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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter July 13, 2023 Case Laws in this Newsletter: Income Tax Customs Corporate Laws PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles Process of restoration of cancellation of GST registration No Penalty if Assessee was bonafide and E-way bill gets expired during transit Appeal to GST tribunal can be made within three months from the date of constitution of Appellate Tribunal News Recommendations of 50th meeting of GST Council Notifications Customs 51/2023 - dated 11-7-2023 - Cus (NT) Transhipment of Cargo to Nepal under Electronic Cargo Tracking System (Amendment) Regulations, 2023 DGFT 19/2023 - dated 12-7-2023 - FTP Amendment in import policy and policy condition of Gold Covered under HS code 71131911, 71131919 & 71141910 of Chapter 71 of Schedule –I (Import Policy) of ITC (HS) 2022. Income Tax 48/2023 - dated 11-7-2023 - IT Exemption from specified income U/s 10(46) – Notifies ‘Yamuna Expressway Industrial Development Authority’, an authority constituted by the State Government of Uttar Pradesh Highlights / Catch Notes GST Recommendations of 50th meeting of GST Council - GST Council recommends Casino, Horse Racing and Online gaming to be taxed at the uniform rate of 28% on full face value - Notification for GST Appellate Tribunal to be issued with effect from 01.08.2023 - Exemption from GST on cancer-related drugs, medicines for rare diseases and food products for special medical purposes - GST rates redued from 18 percent to 5 percent on 4 items i.e Uncooked, unfried & extruded snack palettes, fish soluble paste, LD slag to be at par with blast furnace slag, and imitation zari thread - Several measures for streamlining compliances in GST Visit to Get Source Income Tax Disallowance of expenses u/s 37(1) by the CPC - Associateship fees paid to Mumbai Cricket Association - Membership of the employees of the company including Chairman and Managing Director. - Wholly and exclusively for the purposes of his business or not - The claim of club membership one time entry fee is disallowable on the ground of personal expenditure. Even if the assessee uses its club facility for soliciting customers, the recurring expenditure may be allowed as business expenditure subject to verification but not the one-time entry fee. - AT Visit to Get Source Condonation of delay in filing the present appeal by 1241 days - reasons for delay - Once the appeal has been dismissed ex-parte by the ld CIT(A) due to non-prosecution and his bank account has been attached by the Revenue authorities, the assessee has woken up again and filed the present appeal that too with a substantial delay. - there are clearly latches and negligence on part of the assessee in not filing the present appeal within prescribed time frame. - However, delay condoned - Matter restored before the CIT(A) - AT Visit to Get Source Disallowance made u/s 40A (2) (b) on account of payment of administrative charges paid to TACL - excessive or unreasonable expenditure - assessee i.e NLT had received services from TACL in respect of which payment had been made as per documentary evidence on record and thus, there was no warrant for disallowance paid to TACL by the assessee when the payment was adjudged on the principle of commercial expediency when viewed from the point of view of a prudent businessman. - HC Visit to Get Source Addition of cash deposits - ex-parte orders u/s 144 - When the appeal is filed before the appellate authorities by the assessee himself against the orders of the lower authorities, it is expected that the assessee shall put forth some documentary evidences in support of his contentions as it is the duty of the assessee to lead evidence in support of its claim and for the adjudicating authority to decide upon the sustainability of the claim on the basis of the evidence led by the parties before it. - Appeal dismissed - AT Visit to Get Source Income accrued in India - receipt from offshore sale of goods - rendering supporting services - fees for included services (FIS) - Article 12 of India-Ireland DTAA - A.O has not established that how the amount received by the assessee was related to rendering of any services by the assessee. A.O/DRP have not controverted the facts established from the invoices on sale of equipments as discussed supra in this order. - AT Visit to Get Source Customs Exemption to capital goods imported by them under the Zero Duty Export Promotion Capital Goods (EPCG) Scheme - the respondent has not availed any Zero Duty EPCG Authorization for the period 2010-11. The Zero Duty EPCG Authorization is for the period 2011--12. Thus, there is no violation of the conditions. The Commissioner has analyzed the entire issue and given detailed discussion. - Benefit cannot be denied - AT Visit to Get Source Classification of imported goods - coal of Indonesian origin - on ‘as received basis (ARB)’ and ‘air dry basis (ADB)’, the ‘gross calorific value (GCV)’ – comprising both types of moisture and inherent moisture respectively – are below the threshold of ‘bituminous coal’ in all the samples. The attempt by the adjudicating authority to classify the impugned goods within the description ‘bituminous coal’, corresponding to tariff item 2701 1200 in the First Schedule to Customs Tariff Act, 1975, fails. - AT Visit to Get Source Classification of imported goods/ Ranger (non-electric) Vehicles - import of vehicles including All Terrain Vehicles [ATVs] - even if passengers are transported in the Vehicles, it would not mean that the Vehicles cannot be classified under CTH 8704 and CTH 8709 - it would not be appropriate to refer to the website of Polaris USA. The information conveyed therein may not mention the Vehicles are for transportation of goods, but that would not conclusively prove that the Vehicles are not for transportation of goods. - AT Visit to Get Source Corporate Law Oppression and mismanagement - Appointment of the Ombudsman cum Ethics Officer of the DDCA - Scope of Articles of Association (AoA) the company (DDCA) - The Petitioner has not made out a case that it is imperative for this Court to entertain the present Writ Petition even though an equally efficacious alternative remedy/forum is available to the Petitioner and that the Ombudsman can pass such orders which are irreversible in nature and cannot be rectified if they are found to be faulty - HC Visit to Get Source Allegation of committing fraud and caused loss to the company by incorporating and joining a company which had a similar name and operating pattern - Vague allegations that confidential information and technical know-how were misused are insufficient. Even assuming that this offence is made out the complainant ought to have resorted to the remedy under the Act. This Court also finds that the complaint stems out from the grievance of the complainant that the petitioner had started a rival company and had diverted the business of the complainant. Such issues cannot be the subject matter of criminal prosecution in the absence of the necessary ingredients to constitute the offence alleged. The petitioner has other remedies available in law. Since the allegations do not attract the offences, this Court is inclined to quash the complaint. - HC Visit to Get Source Validity of sale deed - sale of property by the company - Sale was approved by the Board of Director resolution - Locus of the third party - There is no jurisdiction on the part of the respondent to prosecute the petitioners and this Court is of the prima facie view that the petitioners have not committed any offence as narrated by ROC and upon perusal it is clear that the petitioners cannot be prosecuted under Section 628 of the Old Companies Act. Therefore, all the petitioners are relieved from the prosecution - HC Visit to Get Source Wrongful withholding of laptops (after resignation) which is punishable u/s 452 of the Companies Act, 2013 - Former employee of the company - The petitioners have returned the property and since, in the facts and circumstances, it cannot be said that they had initially wrongfully withheld the property, the continuation of the impugned prosecution would be an abuse of process of law. - The prosecution proceedings quashed. - HC Visit to Get Source Indian Laws Deduction of 10% of the amount awarded to the award-holder as TDS and payment of the balance amount to the award-holder - Arrears of salary and interest - award-debtor, being the Union of India represented by the Chief Engineer, Metro Railway - Supreme Court has held that, there is nothing in the Income Tax Act, as it then stood, which permits the debtor to deduct income tax which may become due and payable by the judgment-creditor. - No TDS liability - Award-debtor Union of India/Metro Railway to make payment of the balance amount to the petitioner - HC Visit to Get Source Service Tax Extended period of limitation - Consulting Engineer Services - place of provision of services - Taxable territory - State of J&K. - Once it is not the case of suppression with an intent to evade tax and once the appellant is held not liable to pay the service tax in the given facts and circumstances, the department was not entitled to invoke the extended period of limitation. The question of imposition of penalty upon the appellants also does not at all arise. - AT Visit to Get Source Refund claim - rejection on the ground that the invoice of service is not in the name of the appellant whereas the same is in the name of CHA - in the service provider’s invoice that is issued by M/s Indev Logistics Pvt. Ltd. the name of appellant is appearing as shipper name and in the corresponding invoice of the 4 Star Enterprises which is the appellant’s CHA is showing the exact amount of M/s Indev Logistics Pvt. Ltd. therefore the proper co-relation has been established. - Refund allowed - AT Visit to Get Source Central Excise Clandestine Removal - melting scrap - excess input output ratio - shortage of finished goods - The said input-output ratio cannot remain fixed due to variable factors prevailed in the character of all the constituent raw material, especially, that of Iron Ore, largely due to variation in Fe(T) of the Iron Ore. As Fe(T) content in the Iron Ore varies, standard norms cannot be achieved for production of Iron Ore - AT Visit to Get Source Case Laws: Income Tax 2023 (7) TMI 469 Penalty u/s 270AA - undisclosed income - under reported income as per sub section (8) of Section 270AA - eligibility to immunity from imposition of penalty u/s 270AA - HELD THAT:- The provisions of section 270AA of the Act bring out the complete code in itself. It creates substantive right of immunity in favour of the assessee subject to certain conditions, lays down the procedure to be followed by the AO and attaches finality to the order passed by the AO.This section nowhere indicates that the power of granting immunity is available to the first appellate authority. In the case in hand it transpires that no application was filed before the AO and during the appellate proceedings, for the first time assessee had claimed that he was eligible for immunity from imposition of penalty u/s 270AA and CIT(A) determined the issue against the assessee holding that as the penalty proceedings were initiated u/s 270A(9) of the Act provisions of section 270AA are not applicable. CIT(A) also gave a finding that it was a case of under reporting of the income in the nature of misreporting, therefore, the case of assessee falls within the ambit of Section 270A(9) Thus Bench is of considered view that as AO has specifically invoked Section 270(9)(a) of the Act then by virtue of sub section (3) of Section 270AA of the Act, it has to be considered to be a case of under reported income in consequence of misreporting which creates liability of penalty equal to 200% of the amount of tax payable on under reported income as per sub section (8) of Section 270AA of the Act. Nothing has been portrayed in the form of grounds or argued that the case of assessee was of under reporting the income only and no misreporting was involved. In fact, if the merits are considered the case of Revenue against assessee is that he was maintaining two sets of books of accounts which were impounded during the course of survey proceedings and it was found that assessee has made out of books sales amounting upon which addition on gross profit @ 3.19% was made. That certainly amounts to under reporting of incoming consequence to misreporting by way of misrepresentation of facts. There is thus no force in the claim that penalty ought to have been levied at 50% of the additional tax payable as provided u/s 270A(7) of the Act. Decided against assessee. 2023 (7) TMI 468 Revision u/s 263 by CIT - cash deposit made during the demonetization period - PCIT directed the ld. AO to issue notice u/s 133(6) to the various donors and re-examine the veracity of the gifts received by the assessee and this direction was given by the ld. PCIT before the completion of revision proceedings u/s 263 and AO accordingly issued notices u/s 133(6) to the donors and all the donors duly replied directly before the ld. AO in response to notice u/s 133(6) confirming the fact of giving gifts to the assessee by explaining their sources - HELD THAT:- We hold that the ld.AO in the original assessment proceedings itself had made adequate enquiries with regard to the cash gifts received by the assessee and that the ld. AO had again examined the veracity of the gifts at the behest of ld. PCIT during revision proceedings u/s 263 of the Act, by issuing notices u/s 133(6) of the Act, which stood directly complied with by the donors and no adverse inferences were drawn by the ld. AO on the documents furnished by the donors. Hence the AO had taken the only plausible and correct view on the issue of receipt of cash gifts by the assessee. Once a plausible view has been taken by the ld. AO, the same cannot be subjected to revision u/s 263 of the Act. The law is very well settled on this issue by the decisions of Malabar Industrial Co Ltd [ 2000 (2) TMI 10 - SUPREME COURT] and Max India Ltd [ 2007 (11) TMI 12 - SUPREME COURT] - Hence we hold that the ld. PCIT had grossly erred in invoking revision jurisdiction u/s 263 - Decided in favour of assessee. 2023 (7) TMI 466 Taxability of rent receipts - Assessment of club revenue - Whether taxable under the head Income from house property ? - scope of principle of mutuality - HELD THAT:- A club is an association of persons for certain objects and purposes. The concept of mutuality is that whenever money is being spent by a particular member is also being enjoyed by that person in the form of facilities. Members or a group of persons forming the association and the association are seen as a single identity. One cannot make an income out of any sum paid to oneself or spent on oneself. In charging a member for such utility the club should not make any profit. On that principle the income of the club involving contributors and participators is not taxable. Revenue contended that the space provided by the club was in the exclusive occupation of Reliance. It was not being used as a facility of the club. It was an independent transaction between the club and Reliance . Although Reliance may be a corporate member it had entered into a lease agreement with the club not in the capacity of a corporate member but an independent body. Now, these are questions of facts. These facts had to be established threadbare before any opinion on the substantial question of law could be expressed. On examination of the order of the Assessing Office, CIT (Appeal) and the tribunal we do not find any analysis of the facts, which would go to show whether the principle of mutuality was being maintained in the subject transaction between the club and Reliance. We find that in these orders that only conclusions are made with regard to the status and the transaction between the parties. For all these reasons, the part of the impugned order of the tribunal contained in paragraph 9 cannot stand and is hereby set aside. We remand the appeals to the tribunal to redecide the question taking into account all the disclosures of facts made before the adjudicating authorities. This remand is limited to the above issue only. 2023 (7) TMI 465 Unexplained cash credits - Additions u/s 68 - identity, creditworthiness and genuineness of the transaction - HELD THAT:- Assessee has placed substantial material on record to prove the identity, creditworthiness and genuineness of the transaction. Admittedly, in the instant facts all transactions took place through banking channels, the confirmation of the lender Shri Gaurav Viradia is on record, the returns of income filed by Shri Gaurav Viradia were also placed before the assessing officer for his records and the bank account of Shri Gaurav Viradia was also placed before the Department. The fact that in remand proceedings Shri Gaurav Viradia did not cause appearance in person, does not lead to the inference that the identity of lender or his creditworthiness has not been established by the assessee. In view of the above facts, we are of the considered view, that no addition under section 68 of the Act is called for in the case of Shri Gaurav Viradia. For the other lender assessee has been unable to give any plausible explanation as to why cash was deposited in the bank account of the lender immediately prior to extending loan to the assessee. Also, there is an apparent contradiction in the stand taken by the assessee with respect to the date on which loan was extended to the assessee. Accordingly, assessee has not been able to establish the creditworthiness or genuineness of the aforesaid transaction with Shri Alpesh Patel, and therefore the addition made by the Ld. CIT(Appeals) with respect to the aforesaid party is liable to be sustained. Decided partly in favour of assessee. 2023 (7) TMI 464 Scope of limited scrutiny - Addition beyond the issues as selected for limited scrutiny - Valuation of closing stock - whether the Percentage Completion Method had been adopted or not? - assessee was selected for limited scrutiny to interalia examine real estate business with high closing stock (verify whether the assessee has adopted percentage completion method) - HELD THAT:- The percentage completion method as per assessee s own submission and as per the guidance issued by the ICAI is not just limited to valuing the closing stock rather it is a method of accounting and revenue recognition for real estate transactions undertaken by enterprises dealing in real estate as sellers or developers. It encompasses the whole gamut of determination of project costs, project revenues and determination of closing work-in-progress (closing stock) at the end of the reporting period. Therefore, we find that there is no basis to hold that the scope of limited scrutiny is restricted to determination of whether the assessee has followed the percentage completion method or not rather the scope of the limited scrutiny is to determine whether the assessee has followed the percentage completion method and secondly, how the said method has been actually followed while accounting for the real estate transactions undertaken by the assessee during the financial year relevant to the impugned assessment year. Therefore, the contentions advanced by the ld AR cannot be acceded to and are hereby dismissed. Hence, ground no. 2 is dismissed. Working of revenue recognition and closing stock - Percentage Completion Method as per the Guidance Note issued by ICAI - There would be change in the value of the closing stock, in addition there would be change in the value of the sales which needs to be recognized in the assessee's trading account and that the revised working may be considered and the matter may be set aside to the file of the AO to examine and verify the same. The matter is accordingly set-aside to the file of the AO to examine and verify the revised working of revenue recognition and closing stock and decide as per law after providing reasonable opportunity to the assessee. 2023 (7) TMI 463 Disallowance of expenses u/s 37(1) by the CPC - Associateship fees paid to Mumbai Cricket Association - Membership of the employees of the company including Chairman and Managing Director. - Wholly and exclusively for the purposes of his business or not - CPC invoking section 143(1)(a)(iv) made disallowance for the reason that amount disallowed by the Tax Auditor in the audit report i.e. form No. 3CD, has not been taken into account by the assessee while computing the total income in the return - Whether allowable expenditure u/s 37? - HELD THAT:- Membership entries fee to club could be business expenditure in case of corporate membership , but not in case of individual club membership. In the case of Bayer Vapi P Ltd [ 2019 (5) TMI 1208 - GUJARAT HIGH COURT] also the issue was related to membership of the employees of the company including Chairman and Managing Director. Assessee has submitted that club membership was used by his employees and customers of business, but as per the normal rules of the club, such individual membership can t be allowed by other than individual except as a guest accompanied with the said individual. Thus, as far as individual assessee, is concerned, disallowance of club membership for one time entry fee is not debatable and correctly disallowed by the CPC invoking section 143(1)(a) of the Act. On merit also, the claim of club membership one time entry fee is disallowable on the ground of personal expenditure. Even if the assessee uses its club facility for soliciting customers, the recurring expenditure may be allowed as business expenditure subject to verification but not the one-time entry fee. As in the case of L Jairam Parwani vs DCIT [ 2018 (5) TMI 635 - MADRAS HIGH COURT] held that payment made for acquiring membership in a social club could not be allowed as business expenditure , more so, when there was no evidence to prove that membership of Social club was acquired for entertaining customers by the assessee. Therefore, the Ld. CPC is justified in making adjustment u/s 143(1)(a) the Act. Decided against assessee. 2023 (7) TMI 462 Validity of order passed u/s 201(3)(i) - period of limitation - Short deduction of tds - HELD THAT:- There is no dispute that the order was framed on 30.03.2018 and the impugned financial year 2010-11. It is true that amendments has been brought in the statue w.e.f. 01.10.2014 but in our considered opinion the said amendment is prospective as was held in the case of Connaught Plaza Restaurants P. Ltd. [ 2022 (1) TMI 409 - ITAT DELHI] Thus we hold that the order is barred by limitation and is liable to be quashed. Appeal of assessee allowed. 2023 (7) TMI 461 Condonation of delay in filing the present appeal by 1241 days - reasons for delay - period of delay comprises of period of Covid 19 pandemic where all activities in the economy came to a standstill due to national lockdown and appreciating the said situation - HELD THAT:- The period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation for the filing the appeal and effectively, the said period need not be counted and has to be excluded for working out the delay in filing the present appeal. As far as period prior to 15/03/2020 and post 28/02/2022 till filing of present appeal is concerned, it is no doubt true that the assessee was outside the country and travelling to USA to attend to his family affairs for sufficient long period except for some intermittent period, however, the fact that he was travelling doesn t take away his obligation to attend to the tax proceedings and that too, his own appeal which has been filed before the ld CIT(A). Merely filing the appeal is not enough to seek shelter from the tax obligations or the consequent tax liability. Once the appeal is filed, he is equally required to attend to the proceedings before the ld CIT(A) and/or appoint the Counsel who can seek his instructions and attend to the proceedings and file necessary documentation/submission in support of the grounds of appeal. In the instant case, the appeal was filed on 18/01/2019 and disposed off by the ld CIT(A) on 10/07/2019 and in between, three notices were sent through speed post which remained unattended. Once the appeal has been dismissed ex-parte by the ld CIT(A) due to non-prosecution and his bank account has been attached by the Revenue authorities, the assessee has woken up again and filed the present appeal that too with a substantial delay. We therefore find that there are clearly latches and negligence on part of the assessee in not filing the present appeal within prescribed time frame. At the same time, we believe that where the assessee has come in appeal before this Tribunal, he deserves an opportunity to be heard on merits of his case before the matter is consigned to records.Therefore, in exercise of powers under section 253(5) and in interest of substantial justice, we hereby condone the delay in filing the present appeal subject to cost of Rs 5,000/- which shall be deposited in PM National Relief Fund and evidence thereof should be brought on record. Addition u/s 68 - unexplained cash deposit - As both before the AO as well as before the ld. CIT(A), the additions have been made and confirmed without considering the explanation which the assessee may like to submit in support of the source of the cash deposit in his bank account maintained with Axis Bank. Therefore, in the interest of substantial justice and fair play, we believe that the assessee deserves one more opportunity and the matter is, accordingly, set aside to the file of the AO to decide the same afresh after providing reasonable opportunity to the assessee. Appeal of the assessee is allowed for statistical purposes. 2023 (7) TMI 460 Assessment u/s 153A - incriminating material found during the course of search u/s. 132(1) or not? - HELD THAT:- It is pertinent to note that this Court has recently passed an order [ 2023 (5) TMI 1235 - GUJARAT HIGH COURT] wherein also similar type of substantial questions of law were proposed by the Revenue and this Court, after considering case of Abhisar Buildwell P. Ltd [ 2023 (4) TMI 1056 - SUPREME COURT] and Saumya Construction [ 2016 (7) TMI 911 - GUJARAT HIGH COURT] as well as Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] dismissed the appeal filed by the appellant Revenue as held that no addition can be made in respect of completed assessment in absence of any incriminating material - Decided in favour of assessee. 2023 (7) TMI 459 Exemption u/s 11 - Registration u/s 12AA seeked in course of conducting its activities under the objects has suffered survey and, search and seizure of its honorary secretary - receipts from Board of Control for Cricket in India (BCCI) were shown as corpus fund instead of treating them as revenue receipts - CIT(E) refused to grant registration mainly on the ground that funds of the assessee were diverted for personal benefits of the executives of the society, in violation of provisions of section 13 (1)(c) - HELD THAT:- We have given our anxious consideration to contentions put forth at the Bar. Assessment years under consideration are 1997-98 and 2011-12. The rejection appears to have been made in respect of these two assessment years. In this context, we have perused Tamil Nadu Cricket Association [ 2013 (12) TMI 833 - MADRAS HIGH COURT] - We find that by clause (b) under sub-section (1) of section 12AA the Commissioner requires satisfaction about objects of the trust or institution and the genuineness of its activities. In considering the application for purpose of the satisfaction, the Commissioner had taken into consideration the facts regarding survey, search and seizure, respectively of the assessee s premises as well as its honorary secretary. We admit the appeal on the following question of law to be answered. Where an assessee seeking registration under section 12AA in course of conducting its activities under the objects has suffered survey and, search and seizure of its honorary secretary and there has been violation of provisions in section 13(1)(c), can the facts be considered for the purpose of satisfaction on the application for grant of registration? List on 13th July, 2023, for hearing of the appeal on the papers already on record. 2023 (7) TMI 458 Reopening of assessment - validity of notice issued u/s 148A - proof of allegation of escapement of income - as argued allegation of liability towards a single party was not incorporated in the show cause notice despite the fact that the same was well within the knowledge of respondent - HELD THAT:- It is not in dispute that the reply is silent on the fact that how the reply given by the petitioner was dealt with while passing the impugned order u/s 148A. It is also not in dispute that now on 01.05.2023, the verification report dated 18.06.2021 has been uploaded on the portal of DDIT, Rohtak. Further in the initial notice dated 24.03.2023 (P-1), it had not been reflected the amount received from M/s Dholagiri Enterprises. Thus, the petitioner has no occasion to file reply on that effect. Since the above verification report was never part of the impugned show cause notice and keeping in view the above mentioned judgments, the present petition is allowed and notice issued under Section 148A (d) (P-1) and impugned notice issued under Section 148 (P-4) are set aside. 2023 (7) TMI 457 TP Adjustment - addition of management fee paid to foreign Associate Enterprises - disallowance made u/s 40A (2) (b) on account of payment of administrative charges paid to TACL - excessive or unreasonable expenditure - ITAT deleted additions -HELD THAT:- Appeal of the assessee was accepted by the Tribunal by setting aside the order of AO passed u/s 143 (3) r.w.s.144C by holding that the TPO for the AY 2008-2009, 2009-2010 2011-2012 has accepted the transaction of payment of management fees paid to NLC by NLT and therefore the same having been made entirely for business consideration incurred wholly and exclusively for the purposes of business. Hence no addition was held to be sustainable for the assessment year 2010-2011. Disallowance made u/s 40A (2) (b) on account of payment of administrative charges paid to TACL - excessive or unreasonable expenditure - Tribunal recorded that the AO had failed to discharge the onus as per the mandate of the provisions of Section 40A (2) - assessee i.e NLT had received services from TACL in respect of which payment had been made as per documentary evidence on record and thus, there was no warrant for disallowance paid to TACL by the assessee when the payment was adjudged on the principle of commercial expediency when viewed from the point of view of a prudent businessman. The present appeal filed by the department/revenue thus deserves to be dismissed in view of principle of consistency and rule of finality, in view of judgments i.e CIT vs. Dalmia Dadri Cement Ltd. [ 1969 (11) TMI 16 - PUNJAB AND HARYANA HIGH COURT ], Radhasoami Satsang vs. CIT [ 1991 (11) TMI 2 - SUPREME COURT ], CIT vs. Girish Mohan Ganeriwala [ 2002 (10) TMI 61 - PUNJAB AND HARYANA HIGH COURT ] - No substantial question of law 2023 (7) TMI 456 Revision u/s 263 - as per CIT AO failed to examine the issue of deduction in excess of eligibility u/s 80IC - expansion of industrial unit of the assessee was undertaken by installing new plan and machinery in the F.Y. 2011-12 and it was more than 50% of existing plant and machinery for which assessee claimed - HELD THAT:- As it is only industrial undertaking which is already claiming 100% deduction u/s 80IC as newly established unit cannot be allowed to claim 100% deduction u/s 80IC on substantial expansion undertaken by the same firm simultaneously. AO was apprised on behalf of the assessee that in the case of Hycron Electronics[ 2015 (6) TMI 725 - ITAT CHANDIGARH] has held the issue in favour of the assessee and the Chandigarh Tribunal judgment has been reversed. However, Ld. AO observing that the revenue may be filing a SLP, thus, to protect the interest of revenue 75% disallowance was made. DR submitted that in a subsequent judgment in the case of CIT vs. M/s. Classic Binding Industries [ 2018 (8) TMI 1209 - SUPREME COURT] has settled the issue. The assessee will be entitled for deduction of remaining assessment years @ 25% as there cannot be two initial assessment years within the span of 10 years from the initial assessment year. DR has escaped the judgment of DCIT vs. M/s. Aarhan Softronics [ 2019 (2) TMI 1285 - SUPREME COURT] wherein judgment in Classic Binding Industries case was held to be not good law. The Bench is inclined to allow the appeal for statistical purposes and direct the Ld. AO to consider the aforesaid judgments of Hon ble Supreme Court of India, and pass afresh order u/s 263 / 143(3) of the Act. 2023 (7) TMI 455 Addition of cash deposits - ex-parte orders u/s 144 - as submitted assessee had deposited cash in his bank account as against the addition of cash made by AO and further out of the six bank accounts reported by the AO, two bank accounts does not belong to the assessee - HELD THAT:- As before the AO the assessee did not appear and, therefore, the AO had no option, except to pass ex-parte orders u/s 144 and frame the assessment on the basis of material available before him. Before CIT(A) also no submissions were made by the assessee. Before us, all no material has been placed by the assessee to support his contentions and to point out any fallacy in the findings of lower authorities. When the appeal is filed before the appellate authorities by the assessee himself against the orders of the lower authorities, it is expected that the assessee shall put forth some documentary evidences in support of his contentions as it is the duty of the assessee to lead evidence in support of its claim and for the adjudicating authority to decide upon the sustainability of the claim on the basis of the evidence led by the parties before it. Assessee did not appear before any of the authorities. In absence of any contrary material brought on record to rebut the findings of lower authorities, we dismiss the grounds of the assessee. 2023 (7) TMI 454 Income accrued in India - receipt from offshore sale of goods - rendering supporting services - AO treated the amount received by the assessee company as fees for included services as per Article 12 of India-Ireland DTAA also Fees for Technical Services as per Sec. 9(1) (vii) - Whether impugned amount received for rendering of services? - HELD THAT:- As noticed that in the invoices the description of sale of equipment number of quantity, price of the item sold and detail of the buyer to whom shipment of goods were provided which demonstrate that assessee had received the amount on sale of equipment and nowhere it was mentioned that any amount was received from rendering of any services. In this regard, we find that A.O has not established that how the amount received by the assessee was related to rendering of any services by the assessee. A.O/DRP have not controverted the facts established from the invoices on sale of equipments as discussed supra in this order. A.O has also not brought on record any clinching evidences to substantiate that assessee has received the impugned amount for rendering of services. Decided in favour of assessee. Customs 2023 (7) TMI 453 Jurisdiction - DRI Officer is a proper officer for the purposes of Section 28 of the Customs Act, 1962 or not - summons issued by the DRI Officer to the respondent under Section 108 of the Customs Act, 1962 could be said to be without jurisdiction or not - Customs/DRI Officers are police officers and, therefore, are required to register FIR in respect of an offence under Sections 133 to 135 respectively of the Customs Act, 1962 or not - provisions of Sections 154 to 157 respectively and 173(2) of the Code of Criminal Procedure, 1973 would apply in respect of the proceedings under the Customs Act, 1962, in view of Section 4(2) of the Code or not - registration of the FIR is mandatory before the person concerned is arrested and produced before the Magistrate or not. HELD THAT:- Let the matter come up for final disposal on 19.07.2023. 2023 (7) TMI 452 Maintainability of petition - impugned order is appealable under Section 129 of Customs Act, 1962 before the Customs Excise Service Tax Appellate Tribunal (CESTAT) or not - seizure of Gold Bars - HELD THAT:- In the present case, the petitioner was served a show cause notice under Section 124 of Customs Act, 1962 to show cause as to why the gold bars seized from the possession of Shri Amit Nandi(on the basis of statement of whom, the show cause notice was sent to the petitioner) weighing 1166.40 grams and valued at Rs. 60,88,660/-, should not be confiscated under Section 111(d) and 111(b) of the Customs Act, 1962 and as to why the present petitioner during a period from 25.12.2021 to 26.02.2022 should not be held to be liable for confiscation under Sections 111(d) and 111(h) of the Customs Act, 1962 and why penalty should not be imposed under Sections 112(a) and 112(b) of Customs Act, 1962. The Apex Court in the case of HINDUSTAN COCA COLA BEVERAGE (P) LTD. VERSUS UNION OF INDIA AND OTHERS [ 2014 (9) TMI 585 - SUPREME COURT ] in which it is held that when the statute provides for statutory appeal, the said remedy is to be availed by the litigating parties - In HAMEED KUNJU VERSUS NAZIM [ 2017 (7) TMI 1414 - SUPREME COURT ] the Apex Court held that any petition under Article 227 of Constitution of India should be dismissed in limine when there is statutory provision of appeal. In another case ANSAL HOUSING AND CONSTRUCTION LTD. VERSUS STATE OF U.P. AND ORS. [ 2016 (3) TMI 1435 - SUPREME COURT ] it is held that when there statutory appeal is provided, then the said remedy has to be availed. In view of the aforesaid and also looking to the fact of availability of an efficacious alternative remedy of filing an appeal before the appropriate forum, it is not found proper to entertain this petition - petition dismissed. 2023 (7) TMI 451 Seeking investigation of complaint of the petitioners against the respondent no. 6 - primary concern of the petitioners is that the goods were sold at 1/10th of the market value prevailing at the relevant time - HELD THAT:- The petitioners were conscious when they made a statement as recorded in paragraph 1 of the order dated 03 December, 2018 passed on the suit that they were not interested in the goods and therefore, ad-interim relief be rejected and the said statement was made on the instructions of Mr. Joseph Parakkott, Director of the petitioners. In paragraph 4 of the said order passed in the suit, a statement on behalf of the plaintiffs also came to be recorded that the plaintiffs (petitioners) had abandoned the goods and did not wish to pursue the suit against defendant nos. 3 and 4 and that defendant nos. 3 and 4 be struck off and accordingly, defendant nos. 3 and 4, which includes defendant no. 6 on whom allegation was made, were struck off. On a perusal of the order passed on the review petition, the things do not improve as the statements which were categorically made, have subsisted and they have not been revoked only what was observed was that the statements as made were without prejudice to the rights and contentions of the parties - this would not in any manner support the petitioners to canvass that now investigation ought to be ordered in the sale of the goods and there is some collusion between the private respondents and officers of the customs. There are no merit in this petition - petition dismissed. 2023 (7) TMI 450 SEIS scheme - retrospective effect of notification dated 23 September, 2021 - contention of the petitioner is that the petitioner is entitled to duty credit scrip in respect of such foreign exchange earning inasmuch as the said earnings were made in due consideration to the policy which was prevailing at that point of time, i.e., FTP 2015-2020. Whether the petitioner in the facts and circumstances of the case and with the bonafides the petitioner is contending, in the petitioner s case the impugned notification ought not to have been applied till 31 December, 2021, in respect of balance amount of foreign exchange as earned which is stated to be about 23 crores? HELD THAT:- In the peculiar facts and circumstances of the case, it would be appropriate that the petitioner is permitted to make an application to the Designated Officer of the respondents to make a claim for the entitlement to the balance foreign exchange as earned and to that effect its entitlement to duty credit scripts asserting non-applicability of the impugned notification. Let such application be made as permitted by the earlier order within two weeks from today. If such an application is made, the same be decided within a period of six weeks from the day it is filed, on its own merits. While deciding such application, the concerned authority should consider whether in the facts of the petitioner s case, the petitioner could be exempted from applicability of the impugned notification and/or whether it would be entitled to take the benefit of the entire foreign exchange earning for the FY 2019-20. All contentions of the petitioner to raise the challenge as raised in the petition as and when the need so arises, including all contentions of the revenue are expressly kept open. Petition disposed off. 2023 (7) TMI 449 Exemption to capital goods imported by them under the Zero Duty Export Promotion Capital Goods (EPCG) Scheme - denial on the ground that the importer has been issued duty credit scrips under the Status Holder Incentive Scheme as well as the Zero Duty EPCG Authorization Scheme. HELD THAT:- Relevant conditions of the notification has already been reproduced. The basis for issuing the SCN is that respondent has received SHIS scrips as well as Zero Duty EPCG Authorization scheme in the same year i.e. 2011--12. From the records as well as the arguments it is brought out that SHIS scrips corresponds to the exports made by respondent in the year 2009--10 whereas the Zero Duty EPCG authorization scheme is issued in 2011--12. The respondent has requested for clarification from the DGFT as to whether there has been violation of notification. Vide e--mail dated 28.07.2014, the reply has been received stating that as the SHIS benefits are for the exports made in the year 2009--10, and the Zero Duty EPCG Authorization is issued in the year 2011--12, there is no violation of the provisions as clarified in Public Notice No.12 dt, 26.7.2013. It is mentioned in Public Notice No.12 dt, 26.7.2013 that if SHIS application is filed for the year 2009--10, Zero Duty EPCG Authorisation cannot be issued to an importer for the year 2010--11. In the present case, the respondent has not availed any Zero Duty EPCG Authorization for the period 2010--11. The Zero Duty EPCG Authorization is for the period 2011--12. Thus, there is no violation of the conditions. The Commissioner has analyzed the entire issue and given detailed discussion. The appeal filed by the department is without merits. Impugned order is sustained - appeal filed by Revenue is dismissed. 2023 (7) TMI 448 Refund of SAD - prepackaged bags intended for retail sale - violation of policy provisions or not - Confiscation - Penalty - HELD THAT:- In view of the findings of the Commissioner (A) which are admitted by the appellant and based on the decision of the Tribunal, it is found that the importer has violated the conditions of Import Policy and did not comply with the conditions of the Notification No.29/2010. Accordingly, the impugned order is upheld and the appeal is dismissed. 2023 (7) TMI 447 Classification of imported goods - coal of Indonesian origin - to be classified under tariff item 2701 1920 of First Schedule to Customs Tariff Act, 1975 or not - benefit of notification no. 12/2012-Cus dated 17th March 2012 - contention of Learned Authorized Representative is that the claim of precedence for steam coal at the tariff item level over bituminous coal at the sub-heading level, though dressed up as tariff item, is not consistent with the General Rules for Interpretation of the Import Tariff in Customs Tariff Act, 1975. HELD THAT:- Coal is a bounty of Nature that occurs as localised concentrations and, by its very remoteness from places of deployment, implies voluminouos shipments with appropriate commercial stake. Coal draws worth from its combustion capacity by direct application of heat in manufacturing process or indirectly by generation of steam used for deriving energy of one sort or another. The heating capacity is proportional to carbon content which, being a natural element, not only varies from source to source but is also contingent upon presence of retarding extraneous matter - Anthracite coal is considered superior and relatively scarce; its characteristic of very high carbon permits deployment at the high end of the spectrum in sophisticated equipment. Bituminous coal is most widespread and is primarily used in heating for generation of thermal power; the oozing of the tarry substance, from which the name is derived, renders such coal unsuitable in direct application that would clog equipment. The sub-headings in chapter 27 of First Schedule to Customs Tariff Act, 1975 adopted definitions consistent with the standards developed, and accepted, over the long period of increasing dependence on coal for industry, transportation and energy. The evaluation of fixed carbon , at or more than 86% (on dry, mineral matter free basis) with volatile matter constituting the remaining 14% or less, as the determinant of anthracite bears the insignificance of heating value insofar as coal of this rank is concerned - The adjudicating authority has placed too much premium on the said expressions in the sub-heading notes without considering relevance to the certificate of sampling and analysis (CoSA) or the significance of formula, and more especially, in conversion. Doubtlessly, the investigation, and use of the word advisedly as there has been no scrutiny of the tabulated information by the adjudicating authority who has merely approved the arrangement in Annexure B to the show cause notice, are happy with their mathematical reformulation which carries that derived gross calorific value (GCV) beyond the threshold to reaches of higher duty liability. There is no controversy for the proximate analysis , undertaken at load port and conforming to ASTM, indicated gross calorific value (GCV) to be below the threshold for classification as bituminous coal in chapter 27 of First Schedule to Customs Tariff Act, 1975. However, the notation ARB/ADB for gross calorific value (GCV) and ADB for inherent moisture and volatile matter did. However, the adjudicating authority has not ventured to consider the chicken and egg analysis of the method adopted for measuring gross calorific value (GCV) of coal. That this is a mathematical value , expressed in per kilogram terms to a specific outcome, viz., the raising of temperature of a kilogram of water by one degree on the Celsius scale a theoretically cumbersome and haphazard process save for the invention by Marcellin Berthelot, the founder of organic chemistry in bomb calorimeter appears to have been ignored; that such determination from a sample of powder, bereft of moisture and mineral matter, needed adjustment only for the missing element in the qualification was also equally ignored in the eagerness to carry out algebraic permutation for arriving at the desired result to charge higher rate of duty. Several fatal errors have been committed in the impugned proceedings in consequence. There is, in addition, lack of comprehension about the conversion of gross calorific value (GCV) in load port certification of sampling and analysis (CoSA) for being on as received basis (ARB) into gross calorific value (GCV) on air dry basis (ARB) by application of factor that coal with inherent moisture bears to moisture free coal which should have sufficed to arrive at gross calorific value (GCV) on moist basis ; that, however, would not have suited the investigators for that proved to be below the threshold of 5833 kcal/kg in the sub-heading notes. Therefore, even going by their own calculation, the investigators carried out a superfluous exercise beyond gross calorific value (GCV) on air dry basis (ADB) to contrive a measure that has no rationale. Without ascertaining the method by which gross calorific value (GCV) was determined for inclusion in the certificate of sampling and analysis (CoSA) issued at load port and in the absence of any finding that this was not directly deduced from bomb calorimeter and as content of moisture , ash volatile matter and fixed matter in coal sample will not, of itself, derive the heating capacity as kcal/kg , there is no reason to suppose that it was not steam coal to be classified elsewhere - Consequently, the formula devised for reverse working from moisture free mineral matter free basis gross calorific value (GCV) for computation in terms of any one or other description in sub-heading notes in chapter 27 of First Schedule to Customs Tariff Act, 1975 is not required to be worked out sequentially as the table in Annexure B has done to obtain outcomes that are inexplicable, unfounded and lacking in rationale. It is, thus, clear that, on as received basis (ARB) and air dry basis (ADB) , the gross calorific value (GCV) comprising both types of moisture and inherent moisture respectively are below the threshold of bituminous coal in all the samples . The attempt by the adjudicating authority to classify the impugned goods within the description bituminous coal , corresponding to tariff item 2701 1200 in the First Schedule to Customs Tariff Act, 1975, fails. The claim for classification as steam coal corresponding to tariff item 2701 1920 of First Schedule to Customs Tariff Act, 1975 remains undisturbed. Eligibility for benefit of notification no. 12/2012-Cus dated 17th March 2012 cannot be denied. The impugned order set aside - appeal allowed. 2023 (7) TMI 446 Classification of imported goods - import of vehicles including All Terrain Vehicles [ATVs] from its parent company - Rejection of the declared classifications of ATVs in the Bills of Entry filed and reclassifying the same under CTH 8703 - Confiscation of goods - Demand and recovery of differential customs duty - recovery of interest alongwith penalty - HELD THAT:- Brutus and Ranger Vehicles (electric) classified by the appellant under CTH 8709 are classifiable under CTH 8709 as works trucks and the same is evident from a perusal of their characteristics and features. The Vehicles do not have the features that a vehicle for transportation of persons is required to have as per the HSN Explanatory Notes - the appellant has correctly classified Ranger Vehicles (non electric) under CTH 8704, and Brutus and Ranger Vehicles (electric) under CTH 8709. Even otherwise, it is a settled principal of law that if the department wishes to change the classification proposed by an assessee then it is for the department to discharge the burden and prove that the Vehicles fall under CTH 8703, which includes within its scope motor cars and other motor vehicles principally designed for transport of persons. The department has merely relied upon the website of Polaris USA to conclude that the classification adopted by Polaris India is not correct. It was imperative for the department to have established that the Vehicles are primarily designed for transport of persons. Only when the department discharges the burden of proof, that the burden of proof would shift to the assessee. For a vehicle to be classified under CTH 8703, it is required to be principally designed for transportation of persons. The Vehicles in dispute, namely, the Ranger (non-electric) and the Ranger (electric) and Brutus Vehicles are not designed principally for transportation of persons. It would, therefore be necessary to determine what would constitute principally designed for transportation of persons In COMMISSIONER OF CENTRAL EXCISE, PUNE-I VERSUS TELCO LTD. [ 2002 (2) TMI 717 - CEGAT, MUMBAI] the Tribunal observed any intended/isolated advertised use by the manufacturer, does not induce us to conclude that the entity under dispute, are principally designed for transport of person . Thus, it is the gross weight usage that determines whether the vehicle is principally designed for transportation of persons. This apart, the Ranger and Brutus Vehicles imported by the appellant over the years have been sold to the TN Coastal Security, NIM/UK-SDRF- Disaster Relief Forces, Border Security Surveillance and Utility Support, primarily for the purpose of transportation of goods and utility purposes. Therefore, applying the usage/functionality test, which can be applied in the instant case as CTH 8703 uses the words principally designed for transportation of passengers which implies reading of an end use stipulation in the Tariff as held in Telco , it is clear that the said Vehicles are not vehicles designed for transportation of passengers. Thus, even if passengers are transported in the Vehicles, it would not mean that the Vehicles cannot be classified under CTH 8704 and CTH 8709 - it would not be appropriate to refer to the website of Polaris USA. The information conveyed therein may not mention the Vehicles are for transportation of goods, but that would not conclusively prove that the Vehicles are not for transportation of goods. Thus, it has to be held that the Ranger (non-electric) Vehicles deserve to be classified under CTH 8704 and Ranger (electric) and Brutus Vehicles deserve to be classified under CTH 8709 - Appeal allowed. Corporate Laws 2023 (7) TMI 445 Seeking dismissal of the suit for mandatory injunction and damages - Order XII Rule 6 and Order XV Rule 2 read with Section 151 of the Code of Civil Procedure, 1908 - HELD THAT:- It is an admitted fact that defendant no. 1, a registered Society which was founded by late Sh. Chowdhry Brahm Prakash and others became the shareholder of the Plaintiff Company on 20.05.1962 and they acquired 500 shares having distinctive numbers from 61 to 560, covered by a Single Share Certificate. There are specific averments made by the plaintiff in its plaint that these 500 shares were transferred by the defendant no. 1 Society from time to time between 1968 and 1986 and different share certificates were accordingly issued. It is on record that pursuant to directions of this Court vide Order dated 20.09.2007, the plaintiff was able to produce the share Transfer Deeds only in respect of 260 shares. It has been explained by the plaintiff that in terms of Schedule II of the Companies Act and the Notification dated 09.04.2003 the plaintiff Company was liable to maintain these documents i.e., share Transfer Deeds for a period of 3 years. The documents which were sought are more than 50 years old and the Plaintiff Company was not under an obligation to preserve the same. However, on making a search, it was able to recover transfer deeds in respect of 260 shares which have been placed on record. The defendants however, are basing their assertions in this application on the ground that non-production of 240 shares amounts to an admission that they are in the name of the defendants. In so far as 260 shares are concerned, it is claimed that after these Transfer Deeds were placed on record, defendant nos. 4 to 6 had sent the same for determining their authentication to Indian Security Press, Nasik which has reported that these transfer deeds are forged and a FIR No. 158/2007 has also been registered. However, mere filing of FIR is not sufficient to conclude that the share Transfer Certificates are fabricated. It can be established only by evidence and there can be no summary conclusion drawn about them being fabricated documents. The facts of the present case do not reflect that the suit is liable to be dismissed simply on account of non-production of share Transfer Deeds by the plaintiff, as has been claimed by the defendants. The proof of transfer of shares is not only the Transfer Deeds. The plaintiff has also relied upon the Annual Returns and the Register of Members submitted regularly with the Registrar of the Companies to prove that there has been the transfer of shares by defendant no. 1. Having made these assertions, it cannot be said that it has been conclusively shown from the plaint and the documents of the plaintiff that these shares have not been transferred by defendant no. 1 - The circumstances in which its name has been deleted can be understood only after the evidence is led by both the parties. In the case of UNION OF INDIA VERSUS IBRAHIM UDDIN ANR [ 2012 (7) TMI 887 - SUPREME COURT ] , it was observed that admissions made by a party though not conclusive is a decisive factor in a case unless the other parties successfully withdraws the same or proves it to be erroneous. The admission even if not conclusive, may operate as an estoppel. The law requires that an opportunity be given to the person who has made an admission under cross examination to tender his explanation and clarify the point of admission. In the present case, merely non-production or alleged forged Transfer Deeds is not only the evidence on which the plaintiff has placed reliance. There is other evidence as already mentioned above and also admissions of the defendants about not being the shareholders of the Plaintiff Company which need to be explained and tested on anvil of cross examination. There are averments made by the plaintiff which have been countered by the defendants. It cannot be said that there are any clear and unequivocal admissions on the part of the plaintiff which entails the dismissal of the suit. This application is without any merit and is hereby dismissed. 2023 (7) TMI 444 Oppression and mismanagement - Appointment of the Ombudsman cum Ethics Officer of the DDCA - Scope of Articles of Association (AoA) the company (DDCA) - Validity of notice for convening the Extra-Ordinary General Meeting (the EGM) of the Members of the DDCA - Article 226 of the Constitution of India - HELD THAT:- It is well settled that the jurisdiction of a High Court under Article 226 of the Constitution of India is couched in wide terms and the exercise thereof is not subject to any restrictions except the territorial restrictions which are expressly provided in the Articles but the exercise of the jurisdiction is discretionary and it is not exercised merely because it is lawful to do so. The very amplitude of the jurisdiction demands that it will ordinarily be exercised subject to certain self-imposed limitations and the resort to that jurisdiction is not intended as an alternative remedy for relief which may be obtained in a suit or other mode prescribed by statute. It is well settled that availability of alternative remedy does not operate as an absolute bar to the maintainability of the writ petition and that the rule which requires a party to pursue the alternative remedy provided by the statute is a rule of policy for convenience and discretion rather than a rule of law. Undoubtedly, entertainability and maintainability of the writ petition are two distinct concepts. If the objection to maintainability is sustained then the Courts are rendered incapable of receiving the lis for adjudication. However, on the other hand, the question of entertainability is entirely within the discretion of the High Courts and writ remedy is a discretionary remedy. A writ petition, despite being maintainable may not be entertained by High Courts for many reasons or relief could be refused to the Petitioner despite setting up a sound legal point. Chapter 16 of the Companies Act deals with prevention of oppression and mismanagement. Section 241 of the Companies Act provides that any member of a company who complaints that the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or to any other member or members or in a manner prejudicial to the interests of the company may approach the NCLT - Section 242 of the Companies Act provides that if NCLT is of the opinion that the company s affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company then the NCLT can pass orders for regulating the conduct of the affairs of the company. Section 242 (4) of the Companies Act gives power to the NCLT to make any interim order which it thinks fit for regulating the conduct of the company s affairs upon such terms and conditions as the NCLT deems to be just and equitable - Section 245 of the Companies Act gives the power to the NCLT to restrain a company from committing an act which is ultra vires the articles or memorandum of the company. If the appointment of Ombudsman is contrary to the laws laid down in the AoA, it is always open for the NCLT to stay the effect of the resolution dated 10.04.2023 and reverse any order passed by the Ombudsman or any action taken by him/her if it is not in the interest of the DDCA. The Petitioner has not made out a case that it is imperative for this Court to entertain the present Writ Petition even though an equally efficacious alternative remedy/forum is available to the Petitioner and that the Ombudsman can pass such orders which are irreversible in nature and cannot be rectified if they are found to be faulty - The present case also does not fall within the exceptions that have been laid down by the Apex Court in M/S. SOUTH INDIAN BANK LTD. ORS. VERSUS NAVEEN MATHEW PHILIP ANR. ETC. ETC. [ 2023 (5) TMI 798 - SUPREME COURT] which would compel this Court to entertain the present Writ Petition even in the presence of an equally efficacious alternative remedy to the Petitioner. This Court is, therefore, not inclined to entertain the present Writ Petition at this stage and grants liberty to the Petitioner to approach the NCLT for the redressal of its grievances - Petition disposed off. 2023 (7) TMI 443 Allegation of committing fraud and caused loss to the respondent company by incorporating and joining a company which had a similar name and operating pattern as that of the respondent company and diverted the business of management of the vessels of Daitoh - Offences under Sections 447 and 452 of the Companies Act, 2013 - HELD THAT:- This Court finds that the allegation with regard to the offence under Section 452 of the Act is that the petitioner had retained the laptop. This offence is quasi criminal in nature. It is well settled that the said offence has been incorporated only to provide a speedy remedy for the company to retrieve its property. Admittedly, the petitioner sent the laptop on 24.08.2021 by courier - this Court is of the view that the petitioner cannot be prosecuted for the offence under section 452 of the Act. As regards the offence under Section 447 of the Act, this Court finds that the procedure prescribed for investigating the said offence is provided in Chapter XIV of the Act. A detailed mechanism is provided under the Act. It deals with the power of the Registrar of Companies to conduct an enquiry and submit a report to the Central Government. The Central Government may, on such report or on a report of any inspector appointed by the Central Government may, direct an investigation by SFIO. The Central Government may also direct such an investigation, suo motu, if it is in the public interest. Section 212 of the Act provides for an investigation by SFIO. As regards the offence under Section 415 of the Indian Penal Code, there is no deception at the inception. It may at best amount to a breach of promise. Hence, cheating is not made out since the petitioner was admittedly working in the company for two years. Further, the offences under Sections 378, 403, 405, 408, 120 and 425 of the Indian Penal Code are not made out. This Court finds that the allegations that the confidential information and certain technical know-how were taken away by the petitioner are vague. The allegation of misuse of information and making personal gain with the said information would, at best, make the petitioner liable civilly to the respondent. It may amount to a breach of trust as understood commonly and would not amount to a criminal breach of trust. In order to attract the said offence, the nature of the property entrusted and as to how it was misappropriated must be clearly spelt out. Vague allegations that confidential information and technical know-how were misused are insufficient. Even assuming that this offence is made out the complainant ought to have resorted to the remedy under the Act. This Court also finds that the complaint stems out from the grievance of the complainant that the petitioner had started a rival company and had diverted the business of the complainant. Such issues cannot be the subject matter of criminal prosecution in the absence of the necessary ingredients to constitute the offence alleged. The petitioner has other remedies available in law. Since the allegations do not attract the offences, this Court is inclined to quash the complaint. This Court finds that the complaint, besides being unsustainable in law, does not disclose the alleged offences, and hence the continuation of the impugned proceedings would be an abuse of process of law. The non-interference of this Court would lead to a miscarriage of justice - Petition allowed. 2023 (7) TMI 442 Validity of sale deed - sale of property by the company - Sale was approved by the Board of Director resolution - Locus of the third party - Seeking to relieve the petitioners wholly from the alleged acts of default and liability complained by the respondent - HELD THAT:- This Court finds that the petitioners have not committed any illegality as alleged by the ROC. Further, launching the prosecution under Section 628 of the Old Companies Act is also not permissible since the complaint has been filed under Section 628 of the Companies Act, 1956 (Old Act) and the new Companies Act commenced only from 2014 onwards. Any prosecution has to be launched in accordance with the provisions of Section 448 of the new Companies Act. Therefore, no prosecution can be launched under Section 628 of the old companies Act in view of the provision repealing Section 628 of the old Companies Act and hence, this Court feels that the present complaint is not maintainable. This Court does not find any jurisdiction on the part of the respondent to prosecute the petitioners and this Court is of the prima facie view that the petitioners have not committed any offence as narrated by ROC and upon perusal it is clear that the petitioners cannot be prosecuted under Section 628 of the Old Companies Act. Therefore, all the petitioners are relieved from the prosecution - Petition disposed off. 2023 (7) TMI 441 Continuation of suit / legal proceedings against the company where the name of the company has been struck off from the records of ROC - Respondent sought decree for rendition of accounts, directing the defendant to render a true and proper accounts for the usage of the software Program of the plaintiff in the various branches of the defendant - HELD THAT:- The provisions of Sections 248 and 250 of the Companies Act, 2013, make it very clear that even if the name of the Company is struck off from the Register of Companies maintained by the Registrar of Companies, its registration shall be deemed to have been cancelled from such date. However, there is no embargo for the suit to be filed or to be continued for the purpose of realising the amounts due to the Company and for the payment or discharge of the liabilities or obligations of the Company. In other words, the Company, whose name has been struck off from the Register of Companies maintained by the Register of Companies, cannot carry on any business - there is no case made out for striking off the plaint, merely because the name of the Company has been struck off from the Register of Companies maintained by the Registrar of Companies. That apart, Order VI Rule 16 of C.P.C., deals with specific instances when a plaint can be struck off. Similarly, there are instances under Order IX of C.P.C., when a suit can be dismissed. In any event, it stands confirmed that the petitioner has also filed an application under Order VII Rule 11 of C.P.C. If advised, the petitioner may choose to pray for a relief in the said I.A. on merits if the facts so warrant. A reading of the impugned order also indicates that I.A.No.577 of 2021 filed under Order VII Rule 11 of C.P.C. is pending. I.A.No.577 of 2021 filed under Order VII Rule 11 of C.P.C. shall be disposed on merits and in accordance with law keeping in mind the observations made herein. There are no merit in the present Civil Revision Petition. The Civil Revision Petition is therefore liable to be dismissed - petition dismissed. 2023 (7) TMI 420 Wrongful withholding of laptops (after resignation) which is punishable under Section 452 of the Companies Act, 2013 - HELD THAT:- This Court finds that it is well settled that the offence under Section 452 of the Act, which is pari materia with Section 630 of the Companies Act, 1956 is quasi criminal. It is also well settled that the provision is intended to provide a speedy mechanism for recovery of any property belonging to the company withheld wrongfully by any person. The Act provides that the Court trying an offence may order an employee to deliver the wrongfully withheld property, and the failure to comply with the said order is punishable with imprisonment and fine. In the instant case, the petitioners admittedly delivered the property said to have been withheld by them. The respondent cannot refute the communications and the receipt of the laptops. From the facts and circumstances, it cannot be said that the petitioners had wrongfully withheld the property. The petitioners have returned the property and since, in the facts and circumstances, it cannot be said that they had initially wrongfully withheld the property, the continuation of the impugned prosecution would be an abuse of process of law. Therefore, this Court is of the view that the impugned prosecution is liable to be quashed. Petition allowed. PMLA 2023 (7) TMI 440 Money Laundering - misuse of funds allocated under the National Rural Health Mission (NRHM) Scheme and irregularities in supply of medicines, equipment and other items under the NRHM Scheme - HELD THAT:- A number of pleas and contentions have been raised by the learned counsel for the appellant - Sanjay Agarwal, but we are refraining from the referring to these contentions in view of the request made by the learned counsel for the respondent - Directorate Of Enforcement. However, one of the contentions raised relates to the quantum of the amount involved. Reference can be made to the orders passed granting bail to the appellant-Sanjay Agarwal and the amount that was directed to be deposited. The appellant - Sanjay Agarwal shall surrender before the trial court and thereupon, would be released on bail - Appeal allowed. Service Tax 2023 (7) TMI 467 Recovery of short paid duty aongwith education cess, interest and penalties - case of appellant is that SCN issued merely on the basis of audit objection without verifying the factual position and without seeking any clarification from the appellant - Booking of stands/displayed advertisement and sending the same to media - Outdoor and other advertisement sub-contracted by other advertising agencies - Design and production of advertisement - extended period of limitation. Advertising Agency Service - HELD THAT:- The appellant admittedly is registered with Service Tax Department under the category of Advertising Agency Services. They are regularly discharging their service tax liability and are filing their ST-3 returns. However, the discharge of liability is alleged as short for the reason that the entire taxable value has not been included while calculating the tax liability - there is no denial to the fact that the appellant is providing services to another service provider i.e. another advertising agency instead of providing said services directly to the client. This Tribunal also in the case of BHAVYA ENTERPRISES (ADVERTISERS) VERSUS COMMISSIONER OF C. EX., DELHI-III [ 2005 (5) TMI 649 - CESTAT NEW DELHI ] has held that activity of space selling in print media without being engaged in making of the advertisement, is not covered in the definition of advertisement agency, hence, is not liable for service tax - there is no cogent basis of confirming the allegations of short payment of service tax merely on the basis of difference in figures noticed by the audit team. The discharge of liability with respect to the commission retained by the appellant has already been acknowledged. Demand with respect to the advertisement under works contract - HELD THAT:- The adjudicating authority has nowhere denied the composite nature of certain contracts executed by the appellant. The composite work contracts were not liable to tax prior the concept came into existence in the year 2007 as has been held by Hon ble Supreme Court in the case of Commissioner of Central Excise Customs, Kerala Vs. M/s. Larsen Toubro Ltd. [ 2015 (8) TMI 749 - SUPREME COURT] - The entire period of demand herein is prior 1st July, 2007. Otherwise also, the adjudicating authority has no where denied the discharge of sales tax liability by the appellant with respect to the composite contracts. Confirmation of demand on this ground cannot sustain as on date and thus is liable to be set aside. Extended period of limitation - suppression of facts or not - HELD THAT:- The appellant was discharging the liability on the amount he was receiving as commission. Since the remaining other amount was passed over to the principal advertising agencies, the appellant was not liable to pay service tax on the said amount. The findings of adjudicating authority for including the said amount in the gross value of taxable service are already held liable to be set aside. It becomes clear that there is no short payment of tax by the appellant. The returns were otherwise being filed regularly - Resultantly, there remains nothing on record which may prove any positive act on part of the appellant to be called as an act of collusion or suppression of facts. The adjudicating authority has ignored the landmark decision of M/s. Larsen Toubro Ltd. Resultantly, it is held that extended period has wrongly been invoked by the department while issuing the show cause notice. Penalties - HELD THAT:- Tburden of proving the mala fide lies with the Revenue. When there is nothing on record which displays any wilful default on part of the assessee, no circumstance arises for imposition of penalty. The order under challenge is not sustainable - Appeal allowed. 2023 (7) TMI 439 Levy of service tax - Business Auxiliary Service (BAS) - receipt of commission / incentive from CRS companies (computer reservation service - Performance linked bonus (PLB) from the Airlines - HELD THAT:- There are no merit in the appeal - appeal dismissed. 2023 (7) TMI 438 Extended period of limitation - ample ground to allege suppression of facts with malafide intent or not - levy of penalties - HELD THAT:- Reliance placed in the decision of the Co-ordinate Bench of this Court in the case of THE COMMISSIONER OF SERVICE TAX, MUMBAI-VII COMMISSIONERATE, VERSUS M/S TATA TELESERVICES (MAHARASHTRA) LTD. [ 2023 (2) TMI 734 - BOMBAY HIGH COURT] whereby, on a similar question of law raised by the Revenue, this Court considering an earlier decision arising from the very same order did not entertain the Revenue s Appeal and which came to be dismissed on the ground that no substantial question of law had arisen for consideration in view of the prior pronouncement. Appeal dismissed. 2023 (7) TMI 437 Refund claim - export of services - Invoices pertained to two different quarters - Commissioner (Appeals) has taken the view that only one claim of Refund for every quarter should be made - HELD THAT:- From the above Provisions of N/N. 12/2013-ST dated 01/07/2013 and Explanations thereto, it is seen that the only condition imposed is that the Appellant should file one refund claim per quarter. This means that within the same quarter, the Appellant should not file more than one refund claim. This Notification nowhere mentions as to which of the Invoices pertaining to each quarter can be considered or not considered. Therefore, there is no condition about non-inclusion of the previous quarter invoices in the next quarter refund claim. In fact, this condition has been placed so that the assessee does not make more than one claim per quarter by resorting to monthly refund claims. There are no error in the Appellant filing the refund claim by adding the Invoices of the previous quarter which were not used for claiming the refund claim during the previous quarter. The other condition is that the refund claim shall be filed within one year from the end of the month in which actual payment of Service Tax was made by SEZ Unit. In the present Appeal, it is not the case of the Department that the Appellant has filed the Appeal after one year. In the case law of M/S SRF LIMITED VERSUS C.C.E. S.T. -LTU DELHI [ 2016 (12) TMI 1471 - CESTAT NEW DELHI] , the very issue was before the Tribunal which has held that Since Clause (f) is procedural in nature and the appellant in this case has complied with the statutory provisions of filing the refund application within one year from the date of payment of Service Tax to the service provider, in my opinion, rejection of refund claim of Rs. 4,64,114/- by the authorities below is not in conformity with the conditions laid down in Notification dated 1-7-2013. Since there is no violation of the conditions imposed under Notification No. 12/2013-S.T. dated 01/07/2013 and as the present issue is squarely covered by the decision of the Tribunal in the case of SRF, the impugned order is set aside - appeal allowed. 2023 (7) TMI 436 Levy of service tax - Consulting Engineer Services - place of provision of services - service recipient of the appellants, their registered premises, location of their business establishment, within taxable territory or not - Wrongful availment of Cenvat credit without support of input documents or not - extended period of limitation. Whether the appellant is liable to pay service tax on Consulting Engineer Services rendered by the appellant? - HELD THAT:-The perusal of responsibilities of Consultant Engineer and the defined role in the impugned agreement makes it clear that the scope of service of appellant in the given facts and circumstances was that of a Consulting Engineer for construction of a road in the territory of State of Jammu Kashmir. It is also clear beyond doubts that the consultant appellant had to visit the said site in non-taxable territory for providing the said services irrespective some consultation could be possible while being in his office situated in taxable territory. Hence, the findings of the Adjudicating Authority holding that the services provided by the appellant are in intangible in nature and have no relation to the immovable property of non-taxable territory are apparently wrong and, as such, are liable to be set aside. Taxable territory - HELD THAT:- The appellant as well as service recipient, though both have their Head Offices in taxable territory but the provision of service was outside the taxable territory i.e. in the State of J K. Hence the Department herein was not liable to charge the service tax qua the said provision of service. The adjudicating authority below is, therefore, held to have committed an error while rejecting the appeals. In the present case it is an admitted fact that the services provided by the appellants are towards the construction of a road meant for use by the general public - Thus the appellant is not liable to pay service tax for providing the Consulting Engineering Services as rendered to its clients for construction of road in State of J K - decided in favour of the appellant. Whether the appellants have wrongly availed the Cenvat credit without support of input documents and, as such, the same is recoverable from the appellants? - HELD THAT:- There is no denial to the fact that the appellants have availed the Cenvat credit on the basis of invoices. However, the reason for denying the availment is that the address mentioned on these invoices was not the registered premises of the appellant. Hence, the invoice was the improper documents in terms of Cenvat Credit Rules, 2004. There is no denial of the Department about the requisite price available on the invoices based whereupon the Cenvat credit has been availed by the appellant. Though the address mentioned thereupon is different from the registered address, but as apparent from show cause notice itself the appellant were found existing on the address mentioned in the invoice with explanation of the circumstances about shifting to the different address. Hence the objection about address is nothing but simply a procedural lapse. Substantial benefit of availment of Cenvat credit cannot be denied on the grounds of procedural lapse. Resultantly, Cenvat credit has been properly availed by the appellant based on the invoices. Where the extended period of limitation has wrongly been invoked while issuing the show cause notice? - HELD THAT:- The Adjudicating Authority has justified invocation of extended period of limitation on the ground that information regarding non-payment of service tax and regarding wrong full availment of Cenvat credit has genesis only after investigations of the Department without which such issues could not have been detected - once admittedly the returns were filed regularly by the appellant the Department cannot alleged suppression against the appellant/assessee. It is mandatory for them to bring on record a positive act of the to prove the alleged suppression that too with an intent to evade tax - Once it is not the case of suppression with an intent to evade tax and once the appellant is held not liable to pay the service tax in the given facts and circumstances, the department was not entitled to invoke the extended period of limitation. The question of imposition of penalty upon the appellants also does not at all arise. The Hon ble Supreme Court in another decision in the case of ANAND NISHIKAWA CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT [ 2005 (9) TMI 331 - SUPREME COURT] has held that when the facts were known to both the parties omission by one to do what he might have done not that he must have done, would not render it suppression unless and until there is some positive act from the side of assessee, willful suppression cannot be alleged - Suppression cannot be alleged in such circumstance and thus extended period cannot be invoked for issuing show cause notice - Issue decided in favor of appellant. Appeal allowed. 2023 (7) TMI 435 Classification of services - Transportation Service or Cargo Handling Service? - Transportation of Coal Services upto a distance of 200 km against various work orders - service rendered are essentially Transportation Service naturally bundled or the individual services in the contract can be vivisected to demand service tax or not - scope of SCN for demand of service tax under 'Cargo Handling Service' - validity of demand only based on the data received from Income tax department, without any corroborating evidence - extended period of limitation - penalties. HELD THAT:- The Ld. Commissioner has arrived at the conclusion that the Appellant has provided multiple services in the form of loading, unloading, handling, providing trucks, obtaining delivery orders obtaining mining permission etc. and hence the services provided are not mere transportation - It is observed that the contract is a composite contract primarily for the purpose of transportation of coal beyond 180 to 200 KM. The activities like loading, unloading, obtaining delivery orders etc are incidental or ancillary to the transportation service. The contract has not provided any separate charges for these activities. The composite contract cannot be vivisected to arrive at the value of service for each activity artificially. Relying on the Board Circulars Circular No. 104/07/2008-S.T. dated 06.08.2008 and Circular No. 186/5/2015-ST dated 05.10.2015, it is held that the contracts are essentially meant for transportation of goods and other activities are naturally bundled along with this this principal service. Once the services rendered are classified as Transportation Service, the liability of payment of service tax on these services was not on the Appellant, as the service recipients in all these cases are Companies registered under Companies Act, 1956/2003, and the liability to pay service tax is on the recipients of service as provided under Rule 2(1)(d)(i)(B) of the Service Tax Rules, 1994. Scope of SCN - Classification of the service rendered by the Appellant under the category of Cargo Handling Service - HELD THAT:- The Appellant was not providing any of the services mentioned above which fall under the category of 'Cargo Handling Agent Service'. Further, it is observed that there was no proposal in the Notice to categorize the service rendered by the Appellant as 'Cargo Handling Agent service'. In the impugned order, the adjudicating authority classified the services under the category of Cargo Handling agent Service' on his own. Thus, it is observed that the adjudicating authority has travelled beyond the scope of the Notice, which is legally not sustainable. Demand has been confirmed on the basis of the data received from Income Tax department - HELD THAT:- No effort was made by the department to ascertain whether the amount received by the Appellant was on account of rendering of any taxable service on which the Appellant was liable to pay service tax. There is no finding in the impugned order to this effect - It is observed that there is no new material evidence brought on record for raising the demand of service tax on the value mentioned in the records received from the Income Tax department. The demand cannot be raised merely on the basis of the data received from the Income Tax Department, without any corroborating evidence to substantiate that the value received were in connection with taxable service rendered by the Appellant. Extended period of limitation - Penalties - HELD THAT:- The Appellant stated that there is no suppression of fact involved in this case. The department itself was not clear under what category the service rendered by the Appellant was classifiable - the adjudicating authority himself has classified the service under different categories. Thus, there was no clarity on the classification of the service even within the department - there is no suppression of fact involved in this case. Consequently, extended period cannot be invoked to demand duty. On the same reason, penalties imposed in the impugned order are also not sustainable. Appeal allowed. 2023 (7) TMI 434 Classification of services - works contract services or not - benefit of the composition scheme issued by a notification dated 22.05.2007 - Validity of SCN - SCN did not even specify whether the services provided by the appellant would fall under the category of WCS or CICS - extended period of limitation - penalties. Validity of SCN - SCN did not even specify whether the services provided by the appellant would fall under the category of WCS or CICS - HELD THAT:- It is clear that the demand was proposed without specifying a particular taxable category in terms of section 65(105) of the Finance Act. The confirmation of demand on the basis of the aforesaid show cause notice, therefore, is not justified. In this connection reliance can be placed on the decision of the Delhi High Court in THE PRINCIPAL COMMISSIONER, SERVICE TAX, DELHI- VERSUS SHUBHAM ELECTRICALS [ 2016 (5) TMI 1055 - DELHI HIGH COURT] , wherein it was held As rightly pointed out by the CESTAT, the Department itself is unclear whether the service performed by the respondent was management, maintenance or repair service or Erection, Installation and Commissioning Services . This vagueness goes to root of the matter. Works contract service or not - HELD THAT:- On a perusal of sample work orders submitted by the appellant it also transpires that work orders include the charge supply of goods and fixing and finishing of tiles/granite/marbles by L T. The activity undertaken by the appellant, being composite in nature, shall, therefore, have to be classified as WCS for the reason that the Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] held that the composite contracts are rightly classifiable under work contract services . Whether the appellant has correctly availed the benefit of the composition scheme for discharging service tax liability on WCS for the period after 01.06.2007? - HELD THAT:- Mere non-intimation about the option for paying service tax under the composition scheme is a procedural lapse and substantial benefit cannot be denied. In this connection, it would be pertinent to refer the decision of the Tribunal in M/S. AREVA T D INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, CHENNAI [ 2021 (10) TMI 187 - CESTAT CHENNAI] , wherein it was held that non-intimation of availing the composition scheme is a condonable lapse and the payment of service tax under the composition scheme cannot be denied for WCS. Extended period of limitation - HELD THAT:- For the period 01.04.2007 to 30.09.2007 the demand is even beyond the period of 5 years. This amount comes to Rs. 73,321/-. For the period from 01.10.2007 to 25.10.2010 the demand is for the extended period of limitation. The demand for the period from 01.10.2010 to 31.03.2012 is within limitation. This demand comes to Rs. 09,07,352/- - Though much has been argued on behalf of the appellant that the extended period of limitation could not have been invoked in the facts and circumstances of the case, but it would not be necessary to decide this issue as the demand itself cannot be sustained. Appeal allowed. 2023 (7) TMI 433 Mismatch between Service Tax returns and financial statements of the Appellant company - demand of duty alongwith interest and penalties - HELD THAT:- As could be noticed from the miscellaneous application and its annexed documents, reconciliation statements were submitted vide letter dated 26.12.2014 and 17.05.2015 alongwith several documents and internal audit report was also submitted by the Assistant Commissioner of Service Tax, Division-II, Mumbai on dated 04.11.2016 to the Commissioner who passed the order on dated 15.11.2016 i.e. almost 12 days after receipt of the said report but neither he considered the reports nor given a chance of hearing to the Appellant to examine the reports received by him through an internal enquiry. There is also a comparative analysis made in a tabular form by the Appellant and produced here that speaks about the gist of findings available in the internal report and the observations made by the Commissioner in his impugned order on each and every disputed points. Prima facie it appears that there is substance in the contention made by the Appellant that internal examination report, called for and received by the Commissioner, was favouring the stand taken by the Appellant but without delving into detail of each aspects dealt in the report and attempting to compare the same, that would mount to conducting further enquiry at the Appellate stage, it is considered appropriate to remand the matter back for re-adjudication as Appellant was not provided with an opportunity to defend its case - appeal allowed by way of remand. 2023 (7) TMI 432 Refund claim - rejection on the ground that the invoice of service is not in the name of the appellant whereas the same is in the name of CHA - applicability of N/N. 41/2012 - HELD THAT:- The CHA was appointed by the appellant as their Custom House agent who acts on behalf of the appellant, therefore as authorized person of the appellant, when CHA arranges the service provider for and on behalf of the appellant it cannot be said that the service is not received by the appellant. It is obvious that when the CHA deals with the other service providers whose services are used exclusively for the exporter, in the present case appellant, the invoices of such service providers at times are issued in favor of the CHA subsequently the CHA though bear the service charges but collect the reimbursement from the appellant. From the invoice it can be seen that, in the service provider s invoice that is issued by M/s Indev Logistics Pvt. Ltd. the name of appellant is appearing as shipper name and in the corresponding invoice of the 4 Star Enterprises which is the appellant s CHA is showing the exact amount of M/s Indev Logistics Pvt. Ltd. therefore the proper co-relation has been established. Considering both the invoices it is established that the service provider M/s Indev Logistics Pvt. Ltd. has provided services to the appellant M/S Khushi Enterprise. In this fact the service tax paid in respect of the services received and used for export of goods is clearly refundable to the appellant. In the case of COMMR. OF C. EX., MYSORE VERSUS CHAMUNDI TEXTILES (SILK MILLS) LTD. [ 2010 (4) TMI 450 - CESTAT, BANGALORE] the tribunal held that even though a document is in the name of another entity but on account of assessee credit cannot be denied on such document. Considering this decision in the case of refund also even though the invoice was raised to the agent of the appellant the refund cannot be rejected as invoice raised to the agent is as good as invoice raised to the appellant being the principle. Denial of refund on pre-shipment inspection holding that the same is not input service - HELD THAT:- All the services which are used for export of goods are input services for the purpose of refund under notification No. 41/2012-ST and there is no dispute that the pre-shipment inspection is indeed used in respect of the appellant s export goods - the appellant are entitled for the refund under notification No. 41/2012-ST. Appeal allowed. 2023 (7) TMI 431 Levy of penalty - entire service tax dues along with interest deposited before issue of the show cause notice - suppression of facts or not - HELD THAT:- The appellant voluntarily paid their entire service tax liability with interest thereon and reported such payments in their periodic returns filed. It is also observed that the Appellant has been in correspondence with the department about their liability of service tax on mining service. When a clarification was issued, they have voluntarily paid the service tax along with interest. Thus, there is no suppression or mis-representation of facts involved in this case. As per the provisions of Section 73(3) of the Finance Ac 1994, the Show Cause Notice should not have been issued to the appellant in the present case - This view has also been clarified by the Board in its Circular F.No. 137/46/2015-Service Tax dated 18.08.2015. The penalty under section 78 of the Finance Act is not imposable in this case. No penalty imposable under section 77 also, as the Appellant has taken registration and filed periodical returns regularly - appeal allowed. Central Excise 2023 (7) TMI 430 Recovery of the amount equal to 6% of sale value of Bagasse, Press mud, boiler ash and Sludge - Rule 6(3) of the Cenvat Credit Rules, 2004 alongwith interest and penalty - HELD THAT:- An identical issue had arisen in the matter of PURNA SAHAKARI SAKHAR KARKHANA LTD. VERSUS COMMISSIONER OF CGST C. EXCISE, AURANGABAD [ 2022 (12) TMI 6 - CESTAT MUMBAI] Mumbai in which this Tribunal allowed the appeal filed by the assessee therein - It was held that These are by-products only and merely emerge as waste or residue while manufacturing sugar and molasses from sugar cane. None of the by-products falls within the definition of manufacture and in its absence nothing can be demanded from the appellant. It is not the case anywhere that after the amendment on 1.3.2015 by-products/ waste/residue have been included in the definition of manufacture and therefore in my view the provisions of amended Rule 6(3) or Rule 6(2) ibid has no application and resultantly the demand raised by the revenue cannot sustain. The pressmud, bagasse, boiler ash and sludge which emerged as waste or byproduct, fall outside the purview of Rule 6 ibid. Accordingly the impugned order is set aside and the Appeal filed by the Appellant is allowed. 2023 (7) TMI 429 Extended period of limitation - demand of differential duty for the period from April 2007 to January 2009 and April 2011 to September 2011 - short and excess payment of duty - allegation is that the assessable value adopted for payment of duty on rough castings is not based on 110% of the cost of production arrived at based on CAS-4 statement as certified by Chartered Accountant - CENVAT credit on the excess duty paid by Unit II. HELD THAT:- It is an undisputed fact that for the same reason of not adopting assessable value as per CAS-4 there is indeed excess payment of duty. It can be seen that for the periods 2007-08, 2008-09, and 2011-12 there is short payment of duty. There is excess payment of duty during the periods 2008-09, 2009-10, 2010-11, 2011-12 2012-13. During conduct of audit in July 2008, the non-payment of duty was noted by the audit party. In August 2008 itself, the appellant has written a letter to the department requesting to clarify in regard to the quantification of short payment of duty. Ld. Counsel has submitted that the audit party had informed them to pay the differential duty which was calculated on the basis of cost of production of the company as a whole including Unit I II. Further a letter dated 21.1.2008 was issued to the department. Appellant has also furnished all the details as and when requested by department. However, the show cause notice has been issued only on 2.5.2012 invoking the extended period of limitation alleging that the appellant has suppressed facts with intention to evade payment of duty. It has to be noted that appellant has paid excess duty for certain periods. This being so, it cannot be alleged that there is any deliberate act on the part of the appellant to suppress facts with intent to evade payment of duty. Further, the entire situation is revenue-neutral as Unit I would be able to take credit of the duty paid by Unit II. The Hon ble Supreme Court in the case of NIRLON LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2015 (5) TMI 101 - SUPREME COURT] had occasion to consider a similar issue and it was held that The question is about the intention, namely, whether it was done with bona fide belief or there was some mala fide intentions in doing so. It is here we agree with the contention of the learned Senior Counsel for the appellant, in the circumstances which are explained by him and recorded above. It is stated at the cost of repetition that when the entire exercise was revenue neutral, the appellant could not have achieved any purpose to evade the duty. From the ratio laid down by the above judgement, there are no hesitation to conclude that the facts present is a revenue-neutral situation and therefore the demand invoking extended period cannot sustain and requires to be set aside. The demand for the normal period is sustained. The appellant succeeds on the ground of limitation. Denial of cenvat credit - It is alleged by the original authority that the appellant is not eligible to take credit on the excess duty paid by Unit II - HELD THAT:- The excess duty happened to be paid because of the same reasons of short payment of duty. When the duty has been paid by Unit II as per the invoices, the credit cannot be denied to the receiving unit. Further in the appellant s own case for different periods, subsequently, the Commissioner (Appeals) has held the issue in favour of the appellant and held hat credit is eligible. For these reasons, the denial of credit cannot sustain and requires to be set aside. Appeal allowed. 2023 (7) TMI 428 Exemption to parts of Wind Mills / Wind Operated Electricity Generators (WOEG) under Notification No.12/2012-CE dated 17.03.2012 - Aluminium structures and fabricated items used as towers are integral part of Wind Turbines or Wind Operated Electricity Generators (WOEG) or not - denial of benefit on the ground that such goods are general purpose equipment and are not specific parts of the WOEG. HELD THAT:- The details of the goods manufactured and how these form part of the WOEG is also explained by the write up as well as the image furnished above. Though the adjudicating authority has considered the details submitted by the appellant, has concluded that these items are general purpose equipment and therefore exemption cannot be granted. The very same issue has been settled by the Larger Bench in the case of RAKHOH ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2016 (11) TMI 1207 - CESTAT MUMBAI] where it was held that anchor rings consists of large rings with long bolts attached to it etc. as parts of tower specially designed for WOEG and are eligible for exemption under Notification NO.6/2006 dated 1.3.2006. The said Larger Bench decision has been affirmed by the Hon ble Supreme Court. Recently, the Tribunal in the case of M/S. RRB ENERGY LTD. VERSUS COMMISSIONER OF CUSTOMS (SEAPORT-IMPORT) , CHENNAI [ 2023 (3) TMI 754 - CESTAT CHENNAI] had analysed the very same issue and held that the assessee is eligible for exemption. The goods are eligible for exemption. The impugned order is set aside. Appeal is allowed. 2023 (7) TMI 427 Extended period of limitation - CENVAT Credit - appellant are not the manufacturers of the final product TGT plant demand on the ground that the fact regarding assembling/manufacture of TGT - Plant by Thermax Ltd. came to the knowledge of department only at the time of audit by department, which would otherwise have escaped attention - HELD THAT:- The respondent had availed credit on goods mentioned in the invoices provided by the contractor to the respondent. The goods on which such credit was taken are components, spares and/or accessories of goods classifiable under chapter 84, 85 or 90 of the First Schedule to the Central Excise Tariff Act, 1985. It is not disputed that the component/parts of TGT plant were received in the factory premises of the respondent under duty paid invoices which was in the name of the respondent. Admittedly, the TGT plant was manufactured out of such parts/spares/components and such plant was used in the manufacture of the dutiable final product. There is no dispute that machineries/components received at the factory of the respondent on which the credit has been availed are indeed capital goods in terms of Rule 2(a) of the CENVAT Credit Rules as is evident from the fact that the credit arrangement has been restricted in the impugned show cause notice to 50% in each year. The Tribunal in several earlier decisions has held that the prerequisite for availment of CENVAT credit in respect of capital goods in the factory of manufacturer is its receipt in the factory and use in the manufacture of dutiable final product. The Tribunal in a similar factual matrix in the case of GUJARAT AMBUJA CEMENTS LTD. VERSUS COMMISSIONER OF C. EX., CHANDIGARH [ 2000 (8) TMI 178 - CEGAT, NEW DELHI ], held that they are eligible to the benefit of Modvat credit on parts, components and accessories of DG sets in terms of the provisions of Rule 57-T(7) of the Central Excise Rules, we do not deem it necessary to pronounce upon the other submissions of the appellants. The impugned order is restored - Appeal dismissed. 2023 (7) TMI 426 100% EOU - inclusion of CIF value - contravention of conditions of Notification No.2/95 dt. 04.01.1995 read with EXIM Policy 1997-2002 in as much as they had furnished incorrect details to MEPZ and obtained approval for clearance of goods to DTA sales - value of goods procured indigenously need to be included in the assessable value or not - time limitation - HELD THAT:- The Hon ble Supreme Court in the case of COSMIC DYE CHEMICAL VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [ 1994 (9) TMI 86 - SUPREME COURT] held that the word suppression of facts is qualified by the word wilfull and therefore there should be intent to evade payment of duty. In the case of M/S CONTINENTAL FOUNDATION JOINT VENTURE SHOLDING, NATHPA HP VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I [ 2007 (8) TMI 11 - SUPREME COURT] , it was held that mere omission to give correct information is not suppression of facts unless it was deliberate to stop payment of duty. After appreciating the facts and applying the above Apex Court decisions, the demand is time barred. The demand raised invoking the extended period cannot sustain and requires to be set aside - Appeal is allowed on the ground of limitation. 2023 (7) TMI 425 Clandestine Removal - demand on account of the electricity consumption without any corroborative evidence whatsoever in any form - corroborative evidence or not - HELD THAT:- There is nothing to indicate that the Appellant has given this as the figure for the normal production in other months. Therefore, there is no basis to adopt this formula to arrive at the alleged clandestine production. The Electricity Bill cannot be exactly co-related with the monthly production in the factory. Apart from this, it is observed from ER-1 Returns that the quantities manufactured in other months have been cleared in the months where the production is shown as Nil - The Audit has failed to take note that the stock can always be sold in the next month. Further, the entire consumption of Electricity unit will not directly result in the finished products. The product will be at several stages as initial product, semi finished product, finished product etc. All these facts have been ignored in their over enthusiasm by Audit to fasten the case on the Appellant. From the Recorded statements, it is seen that the Authorized Signatory has stated the facts and is not any form of any confessional recording about any clandestine manufacture or clearances. After going through these factual details it emerges that the only base on which the demand has been confirmed, is on account of the electricity consumption without any corroborative evidence whatsoever in any form. In the case of M/S UNION ENTERPRISES ANOTHER VERSUS UNION OF INDIA OTHERS [ 2014 (5) TMI 93 - CALCUTTA HIGH COURT] , the Hon ble Kolkata High Court has considered the Allahabad High Court s decision in the case of R. A. Casting on similar issue held that mere excess consumption of electricity without any corroborative evidence relating to the purchase of the raw material, conversion of the raw material into a final products and clearance from the manufacturing unit to the respective buyers are produced does not raise presumption of evading the duty. As per the factual matrix, since the Department has relied on the Electricity consumption alone without any corroborative evidence whatsoever, the decision of the Hon ble High Courts are squarely applicable. Appeal allowed. 2023 (7) TMI 424 Clandestine Removal - melting scrap - excess input output ratio - shortage of finished goods - Cenvat credit on pig iron - receipt of only the invoices and not the physical goods which has been diverted. Clearance of melting scrap clandestinely without payment of duty of Rs.1,62,697.00/- - HELD THAT:- The appellant has conceded the said demand of Rs.1,62,692/- stating that the said clearance may be negligible and in such a big plant, therefore, to buy peace they are admitting the said demand and paid the duty. Therefore, the above said demand is confirmed. Demand of shortage of finished goods of Rs.10,82,271/- - HELD THAT:- Although it is claimed that stock verification was done physically in the presence of the offices of the assessees, but it is very strange that such a huge quantity of 6189.32 MT be weighed with a short span of time of 10.30 hrs. which is next to impossible and in such a big plant, negligible quantity of shortages were found as per recorded stock and physical stock as claimed. Therefore, the shortage ascertained during the course of stock-taking are on the basis of assumption and presumption. The same is not sustainable. As in this case it is claimed that physical stock taking has been done, but which is next to impossible to weighment of such a huge quantity in 10.30 hrs. without deployment of excess labour and transporting vehicles and the shortage is also of the negligible quantity of their production, in that circumstances, we hold that the shortages of finished goods are calculated on the basis of assumption and presumption. In the absence of any documentary evidences, therefore, relying on the above cited decision of this Tribunal, which has been affirmed by the Hon ble High Court, the demand of Rs.10,82,271/- confirmed against the assessee is set aside. Denial of Cenvat credit of Rs.19,71,832/- - HELD THAT:- It is found that out of 36 consignments, 9 consignments were having container numbers and rest of the consignments are not having container number which clearly shows that those consignments were not transported by way of container and if the statement of Shri Satya Narayan Dey is found to be correct, in that circumstances, the Cenvat credit can be denied at the most of the 9 consignments mentioned therein. To buy peace, the assessee has already reversed the Cenvat credit pertained to these 9 consignments. Therefore, as same is not disputed by the assessee, the Cenvat credit pertaining to these 9 consignments are denied. The revenue has not come up with any evidence to show that the assessee has procured pig iron from illicit means which has gone in manufacture of sponge iron or have been procured by the assessee from some other means. In the absence of the same, Cenvat credit cannot be denied as held by the Hon ble Punjab Haryana High Court in the case of COMMISSIONER VERSUS SHAKTI ROLL COLD STRIPS PVT. LTD. [ 2009 (8) TMI 1125 - SC ORDER] , wherein the Hon ble High Court has observed The Tribunal has also noted that the findings of the Commissioner clearly established that RT-12 returns have been assessed finally by the Range Officer which contains all the documents including the invoices under dispute on the basis of which the Modvat Credit has been availed and utilised and that payments for the purchase of the inputs have been made through cheque/demand draft. Thus, the Cenvat credit cannot be denied to the appellant in the facts and circumstances of the case, but cenvat credit on 9 consignments admitted by the assessee is denied. Demand of Rs.6,48,48,644/- on account of input output ratio - HELD THAT:- There is no statutory obligation under the Central Excise Act, 1944 and the Rules framed thereunder to maintain standard norms of production in respect of an assessee liable to pay Central Excise duty under Section 3 of the said Act - There is nothing on record that the assesses herein have ever declared input-output ratio to the Central Excise authority during the material period. While computing the input-output ratio of 1.50:1, figures recorded in respect of assessee No.1 during the period of 2004-05 and 2005-06 recorded have been taken into account. The assessee No.1 and assessee No.2 are two distinctly separate units, and also separately registered. It is not on record that in order to calculate the input-output ratio, Iron Ore consumed and sponge iron produced by the assessee No.2 during the year 2004-05 and 2005-06, as considered in case of assessee No.1, have all been considered - the assessee No.2, being a separate legal entity, inputoutput ratio 1.50:1, as worked out on the basis of figures recorded in case of assessee No.1, cannot be made applicable to work out quantum of production of sponge iron during the material period of demand. The said input-output ratio cannot remain fixed due to variable factors prevailed in the character of all the constituent raw material, especially, that of Iron Ore, largely due to variation in Fe(T) of the Iron Ore. As Fe(T) content in the Iron Ore varies, standard norms cannot be achieved ad production of Iron Ore. As Fe(T) content in the Iron Ore varies, standard norms cannot be achieved and production of Iron Ore worked out on the basis of such input-output ratio cannot be considered as actual production but estimated one - the Ld.Adjudicating authority has rightly dropped the demand on the basis of input output ratio. Also, no penalty is imposable on the assessee. Appeal disposed off. 2023 (7) TMI 423 CENVAT Credit - Goods sent for Job-work - damaged/broken bottles were not reused or manufactured of the bottles and same were sold as scrap on payment of duty on nominal value - cenvat credit availed and utilized on the basis of the duty paid without clearance of any goods is in violation to provision Rule 3 (1) of Cenvat Credit Rules, 2004 - Revenue neutrality - time limitation - HELD THAT:- The provision of the section 3 of the central excise act 1944 read with Rule 4 and Rule 8 of the central excise rules 2002 a manufacture assessee is required to pay central excise duty on the goods manufactured and cleared by him. From the facts as appear, it appears that the goods namely waste and scrap which got generated along with the finished goods have been cleared separately on nominal price to various traders and therefore the invoices issued by the appellant themselves for making the balance of the finished goods compare with the total quantity manufactured by them was primarily without any basis i.e. no goods no goods finished or waste or scrap were actually available against the invoices issued by them on which central excise duty was paid - the manufacturer or provider of the output service is entitled to take credit of central excise duty paid by them on any input or capital goods received in the factory of manufacturer of final product or by the provider of the out service and any input service received by the manufacturer of final product or by the provider of the output service. The entire transaction on basis of which the cenvat credit has been availed by the appellant is only on paper. Firstly, the goods which are purported to be shown as cleared have not been cleared and invoices were issued on which central excise duty has been shown as paid. The products which have been mentioned on the invoices is primarily a finished goods of the appellant and therefore otherwise also cannot be an input for manufacturer of the finished product - the cenvat credit availed by the appellant on the basis of their own invoices is not permissible as per the provisions of the law and therefore, the finding given in the impugned orders agreed upon, which are here in appeal and therefore the cenvat credit availed by the appellant denied on the basis of invoices issued in their own name for finished goods which otherwise cannot be an input for them. Revenue Neutrality - HELD THAT:- The revenue neutrality being a question of fact and apparently they should not be foul. The facts of the matter does not absolved the appellant of consciously by passing the law and working with their own whims and convenience. Time Limitation - HELD THAT:- The appellant has availed cenvat credit as per their own convenience which otherwise not as per the provisions of Rule 3 of Cenvat Credit Rules, 2004. It was only during the course of audit from the record of the appellant that the department came to know the practice being followed by the assessee. In view of this, the provisions of invoking extended time period is justifiable on the part of the department. Appeal dismissed. CST, VAT & Sales Tax 2023 (7) TMI 422 Stay of demand / Waiver of pre-deposit - Revision of assessment order - Direction to petitioner to pay further 25% of the disputed tax in addition to the amount already paid by the petitioner at the time of filing the appeal - HELD THAT:- At the time of filing the appeal itself, the petitioner has paid 25% of the disputed tax. By way of this impugned order, the first respondent insisted the petitioner to pay further 25% of the disputed tax. The appeal was filed in the year 2019 and it is yet to be disposed for want of written submission from the third respondent. The impugned order of the first respondent is set aside, with a direction to the first respondent to dispose of the appeal within a period of six weeks from the date of receipt of a copy of this order - Petition allowed. Indian Laws 2023 (7) TMI 421 Deduction of 10% of the amount awarded to the award-holder as TDS and payment of the balance amount to the award-holder - award-debtor, being the Union of India represented by the Chief Engineer, Metro Railway - HELD THAT:- In All India Reporter Ltd. vs. Ramchandra D. Datar [ 1960 (11) TMI 21 - SUPREME COURT ], the Supreme Court decided the question of whether the amount decreed in favour of the respondent would attract the statutory liability under the Income Tax Act. In the facts of that case, the respondent Ramchandra D. Datar, had filed a Civil Suit in the Court of the 5th Additional District Judge, Nagpur, for a decree of Rs. 1,30,000/- as compensation for wrongful termination of employment, arrears of salary and interest. The Court passed a decree on 17th July, 1953 for Rs. 42,359/- which included compensation for termination, salary and costs. The respondent applied for execution of the decree. The Income Tax Officer, Nagpur, served a notice under the Indian Income Tax Act upon the respondent that the appellant company be permitted to deduct tax at source and to pay Rs. 15,956/- as income tax, surcharge and super tax on the sum of Rs. 50,972/- awarded to the respondent into Government Treasury. The executing Court directed the appellant to pay the amount to the Income Tax Department and to pay the balance amount to the respondent. The High Court of Judicature at Nagpur reversed the order of the District Judge and the appellant company approached the Supreme Court - The Supreme Court held that the judgment-debtor cannot satisfy the claim of a third party against the judgment-creditor and pay only the balance to the latter in the absence of a direction in the decree to that effect. The Supreme Court further held that there is nothing in the Income Tax Act, as it then stood, which permits the debtor to deduct income tax which may become due and payable by the judgment-creditor. The dictum in All India Reporter was reiterated by a Division Bench of this Court in S.S. Miranda Ltd. vs. Shyam Bahadur Singh [ 1984 (8) TMI 62 - CALCUTTA HIGH COURT] where the Court went a step further and directed that the appellant, which had deducted TDS, would be at liberty to take steps for recovery of the amount from Income Tax Authority in accordance with law The action of the award-debtor Metro Railway in deducting 10% from the awarded amount of Rs. 3.88 crores as TDS and paying the balance amount of Rs. 3.50 crores to the petitioner/award-holder is hence contrary to the settled position of law. The award-debtor s reliance on the Notification dated 5th March, 2008 is also contrary to law and the award-debtor cannot seek recourse to the same for depriving the petitioner of the balance amount of approximately Rs. 38 lacs. Application is accordingly disposed of by directing the award-debtor Union of India/Metro Railway to make payment of the balance amount of Rs. 38,98,848/- (Rs. 3,88,98,848 - Rs. 3.50 crores) to the award-holder within three weeks from date. This direction is also in terms of the recording in the order passed by the Court on 20th April, 2023.
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