer during the assessment proceedings. No merit in the addition made by AO u/s 69D. Addition of already offered income by the assessee in the revised return filed - It cannot be added once again. Accordingly, AO directed to accept the return of income revised by the assessee on 2nd January, 2014, for the computation of taxable income.Thus, the addition is deserved to be deleted. Appeal of the assessee is allowed.
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2024 (7) TMI 585
Ex-parte order passed by LD CIT(A)/NFAC - Non-appearance of assessee - as explained unfortunate incidents at Advocate's family he was not in sound mental health therefore neither attended the hearings provided by LD CIT(A)/NFAC nor informed the assessee to appoint another counsel - HELD THAT:- As all the relevant documents were handed over to a new appointed CA, who is now representing the case from the side of the assessee. We find force in the arguments of assessee that the ex-parte order passed by LD CIT(A)/NFAC is bad in law there was reasonable cause in not complying with the statutory notices issued by LD CIT(A)/NFAC. Considering the totality of the facts, without going into merits of the case, we deem it appropriate to set-aside the ex-parte order passed by LD CIT(A)/NFAC with a direction to decide the appeal afresh on merits of the case after providing reasonable opportunity of hearing to the assessee. Appeal of the assessee allowed for statistical purpose. CIT(A)NFAC has not adjudicated the ground regarding disallowance of VAT, CGST SGST payable for A.Y. 2018-19 but paid during the year - Ex-parte order passed by LD CIT(A)/NFAC is bad in law to the extent of not adjudicating the above ground. Considering the totality of the facts, without going into merits of the case, we deem it appropriate to remand the matter back to the file of LD CIT(A)NFAC with a direction to decide the ground of appeal regarding disallowance of VAT, CGST SGST payable for A.Y. 2018-19 but paid during the year after providing reasonable opportunity of hearing to the assessee. LD CIT(A)/NFAC shall pass order as per facts law after providing reasonable opportunity of being heard to the assessee.
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2024 (7) TMI 584
Dismissal of appeal by CIT(Appeals) for non-prosecution - Unexplained cash credit u/s. 68 - recharacterizing the cash gift as cash credit - HELD THAT:- CIT(Appeals) had disposed off the appeal for non-prosecution and had failed to apply his mind to the issue which did arise from the impugned order and was assailed by the assessee before him. In my considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. In fact, a perusal of Sec.251(1)(a) and (b), as well as the Explanation to Sec.251(2) of the Act reveals that the CIT(Appeals) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per mandate of law the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution. Thus unable to subscribe to the dismissal of the appeal by the CIT(Appeals) for non-prosecution, therefore, set-aside his order with a direction to dispose off the same on merits - Appeal filed by the assessee is allowed for statistical purposes.
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2024 (7) TMI 583
Addition u/s 69A r.w.s. 115BBE - unexplained money/ cash deposits in bank account - explanation of the assessee as regards the source of the cash deposit - cash deposits during the demonetization period by the assessee, a septuagenarian, having no business income during the subject year - AR stated that the assessee had operated her locker with SBI and on the same day deposited the amount therein kept a/w that as was available with her in the Savings bank account HELD THAT:- As the cash deposit in assessee bank account during the demonetization period was sourced out of the past accumulated cash savings that were kept by her in her bank locker, and also the cash-in-hand available with her out of the cash withdrawals made from her bank accounts during the year under consideration. The fact that the assessee had operated her bank locker with State Bank of India, Branch: Kutchery on 16.11.2016 (as certified by the bank), i.e. the date of the subject cash deposit in her bank account further inspires confidence as regards the veracity of her claim that the same was, inter alia, sourced out of her accumulated cash savings. Also, the assessee's claim for having kept the aforesaid substantial amount of her past accumulated cash savings in the bank locker and not depositing the same in her bank account is supported in the backdrop of the reason given by her. Apropos the assessee s claim that the cash deposit of Rs. 10 lac in her bank account on 16.11.2016 i.e during the demonetization period was, inter alia, sourced from the cash withdrawals made by her from her bank accounts, we find substance in the same. On a scrutiny of the bank accounts of the assessee, a/w her consolidated cash flow statement, we find that as per the assessee s version (ignoring the Op. balance of C.I.H of Rs. 18.92 lac) net of cash deposits/withdrawals of Rs. 4,11,000/- was available with her on 16.11.2016, i.e. the date on which cash was deposited by her in the bank account during the demonetization period. Although part of the cash withdrawals made in tranches over the year would not be fully available with the assessee on the subject date of deposit i.e 16.11.2016, but in the absence of any material which would irrefutably evidence the utilization of the entire amount of cash withdrawals, it can safely be concluded that part of the same was available with the assessee on the relevant date of deposit during the demonetization period. Thus, as the assessee had been practicing as a gynecologist and was in past running a hospital, the assessee is regularly filing her returns of income for the last many decades, that the return of income of the assessee from A.Y. 2012-13 onwards as are available on record reveals substantial income, the assessee is a septuagenarian aged 76 years with no such source of income based on which it could be concluded that she had garnered unexplained money during the subject year and cash available with the assessee out of the withdrawals made her from her bank accounts during the subject year, which have not conclusively been proved to have been utilized for incurring any expenditure or making any investment, it can safely be concluded that , no adverse inferences as regards the cash deposit of Rs. 10 lacs made in her bank account on 16.11.2016, i.e. during the demonetization period could be drawn. Decided in favour of assessee.
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2024 (7) TMI 582
Reopening of assessment - Addition u/s 68 - unsecured loans taken by the assessee as bogus - reassessment merely based on the information received from investigation wing - HELD THAT:- The powers of AO to reopen an assessment, though wide, are not plenary. The words of the statute are reason to believe and not reason to suspect . There can be no manner of doubt that the words reason to believe suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income-tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income-tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. Such an action of the AO regarding formation of belief of escapement of assessment and thereby in starting proceedings u/s 147 is open to challenge in a court of law. The entire law as to what would constitute reason to believe has been summed up in the case of Lakhmani Mewaldas [ 1976 (3) TMI 1 - SUPREME COURT] . Also see Paramjit Kaur' [ 2007 (8) TMI 323 - PUNJAB AND HARYANA HIGH COURT] wherein, making identical observations, the Hon'ble High Court has held that in the absence of sufficient material to form satisfaction of the Assessing Officer that income of the assessee had escaped assessment, the issuance of notices u/s 148 of the Act was not valid. Addition u/s 68 - The assessee had duly furnished the sufficient documents to prove the identity and creditworthiness of the creditors and genuineness of the transaction including the list of directors of the creditor, the loan confirmation from the creditor, the source of creditor, the bank statement of the creditor and even the said creditor had also replied to the notice issued u/s 133(6) of the Act issued by the Assessing Officer and duly confirmed the loan transaction. The most relevant document in this case is the assessment order of the creditor, M/s Annapurna Dealmark Pvt. Ltd. for assessment year 2012-13, which show that no addition has been made by the Assessing Officer in the case of said creditor on account of receipt of any unaccounted money, share subscription or otherwise, except some minor additions u/s 14A of the Act. Under the circumstances, the creditworthiness of the M/s Annapurna Dealmark Pvt. Ltd. has been accepted by the Assessing Officer for the relevant assessment year 2012-13. Therefore, the additions even on merits are not warranted in this case.
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2024 (7) TMI 581
Validity of reassessment proceedings as time barred - scope of substituted provisions of the Finance Act, 2021 - amendment by the Finance Act 2021, which introduced the new amended provisions i.e., Sections 147 to 151 with effect from 1st April, 2021 - HELD THAT:- As decided in Bhagirathi Barik [ 2024 (4) TMI 1143 - ORISSA HIGH COURT] as also the decision in the case of Nutan Bhusan Jena [ 2022 (5) TMI 1467 - ORISSA HIGH COURT] wherein, the Hon ble Jurisdictional High Court of Orissa had following the decision of Hon ble Supreme Court in the case of Union of India vs Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] as quashed the notice issued u/s. 148 of the Act and consequential proceedings and orders holding the same as being time barred.
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2024 (7) TMI 580
Exemption u/s 11 - charitable activities u/s 2(15) - CIT(A) Allowed deduction - As per DR profit earned by the assessee authority is significantly higher than the nominal markup, its activities cannot be treated as charitable activity and the principle of nominal markup in testing the charitable activities of the assessee authority under general utility segment not applied properly by CIT(A) as the profit earned by the assessee before us from such activity was as high as 86.18%. HELD THAT:- The contention made by the Learned DR has been accepted by the Learned AR to this effect that the judgment passed by the Hon ble Apex Court in the case of ACIT(E) vs. Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT] clarified that the assessee advancing general public utility cannot engage itself in any trade, commerce or business or provides services in relation thereto for any consideration. Further guidelines have also been framed under the said judgment passed by the Apex Court to verify and examine the objects and activities of the organizations to find out whether they are in the nature of trade, commerce or business and if it is found so than it must be examined whether the quantified limit as amended time to time in proviso to Section 2(15) of the Act has been breached or not. In that view of the matter since the verification/examination has not been carried out by the authorities below in terms of the observations and guidelines framed in the case of Ahmedabad Urban Development Authority (supra), issue set aside to the file of the Learned AO for examining the same and to pass the order accordingly. Thus remit the issue to the file of Learned AO to consider the same afresh upon examining the nature of assessee s activities and to pass a reasoned order. All the appeals of Revenue are allowed for statistical purposes.
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2024 (7) TMI 579
Revision u/s 263 - higher rate of depreciation rate on assets used for business and hiring purposes - assessee has claimed higher rate of depreciation @30% for the assets used for hiring income - as per CIT since all the assets were not used for the hiring, therefore, the order of the AO allowing depreciation @30% on entire block is erroneous as well as prejudicial to the interest of revenue - HELD THAT:- As the entire block of plant and machinery contained the mixed assets i.e. certain assets which are used fully and exclusively for the construction business and certain items which are hiring income. From the direction given by the ld. Pr.CIT, it is seen that the Pr.CIT has emphasized upon the dominant use of the assets to determine the character for claiming higher rate of depreciation. In this regard, in the case of Gupta Global Exim (P) Ltd. [ 2008 (5) TMI 7 - SUPREME COURT ] as held that accrual of income as a determinative factor for coming to the conclusion that trucks were used in the business of running them on hire is not correct. Therefore, we are of the view that the assessee is eligible for higher rate of depreciation on the assets which were used for business of hiring, no matter how much is the quantum of income from such hire business. Therefore, we direct the AO to allow higher rate of depreciation on the assets which are used in hiring business and the order of the ld. Pr.CIT is modified to this extent only.
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2024 (7) TMI 578
Unexplained investment in the purchase of land - land has been purchased by the society in its name or trustees - CIT(A) consider that the money is not paid by the society out of income but sourced from office bearers of the assessee society [Shri Joginder Singh Sunda and Shri Piyush Sunda] - AO noted that why an Individual will invest his unaccounted money in a property of society when he cannot gain or earn from the same for his own benefit and property become a public property, thus held that the amount shown in sale deed is unexplained investment of the society itself and claiming the same as undisclosed income of office bearers are nothing but an eye wash. HELD THAT:- As it is evident from the finding of the Interim Board of Settlement/IBS wherein the objection of the revenue was considered even though based on the overall facts presented before the IBS the capitalization was allowed. IBS also noted that the society has no income for payment towards purchase of land and also there is no reference of society in the seized material. This fact recorded in the order of the IBS is not controverted by the revenue by bringing any contrary evidence, so we do not see any reason not allow that benefit of the investment to the trustees. Not only that there is no finding in the order of the lower authority that there is unaccounted income of the assessee trust, but contrary to that the IBS has accepted the additional income of the trustees and considered the utilization of that additional income with that of the investment made while purchasing the land in the name of the assessee trust, and trustees have been found the record of the on money and not the assessee trust. Thus, we see no infirmity in the finding of IBS allowing the benefit of on money paid by the trustee for the land purchase of land in the name of the assessee trust. CIT(A) has not appreciated the fact that two brother though has no legal right on the land purchased by the assessee but it is incorrect on part of Ld. CIT(A) to observe that no documentary or corroborative evidence has been filed to show that the money flowed from the two individuals when the working of the on money is found from the mobile of Shri Joginder Singh Sunda. The source for making the payment once considered in the hands of that two brother and trustees as it is evident form the order of the IBS the same sourced investment again cannot be taxed in the hands of the assessee. As regards the non-submission of the statement recorded, the same were not submitted as there is no question raised by the search team. This contention was raised by the assessee was not controverted by the ld. DR. Further no material has been brought on record by the lower authorities to establish that the cash as per the cash flow statement has been spent elsewhere. Therefore, it cannot be presumed by CIT(A) that the same was not available in payment of on money by these persons. In fact, it is the onus of the ld. AO to prove that the same has been spent elsewhere. Thus, considering the overall facts presented, content written in the seized document found from Shri Joginder Singh Sunda we are of the considered view that the payment of on money paid for purchase of land cannot be added in the hands of the assessee trust. Based on these observations ground no. 1 raised by the assessee is allowed.
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2024 (7) TMI 577
Deemed income taxable u/s 69 to 69D to be taxed @ 30% - excess work in progress as detected in the course of survey action on the basis of documents impounded was accepted by the assessee in the course of survey - assessee submitted that it has claimed the excess stock offered to tax as part of the closing stock which is being claimed as an opening stock of the subsequent assessment year i.e. 2016-17 and therefore, the same would be allowed as deduction while computing the income for the succeeding assessment year HELD THAT:- We find merit in the arguments of assessee that although as per proviso to section 69C of the Act such unexplained expenditure which shall be deemed to be the income of the assessee was not to be allowed as deduction under any head of the income, however such type of wording is not available in the provisions of section 69B of the Act. Since the assessee in the instant case has declared the additional income on the basis of impounded documents showing higher calculation of work in progress and there is no evidence on record that the assessee has incurred any such expenditure which has not been recorded in the books of account and since the assessee has not claimed any deduction of expenditure or allowance against the income offered u/s 69B of the Act and has paid the tax on the deemed income, therefore, we are of the considered opinion that the income so declared as additional work in progress will form part of the closing work in progress and cannot be taxed u/s 115BBE of the Act. We hold and direct accordingly. The grounds raised by the assessee on this issue are accordingly allowed. Computation of income of next AY - As additional income so declared during the course of survey shall form part of the closing stock, therefore, such closing stock as on 31.03.2015 shall be the opening stock of assessment year 2016-17. Therefore, the assessee is justified in claiming the same as deduction while computing the income for the assessment year 2016-17. We hold and direct accordingly. The grounds raised by the assessee on this issue are accordingly allowed. Deduction u/s 80IA - treatment of each unit as a separate undertaking - assessee firm is engaged in the business of wind power generation - AO rejected the claim of the assessee holding that the deduction u/s 80IA of the Act is to be worked out by considering all the windmills as part of one undertaking - HELD THAT:- We find the CBDT vide Circular No.1 of 2016 dated 15.02.2016 has clarified that the initial assessment year would mean the year in which the assessee has claimed the deduction for the first time and not the year in which the windmill is installed. Further, the Tribunal in assessee s own case for assessment years 2012-13 to 2014-15 has held that each windmill is to be considered as a separate undertaking. Since the Tribunal in assessee s own case for the immediately preceding assessment years i.e. 2012-13 to 2014-15 [ 2019 (8) TMI 1900 - ITAT PUNE] has already decided the issue in favour of the assessee by dismissing the appeals filed by the Revenue.
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2024 (7) TMI 576
Revision u/s 263 - exemption u/s 54B was not to be allowed on investment in agricultural lands purchased after the due date of filing the return for the year and exemption u/s 54F for investment in residential property was not to be allowed because the plot purchased was industrial plot and the valuation report is fabricated document - assessment was reopened due to a high-value cash deposit in the assessee's bank account HELD THAT:- We note that the assessee s case was reopened to examine the cash deposited in the bank account of Rs. 44,00,000/-. In the assessment order, Assessing Officer enquired this aspect and was satisfied with the explanation given by the assessee. In these circumstances, when the Assessing Officer has not made addition on the issue of reasons recorded, he is ousted of his jurisdiction to any other amount/addition in the assessment order. Assessing Officer did not make any addition for the reasons recorded at the time of issue of notice u/s 148 of the Act. This position is not disputed and disturbed by the PCIT in his order u/s 263 of the Act. Resultantly, Assessing Officer could not have made any addition on account of capital gain in the assessment proceedings u/s 147/148 of the Act. As such, the assessment order is not erroneous as held by the ld. PCIT. Hence, the ld. PCIT could not have exercised his jurisdiction u/s 263 of the Act. In the background of the aforesaid discussion and precedent, we set aside the order of PCIT and quash the order passed u/s 263 of the Act. Appeal filed by the assessee is allowed.
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2024 (7) TMI 575
Addition u/s 68 - sum received towards share premium as undisclosed income - assessee contended that the assessee company is an entry operator and not engaged in any actual business - HELD THAT:- No reason to interfere with the finding of the ld. CIT(A) deleting the addition u/s 68 of the Act and treating the assessee as an entry provider working for earning commission income. Accordingly, the sole effective grounds raised by the revenue is dismissed. Quantum of percentage of commission income - We agree with the contention of the ld. Counsel for the assessee that the percentage of estimation @ 0.75% as determined by the ld. CIT(A) is on a higher side as compared to the judicial decisions referred by assessee. Considering the fact that during the course of appellate proceedings before ld. CIT(A), assessee vide note sheet entry dated 13/03/2019 having conceded to the application of a net profit rate of 0.50%, we deem it appropriate to restrict the same to 0.50%. We, therefore, sustain the addition by applying a net profit rate of 0.5% on total amount of share capital and share premium of Rs. 40 Crore as against 0.75% applied by the ld. CIT(A). Accordingly, the ground raised by the assessee in the cross-objection is partly allowed.
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2024 (7) TMI 574
Unexplained money u/s 69A r.w.s. 115BBE - cash deposits during the demonetization period - HELD THAT:- We find that the assessee is having ownership of agricultural lands and also sold agricultural produce in market.The assessee has filed some sample copies of pakka bills/ documents of firms. Although these are few bills which do not aggregate to the income of Rs. 21,10,298/- but the assessee himself accepts that these are few bills only and he being agriculturist is unable to maintain complete record/bills of entire sales, more particularly the crops directly sold to the customers. We also find that the assessee is having agriculture as sole source of income and there is no other source of income brought on record by Ld. AO. The assessee has also filed a solemnized affidavit to CIT(A) making averment that he has no income except agriculture. Since agricultural income is fully exempt, the assessee does not have any taxable income and therefore the addition u/s 69A cannot be made. Addition made by AO u/s 69A is not sustainable. Invocation of section 115BBE to the impugned addition set aside - Decided in favour of assessee.
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2024 (7) TMI 573
TDS u/s 194IA - Share of Each partner/owner of a joint property - assessee has purchased the land along with his brother - HELD THAT:- Considering the provision of the section 194-IA and case of Dalpat Singh Nanecha, Bhilwara vs. ITO [ 2021 (8) TMI 711 - ITAT JODHPUR] wherein held as admittedly and undisputedly, the assessee is responsible for paying consideration for his 1/4th share in the immoveable property and has actually paid Rs 31,50,000/- only, therefore, following our findings and directions, there was no requirement to deduct tax at source in terms of section 194IA of the Act. The assessee cannot be held as assessee in default on account of non-deduction of tax u/s 194IA, thus demand u/s 201(1) and 201(IA) of the Act is hereby set aside. Assessee appeal allowed.
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2024 (7) TMI 572
Revision u/s 263 - disallowing the Seigniorage Charges, disallowing the productivity lined bonus, disallowing the leave encashment - HELD THAT:- Since the Hon ble Tribunal has quashed the order passed U/s. 263 of the Act, dated 21/11/2013 by the Ld. CIT-1, Visakhapatnam vide its order in [ 2023 (10) TMI 263 - ITAT VISAKHAPATNAM ] wherein held AO is not erroneous as the Ld. AO has applied his mind while allowing the deduction claimed by the assessee U/s. 43B of the Act and therefore one of the conditions as laid down U/s. 263 of the Act is absent, the consequential order passed by the Ld. AO U/s. 143(3) r.w.s 263 of the Act giving effect to the order passed U/s. 263 of the Act has no legs to stand. Accordingly, we hereby quash the consequential order passed by the Ld. AO U/s. 143(3) r.w.s 263, and set-aside the order of the Ld. CIT(A)-NFAC - Assessee appeal allowed.
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2024 (7) TMI 571
Reopening of assessment - Addition u/s 68 - assessee has failed to establish the genuineness and credit worthiness of the transactions - HELD THAT:- AO has accepted the objections of the assessee, and has not assessed or reassessed the income, which was the basis of the notice. Therefore, in light of the judgment of JET AIRWAYS (I) LTD. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] it would not be open to the AO to assess income under some other issue independently. Similar view was taken in the case of Ranbaxy Laboratories [ 2011 (6) TMI 4 - DELHI HIGH COURT] . We quash the assessment order framed u/s 147 r.w.s 143(3) - Decided in favour of assessee.
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2024 (7) TMI 570
Validity of reopening of assessment u/s 147 - statement recorded in the course of survey relied upon - admission as additional income by one of the directors supported by statement u/s 131 - payments appearing in laptop were confronted to director and addition made cash appearing in the laptop as it belongs to the assessee-company - HELD THAT:- As abundantly clear from the judgment of Hon`ble, Madras High Court in the case of M/S A. Thangavel Nadar Stores [ 2019 (3) TMI 1402 - MADRAS HIGH COURT] that a statement recorded in the course of survey cannot be used to reopen the assessment, unless it is supported by tangible material. The materials collected and the statement obtained u/s 133A of the Act would not automatically bind upon the assessee. In the assessee s case as per the statement the director of the company the payments appearing in laptop were confronted to her (Director) and as per her statement, the amount appearing in the laptop are not recorded in the books of accounts. The survey team of the Income Tax department did not find any corroborative evidence or any tangible material that cash appearing in the laptop was belongs to the assessee-company, and assessee-company had actually received the cash, in fact, during the assessment proceedings, the director has denied, having received such cash. Therefore, reasons recorded by the assessing officer fails. Therefore,we note that to initiate reopening of the assessment, the assessing officer must have 'reason to believe that income chargeable to tax has escaped assessment. Such reason to believe must be based on some material coming to the possession of the AO which may trigger reason to suspect. It must be kept in mind that the reason to believe must have a rational connection with or relevant bearing on the formation of the belief, i.e, there must be the direct nexus or link between the material and the formation of such belief. Since in the instant case, the issues/ cheque amount, for which the Assessing Officer has reopened the assessment had already been disclosed by the assessee in the books of accounts. AO having not carried out the scrutiny assessment within the prescribed statutory limit, cannot be given another innings, for no fault of the assessee, and therefore we are of the considered opinion that reason to believe which is the jurisdictional precondition to reopen the assessment as required by the law has not met in the reasons recorded in the instant case and therefore the action of the AO to reopen the assessment is null in the eyes of law and hence we are inclined to quash the initiation of reassessment proceedings being ab-initio void. Reasons recorded by the AO, as set out earlier, were not sufficient reasons for reopening the assessment proceedings. We, therefore, quash the reassessment proceedings. Decided in favour of assessee.
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2024 (7) TMI 569
TP adjustment - price of the power transferred by the captive power plant of the assessee eligible for deduction u/s 80IA to the non- eligible manufacturing units of the assessee and thereby reducing the claim of deduction claimed by the assessee u/s 80IA of the Income Tax Act - As per DR determination of arm s length price in relation to power supply by the captive power plants of the assessee, the average market rates at which the other power generating units sell the power to distribution companies is required to be taken HELD THAT:- As decided in Rungta Mines Ltd [ 2023 (12) TMI 1331 - ITAT KOLKATA ] market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board s rate when it supplies power to the consumers have to be taken as the market value for computing the deduction under Section 80-IA of the Act. That being the position, we hold that the Tribunal had rightly computed the market value of electricity supplied by the captive power plants of the assessee to its industrial units after comparing it with the rate of power available in the open market i.e., the price charged by the State Electricity Board while supplying electricity to the industrial consumers. Therefore, the High Court was fully justified in deciding the appeal against the revenue. As we have discussed in the preceding paras of this order in context to the provision of Electricity Act 2003, that the market value of the power in case of supply by generating units to the distribution units cannot be said to be an uncontrolled market conditions and under the circumstances, the aforesaid observations of the Hon ble Supreme Court is squarely applicable in this case also. In view of the above observations, we do not find any merit in the appeal of the revenue and the same is hereby dismissed. Decided in favour of assessee.
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2024 (7) TMI 568
Penalty proceedings u/s. 271(1)(c) - revised return of income due to the difference between the returned MAT income based on the final audited financial statements as against that disclosed in the original return of income - certain revised expenses that were claimed to have surfaced due to mistakes in feeding expenses and income data in the revised return of income, thus AO made an addition to the book profit disclosed by the assessee company in its revised return of income - HELD THAT:- As the assessee company had not only failed to come up with any bonafide explanation for having raised in its revised return of income filed on wrong claim for deduction of inflated expenses, which was contrary to its audited financial statements, thus, are of the view that the disallowance by the AO of the said inflated expenses clearly falls within the realm of the Explanation 1 r.w. Explanation 4 (for quantification) of Section 271(1)(c) of the Act. Apart from that, we are of the view that as the assessee company could have only revised its claim for deduction of expense by filing a revised return of income, which, it had failed to do; therefore, its letter wherein it had after being confronted by the AO sought to correct its wrong claim would not assist its case. Our aforesaid view is supported by the judgment of Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT ] wherein as observed that an assessee is not vested with any right to raise a claim before the AO otherwise than by filing a revised return of income. In case the assessee company before us intended to seek a further correction of the book profit disclosed by it in its revised return of income by an amount of Rs. 8.84 crore (supra), then, the only remedy available with it was to have further filed a revised return of income, which, we find it had failed to do. As view taken by the CIT(Appeals) that as the information that was sought by the assessee company to be corrected in the assessment proceedings vide its letter dated 06.12.2019 was already available with the AO in Form No. 3CA, Form No. 3CB report, Form 29B and audited financial statements; therefore, it could safely be inferred that it had no malafide intention in hiding/concealing its income, the same does not find favor with us. If an AO who comes across an assessee who had raised a wrong/false claim of expenses in his return of income but a correct disclosure of the same in his audited financial statements/forms/reports, does not visit such assessee with penalty u/s 271(1)(c) for admittedly having raised a wrong/false claim for deduction of expenses in the return of income with an attempt to suppress its income, then, it would send a wrong message and may lead to the adoption of such nefarious practice by certain assessee s who would though correctly disclose their claim for deduction of expenses in the audited financial statements/forms/reports but knowingly raise an inflated/wrong claim of such expenditure in the return of income, which, in case, on being confronted would be offered by them for tax without being subjected to any penalty. We, thus, in terms of our aforesaid observations are of a firm conviction that the AO had rightly saddled the assessee company with penalty u/s 271(1)(c) of the Act w.r.t the inflated/false claim of expenses raised by it in the revised return of income. As the assessee company had failed to come forth with any explanation as regards its claim of inflated expenses in its revised return of income, which claim of it is not borne out from its final audited financials, therefore, we find no infirmity in the view taken by the AO who had rightly saddled it with penalty u/s 271(1)(c) imposed by the AO u/s 271(1)(c) to the extent it pertains to the variance in the book profit under the MAT provisions arising on account of claim of deduction of false/inflated expenses in the revised return of income by the assessee company. Decided against assessee. Penalty u/s. 271(1)(c) - Addition /disallowance of the delayed deposit by the assessee company of the employee s share of contribution towards labour welfare funds u/s. 36(1)(va) - HELD THAT:- Admittedly, as on the relevant point of time, i.e., at the stage of filing return of income/revised return of income by the assessee company, the allowability of the assessee s claim for deduction of delayed deposit of employee s share of contribution towards labor welfare funds there was a judgment of Alom Extrusions Limite [ 2009 (11) TMI 27 - SUPREME COURT ] [reversing the judgment of Pamwi Tissues Ltd. [ 2008 (2) TMI 400 - BOMBAY HIGH COURT ] favoring the assessee] Also, there were certain Hon ble High Courts that took a view in favor of the assessee s on the aforesaid issue. As the claim of the assessee company for deduction of the delayed deposit of the employees share of contributions towards labour welfare funds, as long as the same was made within the due date prescribed under sub-section (1) of Sec. 139 for filing of the assessee s return of income, was at the stage of filing of the return of income/revised return of income by the assessee company a possible and plausible view, thus, the same in our view would not attract penalty u/s. 271(1)(c) of the Act. Decided in favour of assessee. Penalty proceedings u/s. 270A - misreporting of income - assessee company had not disclosed the true and correct figure of book profit while filing its return of income - claim for deduction of the delayed deposit of employees' share of contributions towards labor welfare funds - HELD THAT:- Admittedly, at the stage of filing the revised return of income by the assessee company on 29.03.2019, the delayed deposit of the employees share of contribution towards labor welfare funds as per the judgment of Alom Extrusions Limited [ 2009 (11) TMI 27 - SUPREME COURT ] and other judicial pronouncements were not liable for disallowance u/s. 36(1)(VA) of the Act, and were allowable as a deduction as long as the same was deposited by the assessee before the due date of filing of its return of income as prescribed in sub-section (1) of Section 139 of the Act. As the aforesaid position of law was dislodged only pursuant to the judgment of Checkmate Servies Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] as per which the delayed deposit by an assessee of the employee's share of contribution towards labor welfare funds was liable for disallowance u/s. 36(1)(va) therefore, we find substance in the claim of the Ld. AR that as at the relevant point of time, i.e., on 29.03.2019, the assessee s claim for deduction was supported by the judgment of the Hon ble Apex Court in the case of Commissioner Of Income Tax Vs. Alom Extrusions Limited (supra) Thus, as the assessee company had come up with a bonafide explanation with respect to the aforesaid issue, the same, thus, could not have been construed as an under- reporting of income by the assessee company within the meaning of Clause (a) to sub-section (6) of Section 270A of the Act. We, thus, based on our aforesaid observations vacate the penalty imposed by the A.O u/s. 270A of the Act. Penalty imposed u/s. 270A - difference/variance in the deemed total income assessed as per the provisions of Section 115JB as against that determined in its return of income filed u/s.139(5) - HELD THAT:- When the book profit that was earlier disclosed by the assessee company in its return of income (revised) on 31.03.2018, at Rs. 64.09 crore (approx.) was, thereafter, increased by an amount of Rs. 3.28 crore (approx.) and disclosed in its return of income (revised) on 29.03.2019 at Rs. 67.38 Crore (supra), which, the A.O had thereafter assessed/determined vide his order u/s. 144 therefore, no penalty u/s 270A of the Act for the aforesaid amount ,i.e., increase in the amount of book profit which inadvertently had remained omitted to be considered by the A.O in his order passed u/s.144 could have been imposed on the assessee company.
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2024 (7) TMI 567
Revision u/s 263 - revision based on the DVO s report called for under the provisions of section 142A(1) by the Ld. AO, which was received after the culmination of the assessment - valuation report without adhering to prerequisite conditions of prescribed in relevant section HELD THAT:- As per subsection (4) of section 142A, it was incumbent upon the valuation officed to The Valuation Officer shall, estimate the value of the asset, property or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the assessee., apparently no such opportunity was provided to the assessee. As per sub section (6) of section 142A The Valuation Officer shall send a copy of the report of the estimate made under sub-section (4) or sub-section (5), as the case may be, to the AO and the assessee, within a period of six months from the end of the month in which a reference is made under sub-section (1) , in present case the report of the DVO was send to department way beyond the stipulated time period which shows complete violation of provisions of section 142A. Under such circumstances the report of DVO barred by limitation should be categorized as non-est, thus, cannot be the basis for revisionary proceedings u/s 263. The interpretations in the order of Shri Zulfi Ravdjee [ 2019 (11) TMI 76 - ITAT HYDERABAD] is based on principle of law laid down in the case of B.K. Khanna Co. vs Union Of India And Others [ 1984 (9) TMI 31 - DELHI HIGH COURT] wherein Hon ble High court has categorically interpreted the seriousness of word Shall placed in the sections and provisions of the Act and the significance and prerequisite of its mandatory compliance. Non adherence to such strict mandatory provision thus entails the proceedings illegal and the outcome as not est. Issue regarding valuation report without adhering to prerequisite conditions of prescribed in relevant section renders the reopening assessment bad has been discussed in the case of Reliance Jute and Industries Ltd. [ 1984 (3) TMI 43 - CALCUTTA HIGH COURT] wherein Hon ble Calcutta High court had held that provisions of law need to be followed strictly, failure of compliance to prerequisite essential conditions tantamount the valuation as incompetent, so as the assessment based on such report. Thus, no hesitation to concur with the contentions raised by the AR that the non- disposal of the objections of the assessee on DVO s report by the Ld PCIT in revisionary proceedings against the principle of natural justice, though set aside to AO for opportunity to assessee, however the report of DVO was prepared, completed and furnished by the DVO to the department beyond the stipulated time provided in section 142A(vi), thus the same is against the mandate of law and literal interpretation of provisions of section 142A, therefore the revisionary proceedings initiated u/s 263 based such report are unjustified as well as against the intent of law. Assessee appeal allowed.
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2024 (7) TMI 566
Addition u/s 40A(2)(b) - assignment of contractual receipt by the JV to one of the JV partners for execution of the work is to be construed as incurrence of expenditure and, therefore, the JV was not supposed to make total payment of the actual contract receipt from the contractee, i.e. State of Bihar to the JV partner - Assessee entered in JV with one company entering into an agreement object as to submit bid with CPWD, Government of India for development of State High-way in the State of Bihar and execution of the aforesaid Project, if awarded - CIT(Appeals) appraised that this is not an expenditure incurred by the JV. It is the cost of the Project, which has been assigned to one of the JV partners, who has executed that contract and also given Bank guarantee for performance of that contract HELD THAT:- If an assessee has availed/purchased/incurred any expenditure for the purpose of business towards services/purchase of goods, etc. and such business needs have been availed from the persons mentioned in the list given under sub-clause (b) at a price which is over and above to the one available in the open market, then, such excess payment as deemed by the AO would be disallowed to the assessee as an expenditure. A perusal of the assessment order would indicate that cost of a Project given to the JV by the State Government was termed by the AO as an expenditure for availing the services of the JV partner for executing that contract. It is an incorrect interpretation of the whole activity undertaken by the JV as well as its partner. The contract has been assigned on cost to cost basis to one of the JV partners. AO cannot assume that JV partner could have completed that work. Had it been got down in the open market, then, less than 1.87% of the cost. It is totally an absurd view without support of any facts or in law. The cost of any project cannot be construed as expenditure. It is the cost from which the project is to be executed and on execution of that Project resultant profit/loss has to be offered for tax by the JV partner. Thus it is incorrect expectation of AO that JV will earn profit from assignment of contract to its one of partners. The other partner could raise an objection that profit from the Project should give some loss or profit to other partner also, but there is no grievance by the other partner. He has not undertaken any risk from the contract. He has not put any labour or allocated any assets towards that contract, so in the hands of JV, it is incorrect to suggest that some element of profit for even assignment of the contract to one of the partners deserves to be deemed as a profit. On the other hand, ld. CIT(Appeals) has not recorded any analytical finding. The ld. 1st Appellate Authority has taken note of all the details but nowhere mentioned as to how he is not agreeing with the finding of his predecessor ld. CIT(Appeals) in A.Y. 2011-12. There should be demonstrative reasons as to why the finding of the predecessor is not to be followed. Revenue has not challenged the order of the ld. CIT(Appeals) in A.Y. 2011-12. Therefore, in other words, it is a covered issue in favour of the assessee by the order of the ld. CIT(Appeals) in A.Y. 2011-12, which has been accepted by the Revenue. In view of the above, we allow all these appeals and delete the disallowances. As far as the loss claimed by the assessee is concerned, since existence of the assessee is intact, it is incurred only minimum expenditure for keeping its status as intact. Those expenses deserve to be allowed to the assessee and loss, if cannot be set off in these years, be allowed to carry forward. With the above finding, the appeals of the assessee are allowed.
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2024 (7) TMI 565
Validity of assessment orders without quoting DIN - HELD THAT:- Assessment order(s) dated 31.12.2019 for AYs are not only without mention of DIN in the body of the order, there is no material on the record mentioning the reason for non-issuance of DIN. There is thus violation of the mandate enshrined in CBDT Circular No. 19/2019 dated 14.08.2019. Therefore, the consequence mentioned in para 4 of the said Circular, namely that the impugned assessment order(s) dated 31.12.2019 be treated as invalid and non-est in the eye of law should follow. We are in agreement with the above contentions of the assessee As respectfully following the decision of Brandix Mauritius Holdings Ltd. [ 2023 (4) TMI 579 - DELHI HIGH COURT] as well as the binding CBDT Circular 19/2019, we are inclined to quash the assessment order(s) dated 31.12.2019 passed by the Ld. AO under section 254/153C/144 of the Act.
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2024 (7) TMI 564
Belated payment of GST after due date of filing of return u/s 139(1) - Disallowance u/s 43B - belated payment of GST - assessee s failure to discharge statutory dues by actual payment within the due date of filing as prescribed u/s 139(1) - belated ITR filed u/s 139(4) - whether ITR filed u/s 139(4) can be treated as filed u/s 139(1) for the purpose of section 43B of the Act? HELD THAT:- It is well settled law that, items of expenditure/liability subscribed u/c (a) to (g) in section 43B of the Act which are otherwise allowed as deductions while computing business income u/c IV-D of the Act, shall indeed be allowed in a previous year in which such sums are actually paid irrespective of financial year in which liability towards was incurred. The proviso to section 43B eases the hardship by extending such period upto the due date of filing ITR as prescribed u/s 139(1) of the Act. In nutshell any expenditure which is otherwise allowed as deduction in computing taxable income u/c IV- D is subjected to actual payment within the due date prescribed u/s 139(1) of the Act irrespective of method of accounting employed by assessee. In the instant case, admittedly the due date of filing ITR u/s 139(1) for AY 2019-20 was 30/09/2019 which was extended further by a month to 30/10/2019. The appellant however filed its ITR after the expiry of aforestated extended due date on 29/07/2020 wherein a claim against GST liability was made which by provisions of section 43B of the Act was subject matter of actual payment any-time before expiry of aforestated extended due date. Failing to which the Ld. CPC disallowed the claim for deduction u/s 43B of the Act on the basis of accountants report through TAR. We see this action of disallowance by prima facie adjustment in summary assessment u/s 143(1)(a) of the Act finds support from Sri Jawahar Lal Gupta Vs [ 1991 (9) TMI 29 - ALLAHABAD HIGH COURT] and also finds support from CBDT Circular No. 601, dt 04/06/1991, which Ld. AR could hardly dispute during any of the proceedings including present one. When matter travelled in an appeal to first appellate authority, the Ld. NFAC perfunctorily confirmed the disallowance on the basis of delayed filing of GST return without vouching the exact amount of GST discharged by extended due date i.e. 30/10/2019 and balance amount of GST paid beyond such extended due date for confirming disallowance u/s 43B. For the reason we see strong force in remanding the matter back to the file of Ld. NFAC with a direction to deal this limited issue in accordance with aforestated law pass a speaking order in terms of section 250(6) of the Act. Assessee appeal is allowed for statistical purposes.
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Customs
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2024 (7) TMI 563
Confiscation of seized gold - penalty u/s 112(b) of the Customs Act, 1962 - entire case of the revenue is based on the fact of recovery of subject gold bars from the Appellant, the statements and the call record details of the Appellant - HELD THAT:- The statement regarding smuggling of subject gold bars from Bangladesh to India and foreign markings being erased at Kolkata, was not based on the personal knowledge of the Appellant but clearly based on what was told to the Appellant by Sri Bablu. Therefore, the evidence sought to be relied upon by the Revenue to sustain the charge of smuggling is clearly a hearsay evidence. Now, it is well settled that a hearsay evidence is inadmissible to prove a fact unless corroborated by substantive piece of evidence, as held in Neeraj Dutta vs. State (NCT of Delhi) [ 2022 (12) TMI 1490 - SUPREME COURT (LB)] . As regards corroborative substantive evidence, it is found that let alone any corroborative substantive evidence, the Revenue has not brought on record any evidence to show that the subject gold bars were actually smuggled from Bangladesh into India. The Revenue has also failed to procure and bring the testimony of Sri Bablu on record, who as per Revenue, specifically knew the fact of smuggling and erasing of foreign markings. The mere fact that the summon issued to Sri Bablu remained undelivered, never precluded the Revenue from taking custody of Sri Bablu and procure his testimony, in the manner known to law. The Appellant clearly proved ownership of same quantity of gold against consideration on the strength of valid invoices. By bringing the two invoices on record, the Appellant discharged his initial onus and thereafter it was for the Revenue to establish that the two invoices does not relate to the subject gold bars. However, this onus has not been discharged by the Revenue in the present case as no enquiry has been made regarding consideration paid by the Appellant and its source etc. to prove that the two invoices are not related to the subject gold bars. It is found that neither the foreign origin of the gold nor the nature of the same being smuggled is conclusively established other than merely relying on the conclusions drawn from the statements of the Appellant - entire case of the Revenue appears to be based on presumptions and assumption, which however strong, cannot take place of substantive evidence. Once it is held that the subject gold bars are not liable for confiscation, the question of penalty under Section 112(b) on the Appellant does not arise and therefore the penalty imposed on the Appellant is set aside. Appeal allowed.
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2024 (7) TMI 562
Service of SCN - Issuance of notice to finalise the assessment and demand duties etc. under section 28 of CA 1962 (revenue) or u/s 18 ibid - Undervaluation of imported goods - reprocessed LDPE / HDPE granules and HDPE agglomaterial from various overseas suppliers - alleged misdeclaration of values of the imported goods - involvement of fraud and collusion would justify the SCN issued under section 28 of CA 1962 along with invoking provision for confiscation and penalties or not - violation of principles of natural justice - HELD THAT:- Its only after final assessment that the relevant date for issue of a notice to recover duty which has not been levied or has been short levied etc. involving fraud, if any, becomes operative. By issuing a legally defective notice, the opportunity to examine the probative value of the documents including statements on which reliance was placed by the department, in support of its allegations, was lost. The judgments cited by revenue regarding fraud are hence not found relevant in the peculiar facts of this case. The Hon ble Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] held that the nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import, under section 28 of CA 1962, is broadly a power to review the earlier decision of assessment. Hence the section comes into play only when assessment is final. In the case of AS Syndicate (Warehousing) P. Ltd. Vs Commissioner of Customs (Port) [ 2009 (12) TMI 609 - CALCUTTA HIGH COURT] , the Hon'ble High Court had an occasion to analyse the issue as to whether the demand under Section 28 of the Customs Act, 1962 can be raised before the finalization of assessment. The Hon'ble High Court after referring to the analogous provisions under Rule 9-B(1) of Central Excise Rules, 1944, held that there being no final assessment, the demand-cum Show Cause Notice is without jurisdiction and quashed the same. The Hon'ble High Court of Bombay in the case of Commissioner of Customs (Import), Mumbai Vs Mahesh India [ 2006 (7) TMI 306 - BOMBAY HIGH COURT] held that the Show Cause Notice issued under Section 28 when the goods have not been finally assessed is bad in law and not maintainable. Once the demand itself fails the appropriation of deposits towards duty, the penalties imposed on the appellants and the confiscation of the goods also fail. Appeal disposed off.
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2024 (7) TMI 561
Classification of imported goods - Transponder, Muxponder, and Optical splitter cards - to be classified under Customs Tariff Item (CTI) 8517 62 90 or under CTI 8517 70 90 as claimed by the appellant - HELD THAT:- A Division Bench of the Tribunal in Vodafone Idea Limited [ 2022 (9) TMI 1600 - CESTAT NEW DELHI] in the matter of the appellant had examined the classification of router line cards imported for use in Cisco Routers. The Tribunal recorded a finding that in contrast to network interface cards, the cards under consideration were router line cards which were essential for the routers to operate. Thus, the Tribunal held that the correct classification of the cards would be under CTI 8517 70 90 as parts and not CTI 8517 69 90 as other communication apparatus . In the present case, the subject goods under dispute are not cross compatible with devices of other manufacturers and hence are solely usable for the pre-determined purpose i.e., usage with the main equipment. Thus, the subject goods also have no separable function of their own. It is also seen that the main equipment has modular chassis i.e., chassis has dedicated slots for the subject goods. Unless the subject goods are slotted in the chassis in their designated slots, the cards do not source power and intelligence and hence cannot operate independently of the main equipment. The subject cards are also not NIC cards as was held in Vodafone. The Principal Commissioner committed an error in holding that the subject cards are nothing but NIC cards as like NIC cards connect computer over a network in telecommunication, these cards connect optical transport network equipment over an optical network - It has been clearly established in Vodafone that NIC cards are distinct and separable from the overall equipment and thus satisfy the twin tests laid down by this Tribunal. Using the analogy laid down in Vodafone, the subject cards which are tailor-made for the main equipment are in contrast to the NIC cards and are very much essential for the main equipment to operate. The subject cards are not similar in nature to NIC Cards and any reliance on the classification of NIC Cards to determine appropriate classification for the subject cards is misplaced - the subject cards deserves classification under CTI 8517 70 90. The impugned order is set aside - appeal allowed.
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Insolvency & Bankruptcy
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2024 (7) TMI 560
Suit for recovery - application filed u/s 9 of IBC - interest @ 24% is calculated from the date of default till the date of filing suit - HELD THAT:- The argument raised by Respondent No. 1 appears to be attractive but in view of the statement made by Respondent No. 1 while appearing in the suit which is already captured in the early part of this order, Respondent No. 1 himself stated that he has received part payment of Rs. 34,00,000/- from the Appellant herein and after giving credit to the said payment, an amount of Rs. 61,18,217/- was remaining which includes principal amount of Rs. 23,70,417/- and interest of Rs. 37,37,710/- @18% p.a. Since, Respondent No. 1 itself has claimed the interest @ 18% which too has been granted by the Hon ble High Court in its judgment decree dated 14.12.2022, therefore, it does not lie in his mouth to claim interest @ 24% on the balance amount. The contention of the Appellant and the calculation submitted by him by way of a chart which is already referred to above is accepted, that the remaining amount to be claimed by Respondent No. 1 is less than Rs. 1 Cr. which does not meet the criteria of the threshold, therefore, the application filed under Section 9 of the Code is not maintainable. The appeal is thus allowed and the impugned order is set aside though without any order as to costs - appeal allowed.
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2024 (7) TMI 559
Maintainability of appeal - initiation of CIRP - Respondent had defaulted in payment of the instalments of the loan - Existence of debt and default - Application hit by Section 10A of the IB Code basis the default date being 15.12.2020. Maintainability of the Appeal - HELD THAT:- The fresh application complies with this directive, correcting earlier technical errors and accurately reflecting the default date. Therefore, there was no bar on the Appellant to file a fresh application before the Adjudicating Authority against same debt and against the same corporate debtor. And thus the Appeal is maintainable on at least this ground. Admission of Debt and Default by Respondent - HELD THAT:- The Respondent has explicitly admitted to borrowing funds from the Appellant and defaulting on repayment post-September 2020. Additionally, the Respondent acknowledged that initiating the Corporate Insolvency Resolution Process (CIRP) would be beneficial, supporting the Appellant's case for insolvency proceedings. Changing of default date - Allowable or not? - HELD THAT:- The Appellant, SIDBI, has clearly demonstrated that the Respondent, Sambandh Finserve Private Limited, has ongoing defaults on its loan repayments. Each missed installment constitutes a fresh default, as evidenced by the statement of accounts. This ongoing failure to meet repayment obligations justifies the initiation of insolvency proceedings - it is clear that each failure of the Respondent to pay an instalment in terms of the repayment plan could be treated as a fresh default in payment of the loan amount. Interpretation of Section 10A vis-a-vis Admissibility of Fresh Default - HELD THAT:- In the present case, there is a clear case of debt and default, which has been admitted by the Respondent in its Counter Affidavit before the Adjudicating Authority - in the judgment of the Hon'ble Delhi High Court in KOTAK MAHINDRA BANK LTD. VERSUS ANUJ KUMAR TYAGI [ 2015 (12) TMI 1903 - DELHI HIGH COURT] , it was held that the the fact that that the respondent failed to adhere to the schedule of repayment, would not deprive the right of the appellant to treat each breach as a fresh cause of action and that the right to sue would occur, each time when, there is a default in payment of an EMI on its due date. Therefore, it supports the case of the Appellant that each failure of the Respondent to pay an instalment in terms of the repayment plan could be treated as a fresh default in payment of the loan amount. The material on record (namely the Statement of Account) in the instant case clearly shows that apart from default in 10A period, it was also occurring beyond threshold independently after 25.03.2021 which is beyond the suspension period - each default of the Respondent in non-payment of instalment and interest thereon amounts to fresh cause of default and event of default as per the General Conditions of the Loan Agreement and it could be a sufficient ground to file fresh application. Therefore, in situations of fresh default as in the present case, wherein the default is occurring after the 10A period, insolvency proceedings under section 7 of the IBC are justified. This Tribunal is of the view that the Appellant, SIDBI, has established a clear case of continuous defaults by the Respondent, Sambandh Finserve Private Limited, post the suspension period of Section 10A of the IBC. The Respondent's admission of debt and default and the consistency of the default date of 10.07.2021 in the fresh application substantiate the Appellant s claim - The application under Section 7 of the IBC filed by SIDBI for Corporate Insolvency Resolution Process deserves to be admitted against the Respondent, Sambandh Finserve Private Limited - Appeal allowed.
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PMLA
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2024 (7) TMI 558
Seeking grant of bail - money laundering - proceeds of crime - allegation of amassing property and cash - it was held by High Court that 'In this case, of course, the Petitioner is facing a proceeding under PML Act for commission of offence of Money Laundering and, therefore, the rival claims of ED and the petitioner with respect to the offence and the property attached or seized by the ED are subject of adjudication and presumption under PML Act but keeping the Petitioner in custody for the purpose of trial or in anticipation of any other complaint or supplementary complaint which is not in existence at present, would be devoid of any sound logic, especially when the petitioner had already been acquitted for commission of scheduled/ predicate offences and the property seized in connection with that case had already been directed to be returned back to the Petitioner, no matter the criminal appeal against such order of acquittal is pending before this Court.' HELD THAT:- It is not required to interfere with the impugned orders passed by the High Court, more particularly, when the respondent has already been acquitted in the predicate offence. SLP dismissed.
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2024 (7) TMI 557
Money Laundering - it was held by High Court that ' Since the complaint itself is not maintainable, the respondent has no jurisdiction to attach the properties of the petitioners and therefore the order of attachment passed under Section 5(5) of the Prevention of Money Laundering Act, 2002 dated 30.09.2022 impugned in this writ petition, is liable to be quashed and hence, quashed.' HELD THAT:- It is not required to interfere with the impugned judgment and hence, the special leave petition is dismissed.
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2024 (7) TMI 556
Money Laundering - seeking interim bail on medical grounds - absence of an opinion from the experts - Section 45 (1) of the PMLA - HELD THAT:- his Court finds that evidently in terms of the report of the Deputy Superintendent, Central Jail No. 7, Tihar, Delhi, the dietary requirements for the health and survival of the petitioner are being provided only partially to him. If the remarks/opinion of the Doctors at DDU Hospital are believed, the provision of a strict diet is very critical and essential for the adequate recovery of the petitioner since the surgery has led to removal of 75% of stomach - It is brought forth that the applicant has been experiencing fever and deranged blood glucose level besides the fact that there has been several episodes of blood vomiting. In the case of PAWAN @ TAMATAR VERSUS RAM PRAKASH PANDEY ANR. [ 2002 (5) TMI 890 - SUPREME COURT ], the Supreme Court had an occasion to hold that the discretion vested in the courts to grant bail on medical grounds should be exercised in a sparing and cautious manner. It was observed that every nature of sickness would not entitle the accused to be released on bail unless it is demonstrated that the sickness is of such nature that if the accused is not released, he cannot get proper treatment. In a decision by this Court tilted Sanjay Jain (JC) v. Enforcement Directorate [ 2023 (6) TMI 1324 - DELHI HIGH COURT ], it was held that the right of an individual to be released on interim bail on medical grounds arises when specialized treatment becomes necessary and the same cannot be provided by the jail authorities. On a conspectus of the report dated 14.06.2024 by the Medical Board of the AIIMS as also the treating Doctors at DDU Hospital as per the prescription dated 21.06.2024, besides the medical history of the applicant, the answer should be in the affirmative. It is but manifest that the dietary requirements of the applicant are such that they cannot be provided in the jail premises. Considering that the petitioner has undergone surgery on 09.04.2024, post Bariatric Surgery, he needs to be given a proper diet in order to attain adequate physical, mental and psychological well-being for at least a period of 3 to 4 months - There is no gainsaying that providing home cooked food on an every day basis for a long duration is fraught with several technical hurdles at the jail premises. This court is inclined to allow the application for interim bail on medical grounds for a period of six weeks from the date of his release from jail, subject to the fulfilment of terms and conditions imposed - application disposed off.
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2024 (7) TMI 555
Money Laundering - proceeds of crime - scheduled offence/predicate offence - attachment of bank accounts - illegal racket of kidney transplantation - HELD THAT:- In Pavana Dibbur v. The Directorate of Enforcement [ 2023 (12) TMI 49 - SUPREME COURT ], the Hon ble Supreme Court held that ' an accused in the PMLA case who comes into the picture after the scheduled offence is committed by assisting in the concealment or use of proceeds of crime need not be an accused in the scheduled offence. Such an accused can still be prosecuted under PMLA so long as the scheduled offence exists.' In Nik Nish Retail Ltd. v. Assistant Director, Enforcement Directorate [ 2022 (11) TMI 1280 - CALCUTTA HIGH COURT ], the Calcutta High Court, while dealing with a case where the FIR in respect of the predicate offence was quashed on the basis of settlement has held that the proceedings initiated under PMLA, 2002 provisions cannot stand in isolation in the absence of any scheduled offence. The Telangana High Court in Manturi Shashi Kumar v. Director, Directorate of Enforcement, [ 2023 (4) TMI 1199 - TELANGANA HIGH COURT ] has also quashed a complaint under Section 3 of the PMLA, 2002 on the grounds of the accused being discharged/acquitted of the scheduled offence. This Court, in the case of Prakash Industries Ltd. v. Directorate of Enforecement [ 2022 (7) TMI 877 - DELHI HIGH COURT ], has taken a view that once it is found that a criminal offence does not stand evidenced, the question of any property being derived or obtained therefrom or its confiscation or attachment would not arise at all. A bare perusal of the facts of the present case would show that the Trial Court had already acquitted the appellant-Jeevan Kumar of all the charges framed against him and the same has remained unchallenged by the respondent. Therefore, his acquittal in the scheduled offence breaks the entire chain leading to the other appellants - the attachment proceedings in the present case are unsustainable as the appellants cannot be said to be involved in any activity connected with the proceeds of crime. The impugned order is set aside - appeal allowed.
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Service Tax
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2024 (7) TMI 554
Rebate claim for refund of service tax - Export of consignment of garnets extracted out of illegally mined sea sand - applicability of N/N. 1/12-ST, dated 29.06.2012 issued under Section 93A of the Finance Act, 1994 - HELD THAT:- Both the exports and perpetrator of crime are one and the same. If the Corporate facade is lifted, it is clear that the same M.Ramesh, who is the Managing Director of the petitioner, is the proprietor of Manickam Minerals. Therefore, the export incentives are not to be given for proceeds of crime. Grant of exports incentivies which are out of the illegal activity would not be keeping in tune with the public purpose for which exemption Notification No.41/12-ST, dated 29.06.2012 issued under Section 93A of the Finance Act, 1994 was issued. The export incentives under the Central Excise Act particularly Rules 18 and 19 of the Central Excise Rules, 2002 read with relevant Notifications and Rule 5 of the CESTAT Credit Rules, 2002 as also under Notification No.41/12-ST dated 29.06.2012 issued under Notification No.41/12-ST, dated 29.06.2012 issued under Section 93A of the Finance Act, 1994 are intended to incentivise legitimate exports. The idea of the incentivising such exports is to encourage such exporters, who compete in the international market and bring precious foreign exchange for the country, which enhances the foreign exchange reserves of the country and stabilizes the Government's position quay balance of payments. Unless the exports are legitimate, the question of incentivising such exports would not and could not subserve public purpose. The public purpose in Section 93A of the Act would mean those exports which are legitimate and are within the four-corners of the law. Proceeds of crime and proceeds of illegal exports would not enure in favour of the petitioner in the form of rebate/albit refund of service tax borne on services used in the export of goods in violation of G.O(Ms)No.156, Industries (MMD) Department, dated 08.08.2013. Merely because the Custom Department has not taken any punitive action against the petitioner ipso facto would not mean that the petitioner would be entitled to export incentives under Notification No.41/12-ST, dated 29.06.2012 issued under Section 93A of the Finance Act, 1994 Therefore, the Writ Petition is devoid of merits. Petition dismissed.
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2024 (7) TMI 553
Classification of service - Works Contract Services or Construction of Complex Services and Construction of Residential Complex Services - business of building/developing/ promoting construction projects and plants. Sustainability of demand for the period prior to 01.06.2007 when the works executed by them are indivisible contracts involving both supply of materials as well as rendition of services - HELD THAT:- It is seen that the works executed are not service simpliciter but construction services involving both materials as well as rendition of services. The definition of works contract services was introduced for the first time with effect from 01.06.2007. The Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] had held that the demand of service tax in the case of composite contracts cannot sustain for the period prior to 01.06.2007. Following the decision of the Hon ble Apex Court in the case of Larsen Tourbo, it is held that the demand for the period up to 01.06.2007 cannot sustain and requires to be set aside. Demand for the period up to 01.07.2010 - HELD THAT:- In the present case, the demand is raised under commercial or Industrial Construction Services as well as Construction of Residential Services. In the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] , it was held that in respect of any contract which is composite in nature, the demand of service tax cannot be under CICS/CCS/ RCS for the period prior to 01.07.2012 and the demand would sustain only under WCS. The demand of service tax, interest and penalties cannot sustain. The impugned order is set aside. The appeal is allowed.
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2024 (7) TMI 552
Continuation of show cause notice dated 19.04.2010 - demand for the earlier period from 16.06.2005 to May 2009 in the previous show cause notice on very same issue - levy of service tax on construction of commercial and residential complexes - HELD THAT:- The Tribunal after considering the facts had set aside the demand on the basis of the Board s Circular No.108/02/2009-ST dated 29.01.2009. As per the said Circular, Board has clarified that a promoter/developer/builder is not liable to pay service tax prior to 01.07.2010. So also, the decision in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES [ 2014 (3) TMI 694 - CESTAT AHMEDABAD] was followed to hold that the promoter, developer, builder is not liable to pay service tax for the period prior to 01.07.2010. Moreover, the works executed being composite in nature the Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] had held that the demand of service tax for composite contracts can be made only under Works Contract Services. For this reason also the demand requires to be set aside. The period involved being prior to 01.07.2010 the decision of the Tribunal in the appellant s own case for the previous period would be squarely applicable for this period also. There are no grounds to take a different view for this subsequent show cause notice. The demand of service tax, interest and penalties thereon for the period June 2009 to June 2010 cannot be sustained. The impugned order is modified to the extent of setting aside the demand of service tax along with interest for the period June 2009 to June 2010. The penalty imposed under Section 78 in regard to this is set aside entirely. Appeal allowed.
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2024 (7) TMI 551
Exemption from service tax - Services provided to International Organisation - Services rendered at J K by the noticee in accordance to the Place of Provision of Service Rules, 2012 - Services provided to SEZ - Extended period of limitation - penalties. Services provided to International Organisation - HELD THAT:- There is no connection between exemption provided to United Nations and International Organizations as both are independent from each other. Further, the reference to The United Nations (Privileges and Immunities) Act, 1947 in the definition of Specified International Organisations is for limited purpose and has nothing to do with exemption provided to United Nations. To avail exemption under the Notification No. 25/2012-ST dated 20.06.2012, one has to be either United Nations or a notified International Organization - it is noted that the Mega Exemption Notification No. 25/2012-ST provides exemption to United Nations and there is no condition in this notification that any organizations/agency attached or affiliated to the United Nations also requires to be notified by Central Govt. under Section 3 of the United Nations (Privileges and Immunities) Act, 1947 - the exemption to United Nations is general in nature and services provided to UNDP, UNICEF, UN Women, UN AIDS, UNODC, UNOPS is available on the basis of mega exemption Notification No. 25/2012-ST dated 20.06.2012 itself. The demand in this regard is accordingly is liable to be set aside. Services rendered at J K by the noticee in accordance to the Place of Provision of Service Rules, 2012 - HELD THAT:- It is noted that though the appellant has claimed the exemption, but no documentary evidence was provided by them before the adjudicating authority to corroborate their submissions. It is a fact that the levy of service tax extended to the whole of India except the State of Jammu Kashmir. However, this would be a question of fact to establish that the services were indeed provided in the non-taxable territory. Consequently, it would be appropriate that this issue be remanded to the adjudicating authority, giving opportunity to the appellant-respondent to submit corroborative evidence before the adjudicating authority in order to claim the exemption. Services provided to SEZ - HELD THAT:- To avail the ab initio exemption, certain procedure was laid down, wherein the SEZ unit or Developer had to give a copy of the authorisation to the service provider for claiming the exemption. Therefore, as the adjudicating authority has held that no such evidence was submitted but as per assessee document are available and for this issue matter be remanded to the adjudicating authority with the directions to decide this particular issue afresh after giving opportunity to the appellant-respondent to submit corroborative evidence before the adjudicating authority, in order to claim the exemption - the services provided to the three educational institutions by the appellant-respondent during 2014-15 is exempted under Mega exemption itself. Accordingly, the demand in this aspect is set aside. Extended period of limitation - penalty u/s 77 78 of the Finance Act, 1994 - HELD THAT:- The appellant respondent by filing their ST-3 returns had mentioned the amount received by them in the column meant for exempted services which was not as per the law as the services provided by them were taxable. Self-assessment regime placed the onus to correctly assess their service tax liability on the appellant respondent which was not fulfilled. Therefore, the penalty under section 78 was imperative. Similarly, as the appellant respondent had misdeclared the amount of taxable services, hence penalty under section 77 was leviable - On going through the show-cause notice, it is found that except for stating that the show-cause notice has been issued only after conduct of audit and that the appellants have suppressed the material facts, no evidence has been put forth to show that there has been a positive act of suppression on the part of the appellant-respondent to evade payment of duty - this Tribunal has been consistent in holding that extended period cannot be invoked unless a positive act on the part of the appellant is evidenced showing the intent to evade payment of duty - the impugned order upheld in respect of dropping of penalties under sections 77 78 of the Finance Act, 1994. The service tax demand in respect of services provided to UN agencies and educational institutions set aside - As regards the demand in respect of services provided in the State of Jammu Kashmir and units in SEZ, the same is allowed by way of remand with direction to adjudicating authority below for providing an opportunity to the appellant-respondent to submit all documentary evidence to substantiate their claim to the exemption. The interest and penalties will be subject to recalculation, based on the demand confirmed, if any.
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2024 (7) TMI 550
Classification of service - manufacture of ply wood and also doing job work of seasoning of the wood on behalf of others - GTA service or Business Auxiliary Service? - HELD THAT:- The activity of seasoning of timber by the appellant was made taxable w.e.f. 16.06.2005 whereas the Ld. Commissioner (Appeals) has confirmed the demand of Rs. 3,37,719/- for the period 10.09.2004 to 31.03.2006 @10.2% and on an amount of Rs.4,95,000/- for the period 01.04.2006 to 31.03.2007 @12.24%. Further, we hold that the Ld. Commissioner has wrongly confirmed the demand on the activity of seasoning of timber for the period 10.09.2004 to 16.06.2005 till the entry was amended. As per the appellant, if the benefit of this period is given then their demand would reduce by Rs. 2,09,427/- out of the total demand and they will be entitle to refund of excess duty paid. It is noted that the submissions of the appellant that they are eligible for benefit of SSI exemption under N/N. 6/2005-ST dated 01.03.2005 if their demand of service Tax is considered from 16.06.2005. This aspect will be examined by the Original Authority after fresh quantification. It is also held that since the service tax demand has been confirmed by adjudicating authority, by taking the figures of the amount of job work done from Balance Sheet/ Accounts; the appellant is also entitled to the benefit of cum-tax. Matter remanded back to quantify the demand of service tax w.e.f. 16.06.2005 when the definition of business auxiliary service was amended - appeal allowed by way of remand.
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2024 (7) TMI 549
Failure to discharge the service tax liability - Security agency service - legal fee paid to the advocates - reverse charge mechanism - Commission paid to the directors. Failure to discharge the service tax liability - Security agency service - legal fee paid to the advocates - reverse charge mechanism - HELD THAT:- The appellant had filed a reply to the show cause notice dated 15.09.2015 vide a letter dated nil/October, 2015. Perusal of that letter shows that the appellant has acknowledged his liability vis- vis receiving the Security Agency Service. With respect to legal fee, it was mentioned that the payment is mainly in the form of renewal fee, inspection fee, boiler deposit etc. Hence, were not the services provided in relation to advice, consultancy or assistance. Commission paid to the directors - HELD THAT:- The appellant who otherwise is a limited company is supposed to declare to their auditors such details as are relevant to make conclusions about groupings. The grouping in the audit balance sheet has already become final. No evidence is there to counter the said finality. Resultantly, the demand with respect to the commission to the directors was also confirmed. Since there is nothing on record except the said two replies by the appellant, those replies have duly been considered while confirming the demand in question. In the absence of any document on record, there are no reason to differ from those findings. The impugned order upheld - appeal dismissed.
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Central Excise
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2024 (7) TMI 548
Refusal to de-seal cigarette manufacturing machines and DG sets - validity of the declaration of trade notice dated 18.01.2021 - arbitrary and violation of Article 14 of the Constitution of India or not - it was held by High Court that 'The impugned action of the respondents is wholly without jurisdiction for which the petitioner is liable to be compensated, hence instead of assessing losses caused in this writ petition, it is left to the petitioner to take recourse available under the law against the respondents.' HELD THAT:- No case for interference is made out in exercise of jurisdiction under Article 136 of the Constitution of India - The Special Leave Petitions are accordingly dismissed.
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2024 (7) TMI 547
Imposition of penalty and interest - failure to deposit service tax on reverse charge mechanism when no man power has been supplied to the petitioner as because the petitioner engaged contractors for executing job works who hired labours. Demand of service tax - HELD THAT:- It is not in dispute that the said service tax has already been paid by the assessee. From the order passed by the learned Tribunal, it is found that the Tribunal has re-appreciated the facts, more particularly, Annexure-B to the Chartered Accountant s certificate and found that there are two parts of the labour charges which have been paid one, pertaining to labour charges paid to the contractors and, the second pertaining to labour charges paid to the locally hired workers by the company and, thereafter considered the findings recorded by the adjudicating authority and affirmed the same - there can be substantial question of law arising on the said issue and the appeal challenging the demand of Rs.25,16,900/- towards service tax is affirmed. Imposition of penalty - HELD THAT:- It is settled legal principle that mere use of the expression fraud and willful mis-statement etc. will not automatically attract the penal provision as the adjudicating authority is bound to bring the facts on record, especially fraud or willful mis-statement . Bearing this principle in mind, it is found in the facts of the present case that except using the word willful mis-statement , nothing has been brought on record to show as to how and under what manner the statement made by the assessee was willful and with an intent to evade payment of tax. On facts, it is seen that the assessee was not under the service tax net, because their activities remained exempted under the service tax regime so far as forward charge mechanism was in vogue. Reverse charge mechanism became operative only from July 1, 2012 in so far as supply of manpower service is concerned - it cannot be held that the assessee had made a willful mis-statement so as to invoke Section 78 to impose penalty on the assessee. Ais partly allowed and the penalty imposed on the assessee is set aside - the substantial question of law is answered in favour of the assessee.
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2024 (7) TMI 546
Refund of duty paid at enhanced rate - refund on account of claim of liquidated damages by the Railways. Refund claim - refund on account of increase in the rate of duty of the goods manufactured by them to the Railways - HELD THAT:- It is observed that the agreement entered into by the appellant with the Railways has a denial clause for enhancement of rate of duty. Therefore, the Railways have not paid the differential duty on account of the enhancement. The appellant is therefore liable to pay duty at the enhanced rate and if the Railways refuse to pay the enhanced duty, then the duty at the enhanced rate has to be borne by the appellant. In this case, the appellant has rightly paid the duty at the enhanced rate and claimed it as refund from the Department since the Railways have not paid the enhanced rate of duty to them - the Ld. Appellate Authority has rightly rejected the refund claim of the appellant on this count since the appellant has rightly paid duty at the enhanced rate - the rejection of the refund claim by the Ld. Appellate Authority in the impugned order on this count is proper and sustainable. Refund on account of claim of liquidated damages by the Railways - Railways have imposed a penalty of Rs.1,36,23,253/- on the appellant on account of delay in supply of sleepers - HELD THAT:- The Department is no way connected with the delay in supply of the goods by the manufacturer and if there is any penalty imposed on account of such delay, it is to be borne by the appellant themselves. The appellant cannot consider that the penalty would effectively reduce the assessable value and that they are liable to pay only lesser duty to the extent of Rs.10,93,900/- on account of the deduction of liquidated damages from them by the Railways. Thus, the Ld. Appellate Authority has rightly rejected the refund of Rs.10,93,900/- claimed by the appellant on this count. Thus, the refunds of Rs.35,12,486/- and Rs.10,93,900/- claimed by the appellant have been rightly rejected by the Ld. Appellate Authority in the impugned order - there are no infirmity in the impugned order - appeal dismissed.
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2024 (7) TMI 545
Valuation - determination of assessable value - whether pool lifting charges collected by the appellants from the dealers is includable in the assessable value of Motor Vehicles cleared by the appellants? - HELD THAT:- The reasoning given by the appellants, stating that the pool lifting charges do not add any value to the marketability of the vehicles sold, is not acceptable. Tribunal in the case of Victory Electricals Ltd [ 2013 (12) TMI 81 - CESTAT CHENNAI] held that on the aforesaid analysis, the reference is answered by holding that whatever the assessee, as per the terms of the contract and on account of delay in delivery of manufactured goods is liable to pay a lesser amount than the generically agreed price as a result of a clause (in the agreement), stipulating variation in the price, on account of liability to liquidated damages , irrespective of whether the clause is titled penalty or liquidated damages , the resultant price would be the transaction Value‟, and such value shall be liable to levy of excise duty, at the applicable rate. Extended period of limitation - penalty - HELD THAT:- It is found that various show cause notices have been issued to the appellants over the years based on very same financial records. In case, the department missed out on certain issues during the earlier scrutiny, the blame cannot be put on the appellants and extended period cannot be invoked in the instant case. Moreover, it is amused to find that the Ld. Commissioner hold that Mens rea is not required in transaction matters for imposition of penalty. This is against the settled principle of law as envisaged in a catena of judgments. Therefore, the Department has not made out any case for either invoking extended period or for imposition of penalty. Both the appeals are partly allowed restricting the demand to normal period and setting aside the penalty. However, the appellants are required to pay interest, as applicable, on the duty confirmed for the normal period. Appeal allowed in part.
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2024 (7) TMI 544
Process amouting to manufacture or not - appellants import the filters and affix the labels and supply to various manufacturers of earth moving equipment etc. - HELD THAT:- The amendment carried out w.e.f. 29.04.2010 makes it abundantly clear that a legislature did not intend to tax the parts, components and assemblies of earthmoving equipment etc. under the Head Automobiles ; therefore, to this extent, the demand for the period prior to 29.04.2010 cannot be sustained. The demand for the period prior to 29.04.2010 is not sustainable - The demand for the period from 29.04.2010 is sustainable and it is reported that the appellants have paid duty from the said date. The penalties imposed on the appellant and their Director (Finance) are also not sustainable. Appeal disposed off.
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2024 (7) TMI 543
Refund of accumulated Cenvat credit which was the balance lying in its Cenvat Credit account under the head Education Cess and SHE Cess as on 30-06-2017 - time limitation. Whether Appellant is eligible for refund of Rs.47,98,760/-, which was the balance lying in its Cenvat Credit account under the head Education Cess and SHE Cess as on 30-06-2017? - HELD THAT:- The issue relating to refund of accumulated Cenvat credit of Education Cess and SHE Cess lying unutilized on 30-06-2017 has come up for consideration before this Tribunal in a series of cases. The issue is no more res integra. In the case of NU Vista Ltd. Vs. CCE [ 2022 (3) TMI 1254 - CESTAT NEW DELHI] , the Division Bench of this Tribunal has held that accumulated Cenvat credit on account of Education Cess and SHE Cess is a vested right and its refund is admissible. The aforesaid issue had also come up for consideration in the case of Bharat Heavy Electricals Ltd. Vs. Comm., CGST Bhopal [ 2019 (4) TMI 1896 - CESTAT NEW DELHI] , the Division Bench of the Tribunal held that Appellants were eligible for claimed refund. Refund allowed. Whether the claimed refund was barred by limitation? - HELD THAT:- Similar issue had come up for consideration before this Tribunal in the case of Jai Mateshwaari Steels (Pvt.) Ltd. Vs. Commissioner, CGST Dehradun [ 2022 (3) TMI 49 - CESTAT NEW DELHI] , it was held that limitation of 1 year provided under Section 11B is not applicable to the cases of refund under Section 142(3) of CGST Act, 2017 - the limitation prescribed under Section 11B is not applicable due to overriding effect of the CGST Act, 2017. The impugned order is set aside - Appeal allowed.
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2024 (7) TMI 542
Levy of Excise Duty - excisable goods or not - Copper anode moulds - captive consumption - marketibility - Levy of Excise duty twice - Cost of Copper Anode Mould having been subsumed in the cost of Copper Anode - Demand of differential duty in respect of the copper anodes cleared during the period July, 2001 to March, 2002 - interest - Penalty u/r 25 of the Central Excise Rules, 2002. Levy of Excise Duty - excisable goods or not - Copper anode moulds - captive consumption - marketibility - HELD THAT:- Revenue would have to gather evidence on the question of marketability of the moulds and then issue a fresh SCN, which would altogether be a new proceeding, with implications of time limits on the demand for duty etc adversely affecting Revenue. Hence though the Appellant would not estopped from contesting the excisability of the goods in question, they have to raise it as a fresh issue with the department and cannot ride on the back of the SCN already issued. The cause of the department also deserves fair and equal treatment at our hands. In the larger interest of the administration of justice, we feel that the raising of the mixed question of fact and law at this late stage cannot be permitted. The averments of the appellant on this issue is rejected. Levy of Excise duty twice - Cost of Copper Anode Mould having been subsumed in the cost of Copper Anode - HELD THAT:- Considering that the duty paid on inputs causes a cascading effect on the final price of the goods, government had introduced the MODVAT scheme to be later replaced by the CENVAT credit schemes so as to permit set-off of central excise duties paid by manufacturers on the inputs including capital goods purchased by them against the central excise duty payable on the final excisable goods manufactured and cleared by them. The benefit of credit under the schemes were in the nature of a concession given which could be availed only in the manner and in the circumstances mentioned in the respective rules. The Supreme Court has upheld double taxation wherever the legislative intent is clear. In the case of Premier Tyres Ltd. vs. CCE, Cochin [ 1987 (2) TMI 66 - SUPREME COURT ], relating to Central Excise input tax credit, the Supreme Court held that the language of the notification is so clear that it permits a situation where input credit is not allowed, leading to double taxation. In the case of Hind Plastics v. C.C. Bombay [ 1994 (4) TMI 73 - SUPREME COURT] the Supreme Court held that taxing of packing material twice, (once at the rate applicable to the contents and then the rate applicable to the container) which would be the result if the levy on duty to the packing material were not to be exempted would mean double taxation and therefore harsh. But the Court held that even if it is harsh, it is legal. Demand of differential duty in respect of the copper anodes cleared during the period July, 2001 to March, 2002 - HELD THAT:- It is found that Tribunal vide its Final Order dated 04.02.2016 had at para 8, determined the assessable value of copper anodes for the period July, 2001 to March, 2002 at Rs. 94,446 MT. It is found from para 2.2 of the OIO dated 30/03/2009 that the composition of copper anode and copper anode mould are one and the same. As per para 14, the appellant have also themselves submitted a combined CAS-4 value in respect of Copper Anode and mould for the period from 01/07/2001 to 31/03/2002, thereby indicating that the value of copper anode and copper anode mould are one and the same. The appellant is agreed upon that the value of copper anode mould for the same period can be accepted as the value per MT of the copper anode mould. Penalty u/r 25 of the Central Excise Rules, 2002 - HELD THAT:- The issue pertains to a case where the appellant was clearing the impugned goods on payment of duty. The dispute was relating to the valuation of the goods. The OIO has not been able to establish that the dispute involved intent of the appellant to evade payment of duty. The OIO at para 21 only records that the appellant neither opted for provisional assessment nor adopted the appropriate value hence a penalty was imposable. The Ld. Adjudicating Authority went on to state that he took a lenient view while imposing a penalty due to the complexity involved at arriving at the value. In the circumstances the imposition of penalty needs to be set aside. Interest - HELD THAT:- The Hon ble Supreme Court in Commissioner Of Central Excise, Pune Vs M/s SKF India Ltd [ 2009 (7) TMI 6 - SUPREME COURT] held that interest was payable even in a case of short payment of duty which was indeed completely unintended and without any element of deceit etc. Hence interest is leviable on delayed or deferred payment of duty for whatever reasons. The liability gets extinguished only when the statutory payments are made as required by the statute - penalty imposed under Rule 25 of the Central Excise Rules, 2002 is set aside. Appeal allowed.
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2024 (7) TMI 541
Refund of CENVAT credit in cash on the amount of CVD and SAD paid under the existing law under the provisions of section 142(3) of the CGST Act - HELD THAT:- Shakti Pumps is entitled to cash refund of CENVAT credit on the amount of CVD and SAD paid even after 01.07.2017. The Commissioner (Appeals), therefore, committed no illegality in granting this relief to Shakti Pumps. In GRANULES INDIA LTD VERSUS COMMISSIONER OF CENTRAL TAX HYDERABAD [ 2024 (2) TMI 1375 - CESTAT HYDERABAD] , the Division Bench after placing reliance upon the Larger Bench decision of the Tribunal in M/S. BOSCH ELECTRICAL DRIVE INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL TAX, CHENNAI [ 2023 (12) TMI 1145 - CESTAT CHENNAI-LB] held 'Section 142(3) read with 142(5) of the GST act, provides that every claim for refund by any person before, on or after the appointed day, for refund of any amount of Cenvat credit/duty/tax/interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of the existing law and any amount eventually accruing to him, shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provision of sub-section (2) of section 11B of the Central Excise Act (unjust enrichment).' The present appeal that has been filed by the department to assail the order passed by the Commissioner (Appeals) would, therefore, have to be dismissed and is dismissed.
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CST, VAT & Sales Tax
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2024 (7) TMI 540
Branch transfers - inter-state sale or not - sale of explosives by the appellant to the subsidiaries of Coal India Limited [Coal India] in the State of Jharkhand and the State of West Bengal - branch transfer of the goods by the appellant to its depots/branch offices in the State of Jharkhand and the State of West Bengal - whether the movement of the packaged explosives from the manufacturing unit of the appellant at Nagpur in the State of Maharashtra to the branch offices/depots of the appellant in the State of Jharkhand and the State of West Bengal have resulted in a sale taking place during the course of inter-state trade or commerce pursuant to the Running Contract entered between Coal India?. HELD THAT:- The appellant is merely stock transferring the goods to its depots and it is only when the subsidiaries of Coal India place indents on the appellant and the goods are supplied by the appellant that the sale takes place. The sale does not take place on the basis of the Running Contract dated 28.11.2008. It cannot, therefore, be said that the movement of packaged explosives from the manufacturing unit of the appellant at Nagpur in the State of Maharashtra to the depots of the appellant in the State of Jharkhand and the State of West Bengal has resulted in a sale taking place during the course of inter-state trade or commerce. It is clearly a case of branch transfer of goods by the appellant to its depots in the States of Jharkhand and West Bengal. The impugned order dated 26.09.2017 passed by the Maharashtra Sales Tax Tribunal, therefore, cannot be sustained and is set aside - Appeal allowed.
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Indian Laws
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2024 (7) TMI 539
Applicability of provisions of Order XXI Rule 90 of the Code of Civil Procedure to the writ proceedings under Article 226 of the Constitution - jurisdiction of Additional Commissioner, Konkan Division, Maharashtra to decide the two appeals filed by the respondent nos. 1 and 6 respectively under Section 247 of the Maharashtra Land Revenue Code, 1966. Applicability of provisions of Order XXI Rule 90 of the Code of Civil Procedure to the writ proceedings under Article 226 of the Constitution - HELD THAT:- There is a fine distinction between the auction sale conducted by the executing court under the provisions of the CPC and the auction sale conducted by the State under the provisions of different enactments like Land Revenue Code etc. The whole object behind Order XXI Rule 90 of the CPC appears to be to discourage the judgment debtors from filing frivolous application complaining about the irregularity or fraud in the conduct of the auction sale. A lot of sanctity is attached to the auction sale conducted by the executing court under the provisions of the CPC compared to the auction sale conducted by the State through its authorities - Order XXI CPC deals with the elaborate procedure pertaining to the execution of orders and decrees. Sale is one of the methods employed for execution. Rule 89 of Order XXI of the CPC is the only means by which a judgment-debtor can escape from a sale that has been validly carried out. The object of the rule is to provide a last opportunity to put an end to the dispute at the instance of the judgment- debtor before the sale is confirmed by the court and also to save his property from dispossession. As a court of plenary jurisdiction, the writ court while exercising powers under Article 226 of the Constitution is free to adopt its own procedures and follow them. It cannot be compelled to follow the procedures prescribed in the CPC. This is so for the specific provision made in its Section 141 - The High Court while exercising jurisdiction under Article 226 of the Constitution has jurisdiction to pass appropriate orders. Such power can neither be controlled nor affected by the provisions of Order XXI Rule 90 of the CPC. It would not be correct to say that the terms of Order XXI Rule 90 should be mandatorily complied with while exercising jurisdiction under Article 226 of the Constitution. Proceedings under Article 226 of the Constitution stand on a different footing when compared to the proceedings in suits or appeals arising therefrom. Once it is evident that the mandatory provisions as stipulated under the rules and regulations are not followed or abridged, any action pursuant to the same could be termed as gross illegality. There is a fine distinction between illegality and irregularity. Whereas the former goes to the root of the matter and renders the action null and void, of no effect whatsoever, the latter does not ipso facto invalidate the action, unless prejudice is caused to the person making a complaint, even if, for the purposes of Order XXI Rule 90 of the CPC the lapses we have taken note of could be termed as material irregularities going to the root of the matter. Jurisdiction of Additional Commissioner, Konkan Division, Maharashtra to decide the two appeals filed by the respondent nos. 1 and 6 respectively under Section 247 of the Maharashtra Land Revenue Code, 1966 - HELD THAT:- Section 210(1) of the Revenue Code provides that an application can be made where an immovable property has been sold under the Revenue Code by i) owner of the property; and ii) holding interest therein by virtue of a title acquired before such sale. It would be relevant to state that the respondent No. 6 does not fall within the category as provided under Section 210(1) of the Revenue Code nor has the respondent No. 6 claimed to be the owner of the property or has an interest in the property by virtue of the title acquired - It is well settled principle in law that issuance of a writ or quashing/setting aside of an order if revives another pernicious or wrong or illegal order then in that eventuality the writ court should not interfere in the matter and should refuse to exercise its discretionary power conferred upon it under Article 226 of the Constitution of India. The writ court should not quash the order if it revives a wrong or illegal order. Thus, no interference is warranted with the impugned judgment of the High Court. However, the facts and circumstances of this case have left with an uphill task to mould the final order necessary to be passed in order to do substantial justice with the parties to this litigation. While affirming the impugned judgment and order passed by the High Court, the appellant is directed to deposit a sum of Rs. 4,00,00,000/- with the respondent no. 6-ARCIL within a period of six months from today, failing which we shall proceed to pass further orders - appeal allowed in part.
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2024 (7) TMI 538
Interpretation of statute - purchase for commercial purpose within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986 or not - purchase of a vehicle/good by a Company for the use/personal use of its directors - HELD THAT:- Ordinarily commercial purpose is understood to include manufacturing/industrial activity or business-to-business transactions between commercial entities. The purchase of the goods should have a close and direct nexus with a profit generating activity. It has to be seen whether the dominant intention or dominant purpose for the transaction was to facilitate some kind of profit generation for the purchaser and/or their beneficiary. If it is found that the dominant purpose behind purchasing the goods was for the personal use and consumption of the purchaser and/or their beneficiary, or was otherwise not linked to any commercial activity, the question of whether such a purchase was for the purpose of generating livelihood by means of self-employment need not be looked into. Again, the said determination cannot be restricted in a straitjacket formula and it has to be decided on case-to-case basis. Purchase of two cars for the use by its Whole-time Executive Directors as part of their perquisites - whether the high-priced luxurious car was purchased by the respondent no. 1 for its commercial purpose ? - HELD THAT:- People do not purchase the high-end luxurious cars to suffer discomfort more particularly when they buy the vehicle keeping utmost faith in the supplier who would make the representations in the brochures or the advertisements projecting and promoting such cars as the finest and safest automobile in the world. The respondentcomplainant having suffered great inconvenience, discomfort and also the waste of time and energy in pursuing the litigations, the impugned order passed by the National Commission of awarding the compensation by directing the appellants to refund the purchase price i.e., Rs. 58 lakhs approx. to the respondent-complainant, and take back the car (vehicle) as such does not warrant any interference - having regard to the said offer made by the appellants, and having regard to the subsequent event of the respondent-complainant having retained and used the car in question for about seventeen years, we are of the opinion that the interest of justice and balance of equity would be met if the respondentcomplainant is permitted to retain the car in question and the appellant is directed to refund Rs. 36 lakhs instead of Rs. 58 lakhs as directed by the National Commission in the impugned order. Whether purchase of the car by the respondent no. 1 company for the use of the respondent no.2 i.e., its director would tantamount to purchase for commercial purpose? - HELD THAT:- Incomplete disclosure or non-disclosure of the complete details with regard to the functioning of the airbags at the time of promotion of the car, has rightly been considered by the National Commission as the unfair trade practice on the part of the appellants, and awarded a sum of Rs. 5 lakhs towards it. The National Commission has also rightly balanced the equity by awarding Rs. 5 lakhs only towards the deficiency in service on account of the frontal airbags of the car having not deployed at the time of accident - Since the National Commission has considered in detail the evidence and the material on record adduced by the both the parties, the well-considered judgment dated 11th September 2017 passed by the National Commission does not warrant any interference. Appeal disposed off.
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2024 (7) TMI 537
Inherent power to recall a process - admission of an instrument in evidence and its marking as an exhibit by a court (despite the instrument being chargeable to duty but is insufficiently stamped) - section 151 of the Code of Civil Procedure - whether the Trial Court did judicially determine the question of admissibility? HELD THAT:- The Trial Court not having decided whether the GPA was sufficiently stamped, section 35 of the 1957 Act cannot be called in aid by the respondent. For section 35 to come into operation, the instrument must have been admitted in evidence upon a judicial determination. The words judicial determination have to be read into section 35. Once there is such a determination, whether the determination is right or wrong cannot be examined except in the manner ordained by section 35. However, in a case of no judicial determination , section 35 is not attracted. In view of the reasoning of the Trial Court of admitted failure on its part to apply judicial mind coupled with the absence of the counsel for the appellant before it when the GPA was admitted in evidence and marked exhibit, a factor which weighed with the Trial Court, we have no hesitation to hold that for all purposes and intents the Trial Court passed the order dated 19th October, 2010 in exercise of its inherent power saved by section 151, CPC, to do justice as well as to prevent abuse of the process of court, to which inadvertently it became a party by not applying judicial mind as required in terms of sections 33 and 34 of the 1857 Act. We appreciate the approach of the Trial Court in its judicious exercise of inherent power. The legislature has reposed responsibility on the courts and trusted them to ensure that requisite stamp duty, along with penalty, is duly paid if an unstamped or insufficiently stamped instrument is placed before it for admission in support of the case of a party. It is incumbent upon the courts to uphold the sanctity of the legal framework governing stamp duty, as the same are crucial for the authenticity and enforceability of instruments. Allowing an instrument with insufficient stamp duty to pass unchallenged, merely due to technicalities, would undermine the legislative intent and the fiscal interests of the state - the court must vigilantly prevent any circumvention of these legal obligations, ensuring due compliance and strict adherence for upholding the rule of law. Finding no error in the order of the Trial Court dated 19th October, 2010, the impugned order of the High Court dated 26th September, 2011 is set aside, meaning thereby that the order of the Trial Court is restored - appeal allowed.
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2024 (7) TMI 536
Legality of different State Governments levying and collecting Authorization Fee/Border Tax in violation of All India Tourist Vehicles (Permit) Rules, 2023 - HELD THAT:- The State enactments, rules and regulations being not under challenge, it cannot be said that the demand of Border Tax/Authorization Fee at the borders by the respective State Governments is bad under law. The petitioners, in order to succeed, have to consider challenging the State provision contained in the Act. There is another reason why we are not entertaining the matters on merit is that the petitioners ought to have first approached their jurisdictional High Courts to challenge their respective State enactments. These petitions are disposed off without interfering with the demands being raised by the State Governments while giving liberty to the petitioners to approach the jurisdictional High Courts for their reliefs. It is made clear that we have neither entered into the merits of the matter nor examined the same.
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2024 (7) TMI 535
Dishonour of Cheque - vicarious liability of director u/s 141 of NI Act - petitioner had resigned from the Directorship of the company or not - HELD THAT:- The law as regards the liability of a Director for an offence under Section 138 NI Act committed by a company is no longer res integra. In S.M.S Pharmaceuticals Ltd. v. Neeta Bhalla Anr. [ 2005 (9) TMI 304 - SUPREME COURT] , the Supreme Court while dealing with the aforesaid, discussed in detail the role of a Director in a company as well as their liability. Section 141 being a penal provision, has to be strictly construed. Resultantly, not every Director can be brought into the fold of the said provision merely due to the aforesaid reason. It is only those Directors who were in-charge of the day-to-day affairs and responsible for the conduct of the business of the company can be held liable for the offence under Section 138 NI Act. The word in-charge of a business has been interpreted to mean a person having overall control of the day-to-day business of the company. Thus, for a Director to be vicariously liable, the complainant has to show that the said Director was indeed associated with the day-to-day affairs and management of the business. A Director cannot be arrayed as an accused on the basis of a cursory statement or vague averment. What would be appropriate pleadings/averments would be determined on a case-to-case basis. The petitioner has denied liability by arguing that the complaint is bereft of the necessary averments against the petitioner, to bring her into the net of Section 141 NI Act. However, upon a reading of the criminal complaint placed on record, this Court is of the considered opinion that the complaint contains the necessary averments in line with Section 141 NI Act inasmuch as it has been stated that the petitioner alongwith the other Directors was jointly and severally responsible and in-charge for the conduct of the business as well as in control of the management of the affairs of the accused company. Petition dismissed.
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