Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 19, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
Highlights / Catch Notes
GST
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GST rates: Solar cookers 12%, fire sprinklers 12%, poultry machinery parts 12%. Farm produce >25kg/L exempt. Pulses/cereals for weaker sections regularized.
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GST clarifications: Railway supplies exempted, SPV transactions exempted, RERA fees exempted, RuPay/UPI incentives non-taxable, reinsurance regularized, accommodation under Rs.20k/month exempted.
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Rule 86A empowers restricting fraudulent ITC debit for liabilities/refunds. Restriction ceases after 1 year by law.
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Arbitral award upheld; GST implementation envisaged; tax incentives conditional; estoppel claim rejected. Secure awarded amount.
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Alleged fraud led to registration cancellation. Show cause notice issued, petitioner claimed lack of basis. Documents provided, response filed but registration canceled.
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Eligible for ITC on capital goods like wires/cables for electricity transmission from power station to factory premises, not fixed to earth.
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Nominal deduction from salaries for factory canteen facility is not 'supply' u/s 7 of CGST Act. ITC available on GST charged by Canteen Service Provider.
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Turnkey contract = composite supply, GST payable on advances. Not divisible despite two parts. Notification 66/2017-CT inapplicable.
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Transporting coal within mining area via rented vehicles with operators falls under SAC 9966, not goods transportation exemption. GST reduced from 18% to 12% from 18.07.2022.
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Deposit work & supervision charges not exempt under GST for transmission/distribution of electricity. Ancillary to principal supply.
Income Tax
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Assessee's failure to file return led to proceedings u/s 148. Assessment order set aside on condition of paying costs. Petitioner to reply to show cause, respondents to provide portal access.
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Absence of incriminating search material prevents deemed dividend addition u/s 2(22)(e) & 153A. Court upholds taxpayer's stance.
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Software payments not taxable as royalty in India if no PE.
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Order upheld: 20% pre-deposit in 18 installments due to financial constraints. Appeal for AY 2022-23 to be disposed within 4 months.
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AO rightly deleted irrelevant portions from show cause notice, mentioning only charge of furnishing inaccurate income particulars.
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Non-compete fees paid are revenue expenditure, deductible u/s 28(va). Expenditure related to profit-earning is revenue in nature.
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Exemption u/s 11: Tribunal remits reassessment case to AO for hearing after wrong ITR filing; allows appeal statistically.
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Trust denied registration by CIT(E) on caste grounds, but ITAT allowed pre-existing trust citing pre-1961 status.
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Reopening assessment invalid due to no non-disclosure by assessee. Purchases from GST non-filers already examined & accepted earlier.
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DRP's stance on forex gains/losses inconsistent. Comparables' inclusion/exclusion remitted. Infosys BPO, BNR Udyog excluded. Informed Tech, Ace BPO included. TDS disallowance restored to AO.
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Cash payments to state govt co. for rent & electricity allowed as legal tender exception; pervasive state control test applied.
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Deduction for written off "Unclaimed VAT" allowed. Excess PF contribution to contractual laborers allowed as per EPF Act. Payment for business purposes.
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Salaried employee deputed abroad, income taxed in work country as per DTAA. AO to verify foreign taxes paid.
Customs
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Procedure to carry personal gold/silver jewelry abroad & duty-free reimport. Valuation, packing list, photos required pre-departure. Valid 3 yrs.
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Tribunal's selective reliance on statements led to inconsistent order; must re-evaluate all facts for reasoned conclusion. Agency's penalty upheld; remanded for fresh adjudication.
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Refusal of MESI benefits violated equality. Conversion of Shipping Bills allowed. Digital errors rectifiable in Welfare State. No limitation period for delay condonation.
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Denial of cross-exam opportunity to customs broker in license revocation case involving undervaluation, misdeclaration & concealment charges. Inquiry officer delayed report.
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Imported goods valuation: Aluminium & zinc scrap undervaluation rejected. Contract price prevails over LME rates if no evidence of undervaluation.
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Tribunal quashed gold seizure & penalty due to lack of evidence of foreign origin/smuggling. Onus on officer to establish reasonable belief.
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Cost recovery charges under Cargo Handling Regulations unsustainable due to lack of statutory mechanism & prescribed rates/manner.
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Cut & polished diamonds, gold jewellery exports valid. No circular trading, license misuse found. Revenue's allegations dismissed.
FEMA
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FCRA registration validity extended for certain entities till 30.09.2024 or renewal disposal, whichever earlier.
Corporate Law
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Additional fee waived for IEPF e-forms till 16/08/2024 due to MCA21 v2 to v3 transition. Plan accordingly.
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Centre amends IEPF Rules: New forms, online remittance to Authority within 30 days. Effective from gazette notification.
Bharatiya Nyaya
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Notification issued to construe references to repealed laws like IPC, CrPC, Evidence Act in any Act/Order as Bharatiya Nyaya Sanhita, Nagarik Suraksha Sanhita & Sakshya Adhiniyam 2023.
IBC
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EMD forfeiture upheld for non-payment after e-auction; bidder breached terms despite reminders. Sale certificate subject to tribunal orders.
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NCLAT affirmed admission of insolvency case against corporate guarantor despite asset insufficiency claims. Debt & default evident, asset value irrelevant for admission.
SEBI
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Liquidate assets via auctions, refund investors, disburse sale proceeds to genuine investors. Honorarium fixed for HPSC. State/police cooperation directed. Interim bail granted.
Central Excise
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Petroleum jelly for skin care = cosmetics under 3304, not 2712. Chapter 27 covers pure petroleum jelly w/o additives.
Articles
Notifications
Bharatiya Nyaya-
F. No. 13(12)/2024–Leg.I - dated
16-7-2024
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100
Construction of references to repealed enactments according to section 8 of the General Clauses Act, 1897
Companies Law-
G.S.R. 414(E) - dated
16-7-2024
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Co. Law
Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2024
GST - States-
38/1/2017-Fin(R&C)(04/2024-Rate)/26037 - dated
15-7-2024
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Goa SGST
Amendment in Notification No. 38/1/2017-Fin(R&C) (12/2017-(Rate), dated the 30th June, 2017
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38/1/2017-Fin(R&C)(03/2024-Rate)/26036 - dated
15-7-2024
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Goa SGST
Amendment in Notification No. 38/1/2017-Fin(R&C)(2/2017- (Rate), dated the 30th June, 2017
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38/1/2017-Fin(R&C)(02/2024-Rate)/26035 - dated
15-7-2024
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Goa SGST
Amendment in Notification No. 38/1/2017-Fin(R&C)(1/2017-(Rate), dated the 30th June, 2017
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02/2024–C.T./GST - dated
16-7-2024
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West Bengal SGST
Seeks to exempt the registered person whose aggregate turnover in the financial year 2023-24 is up to two crore rupees from filing annual return for the said financial year
Circulars / Instructions / Orders
Case Laws:
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GST
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2024 (7) TMI 991
Alleged inadmissible Input Tax Credit (ITC) availed by petitioner - blocking of credit beyond one year period - HELD THAT:- Rule 86A empowers the Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available in electronic credit ledger has been fraudulently availed or is ineligible in as much as for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger for discharge of any liability under Section 49 or for claim of any refund of any unutilised amount. Sub-rule (3) of Rule 86A provides that such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction. The restriction was imposed on 23rd November 2022 and one year period expired on or about 23rd November 2023. Therefore, by operation of law itself, the restriction imposed has lapsed. Petition disposed off.
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2024 (7) TMI 990
Violation of principles of natural justice - petitioner's reply was not taken into consideration - it is contended that the petitioner submitted a brief reply and did not annex any documentary evidence, including the bank statement - HELD THAT:- By the reply dated 24.10.2023, the petitioner asserted that no purchases were made in financial year 2017-2018. He further stated that there were no transactions in the bank account, but did not attach the bank statement. The petitioner also did not attach the stock register or any other documents to corroborate the assertion that there were no purchases. Consequently, it is necessary to put the petitioner on terms. The impugned order dated 29.12.2023 is set aside on condition that the petitioner remits a sum of Rs. 1,00,000/- towards the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit an additional reply along with supporting documents within the aforesaid period. Petition disposed off.
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2024 (7) TMI 989
Tax incentives - Prayer for an unconditional stay of operation of the Award - As per the case of the petitioners, in the present case, the impugned award is affected by fraud and as such the award is to be stayed unconditionally - HELD THAT:- It is not the case of the petitioners that the Essex had committed any fraud of corruption. The Arbitral Tribunal has arrived upon the findings after considering the materials placed before the Tribunal and the submissions made by the respective parties before the Tribunal. The Tribunal has recorded all the submissions of the parties in the Award. Considering the case of the petitioners, the judgments relied by the parties and the Award passed by the Arbitral Tribunal, this Court finds that the no case is made out by the petitioners with respect to fraud and corruption while passing the Award by the Tribunal. At the time of execution of the Share Purchase Agreement, the parties had expressly contemplated change in law i.e. implementation of GST. Clause 1 (B) (c) of Schedule 5 of the Share Purchase Agreement was incorporated and agreed to by the parties which provides that in the event of any change in law, as a result of which tax does not accrue to the Government of West Bengal, incentives would be suitably adjusted so as not to cause of any loss to the State Government on such account and incentives would be payable only to the extent the tax accrue to the State Government - It is agreed by and between the parties that pursuant to the GST, the incentives are payable to HPL only to the extent the tax accrued to the Government of West Bengal. The Government of West Bengal has not made out any case that the Share Purchase Agreement became frustrated after the change in law. Undisputedly, the Notification dated 18-7-2017 withdrawing the exemption notifications was issued in pursuance of the statutory mandate as provided under Section 174 (2) (c) of the CGST Act. If the contention as raised by the appellants is to be accepted, it would make the provisions under the proviso to Section 174 (2) (c) of the CGST Act redundant and otiose. The legislature in its wisdom has specifically incorporated the proviso to Section 174 (2) (c) providing therein that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded - the claim of the appellants on estoppel is without merit and deserves to be rejected. This Court is not satisfied that the petitioners have made out any prima facie case for grant of unconditional stay of the operation of the Award dated 18th September, 2023. The petitioners are directed to secure the entire awarded amount with the Registrar, Original Side within a period of six weeks from date. 50% of the awarded amount shall be transferred through bank in the account of the Registrar, Original Side of this Court and the Registrar, Original Side on receipt of the said amount shall invest in an interest bearing fixed deposit with the nationalised bank and remaining 50% of the awarded amount by way of Bank Guarantee within the time period. Application disposed off.
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2024 (7) TMI 988
Cancellation of registration of petitioner - fraud, willful misstatement, or suppression of facts in obtaining registration - HELD THAT:- Although, initially, it was claimed on behalf of the said firm that the basis on which the aforesaid show cause notice had been issued had not been disclosed, however, subsequent to the Proper Officer by communication dated 5th February, 2021 clarifying the position and once again by enclosing the documents as an attachment had forwarded the same to the petitioners, the said firm though the petitioners had filed its response dated 9th February, 2021 - The records, however, reveals that by an order dated 8th March, 2021 the Proper Officer under the said Act by proceeding on the premise that the said firm had failed to reply to the show cause notice had cancelled the firm‟s registration. The matter is remanded back to the Proper Officer for reconsideration of the firm‟s case by taking note of the response given by the petitioners and to decide the same upon giving an opportunity of hearing to the petitioners - Petition disposed off by way of remand.
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2024 (7) TMI 987
Cancellation of registration of petitioner - order was passed without assigning any reasons for cancellation of registration of the petitioner - violation of principles of natural justice - HELD THAT:- The Co-ordinate Bench of this Court in case of AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] has issued the guidelines to the respondent-authorities holding that ' all the writ applications deserve to be allowed solely on the ground of violation of principles of natural justice and, accordingly, the writ applications are allowed.' Petition disposed off by way of remand.
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2024 (7) TMI 986
Cancellation of GST registration of petitioner - petitioner was unaware of the initiation of proceedings until the petitioner received the impugned recovery notice - discrepancies between the petitioner's GSTR 3B return and the auto-populated GSTR 2A - HELD THAT:- On perusal of the order confirming the tax proposal, it is evident that such order pertains to discrepancies between the petitioner's GSTR 3B return and the auto-populated GSTR 2A. Especially in view of the cancellation of the petitioner's GST registration, the petitioner had little reason to monitor the GST portal on an ongoing basis. Therefore, by putting the petitioner on terms, it is just and necessary to provide the petitioner with an opportunity to contest the tax demand on merits. The orders impugned herein are set aside solely with a view to provide the petitioner an opportunity to contest the tax demand on merits. As a corollary, the matter is remanded for reconsideration by respondents 1 2 subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.
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2024 (7) TMI 985
Breach of principles of natural justice - service of SCN - Petitioner was unaware of the SCN and the impugned order because the same was not communicated through any other mode other than being uploaded on the portal - discrepancy between the petitioner's GSTR 3B and 1 returns - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal confirmed therein pertains to the discrepancy between the petitioner's GSTR 3B and 1 returns for financial year 2017-2018. Learned counsel for the petitioner points out that additional tax was remitted to the extent of Rs.6,75,073.10 as per the screenshot at page no.41 of the typed set of papers. This aspect warrants verification by the respondent. Nonetheless, since the impugned order was issued without the petitioner being heard, reconsideration on terms is necessary in the interest of justice. The impugned order dated 27.11.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.
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2024 (7) TMI 984
Levy of penalty for transporting the vehicle in question after expiry of the e-way bill - gap between the expiry of the bill and interception of the vehicle in question is about 18 hrs - the respondents could not make out any case against the petitioners that there was any deliberate or willful intention of the petitioners to avoid and evade the tax and he opposes this writ petition on the ground of availability of alternative remedy. HELD THAT:- This writ petition is disposed of by setting aside the aforesaid impugned order of the appellate authority and adjudicating authority and as a consequence, petitioners will be entitled to get the refund of the penalty in question subject to compliance of legal formalities. This writ petition stands disposed of.
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2024 (7) TMI 983
Maintainability of petition - availability of alternative remedy - appealable order u/s 112 of the CGST/OGST Act, 2017 - HELD THAT:- In tune with the said Removal of Difficulties Order dated 03.12.2019, the Central Board of Indirect Taxes and Customs, GST Policy Wing vide Circular No.132/2/2020-GST Dated 18th March, 2020 has come out with the clarification in respect of appeal having regard to non-constitution of the Appellate Tribunal - Taking into account the aforesaid Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition, subject to fulfilment of conditions imposed. Subject to verification of the fact of deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, or deposit of the same, if not already deposited, in addition to the amount deposited earlier under Sub Section (6) of Section 107 of the CGST/OGST Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the CGST/OGST Act, for the petitioner cannot be deprived of the benefit, due to non-constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed.
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2024 (7) TMI 982
Eligibility to take ITC on the capital goods in the form of wires/cables electrical equipment etc used for transmission of electricity from power station of the DISCOM to the factory premises of the registered person which are installed outside factory premises as per rules and policy of GETCO, Government of Gujarat Electricity distribution company - HELD THAT:- It is the applicant's case that the conditions specified under section 16 stands fulfilled. The applicant's averment to this extent appears to be correct. The applicant's averment is that they are not hit by 17 (5) (c), ibid. The applicant further stales that they have capitalized the basic value as capital goods and the tax portion is being availed as ITC. Therefore, it is not hit even by the explanation. As far as 17 (5) (d) is concerned, the applicant states that they are covered by the explanation which defines plant and machinery and that they are also not hit by the three exclusions listed in the explanation, The ITC that the applicant wishes to avail is on capital goods viz cables/wires, equipment viz 750 meters new 66 KV S/Cable (3+1), 630 mm square aluminium corrugated sheath/G cable line for installation of 66 KV feeder bay at sub-station of GETCO. On a specific query raised during the course of personal hearing, it was stated by the representative of the applicant that though these are underground cables, they are not fixed to earth; that they are kept in a duct and can be removed/opened as and when any maintenance is required to be done on these goods - the ITC sought by the applicant is not blocked by sub-sections 17 (5)(c) (d), ibid. What is left to be examined now is whether the transfer of the service line to GETCO under an agreement, on a stamp paper of Rs. 300/- at zero value [as claimed by the applicant), which even in terms of the agreement with GETCO [as reproduced supra], would remain the property of GETCO, would have any bearing on the availment of ITC - there is no provision under the CGST Act, 2017 which bars availment of ITC by the applicant if subsequently the capitalized goods are handed over to GETCO/others. However, we would like to point out to the applicant of the liability cast on him, in such situations in terms of section 18 (6) of the CGST Act, 2017. The applicant is eligible to take ITC on the capital goods in the form of wires/cables electrical equipment etc [viz 750 meters new 66 KV S/Cable (3+1), 630 mm square aluminium corrugated sheath/G cable line for installation of 66 KV feeder bay at sub-station of GETCO] used for transmission of electricity from power station of the DISCOM to the factory premises of the applicant.
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2024 (7) TMI 981
Classification of supply - supply of service or not - deduction of a nominal amount by the Applicant from the salary of the employees who are availing the facility of food provided in the factory premises - applicability of GST on the nominal amount to be deducted from the salaries of employees - availability of ITC to the extent of cost borne by the applicant, to the Applicant on GST charged by the Canteen Service Provider for providing the catering services. Whether the deduction of a nominal amount made by the applicant from the salary of the employees who are availing the facility of food provided in the factory would be considered as a 'supply' of services by the applicant under the provisions of section 7 of the CGST Act, 2017? - HELD THAT:- In terms of circular No. 172/04/2022-GST, it is clarified that perquisites provided by the 'employer' to the 'employee' in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST when the same are provided in terms of the contract between the employer and employee - The deduction of nominal amount made by the applicant from the salary of the employees who are availing the facility of food provided in the factory premises would not be considered as a Supply' under the provisions of section 7 of the CGST Act, 2017. Whether Input Tax Credit of GST charged by the CSP would be eligible for availment to the extent of cost borne by the applicant? - HELD THAT:- The Input Tax Credit will be available to the applicant in respect of food and beverages as canteen facility is obligatorily to be provided under the Factories Act, 1948, read with Gujarat Factories Rules, 1963 as far as provision of canteen service employees working at the factory is concerned. It is further held that the ITC on GST charged by the canteen service provider will be restricted to the extent of cost borne by the applicant only - Input Tax Credit will be available to the appellant in respect of food and beverages as canteen facility is obligatorily to be provided under the Factories Act, 1948, read with Gujarat Factories Rules, 1963 as far as provision of canteen service for employees in factory is concerned.
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2024 (7) TMI 980
Applicability of N/N. 66/2017 on turnkey contract - levy of GST on advance received against supply portion in Turnkey contract - divisible contract or not - Identification of rates for supply and service separately under single contract can be read as divisible contract. Divisible contract or not - HELD THAT:- The recipient has not contracted for ex-factory supply of materials, but for the composite supply, namely works contract service tor supply, installation, testing and commissioning of 11 KV medium voltage covered conductor (MVCC) with its accessories. A bifurcation of the turnkey contract into two further contracts as part-I and part-II, would not change the classification. The contract, being a turnkey contract, both of which are interlinked interdependent to performance as is evident from article 5, leads to the conclusion that the turnkey contract entered by the applicant with the PGVCL,, is a works contract as defined u/s 2(1 19) supra. Further, there is nothing on record cither in the application or in the additional submission averring that the supply, installation testing commissioning of 11 KV medium voltage covered conductor (MVCC) with its accessories, is not an immovable property. The contract entered into by the applicant with PGVCL is also not a divisible contract, notwithstanding the fact that the turnkey contract, constitutes two different contract, entered on the same day, the performance of which is interconnected, interdependent wherein the obligations cast in part-II clearly slate that his performance in part-I is interconnected to his performance in part-II vice versa. Whether GST is payable on advance received and whether the notification no. 66/2017-CT dated 15.11.2017 is applicable for turnkey contract? - HELD THAT:- CGST Act, 2017 clearly states that a works contract in terms of schedule II, is to be treated as supply of service. Now, N/N. 66/2017-CT dated 15.11.2017, relied upon by the applicant states that a registered person, shall pay the central tax on the outward supply of goods at the time of supply as specified in section 12 (2) (a) of CGST Act, 2017 including in the situations attracting the provisions of section 14 of the said Act - GST is payable on advance received by the applicant and the benefit of notification no. 66/2017-CT dated 15.1 1.2017 is not applicable in respect of the turnkey contract entered into by the applicant.
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2024 (7) TMI 979
Levy of GST - stamp duty registration fee paid for the purpose of a registering lease deed with registering authority - nil rate of tax under Sl. No. 47 of the exemption N/N.12/2017-CT dtd. 28.06.2017 - treatment of stamp duty and registration fee as consideration for mining lease service - HELD THAT:- The Asst. Commissioner of Audit, Angul Circle Gr.-I, CGST Bhubaneswar has issued Audit Observation No. 6 dated 10.11.2023 to the Applicant for recovery of Rs. 6,27,74,106/- towards GST on RCM on the amount paid towards Stamp duty and Registration fees. Pursuant to the said audit observations the Applicant has sought ruling. Further, it is also seen that the Applicant has been issued GST DRC-01A by the Addl. Commissioner, Audit Commissionerate vide C.No. GADT/CnG/ADT/GST/2791/2023-GR-1-CGST-ADT CIR-ANGL-ADT-2941 A dated 23.02.2024 for payment of GST on the aforesaid amount. It would be pertinent to mention here that the proviso to sub-section (2) of Section 98 of the CGST Act, 2017 provides that the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act . In the instant case, the Applicant i.e. M/s. Geeta Rani Mohanty, Barbil, appears to have fallen under the first proviso to Section 98 (2) of the CGST Act, 2017, by opting for advance ruling at this stage particularly when the subject matter is already taken up and pending in proceedings initiated by the Audit Commissionerate, CGST, Bhubaneswar under Section 65 of the CGST Act, 2017.
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2024 (7) TMI 978
Taxability of the works/services - transportation of coal located at mines to the railway siding or to the delivery point as per the requirements of recipient of service and applicable rate of GST on the said services. HELD THAT:- The transport of minerals within a mining area by vehicles deployed with drivers would be a service of renting of transport vehicles with operator falling under Heading 9966 and not service of transportation of goods by road. This being so, it is not eligible for exemption under SI. No. 18 of notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. On such rental services of goods carriages where the cost of fuel is included in the consideration charged from the recipient of service, GST rate has been reduced from 18% to 12% with effect from 18.07.2022. Prior to 18.07.2022, it attracted GST at the rate of 18%. The transportation of coal (minerals) within a mining area say from mining pit head or coal stockyard located at mines to railway siding, beneficiation plant etc for a specified period and at an agreed price as mentioned in the agreement will be classified under SAC 9966 i.e., Renting of Transport Vehicles and for that the applicable tax rate is 12%.
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2024 (7) TMI 977
Taxability - Deposit Work undertaken by the Applicant and 6% supervision charges received for supervision and monitoring of deposit work - transmission or distribution of electricity - exemption under Entry 25 of N/N. 12/2017-CT (R) dated. 28.06.2027 issued under GST Laws - ancillary / incidental to the principal supply of transmission or distribution of electricity - ITC of GST paid to contractors on execution of said work and GST paid on materials and equipment supplied free of cost out of its stock - reversal of ITC u/s 17 (2) of CGST Act read with Rule 42 and 43 of CGST Rules. HELD THAT:- As per provisions of Electricity Act 2003, the deposit work is either executed by the applicant or by the consumer. Both the applicant and the consumer have liberty to execute the deposit works of creation of electrical transmission infrastructure for transmission and distribution of electricity and therefore, the supplies of support services of transmission infrastructure and supplies of services of transmission and distribution of electricity are separable - the amount is recovered from the consumers as non-tariff charge. This shows that the services of transmission of electricity is independent of the deposit contribution works under taken by the Applicant and accordingly do not fulfill all conditions specified in section 2 (30) of the CGST/OGST Act for the purpose of treating both the supplies as composite supply. Thus, the exemption notified for 'transmission and distribution of electricity' cannot be extended to the deposit contribution works (support services) undertaken by the applicant on the pretext of those being a part of the composite supply, which is far from true. Rather those support services in form of deposit contribution works provided by the applicant are taxable supplies irrespective of the fact that whether the same are supplied by contractors or third parties. Thus, the exemption is limited to Transmission and distribution' of electricity only. The deposit works undertaken by the Applicant is supplying support services to electricity transmission distribution classified under SAC-998631. The applicable rate of tax is 9% in view of Entry SI No. 25 of the Notification No. 11/2017-CT dated 28.06.2017. Whether, the Applicant is eligible for ITC of GST paid to contractors on execution of deposit work and GST paid on materials and equipment supplied free of cost to the contractor? - HELD THAT:- As per Section 16(1) of the Act, every registered person is entitled to take ITC charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business - In the instant case, it is seen that the works undertaken by the Applicant is for creation of the infrastructure which will be used for supplying supply of services of transmission or distribution of electricity for the furtherance of business. Therefore, ITC can be admissible to Plant and Machinery means apparatus, equipment and machinery fixed to the earth by foundation or structural support that are used for making outward supply of goods and services or both in accordance with the explanation provided under the third proviso to sub-section (5) of Section 17 of the CGST Act.
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Income Tax
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2024 (7) TMI 976
Delay preferring the Special Leave Petition - condonation of delay of 325 days - Reopening of assessment - addition u/s 68 - unexplained cash credit - As decided by HC [ 2023 (6) TMI 133 - KARNATAKA HIGH COURT] so far as any sum credited consists of share application money, the same is dealt by proviso to Section 68. Admittedly, the proviso had been inserted with effect from 01.04.2013. Admittedly the Assessment year in this case is 2008-09. Thus addition to be deleted. HELD THAT:- As special leave petition was sent to CAS after vetting, there afterwards nothing is stated and special leave petition has been filed on 07.06.2024. However, what is stated in the application seeking condonation of delay is otherwise. The explanation offered for the said delay is also not satisfactory and neither is it sufficient in law to condone the same. The application seeking condonation is dismissed. Consequently, the Special Leave Petition is also dismissed on the ground of delay.
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2024 (7) TMI 975
Delay of 202 days in preferring the SLP - Penalty u/s 271(1)(c) - defective notice u/s 274 - non specification of clear charge/Default - HC [ 2023 (8) TMI 1373 - DELHI HIGH COURT] decided that it is not clear whether the AO intended to levy a penalty on the respondent/assessee for concealment of particulars of his income, or furnishing inaccurate particulars. This issue is covered against the appellant/revenue HELD THAT:- As perused the application seeking condonation of delay, noted from the memorandum of special leave petition that the affidavit verifying special leave petition is dated 22.05.2024 and the special leave petition has been filed on 05.06.2024. However, what is stated in the application seeking condonation of delay is otherwise. The explanation offered for the said delay is also not satisfactory and neither is it sufficient in law to condone the same. In the circumstances, the application seeking condonation is dismissed. Consequently, the Special Leave Petition is also dismissed on the ground of delay.
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2024 (7) TMI 974
Delay in filling SLP - Refund of the income tax for the past years on exempted income of disability pension (service element and disability element) - petitioner is a disabled officer of the Indian Army who was commissioned and retired with service pension - HC [ 2023 (5) TMI 741 - PUNJAB AND HARYANA HIGH COURT] allowed writ petition as once the disability pension was exempted from income tax then why this benefit has not been given to the petitioner and the amount of income tax paid by the petitioner for the relevant years be refunded to him alongwith interest @ 9% p.a. within a period of one month from the date of receipt of certified copy of this order alongwith costs of Rs.1 lac. HELD THAT:- There is a delay of 279 days in the filing of the present special leave petitions. Looking at the nature of controversy and the stand taken by the petitioner, we are not inclined to interfere with the impugned judgments/orders. The application for condonation of delay and, consequently, the special leave petitions are dismissed.
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2024 (7) TMI 973
Validity of assessment order passed - materials placed on record by the petitioner were not duly taken into consideration - proceedings initiated u/s 148 assessee did not file the return of income - undisclosed interest income - By referring to Section 69A, assessee contends that the said provision is attracted only if the source of income is not adequately explained by the assessee, but assessee clearly indicated the source of income and annexed documents to corroborate the same HELD THAT:- As petitioner stated categorically that the amounts specified in the notice u/s 142(1) were received as interest income. The petitioner annexed an income computation statement and the income tax paid challan for the relevant assessment year. Such challan has also been placed on record and indicates that a sum was paid by way of self assessment tax for assessment year 2019-20. The petitioner further attached documents to the reply dated 12.12.2023 and these documents include copies of the relevant sale deed and the bank account statements. On examining the impugned assessment order, it appears that the assessing officer took note of the sale deed relating to the sale of property. The contention of the petitioner with regard to interest income having accrued from fixed deposits was also noticed. However, the income tax challan and the TDS were not taken into consideration. Also it should be noticed that the assessee failed to reply to the show cause notice or file the return of income even after a notice under Section 148 was issued. In these circumstances, it is appropriate that the matter is remanded by imposing costs on the petitioner. Impugned assessment order is set aside on condition that the petitioner pays costs of Rs. 15,000/- to the Tamil Nadu State Legal Services Authority within two weeks from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to reply to the show cause notice. In order to enable the petitioner to upload such reply, the respondents are directed to provide access to the portal.
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2024 (7) TMI 972
Assessment u/s 153A - Deemed dividend addition u/s 2(22)(e) - HELD THAT:- As decided in ABHISAR BUILDWELL P. LTD. [ 2023 (4) TMI 1056 - SUPREME COURT] AO would not be justified to assess income in case no incriminating material is found during the search. Thus, as no incriminating material, based on which the assessment orders are passed, is placed before us, the substantial questions of law are answered against the Revenue, while affirming the order passed by the Appellate Tribunal.
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2024 (7) TMI 971
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid. We, accordingly, allow this petition in terms of prayer clause (a).
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2024 (7) TMI 970
Validity of reassessment proceedings - period of limitation - time limit to issue notice u/s 148 - HELD THAT:- Admittedly, in the present case the impugned notice is dated 19 July 2022 which is for the assessment year 2015-16. Adverting to what has been held by the Division Bench of this Court in Hexaware Technology Ltd. [ 2024 (5) TMI 302 - BOMBAY HIGH COURT ] the notice for such reason certainly would not satisfy the test of law, accordingly, it would be required to be quashed and set aside. Decided in favour of assessee.
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2024 (7) TMI 969
Taxability of income in India - Royalty receipts - payments received by the assessee for supply of software - as per revenue receipts of the amounts in question from Reliance were on account of supply of the copyright software as per the terms of the Wireless Software Assignment and License Agreement - case of the assessee was to the effect that the amount was a business income and was not taxable in India, in the absence of or assessee having a Permanent Establishment (PE) in India. HELD THAT:- It is clear that the approach of the AO in the present case was against the correct position in law as held by the Tribunal in Commissioner of Income Tax- (LTU) Versus Reliance Industries Ltd. [ 2024 (6) TMI 1069 - BOMBAY HIGH COURT ], and now also endorsed by the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT ] as held remittance made by the assessee to foreign parties on account of purchase of certain computer software, would not be liable to tax in India as royalty under the provisions of Section 9(1) (vi) - Decided in favour of assessee.
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2024 (7) TMI 968
Stay petition - order granted the petitioner the right to remit 20% in 18 installments - financial stringency in granting stay - HELD THAT:- As regards the application for stay, such application is required to be considered by taking into account the classical principles of prima case case, balance of convenience and financial stringency. On perusal of the impugned order, the second respondent appears to have taken into account the financial stringency pleaded by the petitioner and has permitted the petitioner to make the pre-deposit in 18 installments. Since find no infirmity in such order, we find no reason to interfere with the same. Directing the third respondent to dispose of the appeal filed by the petitioner on 14.01.2020 in respect of assessment year 2022- 23 within four months from the date of receipt of a copy of this order.
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2024 (7) TMI 967
Validity of proceedings initiated u/s 153A - absence of any incriminating material found and seized in course of search and seizure operation conducted u/s 132 - share application money/share premium received by the assessee, being treated as unexplained cash credit u/s 68 and disallowance made u/s 14A of the Act read with Rule 8D - HELD THAT:- Careful perusal of the assessment orders reveal that in course of assessment proceedings, while verifying the audited financial statements of the assessee, AO came to know about the receipt of share application money/share premium during the years under dispute. To verify the genuineness of the money received the AO conducted inquiry by calling upon the assessee to furnish documentary evidences including bank statement, names and addresses of persons from whom share application money/share premium was received, their confirmations, income tax return copies etc. In compliance with the queries raised, the assessee did furnish various documentary evidences. AO was not convinced with the evidence furnished by the assessee to prove the creditworthiness of the persons/entities from whom the share application money/share premium was received. Hence, he also doubted the genuineness of the transaction. However, nowhere in the impugned assessment order the AO has referred to any incriminating/ seized material, much less any incriminating/seized material having direct bearing on the additions made. Even, he has not referred to any statement recorded in course of search seizure operation. On the contrary, reading of the assessment order clearly reveals that the additions made u/s 68 as well as section 14A r.w.r. 8D are based on inquiry conducted in course of assessment proceedings and nothing else. Thus, it is established on record that none of the additions made in the assessment orders are based on any incriminating/ seized material, found during search and seizure operations. Asa decided in ABHISAR BUILDWELL P. LTD. [ 2023 (4) TMI 1056 - SUPREME COURT] in case of unabated assessment u/s 153A of the Act, no addition can be made in absence of any incriminating/ seized material found as a result of search and seizure operations. That being the settled legal position, the additions made by the AO u/s 68 and 14A cannot survive. Thus we direct the AO to delete the addition. Decided in favour of assessee.
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2024 (7) TMI 966
Ex-parte order passed by CIT(A) - Denial of deduction u/s 54F - Non speaking order passed - as assessee argued not giving reasonable and sufficient opportunities of being heard to the assessee - HELD THAT: - The assessee had requested for adjournment in response to the notice issued by CIT(A) on 30.12.2020. He has requested to grant a date in April, 2021. However, we find that subsequent notices were issued very late on 13.10.2022 and 29.01.2024 We also find that assessee had expired on 26.04.2021. Thus, we are of the considered view that assessee was not granted reasonable and sufficient opportunities of hearing by CIT(A). AO has made addition u/s 54F - CIT(A) has dismissed the appeal by passing a cryptic order without discussing the merits of the case. AR has stated that the appellant has all evidences and explanation in support of the claim of deduction u/s 54F of the Act. We find that impugned order passed by the Ld.CIT(A) is clearly violative of the express provisions of Section 250(6) of the Act, which provides that the appellate orders of the Ld.CIT(A) are to state the points arising in the appeal, the decision of the authority thereon and the reasons for such decisions. Speaking order would obviously enable a party to know precise points decided in his favour or against him. Considering the facts and circumstances of the case and the submission of Ld.AR for the assessee that the Assessing Office made addition for the want of evidence, which was confirmed by Ld.CIT(A) in ex parte order, we are of the considered view that the assessee deserves one more opportunity to contest his case on merit. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (7) TMI 965
Estimation of income - bogus purchase - addition of @12.5% of the disputed purchases - HELD THAT:- The sales were executed depending on the purchases of materials. In the transaction, the purchases and sales are interlinked during this impugned financial year. We respectfully relied on the order of S.V. Jiwani [ 2022 (10) TMI 173 - BOMBAY HIGH COURT] wherein involving similar set of facts and circumstances of the case, the Hon ble jurisdictional High Court has upheld the decision of the Hon ble ITAT, Mumbai Bench that addition to the extent of @12.5% of the bogus purchases is fair and reasonable. AO had not rejected the sale of assessee but only the purchase. Hence, we direct the ld. AO to restrict the addition @12.5% on bogus purchase.
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2024 (7) TMI 964
Penalty u/s 271(1)(c) - addition was made on the basis of the estimation of manpower related to Associated Enterprises and non-related Associated Enterprises - HELD THAT:- Addition was made on the estimation which is not attracted the penalty u/s 271(1)(c). AR only pressed the ground no. 1 and 2 related to legal issue for issuance of notice u/s 271(1)(c) r.w.s. 274, which is defective for non-mentioning of the reasons of penalty. The assessee made an objection during the penalty proceedings and also in the appellate proceedings. The grounds were taken before the learned CIT (A). The issue is squarely covered by the decision of Hon'ble Jurisdictional HC in case of MR. MOHD. FARHAN A. SHAIKH [ 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] AR laid down that in the absence of such specific notice, the notice would be invalid. As held in various judicial pronouncements including the decision of CIT V/s SAS s Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] against which Special Leave Petition (SLP) filed by the department stood dismissed by Hon ble Supreme Court [ 2016 (8) TMI 1145 - SC ORDER] . The notice u/s 274/271(1)(c) of the Act is not carrying the specific limb. Therefore, this is a case where both the parts of the offences i.e., concealment of income as well as furnishing of inaccurate particulars of income were involved. We allow the appeal of the assessee.
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2024 (7) TMI 963
Validity of order u/s 250 by CIT without deciding the issues pending in appeal - also issue decided in the Appellate Order does not pertain to the issue against which appeal was filed before Ld. C. . .(A) - HELD THAT:- While disposing of the appeal filed by the assessee against the order passed by the ACIT, Range-1, Lucknow under section 143(3) of the Act, challenging the disallowance of Commission Expenses while CIT(A) has dealt with the issue relating to Late Fee under section 234E of the Act levied by the Assessing Officer, CPC-TDS passed under section 154 r.w.s. 200A. Since the ld. CIT(A) has dealt with altogether a different issue than what has been raised by the assessee before him, there is a mistake crept in the order of the ld. CIT(A). We, therefore, in the interest of justice, set aside the impugned order of the ld. CIT(A) dated 3.1.2023 and restore the matter to his file with a direction to decide the issue raised by the assessee relating to disallowance of Commission Expenses made by the ACIT, Range-1, Lucknow vide order passed under section 143(3) of the Act, on affording due and adequate opportunity of hearing to the assessee. Assessee appeal allowed for statistical purposes.
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2024 (7) TMI 962
Penalty u/s 271(1)(c) - Defective notice - as argued non specific charge of furnishing incorrect particulars of income - HELD THAT:- AO has consciously deleted all irrelevant and unrelated part of the show cause notice and only the charge of furnishing inaccurate particulars of income was mentioned in the show cause notice. Thus, it is a case of initiation of penalty proceedings against a specific charge of furnishing inaccurate particulars of income which in our view is a correct charge for initiation of penalty u/s 271(1)(c). Accordingly there is no defect either in recording of satisfaction or in issuing the show cause notice u/s 274 r.w.s. 271(1)(c) of the Act for initiating the penalty proceedings u/s 271(1)(c). Once the penalty proceedings were initiated on a definite charge and was made known to the assessee by both means of recording the satisfaction in the assessment order as well as serving the show cause notice then the objection of the assessee has no legs to stand. Accordingly we do not find any substance in this objection of the assessee. Levy of penalty u/s 271(1)(c) is proper and justified as it is a case of furnishing of incorrect particulars of income by making a claim of business loss as against the speculative loss not permissible under the provisions of the Act. Hence we do not find any reason to interfere with the impugned order of the CIT(A) confirming the levy of penalty u/s 271(1)(c) of the Act. Appeal of the assessee is dismissed.
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2024 (7) TMI 961
Nature of expenses - non-compete fees - revenue or capital expenditure - HELD THAT:- Non-complete consideration u/s 28(VA) of the Act is considered as income and, therefore, the assessee has rightly claimed the same as expenditure as the source of the profit or income of profit-making apparatus remains untouched and unaltered. The decision of Hon ble Gujarat High Court in the case of Smartchem Technologies Limited [ 2016 (8) TMI 559 - GUJARAT HIGH COURT] categorically mentions that the expenditure incurred for the purpose which is set out primarily and essentially related to the operation or work of the firm (LLP partnership firm) constituted the profit earning apparatus of the assessee is in the nature of revenue expenditure. Thus, in the present case, the assessee paid the non-compete fees to Shri Paras C. Pandit and, therefore, it is in nature of revenue expenditure. Hence, the disallowance of non-compete fees expenditure by the AO and the CIT(A) is not justified. Thus, appeal of the assessee is allowed.
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2024 (7) TMI 960
Penalty u/s 271(1)(c) - defective notice u/s 274 - non specification of clear charge - additions on account of gift and undisclosed stock - HELD THAT:- We note that the notice is an omnibus notice without specifying the specific charge upon the assessee and in such circumstances, Higher Courts have held that penalty levied is not sustainable. In this regard, we refer to case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB) ] wherein it has been held that no specification of charge in the penalty notice leads to same becoming void and penalty on that count is to be deleted. Thus, we note that due to defect in the penalty notice, penalty is not sustainable, hence the same is quashed. Decided in favour of assessee.
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2024 (7) TMI 959
Revision u/s 263 - as per CIT AO had not examined the issue of accumulation in depth and AO had also not examined the actual difference between the interest income earned by the assessee and as accrued by the assessee as to whether the assessee was liable to be taxed in respect of differential amount HELD THAT:- A perusal of the facts in the present case clearly shows that both the issues which have been raised by ld CIT(E) have been specifically queried to by the AO in the course of original assessment proceedings. These queries have also been answered substantiated with documentary evidence. AO in the course of Face Less Assessment would have obviously had this documentary evidence verified by the Verification Unit. There is no allegation by ld CIT(E) that these documents and evidences were not verified by the Verification Unit of the FaceLess Assessment Proceedings. The issues which have been raised by ld CIT(E) in his order u/s. 263 have clearly been examined by the AO in the course of assessment proceedings, it cannot be said that there has been no application of mind by the AO. A perusal of the order of the ld CIT(E) does not show as to what is the specific error which has been done by the AO has led to prejudice the interest of the revenue. Now, if at all, the interest income is also considered as income still the application would stand at 85% and the exemption of 15% would still cover this income of Rs. 19,15,625/- and income itself would be exempt. The amount of Rs. 5,00,00,000/- admittedly have been clearly shown to be held in fixed deposit and in Flexi account with scheduled bank. Thus, order passed u/s. 263 is only a fishing enquiry which has already been examined in depth by the AO in the course of assessment, which is not permissible in the proceedings u/s. 263 - Decided in favour of assessee.
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2024 (7) TMI 958
Unexplained credit u/s 68 - treating the deposit as accommodation entry - main issue of source of deposit being Bright corporation/Samsun Paul Gohil was lost site off and uncalled for attention was centered on the trade deal of Dhaniya HELD THAT:- Sum received on 13.11.2016 stands fully explained. It is a genuine transaction through banking channels. The amount was remitted in the account of the assessee through RTGS. The source of deposit was already known to the department i.e. Shri Samsun Paul Gohil. Thus, the source of deposit also stood fully explained. There was no case for treating the same as unexplained u/s 68. Addition u/s 68 can be made only if the source of amount remains unexplained. In the case of the assessee the source of deposit was already on record with the department. Hence, the AO has wrongly made addition u/s 68. CIT(A) has also erred in confirming the same. Thus there were no case for treating the amount as accommodation entry. There is no statement of Samsun Paul Gohil that the amount of Rs. 17,00,000/- was remitted to the assessee in view of cash receipts of the assessee. The investigation wing has also not furnished any material to establish that the amount received by the assessee was an accommodation entry. So far as the assessee is concerned, the transaction of receipt of Rs. 17,00,000/- and the returned thereof are genuine transactions. Hence, the addition made in the hands of the assessee are totally uncalled for and unlawful. The same was wrongly made by the AO only on the ground that the information was received from the investigation wing. AO has wrongly acted upon the receipt of information from the investigation wing as a thumb rule, without causing any enquiry at his level - CIT(A) has also erred in confirming the same. Hence, addition of Rs. 17.00 lacs is directed to be deleting by allowing the appeal of the assessee.
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2024 (7) TMI 957
Addition u/s 68 - bogus share capital and share premium - unexplained cash credit as the assessee could not establish the identity, creditworthiness and genuineness of the share subscribers and even did not produce the director of the investor companies in spite of summon issue u/s 131 - HELD THAT:- Hon ble Delhi High Court in the case of CIT vs. Steller Investment Pvt. Ltd. [ 1991 (4) TMI 100 - DELHI HIGH COURT] has held that even if it be assumed that the subscribers to the increased share capital were not genuine, even then under no circumstances could the amount of share capital be regarded as undisclosed income of the assessee. The Hon ble Court admitted that there were some bogus share holders and the money may have been provided by some other persons. But it would have been sensible to reopen the assessments of the person alleged to have advanced the money and how the amount in respect of increase in share capital could be assessed in the hands of the assessee company itself was beyond understanding. CIT(A) has given a finding that the submissions given by the assessee during the appellate proceedings pointed towards the elaborate documentations filed by the assessee in relation to application of shares, allotment of shares, share certificates, payments by cheques and necessary papers/documents filed before the Registrar of the company. CIT(A) also noted that the assessee has provided a copies of bank statements, contract notes, delivery instructions to the broker that all the transactions were genuine however in his considered view of the matter, it is precisely this elaborate paperwork strengthen the issue long term capital gain which clearly has been schemed, preplanned and executed with malafide intelligence and precision. We find that the CIT(A) has completely gone out of track while recording the findings as in the present case issue involved is raising share capital / share premium by issuing equity shares and not of earning of long term capital gain by selling equity shares. There was a complete non-application of mind to the facts/evidences filed by the assessee as well as share subscribers as the CIT(A) has wrongly recorded a finding that the assessee has wrongly derived benefit by way of long term capital gain on sale of equity shares which is totally wrong and based on conjectures, surmises and day dreaming . We are not in a position to sustain the findings given by the Ld. CIT(A). Accordingly, the order of Ld. CIT(A) is set aside and AO is directed to delete the addition. Assessee appeal allowed.
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2024 (7) TMI 956
Assessment u/s 153A - Addition u/s 68 - assessee had taken accommodation entry in the form of penny stock - HELD THAT:- The judgment of Ld. CIT (A) while relying on PCIT Vs. Abhisar Buildwell P. Ltd [ 2023 (4) TMI 1056 - SUPREME COURT] is correct interpretation of the issue and we do not find any perversity in the order of Ld. CIT (A) wherein held the impugned addition cannot survive de hors the incriminating evidences. Addition u/s 68 on bogus LTCG - Transaction of LTCG claimed exempt u/s. 10(38) of the Act by the assessee is colourable device in guise of investment in listed shares. Entire transactions were stage managed with object to plough back his unaccounted income in form of fictitious long term capital gain (LTCG) and claim bogus exemption, Assessing Officer was justified in denying exemption under section 10(38) of the Act and treating such bogus LTCG in penny stock under purview of unexplained cash under section 68 of the Act. The prime evidence against the assessee is presence of the exit provider namely Mr. Rohidas Sarjine, has admitted and filed a submission that there was no genuine activity through his account, that his account was managed and operated completely by Mr. Naresh Jain. This fact on the record remained unchallenged by the assessee and there is not even a whisper about it in addition to the fact that the share price of the share was moved from 1.82 per share in April 2011 and rigged to the peak of Rs. 1,425/- per share in August 2014, which again came down to Rs. 0.88 per share in March 2016. Grounds taken by the assessee are dismissed.
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2024 (7) TMI 955
Exemption u/s 11 - assessee has filed the return of income in ITR 7 instead of ITR 5 - whether the assessment proceedings are pending in this case when the 12A registration was granted on 22/02/2016? - HELD THAT:- It is fact on record that assessee did not have a proper registration u/s 12AA at the time of filing the return of income and the mistake was apparent that assessee should have filed the return of income only under ITR Form 5. It is brought to our notice that the assessee was granted registration subsequently on 22/02/2016. As per the first proviso to section 12A(2) of the Act when assessment proceedings pending before the Assessing Officer as on the date of such grant of registration and the objects and activities of such trust remain the same for such preceding assessment year, the provision of section 11 12 are applicable in such cases. It is fact on record that the issue pending at the time of grant of registration was only relating to rectification of mistake and for not filing the return of income in proper Form i.e., assessee has filed in Form ITR 7 instead of Form 5. Technically, there is no assessment proceeding pending before the any authority at the time of grant of registration as per the fact available on record. We are inclined to remit this issue back to the file of the Jurisdictional Assessing Officer for wrongly rejecting the rectification application filed by the assessee and in our considered view as per the facts available on record, at that point of time, assessee has wrongly filed ITR 7 instead of ITR 5, therefore,direct the Assessing Officer to consider the case of the assessee and reassess the income of the assessee as per ITR 5. Further, direct the assessee to file the financial statements and submit the data as per ITR-5 before the Jurisdictional Assessing Officer. We direct the Assessing Officer to re-do the assessment after giving proper opportunities of being heard to the assessee - Appeal filed by the assessee is allowed for statistical purposes.
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2024 (7) TMI 954
Revision u/s 263 - allowability of business promotion expenses u/s 37 - as per CIT business promotion expense claimed by the assessee was in the nature of freebies/monetary grant for promoting products and was required to be disallowed, thus AO had passed the assessment order without making proper enquiry and the required addition in respect of this claim - HELD THAT:- AO had made the enquiry, applied his mind and came to the conclusion that no disallowance u/s 37 was called for. The Ld. PCIT had not brought anything adverse on record to substantiate her allegation that the claim of the assessee was liable to be disallowed under Section 37 of the Act. PCIT has also not brought out any inadequacy in the enquiry as conducted by the AO in the course of assessment proceeding rather the entire foundation of the order u/s 263 of the Act is found to be based on change of opinion. As per the provision of Section 263 of the Act, the Ld. PCIT is empowered to conduct further enquiry as deemed necessary, but no such enquiry was conducted to prove that the claim of the assessee was not admissible. PCIT has only examined the details and evidences filed before the AO in the course of assessment and on that basis she had a different opinion about the admissibility of the claim. The powers u/s 263 of the Act cannot be exercised only on the basis of change of opinion. It had to be first established that order was erroneous and prejudicial to the interest of the revenue and, this condition is not found fulfilled in this case. Assessee appeal allowed.
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2024 (7) TMI 953
Disallowance u/s 14A r.w.r. 8D - Expenditure incurred in relation to income not includible in total income - HELD THAT:- Contention of the appellant that as it hadn t earned any exempt income during the year and therefore the disallowance made u/s. 14A of the IT Act deserves to be deleted completely is not tenable. We are of the opinion that in the present case, the amount of exempted income of Rs. 55,56,958/- was earned on investments and consequently, the amount of disallowance if at all to be made should be restricted to Rs. 55,56,958/-. We are also of the opinion that the disallowance u/Rule 8D of IT Rules r.w.s.14A can never exceed the exempted income earned by the assessee as per proviso to Rule 8D(2) of the IT Rules, 1962. Accordingly, ground no. 3 is partly allowed.
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2024 (7) TMI 952
Denial of registration u/s 12AB - CIT(E), rejected application holding that the nature of activity of the trust is restricted to the benefit of particular religious community or caste ( Leva Patel ) and therefore provisions of section 13(1)(b) would be applicable - HELD THAT:- We find that assessee-trust, under consideration, was in existence since 1946, that is, prior to the Income-Tax Act, 1961, came into being. That is, the trust under consideration was created in 1946, however, the Indian Income Tax Act 1961, was come into force in the year 1961. The assessee-trust was in existence prior to the Indian Income Tax Act 1961, hence the provisions of section 13(1) (b) would not be applicable to the assessee-trust under consideration. Assessee, explained before us that the property was purchased by the trust in 1946. As per the PTR records, the assessee- trust became an owner of land by registered purchase deed, dated 26.12.1946 and 30.06.1959. Therefore, the assessee- trust, was in existence before the commencement of the Income-Tax Act 1961, hence, even if, the trust was created only for a particular community, ( LEVVA PATEL ), the Ld. CIT(E), should not have denied the registration of the trust, provided, the assessee- trust fulfilled the conditions mentioned in section 12AB of the Income Tax Act, 1961 and Rule 17 A of the Income Tax Rules, 1962. Therefore, we find that judgments referred by Ld. CIT(E) in the case of Palghat Shadi Mahal Trust [ 2001 (7) TMI 8 - SUPREME COURT] and the case of Dawoodi Bohara Jamat [ 2014 (3) TMI 652 - SUPREME COURT] are not applicable to the assessee trust under consideration. Registration of the trust, should not be denied on account of provisions of section 13(1) (b) of the Income Tax Act, 1961, as these provisions are not applicable to the assessee-trust, under consideration, as explained above. Therefore, we direct the ld CIT(E ) to grant the registration to the assessee- trust provided, the assessee-trust fulfilled other conditions, as mentioned in section 12AB and Rule 17A of the Income Tax Rules, 1962. For statistical purposes, the appeal of the assessee is treated to be allowed.
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2024 (7) TMI 951
Reopening of assessment u/s. 147 - case reopened on some ITBA data base where the parties from whom assessee had made purchases were found to be non-filer of GST and simply based on this information, assessment has been reopened u/s. 148 - addition on account of purchases which already stood examined earlier as it is part of the trading amount - HELD THAT:- Here in this case there is no document or evidence revealing income chargeable to tax, represent in the form of an asset. AO has sought to reopen is to disallow the purchases made by the assessee which is an item of a trading account duly reflected in the books and also the quantity of sale of purchases have been accepted alongwith gross profit in the original assessment order u/s. 143(3) dated 20/03/2016. Thus, even under the terms of first proviso to Section 147 as was then applicable, no reopening can be done after expiry of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for the reasons of the failure on the part of the assessee to disclose truly and wholly all material facts necessary for the assessment. Here, there is no such failure on the part of the assessee. Accordingly, in terms of time limit provided in Section 149 and first proviso to Section 147, the reopening itself is bad in law and same is quashed. Accordingly, the entire assessment order is quashed. Appeal of the assessee is allowed.
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2024 (7) TMI 950
Delay filling appeal before CIT - delay of 1999 days in filing the appeal for A.Y. 2013-14 and a delay of 536 days in filing appeal for A.Y. 2015-16 before the CIT(A) - sufficient cause for condonation of delay - ongoing litigation between the assessee and the Union Bank of India, the delay occurred in filing the appeals before the CIT(A) HELD THAT:- The Court/authority has to examine whether the sufficient cause has been shown by the party for condoning the delay, and whether such cause is reasonable or not. In the present case in hand, the assessee explained the delay in filing the appeals before the CIT(A) was on the reason that the assessee presumed the appeals were filed by the representative who was handling the case at that point of time, and it was only on receipt of the recovery notice that the lapse was realized. This being the position, it constitutes a sufficient cause for filing the appeals belatedly. Further, on perusal of the affidavit filed by the then representative, we are of the opinion that due to the circumstances that existed, the lapse that occurred on behalf of the representative cannot be attributed to the assessee for which assessee could be punished. Whether delay was excessive or inordinate? - There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not able to file the appeals within the period of limitation. The cause for the delay therefore deserves to be considered, when there exist a reasonable cause, and therefore the period of delay may not be relevant factor. K.S.P. Shanmugavel Nadai and Ors. [ 1984 (4) TMI 24 - MADRAS HIGH COURT] considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Hon ble Madras High Court thus condoned nearly 21 years of delay in filing the appeal. As compared to 21 years, delay of about 1000 to 2000 days cannot be considered to be inordinate or excessive. As decided in Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi [ 1978 (2) TMI 210 - SUPREME COURT] clarified the distinction between an 'explanation' and an 'excuse', emphasizing that, mere excuses wouldn't suffice; a satisfactory and acceptable explanation was required. The Court added, there is no formula that caters to all situations and, therefore, each case for condonation of delay based on existence or absence of sufficient cause has to be decided on its own facts. We therefore feel that we feel that the reasons assigned by the assessee and the then representative for condonation of delay on account of the assessee and inability to present the appeals within time, deserves consideration. We are therefore of the view that, there is a reasonable cause in filing the appeals belatedly before CIT(A), as delay was neither willful nor wanton but was due to the circumstances beyond the control of the assessee. It is noted that there is no malafide intention on behalf of assessee in not filing the appeals before Ld.CIT(A) within time. In our opinion there is a sufficient cause for condoning the delay as observed in case of Collector Land Acquisition Vs. Mst. Katiji Ors, [ 1987 (2) TMI 61 - SUPREME COURT] in support of his contentions. We condone the delay in filing the appeals before CIT(A) belatedly and the appeals are admitted for adjudication by exercising the power u/s 253(5) of the Act.
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2024 (7) TMI 949
Bogus sub-contract charges debited to the profit and loss account - AO stated that assessee has recorded the bogus expenditure in the form of sub-contract charges so as to inflate the expenditure with ultimate motive to reduce the profits and evade taxes there on - HELD THAT:- As relying on own case [ 2023 (9) TMI 1497 - ITAT MUMBAI] we direct the assessing officer to restrict the disallowance to the extent of 4.5% of sub-contract receipts for the reason as discussed in the finding of the ITAT order. Therefore, ground no. 1 of the appeal of the assessee is partly allowed. Disallowance being interest paid on unsecured loan - assesse has debited an amount under the head interest to others - HELD THAT:- Assessee has executed agreement with the 4 parties to clear the dues of the sub-contractor for which the assessee has defaulted in making the payment because of shortage of working capital funds. The material placed on record substantiate that aforesaid lender parties have cleared the outstanding dues payable to the sub-contractors and the assessee company has paid interest on the amount of unsecured loan payable to these lenders as per the terms and conditions of the agreement. AO has not brought any relevant material on record to controvert and disproved the evidences and clam of interest expenditure incurred by the assesse in respect of unsecured loan amount. Therefore, we consider that decision of ld. CIT(A) in sustaining the disallowance of interest payment made by AO purely on presumption basis without disproving the relevant supporting evidences brought on record by the assessee is not justified. Therefore, this ground of appeal of the assessee is allowed.
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2024 (7) TMI 948
TP Adjustment - Treatment of forex Gains - TPO has treated forex losses as operating costs but has held that forex gains would be non-operating in nature - HELD THAT:- DRP, considering safe harbor rules, held that forex losses as well as gains would stand excluded while computing operating income. However, the forex losses have still been considered as operating cost and no directions have been given by Ld. DRP in this regard. The same could not be held to be justified since both items, being of similar nature, are to be given same treatment. In earlier years also, similar treatment has been given by the assessee and the same has been accepted by revenue. Similar treatment has been given while computing margins of comparable entities. Another fact is that as per inter-company agreement, costs include forex losses. No logic in giving separate treatment to forex gains arising out of same set of transactions. Under these circumstances, we would hold that forex gains are to be treated as part of operating income only. The corresponding grounds raised by the assessee stand allowed to that extent. Comparable Entities under IT segment - M/s Thirdware Solutions Ltd. seeked to be excluded by assessee on functional difference whereas Ld. CIT-DR submits that this entity is having similar functional profile - To support the submissions assessee relies on published Annual Statements whereas Ld. CIT-DR has brought on record the assessment details and other financial statements of this entity. To ensure fair adjudication of this entity and to bring correct facts on record, the bench deems it fit to remit the issue of exclusion / inclusion of this comparable entity to the file of Ld. AO / TPO with a direction to the assessee to substantiate its case - ground raised by the assessee stand allowed for statistical purposes. Akshay Software Technologies Ltd. - We find that the observation made by Ld. TPO, as rightly pointed out by Ld. AR, are erroneous. The observations have been made in the Annual Report not with respect to the assessee but with respect to another entity. This entity meets filters applied by TPO while carrying out comparable analysis. In the cited decision of Mercedes-Benz Research Development India (P.) Ltd. [ 2018 (7) TMI 1748 - ITAT BANGALORE] this entity has been accepted to be a comparable entity. Therefore, we direct Ld. TPO to accept this entity as comparable entity. The corresponding grounds raised by the assessee stand allowed. Comparable entities under ITeS Segment - M/s Infosys BPO Ltd. entity provides services to both horizontal and vertical focus areas. Under both these areas, this entity offers a gamut of different and diversified services which cannot be compared with routine back office services provided by the assessee. This entity was also providing business process management services which are different from routine back office services. Further, this entity enjoyed significant brand value and own intangible assets which makes it distinguishable. Therefore, we accept the argument of Ld. AR and direct Ld. TPO to exclude this entity. M/s BNR Udyog Ltd. (segment) - Entity engaged in providing medical transcription services would fall under KPO services which could not be compared with an entity like assessee who is a routine software service provider. Further, the assessee is a low risk entity. On the same reasoning, this entity has been excluded. M/s Informed Technologies India Ltd. entity has been held to be a comparable entity under ITeS segment by Bangalore Tribunal in Ocwen Financial Solutions P. Ltd. (supra). As per Directors Report this entity is operating as IT enabled Service provider and is a leading content provider to the securities and financial research industry. Its entire revenue is out of revenue information technology services. These functions are similar to assessee s functions. Therefore, we direct for inclusion of this entity. M/s Ace BPO services Ltd. excluded this entity on the ground that current year data was not available - AR submitted that Annual Report of this entity is very much available and the same was furnished before Ld. DRP and this entity is functionally comparable and satisfies all the filters direct Ld. AO / TPO to consider inclusion of this entity after perusal of financial statements. The assessee is directed to provide the requisite details and data. Disallowance u/s 40(a)(i) for want of TDS u/s 195 - As assessee made certain contractual payment to another entity i.e., GTE-Overseas Corporation (GTC-OC) under Personnel Secondment Agreement dated 01.04.2008 which were claimed to be mere reimbursement in nature - HELD THAT:- Having considered earlier direction of Tribunal and to enable revenue take consistent stand in the matter, this issue stand restored back to the file of Ld. AO on similar lines.
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2024 (7) TMI 947
Disallowance u/s 40A(3) - cash payments on different dates towards Godown Rent payment to undertaking of the Government Whether cash payments made by the assessee towards electricity charges to undertaking of the Government, viz. Chhattisgarh Electric Power Distribution Company Limited, a public sector undertaking owned by the Government of Chhattisgarh, to be considered as an arm of the State Government that had received the payment in legal tender, i.e., in Indian currency, would by virtue of the exception carved out in Rule 6DD(b) of the Income Tax Rules, 1962 be saved from the disallowance contemplated in Sec. 40A(3) of the Act? - HELD THAT:- As relying on tests laid down in the case of Som Prakash Rekhi [ 1980 (11) TMI 113 - SUPREME COURT] the aforesaid undertaking, viz., Chhattisgarh Electric Power Distribution Company Limited, a public sector undertaking is State Government Companies wherein the State Government holds 100% shareholding; there is an existence of deep and pervasive control of the State Government on the said undertaking, and the full control of their working, policy, and framework is vested with the State Government; therefore, they can safely be brought within the meaning of State. As regards the requirements contemplated in Rule 6DD(b) that the payment is required to be made in legal tender, we find that the term legal tender has not been defined in the Income-Tax Act - Dictionary meaning of legal tender, as mentioned in Aiyer s Law Terms and Phrases, is the coinage of a country in which debts may be paid and which the creditor is bound to accept. The dictionary meaning of the coin is; metal used for the time being as money and stamped and issued by the authorities of the state in order to be used. Therefore, it can be said that legal tender means the currency of a state to be used as money. Thus, the payments in question to the aforementioned State Government undertaking have been made by the assessee in Indian currency; therefore, it can safely be concluded that the same has been made in legal tender. Payments made by the assessee to the aforementioned Government undertaking, viz. Chhattisgarh Electric Power Distribution Company Limited, a public sector undertaking., that could safely be held as a part of the Government, would fall within the realm of the exception carved out in Clause (b) of Rule 6DD of the Income Tax Rules, 1962, qua, the applicability of the provisions of Sec. 40A(3) of the Act. Electricity charges paid by the assessee to the aforementioned Government undertaking, viz. Chhattisgarh Electric Power Distribution Company Limited, a public sector undertaking., is covered by the exception contemplated in Rule 6DD(b) of the Income Tax Rules, 1962; therefore, the same could not have been disallowed u/s 40A(3) of the Act. Assessee appeal allowed.
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2024 (7) TMI 946
Disallowance u/s 80(P)(2)(d) - interest income received from co-operative bank by the assessee a co- operative society from its investments on the alleged ground that ITR was filed beyond due date - treating the due date of filling the return of is 1-08-2011, irrespective of the fact that the assessee has filed the return of income within the time allowed u/s 139(1) - HELD THAT:- In the present case, the Books of Account of the assessee society are audited on 09-07-2011 which is not disputed by the revenue. The assessee has filed the return of income on 20-09-2011 very much before the extended due date U/sec 139(1) as per CBDT order. Further the due date of filing of the return of income is 30-09-2018, as the assessee is a cooperative society and the books of accounts are audited under other laws. Further the applicability of the provisions U/sec 80AC of the Act are made in Finance Act 2018 effective from 01.04.2018 i.e from A.Y.2018-19 and the AY in consideration is A.Y.2011-12. Accordingly, considering the facts, circumstances and the ratio of the judicial decision, set aside the order of the CIT(A) and direct the AO to allow the claim of deduction u/sec 80P(2)(d) of the Act and the grounds of appeal allowed in favour of the assessee.
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2024 (7) TMI 945
Deduction of written off of Unclaimed VAT - HELD THAT:- Section 43B can be applied only in the cases, where assessee collects VAT from customers, and then in that case as per section 43B, amount collected has to be paid before filing of return as per the due date prescribed u/s. 139(1). Whereas in this case the amount written off by the assessee was part of purchases made by assessee, which is otherwise available for set-off against VAT liability of the assessee to be discharged by him (As collected from customers on sale). We find the treatment given by assessee to be in order, hence orders of authorities below set aside and AO is directed to allow the same. In the result, Ground No. 1 raised by the assessee is allowed. Disallowance on account of excess contribution to provident fund - HELD THAT:- As per EFP and MP Act 1952, any person working for an establishment whether his on his role or otherwise, establishment will be treated as a deemed employer and contribution of PF (both employer and employee share) will be paid by the establishment. In view of this, we observed that as contractual labours usually works on a very meagre amount of salary as compared to the labour on permanent role. Secondly, the duration of labour contribution to the establishment is also very uncertain e.g. they may work for some days, some weeks or even for a part of month. In that situation, they will not allow the deemed employer to deduct their share of PF, but compliance of EPF and MP Act 1952 is always there on the head of the establishment. On this portion of employees contribution which is actually borne by the establishment ceiling of 27% as prescribed in Rule 87 of the Income Tax Rules 1962 cannot be applied here. We find this share of contractual employee PF contribution borne by deemed employer i.e. assessee cannot be disallowed as the same has been incurred wholly and exclusively for the purposes of business and this is true complied with EPF and MP Act 1952, we find this payment is not in the nature of optional expense or gratuitous payment. Rule 87 of the Income Tax Rules 1962 is there to serve a different purpose by putting a ceiling of 27%, but the same is not applicable for the situation under discussion. Ground no. 2 raised by the assessee is allowed and AO is ordered to allow the same in the case of assessee for the purposes computation of statutory total income. Appeal of the assessee is allowed.
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2024 (7) TMI 944
Taxability of salary income earned from long-term international assignment to Singapore - residential status of assessee - entitlement to treaty benefits - HELD THAT:- As the assessee was employed with Indian entity but sent on a foreign assignment. Thought the salary has been received in India for administrative reasons, the employment has been exercised in Singapore only. The assessee is non-resident in India and resident of Singapore which is evidenced by Tax Residency certificates as furnished by the assessee. It is also the submission that this income has already been offered to tax in Singapore and the assessee has paid taxes thereon. It has further been stated that no credit of Tax paid in India has been taken in Singapore. On these facts, the assessee, in our considered opinion, would be entitled for the benefit of Article 15 of relevant DTAA which provides that the salary would be taxable in the country wherein the employment is exercised. The same would be subject to verification by Ld. AO that this income has already been offered to tax in Singapore and the assessee has paid due taxes thereon. AO would also verify that no credit of Taxes paid in India has been taken by assessee in Singapore. As decided in Shri Kanagaraj Shanmugam [ 2022 (10) TMI 711 - ITAT CHENNAI ] regular salary accrued to any assessee is chargeable to tax in terms of Sec. 15(a). Even as per the provisions of Sec. 9(1)(ii), salary income could be deemed to accrue or arise in India only if it is earned in India in respect of services rendered in India. The bench, reading down Article-1 and Article-15 of India-Australia DTAA, held that Treaty benefit shall be applicable to persons who are residents of both India as well as Australia - contention of the revenue that the assessee being a non-resident and hence, treaty benefit cannot be extended to assessee, is incorrect. Accordingly, it was held by the bench that the salary so earned for work performed in Australia would be taxable in Australia.
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Customs
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2024 (7) TMI 943
Grant of permission to the petitioner to export the warehoused goods/machinaries - HELD THAT:- The permission granted to the petitioner to export the warehoused goods/machinaries, which are the subject matter of the present special leave petition, subject to the proceeds of the said export being deposited before the Registry of this Court within a period of two weeks from the date of the receipt of the proceeds of the said export sale. On such deposit being made, the Registry shall transmit the same in an interest bearing Fixed Deposit Account in a nationalised Bank offering highest rate of interest initially for a period of six months on auto-renewal basis. Application disposed off.
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2024 (7) TMI 942
Exonerating the assessees from the levy of customs duty and levy of penalty - active involvement in import of the goods and undervaluation of the same - HELD THAT:- There is clear inconsistency in the order passed by the Tribunal. The Tribunal has elaborately referred to a statement recorded from John Miranda. In fact, the entire statement has been reflected. The statement of Shri Rakesh Magoo has been referred. The finding of the Tribunal is only in paragraph 10 wherein it has been held that in the light of the discussion made by the Tribunal, it is clear that Rakesh Magoo and John Miranda were using IEC Code of various IEC holders for import of car electronic goods by undervaluing the same and differential amount has been paid to the oversees suppliers through their office in India by illicit means - if learned Tribunal had to rely upon the statement of those two persons, it has to discuss the statement in its entirety and cannot pick and choose a few paragraphs more particularly there is nothing on record to show that there was a valid retraction of the statement by Rakesh Magoo and John Miranda. The Tribunal should re-consider the matter and taking note of all factual matrix and then come to a clear conclusion. This exercise is required to be done by the learned Tribunal, since learned Tribunal is last fact finding authority in hierarchy of authorities - So far as the imposition of penalty on the clearing agency namely Sai Dutta Clearing Agency Pvt. Ltd., the said order has been affirmed by this Court as the appeal filed by the said clearing agency in CUSTA/17/2024 was dismissed by judgement dated 26.04.2024. The order passed by the learned Tribunal to set aside in so far as the respondents alone namely Rakesh Magoo and John Miranda and the matter is remanded back to the learned Tribunal for fresh consideration in accordance with law - the appeals filed by the revenue as well as appeals filed by the assessee are allowed.
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2024 (7) TMI 941
Refusal of MESI benefits - foul of the doctrine of equality enshrined in Article 14 of the Constitution of India - Conversion of Shipping Bills from one scheme to another - learned Single Judge allowed the benefit of the scheme - HELD THAT:- The vehement contention of learned Panel Counsel appearing for the Appellants that the very scheme in question being digitally handled, there is no scope for human intervention and therefore, the inadvertent error attributable to the private Respondent, regardless of his intent cannot be rectified, appears to be too farfetched an argument. In all human institutions whether humanly handled or machine handled, the errors are bound to occur and they need to be rectified, in the absence of law to the contrary. Otherwise, innocuous errors would perpetuate to the disadvantage of citizens, which a Welfare State like ours cannot justify. Further, it is not notified any rule that prescribes some limitation period that does not admit condonation of delay. This Appeal being devoid of merits is liable to be and accordingly dismissed.
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2024 (7) TMI 940
Revocation of Customs Broker License - forfeiture of the full amount of security deposit furnished by the customs broker - levy of penalty - misdeclaration in respect of value and other material particulars - denial of cross-examination - violation of principles of natural justice - HELD THAT:- The investigation revealed goods covered under Bill of Entry were undervalued, mis-declared, undeclared/concealed and prohibited in nature. Further as per revenue the importer was a dummy firm. Alleging violation on the part of the appellant Customs Broker, the Commissioner Customs initiated proceeding under CBLR, 2018 (erstwhile CBLR, 2013) by issuing a notice to the appellant; Inquiry Officer was appointed and on the basis of the said Inquiry report, in the impugned order the adjudicating authority directed revocation of license, forfeiture of security deposit and imposition of penalty of Rs. 50,000/- on the appellant. The main contention of the Appellant is that neither the Inquiry officer nor the Ld. Commissioner gave an opportunity to Appellant to bring the correct facts on records by way of cross-examination of the persons whose statements were relied upon by the Department. Further the Inquiry officer delayed the issuance of his report beyond the prescribed period provided under CBLR 2018, hence the impugned order is not sustainable in law. The right of cross-examination has been recognized under Regulation 17(4) of the CBLR Regulations, 2018, which requires Inquiry Officer to give reasons if he intends to deny such right to the Customs Broker. Recognizing the right of cross-examination, in the case of FLEVEL INTERNATIONAL VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2015 (9) TMI 1151 - DELHI HIGH COURT] held that ' the circumstances under which the right of cross-examination can be taken away would have to be exceptional . This would include circumstances where the person who had given the statement was dead or cannot be found or is incapable of giving evidence or is kept out of the way by adverse party or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances, the Court considers unreasonable.' In the present case, the Appellant questioned the integrity of the statements of the persons recorded under Section 108 of the Customs Act, 1962. Such statements were required to be tested through cross-examination. Despite specific request by the Appellant to cross examine such witnesses, no attempt was made to secure their presence in the adjudication proceedings - The Commissioner of Customs ignored the error on the part of the Inquiry Officer to grant an opportunity of cross examination of the importer and other persons. Provisions of Regulation 17(4) were given a complete go-by. Not allowing the Customs broker an opportunity to cross-examine the persons examined in support of the grounds forming the basis of these proceedings has resulted in serious prejudice to the Appellant. The impugned order is set aside - appeal allowed.
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2024 (7) TMI 939
Valuation of imported goods - undervaluation of aluminium scrap and zinc scarp of various grades imported from overseas suppliers - redetermination of the value of scrap items was based on the fact that the import price of the said items were much lower than the prevailing prices contained in the bulletin published by the London Metal Exchange (LME) - HELD THAT:- The valuation of imported goods for the purpose of assessment is contained in Section 14 ibid, which mandates that the value of goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale for delivery at the time and place of importation, in the course of international trade. The said statutory provision also provides for consideration of the deemed value in the ordinary course of trade, where the seller and the buyer should not have any interest in the business of each other and the price should be the sole consideration for the sale or offer for sale. In the case in hand, the appellant M/s. NICO had entered into contract with the overseas suppliers for importation of the scrap items in question. Pursuant to the contractual norms, the goods were supplied by the overseas entities under the cover of commercial invoices, bearing the reference of description of goods, quantity, price etc. On the basis of the import documents, the appellant had filed the B/Es before the jurisdictional Customs Authorities for duty assessment and for clearance of the imported consignments for home consumption. It is not the case of Revenue that over and above the contractual amount, the appellant had paid any other amount either to the overseas supplier or any other person in context with importation of the subject goods. There is no evidence on record in this context. Further, Revenue has also not alleged that the appellant had any interest in the business of the overseas suppliers and vice-versa. It is a settled position of law that if the declared value is to be rejected, then in that case, for re-determination of the value, the proper officer has to proceed sequentially through Rule 5 to Rule 8 of the CVR, 1988 - LME prices cannot be the sacrosanct evidence to substantiate the charge of undervaluation, especially when contemporaneous import of almost same price was available during the material time. The law is well settled in the following cases, that transaction value cannot be rejected, unless there is contemporaneous evidence to reject the invoice value. The adjudged demands confirmed against the appellant M/s. NICO are not sustainable. For the same reason, the penalty imposed upon the co-appellants namely, Shri Nitul B. Shah and Shri Tushar A. Porwal is also not sustainable - the impugned order is set aside - appeal allowed.
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2024 (7) TMI 938
Absolute Confiscation - penalty - foreign marking on the seized gold - Indian Currency - town seizure - onus to prove u/s 123 of the Customs Act, 1962 - HELD THAT:- The facts placed as the Seizure Memo, the gold has been seized in the office premises of Shri Om Prakash Shah, who is the brother of the appellant and there was no foreign marking on the gold and later on, on testing the same, the purity of gold is 99.5% to 99.6%. There is no foreign marking on the gold and it is a case of town seizure, therefore, before seizure of the said gold, it is the duty of the officer, who effected the seizure of gold, has to make out the reasonable belief that the gold is of foreign origin, which is absent in the facts and circumstances of the case. As the gold does not have any foreign marking, moreover, it is a case of town seizure, therefore, the provision of Section 123 of the Customs Act, 1962, cannot be invoked unless and until there is no reasonable belief that the gold in question is of foreign origin. In the case of Nand Kishor Sumani [ 2015 (10) TMI 2329 - CESTAT KOLKATA] , when the purity of gold was less than 99.99% and no foreign marking on the gold seized and it was a town seizure, in that circumstances, this Tribunal has held ' There could be non-observance of provisions of some other enactments like income-tax or sales tax laws but the same cannot be grounds for confiscation of goods under Section 111 of the Customs Act, 1962 when there is no iota of evidence that seized gold bars are of foreign origin or smuggled into India. Suspicion/presumption howsoever strong cannot take the place of an evidence.' The gold in question cannot be confiscated. Consequently, the confiscation of gold in this case is set aside and no penalty is imposable on the appellant - the impugned order qua confiscation of gold and imposing the penalty on the appellant is set aside - appeal allowed.
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2024 (7) TMI 937
Recovery of cost recovery charges under Handling of Cargo in Customs Areas Regulations, 2009 - HELD THAT:- Though there is condition for payment of cost recovery charges by the custodian. However, there is no statutory mechanism to recover the cost recovery charges by the Commissioner. Therefore, in absence of any power to recover the cost recovery charges the Ld. Principal Commission in the present impugned order confirming the cost recovery charges is without jurisdiction and without authority of law. It is further observed that Regulation 6 (1) (o) clearly provides that recovery of cost should be at such rate in the manner specified by the Government of India and the Ministry of Finance. However, in the present case there is nothing on record to show that the rates were prescribed and the manner was specified by Government of India in the Ministry of Finance, for this reason also the provision of regulation 6 (1) (o) of HCCAR, 2009 cannot be invoked. Reliance placed in the case of COMMISSIONER OF CUSTOMS, CUSTOM COMMISSIONERATE, LUDHIANA VERSUS M/S KRISHNA CARGO MOVERS PVT. LTD. [ 2019 (12) TMI 899 - PUNJAB HARYANA HIGH COURT] where it was held that ' It was duty of Government of India to specify rate and manner and it is axiomatic in taxation law that in the absence of mechanism, no recovery can be made. Thus, we find substance in the findings recorded by Tribunal that no demand of cost of officers can be made in the absence of specified rates and manner .' In view of the above settled legal position, the order for confirmation of cost recovery charges is not sustainable. A recent judgment of Hon ble Telangana High Court in CENTRAL BOARD OF EXCISE AND CUSTOMS, REP. BY ITS MEMBER CUSTOMS, NORTH BLOCK, GOVERNMENT OF INDIA, NEW DELHI AND OTHERS VERSUS M/S. GMR HYDERABAD INTERNATIONAL AIRPORT LIMITED [ 2024 (3) TMI 1301 - TELANGANA HIGH COURT] , dealing with the same HCCAR, 2009 regulation wherein it was held the provision of cost recovery charges as ultra virus on the ground that under Section 157 of Customs Act, 1962 there is no power to make such rule for recovery of cost recovery charges. Hence in view of this judgment, there is no scope left for the revenue to recover cost recovery charges. As regard the Revenue s appeal, since the recovery itself without jurisdiction, demand of cost recovery charges will not sustain. Moreover the Learned Commissioner drop the demand or not confirmed the cost recovery charges attributed to House Rent Allowance and Transport Allowance on the ground that the assessee have provided the accommodation and transport facility to the officer. In this fact we do not find any error on the part of the Principal Commissioner for not confirming the demand of recovery charges also to this extent. The Assessee s appeal is allowed.
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2024 (7) TMI 936
Circular trading of Cut and Polished Diamonds (CPD) and Gold Jewellery - over invoicing of exports of studded Gold Jewellery - Mis-use of the Target Plus Scheme - allegation of entering into conspiracy with certain entities/persons and colluded with them to cause of dubious import of gold and exports of so called studded Jewellery, to take undue benefits of the Target Plus Scheme - Confiscation - penalty - HELD THAT:- The identical allegations were raised by the department in Show Cause Notice F. No. DRI/AZU/INQ-15/2005 dated 30.3.2007 issued by Additional Director General, Directorate of Revenue Intelligence, Ahmedabad. However, the allegations were set aside and transactions were held to be genuine by the Hon ble Tribunal by its decision in CC (II) AIRPORT SPECIAL CARGO, MUMBAI AND OTHERS VERSUS SHRI SAMIR VORA AND OTHERS [ 2015 (9) TMI 1370 - CESTAT MUMBAI ] duly affirmed by Hon ble Supreme Court by dismissing the Revenue s Appeal as reported in COMMISSIONER VERSUS ADANI ENTERPRISE LTD. [ 2017 (1) TMI 474 - SC ORDER ] and further, review Petition filed by Revenue was also dismissed by Hon ble Supreme Court vide Order dated 30-3-2017. It is found that By way of the said order, it was held by the Tribunal to the effect that there was no inter relationship between the Respondents and Indian/overseas entities as well as no circular trading had taken place. The Order dtd. 27.12.2013 passed by the Joint Director General of Foreign Trade in the matter of M/s AEL is perused. It is found that in the said order he accepted the fact that there was no Circular trading, and that all the exports were to be accepted towards the discharge of the obligation under the Advance Licenses, and accordingly, redeemed all the Advance Licenses. The Order dated 27.12.2013 of the Joint DGFT covers the very same Advance Licenses, which are the subject matter of the present Show Cause Notices. Since the Licensing Authority, having accepted that the M/s AEL has discharged the export obligation under Advance Licenses, in accordance with law, there is and can be no breach of Condition (v) of Notification 93/2004-Cus dated 10.09.2004 and/or the bond issued in terms thereof. It is also noticed that the department s appeal does not allege that the licences had been cancelled by the Additional Director General of Foreign Trade in the instant case or Licencing authority take any legal action against the respondents. Clearly, the facts are on record that the DGFT has not taken any action against the respondent related to the disputed transactions and same were valid in the eyes of law. So it is clear that DGFT does not agree with the contention of the department. The allegation of the revenue that the exports/imports have been mis-declared and benefit of exports/imports have been obtained fraudulently cannot be agreed upon. There are no reason for demand of duty or confiscation of the goods, or imposition of penalties - no valid grounds have been brought out to interfere with findings of the Ld. Adjudicating authority - there is no infirmity in the impugned orders and they deserve to be upheld - appeal filed by Revenue dismissed.
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Securities / SEBI
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2024 (7) TMI 935
Liquidation of attached assets - time-bound public auctions - refund of the due amount to all the investors as well as various statutory, foreseen or unforeseen liabilities - Direction to SEBI to liquidate the attached assets in a time-bound manner and disburse the sale proceeds to genuine investors as early as possible - HELD THAT:- The entire process in the case in hand might take more than a year, it seems to us that fixation of monthly honorarium may not be desirable. Similarly, we do not want to leave it for the learned Chairperson or members of the HPSC to fix their own honorarium as it is likely to cause embarrassment to them. Considering all these aspects in view, we issue the following directions:- (i) The Chairperson of the HPSC shall be entitled to an honorarium of Rs. 2 lakhs per sitting day, when effective proceedings are held. This will be in addition to travelling, boarding and other miscellaneous expenses as may be incurred in discharging the assigned responsibilities; (ii) The learned Member, who is a former Judge of the High Court shall be entitled to an honorarium of Rs. 1.50 lakhs per sitting day, when effective proceedings are held. This will be in addition to travelling, boarding and other miscellaneous expenses as may be incurred in discharging the assigned responsibilities; (iii) The Member nominated by SEBI shall not be entitled to any remuneration since he is a full-time officer of SEBI. However, he shall be entitled to travelling, boarding, and other miscellaneous expenses as may be incurred in discharging the assigned responsibilities; (iv) The Member Secretary cum Nodal Officer of the Committee shall be entitled to an honorarium of Rs. 75 thousand per sitting day, when effective proceedings are held. This will be in addition to travelling, boarding and other miscellaneous expenses as may be incurred in discharging the assigned responsibilities; (v) Remuneration of experts like Chartered Accountant, Civil Engineer, Architect, Certified Valuer etc. shall be determined by the HPSC; and (vi) The expenditure towards honorarium, hiring of office, secretarial assistance, as well as for following the prescribed procedure of auction, etc., shall be reimbursed from the sale proceeds. The initial expenditure shall be reimbursed from the sale proceeds of the properties which have already been sold, namely, the amount which the SEBI will transfer to the Escrow Account. The States of Chhattisgarh, Maharashtra, Madhya Pradesh, Rajasthan, Uttar Pradesh and Haryana are hereby directed through their Chief Secretaries and Financial Commissioners (Revenue), to extend full cooperation and provide complete assistance as may be required by the HPSC for the purpose of execution and fulfilment of the assigned task. There must not be any delay on their part to comply with the instructions as may be received from the Chairperson of the HPSC. Directors General of Police of the above-mentioned States are directed to provide assistance, if so required for the purpose of securing and protecting possession of the properties of the Companies. In addition, the HPSC, if so required, may deploy private guards for the protection of the properties of the Companies. SEBI and the Petitioners are also directed to extend full cooperation to the HPSC. To facilitate the sale and disbursement process and keeping in mind the period of incarceration already undergone, Petitioner Nos. 1 and 2 are directed to be enlarged on interim bail to the satisfaction of the MPID Court, Mumbai in Case No. 7 / 2016. This will be treated as interim bail in all of the FIRs. We order this on the basis of the special facts of the case, in exercise of our power under Article 142 of the Constitution of India. HPSC shall be at liberty to seek further guidelines or clarifications as may be required, for which its Member Secretary cum Nodal Officer shall be at liberty to move an appropriate application before this Court.
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Insolvency & Bankruptcy
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2024 (7) TMI 934
Composition of Disciplinary Committee - respondents accepts notice and seeks time to file a response - HELD THAT:- Issue notice. List on 03.07.2024 before Roster Bench.
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2024 (7) TMI 933
Challenge to action of the Liquidator forfeiting EMD of Rs.96 Lakhs pursuant to e-auction of the assets of JVL Agro Industries Ltd. - refund of amount along with compensation /damages caused to the applicant due to non-issuance of Sale Certificate - HELD THAT:- On looking into the clauses of the E-auction Process Document, it is clear that there is timeline for payment of balance amount. The Liquidator has communicated 90 days timeline for payment of balance amount ending on 05.07.2022. Liquidator after expiry of one month also informed the Appellant from 06.04.2022 that the balance amount has to be paid along with interest. Admittedly, the Appellant has not made the balance payment. Clause 4.9, as extracted above, clearly contemplate that EMD could be forfeited if the Successful Bidder fails to make the complete payment towards total sale consideration as per the terms of the Letter of Intent issued by the Liquidator within the stipulated time not exceeding 90 days from the date of e-auction. Admittedly, the Appellant has not paid the balance amount within the period of 90 days and Clause 4.9 clearly entitle the Liquidator forfeit the EMD. On looking into the E-Auction Process Document, there was clear stipulation that entire sale including issue of Sale Certificate is subject to orders and directions passed by NCLT/NCLAT. Clause 5.11 Sub-clause (viii) has already been extracted above which clearly provides that issue of sale certificate in respect of a particular Block of assets shall subject to such orders and directions as maybe passed by the NCLT/NCLAT. Thus, the Process Document already contemplated that issue of Sale Certificate is subject to orders passed by NCLT/NCLAT. Thus, the submission of the Appellant cannot be accepted that Appellant was not aware that the Sale Certificate shall not be issued without leave of the NCLT. Present is not a case where the Liquidator due to any deficiency on his part could not issue Sale Certificate or hand over the material but on account of order dated 04.04.2022, the Liquidator could not issue Sale Certificate and that was cleared only after passing of order dated 01.06.2023 when IA No.98 of 2022 was rejected. Appellant even before the said date communicated that EMD be refunded and filed IA No.266 of 2022. Appellant has neither deposited the balance amount nor has complied with the terms and conditions of the Process Document. The Appellant having breached the clauses of the E-auction Process Information Document and having failed to deposit the balance amount within the time allowed, the Liquidator did not commit any error in forfeiting the EMD. Appellant was not entitled for refund of EMD and the application filed by the Appellant has rightly been rejected by the Adjudicating Authority. The claim of compensation made by the Appellant has also been rightly negatevated by the Adjudicating Authority. The order of the Adjudicating Authority upheld - appeal dismissed.
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2024 (7) TMI 932
Admission of Section 7 application against the corporate debtor (corporate guarantor) - existence of debt and default or not - corporate debtor has only one asset - HELD THAT:- The submission of counsel for the appellant is that the corporate debtor has only one asset which may not be sufficient to clear the debt of financial creditor nor sufficient for the resolution of insolvency does not commend us. Initiation of CIRP process is consequent to debt and default on the part of the corporate debtor who was corporate guarantor. The debt and default by the corporate debtor is writ large on the record. The corporate debtor having unable to pay its debt, insolvency resolution process against such corporate debtor cannot be interdicted on the submission that asset of the corporate debtor is not sufficient to resolve the insolvency of the corporate debtor. These are the issues which have to be addressed in the CIRP of the corporate debtor and cannot be ground to set aside an order of admission under Section 7. It is already noticed that the insolvency process has also commenced against the principal borrower. There are no ground to interfere with the impugned order of the Adjudicating Authority admitting Section 7 application against the corporate debtor who was a corporate guarantor. There is no merit in the appeal - appeal dismissed.
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Service Tax
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2024 (7) TMI 931
Refund of unutilized balance of Cenvat Credit and Service tax on services utilized for export of goods - period prior to the introduction of the N/N. 05/2006-CE(NT) dated 14.03.2006 - HELD THAT:- N/N. 11/2002-CE issued under Rule 5 of the Cenvat Credit Rules, 2004 allowed refund of CENVAT Credit of specified duty only in respect of inputs used in or in relation to the manufacture of final products which are cleared form export under bond. After 14.03.2006, as per N/N. 05/2006-CE (NT), such refund of CENVAT credit was allowed both in respect of the input or input services used in the manufacture of the final products which is cleared for export under bond or letter of undertaking; as well as input or input services used in providing output service which has been exported without payment of Service tax. In the present disputed matter as per the revenue benefit of input services used in manufacture of final products exported was started to be admissible from the said date i.e 14.03.2006, the date of issuance of Notification No. 05/2006-CE (NT) and as per the revenue the provisions of Notification No. 5/2006-CE (NT) will not apply to cases prior to 14.03.2006. The disputed issue is no more res integra as the Division Bench of the Tribunal in the case of WNS GLOBAL SERVICES (P) LTD. VERSUS COMMISSIONER OF C. EX., MUMBAI [ 2008 (1) TMI 94 - CESTAT, MUMBAI] held that substituted Rule 5 will be applicable for the export of services prior to 14-3-2006. In the present case, revenue found that an amount of Rs. 55,88,459/- pertained to the period prior to 14.03.2006 i.e. the introduction of Notification No. 5/2006-CE and as such refund of the same would not be admissible. The only reason given in the adjudication for rejection of the claim is that it pertains to the year prior to 14-3-2006. In view of the decision of the Mumbai Bench this objection cannot be sustained. The impugned order has no merits, the same is set aside - Appeal allowed.
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2024 (7) TMI 930
Scope of sale of space for advertisement in print media - publication by the name of INSITE falls under the category of the newspaper or not - HELD THAT:- From the registration certificate which have been produced by the learned Advocate, it is clear that the publication has been considered by the Registrar of the Newspaper for India as newspaper having periodicity of monthly publication. On the strength of this certificate of registration they clearly get excluded from the definition of Service Tax category of sale of spaces for advertisement and print media as the newspapers have been excluded from the category of print media. It is found from the record of the appeal that other publications like India plumbing today has also been registered with the Registrar of Newspaper of India as newspaper having publication periodicity bi-monthly. The publications printed by the appellant fall under the category of newspapers and thus entitled in the exclusion clause given in the definition under Section 65 (105) (ZZZM) of the Finance Act, 1994 for service category of sale of space for advertisement in print media - the finding of learned Adjudicating Authority in the impugned Order-In-Original are not sustainable in law and is set aside - appeal allowed.
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2024 (7) TMI 929
Levy of service tax - Business Auxiliary Service (BAS) - margin between the purchase price and selling price of cargo space - suppression of facts - extended period of limitation - HELD THAT:- Admittedly, there is no dispute that the Appellant as an IATA Member, books the cargo space in various airlines for which they pay the amount to the airlines. Subsequently, they sell such space to their clients. The clients are sold the cargo space which is already booked by the Appellant. It is not the case of the Department that the Appellants are getting any commission from the airlines or from their clients. This is a purely a trading activity of purchase and selling of cargo space and a margin between the same is only the profit. Such an activity cannot be treated as an activity amounting to service to their clients. There is no liability to pay any Service Tax in terms of Business Auxiliary Service (BAS) as has been held of the Adjudicating Authority. The re-imbursement received by the Appellant in the course of providing their service, the issue is no more res integra. The Hon ble Delhi High Court in the case of INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. [ 2012 (12) TMI 150 - DELHI HIGH COURT] where it was held that ' What is brought to charge under the relevant Sections is only the consideration for the taxable service. By including the expenditure and costs, Rule 5(1) goes far beyond the charging provisions and cannot be upheld. It is no answer to say that under sub-section (4) of Section 94 of the Act, every rule framed by the Central Government shall be laid before each House of Parliament and that the House has the power to modify the rule.' All the data which has been used for quantification of the demand emanates from the Profit and Loss account of the Appellant. All these facts show that there has been no attempt on the part of the appellant to suppress any fact. The Department has not come out with any concrete evidence to the effect that the Appellant has deliberately suppressed any facts to evade Service Tax payment - the confirmed demand pertaining to the extended period is not legally sustainable - the confirmed demand for the extended period set aside even on account of limitation also. The Appellant would be eligible for consequential relief - Appeal allowed.
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2024 (7) TMI 928
Classification of service - Site Formation and Clearance, Excavation and Earthmoving and Demolition Services or not - services rendered by the assessee with respect to transport, dumping, filling, dozing, compacting, reformation and shifting of waste (Municipal Solid Waste) in respect of eight contracts of CMC - HELD THAT:- From the facts, it is clear that M/s. UPL, who have been awarded the contract by CMC, are pioneers in environmental engineering and waste management etc. The work undertaken by the various work orders (8-CMC +7-UPL) are nothing but part and parcel of Integrated Waste Management system. In all these work orders the word waste has been mentioned. It is to be noted that the activities done are not for site formation or clearance in connection with erection of a civil structure, building, factory or mining area. In the present case, the activities of excavation, earthmoving, dumping etc. are done for the purpose of managing the waste and protecting the water tables / water sheds. The Commissioner has discussed the legislative intent of site formation service as brought out from the clarification issued by the Board Circular dt. 27.7.2005. The Ld. counsel has adverted to the works carried out along with the photographs to explain the nature of the work carried out at the site. The photographs placed on pages 99 to 126 of the appeal paper book filed by the assessee show various works carried out. The definition of Site Formation and Clearance, Excavation, Earthmoving and Demolition Services , excludes the services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovation or restoring of water resources or water bodies. In fact, the entire effort on the part of CMC by engaging M/s.UPL is to manage the waste and also to protect the watersheds / water bodies. The original authority in para 33.3.24 has discussed this aspect and held that the works carried out by the assessee as per the work orders of CMC as well as M/s.UPL would fall under the exclusion part of the definition. After perusal of the work orders and the nature of works undertaken by assessee, we agree that the arguments by the learned counsel are tenable and acceptable. When the assessee has been given work orders by M/s.UPL and the Corporation with intention to prevent contamination of water, it cannot be construed that part of the works are done independently at the site and not as part of the complete work - Merely because the word 'waste' is not used in the work orders, the Commissioner has been carried away to conclude that these works undertaken are in the nature of Site Formation Service. Without executing works as per these work orders, the activity of waste management cannot be completed. From the above discussions, the confirmation of service tax demand in respect of the two work orders requires to be set aside. The impugned order to the extent of confirming the service tax demand of Rs.19,50,571/- along with interest and penalties imposed is set aside - The assessee's appeal is allowed.
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2024 (7) TMI 927
Liability of appellant to pay service tax on the land owner s share as well as builder s share for the disputed period of 2009 to 2011 - Construction of Residential Complex Services - HELD THAT:- The co-ordinate bench of the Tribunal in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES [ 2014 (3) TMI 694 - CESTAT AHMEDABAD] had examined the issue as to whether a promoter/builder/developer is liable to pay service tax on construction of residential complex services prior to 01.07.2010. The Tribunal referred to the CBEC Circular No.108/2/2009 dated 29.01.2009 wherein it has been clarified that the promoter/developer/builder is not liable to pay service tax for the period upto 30.06.2010 - In the case of M/s Krishna Homes the Tribunal set aside the demand for the period prior to 01.07.2010. The Tribunal in the said case held that it was only with effect from 01.07.2010, wherein an explanation was added under Section 65 (105) (zzzh), builder/promoter/developer was brought within the service tax net for construction services provided by them. In the present case part of the demand is prior to 01.07.2010. For the period after 01.07.2010 also, the demand has been made under Construction of Residential Complex Services. Undisputedly the works rendered by the appellant are indivisible contracts which are composite in nature. It involves supply of materials as well as rendition of services. After introduction of definition of Works Contract Services, which sets out the ingredients of composite contracts, the demand of service tax for such composite contract can only be under the category of works contract services. In the present case, the demand is made under residential complex services which has been held to be in the nature of service simpliciter as per the decision of the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] . On perusal of the Annexure to the show cause notice, it is seen that the department has demanded the service tax on 33% of the value giving 67% abatement to the appellant while quantifying the tax liability. This itself would show that the works are indivisible contract or composite in nature - In the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] the Tribunal considered the issue whether the demand of service tax in the case of composite contract can be raised under construction of residential complex services/commercial or industrial construction services / construction of complex services. The issue was answered in negative and in favour of the appellant. The contracts being composite in nature and the demand having been raised under Construction of Residential Complex Services, the demand of service tax cannot sustain for the period after 01.07.2010 also. The impugned order is set aside - Appeal allowed.
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Central Excise
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2024 (7) TMI 926
Wrongful availment of Cenvat credit on different input services - recovery of credit with interest and penalty - HELD THAT:- The respondent-assessee availed Cenvat Credit on various services and Revenue denied on few which included CHA services for export, renting of immovable property service, CHA (import), legal consultancy service, company secretary service, convention services, real estate service, cargo handling service etc. These all services have been used in or relation to manufacture of finished goods and fall within the definition of input service . There are no factual or legal infirmity in the impugned order warranting interference of this Court, thus, the instant appeals deserve to be dismissed and accordingly dismissed.
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2024 (7) TMI 925
CENVAT Credit - clearance of cement coated pipes under exemption N/N. 6/2006-CE dated 01.03.2006 directly from the job worker s premises - Department is of the view that activity undertaken by the job worker that of cement coating on the steel pipes amounts to manufacture as per clause (5) of the Chapter note 73 of Central Excise Tariff Act, 1985 hence the job worker is not liable to charge and pay any service tax on such activity - manufacture of dutiable and exempted goods - Failure to separate accounts - HELD THAT:- It is matter of record that since the appellant have availed credit of common input services which have been used both in the manufacture of dutiable and exempted goods and have not maintained separate accounts with respect to dutiable and exempted goods as required under Rule 6(2) of the Cenvat Credit Rules, 2004 they have paid an amount equal to 6% of the value of exempted goods cleared by them, as provided under Rule 6(3)(i) of Cenvat Credit Rules, 2004. With regard to the question whether the appellant is entitled to avail Cenvat credit of the service tax paid by the job worker for the activity which amounts to manufacture and thus falls beyond the scope of definition given for Business Auxiliary Service. It is found that the matter has already been decided by the Hon ble Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD-III VERSUS NAHAR GRANITIES LTD. [ 2014 (5) TMI 57 - GUJARAT HIGH COURT ] - In view of the above judgment, it can be seen that on both the counts i.e. on the issue of availment of exemption Notification No. 44/2001-CE (NT) dated 26.06.2001 by the supplier and also where even if the duty is not payable by the supplier but the same was paid, Cenvat credit cannot be denied at the recipient end. Consequently, the personal penalty on Shri Omdev R. Mishra is also not imposable. Accordingly, the impugned orders are set-aside and the appeals are allowed. It is held that it is matter of record that M/s. Welspun Corp. Limited were reversing 6% of the value of goods which were cleared without payment of duty as per the requirement of Rule 6(3)(i) of Cenvat Credit Rules, 2004. At the same time, in their reply to show cause notice, it has categorically been mentioned by the respondent assessee that they have also been clearing the cement coated pipes on payment of Central Excise duty. In view of above, the grounds taken by the department for filing this appeal are devoid of merits. The appeal filed by the department is not maintainable on merits and therefore, the same is set aside. Appeal allowed.
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2024 (7) TMI 924
Determination of transaction/ assessable value of excisable goods - whether the advertisement cost incurred by the dealer/ distributor is includible in the assessable value of the excisable goods manufactured and sold by the appellant to or through such dealer/ distributors? - HELD THAT:- For the period prior to new Section 4 and Valuations Rules, 2000 there are judgments of the Hon ble Supreme Court that the advertisement cost incurred by the dealer/ distributor will not be included in the assessable value of excisable goods. However, the Revenue s contention is that post 1.7.2000 as per the amended Section 4 and Valuation Rules made their under such advertisement cost incurred by the dealer/distributor shall be included in the assessable value as clarified by the board in circular No. 643/34/2002-CX dated 01.07.2002. Reliance placed in the HENKEL ADHESIVES TECHNOLOGIES INDIA P. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-III [ 2017 (12) TMI 163 - CESTAT MUMBAI ] where it was held that ' From these advertisements, it is clear that the advertisements are mainly to the effect that a particular dealer deals in the product of the appellant. Thus, these advertisements cannot be called as advertisements for the manufactured goods but are advertisements of the dealer. Undoubtedly, such advertisement indirectly helps the appellant and it is for this reason that they are reimbursing 50% of the expenses.' In view of the above judgment, it can be seen that even for the period post 2000 the courts have taken a view that advertisement cost incurred by the dealer/ distributor shall not be included in the transaction/ assessable value of excisable goods manufactured and cleared by the appellant. The impugned order is not sustainable - the impugned order is set aside - appeal allowed.
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2024 (7) TMI 923
Classification of goods - White Petroleum Jelly variants - to be classified as petroleum jelly under CTH 2712 or cosmetics, under CTH 3304? - whether the products in question are drug or Cosmetic and the addition of ingredient would result in any change in their classification? HELD THAT:- It is relevant to refer to both to Chapter Headings; Chapter 27 of CETA refers to Mineral Fuels, Mineral Oils and Products of their distillation; Bituminous Substances; Mineral Waxes. Entry at 2712 gives the description of goods as Petroleum jelly, paraffin wax, microcrystalline petroleum wax, ozokerite, etc. obtained by synthesis or by other processes, whether or not coloured . This gives an indication to be covering petroleum jelly per se, in pure form, obtained by synthesis or by other processes, without any additives. Interestingly, Heading 27.12 of HSN at (A) has provided for specific exclusion, as noted earlier, for petroleum jelly suitable for use for the care of skin, which is also indicated to be covered under heading 33.04. The products in question viz, petroleum jelly Baby and petroleum jelly Aloe Vera are those meant exclusively for the care of skin, petroleum jelly meant for skin care specifically excluded from CTH 2712 and therefore, they are cosmetics which are correctly classifiable under CTH 3304. Hence, the appellant should succeed. The impugned order upholding wrong classification cannot sustain for which reason, the same is set aside - appeal allowed.
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2024 (7) TMI 922
Provisional assessment under Rule 7 of the Central Excise Rules, 2002 - inability to determine the grade of their coal - HELD THAT:- It is agreed that at the time of clearance of coal from the respondent s premises, the grade of coal was not known and the same is to be done at the end of DVC as per the joint venture agreement and after arriving at the grading of the coal by DVC, M/s Coal India Limited has fixed the price and on that price, the duty is payable by the respondent - Admittedly, at the time of clearance of coal from the premises by the respondent, the value of coal is not known. In that circumstances, the respondent is entitled to claim the provisional assessment in terms of Rule 7 of the Central Excise Rules, 2002, which has been allowed by the ld.Commissioner (Appeals) in the impugned order. There should be no interference in the impugned order and the same is upheld - appeal filed by the Revenue is dismissed.
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