Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 18, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Cancellation of petitioner's registration - vague SCN - The particulars such as designation and office of the issuing authority are also not mentioned in the show-cause notice - these defects themselves are sufficient to strike down the notice at the threshold. - Further, this is not the first occasion where these type of show-cause notices are being issued by the concerned authorities without clearly mentioning the reason for issuing such notice and without mentioning the particulars of issuing authority. - GST registration restored - HC
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Validity of Criminal proceedings whereas the complain case has already been quashed - Allegation of irregular input tax credit (ITC) availed - As the basis of filing the complaint case has already quashed, to allow the criminal proceeding to continue will amount the abuse of process of law. - Proceedings quashed - HC
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Grant of Interim Bail - discrepancies in the Input Tax Credit - It is settled principle of law that the object of bail is to secure the attendance of the accused at the trial. No material particulars or circumstances suggestive of the applicant fleeing from justice or thwarting the course of justice or creating other troubles in the shape of repeating offences or intimidating witnesses - Bail granted subject to conditions - HC
Income Tax
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Characterization of income - Determine the nature of interest income earned - mere fact that the deposits were linked with projects would not alter the character of the income after the business has been set-up - The terms of the project may require the assessee to make fixed deposits but the same could not alter the Tax treatment of the interest income so earned by the assessee. - it was pure and simple interest on deposits which had to be considered as ‘income from other sources’ only. - AT
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Revision u/s 263 - claiming business expenditure while claiming standard deduction in the rental income - No doubt assessee has claimed the voluntary expenditure under the head income from business. - However, the relevant expenditure was voluntarily disallowed while computing the income from business and the expenditures which are relevant for the business expenditure were claimed. - Revision proceedings not valid - AT
Customs
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Levy of penalty u/s 112(a) of Customs Act - vicarious liability of appellant / Pre-Shipment Inspection Agency - Nothing has been brought on record as to show, how due diligence on the part of the employer (located miles away, from employee) is lacking, specially when it has prescribed percentage checks provided radiation detecting equipments as has been indicated by the investigation and also employed qualified persons - Penalty waived - AT
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Confiscation - Export of prohibited goods or not - woollen shawls of Pashmina wool - the admitted fact is that the consignment of 59 shawls was found to have 53 Pashmina Shawls and six Shawls were detained on the basis of mere suspicion - no cogent verification has been arrived at to confirm the said suspicion. The prosecution is nothing but an outcome of presumption and surmises. - Order of confiscation, fine and penalty set aside - AT
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Demand of duty (CVD & SAD) foregone at the time of import - The quantity of imported Sulphur, which was not used in manufacture of fertilizer - the said clearances of Sulphuric Acid were made under the cover of excise invoices, on payment of appropriate central excise duty and duly mentioned in the ER-1 returns filed and other Central Excise records which have been audited by the department at periodical intervals. In such a situation, no charge of suppression or willful mis-statement and fraud etc., can be alleged against the Appellant - the extended period of limitation cannot be invoked in this case. Hence, the duty demand has to be limited only to the normal period of limitation. - AT
Corporate Law
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Scheme of Rearrangement - demerger/transfer of business - the Demerged Company RPPMSL is a wholly-owned subsidiary of the Appellant Company RIL - Requirement of getting consent from creditors and shareholders - Discretionary power of NCLT - Following the decision of High Court and NCLAT, the convening and holding of meetings of Equity Shareholders, Secured and Unsecured Creditors of the Appellant Company RIL is dispensed with - AT
IBC
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Initiation of CIRP - NCLT returned the application of the Financial Creditor instead of adjudicating on the Company petition - the Appellant has issued a demand notice which contained cumulative demand of all the three loan amounts. In the given factual matrix, the Adjudicating Authority is required to notice as to whether the application is complete or not and if there is a debt and the Corporate Debtor has defaulted in the payment, whether the amount so defaulted is more than the threshold limit of Rs. 1 lakh. - NCLT directed to consider the application - AT
Service Tax
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Extended period of limitation - manpower recruitment or supply agency service - separate employment contract with foreign expatriates - even if it were to be assumed that the appellant had received manpower supply services, the fact remains that the whole of the activities were within the knowledge of the Revenue / officials of the Department and hence, there is no scope whatsoever to allege suppression of any facts - the issue, therefore, involved classification and interpretation of taxing statute, for which reason also suppression of facts could not be alleged. - Demand confirmed for the normal period only - AT
Central Excise
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Seeking condonation of delay in filing appeal - Tribunal found that the appellant had abused its process - In our view, the appellant has got away very lightly with the imposition of costs of Rs. 10.00 Lakhs. In fact, it was a fit case for initiation of proceedings for perjury against the appellant. However, since the Tribunal has chosen not to take steps, we say no further in that regard. - HC
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Extended period of limitation - The fallacious approach adopted by the Appellate Tribunal, though the consideration as to revenue neutrality and exemption under the relevant notifications become irrelevant upon it being noticed that the show-cause notice issued in the year 2008 could not have related to a period of more than one year prior to the date of its issuance since there was no element of deceit or intention on the part of the assessee to evade duty nor had any case in such regard been made out - HC
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Reversal of credit at the time of transfer of capital goods - Determination of Depreciated value for reversal of Credit - The reference to depreciation under the Income Tax Act in Rule 4(4) is in an entirely different context and has no application as urged by the Appellant. This condition has to be seen solely in the context of availment of CENVAT credit only and has no bearing on the valuation of the goods. - HC
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CENVAT Credit - works contract service or not - The specific disallowance of availment of Cenvat credit with respect to such construction/erection, installation and commission, services which are with respect to the new construction if undertaken by the assessee, however, there is no such specific disallowance in Rule 2 (i) of CCR, 2004 with respect to repair and maintenance work of the premises of the manufacturer. - AT
VAT
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Classification of goods - 150 HP Fully Automatic ATS (Auto-Transformer Starter) Control Panel, Motor Starter Panel Board and other Control Panel - the commodities, i.e., 150 HP Fully Automatic ATS (Auto-Transformer Starter) Control Panel, Motor Starter Panel Board and other Control Panel is comprehended in the term “accessories” - HC
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Valuation - Inclusion of Mandi Fees/ Mandi Shulk into the Sale Price for calculation of VAT - The expression ‘any other duty or tax’, is clearly broad enough to include the Mandi Shulk, which is nothing but a duty which the dealer is statutorily entitled to recover from the purchaser. Merely because it is statutorily recoverable by the dealer from the purchaser, it does not cease to be ‘any other duty’ within the meaning of ‘sale price’ defined in Section 2(42) of the Uttarakhand VAT Act. - Demand confirmed - HC
Case Laws:
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GST
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2023 (7) TMI 656
Cancellation of petitioner's registration - vague SCN - opportunity of hearing not provided - violation of principles of natural justice - HELD THAT:- The reason shown in SCN requires no further emphasis as it is vague and delphic and therefore, show-cause notice gives no scope for the petitioner to give an affective reply. Still, the petitioner submitted his explanation/objections on 20.06.2023 giving certain details therein, which in our view need not be discussed at length as the show-cause notice itself suffers the vice of obscurity. That apart, the particulars such as designation and office of the issuing authority are also not mentioned in the show-cause notice - these defects themselves are sufficient to strike down the notice at the threshold. It is also constraining to hold that this is not the first occasion where these type of show-cause notices are being issued by the concerned authorities without clearly mentioning the reason for issuing such notice and without mentioning the particulars of issuing authority. The impugned show-cause notice is set aside and consequently, the registration of the petitioner is restored with immediate effect - petition allowed.
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2023 (7) TMI 655
Validity of Criminal proceedings whereas the complain case has already been quashed - Allegation of irregular input tax credit (ITC) availed - revisional authority without passing the order under section 108 of the JGST Act, 2017 had just returned the revision applications filed by the respective petitioners - HELD THAT:- The Court finds that the basis of filing of the complaint case has already been quashed by the Division Bench of this Court and the matter has been remitted back to the concerned authority to pass afresh order. As the basis of filing the complaint case has already quashed, to allow the criminal proceeding to continue will amount the abuse of process of law. Petition allowed.
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2023 (7) TMI 654
Maintainability of petition - availability of efficacious remedy for filing appeal u/s 107 of theJammu and Kashmir Goods and Service Tax Act, 2017 - Seeking waiver of penalty under Section 129(1)(A) of the Act - HELD THAT:- Since the remedy is available to the petitioner under Section 107 of the Act, therefore, this petition need not be entertained and accordingly, the same is dismissed. The petitioner shall be at liberty to avail the appropriate remedy available to him in terms of the provisions admissible to the field. On receipt of the appeal, to be filed by the petitioner herein, the appropriate authority shall consider the same at the earliest having regard to Section 129 of the Jammu and Kashmir Goods and Service Tax Act, 2017. Petition dismissed.
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2023 (7) TMI 653
Grant of Interim Bail - discrepancies in the Input Tax Credit - no proof with regard to any realization of the tax credit on the basis of forged documents - HELD THAT:- The principle that Bail is a rule and Jail is an exception has been well recognised by Apex Court more specifically on the touch stone of Article 21 of the Constitution. The said principle has been reiterated by the Apex Court in Satyendra Kumar Antil Vs Central Bureau of Investigation and another [ 2022 (8) TMI 152 - SUPREME COURT ]. Learned counsel for the opposite party no.2 has not shown any exceptional circumstances which would warrant denial of bail to the Applicant. No material, facts or circumstances has been shown by learned counsel for the opposite party no.2 that the accused may tamper with the evidence or witnesses or the accused is of such character that his mere presence at large would intimidate the witnesses or that accused will use his liberty to subvert justice or tamper with the evidence - It is settled principle of law that the object of bail is to secure the attendance of the accused at the trial. No material particulars or circumstances suggestive of the applicant fleeing from justice or thwarting the course of justice or creating other troubles in the shape of repeating offences or intimidating witnesses and the like have been shown by learned counsel for the opposite party no.2. Considering the facts and circumstances of the case, nature of offence, evidence, complicity of the accused, submissions of learned counsel for the parties and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. The bail application is allowed subject to conditions imposed.
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2023 (7) TMI 643
Rejection of refund claim - petitioner not replied to SCN - opportunity of hearing not provided to petitioner - violation of principles of natural justice - HELD THAT:- It is known fact that from 23rd March 2020 onwards, there was a total disruption of the normal human activities as also of every economic activity world over, on account of the pandemic. The whole world had virtually come to a stand still. It is, however, surprising that the show cause notice was issued during the pandemic that is on 30th September 2020, certainly it could not be expected that the Petitioner could immediately reply to the same. Thus, the reason as furnished for extension of time to file a reply to the show cause notice by the Petitioner on account of pandemic was a sufficient reason. The Respondent No. 2, in these circumstances, ought to have given a reasonable time for the Petitioner to file its reply, however, Respondent No. 2 gave only three days to file the reply, which cannot be termed on the facts of the present case any reasonable time or an adequate opportunity of a hearing - This application of the Petitioner has not been rejected by Respondent No. 2 and, therefore, Respondent No. 2 cannot be said to have given adequate opportunity of hearing to the Petitioner to reply to the show cause notice. The impugned order is required to be set aside on account of violation of principle of natural justice - Petition allowed.
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Income Tax
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2023 (7) TMI 652
Reopening of assessment u/s 147 - Reasons to believe - cash deposited unexplained - HELD THAT:- No merit in the contention of the assessee that the reopening is illegal and is not based upon the reasons recorded by the Assessing Authority. Undisputedly, additions are made on the basis of cash deposited by the assessee and the assessee has failed to point out where the AO did not consider the facts available at the time of reopening of the assessment. Therefore, ground of the assessee s appeal are dismissed. Addition of unexplained cash deposits - The assessee also filed affidavit of said Shri Duli Chand wherein he has admitted that he had received Rs. 15 lakh as advance in lieu of agreement to sell his land which he had given to the assessee for purchase of land. The stand of the assessee is that the sum received from Shri Duli Chand for propose sale of land was deposited by him in his bank account and since the deal could not be materialized the same was returned back to Shri Duli Chand - the averments made in the affidavit of Shri Duli Chand could not be rebutted by the Revenue - Decided in favour of assessee.
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2023 (7) TMI 651
Modification of assessment order by CIT(A) - Addition of remission of liabilities u/s 41(1) rather than sec 68 - CIT(A) sustained the impugned addition by invoking the provision of section 41(1) without giving any notice to the assessee - HELD THAT:- As per section 251(1)(a), Ld.CIT(A) is empowered in an appeal against the order of assessment to confirm, reduce, enhance, annul the assessment but it does not speak of modification of the order. In the present case, Ld.CIT(A) in essence has modified the assessment order by sustaining the addition u/s 41(1) of the Act instead of section 68 of the Act. Therefore, in our considered view, Ld.CIT(A) travelled beyond the jurisdiction conferred by the Act. Moreover, both the Authorities have failed to take note of the binding judgement of Shri Vardhman Overseas Ltd [ 2011 (12) TMI 77 - DELHI HIGH COURT] as concentrated on applicability of Clause (a) of sub-section (1) of Section 41 and as to what constitute remission or cessation of a trading liability. It may be noted that in the present case, the assessee has not unilaterally written back the accounts of the sundry creditors in its profit and loss account. In the present case, the AO as well as Ld.CIT(A) have recorded the fact that the creditors are outstanding for more than 02 years. However, in the case of CIT vs Sugauli Sugar Works Pvt.Ltd. [ 1999 (2) TMI 5 - SUPREME COURT] as recorded that the liabilities were existing for more than 20 years. Therefore,we are of the considered view that the authorities below were not justified in making the impugned addition. We therefore, direct the AO to delete the addition. Grounds raised by the assessee are thus, allowed.
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2023 (7) TMI 650
Characterization of income - Determine the nature of interest income earned - business has already been set-up though it may not have commenced - assessee has reduced proportionate interest from cost of project on the basis of ratio of debt and equity whereas Ld. AO has assessed the same as Income from other sources - HELD THAT:- There is a difference in set-up of business and commencement of business. Once the business is set up though it may not have yet commenced, the assessee would be eligible to claim the business expenditure as revenue expenditure. On the same very reasoning, any income arising after set-up of the business would be revenue in nature and assessable to tax. The assessee has generated business income and claimed revenue expenditure including finance cost. However, mere fact that the deposits were linked with projects would not alter the character of the income after the business has been set-up. As rightly held by Ld. CIT(A), the said bifurcation is only an artificial bifurcation. The terms of the project may require the assessee to make fixed deposits but the same could not alter the Tax treatment of the interest income so earned by the assessee. The interest arises to the assessee only because of creation of fixed deposits which is nothing but assessable as income from other sources . CIT-A was correct to concluded that it was pure and simple interest on deposits which had to be considered as income from other sources only. - Decided against assessee.
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2023 (7) TMI 649
Levy of penalty u/sec. 270A - under-reporting in consequence of misreporting of income - fraudulent refund by increasing deductions and reducing his taxable income - HELD THAT:- Assessee who has a history for habitually claiming fraudulent refund by increasing deductions and reducing his taxable income since A.Y. 2016-17 onwards, could not justify why he has continuously misreported his income and what was the legal basis for such an action and no plausible legal explanations were submitted why such misreporting was done by the assessee. It is obvious that this is a fraud committed against the Department in order to evade tax. We hold that NFAC has rightly upheld the levy of penalty by the AO @200% for misreporting of income as defined u/sec. 270A(9) - we do not find any infirmity with the findings of the NFAC which is upheld. Grounds of appeal stands dismissed.
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2023 (7) TMI 648
TP Adjustment - aggregation to distribution segment with that of assembly segment - HELD THAT:- For assembly, the assessee has set up a full scale assembly facility, including, deployment in the plant machinery, land, building and other tangible assets. Whereas in the case of import of finished products, products are sold to third party customers without making any value-addition and the assessee primarily engages in activities of storage and distribution. In our considered opinion, the submission of the assessee is justified that the AO has wrongly aggregated the assembly segment with distribution segment. We direct that such aggregation is not permissible in the facts and circumstances of the case as discussed above. We direct accordingly. Treatment of outstanding receivables from AE as unsecured loans and imputing an interest thereon - HELD THAT:- As in assessee s own case for Assessment Year 2014-15 [ 2022 (5) TMI 1567 - ITAT DELHI] on the same issue ITAT has deleted the similar adjustments as assessee in not charging interest from both the AE and Non AE debtors and the delay in realization of the export proceeds - Thus relying on M/s. Indo American Jewellery Ltd. [ 2013 (1) TMI 804 - BOMBAY HIGH COURT ] as neither interest has been charged nor paid, we hereby allow the appeal of the assessee on this ground.
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2023 (7) TMI 647
Assessee in default u/s 201(1) - non deduction of tds u/s 194C - Order beyond statutory period as per section 201(3) - HELD THAT:- As the show cause notice was issued on 16/03/2021 and the order was passed on 30/03/2021 for the financial year 2012-13 which is not as per sec. 201(3) of the IT Act, accordingly the order has not been passed by the AO within the within the prescribed time period of seven from the end of relevant financial year in which the payment was made. See M/s Coffee Day Enterprises Ltd. case [ 2020 (12) TMI 1192 - ITAT BANGALORE ] Decided in favour of assessee. TDS u/s 194H - service charges received from the end customers - HELD THAT:- Admittedly, in the present facts of the assessee, no expenditure is claimed by the assessee in respect of any payments alleged to be in the nature of commission / service fee by the Ld.AO. On analyzing the above scanned agreement between the assessee and M/s. Bigtree, we note that there is no non-compete clause wherein a complete /partial control of M/s. Bigtree by the assessee is not established. M/s. Bigtree on its online platform sells tickets of other / many theatre owners apart from the assessee before us. The agreement of the assessee with M/s.Bigtree is a non exclusive agreement for selling cinema tickets of the assessee through its platform. The only income earned by the Bigtree is the convenience fee that it collects from the customers / movie viewers. Even there is no discounts given by the assessee to the Bigtree on account of tickets purchased by the customer from their platform. In our view, the transaction / service fee collected by M/s. Bigtree from the end customers are actually margin charged from the end customers for provision of such services to the end customers. It is also to be noted that the end customer, pays service tax on such additional transaction / convenience fee charged by M/s. Bigtree. It is also very much pertinent to note that such service tax is not levied on the ticket charges. This fact establishes that the assessee do not cast any obligation on M/s.Bigtree to sell tickets from their platform. However one more aspect that needs to be considered is the situation where the tickets are liable to be refunded. For example, the theater owner is unable to start or play the movie, then who will be liable to refund the ticket price. Is it the Bigtree or the Theater owner. This issue needs to be ascertained. The risk needs to be analysed. We therefore direct the AO to carry out necessary verification. We direct the Ld.AO to consider the claim of assessee in accordance with law.
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2023 (7) TMI 646
Revision u/s 263 - claiming business expenditure while claiming standard deduction in the rental income - CIT observed that, assessee has declared rental income and also maintenance charges which is the common source income and also common expenditure - since there is no record on the assessment record to show that Assessing Officer has verified the claim of the assessee CIT issued notice of revision - HELD THAT:- We observe that assessee has filed the detailed submissions before CIT that assessee has already declared all the material facts necessary for completion of assessment in the return of income as well as in the computation of income. Assessee submitted that in computation of income wherein voluntary disallowance is made under the head income from business - The details of these voluntary disallowance, as required, are now filed herewith. These expenditures were pertaining to income from house property were disallowed under the head business income and the same were claimed under the head income from house property Therefore there is no prejudicial to the interest of the Revenue. The assessee has explained to the Ld. Pr.CIT that assessee has segregated the expenditure claimed for income from house property in which assessee is claiming standard deduction, accordingly, the relevant expenditure was voluntarily disallowed while computing the income from business and the expenditures which are relevant for the business expenditure were claimed. Therefore, there is absolutely no additional expenditure claimed by the assessee. No doubt assessee has claimed the voluntary expenditure under the head income from business. However, on a perusal of the various submissions made before CIT we observe that CIT has not brought on record any loss to the revenue except by observing that the submissions of the assessee itself clearly shows that Assessing Officer has not verified the same. Accordingly, he invoked the Explanation 2(a) to provisions of section 263 of the Act incorrectly. Interest paid to partners - As fact on record that assessee has paid interest @18% to the related parties and which comes under the provisions of section 40A(2)(b) - At the same time, we observe that assessee has also taken several loans from unrelated parties and paid interest in the range of 12% to 18% to unrelated persons. With regard to related parties assessee has paid standard rate of 18%. We also observed that all these informations were submitted before the Assessing Officer (as per the declaration made before us in the Paper Book) it clearly shows that assessee has paid various rate of interest to unrelated persons the average may come to less than 18%, however, it maintains to pay @18% to the related parties.Therefore, as per the principle of consistency the rate adopted by the assessee should be accepted. We have considered the submissions carefully and we observe that there is no whisper of any discussion in any of the Assessment Orders submitted by the assessee on the aspect of payment of excess interest to the related parties, that means, in none of the AY Assessing Officer has not verified this aspect of additional payment of interest to the related parties much above the industry average or average interest rate to the assessee itself. Therefore, merely accepting the submissions made by the assessee without there being any evidences on record to show that AO has actually verified or enquired on this aspect. The submissions by the assessee before us does not show any evidence that AO has actually verified the above said aspect. Therefore, we are inclined to accept the revision proceedings with the observation that the AO has not verified on this aspect of interest payment to related parties itself makes the revision proceedings proper. Decided partly in favour of assessee.
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2023 (7) TMI 645
Ex-parte order of CIT(A) u/s 250 - Opportunity of being heard - HELD THAT:- CIT(A) has issued given several opportunities to the assessee but, however, the assessee has not availed those opportunities. CIT(A) has passed a detailed order on merits of the case and adjudicated the assessee s grounds with a due consideration. Hence the order passed by CIT(A) is a detailed order on merits and not a summary-order. Being so, we do not find any merit in the claim of assessee that the CIT(A) has passed order without giving opportunities of hearing. Therefore, we are inclined to dismiss Ground No. 1 of assessee which is devoid of any merit. Bogus capital gain - assessee has earned capital gain from the transactions of shares of Turbotech Engineering Ltd., which falls within the category of a Penny stock as per the information available with the Income-tax Department - HELD THAT:- As already decided in Shri Abhishek Gupta [ 2022 (8) TMI 1333 - ITAT INDORE] wherein the identical issue of exempted capital gain from shares of Turbotech Engineering Ltd. the Bench has rejected the assessee s claim of long-term capital gain and upheld the additions made by revenue. No material change which could suggest non-applicability of the decision in present appeal. Hence, we find no valid reason to deviate. Accordingly, we uphold the additions made by revenue-authorities - Decided against assessee.
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Customs
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2023 (7) TMI 644
Cancellation of Advance Licenses - consideration of materials/documents and providing appropriate calculations to the petitioners so that the benefit under the licenses can be ascertained and whether the same would be available to the petitioners - HELD THAT:- Certainly, in exercise of jurisdiction of this Court under Article 226 of the Constitution, it may not be possible for this Court to exercise any executory jurisdiction. Article 226 of the Constitution would confer powers of judicial review on the High Court, to issue appropriate writs, when the aggrieved petitioners seek redressal in regard to infringement of any legal right or Constitutional rights. Certainly, this Court in exercise of jurisdiction under Article 226 of the Constitution would pass orders which are purely executory - In the present case, this Court had already adjudicated the writ petition filed by the petitioner in terms of a detailed order. All consequences under the order stand crystallized. In the event, there is any intentional breach or disobedience of the orders passed by this Court, the remedy for the petitioner was to file a contempt petition. In the absence of any intentional or deliberate disobedience, the remedy available for the petitioner is to execute the orders passed by the Court in execution proceedings, as provided in Rule 647 of contained in chapter XXXIII of the Bombay High Court (Original Side) Rules 1980, as the orders passed on Writ Petition are treated as a decree made in exercise of the Ordinary Original Civil Jurisdiction of this Court. There can be no two opinions on this clear position in law. The petition cannot be adjudicated upon - petition disposed off.
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2023 (7) TMI 642
Levy of penalty u/s 112(a) of Customs Act - vicarious liability of Pre-Shipment Inspection Agency - Allegation is that appellant's proprietorship firm is lack of diligence or negligence (on the part of its employee, i.e., Mr. Bob in the course of examination of cargo at the time of loading of containers in UK) and not the appellant by itself - HELD THAT:- Shri Bob Inspector was located in London which was at the relevant time not a territory, within the purview of penalty proceedings under Indian Customs Act, 1962, as being a person who commits any omission outside India. However, for the purposes of present proceeding this may not be a relevant consideration as the penal proceedings have been directed against the present appellant in its capacity as an employer for lack of diligence on the part of its employee and itself. The concept of vicarious liability in penal proceedings, is not completely unknown in the Customs Act proceedings, as number of such cases between CHA and its employees have been dealt with under purview of Section 117, which is in the nature of residuary penal provision, and is applicable when no other express penalty provision is available. In the instant case, this Court is concerned with penalty which was initially purposed under Section 112 without quoting any sub-clause. However, same was later confirmed under Section 112(a) of Customs Act, 1962. Nothing has been brought on record as to show, how due diligence on the part of the employer (located miles away, from employee) is lacking, specially when it has prescribed percentage checks provided radiation detecting equipments as has been indicated by the investigation and also employed qualified persons - the invoking of Section 112(a) requires mens rea to be established on record. This Court is of the view that penalty as imposed does not sustain both in law and in the facts of the matter. The appeal is allowed with consequential relief of wavier of penalty under Section 112(a) as imposed - Appeal allowed.
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2023 (7) TMI 641
Valuation of imported goods - medical and other equipments - enhancement of transaction value - related party transaction - Rule 2(2)(I) and (V) of the Customs Valuation Rules, 1988 - HELD THAT:- The fact that the appellant and supplier are related parties is not in dispute. Appellant had imported various medical equipments through Bangalore Air Cargo Complex and the Deputy Commissioner of Customs, Bangalore had referred to SVB Chennai for registration with the approval of Commissioner of Customs, Bangalore in terms of Circular No.11/2001 dated 23.2.2001 - the order No.399/2003 dated 1.4.2003 issued by the Deputy Commissioner of Customs, SVB was taken up for review and vide Order-in-Original No.5588/2006 dated 15.11.2006 the same was confirmed by upholding the original Order No.399/2003 dated 1.4.2003. Both the above orders were accepted by the appellants. The impugned order following the above order cannot now be questioned on jurisdiction because the above two orders were rightly referred to SVB Chennai in terms of Board Circular No.11/2001 dated 23.2.2001. Since the SVB orders issued earlier were also imports made from Air Cargo Bangalore, whose orders based on SVB Chennai was accepted; the appellants cannot turn around and state that the SVB order of Chennai is not applicable to the present case. The jurisdictional Notification No.15/2002 dated 7.3.2002 quoted by the appellant is only a Notification to define the areas of jurisdiction in the respective designated offices. This has no relevance as far as Special Valuation Branch is concerned, which is an institution specialised in investigation of transaction involving related parties. Appeal allowed by way of remand.
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2023 (7) TMI 640
Confiscation - Export of prohibited goods or not - woollen shawls of Pashmina wool - distinction between two kinds of shawls one made by Pashmina Wool and another by Shahtoosh wool - appellant was alleged to have deliberately engaged in dealing, keeping, concealing, selling or purchasing the shawls containing guard hair of Tibetan Antelope (prohibited goods) by mis-declaring and concealing them alongwith 53 Pashmina Shawls - HELD THAT:- Shahtoosh is the name given to the wool of Tibetan Chiru-Antelope. These species are trapped killed and skinned for their short fine fleece called Shahtoosh which is the warmest and the softest wool of the world. Pashmina on the other hand comes from Tibetan mountain goats without killing the animal but the fleece is obtained. Hence, Shahtoosh is a wool obtained by killing the animal, resulting into the animal getting endangered whereas Pashmina is a craft. For the same reason the possession and sale of Shahtoosh are illegal in most of the countries including India, due to being prohibited under CITES and Wild Life Act, 1972. Despite making all efforts to ensure quality control, many times it is noticed that the shawl which is otherwise 100% pure pashmina and manufactured/weaved from pashmina wool contains a few stray guard hairs superficially or somehow contamination found belonging to different species or for that matter of Tibetan Antelope (Chiru) / Shahtoosh. However, it is to be noted that accidentally falling hair are a case of contamination and by no stretch of the imagination can be said to constitute trading an illegal item or Animal Article as defined under Wildlife Protection Act, the PIL contends. The difference can be observed from fibers surface morphology in such parameters. The report is absolutely silent about any of these methodologies and even about the noticed characteristics - denial to cross-examine amounts to violation of principle of natural justice. The confiscation has been confirmed based on un-detailed insufficient report, the examiner whereof was denied to stand the test of veracity - the issue has already been raised by the shawl traders before Delhi High Court, the PIL has been accepted. Notice has already been issued. Finally, keeping in view that shawls of both kind of stuff are soft and warm and it is difficult for a layman or a non-technical person to distinguish between the two merely on the basis of appearance. The test reports based on such scientifically advanced techniques have been placed on record by the appellants about the impugned shawls. The perusal reveals the elaborations as far as the morphological as well as scientific characteristics of Chiru hair and Circus hair are concerned. Since those features are missing in this report such report is held to have been wrongly relied upon to prosecute the appellant. Otherwise also the admitted fact is that the consignment of 59 shawls was found to have 53 Pashmina Shawls and six Shawls were detained on the basis of mere suspicion - no cogent verification has been arrived at to confirm the said suspicion. The prosecution is nothing but an outcome of presumption and surmises. The reports are insufficient to prove that the 6 shawls were prohibited goods. Question of those six shawls to be concealed on the ground of it being a prohibited product doesn t arise. Remaining 53 shawls also cannot be subjected to confiscation as question of them to be used for concealing the prohibited goods stands redundant - Appeal allowed.
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2023 (7) TMI 639
Demand of duty (CVD SAD) foregone at the time of import - The quantity of imported Sulphur, which was not used in manufacture of fertilizer - Confiscation - redemption fine - penalty - invocation of extended period of limitation, under Section 28 of the Customs Act, 1962 - contention of the department is that the Sulphur content in the said quantity of Sulphuric acid cleared in the domestic market are not eligible for exemption under N/N. 4/2006-CE dated 01.03.2006 and Notification No. 20/2006-CUS dated 01.03.2006 - HELD THAT:- The Sulphur content in the total quantity of sulphuric acid removed for the purposes other than for manufacture of fertilizer works out to 8304.265 MT, which accounts for 0.66% of the total import of Sulphur made by the Appellant. Hence, this quantity of Sulphur which was not used in manufacture of fertilizers does not qualify for the exemption, under Sl. No. 3 of Notification No 4/2006-E dated. 01.02.2006 and chargeable to CVD SAD at applicable rates. A perusal of Notification No. 4/2006-CE dated 01.03.2006 and Notification No. 20/2006-CUS dated 01.03.2006, clearly indicates that the exemption from CVD and SAD are available to Sulphur, only when they are used in the manufacture of fertilizer. Admittedly, the Appellant have sold 25165.450 MT of Sulphuric Acid in the market and hence the Sulphur content in the total quantity of sulphuric acid removed for the purposes other than for manufacture of fertilizer are not eligible for the exemption. The quantity of Sulphur in the Sulphuric Acid cleared to open market works out to 8304.265 MT, which accounts for 0.66% of the total import of Sulphur made by the Appellant - the Appellant are not eligible for the exemption of CVD and SAD provided under the above said Notifications, for the above said quantity of Sulphur cleared to domestic market. Extended period of limitation - suppression of facts - HELD THAT:- The Appellant has imported sulphur in bulk. At the time of importation of Sulphur they could not visualize how much quantity will be used in the manufacture of Sulphuric Acid and what quantity will be cleared in the domestic market. Therefore, the entire quantity of imported Sulphur was taken clearance at Nil rat of duty. Due to storage and other constraints, they were compelled to clear some quantity of Sulphuric Acid in the domestic market, which is beyond their control - the said clearances of Sulphuric Acid were made under the cover of excise invoices, on payment of appropriate central excise duty and duly mentioned in the ER-1 returns filed and other Central Excise records which have been audited by the department at periodical intervals. In such a situation, no charge of suppression or willful mis-statement and fraud etc., can be alleged against the Appellant - the extended period of limitation cannot be invoked in this case. Hence, the duty demand has to be limited only to the normal period of limitation. Interest is also chargeable for the demand of duty payable under the normal period. Penalty under Section 114A of Customs Act, 1962 - HELD THAT:- The penalty under this section can be imposed only when duty has not been paid on account of suppression of fact, willful mis-statement, fraud, collusion etc. As discussed, no such ingredient was present in this case warranting imposition of penalty under this Section. Accordingly, we set aside the penalty imposed under the Section 114A of the Customs Act, 1962. Redemption fine - HELD THAT:- The clearances of Sulphuric Acid were made by the Appellant under the cover of excise invoices, on payment of appropriate central excise duty and the same was duly mentioned in the ER-1 returns filed by them for the relevant periods. Hence, the goods cleared to open market are not liable for confiscation under Section 111(o) of the Customs Act, 1962. Accordingly, the redemption fine imposed on the Appellant is not sustainable. The demand for the normal period of limitation is upheld and the demands made in the impugned order set aside by invoking the extended period - the penalty imposed on the Appellant under Section 114A of the Customs Act, 1962 set aside - The redemption fine imposed on the Appellant is also set aside - appeal allowed in part.
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Corporate Laws
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2023 (7) TMI 638
Scheme of Rearrangement - demerger/transfer of business - the Demerged Company RPPMSL is a wholly-owned subsidiary of the Appellant Company RIL - Requirement of getting consent from creditors and shareholders - Discretionary power of NCLT - Validity of order of NCLT to direct the Appellant Company to obtain consent affidavits of at least ninety percent of value of total Secured Creditors as per section 230(9) of the Companies Act, 2013 or to hold meeting of Secured Creditors as per section 230(6) of the Companies Act, 2013 HELD THAT:- It is seen from the averments and pleadings of the Appellant made as Applicant before NCLT, which is also noted in the Impugned Order, that RPPMSL is a wholly-owned subsidiary of the RIL and further that no shares are required to be issued or allotted as consideration after implementation of the proposed Scheme. Also, admittedly the rights of the shareholders of RIL will not be affected after implementation of the Scheme, as no new shares are proposed to be issued in consideration neither there is any reorganization of the shareholding structure of the RIL. In Section 232(1) of the Companies Act it is left to the discretion of the Tribunal, as the word used is may , regarding the holding of meeting of the creditors or class of creditors or members or class of members in the manner directed by the Tribunal - this discretion given in section 232(1) to the Tribunal has been interpreted by Hon ble Bombay High Court in the matter of Mahaamba Investments Limited [ 2001 (1) TMI 904 - HIGH COURT OF BOMBAY] and Eurokids India Pvt. Ltd. [ 2014 (12) TMI 1380 - BOMBAY HIGH COURT] and also by this Tribunal in the matter of Patel Hydro Power Private Limited [ 2021 (12) TMI 967 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] that if the Transferor Company is wholly owned subsidiary of the Transferee Company and there is no reorganization of the share capital of Transferee Company and the creditors and shareholders of the Transferee Company are not affected by the implementation of the Scheme as the assets of the Transferee Company and the Transferor Company far exceed their liabilities, the requirement for holding meetings of the shareholders, secured and unsecured may be dispensed with. The impugned order set aside - it is directed that the convening and holding of meetings of Equity Shareholders, Secured and Unsecured Creditors of the Appellant Company RIL is dispensed with and further consent affidavits of 90% of the total value of shareholders and secured creditors and all unsecured creditors will not be necessary at this stage - appeal allowed.
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Insolvency & Bankruptcy
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2023 (7) TMI 637
Initiation of CIRP - sufficient cause for the Adjudicating Authority to return the application of the Financial Creditor instead of adjudicating on the Company petition - HELD THAT:- Present is a case where it is an undisputed fact that the Appellant in its capacity as NBFC had sanctioned three loans to the Respondent totaling an amount of Rs.5,95,00,000/-. The three sanction letters are placed at pages 158, 161 and 164 of the Appeal Paper Book ( APB in short). It is also an admitted fact that the loan amounts had actually been disbursed by the Appellant and had been credited to the accounts of the Corporate Debtor. The Corporate Debtor has also admitted taking the said loan amount before the Adjudicating Authority. As per the respective loan sanction letters, the tenure of each of the three loans was 36 months. The sanction letters also clearly provided that the loan was repayable on demand. The first loan was for an amount of Rs.25,00,000/- sanctioned on 20.05.2015 with an interest of 10% per annum. The second loan amount for Rs.4,70,00,000/- was sanctioned on 22.05.2017 with 12% interest per annum while the third loan was for Rs.1,00,00,000/- with 10% per annum which was sanctioned on 15.02.2018 - It is noticed that the first tranche of loan which had been disbursed on 26.05.2015 (as placed at page 167 of APB) had already become due having crossed the 36 months tenure. Section 5(8) of the IBC which is relevant for the present case defines financial debt to mean a debt along with interest which is disbursed against the consideration for the time value of money. Further, clauses (a) to (i) of Section 5(8) delineates the nature of transactions which are included in the definition of financial debt which includes money borrowed against payment of interest - In the facts of the present case, the Appellant has issued a demand notice which contained cumulative demand of all the three loan amounts. In the given factual matrix, the Adjudicating Authority is required to notice as to whether the application is complete or not and if there is a debt and the Corporate Debtor has defaulted in the payment, whether the amount so defaulted is more than the threshold limit of Rs. 1 lakh. The corpus of facts and documents are sufficiently adequate to consider a Section 7 application - there are no cogent basis for the Adjudicating Authority to have returned the application of the Financial Creditor. The appeal is allowed.
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FEMA
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2023 (7) TMI 636
Maintainability of appeal against an order passed by the Appellate Tribunal for Foreign Exchange - Period of limitation - Appellate Tribunal dismissing the appeal on the ground of provisions of Section 52 of the Foreign Exchange Management Act, 1999 - HELD THAT:- Non-entertainment of the appeal by the Appellate Tribunal on the ground of Section 52(2) of the Act of 1973 was erroneous in view of the ratio laid down in Thirumalai Chemicals Ltd. [ 2011 (4) TMI 489 - SUPREME COURT] However, we find from the materials produced on record that, the appellant was served with the order-in-original dated January 21, 2000 by registered post which was dispatched on March 13, 2000. The appellant is unable to show any reasonable cause as to why, the appellant did not file the appeal within the time prescribed under the Act of 1973. No explanation is put forward under the Act of 1999 for condonation of delay in preferring the appeal. We find no merit in the present appeal.
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Service Tax
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2023 (7) TMI 635
Levy of Service tax - manpower recruitment or supply agency service - separate employment contract with foreign expatriates - payments directly to the expats like salary and other allowances, which are not reimbursement of any expenditure - suppression of facts or not - time limitation - revenue neutrality - HELD THAT:- In terms of the agreement between the parties, specifically Article 4, where salary, bonus and others have been provided for, it is clear that it is for the appellant to pay the salary, bonus, perks, etc., to the secondees working for it in India, and there is also no dispute that the above clauses of the agreement are binding on both the parties - It is thus clear that what is paid is towards the cost incurred for making available the service which the appellant has received. Further, in terms of the definition under Section 67 ibid., consideration would include any amount that is payable for the taxable services provided or to be provided and thus, there is no doubt in our mind that what is provided by M/s. NMC is nothing but manpower recruitment service. The decisions of the Hon ble Apex Court in C.C.,C.E. S.T. BANGALORE (ADJUDICATION) ETC. VERSUS M/S NORTHERN OPERATING SYSTEMS PVT LTD. [ 2022 (5) TMI 967 - SUPREME COURT] , clearly hold that the definition of manpower recruitment or supply agency is wide enough to include recruitment as well as supply of manpower. The expression supply is of a wider connotation than recruitment - thus the ratio of the above rulings squarely apply to this case and thus, there is no escape for the appellant before us from Service Tax liability in respect of manpower recruitment or supply agency service under reverse charge mechanism - the appellant is required to pay applicable Service Tax for the normal period along with interest. Time limitation - suppression of facts or not - HELD THAT:- On perusal of the table indicating the dates of SCN/SODs and periods covered vis- -vis the other table wherein the visit by the officers of the Revenue on various dates is depicted. From the above, even if it were to be assumed that the appellant had received manpower supply services, the fact remains that the whole of the activities were within the knowledge of the Revenue / officials of the Department and hence, there is no scope whatsoever to allege suppression of any facts - the issue, therefore, involved classification and interpretation of taxing statute, for which reason also suppression of facts could not be alleged. Revenue Neutrality - HELD THAT:- There are no doubt that it is the case of a revenue neutral situation and that by suppressing the same, the appellant / assessee could not have achieved any benefit - In the case of M/s. Northern Operating Systems Pvt. Ltd. the Hon ble Court held that This Court has been, in the present case, called upon to adjudicate about the nature of the transaction, and whether the incidence of service tax arises by virtue of provision of secondment services. Thus, on merits, the appellant has to fail, but however, the appellant s claim as to this case being revenue neutral, deserves merit, for which reason the extended period of limitation cannot be invoked. Further, even on the issue of limitation, following the decision in the case of M/s. Northern Operating Systems Pvt. Ltd. specifically paragraphs 64 and 66 which are extracted by us elsewhere in this order, we hold that the demand, if any, would survive only for the normal period.
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Central Excise
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2023 (7) TMI 634
Seeking condonation of delay in filing appeal - Condonation of delay was sought on the premises that the appellant- Tasleem Ahmed was not aware of the passing of the order dated 30.06.2017, since he had resigned from the Directorship of the Company in July, 2014 - HELD THAT:- The appellant submits that he had not preferred the earlier appeal, since he had not signed either the memo of the appeal, or the Vakalatnama - there are no merit in this submission, for the reason, that when the appellant was granted the opportunity to file an affidavit to explain the position as to how the earlier appeal had been preferred, he failed to do so. It is obvious that the counsel had preferred the earlier appeal upon instructions of the appellant, as no counsel would, on his own file an appeal or other proceedings before any Court or Tribunal, without receiving instructions, including the fees therefor. The appellant has got away very lightly with the imposition of costs of Rs. 10.00 Lakhs. In fact, it was a fit case for initiation of proceedings for perjury against the appellant. However, since the Tribunal has chosen not to take steps, we say no further in that regard. The appeal is dismissed with costs of Rs. 50,000/- to be deposited with the Uttarakhand Legal Services Authority within two weeks.
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2023 (7) TMI 633
Non-payment or short payment of duty for a period more than one year prior to the date of issuance of the show-cause notice - wilful misstatement or suppression of facts or not - extended period of limitation - HELD THAT:- Apropos the extended period of limitation under the proviso to Section 11A(1) of the Act, as it stood at the relevant point of time, the Appellate Tribunal noticed the certificate issued by the Range Superintendent on September 13, 2006 and expressed surprise as to how such clarification in respect of the dutiability of the product could be sought when it was subsequently accepted by the assessee that the product became dutiable from March 1, 2006 pursuant to notification No. 3/2006-CE of such date. The Appellate Tribunal wondered as to what purpose there may have been for the assessee to have approached the Range Superintendent to obtain the opinion or the certificate. There is no doubt that in response to the above query, the Range Superintendent categorically indicated in his letter of September 13, 2006 that the manufactured product of the assessee did not attract any excise duty and, as such, it was not obligatory on the part of the assessee to obtain any central excise registration. It does not appear that such certificate or the opinion of the Range Superintendent expressed therein was obtained by fraud or collusion or wilful misstatement or wilful suppression. The facts were clearly indicated in the assessee s letter of September 4, 2006 and nothing in such letter can be said to have deceived or attempted to deceive the relevant Range Superintendent. In view of the fact that the assessee had approached the Department or an officer in the Department for an opinion and acted in terms of the opinion rendered, it would rule out any act of deceit on the part of the assessee or conduct which could be construed to having an intent to evade payment of duty - Once so much is seen, the proviso to Section 11A(1), as it then stood, would not be available to the Department and the rest of the arguments and findings on such arguments become redundant. However, there is a further leg on which the assessee s contention can stand. The fallacious approach adopted by the Appellate Tribunal, though the consideration as to revenue neutrality and exemption under the relevant notifications become irrelevant upon it being noticed that the show-cause notice issued in the year 2008 could not have related to a period of more than one year prior to the date of its issuance since there was no element of deceit or intention on the part of the assessee to evade duty nor had any case in such regard been made out - the judgment and order impugned passed by the CESTAT on August 25, 2022 is set aside. Since the assessee has already made payment of the duty that it was liable to from March 1, 2006 onwards, there will be no further liability to the assessee on such account. Appeal disposed off.
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2023 (7) TMI 632
Reversal of credit at the time of transfer of capital goods - Determination of Depreciated value for reversal of Credit - application of law for availing the depreciation Under Section 32 of the Income Tax Act incorporated in Rule 4(4) of Cenvat Credit Rules read with Rule 3(4) of Cenvat Credit Rules, in respect of removal of used capital goods as such, during the year 2002-2003 - straight line method of depreciation effective from 13-11-2007 read with amended Rule from 27-2-2010 by Notification No.6/2010-CE(N.T) - rejection of application of Section 32 of the Income Tax Act, 1961, for depreciation used capital goods - placing the Circulars No.643/34/2002 dated 1-7-2002 read with Circular No.495/16/1993-Cus. dated 26-5-1993 without applying Section 32 of the Income Tax Act, 1961 - violation of principles of natural justice. HELD THAT:- This Court in the case of Rohini Mills Limited [ 2010 (10) TMI 424 - MADRAS HIGH COURT] considered the import of the phrase as such and rejected the argument of the revenue that the reversal of credit much be total. On a conjoint reading of Rule 3(4) of the 2002 CCR, the 2002 Circular and 1993 Board Letter, the Bench concluded that the assessee was entitled to the benefit of depreciation in arriving at the assessable value of the goods - This decision has also been followed by a larger Bench of the CESTAT in the case of Navodhaya Plastic Industries Ltd [ 2013 (12) TMI 82 - CESTAT CHENNAI] . The Bench has, therein, noted the practice of bringing in capital goods for use for a short period and removal to another unit without reversal of CENVAT Credit availed, finding it to be an abuse of the scheme of CENVAT credit. The purpose of the scheme must thus be understood to provide a balance between the grant of credit and checking of abuse in the availment of the same. The appellant cannot be agreed upon that the above Rule would be applicable in the present case. Rule 4 sets out the preconditions for availment of credit. One of those conditions is that no credit shall be allowed in respect of that part of the value of capital goods that represents duty amount which the manufacturer claims as depreciation under the Income tax Act 1961 - This, by no means, can be understood to relate to Rule 3(4) of the methodology of valuation required thereunder. The reference to depreciation under the Income Tax Act in Rule 4(4) is in an entirely different context and has no application as urged by the Appellant. This condition has to be seen solely in the context of availment of CENVAT credit only and has no bearing on the valuation of the goods. The provision has always been at a flat rate and there has been no option extended to the assessee in regard to the manner by which the depreciation may be computed. In light of this conclusion, the judgement of the Constitution Bench in Commissioner of Central Excise, Bolpur vs. M/s. Ratan Melting and Wire Industries [ 2008 (10) TMI 5 - SUPREME COURT] is of no relevance. The substantial questions are answered in favour of the revenue and this appeal is dismissed.
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2023 (7) TMI 631
CENVAT Credit - works contract service or not - construction services provided by various contractors towards the construction of the civil structure or the part thereof for the appellants premises for making of structure of support of capital goods - SCN barred by time limitation or not - HELD THAT:- The modernization, renovation or repairs of a factory are appearing in the inclusion part of the definition of input service. In the exclusion part such work contracts are covered where service element can be vivisected from the goods element and the properly in those goods gets transferred in favour of the recipient. There are no evidence on record produced by the Department to prove that the construction services for the building/civil structure was for a building other than the factory premises of the appellant. Also there is no evidence to prove that properly in goods got transferred to appellant - there are no hesitation to accept the submission of the appellant that they were receiving the construction services for the repair, maintenance and modernization of their premises. The specific disallowance of availment of Cenvat credit with respect to such construction/erection, installation and commission, services which are with respect to the new construction if undertaken by the assessee, however, there is no such specific disallowance in Rule 2 (i) of CCR, 2004 with respect to repair and maintenance work of the premises of the manufacturer. Time limitation - only allegation is that had the Department not conducted audit, the appellant would have succeeded to evade - HELD THAT:- The said allegation has no basis to stand otherwise also, it is observed that the show cause notice was based on appellant s own documents i.e. the invoices as were maintained by them in accordance of business the returns were admittedly being filed in time mentioning required details about availment of credit. There is nothing on record which may be called as the proof for alleged suppression or mis-conduct. Resultantly the extended period of limitation has wrongly been invoked by the Department while issuing the impugned show cause notice. The order under challenge is also liable to be set aside for an apparent ambiguity in the show cause notice itself i.e. the authority issuing show cause notice itself was not sure as to whether the services are merely the construction services in their own building. Appellant has produced on record enough document in the form of several invoices that the services in the construction/erection, commissioning and installation services, but those were meant purely for maintenance/repair/ modernization of appellant s own premises - Appeal allowed.
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CST, VAT & Sales Tax
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2023 (7) TMI 630
Classification of goods - 150 HP Fully Automatic ATS (Auto-Transformer Starter) Control Panel, Motor Starter Panel Board and other Control Panel - whether ATS falls within the scope of Entry Serial No. 29 of Part-II of Schedule-B so as to attract levy of value added tax @4% [prior to 01.04.2012] and @5% [with effect from 01.04.2012] or subject to tax @13.5% as per entry in Part-III of Schedule-B appended to the Odisha Value Added Tax Act, 2004? HELD THAT:- Considering the instant case etched on various tests and well-accepted tenets, ATS answers that it is accessory to Centrifugal, Monoblock and Submersible pumps and pump sets . The document like expert opinion supported by Affidavit furnished by the petitioner remained undisputed by the opponent-State of Odisha. This Court is of the firm view that the contention of the petitioner deserves seal of approval. In the present case, the authorities below never examined the pertinent issue as to the identity of the commodity ATS with reference to Entry 29 of Part-II of Schedule-B. The Assessing Authority mechanically discarded the explanation rendered by the petitioner and shifted the onus on the dealer. For ascertaining the true nature of ATS, the petitioner has brought on record the expert opinion and this Court on visiting web portal of manufacturers of such commodities found that in trade parlance ATS is treated as accessories to Centrifugal, Monoblock and Submersible pumps and pump sets . The explanation of the petitioner being in consonance with the well-settled tests and guidelines propounded by the Courts, the suggestion of Sri Sunil Mishra, learned Standing Counsel for the Commercial Tax Goods and Service Tax Organisation for sending the matter back to the Assessing Authority for fresh adjudication by giving scope for enquiry/investigation is rejected. What is emanating from the Order-in-Second Appeal of the learned Sales Tax Tribunal is that no enquiry as to identity of commodity vis- -vis entry in Serial No. 29 of Part-II of Schedule-B was conducted by neither the Sales Tax Officer (Audit) nor the Assessing Authority. Legal position is well-established in HINDUSTAN FERODO LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [ 1996 (12) TMI 49 - SUPREME COURT ] ratio of which is this, that the onus of establishing that a product falls within a particular item is on the Revenue. This Court does not find force in the argument of Sri Sunil Mishra, learned Standing Counsel for the Commercial Tax Goods and Services Tax Organisation, more so when the Revenue has not chosen to file any objection to the Expert Opinion supported by Affidavit sworn to by Managing Partner of the petitioner-firm. This Court, hence, feels it expedient to show indulgence in the Order-in-Second Appeal of the learned Odisha Sales Tax Tribunal in exercise of power of revision under Section 80 of the OVAT Act. By reversing the conclusion arrived at by the Appellate Authority, the learned Odisha Sales Tax Tribunal essentially held that the commodity in question, i.e., ATS, falls within the scope of entry in Part-III of Schedule-B. Before holding the commodity to fall in residuary entry, the learned Tribunal as also the Assessing Authority failed to bear in mind the enunciation in the matters of BHARAT FORGE PRESS INDUSTRIES (P) LTD. VERSUS COLLECTOR OF C. EX. [ 1990 (1) TMI 70 - SUPREME COURT] ; INDIAN METALS FERRO ALLOYS LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 1990 (11) TMI 143 - SUPREME COURT] ; SPEEDWAY RUBBER CO. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [ 2002 (5) TMI 51 - SUPREME COURT] ; CC. (GENERAL), NEW DELHI VERSUS GUJARAT PERSTORP ELECTRONICS LTD. [ 2005 (8) TMI 657 - SUPREME COURT] ; COMMISSIONER OF C. EX., MEERUT VERSUS MAHARSHI AYURVEDA CORPN. LTD. [ 2005 (12) TMI 93 - SUPREME COURT] , conspectus of which leads to show that only such goods as cannot be brought under the various specific entries in the tariff should be attempted to be brought under the residuary entry. In other words, unless the Department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item. This Court has no hesitation to hold that the commodities, i.e., 150 HP Fully Automatic ATS (Auto-Transformer Starter) Control Panel, Motor Starter Panel Board and other Control Panel is comprehended in the term accessories as per entry in Serial No. 29 of Part-II of Schedule-B appended to the OVAT Act, which attracts rate of tax @ 4% for the tax periods prior to 01.04.2012 and @5% for the tax periods commencing from 01.04.2012 pertaining to the periods of assessment - the question of law as framed by this Court which fell for consideration is answered in the negative, i.e., in favour of the petitioner-assessee and against the Revenue.
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2023 (7) TMI 629
Valuation - Inclusion of Mandi Fees/ Mandi Shulk into the Sale Price for calculation of VAT - Mandi Fees charged by the Mandi could be treated as a part of sale price under Section 2(42) of the Uttarakhand Value Added Tax Act or not - Section 17(iii)(b) of the Adhiniyam - HELD THAT:- There can be no doubt that the Supreme Court in M/s Anand Swarup Mahesh Kumar [ 1980 (9) TMI 238 - SUPREME COURT] drew a distinction between the levy of tax/ duty, which the dealer/ seller can statutorily pass on to the purchaser, and the levy of tax/ duty, which the dealer or seller is not statutorily entitled to pass on to the purchaser (though he may pass it on to the purchaser), and concluded that the levy of tax which can statutorily be passed on to the purchaser, cannot form part of the purchase price , within the definition of that expression found in Section 2(gg) of the U.P. Sales Tax Act. However, that is not the issue before us. The real issue is whether, the Mandi Shulk, which the dealer is entitled to statutorily recover from the purchaser, falls within the definition of expression sale price contained in Section 2(42) of the Uttarakhand VAT Act, or not. The expression sale price defined in Section 2(42) of the Uttarakhand VAT Act is a very widely defined expression, which means the amount of valuable consideration received or receivable by a dealer for sale of any goods, and shall include any sum charged for anything done by the dealer in respect of goods at the time or before the deliver thereof, excise duty, special excise duty or any other duty or tax . The expression any other duty or tax , is clearly broad enough to include the Mandi Shulk, which is nothing but a duty which the dealer is statutorily entitled to recover from the purchaser. Merely because it is statutorily recoverable by the dealer from the purchaser, it does not cease to be any other duty within the meaning of sale price defined in Section 2(42) of the Uttarakhand VAT Act. Thus, Mandi Shulk levied under Section 17(iii)(b) of the Adhiniyam would fall within the definition of the expression sale price , as defined in Section 2(42) of the Uttarakhand VAT Act, and would be treated as a part of sale price of the goods. The decision of the learned Single Judge of this Court in M/s Ashok Kumar [ 2010 (9) TMI 1290 - UTTARAKHAND HIGH COURT] , lays down the correct position in law. The learned Single Judge, while deciding M/s Ashok Kumar [ 2010 (9) TMI 1290 - UTTARAKHAND HIGH COURT] has appreciated the difference in the definitions of purchase price and sale price as defined in the U.P. Sales Tax Act, 1948 and the Uttarakhand VAT Act respectively. There are no reason to interfere with the impugned judgment dated 30.10.2021, rendered by the Commercial Tax Tribunal, Uttarakhand, Haldwani Bench - revision dismissed.
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Indian Laws
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2023 (7) TMI 628
Seeking for a permanent injunction against the petitioners herein and others from interfering with the peaceful possession of the suit land - whether a public charitable trust could be required to obtain permission from the jurisdictional District Court in order to file the suit against a third party? HELD THAT:- In terms of sub Section (1) of Section 92 of CPC, it is mandated that if a trust were to file a suit whether contentious or not, leave of the principal Civil Court of original jurisdiction or any other Civil Court empowered in that behalf by the State Government within the local limits of which subject matter is situate, would have to be obtained in order to institute the suit. The said provisions also details out the nature of the suit that would come within the purview of sub Section (1) of Section 92 of CPC - A perusal of the various matters enumerated under Sub Section (1) of Section 92 of CPC would indicate that a suit relating to removal of a trustee, appointment of new trustee, vesting the property in a trustee, direction to a trustee, accounts and enquiries of the trust, usage of the trust property for a particular purpose, settling the claim, etc. is carried under sub section (ii) of Section 92 of CPC. The suit filed by the trust against a third party as done in this case, would not come within the purview of Section 92 of CPC. The said suit having been filed in the normal operation of the trust for the trust to preserve and protect its properties and or claim such other properties and not relating to the management of the trust would be outside the purview of Section 92 of CPC. If such an interpretation is taken up, then a public charitable trust would never be able to file any suit for bare injunction, recovery of money, specific performance, declaration or the like, thus, impending effective functioning and operation of the trust. In that view of the matter the trial Court having considered several aspects relating to the dispute between the plaintiff and the defendants of the suit and held that Section 92 of CPC would not apply for the reasons stated hereinabove and that stated by the trial Court, there are no reason to interfere with the matter - petition dismissed.
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